208
Have been hearing similar buzz about the weeks and months ahead since at least December. (Raoul Pal has a segment in that link about crypto, macro situation, and the fed). The economy and stock market are overheated from stimulus, hence the inflation, and that will cause the Fed to reign in their purchases and increase interest rates (0% interest rates used to not be normal btw). And that in anticipation of that the investor markets are taking a hit this quarter at least, and we'll begin to see how much adjustment is going to be made starting Tuesday with the Fed meeting, and again in March once they're supposed to start implementing taper and interest rates.
I'm no expert, but just sharing what I've been learning, or at least the gist of what respected and better studied people say this is how it works. Of course inflation is a problem, one that needs to get under control, ideally. Some inflation is however an indicator of the health and strength of the economy however, it's basically an indicator of money moving. There's also real and perceived inflation. If there's 2% and then people go out and spend 4% to stay ahead, guess what that does, it's more money moving because more money is moving, making things worse. Right now we still have a lot of pent up demand from the pandemic situation - so the economy is doing well, but only on that side of it - the supply side is where we've been having issues. On one side it's shutdowns and restrictions, on the other end lately it's been the substantial number of sick exacerbating that dynamic, the results being the same, the supply side and supply chain issues. The economy is sort of stumbling over itself right now, and the virus.
A curious place to study to learn more about all this is Japan. Japan's basically been in a macro recession since the 1980's bubble economy, and their demographic situation puts them as been in decline for going on 20 years. So their economic problems are curiously mirrored to ours, it's basically been shrinking since the 80's. They have deflation, which makes the goods and services cheaper and cheaper, to the point that having a job is really tough to get by, and you're forced to save and not spend, which they do socially anyway, which exacerbates the deflation force. Supposedly qualitative easing (printing) and negative interest rates (like Euro) were tools they discovered to fight their deflation and shrinking scenario. Which doesn't sound all that different from the old Window Guidance, it's a different form of "please take our money and spend it." This is all gonna get 21st century interesting once we have central bank digital currencies because it will give them a whole extra tool to play with. Hopefully we don't all die.
Long story short, the wet finger in the winds of wiser people than I read adjustments ahead from Fed. Which is going to be basically a controlled recession. As the investment sectors cool down and more people Hodl the dollar around the world, this could bring temporary strength to the dollar and something of a reversal to the inflation. What's definitely in question is how much this is all going to happen, short recession or a long one, or are we talking double dip crashes like the dotcom bubble or something (the guest speaker in the Real Vision btw says current circumstances remind him of dotcom bubble). And this is why the crypto people I've been listening too say "we could go lower and see 30k or even lower."
The optimistic part of this is knowing it ahead of the fact, you can take some action to be cautious ahead of time. Also, the fact that this should be relatively short lived, some 3-6 months, perhaps the year, as the Fed is supposedly wanting to do 4 taperings and/or interest rate hikes. Asteroids could always hit, Russia could always invade somewhere, but at least the textbook reading of these things, it seems, we're in for a traditional slow down, which is in theory good - because you ought to understand that things have been overheated for a while, and the pandemic artificially carried things over. All of that is now catching up with us and we've been entering the unhealthy inflation situation.
Politics and agreeing or not aside, being Fed chairman sounds like a difficult job with basically the responsibility of the health of the US and global economies on your shoulder. And no matter who's asked, layman or economics veterans, no one ever seems to know what to do, unless it's what the chairman isn't doing. We are all Fed chairman's, in a way. Sure, maybe stimulus shouldn't have been issued, maybe banks shouldn't have been bailed, I'm open to all that, if you're also open to the other end of the consequences of possibly not having done those things. If these supposed waning days of the US are in order, is it better to admit defeat, or try to tie up in the last quarter and go into overtime? Tapering and interest rate hikes are at least to some degree the opposite of stimulus printing, and so, a lot of people's politically motivated sentiments are being answered with that (the way the politics goes though, the same people will flipflop and want the opposite, or won't want the consequences of getting what they want watch lol). Very often the shortest answers in disagreement with something, with no elaboration, is an indication of the person speaking having no clue what they're talking about. We see this with crypto fudsters all the time, "crypto is a scam!" Oh really, you must be like some sort of expert or something and really looked into it.
Anyway, and so, the world doesn't appear to be ending, not by this at least, it's just another step on our journey, another feature of our times, another page for the books. So, I dunno, keep your head about you, if you're a spotter, don't feel bad about buying this 2 month crypto dip. If you're holding out to snipe more prices, might be able to do that, especially come March (or Tuesday!) and these hike and taper deadlines. And if you're a hodler, hodl on! I think, just a hunch, Monday gets crushed in the markets and possibly Tuesday too, then we're in the de-frothed temporary market bottom until next deadline lol. I keep hearing "2022 is going to be interesting." Let's make sure of that!
Chairman of the Fud, powers activate!
