2022-01-10 20:38:37
Chach-onomics:
Interesting week on the financial front in the United States. I realize the world doesn't revolve around the US but that's where I'm at and the insanity I'm exposed to. I'm going to stay out of the prediction of crypto markets here because I think we are headed to uncharted territory but this will give you an idea of what is happening here and most likely similar to what is going on in different parts of the world......
The next CPI Inflation reporting is this Wednesday. This morning a story was released that smelled of an attempt to temper expectations. The fed said recently that they would raise rates 3 times this year and the first thing to hit this morning is a story about them having to do it 4 or more times. This just feels like narrative setting so it doesn't hurt as much when the officials say it.
If inflation is truly getting away from them there are only so many ways to combat...
1- Raise RatesThis will hit real estate hard and middle class/ small business crowd the worst. It'll take some time for the economy to get used to the new cost of money but it will get more private money out of the street in the long term and not rely on printing money to oil the machine.
2- Quantitative Tightening/ TaperingThe Fed for the last few years has printed a massive amount of money and used it to provide liquidity in the markets. ($120Billion a month) The only way to keep inflation at bay is to stop this and start to shrink their balance sheet.
These policies are going to have an effect on everything as investors seek safer investments at least initially. I think overall it will shine a bright light on why we need crypto as the negative effects of irresponsible centralized finance will be very apparent over the coming year. ie: We know how much Bitcoin will be printed down to the second instead of at a politicians whim.
If your household costs $5,000 to run (Mortgage, Food, Gas, Etc) a 20% run on inflation is an extra $1000 a month. Unless wages keep up with that most households are just getting by with a few hundred dollar margin of error. Spoiler Alert: Wages will not keep up.
Overall we are about to see what the implications of the runaway fed policy has been in the coming months. It has been 40ish years since we have seen a setup like this and from what the old heads I know say around me it was no good. Mortgage Rates were 14% (instead of 3%) Gas shortages (you needed to gas your car up on certain days and had to wait in long lines) nothing grew in the economy for years.
It's not all doom and gloom. Money is addicted to unreasonable ROI. We may see a flood money that usually gets it's fix in stocks trying to find that in crypto. More people will wake up to the fact that the biggest ShitCoin there is is the US Dollar and seek to allocate their savings into assets and some of the money will find the new economy (Personal Saving Rates are high)
I'll throw together an update and a few predictions on Wednesday after we see how the markets react to whatever news comes out.
829 viewsMad Chach (WON'T EVER ASK FOR MONEY), 17:38
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