/View.info/ The pain is just beginning. No one yet realizes what a total catastrophe the world is approaching, provoked entirely by infantilism, the populism of politicians and monetary, fiscal degenerates. Irresponsible and hypocritical policies aimed at aggressive monetary expansion and maintaining bubble stability have fatal and irreversible long-term consequences. Given the extremely high vulnerability of the debt structure and sensitivity to interest rates, any deviation of the system from equilibrium will immediately destroy the system itself.
The center of balance/stability is balanced on the simplest principle – the ability to monetize debt in unlimited volumes, sterilizing excess liquidity through asset market bubbles. In other words, the bubble has now become the de facto official goal and objective of the monetary degenerates. The latter means above all: the US Federal Reserve, the ECB, the Bank of Japan, the Bank of England, the Central Bank of Canada, the Central Bank of Australia. Not inflation and employment, as is commonly believed to be the benchmark of monetary policy, but inflation and asset market bubbles, as one does not exist without the other and they essentially have two tools to reproduce inflation. Provoking artificial crises by blocking security, forcibly limiting consumer demand and sterilizing excess money in financial bubbles. This is why they are so sensitive to the slightest deviation of the bubbles from the trajectory of an even more aggressive bubble. Two ticks from the pullback from the All Time High (ATH) and tons of monetary degenerate snot in official announcements trying to calm the markets.
The problem is, these asses are playing with us. You can’t inflate bubbles in Tesla, Apple, Bitcoin and similar toxic assets, isolating everyone else. Everything is swelling – commodity assets, food, real estate…. We are in an incredible stage of massive psychosis, stupidity and loss of sense of connection with reality. At no time in history has there been such rapid and widespread participation of individuals in asset trading, never has there been such extreme sentiment and “future confidence”, never has there been such outrageous overbuying almost simultaneously in all asset classes for a whole set of multipliers and technical indicators … How does it all end? It is known.
Don’t forget this graph of the stock market capitalization to GDP ratio, it might be the last time you see it like this. You are lucky to observe historical processes …
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Money freaks try to instill in the markets a sense of infinity and total certainty. A free and comprehensive release option from everything as a gift, ie. in either scenario, the markets will be overbought. Always and in everything. But it is impossible to pump into the market for a year and a half without any consequences the four aggregate monetary bases that were formed in the century up to and including 2008. The consequences will manifest themselves. You cannot hit the ocean with a volley of nuclear charges and successfully channel the wave into a certain. The wave will spread in all directions.
This is what we are seeing now, where there is a loss of control over liquidity, which is absolutely inevitable and natural. Cost inflation is no longer double digits, it’s triple digits – compare metals, energy and food prices in March-April 2020 and now. This is still a short-term and local inflationary impulse. But that’s not the problem.
More important are the deep structural transformations in the economy, which will be associated with the withdrawal of a significant part of the labor force from the macroeconomic turnover and reproduction processes with a trajectory of decreasing labor productivity. There are now 20 million people on welfare in the US, which is at least 13-14% of the normal labor force, ie. one sixth of the economy goes down the toilet. Will these lazy bastards be able to get back to work without social unrest? But this will only make matters worse – the system is constantly deteriorating when one sixth of the workforce is on welfare and another fifth masturbates looking at Tesla and GameStop shares, believing in a quick and easy way to generate income . All of this is exacerbated by the marginal concentration of free (distributable) savings amid the pent-up demand due to the enforced lockdown.
While monetary degenerates throw up $10 trillion a year earlier to earn $4.5-5 trillion this year, the imbalances are only piling up.
Let them put the predictions of 2023 rate hikes and endless quantitative easing in one place, physical, economic and monetary processes have their own identities and process logics that are independent of the predictions of monetary freaks. It is very important that they do not stop, which means that they will definitely miss the moment of finally screwing up the system. They also intend to put out the gasoline fire by expanding quantitative easing programs to shrink the far end of the yield curve. And that’s a good thing too, the more aggressively they try to reduce it, the more market rates will rise and this process cannot be stopped.
It was said earlier that any deviation of the system from equilibrium will immediately destroy the system itself. What does this mean? Natural inflationary pressures will force them sooner or later (but certainly sooner rather than later) to back off and raise interest rates, sterilize liquidity using more radical methods. There are two recipes for this. Lower prime rates and infinite quantitative easing. But all this will end. And then the fun begins. A very strong and painful period of deconstruction of everything and everyone. Just try to understand the magnitude of the future problems when, on the one hand, you have to somehow maintain a rotten system that requires a 20% budget deficit to grow the economy close to zero, plus the outrageous commitments previously made, plus the stabilization of the balloons. And all of this will explode almost instantly. We are on the brink of the worst crisis in all of modern human history. The combination of a zero base rate and quantitative easing got by before, but now there will be nothing to salvage.
Just a year ago, when markets were on fire, the investment community around the world was spitting blood, the scale of quantitative easing was unknown even to the global central bank, and no one had heard of inflation, I put the estimate at 10 trillion a year and the S&P500 at 4000. Oh, that one nostalgic sign “chronicle of the apocalypse”. It’s time to give a new forecast – no interest rate hikes in 2023-2024 and endless quantitative easing. The system will start to break down this year (but not immediately, empires don’t collapse overnight) and inflation will surprise everyone very, very hard… and unpleasantly.
Translation: V. Sergeev
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