In the recent episode of “Macro Markets,” analyst Marcel Pechman delved into the consequences of the United States Federal Reserve’s balance sheet expansion. Pechman highlighted that the Fed had inflated its assets by a staggering $5 trillion from December 2019 to April 2022. Interestingly, this expansion period coincided with a 38% crash in the S&P 500 index. Furthermore, as the stock market index reached its all-time high of 4,800 points, the Federal Reserve balance sheet exceeded the $8.9 trillion mark.
According to Pechman, the main challenge arises from the significant deficit of the U.S. Treasury Department. With the government spending more than it generates through revenues and taxes, the need to roll over some of the debt arises, instead of allowing it to naturally expire. Consequently, it is unlikely that the reduction of the balance sheet, which has significantly contributed to lowering inflation, can continue.
Pechman predicts that inflation will experience a substantial impact once the Federal Reserve is compelled to expand its balance sheet once again. In light of this, he advises individuals holding scarce assets such as Apple shares, land, gold, and Bitcoin (BTC) to hold onto them tightly and not be deceived by the current temporary period of reduced inflation.
The subsequent segment of the show focuses on deflation in China, which economists consider a concerning issue. With domestic consumption on the decline, investors seem to place high expectations on their central bank’s expansion of the balance sheet.
Pechman asserts that there are numerous red flags emerging from China, raising concerns about potential risks for international economies, as well as the future of stock markets and Bitcoin. To gain further insight into Pechman’s viewpoint on the impact of China’s deflation and its implications for Bitcoin and stock markets, viewers are encouraged to watch the latest episode of “Macro Markets” on the Cointelegraph Markets & Research YouTube channel.
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Overall, Pechman sheds light on the significant consequences of the United States Federal Reserve’s balance sheet expansion, emphasizing the potential future risks associated with inflation and the impact on various assets. Additionally, his attention turns to the issue of deflation in China and its implications for global economies, stock markets, and Bitcoin. To stay informed on these crucial topics, interested individuals are encouraged to watch the full episode of “Macro Markets” on the Cointelegraph Markets & Research YouTube channel.