Let's recharge the faith of the bulls:

The road ahead may be bumpy, with doubts and even despair, but the future is still bright!

1. Short-term and medium-term situation: a gap between the old and the new

The bond issuance wave is rolling in, and the Fed dare not print money. The rise in long-term bond interest rates is the general trend, and there will be competition for risk funds

PBoC is forced to keep an eye on the Fed to protect CNY, and the printing of money has slowed down. How can the two major countries rise like this?

2. Long-term situation: Treasury expansion is a road of no return, and the end point is lying flat and printing!

Japan has already lied flat, Europe and China are on the way to lying flat, and the United States will end up with this result.

After the epidemic, the United States has returned to China's old path in 2008, investment (AI vs. China's infrastructure) + government spending, and has lost sensitivity to interest rate hikes. At the beginning, the marginal benefit of ROI is very high, and capital is all in a carnival

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However, once relying on government investment, the debt will accumulate and it will inevitably fall into a debt crisis (Indonesia, Thailand, Argentina, Mexico...) At present, the only two countries that have not temporarily erupted are China and the United States. One relies on foreign exchange control + US demand and investment; the other relies on its own currency status

Modern economies are accustomed to a nominal GDP growth of 3-5%: it is easy to go from frugality to luxury, but it is difficult to go from luxury to frugality!

Economic formula: Debt must also increase by 3-5% accordingly: and debt increase = weighted average of public and private debt increments

There is no such thing as public money; there is only taxpayers' money

Unless the investment returns are extremely high, similar to China after the reform and opening up, or there are changes in the level of technological revolution. There are only two results:

1. Forced to cut spending:

Economic recession, slowdown, vicious cycle with debt repayment, debt deflation. Finally, negative interest rates, zero growth. For 12 years, Europe has been like this. It is easy to borrow money but difficult to repay it, but it will not get out of the situation without 20 years

2. Maintain deficits and continue to print:

The general result is the collapse of the monetary system, Argentina is a precedent. Now Japan and China are following in its footsteps.

The Fed is now far more responsible than China, Europe, and Japan, and USD is the fulcrum of the global faith lever, so there is no need to consider the collapse of the monetary system

In the upcoming contraction period, the reason may be that the debt accumulation and rising interest rates lead to a recession; or Trump's election and spending cuts may lead to a recession. BTC, as a risky asset, may be reshuffled

However, no matter what the result is, the Fed is likely to open the floodgates later, and we will usher in a real "violent bull market"

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