2023-2-25 13:53 |
Quick Take As the global world faces extreme inflation, central banks try to rein in inflation by decreasing their balance sheets (quantitative tightening) and increasing interest rates. The blue line is Bitcoin which has soared roughly 50% year to date. The orange line aggregates central bank balance sheets, including the US, EU, UK, Japan, and China. The red line is the fed net liquidity indicator; the formula is as follows; net liquidity = (fed balance sheet – (Treasury General Account + Reverse Repo)) / units. All three metrics have increased from their respective bottoms in October 2022 — while the balance sheet of the major central banks has increased to 756 trillion from roughly 706 trillion Japan and China have continued to increase their balance sheet — despite high inflation and undoing the work the US, EU, and UK are trying to achieve. Bitcoin, balance sheets and liquidity: (Source: Trading View) Central bank balance Sheets: (Source: Trading View)
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