Hey everyone!
Hope you had an amazing weekend.
For those of you who follow the markets closely, you know it’s been a pretty crazy 12 months.
The stock market/bitcoin/and pretty much any other asset (think home prices, rare art, etc) have hit ALL TIME HIGHS.
This, coupled with the fact that much of the World has been SHUT DOWN, begs the question…
Does the government actually WANT to pump these assets to the moon?
They have to be doing SOMETHING behind the scenes to be causing this, right?
Otherwise, it makes no sense!
Well, I won’t speak to whether they WANT to or NOT… (although, let’s be honest, most politicians are HEAVILY invested in whatever Wall Street is invested in…..)
I will say this…
They have NO CHOICE but to pump assets to the moon.
Last week was a great example of what will happen if they DON’T intervene.
ALL of the headlines blamed rising interest rates for the total bloodbath that was the stock market, bitcoin, and every other asset last week.
I actually wrote a very detailed letter on why this matters last week, so read that one too if you haven’t already -> LINK
But basically, it all comes down to this…
1) The government is in a crap ton of debt, we all know this.
2) If interest rates RISE, the government will be in an EVEN WORSE position, because the interest payments on their DEBT will rise. Pretty soon they won’t even be able to pay the interest….
3) The only way to keep interest rates down is to print money to buy back their own debt.
4) Printing money BOOSTS ASSETS, because it DEVALUES the currency that is being printed.
5) Thus, assets aren’t necessarily getting more VALUABLE, the currency is just getting LESS valuable.
You should probably stop and read those 5 points again.
I’m serious.
If you understand those 5 points, you already know MORE than 99.99999% of the population, who has no idea about finance or saving or wealth.
Get the basic idea of those 5 points? Good.
Now, let’s take this one step further okay?
In point #3, I said -> 3) The only way to keep interest rates down is to print money to buy back their own debt.
Now, there are a bunch of different ways to do this, the main ones are words you have probably heard of….
A) Quantitative Easing
B) Yield Curve Control
Let’s break these two down real quick I promise they aren’t that scary.
Quantitative easing is literally just the government pledging to buy back a certain amount of their debt.
I.e. they will announce, “We are going to purchase $1 trillion of 10 year Treasury Bonds (their own debt)”
QE is basically just a fancy term for “money printer go brr…”
Yield Curve Control, on the other hand, is even MORE aggressive.
Remember how I said that if interest rates go UP the government gets screwed?
How they have NO CHOICE but to print money to correct it?
Well, sometimes, they will simply CAP interest rates.
Yield Curve Control simply means that they will CONTROL the YIELD (the interest rate).
See?
So… for instance, the Gov could step in and say…
“INTEREST RATES ON 10 YEAR TREASURIES ARE CAPPED AT 1.5%.”
In normal person speak that means…
“WE WILL BUY AN UNLIMITED AMOUNT OF OUR OWN DEBT BACK FROM OURSELVES IN ORDER TO NEVER EVER EVER EVER LET THE INTEREST RATE GO ABOVE 1.5%.”
Read that sentence back to yourself real quick.
Sounds pretty aggressive huh?
And yeah, it is.
Oh, and if you think this is something that would never happen, maybe check out the headline from MoneyWeek, TODAY…
I’m here to tell you that YCC is coming, and probably coming sooner than we thought.
Last week was the perfect example.
Absolute bloodbath because interest rates went up.
This morning, everything in the GREEN, because the GOV made comments about making sure that those rates are never able to rise….
If this type of manipulation of the markets seems wrong to you…
It’s because it IS.
However, it doesn’t matter, because like I said, the Gov has no choice but to keep on doing it, or there will literally be a global financial crisis.
If they were to let interest rates go up…
Stocks would crash by 50%-70%+
Mortgage rates would skyrocket
Retirement funds would be gutted.
And the snowball effect of those 3 things alone would likely lead us into a depression 10x greater than 2008 as the dominos fell around the World.
I don’t know much about the Gov..
But I do know this…
They don’t get re-elected by causing global depressions.
So they WILL continue to do everything in their power to stop that.
And the best tool they have in their arsenal is YCC.
Expect to hear more and more about it in the coming months and for them to actually implement it sometime this summer…
When they do, or if markets even catch a WHIFF of it…
You might as well hold up a GIANT BILLBOARD that says…
PUMP STOCKS, BITCOIN, AND THE PRICE OF ANY SCARCE ASSET TO THE MOON!!!!
I’m serious.
See you on the moon, and see you subscribers tomorrow.
Kale
THIS LETTER IS STILL AVAILABLE AS A FREE TRIAL FOR 30 DAYS WHAT ARE YOU DOING :) ->
Share this post