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1) Contracting cash provide + inflation is a nasty mixture.
As a result of it means there are fewer {dollars} floating round within the system to pay for the upper costs. ❌💵
In some unspecified time in the future the system “breaks” & a deflationary crash happens.
— Nick Gerli (@nickgerli1) March 8, 2023
3) All it took was a -2% contraction within the cash provide in 1921 to trigger that deflationary despair.
And we’re already at -2% contraction at present in 2023.
Suggesting that the resilience of our economic system and the present inflation may not be as sturdy as individuals suppose.
— Nick Gerli (@nickgerli1) March 8, 2023
5) However historic file is evident: Depressions/Deflation do not want a “linear” lower in cash provide to happen.
It simply must be a bit of bit. 2-4% contraction YoY. After which issues happens.
— Nick Gerli (@nickgerli1) March 8, 2023
7) Now the Fed is doing “Quantitative Tightening”.
This QT is what’s inflicting the cash provide to contract in 2023.
Everybody’s targeted on fee hikes. However it’s the QT/Cash Provide they need to be listening to.
— Nick Gerli (@nickgerli1) March 8, 2023
U.S. 🇺🇸
LAYOFFS pic.twitter.com/tVRPh3lDfZ— Win Good, CFA (@WinfieldSmart) March 9, 2023
CONSTRUCTION 🚧
OPENINGS pic.twitter.com/TlR6mEle6x— Win Good, CFA (@WinfieldSmart) March 9, 2023
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