For those might not know, Q.E 4 is on the horizon
Q.E 4? what is that?
That probably is the question you might be asking. What is Q.E 4? Q.E is quantitative easing and it is one of the main financial tools central banks across the world use to juice up the economy (in reality, they only end up juicing up the financial markets). It is in essence money printing. The treasury (or the central bank itself) of a particular country issues out its debt (treasury bills, treasury notes and treasury bonds). Instead of waiting on the free markets to buy up these debts (the demand for it will be based on the perceived integrity of the particular country’s economy or otherwise). The central bank steps in, buys it up with nothing obviously and prints out the value the debt it just purchased as currencies, flooding the economy with cash while retaining the value of the debt on its balance sheets. It is one of the new sets of financial tools called call MMT ( modern monetary theory) others include ZIRP (zero interest rate policy); NIRP (negative interest rate policy).
We are living in very unique times in the history of the world and that of financial markets. Q.E is one of the tools central banks across the world has been using aggressively for the past forty or so years to distort the normal financial cycles of economic boom followed naturally by recessions.
The normal financial cycles
In normal and sound economies, there are periods of financial boom and in those periods, market participants (which include, governments, banks, investor, business people, consumers etc) tend toward being overly aggressive. As the good times progresses, market participants throw away caution and become over invested and over leveraged in their various positions (its simply human nature to do so). These actions push the business cycle to its top (what in financial market parlance is referred to as a blow off top) and the market begins to correct. The bubble bursts, and the economy enters a recession. In a recession, the economic indices corrects to the mean, over-valued assets corrects to the mean and the economy cools off. A recession provides the opportunity for the economy to restart as it prepares for the next boom phase.
Enter, the financial alchemists of the 21st century
The central bankers, with the Federal Reserve Bank as the default central bank of the world have succeeded in blurring the perfect fault lines between economic expansions and recessions within a normal business/market cycle.
The BOJ example
The economic expansion of japan through the 1970s to the latter half of the 1980s came to a head in the late 1980s. The Japanese economic bull run went burst in 1989. Now, instead of allowing the ensuing recession to play out, the BOJ instead started a series of Q.E. the various rounds of Q.E progressed through the 1990s and well into the 2000s. the BOJ has done so much debt and financial assets purchases to the point that it currently owns 45% of all Japanese government bonds (debt). It also holds 75% of the ETFs (exchange traded funds, a form of stock market asset) in Japan. It gets even more interesting, the amount of debt on the BOJ’s balance sheets $4.87 trillion, is more than the entire GDP of Japan!!! This simply means that the debt the central bank of Japan owes is more than the productivity of the entire country! Talk of some zombie country!
The Federal Reserve Bank’s example
After the stock market collapse of 2008. The Fed stepped in and began its own round of Q.E. IT conducted three rounds, Q.Es 1, 2 and 3. At a point between 2011-2014, the Fed reserve bank was printing an average of $1billion every day. The debt on in its balance sheets increased from $800 billion in 2008 to $4.3 trillion as of today.
Another round of Q.E is imminent
Like a true junkie, the injection of Q.Es 1, 2 and 3 has proven not enough for the American economy. Its financial markets are beginning to stutter. The world’s economy is beginning to shudder under the weight of this massive debt and…. The financial wizards are out with the solution of Q.E4. there would be another round of Q.E by the United States’ Federal Reserve Bank and you should position yourself to profit from it massively.
Bitcoin will gain massively in an environment of Q.E
Bitcoin has established itself as a store of value asset much like gold. It has should its non-correlative nature to traditional financial assets like stocks derivatives etc. like it happens in all financial recessions and economic bursts, as investors loose faith in the financial markets and regulators, the look for assets that are non correlated to traditional markets to park their funds in. Traditionally, investors park their money in precious metal like gold and silver. These asset, though not correlated to traditional markets, are still under the control of central banks and though with difficulty, they still do engage in manipulation of prices of precious metals. For the first time in a long time, humanity has gotten an opportunity at financial sovereignty. Bitcoin, gives everyone everywhere with an access to a smart phone and some internet connection the opportunity to be financially sovereign. As it is censorship resistant, no one can stop anyone wanting to get involved and invest in it from doing so. As a deflationary asset with a known supply cap, supply rate and its Stock to Flow ratio will surpass that of gold by 2021 making it the hardest asset on earth. Investors who invest in Bitcoin today will become the fresh set of the super rich five to ten years down the line.
Get yourself positioned
As we have been advocating on this channel since November of 2018, there is no better time to start investing in Bitcoin than now. Sure, it would have been nice if you had taken your position last year Nov/Dec when the markets hit its low. However, if you look at the long term opportunity for growth this asset has. The current price of around $10,000 is a steal! You need to understand the position we all find ourselves today, as major central banks across the world begin preparation to flood their various economies and by default the world with cash, we should understand the opportunity this avails those of us living in developing economies. The border-less nature of Bitcoin and cryptocurrencies provides us the opportunity to gain massively from the massive money printing that is about to commence which we wouldn’t have had the opportunity to hitherto. ever heard of the tech market boom? It took place between 1998-2002. An asset class moved from zero to $6trillion dolars and scores of every day people who got in early became wealthy over that period of time. The dotcom boom was only a United States phenomenon, Bitcoin and cryptocurrency revolution, with its decentralized nature is a global phenomenon. The gains for early adopters and investors will be really huge
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