GDP Expectations & MV=PQ and Friday's Settles

We first wanted to make sure you see this current Atlanta Fed GDP Now forecast for the upcoming Q3 GDP report. This one is going to be massive so here it is:

How hard do you think Trump is going to shove this down left wing Democrats throats? We can only imagine the tweetstorm this is going to cause.

We also saw this weekend some excellent charts on Zhedge in a must read article, you can find HERE

A must read for all and it points out to very very important axioms, first it destroys the MMTers myth that loans create deposits which by the looks of this chart, only a complete moron would believe that claim:

Second Magnelibra Econemotions has hammered its readers with the fact that its shadow bank money, in particular loan creation that leads to inflation and not QE driven balance sheet and aggregate deposit balance. Yes you have seen us post the almighty MV = PQ equation and you can go hit the archives for a refresher on why believe this is indeed the only equation that matters.

Anyway the central banks can disguise economic expansion via asset price appreciation, but the reality is this is being offset by a continued decline in the velocity of money:

What does this decline tell us? Something very plain and simple and something the over 700 Phd egg heads at the FED are paid a tremendous amount of money to keep you from knowing, that is

QE CONCENTRATES WEALTH AND CREATES WIDENING INCOME DISPARITY!

Here is another chart from the article highlighting this:

So while the PTBs continue to play ping pong with another round of stimulus, which will probably be around $250Bln, know this, that during Covid, during one of the biggest exogenous shocks America has ever known, the top 50 richest Americans net worth grew over 25% to hit just over $2 Trillion dollars!

Take that in your QE breeds Socialism pipe and smoke it, think long and hard about the reality of the situation, think long and hard about who exactly benefits from QE. Think long and hard about the destruction of middle class jobs and businesses and realize that those in power, the real power, knew exactly what this lockdown was going to do and its no wonder the grab for more land, businesses, buildings and power exists, because when you destroy the average persons ability to eke out a meager existence, all you need to do is be the shining white knight of QE and use your political ambassadors to pretend a $250bln stimulus plan will amount to anything more than a 1 month handout, bread and circuses, rinse, recycle, repeat.

So go read that article and see what you think, see if it makes sense and see how Magnelibra has been right for years saying QE will never generate inflation, because its shadow bank money and loan creation that generates increased velocity and discourages hoarding which then leads to organic inflation.

What we really have is the largest takeover of information, resources and assets in history and the populace is too blind, too worried, too nervous about a virus that has a 97% recovery rate, but hey keep thinking what you want, we just want you to know what we think.

Anyway the Zhedge article so aptly explained all of this with the best and most thought thru accurate description as to why the disconnect between deposits and loans actually exists, their words not ours:

In other words, by keeping the pedal to the metal on QE, the Fed is giving the banks all the benefits of money creation (soaring deposits), without any of the risks (loan creation in a record low Net Interest Margin environment) and if you are a major US bank - say JPMorgan - you will be perfectly happy with this arrangement and not seek to lend out any money, as the case has been for the past 12 years.

Ok here are last Friday’s settlements:

Nasdaq the big loser on a pretty uneventful day and as we draw closer to the election, expect the volatility to pick up as many place their chips on to the table and if the last election is any indication, rest assure fireworks for both bulls and bears will be on full display! Stay nimble investors and traders!

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-Magnelibra Econemotions

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