The Fed Is Going To Start Buying Stocks Outright

in money •  2 months ago 

Hey Jesstock holders

As M2 money velocity is falling like a rock and according to deflation.com it's at an all-time low. As people stop spending and continue to save, transactions are drying up, and businesses are suffering. Money exchanging hands as fast as possible is what economists want, it makes sure one unit of currency generates far more value than its worth; however, in recent years that has not been the case.

The US alone spends about $4 in debt for every $1 of productivity, and the world is not far behind. That was before the lockdown and social unrest so as job retention has fallen off a cliff to pre-depression numbers; we see it's going to take bigger stimulus packages to get things back to the way they were before.

Is it 3 trillion? 6 Trillion? 10 Trillion? 100 Trillion we don't know,, but they are going to keep printing via debt issuance to try and buy time. If they see it doesn't work, they'll switch to a CBDC in my opinion.

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Phase 1 of QE - Buying up government bonds

Governments are naturally going to roll over their own debt first so what they do is issue out new bonds, get the cash from the new debt and buy up the old debt holder bonds so we can keep this Ponzi scheme moving along that is the primary basis of QE.

Phase 2 of QE - Buying up corporate bonds

As shit hits the fan and corporates start to feel the pinch, they look at buying up corporate debt and moving it to the Feds balance sheet. Then the corporate is free to go out and "generate wealth" and 'productivity" but what they have been doing is buying back their own shares as there is not additional productivity.

Phase 3 of QE - Buying up public debt

Next the look to bail out the banks, banks have a license to print money by issuing debt, and that's great when times are good. Still, when times are bad they are sitting holding the back, so they either ship it on to pension funds and other cash-rich organisations looking for yield or the dump it on the fed, so they don't go bust and remain liquid.

It might be public debt but that doesn't mean you're bailed out, the banks get the cash from the debt they sell, and you get the privilege of paying back the fed as you don't get loan forgiveness as corporate and banks do.

Phase 4 of QE - Buying equities

This has been illegal for some time, but there are only so many bonds and serviced debt you can buy to stimulate the market. Eventually, as things continue to flatline or get worse, they are going to go out and buy equities directly to keep companies in business. If Black Rocks proposal is moved into law, this is the next step for the fed int he ultimate fuck you to the ordinary person.

This is where I feel the balance sheet will show its muscle and how much it can absorb as it buys stocks at way over market value. This is the mechanism by which failing companies will suck the public funds dry as they now don't need to run a tight ship they can just absorb freshly printed money at will.

The aim to keep the stock market up will have no bounds; I can't wait to see what the final bill will be for all of this!

Will there be a phase 5?

Probably, the powers that be keep taking their share for every stimulus that goes out and they are nominally getting rich so why would they stop? I think that they'll continue to push it in the name of "the people" to try and stave off deflation as long as possible but market forces always correct.

This fiat Ponzi debt bubble is something I watch closely, and I'm amazed at how robust it is, it can take so much I don't think anyone can predict how far we can issue debt-based money until it breaks.

For now, it allows us in the know to prepare, which I'm grateful for; I'm only wondering how much time they can give us before it all comes crashing down.

Have your say

What do you good people of HIVE think? Where do you think money printing will lead us?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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buying corporate debt underway... great post

The bonds were one thing but now that they going equity side it’s like what’s the point of having the business at all just tell the staff to go home and send them welfare it would be more efficient

It will be interesting to watch.... It is not going to be good to be caught in the middle of the crash. Or even touched by it. Pfew... The times we are living now. Will be a challenge to stay strong

We only see it as a crash because we've been living in a fantasy land, its actually just going back to where it should be, people will just adapt as always. Every empire eventually falls, I'm sure the Romans, British, Greeks, Mongolians and Bazantyne all thought they would rule forever too

True. Natural evolution.

You think they will go full crazy in Banning Cash yet? That is what I expect to happen before going negative interest rates.

Certain countries, I feel like places like Canada and Australia have the ability to go cashless pretty quickly, really depends on the cash usage, like here in Africa, it would be much harder. I think you can pull off negative interest rates without cash bans, Germany are doing it now, we'll see how that goes.

Yes, it would be easier to do negative interest rates or high taxes with a cash ban, which a gain more developed and less physical cash dependant economies can pull off.

If they tried that shit here, there'd be blood in the streets within a week. I think they'll only bring in those moves once they hit around 50 trillion and have bought up most of the stock market.

Going to be interesting to watch

Well, I think you’re right and I think that this will keep going for an astonishingly long time. That’s because every government and every bank and every corporate business is dependent on this debt based system. So that means everyone with authority and power.

They only reason I would see this fail anytime soon, is when the majority of people start losing trust. When trust is lost, it can’t be bought back.

This will be a terrible day for the world, because history tells us what governments with armies, police and secret services to do keep control: they enforce it.

I hope this won’t happen.

I honestly am amazed at how much confidence we have in this system when it’s so evidently broken it’s kind of impressive in a weird way!i think certain countries will fair better than others and some will need the Marshall law while others will jusy coast along and move to say a CBDC and let the banks fail!

I do hope that some will opt for a crypto economy and either peg their currency to BTC or allow crypto as legal tender

There are quite a few options I just wonder if we’ll explore them I know I can only protect myself against it so let’s see shall we