So in the near term, the pressure is on. Somewhere on that tightening trajectory the Fed is going to stop.
So will the fall in stocks and crypto. Everyone says how brilliant their stocks or crypto are and that is why they are rising. They sing the praises of clever entrepreneurs and everything is genius and disruptive. The truth is money supply is inflation nominal values and when that money flows in reverse all of a sudden the same companies and people are rubbish because the prices of their projects deflates.
As such, the call on this bear market crash is, where is the bottom? It’s easy to say $10,000-20,000 on bitcoin but it’s harder with stocks because so many are valued nonsensically high. A cigarette company in the U.K. is worth 50% of sales, the U.S. equivalent 500% of sales. This is what makes it hard to spot the U.S. market bottom because valuations have become so unanchored.
They will use “trickle down” definition to check inflation in the same way as they used “trickle down stimulus” to dig out of previous crisis. It can be too sharp or too deep because it can’t hurt the tax base that needs to bail out fiscal budget deficits and finance huge public debt liability positions.
If nature was left to take its course, we would get one of the deepest crashes ever, rivalling 1929 and the 2001 dotcom debacle. However, like so much recent market action it will be regulated to stave off a vicious negative feedback doom loop.
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