Grow Up or Blow Up

The 2008 Global Financial Crisis

Whatever It Takes

Listen Up

  1. The Treasury borrows money from the bond market to spend on bills that the White House passes.
  2. In order to keep interest rates down and prevent the government from crowding out all other borrowers, the Fed expands its balance sheet.
  1. All advanced economies’ federal governments are committed to aggressive fiscal spending to re-energise their middle class after the ravages of COVID.
  2. The government will sell bonds to finance spending rather than raising taxes too aggressively. At a certain level, raising taxes acts as a drag on the economy and is very unpopular (take a look at the Laffer Curve). It is much easier politically to print money and spend it into the economy.
  3. The central bank will support the government by expanding their balance sheet to buy bonds in order to reduce borrowing costs.
  4. A weaker currency helps your export sector. Increasing the supply of a thing, reduces the price of a thing.
  5. In conclusion, if everyone else is debasing their currency to stimulate their domestic economy, you must do it too. If you don’t, your currency will appreciate in value and it hurts your export sector.

Grow Up or Blow Up

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Arthur Hayes

Arthur Hayes

49.95K Followers

Co-Founder of 100x. Trading and crypto enthusiast. Focused on helping spread financial literacy and educate investors.