Why the Printer Must Continue
TL;DR: The Fed is putting so much money into the economy because it already had a goal to inflate it so that the market could go to all-time highs. It has always had this goal. It doesn't care how much inflation goes up by now because we are going into a depression with the potential to totally crash the US economy forever. It believes the only way to save the market from going to zero or negative values is to inflate it so much that it cannot possibly crash that low. Even if the market does not get that bad, inflation serves the interest of powerful people. We will crash eventually.
PART 1: [https://www.reddit.com/r/wallstreetbets/comments/fzhs4d/when\_will\_we\_bottom\_out/](https://www.reddit.com/r/wallstreetbets/comments/fzhs4d/when_will_we_bottom_out/)
PART 2: [https://www.reddit.com/r/wallstreetbets/comments/g0sd44/what\_is\_the\_bottom/](https://www.reddit.com/r/wallstreetbets/comments/g0sd44/what_is_the_bottom/)
\----
The Federal Reserve has caused some serious consternation with their release of ridiculous amounts of money in an attempt to buoy the economy. It does not seem to have any rationale or logic behind it other than keeping the economy afloat long enough for individuals to profit financially and politically. However, there is an underlying basis to what is going on which is important to understand in order to profit from it financially.
The market is a price probing system. It is constantly undergoing a price-discovery process. In a fiat system, money is an illusory and a fundamentally synthetic instrument with no intrinsic value. Markets are composed of indices (pl. of index). Indices are non-trading market instruments which are essentially summaries of business values which comprise them. They are continuously recalculated throughout a trading day, and sometimes indicated as Exchange Traded Funds or Futures. Indices are weighted by market capitalizations of various businesses.
Essentially, when a market fails to take out a new low in a given range, it will have an objective to take out the high. When a market fails to take out a new high, it has an objective to make a new low. This is why price-time charts go up and down, as it does this on a second-by-second, minute-by-minute, day-by-day, and even century-by-century basis. Therefore, market indices will always return to some type of bull market as, once a true low is formed, the market will have a price objective to take out a new high outside of its' given range - which is an all-time high. INSTRUMENTS CAN ONLY FALL TO ZERO, BUT THEY CAN GROW INFINITELY.
So, why inflate the economy so much?
Deflation is disastrous for central banks and markets as it raises the possibility of producing an overall price objective of zero or negative values. THE PURPOSE OF THE DOLLAR IS TO DEPRECIATE.
Central banks have a goal of continued inflated fiat values. They contain it at less than ten percent (10%) per annum in order for the psyche of the general populace to slowly adjust price increases. As such, THE MARKETS ARE FUNDAMENTALLY DETACHED FROM HUMAN LOGIC. Economic policy is the maintenance of human egos. GDP growth is well-known not to be a measure of actual growth or output. It is a measure of increase in dollars processed. Banks seek to produce raising numbers which make society feel like it is growing economically, making people optimistic. To do so, the currency is inflated, though inflation itself does not actually increase growth. When society is optimistic, it spends and engages in business - resulting in actual growth. It also encourages people to take on credit and debts, creating more fictional fiat.
Inflation is neccesary for markets to continue to reach new heights, generating positive emotional responses from the populace, encouraging spending, encouraging debt intake, further inflating the currency, and increasing the sale of government bonds. THE FIAT SYSTEM CAN ONLY SURVIVE BY CREATING MORE IMAGINARY MONEY ON A REGULAR BASIS.
We profit from this by realizing: investors as a whole always stand to profit from the market so long as: it is managed by a central bank and does not collapse entirely. If those elements are filled, it has an unending price objective to raise to new heights. It also allows us to realize that this response indicates that the higher-ups believe that the economy could crash in entirety, and it may be wise to have multiple well-thought-out exit strategies.
Originally posted on Reddit. Browse posts from 2020.