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Louis 路易
1/According to Fed, year-to-date alone, the M2 has increased by 19%, and continues to rise by over 1% per week. Between the end of Feb and the beginning of June, the money supply increased by $2.6 trillion which is 12% of U.S GDP ($21.5 T) and 11% of year-end Fed debt ($23.2 T).
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Louis 路易 Jun 21
Replying to @louishliu
2/The dramatic increase in the money supply further increases the probability of inflation returning on a scale. In addition, the higher amount of dollar chasing amount of goods and services that are disrupted by Covid-19 during the global lockdown will push inflation higher.
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Louis 路易 Jun 21
Replying to @louishliu
3/If the objective is growing GDP at the same growth rate, then it takes ever-increasing debt creation to generate the same percentage gain in GDP. This situation is likely permanent and inflation will hit the market sooner or later.
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Louis 路易 Jun 21
Replying to @louishliu
4/Every year, approximately $1.0 T of capital gains are taxed at 20%. Investors get $800 B and the government gets $200 B of tax revenue. This provides a significant incentive for the system to keep the economy and the stock market goes up permanently.
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Louis 路易 Jun 21
Replying to @louishliu
5/With the U.S National Debt at $25.3 T, the total debt of all types in the U.S. at $77.3 T, and $147.6 T in total US unfunded liabilities. There is simply no way rates can be allowed to rise.
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Louis 路易 Jun 21
Replying to @louishliu
6/With just a 1% point increase on $77.3 T of debt would mean an incremental $773 B in interest expense, which would represent 3.6% of US GDP going to debt service instead of consumption. A 2% or 3% increase in interest rates could be catastrophic.
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Louis 路易 Jun 21
Replying to @louishliu
7/If the situation continues, the traditional stock/bond 60/40 portfolio will be challenged as bond yield trending zero or negative. Stock, real estate, gold, and continue to be a good store of value in the current situation.
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Louis 路易 Jun 21
Replying to @louishliu
8/Amoung all assets, the only asset that is "quantitative hardening" while Fed is "quantitative easing" is . Important to remember that when there is demand for any other commodity or currency, for example, gold. If the price rises enough, new supply can be created.
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Louis 路易 Jun 21
Replying to @louishliu
9/Bitcoin is unique and different from other assets because its supply is strictly limited to 21M with the last coin expected to be mined in 2140, and there are currently 18.4M coins already mined with 2.6M left remain to be mined over the next 120 yrs.
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Louis 路易 Jun 21
Replying to @HorizonKinetics
10/In other words, the inflation rate in Bitcoin for the next 120 years is known (a cumulative 14.2% or an average of 0.1% per year). The idea of buying bitcoin because it has moved higher is the wrong analysis. You should be stacking sats every day. h/t
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