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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 right now in 2023.
Suggesting that the resilience of our financial system and the present inflation may not be as robust as folks assume.
— Nick Gerli (@nickgerli1) March 8, 2023
5) However historic document is evident: Depressions/Deflation do not want a “linear” lower in cash provide to happen.
It simply must be a little bit 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 charge hikes. But it surely’s the QT/Cash Provide they need to be taking note of.
— 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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