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.
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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