Bitcoin represents the only money ever created that does not require DEBT to create velocity of money. Jeff Booth said this at the Bitcoin 2022 conference in May. Today, we will look at global macro economics again from the stand point of where we are with velocity of money and why that is important.
This first chart shows that the US government has been printing federal deficits ever since it got off the Gold Standard on August 5, 1971! The late 90’s was the only exception. Now, the defecit spending is approaching 2009 levels. Perhaps by the end of 2023 it will get there. Here is the chart below:
Meanwhile, as the federal deficit is climbing, here is a chart that details what is happening with families:
Credit Card and revolving debt is at all time highs. Family savings are dropping fast. Especially since the covid stimulus checks stopped being sent out by the US Government. Here is what Michael Burry has to say about 2022:
Here are the reasons why he is right. This next chart is small, we will explain it. This chart is daily reverse repo payments. They are up to $2 trillion, per day! Money market funds park money at the Fed. The Fed moves the money into bank reserves. Remember, bank reserves allow commercial banks to loan out that amount of money. Then, due to fractional reserve banking laws, they can actually loan out 10 times more than they have in reserves. Basel III regulations force banks to have smaller balance sheets. This creates the demand for reverse repo. Below is the reverse repo chart, notice the demand is up and to the right:
However, look at the M2 velocity of money chart. Lately, over the past two months velocity of money has dropped way off. See the red arrow: