Welcome to “Not-QE”, ie, QE4

By Dr. Chris Kacher of Hanse Digital Access, KJA Digital Investments and Virtue of Selfish Investing on ALTCOIN MAGAZINE

Image courtesy of B. Rich of Hedgeye with edits by Dr. Chris Kacher aka Dr K

Welcome to “Not-QE”, ie, QE4

Despite the Federal Reserve’s declarations that they have not restarted QE, reality seems to disagree. In October, the Fed’s assets grew by over $162 billion to register the biggest monthly rise since 2008. Everything is fine though 😹

Bitcoin Rocket Boosters

The confluence of lower interest rates, more QE, and the miners’ reward halving in May 2020 are nice rocket boosters for bitcoin. The bitcoin halving reduces supply expansion by 50%, in contrast to central banks which expand the money supply. The U.S. Federal Reserve has expanded the money supply by $2 trillion since 2008. That’s 2 trillion reasons to own bitcoin and hard assets.

The Cantillon Effect

The Cantillon Effect refers to the change in relative prices resulting from an increase in the money supply. It argues that money injection (QE and other inflation-boosting policies) may not change an economy’s output over the long-term. Indeed, global stagnation underscores this point as well as Ray Dalio of Bridgewater who has pointed out that capital often gets hoarded by the ‘haves’ as they already have achieved sufficiency. Dalio agrees additional QE should be pushed into the hands of the less fortunate who will spend it as well as into economically beneficial programs such as small business or education.

Bitcoin Deflationary By Design

So what options do the have-nots have? Real estate is one option but generally not an option for those less well off. Bitcoin solves this issue. Fiat is inflationary by design while bitcoin is deflationary by design.

Global Stagnation

Despite QE, the global economy is growing at the slowest pace since the financial crisis in 2008 according to the Organisation for Economic Cooperation and Development (OECD). Central banks have tried to revive investment but the world economy is projected to grow by a decade-low 2.9% this year and next. The OECD said growth may edge up to 3.0% in 2021 but only if a number of risks including the trade wars and the unexpectedly sharp Chinese slowdown are contained.

Rates to 0% and Below

U.S. growth was forecast at 2.3% this year, trimmed from 2.4% in September as the fiscal advantage from a 2017 tax cut waned while the trade wars drag on. With the world’s biggest economy seen growing 2.0% in 2020 and 2021, the OECD said further interest rate cuts would be warranted if growth turned weaker. This suggests that the already low levels will go to 0% as renowned investor Stanley Druckenmiller has predicted with his own money while negative rates will drop even deeper into negative territory. Yikes. Here’s a report I wrote recently that helps steer investors into what has already been and I continue to believe will be the best bets going forward.



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Hanse Digital Access, KJA Digital Asset Inv. & VSI

TriQuantum Technologies: 1) construction equity cap raise using blockchain, 2) Quantum Poodle Cryptofund, 3) NFTs/DeFi. www.hansedigitalaccess.com