Doc's Daily Commentary

Mind Of Mav

The Fed Will Buy Stocks, Then Impose Negative Rates

Central banks have driven their respective policy rates way down in recent years — most rapidly in recent months.

From near-zero (the Federal Reserve and Bank of England) to below zero (the Bank of Japan and the European Central Bank), these rates are unprecedented and expected to be with us a long time.

What’s important to know is that extremely low policy rates exert a gravitational pull that anchors interest rates across the economy, including those on government debt — think of policy rates like wind, and economic activity like sailboats; too much or too little at the wrong time and those boats won’t sail! It’s a balancing act.

As the entire world follows the same economic model and design, it’s almost a certainty that we’ll voluntarily or involuntarily embark on one of the riskiest monetary experiments of our time: a globally synchronized world of negative interest rates.

Before we get there, we’ll see large central banks, like the Federal Reserve, justify it as a last resort. They have thrown everything, even the kitchen sink, at financial markets, propping up all the risky, speculative asset classes: stocks, corporate bonds, auto loans, mortgages, anything close to defaulting while the economy remains shuttered.

So when the stimulus inevitably wears off and asset prices continue to fall, the Fed will have exhausted their “conventional” toolbox: Fed officials have already dropped interest rates to zero, created an array of alphabet soup “asset relief” programs with exotic names like CPFF (Commercial Paper Funding Facility) and TALF (Term Asset‐Backed Securities Loan Facility), and executed yet another round of QE (quantitative easing).

Though these actions support asset prices, printing trillions of dollars decimates the purchasing power of savers while rewarding investors that take high risks for high returns (as we covered yesterday).

It’s no surprise that they want you to buy stocks, not to save money.

A deep economic recession tends to drive up savings by households and firms. When people are uncertain about their job prospects, they are unlikely to be spending money freely. Hence, deflation occurs, the arch-nemesis of central banks.

So, as a signal of faith for investors to follow, the Fed will promise to buy stocks. If the stock market bubble starts to implode — and it will because it always does — the Fed’s final pump will be to acquire various stock ETFs, such as SPY and DIA.

If buying ETFs is the “last hope” for the Fed to keep stock prices high, it’s crazy to think the stock market will perform well in the distant future. After all, hope is an absurd reason to invest in anything.

When the Fed faces the (obvious) reality that buying stocks fails to hold up prices, their next move that “no one will see coming” will be negative interest rates.

Sure, countries like Germany, Switzerland, and Japan have reached subzero levels, but have shown little benefit of doing so.

Still, we’ll go through another round of farcical parody: The market will rally on “hope” until everyone figures out negative rates destroy future growth.

As we covered last week, Fed Chairman Jerome Powell has denied repeatedly that the U.S will impose negative rates, stating, “I continue to think, and my colleagues on the Federal Open Market Committee continue to think, that negative interest rates are probably not an appropriate or useful policy for us here in the United States”.

Which means they are an absolute certainty.

What should be crystal-clear is that taking a contrarian perspective to the Fed’s statements will help you forecast their eventual actions with 100% accuracy.

Clown economics, here we come.

The ReadySetCrypto "Three Token Pillars" Community Portfolio (V3)


Add your vote to the V3 Portfolio (Phase 3) by clicking here.

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What is the goal of this portfolio?

The “Three Token Pillars” portfolio is democratically proportioned between the Three Pillars of the Token Economy & Interchain:

CryptoCurreny – Security Tokens (STO) – Decentralized Finance (DeFi)

With this portfolio, we will identify and take advantage of the opportunities within the Three
Pillars of ReadySetCrypto. We aim to Capitalise on the collective knowledge and experience of the RSC
community & build model portfolios containing the premier companies and projects
in the industry and manage risk allocation suitable for as many people as

The Second Phase of the RSC Community Portfolio V3 was to give us a general idea of the weightings people desire in each of the three pillars and also member’s risk tolerance. The Third Phase of the RSC Community Portfolio V3 has us closing in on a finalized portfolio allocation before we consolidated onto the highest quality projects.

Our Current Allocation As Of Phase Three:

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The ReadySetCrypto "Top Ten Crypto" Community Portfolio (V4)


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What is the goal of this portfolio? 

The “Top Ten Crypto” portfolio is a democratically proportioned portfolio balanced based on votes from members of the RSC community as to what they believe are the top 10 projects by potential.
This portfolio should be much more useful given the ever-changing market dynamics. In short, you rank the projects you believe deserve a spot in the top 10. It should represent a portfolio and rank that you believe will stand the test of time. Once we have a good cross-section, we can study and make an assessment as to where we see value and perhaps where some diamonds in the rough opportunities exist. In a perfect world, we will end up with a Pareto-style distribution that describes the largest value capture in the market.
To give an update on the position, each one listed in low to high relative risk:
SoV/money == BTC, DCR
Platforms == ETH, XTZ
Private Money == XMR / ZEC / ZEN
DeFi == MKR / SNX and stablecoins
It is the most realistic way for us to distill the entirety of what we have learned (and that includes the RSC community opinion). We have an array of articles that have gradually picked off one by one different projects, some of which end up being many thousands of words to come to this conclusion. It is not capitulation because we all remain in the market. It is simply a consolidation of quality. We seek the cream of the crop as the milk turns sour on aggregate.

Current Top 10 Rankings:



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