Money Emission to Energize Markets

We need to admit the fact that the monetary system cannot be sustained unless we print more money during the QE (Quantitative Easing) period than the QT (Quantitative Tightening). When the QT exceeds the bearable limits, the markets and the economy starts to show some red signs.

As of writing, we are in a period of Quantitative Tightening since December 2021. You are familiar with this time because it was the time when we tested another ATH (All time high) in the price of Bitcoin. Moreover, it was the time S&P 500 tested 4800, its ATH level and NASDAQ tested 16500 with its ATH.

As it is pretty obvious, money emission, or money printing as we call, is the fundamental catalyst for the markets to go up. When there is a sharp QT as we experience, there is no way for markets to go up. Interest rates or hawkish and dovish statements by central banks are just a make up for that fact. Just have a look at the case: Are we in QE or QT?

I took this weekly money emission figure from Yardeni. You can also find lots of useful data over there.

As you see We had a QE period started in Covid, then we have to tighten the money supply as the inflation of money (due to increasing demand for the products and assets when people have more money in their pockets) pushed the markets higher drastically.

However, please also look at the part QT2 where you will see the the decrease in the money supply. Since the ATH of markets, crypto, S&P and NASDAQ, we have been slightly going down. Meanwhile, crypto was oversold compared to the stock markets but it came back to its "fair value" with around 30K levels.

How much money is being burned so far?

1,100,000 Million Dollars was burned from December 2021 to Q1 2023.

To make these numbers more solid, have a look at the total supply in the past.

That was the amount of money being printed until 2008!

We witnessed the burn of such a high supply of money. Almost 1/6 of the USD was burned. As expected, markets have lost their value, and people suffered due to the debt from inflation times and the effects of higher interest rates over the last year.

Next: Recession and More Money 💰

Nowadays the expectation of a "mild" recession is one of the hottest topics among investors. Actually, there is a step in the cycle where economies go through a recession before another quantitative easing period. However, the best part of the recessions is their limited duration. In most cases, recessions do not exceed 2 years ( mostly less than a year) as the central banks and governments declare lots of initiatives to energize the economy and markets.

I am expecting a recession period as a consequence of the FED's and the European Central Banks' 2% inflation rate policy. Even though 3% can be a perfect fit, they insist on the rate of 2% for some reasons. If they gear up, the likelihood of a recession will be higher and this period will eventually be followed by a hard QE again.

QE is the fuel of the markets. Though 7/24 we talk about how strong a company or a blockchain project is, all markets are inherently bound to the policy of the central banks in the cycles.

While we are in a Quantitative Tightening period, I'm into buying more assets, cheap commodities, Bitcoin, Ethereum, and strong projects that I believe in. When the QE hits the market, I'll be impatiently waiting for a good trade to realize the profit. However, for now, it is not time to focus on short-term profits, rather, it is time to DCA and buy more valuable assets for myself.

Please share your experience or observations below 👇

Hive On ✌🏼

Posted Using LeoFinance Alpha