Fed quantitative easing might crash the market 📉

👉 Excessive Fed tightening, achieved through raising interest rates, can crash the stock market by increasing borrowing costs for businesses and consumers, reducing corporate profits, raising the burden of corporate debt, and triggering global economic instability.

However, while it's a common belief that stock markets often respond positively to interest rate cuts, markets may experience a delayed negative reaction like in 1991, 2001, 2008, and 2020 🙄

Fed starts cutting interest rates —> a few months pass —> market begins to fall as rate cuts continue. This scenario has played out many times already.

Balancing excessive tightening and easing is a difficult task for the Federal Reserve, and it hasn't done it well enough lately 🫠

#economy_tips

Luxury watch prices as an indicator ⌚️

Sometimes economists look beyond traditional indicators to analyze the economy's strength, one of such unusual instruments is the Rolex prices index. The sales of high-end watches indicate how the economy's top tier is doing.

👉 The idea is simple: The more free capital people have and the higher their confidence level in their financial well-being, the greater the demand for luxury items such as Rolex watches.

Look at the chart of prices over the last three years, and you can immediately see at what point the Federal Reserve started raising the interest rates and the economy stopped being flooded with printed money 🖨

As you can see, watch prices continue to fall, complementing indicators that show the well-being of the US population, whose financial situation, contrary to what the mainstream media says, continues to deteriorate 🤷‍♀️

#TrendingTopic #economy_tips

The most important chart for crypto 📊

The chart above shows how much correlation with a small lag there is between the BTC price and US Net Liquidity.

👉 US Net Liquidity refers to the amount of money that is available in the economy for spending and investing, after accounting for all the borrowing costs

When US Net Liquidity is high, it means there's a lot of money flowing through the economy. This can make investing in stocks, real estate, and even risky assets like crypto easier for people and businesses 📈

When liquidity is low, there might be less money available for investments, which can lead to lower demand for assets, which might cause their prices to drop 📉

#economy_tips

Here’s a refreshed version:

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🔶 U.S. Interest Rates: Too High for Too Long? 🔶

◆ The Fed funds rate, adjusted for core CPI, has surged to 2.33%, the highest level since October 2007.

◆ Real interest rates have increased by 8 percentage points over the past two years.

◆ Current rates surpass pre-pandemic levels, even those before 2020.

◆ Historically, such restrictive rates have often led to economic downturns.

◆ Is the Fed at risk of acting too late once again?

#economy_tips

🚨 **Debt Alert!** 🚨

The U.S. Treasury Department is borrowing like there's no tomorrow, and the consequences are piling up. In Q2 2024 alone, the federal government shelled out a staggering $1.089 trillion in interest on its debt. That’s more than what it spends on national defense and gross investment combined! 🤯

This pattern mirrors reckless financial behavior—where all resources go towards managing mounting debts rather than investing in sustainable growth and economic strength. 💸📉

But here's the kicker: $BTC won't solve this mess. While cryptocurrencies have their place, they can't replace the need for smart fiscal policies and responsible debt management.

Stay informed, stay smart. 🌍💡 #Finance #DebtDynamics #economy_tips #cryptotipshop #Write2Earn!

The lion's share of Americans' tax dollars goes to debt service 🇺🇸

🤪 "Where does the government get the money from?"

🧠 "It borrows it."

🤪 "But who wants to lend money to the government?"

🧠 "Those who want to earn an interest rate. They buy bonds. U.S. bonds are considered the safest investment out there."

The U.S. national debt equals almost $35 trillion and the interest on this debt was equal to 76% of all personal income taxes collected in June 📊

The single biggest expense for the US government is currently debt service, which means paying the interest rate to those who buy US bonds.

Treasury expects this expense will break the $1.14 trillion level this fiscal year, which would be seen as an outrageous number just a few decades ago 😨

#economy_tips

The market has only been this concentrated once before, during the Great Depression in the United States 📊

Look at the market value of the top 10% of companies in the S&P 500. You will see that companies such as Apple, Nvidia, and Microsoft, dominate the index's total value.

Why it matters: The biggest companies - especially the giant tech firms known as the "Magnificent Seven" - increasingly stand astride corporate America and the broader economy as colossi.

🌍 This means that the entire US economy, and the economies of many countries around the world, are somewhat dependent on things like Nvidia's quarterly reports, Apple's earnings reports, and so on.

If something happens to those companies, things will get very bleak very quickly 😨

#economy_tips #Write2Earn #TradeNTell

The Fed's balance sheet continued to shrink. Since ATH it decreased by $32.8 billion to its lowest level since January 2021 📉

👉 Shrinking the balance sheet means that the Fed is selling its holdings of assets such as government bonds and mortgage-backed securities, this is a part of tightening monetary policy, which the Fed implemented to combat inflation

By selling off assets or not reinvesting the proceeds of maturing assets, the Fed reduces the amount of money circulating in the economy and prevents the economy from overheating.

As the balance sheet shrinks, it can lead to a rise in longer-term interest rates, affecting everything from mortgage rates to bond yields 📈

#economy_tips

Luxury watch prices as an indicator ⌚️

Sometimes economists look beyond traditional indicators to analyze the economy's strength, one of such unusual instruments is the Rolex prices index. The sales of high-end watches indicate how the economy's top tier is doing.

👉 The idea is simple: The more free capital people have and the higher their confidence level in their financial well-being, the greater the demand for luxury items such as Rolex watches.

Look at the chart of prices over the last three years, and you can immediately see at what point the Federal Reserve started raising the interest rates and the economy stopped being flooded with printed money 🖨

As you can see, watch prices continue to fall, complementing indicators that show the well-being of the US population, whose financial situation, contrary to what the mainstream media says, continues to deteriorate 🤷‍♀️

#economy_tips

📈 U.S. Inflation Data Next Week: What to Watch For!📊

Next week, we’re expecting crucial inflation data that could shape the Federal Reserve's interest rate decisions. Economists are buzzing with predictions of a modest 0.2% rise in the core personal consumption expenditures price index for July. This marks the second month in a row of this tiny bump!

But here’s the kicker: the three-month annualized core inflation rate is projected to drop to 2.1%. While it’s not quite at the Fed’s target of 2%, it’s close enough that many are speculating about potential rate cuts.

On top of that, consumer spending is anticipated to increase by 0.5%—the strongest gain in four months! This suggests that the economy is holding steady, which is crucial for the Fed as they work to steer inflation back on track without derailing economic growth.

Fed Chair Jerome Powell hinted at a possible policy tweak, noting increased confidence in inflation trends. As they review their approach since the pandemic, the Fed’s focus is not just on inflation but also on the labor market.

Will this data be the final nudge for the Fed? Let’s stay tuned for the report and see how it unfolds! 🔍💡 #Inflation #InterestRates #FederalReserve #economy_tips

📢 Big News from Jackson Hole!

All eyes are on Fed Chair Jerome Powell as he gears up to speak at the Jackson Hole Economic Symposium—a key event that could shape the future of the economy. Why does this matter?

🔍 What’s Happening?
Powell’s past speeches have been game-changers, especially last year’s “Volcker Moment” when he channeled the tough inflation-fighting tactics of the late 1970s. His firm stance led to a cycle of interest rate hikes that we’re still feeling today.

📈 Why It Matters:
This year, there’s buzz that Powell might signal a change in direction. With inflation cooling and unemployment rising, markets are hoping for a possible rate cut. But will Powell deliver, or will he stick to his guns on keeping rates high to ensure inflation is truly under control?

🌍 The Impact:
What Powell says could shake up stock markets, influence mortgage rates, and even affect job opportunities. In short, it’s a pivotal moment for the economy.

Stay tuned—it’s not just another speech, it’s a potential market mover! 📊

#economy_tips #CryptoMarketMoves #InvestingRevolution #interestrates #PowellAtJacksonHole