Quantity Theory of Money: Team TransitoryIs it possible that all of Team Transitory used the Quantity Theory of Money to come up with the Transitory narrative????
Transitory
Worthless Dollar by 2050?Suppose you wanted to ask the question, hypothetical of course: What percentage of the economy does the FED balance sheet comprise of? If you were to replace "the economy" with "M2", then you could get something easily measurable. Simply use the symbol:
FRED:WALCL/1000/FRED:WM2NS
One is measured in billions, the other millions, so we divide by 1000 (I say just switch to trillions and stick with it, but so much for standards).
IF this trend continues at the current pace, the FED balance sheet will make up 100% of the economy by about 2050. The dollar will probably be worthless by then, as the only thing that fuels debt monetization currently seems to be a continuously decreasing proportion of honestly earned, productive dollars, and an increasing proportion of dishonest dollars supporting a bankrupt institution of commercial and federal finance.
By using productive money as a means to price in something which should be bankrupt (this is happening now), this bankruptcy will eventually flow and be fully priced into the economy and the proportion of people who believe in the dollar simply stop using the dollar or go bankrupt via the dollar.
The balance sheet consists of mostly (see more: www.federalreserve.gov):
5.7T Treasury bills, notes, bonds. Who else could buy that many of them? Nobody I know.
2.7T Mortgage backed securities. They own more mortgages than anyone.
Unfortunately the data only goes back to 2012 on TV, not sure why. The FRED WALCL data actually goes back to 2002, so I filled the data in as best as I could using the data from FRED using some red lines. Pretty crude, but probably good enough (should we even trust the data?).
I hope you enjoyed this simple idea and many thanks for reading. Don't forget to hedge your bets :)
BTU: Oversold at Low End of Trend RangeTrend is intact measured by volatility and registering an extreme oversold condition at the edge of the trend. Heighted fear and uncertainty can result in some very handsome buying opportunities....
$BJ: Budding $COST competitor?Wholesale and membership models have really stood the test of time as we've seen with $COST reaching new all time highs. The Fed doesn't seem too concerned with inflation which could be giving the green light to some of the strong inflation players once again. Wheat threatens a breakout at the time of writing. Good luck traders!
SPY vs Transitory InflationSPY Journal 12/10
There has been no sign of relief as Bear pressure mounts against the Bulls around the 435 inflection point.
435 seems to be the point at which Bears are in control of the weekly.
Bulls pulled ahead last week, but was it just another well laid Bull trap as 435 was rejected 3x today.
I took another shot at the Trendsetter XYZ
after last weeks epic miss!!!
This weekend I think I will SPY more on GME.
Not Financial Advice. A SPY Parody.
Maybe inflation is transitory?Money printing in real terms is admittedly at the top of the historical range of this data set but its not beyond what we have seen.
Maybe inflation is transitory? Maybe it's not. It is clear that a vast majority of the additional money printing causes asset inflation otherwise this chart would look a lot different. i.e. if gold didn't have a significant move up then this chart would have broken out to a new ATH a long time ago.
Yes these charts are Raoul Pal inspired so nothing original is going on here but I find the idea of making gold the denominator or unit of account, to be a fascinating lens to view things.
Vix could have one last spikeThe VIX could have one last spike left in it before it settles down for this secular bull market run. When it settles down it should settle below the '20s but until then a potential catalyst for another spike could be the June 10th CPI release or if a member of the Fed mentions tapering. If numbers come in hotter than expected again, there could be a frantic sell-off accompanied by a spike in the fear index as people worry it is non-transitory.
I am still overall bullish on the market since we are in a secular bull market but corrections are normal, healthy, and necessary in order for the market to take the next leg higher. BMO came out with a year-end target on the S&P of 4500. Some projections show that inflation could run hot for 6 months, which would be transitory. As for the damage it could do to the underlying economy, that is unknown. As for equity, stocks are a natural inflation hedge.
