Unlimited QE and Why Markets Can’t Price In COVID19

The Breakdown

Blockworks

Investing, Business

4.8 • 806 Ratings

🗓️ 23 March 2020

⏱️ 17 minutes

🔗️ Recording | iTunes | RSS

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Summary

Last October, Ikigai Asset Management’s Travis Kling predicted that Central Banks would have to “juice QE to infinity” in order to save markets from recession. Yesterday on 60 Minutes, Fed President Neel Kashkari said “there is an infinite amount of cash at the Federal Reserve. We will do whatever we need to do to make sure there is enough cash in the financial system.” This was followed this morning by an announcement that the Fed was giving itself effectively unlimited capacity to intervene in markets. Markets were...still not impressed. In less than two hours, an initial gain had entirely retraced. On this episode of The Breakdown, @NLW looks at: Specifics details of the Fed Announcement Why FinTwit and Bitcoin Twitter are focusing on inflation Why some think that this action amounts to a nationalization of markets How the ‘money printer go brrr’ meme is taking hold

Transcript

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0:00.0	Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW.
0:15.0	The Breakdown is distributed by CoinDesk.
0:22.6	Welcome back to The Breakdown. It is Monday, March 23rd, and today we are talking about the era of unlimited QE.
0:29.5	The Fed has double, triple, infinity down on its commitment to injecting liquidity into
0:35.7	the markets in ways that are unprecedented and unique,
0:39.9	and everyone is trying to now wrap their head around.
0:43.3	So what we're going to do today is actually do basically a hot take reaction show
0:47.4	looking at what people from FinTwit and Bitcoin Twitter had to say about this new action.
0:53.4	But where I want to start is actually with two
0:56.0	contrasting audio clips. The first comes from Travis Kling last fall on the Bitcoin macro podcast
1:03.2	that we produced in advance of CoinDesks Invest New York City event. In it, he talks about how the Fed
1:09.7	is basically going to be forced to do ever more exotic
1:12.9	forms of QE. So let's listen to that real quickly. But there are problems starting to show up here.
1:19.2	The global economic data is undoubtedly turning down right now. It's all turning down at the same time.
1:24.9	It's all turning down at the same time because the whole world is now on this central bank trade
1:29.1	and on this cheap money trade.
1:31.6	But it's apparent that central banks are going to cut interest rates
1:35.1	and juice QE into infinity
1:37.1	to either prevent a recession
1:38.9	or have the recession be as soft as possible.
1:42.3	And those forms of quantitative easing are going to be increasingly more exotic.
1:46.6	Because in the same way that, you know, if you do heroin long enough,
	...

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