Will Crashing Stocks Stop The Fed?

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In this video, I discuss the debate over whether a crashing stock market is enough to cause the Fed to reverse course. The market consensus today is that the Fed is willing to inflict major pain on stocks, if the end result is much lower inflation.

This analysis leaves out the important question of US tax revenue. Sharply lower tax revenues means that the US gov needs to issue more debt at the same point in time that the Fed is trying to shrink its balance sheet by buying less debt. This could result in much higher interest rates, lower stock and housing prices, and a government funding crisis.

For this reason, it is highly likely that the Fed reverses course before the end of 2022 and turns the money printers back on. When it does, expect stocks and Bitcoin to skyrocket.

Not investment advice! Consult a financial advisor.

Fed to Plow Ahead on Half-Point Hikes, Undeterred by Stock Slump:
https://www.bloomberg.com/news/articles/2022-05-19/fed-plans-for-half-point-hikes-won-t-be-shaken-by-stocks-rout

Debt to GDP chart:
https://fred.stlouisfed.org/series/GFDEGDQ188S

US debt clock:
https://www.usdebtclock.org/

Yellen optimistic on tax revenues:
https://twitter.com/carlquintanilla/status/1524039540981256192

Huge tax haul from meme stocks:
https://www.yahoo.com/now/meme-stock-frenzy-fuels-record-090001257.html

Federal current tax receipts:
https://fred.stlouisfed.org/series/W006RC1Q027SBEA

Federal tax revenue breakdown:
https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government
https://www.oecd.org/tax/revenue-statistics-united-states.pdf

Wilshire 5000 to GDP Ratio:
https://www.longtermtrends.net/market-cap-to-gdp-the-buffett-indicator/

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#stockmarketcrash
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