The Big Confidence Game Of Central Banks

in #markets2 months ago

Hey Jesseconomists

The worlds finances are in a state of ruin, everyone's walking around like its still okay and yet I'm looking at figures and it's not looking like anyone should be financing a home, car or buying luxury items or taking holidays but hey people are going to do what they want to do and if you have more the disposable income why the not?

It's going to shit anyway.

The economy for all its fancy terms and stats and figures is heavily reliant on a confidence game as long as there are enough people who believe in and remain in it to prop it up, it will remain intact regards of key indicators.

Most people don't know where the money comes from or how it works, they just work for it and use it so they so far removed from the engine room they don't care. Those that sort of do, believe that this thing can't fail and we'll print our way out and all will be fine.

As long as these people have confidence in the monetary system, we'll keep trucking along.


When things go to shit we normally look for volatility people are going to be jumping in and out of markets and central banks are going to try and flatten the curve, sound familiar?

One of the key indicators of volatile many investors use is the VIX.

What is the Vix

The VIX was created by the Chicago Board Options Exchange (CBOE), and is the Volatility Index, or VIX, is a real-time market index that represents the market's expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors' sentiments.

What does a high or low VIX mean?

If the VIX is high, it's time to buy

This tells us that market participant is too bearish and implied volatility has reached capacity.

However, when the VIX is low, look out below!

This tells us that the market is about to fall and that implied volatility is going to ramp up.

The VIX bounces between a range of approximately 18-35 the majority of the time but has outliers as low as 10 and as high as 85.

Now that you know how it works, let's take a look at how its performing shall we?

Vix 1 day

If we look at the one day chart, have you ever seen something track like that? The Vix was plummeting and now suddenly it's a straight line up, if that's not manipulation I don't know what is.

Screenshot 20200807 at 13.36.41.png

Vix 1 month

Screenshot 20200807 at 13.37.07.png

Vix 5 years

The 5 year shows us that while it's still in a safe range it is trending downwards and the closer we trend towards outlier territory the more volatility we are going to see in various markets.

Screenshot 20200807 at 13.37.26.png

You can see from all 3 charts that we're going into a more volatile market, it's going to get crazy and people are going to start to find where they want to put their money as inflation, as job loss, as uncertainty will continue to increase over the next few years.

Central banks are going to try and do their best to stop indicators like the VIX from showing anything other than market stability and while they can move the numbers, the truth will eventually surface.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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Icarumba, it's crazy town. No wonder i love being in nature away from the complexities of the matkets. Hold on to your hat! We are in for a bumpy ride folks.

Lol I think I will be there with you, I'd rather opt for nature than deal with all these numbers and stuff. If I didn't have to think about these things for my investments and could just be happy with what I have knowing it wouln'd be obliterated by inflation id probably be off in nature as much as possible lol

What a coincidence. I was just looking for call options on the VIX.
Do you trade the VIX?

I don't trade the VIX anymore, but it's still one of my key indicators I look at from time to time