Post by Roberto Rios (Peruvian Bull)
FINANCIAL GRAVITY: If we divide the performance of the S&P 500 by the Fed’s Balance Sheet since the GFC, the LINE IS FLAT. This means that there has been basically NO REAL growth in stock prices since 2008- with the only rise in prices due to money printing. The correlation coefficient between central bank quantitative easing and the price of stock indexes is nearly 1. The money printed by the Fed, because of the structure of the Open Market Operations, is plugged directly into the Treasury markets, and from there, flows into equities and derivatives. This has served to primarily enrich the asset owners, financial institutions, and wealthy elites who own the majority of the stock market anyways. The entire rally has been an illusion, financed by the Fed and maintained through QE. In the black expanse of space, many things are not what they seem.
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I am not sure about casuality here. There is corelation but is FED balance sheet directly responsible for SP500 performance? It would require all of this money to flow directly to those stocks and take effect at the prices. Could you please elaborate a but more. I am not saying you’re wrong. I jus
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causality sorry for typo Anyway let me rephrase it. I might be mistaken but FED’s balance sheet does not directly translates to money flowing to equities. Balance sheet expansion might not result directly in money base expansion. I think that in your equasion it should rather be something like M2
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All in bitcoin is the way
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