Global Intel Hub 2/25/2021 -- Charlotte, NC - ZERO HEDGE EXCLUSIVE
Markets ranging from 'meme stocks,' real estate in select areas, Pre IPO, and many others are going nuts. Inventory is being sold out, and prices are ballooning. Companies are SPACing into public markets quicker than many can keep track. There are tons of opinions as to the why and how and who, but we can sum it up in one chart from the Fed: Money Supply (M1). Being a Forex trader you look at markets from a Monetary Policy perspective - not suggesting that all FX dealers are Austrians, simply that you look for what's driving prices and in FX it's always one thing: real money flows. Well, that's actually the case for all markets. Supply and demand is a thing of the past, for useless textbooks that nobody reads, so Professors can make extra money to cover inflation by copying and pasting the copyright free concepts created 300 years ago i.e. 'the invisible hand' selling course required textbooks at 1,000% margins. But hey - they are teaching economics! If you look at it the right way, it's a great lesson. Here is the M1 chart from the Fed:
Is this a sign of things to come - will the US Dollar soon be (DISCONTINUED) ?
This series will no longer be updated. More information is available in the notes below the graph. This series is the suggested substitute: M1SL https://fred.stlouisfed.org/series/M1SL
M1 represents digital dollars, not physical cash which is M0 and is the greatest measure of actual Money Supply, because it includes:
- M1: The total amount of M0 (cash/coin) outside of the private banking system[clarification needed] plus the amount of demand deposits, travelers checks and other checkable deposits
Here's how it works. The Fed creates $1 via loans - they loan money to banks, and to the US Treasury. They do literally 'create money out of thin air' - or more correctly, by typing in digits into a software program. Once the money is in the hands of the banks, it filters to hedge funds, institutions, borrowers, and others at which point it gets either 1) injected into the economy or 2) invested. The 1) is good for the economy but 2) is not, it creates asset inflation and it's great for the .01% but sucks for 99% of working class people, because wages are flat and cost of living inflation kills everyone except those on the extreme ends of the spectrum (the extremely poor are also unaffected by inflation).
So there you have it. For a more detailed explanation, checkout Splitting Pennies or if you just want to participate in the insanity - CAVEAT EMPTOR - open an account at LevelX and level the playing field.
