This article attempts to put into words what is a dynamic, macro market theory that deals with what is the single most important global economic driver and determinant: the influence of central banks, and whom has influence over this influence.
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 her/his own.
For some background, I highly recommend viewing the following documentary. It is a bit slow and dry. Yet, 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, an organization that has capitalized on each sovereign financial crises since WWII and is actively centralizing power over the 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 other investment holdings? After all, we are here to make money in the markets, are we not?
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 those in power and those who’ve benefited most from the current system’s structure will look to harvest as much profit as they can from this dying system which they have harvested so much from already.
Extrapolate the non-linear behavior of the chart below through to today and the trend clear. 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 growing 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 solvent and/or rich on paper, and, as a result, let the government and corporate sector continue doing whatever they please.
Behind the curtain, all the governments and central banks have done is pump the system with debt beginning withe the public bond market. Naturally, this debt cascades down into the credit systems supporting debt loads in corporate bonds, in equities, private equity, real estate, you name it.
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.
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. Increasing relative amounts of this phony money is set to flow into crypto assets at increasing velocities.
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. 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.
Before we reach the ultimate turning crisis point in our globalized, economic system I see a blow off top valuation bubble taking place so that those reaping the largest reward from the current economic and financial system’s structure can make a last ditch effort to reap as much real-wealth as they can from a system that will be 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. Affording oneself the ability to avoid being grouped into this suffering masses while also understanding how and why certain things come to light is the name of the game.
Considering the valuations of other rich;y-valued asset classes, 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 good times and bad.
“The only thing we learn from history is that we learn nothing from history.” — Friedrich Hegel
DISCLAIMER : This content is for informational, educational and research purposes only. This post is not to be taken as personalized investment advice.