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SBF
@SBF_FTX
Replying to
@SBF_FTX
37) There’s another side to this, too, though. “Number go up.” See, if all you do is ‘stock split’ the US Dollar, handing everyone an extra 50%, it has no real economic impact… …as long as everyone mentally multiplies all price charts by ⅔ after the split.
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SBF
@SBF_FTX
38) But if you don’t adjust how you look at the charts, then it seems, I guess, like everything just went up 50%. Which is bad for inflation, but great for markets?
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SBF
@SBF_FTX
39) And so some of what’s happened over the last decade–and especially over the last few years–is that bad things happened (e.g. COVID) but markets went up instead of down, because we increased monetary supply.
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SBF
@SBF_FTX
40) And, I guess, it ‘tricked’ some of us into thinking that things were going great, because “number go up”, when really that $440 SPY buys about as much stuff today as $330 SPY bought a few years ago.
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SBF
@SBF_FTX
41) So what does all of this imply for the future? Well, on the one hand, inflation–true inflation–is high. Really high. High enough that it would generally be worrying. Does that mean markets will keep going up? Especially given that even CPI inflation is now high?
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SBF
@SBF_FTX
42) Maybe. But maybe not. Because to some extent, that should already be priced in to “efficient” markets. As soon as the world realized what was going to happen to policy because of COVID, prices should have adjusted to the full increase that all future QE would bring.
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SBF
@SBF_FTX
43) CPI increasing this year doesn’t make markets go up more: markets already knew that the monetary supply had increased, and didn’t have to wait for CPI to move.
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SBF
@SBF_FTX
44) Instead, CPI increasing this year had the effect of increasing political pressure to reduce inflation by tightening monetary policy. So increased inflation indicators sometimes lead to decreased inflation, because of policy reactions.
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SBF
@SBF_FTX
45) So I don’t know what this means going forward. On the one hand, there are real signs of tightening policy for the first time in a while. On the other hand, even the proposed rate hikes are a lot less than true inflation probably is, barely making a dent in real rates.
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SBF
@SBF_FTX
46) And also, there’s a war going on now, on top of COVID; there will be pressure to prevent markets from crashing, which means, well, you know…
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SBF
@SBF_FTX
Replying to
@SBF_FTX
48) Those are, sometimes, two sides of the same coin. And, also: c) QE → number go up → easy to get financing → number go up → easy to get financing → …
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SBF
@SBF_FTX
49) We have, accidentally, been exploring Post-Modern Monetary Theory as a society. A system designed so that numbers mostly just go up and up and up, as they mean less and less and less.
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SBF
@SBF_FTX
50) Thus, BTC. And oil, and nickel, and SPY, and houses, and art, and bonds, and VC fund sizes, and private markets, and pretty much everything marked to market.
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Andrew Wertheim
@awertheim
Replying to
@SBF_FTX
Prolonged* a recession. Akin to giving a heroin addict another hit: they feel better today, but they're still totally rekt. Without a full withdrawal (recession/correction), they'll never be healthy again.
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Sean
@Sean00990
Replying to
@SBF_FTX
Did MMT cause the recession in the American midwest? It seems like because of American inflationary policies, labor *had* to be outsourced to somewhere "low cost".
George Clayton
@G_Cryptanalysis
Replying to
@SBF_FTX
Where is/was the MMT? a) Are you sure it is inflation and not price increases due to (among many other things) supply chain issues and a breathtaking array of oil industry bankruptcies over the last 2 years. b) by most measures a recession was and continues to be happening.
Power@PointVC
@BirthStage
Replying to
@SBF_FTX
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Michel Lara
@VeraCausa9
As Prometheus created the first man he didn't endow him with his own divine gift of foresight (prometheia) so mortals became more like his brother Epimetheus, "afterthought". Thus our tragic human condition lies in our belated wisdom as we are creatures of hindsight not foresight
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