US Dollar looking weak.
Updated
The fed has continued with "QE" Quantitative Easing. They call it "adding to it's balance sheet"
It started buying long-term treasury's, debt and mortgage-backed securities to “increase the availability of credit” for home purchases and prop up the economy, according to a Fed statement from 2008.
Fast-forward to October 2017: The Fed started gradually selling off those holdings because the economy had since healed from the last recession. The Fed concluded this process Aug. 1.
What does QE have to do with the balance sheet?
You probably have an idea of the different types of debts you may owe, such as student loans, credit cards or a mortgage. In accounting terms, those are considered liabilities. In contrast, the things you own — stocks, bonds or a house, for example — are considered assets.
The U.S. central bank, too, keeps track of its assets and liabilities. It publishes this data in a weekly financial statement known as “the balance sheet.”
U.S. paper currency, as well as money that commercial banks hold in accounts at the Fed, are counted as a liability. Assets, on the other hand, are things that the Fed has purchased, such as Treasurys.
Now, go back to 2008. When the Fed announced it would start buying massive amounts of bonds, including “subprime” mortgage securities and other forms of distressed debt, it listed them as “assets” on its balance sheet.
This caused the balance sheet to balloon. In August 2007, before the financial crisis hit, the Fed’s balance sheet totaled about $870 billion. By January 2015, after those large-scale asset purchases had occurred, its balance sheet swelled to $4.5 trillion. That’s more than a five-fold increase.
By the time the Fed finished its normalization process, the balance sheet totaled $3.78 trillion.
As a result of all this Satoshi Nakamoto (Craig Wright and Dave Kleiman?) solved the Byzantine Generals problem of double spending and created the White paper for Bitcoin in Oct 31, 2008 (All Hallows Eve) with the hopes of creating a decentralized anti inflationary form of transact able, honest value.
This Creation coincided with the bottom on this chart. I can only imagine what the price of that creation(BTC) will do if the chart displayed here bottoms again. Thank you for reading.
It started buying long-term treasury's, debt and mortgage-backed securities to “increase the availability of credit” for home purchases and prop up the economy, according to a Fed statement from 2008.
Fast-forward to October 2017: The Fed started gradually selling off those holdings because the economy had since healed from the last recession. The Fed concluded this process Aug. 1.
What does QE have to do with the balance sheet?
You probably have an idea of the different types of debts you may owe, such as student loans, credit cards or a mortgage. In accounting terms, those are considered liabilities. In contrast, the things you own — stocks, bonds or a house, for example — are considered assets.
The U.S. central bank, too, keeps track of its assets and liabilities. It publishes this data in a weekly financial statement known as “the balance sheet.”
U.S. paper currency, as well as money that commercial banks hold in accounts at the Fed, are counted as a liability. Assets, on the other hand, are things that the Fed has purchased, such as Treasurys.
Now, go back to 2008. When the Fed announced it would start buying massive amounts of bonds, including “subprime” mortgage securities and other forms of distressed debt, it listed them as “assets” on its balance sheet.
This caused the balance sheet to balloon. In August 2007, before the financial crisis hit, the Fed’s balance sheet totaled about $870 billion. By January 2015, after those large-scale asset purchases had occurred, its balance sheet swelled to $4.5 trillion. That’s more than a five-fold increase.
By the time the Fed finished its normalization process, the balance sheet totaled $3.78 trillion.
As a result of all this Satoshi Nakamoto (Craig Wright and Dave Kleiman?) solved the Byzantine Generals problem of double spending and created the White paper for Bitcoin in Oct 31, 2008 (All Hallows Eve) with the hopes of creating a decentralized anti inflationary form of transact able, honest value.
This Creation coincided with the bottom on this chart. I can only imagine what the price of that creation(BTC) will do if the chart displayed here bottoms again. Thank you for reading.
Note
Our social media-constrained attention spans make it hard to focus on anything lasting longer than 24 hours, let alone a decade.So, we risk missing the big, secular trends that lead to the kinds of paradigm shifts Bridgewater Associates founder and co-chairman Ray Dalio speaks of. Once they’ve occurred, and the world you were used to suddenly disappears, it’s too late.
Thankfully, the Roman calendar periodically offers an excuse to sit back and reflect on longer time frames. We have one of those moments right now: the end of the 2010s.
For most capital market investors, the past 10 years are perhaps best described as the “decade of QE.” And they don’t mean a British monarch or an ocean liner.
Through a radical policy of “quantitative easing” introduced to counter the “zero lower bound” problem in interest rates, the central banks of the U.S., the euro zone, and Japan have added almost $10 trillion in assets to their balance sheets since the end of 2009.
Given that massive surfeit, nothing else mattered much to financial markets. Stocks, bonds and commodities moved in ever closer correlation to one another. Mostly they rose, though sometimes they fell, all in lock-step dependence on monetary policymakers administering the drug of QE.
There are many reasons to believe that this massive intervention has created a giant distortion.
One that gets attention is the fact that, at one point, $17 trillion of dollars in bonds traded at negative yields this year, meaning that investors had too much cash and were willing to pay “safe” creditors for the privilege of taking their money.
But there are other warning signs that the QE-fueled market runup is starkly out of line with the realities of the world. As Bank of America chief strategist Michael Harnett put it in a recent research report, “We enter the next decade with interest rates at 5,000-year lows, the largest asset bubble in history, a planet that is heating up, and a deflationary profile of debt, disruption, and demographics.”
So, while the decade of QE might seem like the ultimate expression of central bank power and influence, the next decade may produce the opposite: a reversal that reveals central bankers’ impotence. The fear is that monetary authorities have spent all their ammunition, leaving nothing for the next crisis.
Perfect time for Bitcoin to initiate it's next Bull Run. Thank you for reading.
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