FARB<L>AST OFF <GO>
(Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)
For those of you who have a Bloomberg terminal, run FARBAST Index <GO>. This is the index that outputs the US Federal Reserve’s balance sheet in millions of USD, updated weekly. I keep droning on about this, but this number and its trajectory is the only thing that matters. If you have confidence that the Fed’s balance sheet will rise exponentially from today’s levels, then short term wobbles in the crypto markets become immaterial.
Self-perpetuation and growth are the two universal constants when evaluating the potential actions of organisms or a civilisation which is a collection of humans. Most modern societies have an underlying assumption of infinite growth. Look no further than how we price a stock.
A stock’s value is the discounted stream of all future cash flows. The terminal value assumes the company continues to exist and grow forever. That is obviously empirically false, but we plug it into our fancy model anyway. Therefore, my overarching assumption is that growth is preferred and assumed. The question is cost. There are various ways to pay for growth, and one of the most effective on a national level is nominal GDP targeting paid for with borrowed money.
