about the latest episode macro marketAnalyst Marcel Pechman explains the impact on the Fed’s balance sheet, detailing how the Fed inflated its assets by $5 trillion between December 2019 and April 2022. Pechman noted that the period of expansion coincided with a 38% plunge in the S&P 500 index. Also, the Fed balance sheet crossed the $8.9 trillion mark as the stock market index hit a record high of 4,800.
The problem, Pechman said, is that the U.S. Treasury runs a huge deficit because government spending exceeds revenue and taxes. So it needs to start rolling over some of that debt instead of letting it mature, so it probably won’t be able to continue shrinking its balance sheet — which has been a huge factor in lowering inflation.
Inflation will ultimately suffer the most once the Fed is forced to expand its balance sheet again, according to Pageman. He suggested that those holding scarce assets such as Apple stock, land, gold and Bitcoin (BTC) should hold on tight and not be fooled by a temporary drop in inflation.
In the next segment of the show, Pageman talks about deflation in China, which economists see as a problem. Domestic consumption is falling and investors appear to be expecting a miracle from the central bank expanding its balance sheet.
In essence, China is sending out a number of red flags, Pechman believes.If you want to see if Pechman sees this as a risk to the international economy and what happens to the stock market and Bitcoin, watch the latest episode macro market At Cointelegraph Markets & Research YouTube Channel.
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