The #Fed Playbook
Oct. 17, 2020

The Federal Reserve is back in business.

So I guess it's time for a thread. πŸ‘‡πŸ‘‡πŸ‘‡

1/ This week the balance sheet stands at $7.15 trillion which is close to its all time high.

But new records are incoming.
2/ Since the start of the #Fed intervention this year they have added $2.9 trillions to the system.

Looks like a lot but in percentage terms it is a much smaller expansion than in 2008.
3/ After 2008, all that money added to the system has inflated the valuation of various financial assets but most of all the stock market.
4/ This time is more of the same except that we have a new tool on our side: Bitcoin!

Problems: #FOMC #QE #CentralBanks
Solution: #Bitcoin
5/ #Bitcoin is a store of value, a hedge against inflation and an asymmetric bet.

Going by its current market cap it has the potential to grow 10x to 50x in the next decade in order to just catch up with gold.
6/ #Bitcoin is the asset that is most likely to be able to keep up with the expansion of the Fed in the years to come.

Public companies are waking up to that with @MicroStrategy and @Square leading the way.

Don't miss the boat.…

β€’ β€’ β€’

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with ecoinometrics

ecoinometrics Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @ecoinometrics

21 Aug
The #Fed Playbook
Aug. 20, 2020

What's up with the Federal Reserve this week? Time fo a thread. πŸ‘‡

1/ The balance sheet is back above $7 trillion. We are probably not going to go very much below that this year. ImageImageImage
2/ Since the start of the #Fed intervention this year that's $2.8 trillions added.

Sure that's a lot of money... but in percentage that's only a 65% expansion.

There is a lot more room for growth if we compare to what happened after the 2008 crisis. 🧐 ImageImage
3/ But the #FOMC doesn't really have a choice... #stonks need to go up... Image
Read 5 tweets
20 Aug
Is it realistic for #Bitcoin to reach $100,000 per coin during this halving cycle?

Time for a thread. πŸ‘‡πŸ‘‡πŸ‘‡
1/ PlanB (@100trillionUSD ) stock to flow model is targeting #Bitcoin to stabilize around $100,000 by the end of this halving cycle.

So far so good.

2/ The 3rd halving happened 100 days ago. Since then #BTC has gained 25%.

But to get to $100,000 we’ll need to see a total growth of 10x.

That’s still a long way to go.
Read 12 tweets
7 Aug
The #Fed Playbook
Aug. 06, 2020

What's going on with Brrrr? Time for a thread. πŸ‘‡

1/ Not much has changed for the Fed. Minus $4 billion on the balance sheet this week.

When your assets total $7 trillion that's barely visible. ImageImageImage
2/ In net value the size of the 2020 #FOMC intervention dwarfs what happened in 2008.

But in percentage term that is barely the beginning. πŸ‘‡ ImageImage
3/ So far the US Federal Reserve is getting what they wanted. They have prevented a total meltdown of the stock market.

But investors aren't blind to the side effects of money printing: #gold and #Bitcoin are on the rise. Image
Read 5 tweets
24 Jul
The #Fed Playbook
Jul. 24, 2020

1/ Only $6 Billion added to the balance sheet this week.

This is so small compared to what happened recently that you can barely see it on the chart.

For now the balance sheet is sitting just below $7 Trillion. ImageImageImage
2/ Same as in 2008, after the initial emergency measures we have moved to the plateau phase of the balance sheet expansion.

The next step for the #Fed is to come up with a more permanent #QE program.

I wouldn't be surprised if we hit $10 Trillion this year. ImageImage
3/ At the same time the money supply continues to expand at an unprecedented rate.

M2 is up more than 20% this year. This is:
- 4 times higher than the average year
- 2 times higher than the largest M2 growth on record

If you haven't already it is time to consider #Bitcoin. Image
Read 4 tweets
20 Jul
#Bitcoin vs SP500 Correlation

1/ Recently #BTC went from uncorrelated to a +0.64 correlation to the stock market.

Without context this could be worrying. So let's have a look... πŸ‘‡
2/ At the end of February the stock market takes a dive.
Traders are facing margin calls. They sell their hard assets to raise cash.

Naturally #Bitcoin and the SP500 get more correlated. Image
3/ Then the #Fed put kicks in. The stock market starts its rally. At the same time people buy #Bitcoin on the cheap.

Simultaneous rally means again higher correlation than usual. Image
Read 7 tweets
17 Jul
The #Fed Playbook
Jul. 16, 2020

1/ After a few weeks of decline the Federal Reserve is adding a small $38 billion to its balance sheet.

The emergency measures are almost gone so we are now getting a good old regular asset purchase program. ImageImageImage
2/ We are entering the plateau phase of the #Fed playbook.

In 2008 during this period the balance sheet stayed around the same level until the #FOMC put in place a more permanent #QE program. Image
3/ Don't expect the #Fed balance sheet to go back down to "normal" levels, the #Stonks market cannot afford that... #Brrrr Image
Read 4 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!