With all that is going on, it can be easy to miss major historic news! Whilst this is being reported, the implications are not being explained by the general media. The pledge by the federal reserve to print unlimited amounts of money to prop up the stock markets is unprecedented in the whole of USA history.
This means that the fed will choose which stocks it supports, and it can do so with literally any amount of money that will printed to prop up desired stocks. This means we no longer have a free market, as they continue to expand their balance sheet indefinitely. The Fed are now in control of the stock market in a way that has never happened before, who will they support.. what companies will it choose to save? Let's watch and see if they offer a blanket support, or if they start controlling the markets in the way that just suits their agenda.
These are extreme measures, and will no doubt have very significant long term consequences. The amount of money involved even already is mind boggling. The FED have Already used half of the 700 Billion Dollars that were released just last week, and so it is clear now that the amount of money that will be printed and pumped in to the economy will reach trillions of dollars even in just a short term. Whilst there are many reasons why this is going to help the very short term problems of job loss and total economic collapse, there are some things worth noting.
With the new round of emergency-lending programs, the Fed has now undone nearly all of its efforts to “normalize” financing conditions following the unprecedented actions taken during the 2008 financial crisis. In that era, the Fed also cut rates close to zero and provided some $1.2 trillion of secret emergency financing to the world’s largest banks, on top of the $700 billion Troubled Asset Relief Program (TARP) bailout package approved by lawmakers. Measures that were meant to be temporary are now ramping up even more after more than a decade!
Unemployment is about to sky-rocket to over thirty percent, helping to send GDP plummeting forty percent or more. The world is filled with mountains of debt and very few assets that can generate cash. As a result, central banks are panicking. The Bank of England’s new boss has promised to “do whatever it takes”. Banks are on the ropes and their clients are going bust. A tsunami of defaults is coming. Bankers’ ‘Whatever It Takes’ bazookas are impotent and only dribble or misfire. In other words, no lessons were learned from the last great financial crisis. The lunatics are running the asylum. Money printing, unlimited bailouts, central bank manipulations and ‘buy the dip’ no longer work.
WHAT WILL THIS LEAD TO?
If COVID-19 takes time to resolve and our governments continue to print money like this we can only expect one thing. It is already almost inevitable.. Inflation and devaluation of the USD and most other currencies. It is simple math and very worrying for the long term. It is not hard to see that this could well be the opportunity that they have been waiting for to create a new currency, perhaps a global even more centralized one! Let us watch out for that, and if it happens then I think we should be even MORE concerned. It LOOKS Like this might happen through a digital currency approach, one that would be created to replace paper money and the USD as we know it.
WHAT SHOULD YOU DO?
It is hard to fund or know what will be a safe investment. It is interesting to see crypto currencies currently booming, whilst the rest of our economies are contracting and falling apart at the seams. It is too early to say if Bitcoin has de-coupled from the mainstream markets, but right now at least its looking very promising. I think now is a very good time to start putting some savings into Crypto, even just a small amount! I also think now is truly the time to invest in things with intrinsic value.. with fertile land and food production being my top recommendation! When nothing is secure we had better make sure our basics are covered. There is no use having any amount of money or currency, even digital, if we do not have food to put into our mouths.
I watch this unfold with baited breath!