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I've love to get some Friday evening Fintwit thinking going so I want to pick your collective brains...
I'm mulling over The Death of Macro. Let me explain..
I'm mulling over The Death of Macro. Let me explain..
My view (right or wrong) is that rates aren't going up and are pinned at zero or negative for a long, long time. So, there is going to be no bond trading (see Japan and EU). The biggest trade in macro ever is nearly over.
The IMF and the CB's are talking about CBDC's and a new Bretton Woods. That is likely to be something around the original Libra idea of a world currency/currencies, based on a basket that includes the USD.
They also have talked about getting everyone to monetize debt in a "once off" event for COVID, so maybe they agree a 30% to 40% money supply increase for all (currency neutral but obis bullish gold and bitcoin). Essentially a jubilee of sorts.
Then I think that for that basket to work, if it includes the US dollar, the denominator will be global money supply, so after the big print, maybe the cap it for all members at 2% per annum, or whatever.
Basically, there is a huge trade to be had from the re-adjustment and then FX dies a death.
At this point there is no bond market and no FX market. The two largest on Earth. Corp credit is probably backstopped too.
At this point there is no bond market and no FX market. The two largest on Earth. Corp credit is probably backstopped too.
So, where does that leave macro? Even gold and bitcoin become oddly less positive once the big event is done.
Does that just leave equities? Is there inflation after the big event? Maybe they are on larger M2 growth per annum?
Does that just leave equities? Is there inflation after the big event? Maybe they are on larger M2 growth per annum?
I dont know, but I think that the probability of all of this coming is not inconsiderable.
How are equities prices in that? Do we just move to a digital world instead, where the alpha lies in tokenized securities? How does real estate work?
How are equities prices in that? Do we just move to a digital world instead, where the alpha lies in tokenized securities? How does real estate work?
Not easy to know but interesting to think about.
A world of no bond investing, no FX, constrained money supply growth. It is possible. Maybe inflation runs hot, maybe technology deflation helps?
A world of no bond investing, no FX, constrained money supply growth. It is possible. Maybe inflation runs hot, maybe technology deflation helps?
Where does the worlds capital flow? Is it fixed asset investment such as technology, clean energy, AI, robotics? Does that accelerate good or bad trends? Capital will find a home somewhere...
