"Princes of the Yen" – Co-opted Central Banks

maven360 (53)in #macro • 6 years ago (edited)

Today’s post will attempt to put into words what is a dynamic, macro market theory that deals with what I think is the single most important global economic determinant. This is not by any means considered conventional analysis, and this does not produce directly actionable trades, but it is something every market participant should explore on his/her own.

“The only thing we learn from history is that we learn nothing from history.”

– Friedrich Hegel

For some background on where I am coming from, I highly recommend you view the following documentary. It is a bit slow and dry, yet, I think the underlying message of the story is a worthy one.

Systematically, central banks across the world are being removed from government oversight and brought into the fold of the IMF. In short, the IMF has capitalized on each sovereign financial crises since WWII and is actively working towards a centralized, global financial system.

While I will let you draw your own conclusions, all I will say is that there are clearly conclusions to be drawn.

What does this have to do with stocks, bonds, crypto assets, and more importantly, your stocks, bonds, and crypto holdings? After all, we are here to make money in the markets, are we not?

Well, something that really struck me in the documentary is when Werner talks about how financial crisis is the only catalyst that can be used to change a system. Undoubtedly, our system needs to be changed. Therefore logic tells us we are due for a crisis. It is really that simple. Timing on the other hand is where things get very complex.

Crisis accounted for, before we reach that point, it seems to me that the major market players (and I don't mean whales, I am referring to something bigger like ocean currents) will look to harvest as much profit as they can from this dying system which they have harvested so much from already.

This is what I mean when I say they have already harvested a great deal from our current system's structure, and this chart only carries data through 2014. Extrapolate the non-linear behavior of the chart to today and the trend is as clear as day. So clear, in fact, it only brings one word to mind: unsustainable.

Ask yourself the following:

If you were profiting from a specific system, and found out this system was in danger of ending in the near future, would you not try and harvest as much profit before it ultimately collapsed? Of course you would, it’s only natural.

This is why I suspect the melt up in crypto assets, specifically, will be one of the most rapid, maniacal bubbles to ever take place.

Put simply, markets are aware of how much phony money currently exists in our system thanks to the unprecedented central bank-led stimulation efforts. These efforts to artificially bolster the global economy were done primarily to achieve one goal: maintain asset values to keep society complacent. When asset values are going up, the masses believe they are rich and let the government and banks continue doing whatever they want.

Behind the curtain, all the governments and banks have done is pump the system with debt, and whether the credit system supporting this debt lies in bonds, in equities, private equity, real estate, it does not matter, it's there. For the record, a majority of it lies in bonds, a topic I touched on in the two posts below.

https://steemit.com/money/@maven360/the-devil-is-in-the-details-part-i-investing
https://steemit.com/money/@maven360/the-devil-is-in-the-details-part-2-investing

There is simply too large a supply of injected credit into our system from the central banks under the guise of stimulation, that before the system corrects all that money will be trying to outbid itself in whatever market aligns best with the classic narrative of “this time it is different”.

Seeing that the FAANGS have soared, it seems apparent that the high-tech market for investment is saturated, and therefore, unattractive. In other words, the high-tech narrative has already been played or is nearing its final innings.In fact, recent social/political backlash against these tech titans lends credence to the argument that the bull market for FAANGS is nearing its end, if it is not already over.

The crypto asset narrative hit the mainstream scene in one of the most ridiculous times in financial history, and nearly nobody had an allocation to it; this dynamic has changed in recent months, but still has a lot of room to run. All this phony money is set to flow into crypto assets faster than any other asset class in history, and the price will appreciate faster than anyone can imagine. With it, the phony money will also pull in real capital, of course.

There is a lot of money left to be made in pursuit of this trend. Yet, it seems apparent to me that eventually the amount of marginal buyers will dwindle and this market will turn into a selling frenzy. So while I encourage everyone to refrain from trying to get too cute with trading this mega trend, I will say that it is time you understand the game you are playing and how best to maximize your score.

In short, if you do not yet have a crypto asset allocation, you should begin thinking about building one.

Please revisit my previous posts for actionable insight into what I recommend. Links provided below.

Conclusion

Before we reach the crisis point in our globalized, economic system I see a ludicrous blow off top bubble taking place so that the 1%/shadow governments/IMF/globalist elite (or whatever you call them) can make a last ditch effort to reap as much money as they can from the current system before it is forced into change.

It's worth mentioning that the system will be forced to change because the masses will demand it, and it is very likely the masses will suffer the most from the crisis that serves as the catalyst for this change. I am trying very hard to avoid being caught up in these masses, and that is the basis of what I write about here on Steemit.

Add into this the fact that there is an unprecedented amount of “money” (credit and debt, really) in the system, and that other marketplaces already appear richly valued, I see crypto assets extremely well-positioned to benefit from a “globalist elite” plan to make one last cash grab to get them through the coming tough times.

Soon thereafter, I anticipate profits to be pulled from crypto asset markets and re-allocated towards treasury bills, commodities, precious metals, energy, agriculture, and other physical goods that always maintain their relative value throughout time. The time tested safe havens. I will be delving into these topics more in the future, but I will leave you with one chart for you to digest in anticipation of where I am taking this blog.

Source

DISCLAIMER : This content is for informational, educational and research purposes only. This post is not to be taken as personalized investment advice.

If you found this interesting, please up-vote and chime in via the comments. If not, feel free to forward this to your frenemies.

For anyone new to my blog, I highly encourage you to read through my previous posts. While I have been concentrated in the crypto asset markeplace for the past year, I will be shifting gears moving forward. Here is a list of my finance-focused material:

1 - Follow the Money - An Approach to Investing (And Life)

2 - Anybody Can Invest Successfully

3 - Pitfalls of Passive Investing

4 - The Importance of Limit Orders

5 - Learning? How About Earning? (Part 1)

6 - Learning? How About Earning? (Part 2)

7 - Cheat Sheet: Where to Invest Now (And Where Not To)

8 - A Tool to Avoid Investing Clickbait

9 - The Devil is in the Details (Part 1)

10- The Devil is in the Details (Part 2)

11- The Big Picture With Crypto

12- Are We Experiencing A Crypto Bubble?