We all remember The Great Depression. That is a lie.
Very few who live today lived when this monumental event occured.
After the Roaring '20s, a decade of parabolic stock market growth and explosive demand for stocks, the cash-out came. In the Depression, people were giving out stocks for free, burning the titles. Truly a desperate action by many. Demand for stocks has gone to zero.
Then, WWII came around, and demand for money was vital for survival.
In finance, supply and demand dictate everything.
Prices increase when demand increases, and they fall when demand diminishes.
Equities and Currencies are opposite powers, both vital to sustain the eternal cycle of markets.
The aftermath of the Great Depression is full of lessons.
Demand for stocks has never been so high as it was in the Roaring '20s.
This may have two explanations. Most of worlds' debt is denominated in Dollar. The function of the dollar changed substantially after the first QE experiment: Abandoning the Gold Standard.
A modern analogue of the mania that existed in 1920s is Bitcoin.
With that in mind, we may conclude the following for the relationship between Gold and Dollar.
Now, demand for Dollars is at an all-time high level.
Fiat currency is a proof of debt. To make some sense of the scale of demand for dollars, we can calculate the total debt. The World Economic Forum has posted the following article regarding world debt.
www.weforum.org/agen...lobal-debt-why-high/
In short, Global Debt has surpassed 300 Trillion in 2023.
Much of that debt is dollar-denominated. US Debt alone has reached 33T at the time of writing.
The (im)possible serviceability of that scale of debt deserves a conversation on its own.
Many questions arise, more than the conclusions.
If BRICS is to create an alternative reserve currency to dollar, what effect will that have in the strength of the dollar? Some may believe that dollar strength will vanish if an alternative is born. After all, demand for it will surely decrease.
Well, there is a catch to all of that.
Dollar has been artificially weak so as weaker economies can afford to borrow it.
As we talked about, world debt has largely depended on dollars.
Some charts (even slightly wrong ones like the following one) may suggest that a Dollar Milkshake scenario is indeed probable. A simplistic PnF analysis of accumulation gives us the following targets for DXY. Don't forget that DXY is nowhere near its all-time high value. So there is the remote probability that this chart is true.
Until now, the focus of the FED was keeping dollar cheap to promote its' borrowing.
Now their stance has changed dramatically.
Yield rates are decisively high, and money supply is actually being burned.
Money supply is vanishing rapidly. This has given birth to a war, between demand for dollars and demand for other currencies. The FED is doing what it can to stop the mania for equities and crypto.
A pivot has been reached. For decades the benefit of the many (cheap debt) resulted in dollar taking the hit (dixie). With the US indirectly involved in war, it is time for The States to look at their survival....
...keeping the nation, the currency and the economy strong. Now that, is something the FED is unwilling to pivot upon. All charts suggest that the FED is performing actions that will strengthen the US. Inflation is being fought, unemployment avoided and equities being kept in stable levels.
Extra Chart:
If the role of the dollar changes once again, and global demand for it decreases substantially, what effect will that have for the relative demand for equities?
Thought Experiment:
Imagine if you will, a scenario where corporate investment utilizes Bitcoin ETFs.
What effect will that have in the performance of their equities as a result of improved investment strategies?
Tread lightly, for this is hallowed ground.
-Father Grigori
Very few who live today lived when this monumental event occured.
After the Roaring '20s, a decade of parabolic stock market growth and explosive demand for stocks, the cash-out came. In the Depression, people were giving out stocks for free, burning the titles. Truly a desperate action by many. Demand for stocks has gone to zero.
Then, WWII came around, and demand for money was vital for survival.
In finance, supply and demand dictate everything.
Prices increase when demand increases, and they fall when demand diminishes.
The aftermath of the Great Depression is full of lessons.
This may have two explanations. Most of worlds' debt is denominated in Dollar. The function of the dollar changed substantially after the first QE experiment: Abandoning the Gold Standard.
A modern analogue of the mania that existed in 1920s is Bitcoin.
With that in mind, we may conclude the following for the relationship between Gold and Dollar.
Fiat currency is a proof of debt. To make some sense of the scale of demand for dollars, we can calculate the total debt. The World Economic Forum has posted the following article regarding world debt.
www.weforum.org/agen...lobal-debt-why-high/
In short, Global Debt has surpassed 300 Trillion in 2023.
Much of that debt is dollar-denominated. US Debt alone has reached 33T at the time of writing.
Many questions arise, more than the conclusions.
If BRICS is to create an alternative reserve currency to dollar, what effect will that have in the strength of the dollar? Some may believe that dollar strength will vanish if an alternative is born. After all, demand for it will surely decrease.
Well, there is a catch to all of that.
Dollar has been artificially weak so as weaker economies can afford to borrow it.
As we talked about, world debt has largely depended on dollars.
Some charts (even slightly wrong ones like the following one) may suggest that a Dollar Milkshake scenario is indeed probable. A simplistic PnF analysis of accumulation gives us the following targets for DXY. Don't forget that DXY is nowhere near its all-time high value. So there is the remote probability that this chart is true.
Until now, the focus of the FED was keeping dollar cheap to promote its' borrowing.
Now their stance has changed dramatically.
A pivot has been reached. For decades the benefit of the many (cheap debt) resulted in dollar taking the hit (dixie). With the US indirectly involved in war, it is time for The States to look at their survival....
...keeping the nation, the currency and the economy strong. Now that, is something the FED is unwilling to pivot upon. All charts suggest that the FED is performing actions that will strengthen the US. Inflation is being fought, unemployment avoided and equities being kept in stable levels.
Extra Chart:
Thought Experiment:
Imagine if you will, a scenario where corporate investment utilizes Bitcoin ETFs.
What effect will that have in the performance of their equities as a result of improved investment strategies?
Tread lightly, for this is hallowed ground.
-Father Grigori
Comment:
Bitcoin, as I said, is a good example of what the Roaring '20s may have looked like. Now this "miracle" is about to meet its fate.
This is a relative chart of the trend of Bitcoin.
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There are also some stocks out there that print similar pictures...
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The Golden Apple?
Or the Golden Retracement? Short???
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AI Revolution?
Or Skynet? Short???
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Long Live Inflation!
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Dollar is fighting for its life.
Rate cuts from US will spell much more trouble going ahead for our precious dollar.
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It is incredible how massive bubbles can sometimes form...
A 4-sigma event has a probability of 1 in 15.000 (twice in a lifetime)
A 5-sigma event (approximately The Great Depression) has a probability of 1 in 1.7 Million (once in recorded history)
Comment:
Are Bitcoin Miners about to get rich?
This chart calculates the ratio between how much is paid out in Miners, relative to Bitcoin's Market Cap. A breakout of this chart means that a massive sellout of crypto and into USD is taking place.
LUNA Collapse was no random event. It triggered a first breakout of the trend, and created a massive supply that still exists to this day. On the right a bullish continuation pattern seems to be shaping.
While price action is volatile, moving averages are not.
The simplest of averages, SMA, has broken out.
LUNA Collapse was no random event. It triggered a first breakout of the trend, and created a massive supply that still exists to this day. On the right a bullish continuation pattern seems to be shaping.
The simplest of averages, SMA, has broken out.
Comment:
Should Bitcoin analysis really that complex?
Maybe 13 degrees is all there is to it.
13 more to go to reach zero. The clock is ticking.
Comment:
Maybe the answer is right under our noses...
There is a fundamental difference between stocks and crypto.
-- By buying a stock you become an investor for a company that sells products to other people. You get paid from the profits of the company.
-- By buying one of the 23k cryptocurrencies you become a customer to the company which made this product. That company takes the profits they made from selling these products and pays some of them to its investors.
There is a fundamental difference between stocks and crypto.
-- By buying a stock you become an investor for a company that sells products to other people. You get paid from the profits of the company.
-- By buying one of the 23k cryptocurrencies you become a customer to the company which made this product. That company takes the profits they made from selling these products and pays some of them to its investors.
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The 30 year war. If MMT was first talked about in 1964, this must mean that it was invented in 1934. So, what was invented in 1964, 1994 and what will be invented in 2024?
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Part 2 is here...
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Transitory Inflation? Hmmmmm
When someone defaults on their debt, money itself vanishes.
A rapidly decreasing money supply deserves more conversation on what it is caused by. A default by more than a few countries on their debt could be all it takes to make dollar go kaboom.