The Good Tech Companies - Group of Fools

Episode Date: June 7, 2024

This story was originally published on HackerNoon at: https://hackernoon.com/group-of-fools. Analyzing the dollar-yen exchange rate's significance, central bank strategies, and potential impacts on global forex markets. Check more stories related to web3 at: https://hackernoon.com/c/web3. You can also check exclusive content about #cryptohayes, #cryptocurrency, #bitcoin, #federal-reserve, #finance, #currency, #hackernoon-top-story, #good-company, and more. This story was written by: @cryptohayes. Learn more about this writer by checking @cryptohayes's about page, and for more stories, please visit hackernoon.com. The dollar-yen exchange rate is the most important macroeconomic indicator. G7 inflation is forming a local bottom in the 2-3% range before exploding higher. In orthodox central bank thought, cutting rates is good if inflation is below target. This week, the BOC and ECB cut rates while inflation was above target levels.

This audio is presented by Hacker Noon, where anyone can learn anything about any technology. Group of Fools, by Arthur Hayes. Info 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. The dollar-yen exchange rate is the most important macroeconomic indicator. In my last essay, The Easy Button, I wrote that something must be done to strengthen the yen. The solution I proposed was that the US Federal Reserve, Fed, could swap unlimited amounts of freshly printed dollars with the Bank of Japan, BOJ, for yen. This would allow the BOJ to give unlimited dollar firepower to the Japanese

Ministry of Finance, MOF, with which they could purchase THAN in the global forex markets. While I still believe in the validity of that solution, it appears that the central banking charlatans in charge of the group of fools, A.K.A., the group of seven, G7, have chosen to convince the market that the interest rate differential between the yen and the dollar, euro, pound, and maple syrup, Canadian, dollar will narrow over time. If the market that the interest rate differential between the yen and the dollar, euro, pound, and maple syrup, Canadian, dollar will narrow over time. If the market believes in this future state, it will buy yen and sell everything else. Mission accomplished. For this magic trick to work, the G7 central banks, the Fed, European Central Bank, ECB, Bank of Canada, BOC, and Bank of England, BOE, with high policy interest rates must cut them. The critical thing to note is that the BOJ's policy rate, green, is 0.1%,

whereas everyone else is 4-5%. The interest rate differential between the home and foreign currency fundamentally drives exchange rates. From March 2020 until early 2022, ERR body played the same game. Free money for all as long as you stay inside with the flu and shoot up that mRNA heroin. When inflation showed in such a big way that the elites could not ignore the pain and suffering of their plebs, the G7 central banks, with the exception of the BOJ, all raised rates aggressively. The BOJ could not raise rates because it owns over 50% of the Japanese government bond, JGB, market. JGB prices pumped as rates dumped, making the BOJ appear solvent. However, the highly levered central bank would

suffer catastrophic losses if the JGBs it held declined because the BOJ allowed rate esto rise. I did some scary maths for readers in, the easy button. This is why if the decision by bad girl Yellen, who calls the shots at the G7, is to reduce the interest rate differential, the only option is for the central banks with, high, policy rates to reduce them. In orthodox central bank thought, cutting rates is good if inflation is below target. What's the target? For some reason, and I don't know why, the inflation target for every G7 central bank is 2%, irrespective of differences in culture, growth, debt, demographics, etc. Is the current inflation rate hurtling through 2%? Each colored line represents a different G7 central bank's inflation

target. The horizontal line is at 2%. No G7 country's manipulated and dishonest government published inflation statistic is below target. Putting on my technical analysis hat, it appears that G7 inflation is forming a local bottom in the 2-3% range before exploding higher. Taking that chart into consideration, an orthodox central banker would not cut rates at their current levels. However, this week, the BOC and ECB cut rates while inflation was above target. This is strange, is there some financial disturbance that demands cheaper money? Nope. The BOC cut its policy rate, yellow, while inflation, white, is above the target, red.

The ECB cut its policy rate, yellow, while inflation, white, is above the target, red. The problem is the weak yen. I believe bad girl Yellen stopped the rate-hike Kabuki theater performance. It is time to get down to the business of preserving the Pax Americana-led global financial system. If the yen isn't strengthened, the big bad pinko kami Chinaman will unleash the dragon of a devalued yuan toe match their chief export competitor Japan's super-duper cheap yen. In the process, US treasuries will get sold, and that will be game, set, and match for Pax Americana if it occurs. Next up, the G7 meets in a week. The communique released after the meeting

will greatly interest the market. Will they announce some sort of coordinated currency or bond market manipulation exercise to strengthen the yen? Or will they stay quiet but agree that everyone except the BOJ should begin cutting rates? Stay tuned. The big question is whether the Fed will start cutting rates this close to the November US presidential election. Typically, the Fed doesn't change course this close to an election. However, typically, the favored presidential candidate is not staring down a potential prison sentence, so I'm ready to be flexible in my thinking. If the Fed were to cut at its upcoming June meeting whilst their favored doctored measure of inflation was above target, the dollar-yen would gap lower bigly, which means the yen would strengthen.

I don't believe the Fed is ready to cut rates, given that slow Joe Biden is getting skewered in the polls over rising prices. American plebes understandably care more that the vegetables they ate are more expensive than the cognitive ability of the vegetable running for election. To be fair, Trump is also a vegetable because he loves munching McDonald's fries and watching Shark Week while doing his thang. I still think it's political suicide to cut rates. My base case is the Fed holds. By the time the dilettantes sit down for a sumptuous meal paid for by their tax-paying subjects on June 13, the Fed and BOJ will have conducted their June policy meetings. As I said before,

I expect no changes to monetary policy from the Fed or the BOJ. The BO meets shortly after the G7, and while the consensuses they hold their policy rate steady, I think we are in for a surprise to the downside, given the BOC and ECB cuts. The BO has nothing to lose. The Conservative Party is going to get their ass handed to them at the next election, so there is no reason to disobey orders from the rulers of their former colony in order to keep a lid on inflation. Exit the choppa zone. The June central banking fireworks kicked off this week by the BOC and ECB rate cuts will catapult crypto out of the northern hemispheric summer doldrums. This was not my expected base case.

I thought the fireworks would start in August, right around when the Fed hosts its Jackson Hole symposium. That is typically the venue where abrupt policy changes are announced going into autumn. The trend is clear. Central banks at the margin are starting easing cycles. We know how to play this game. It's the same fucking game we have been playing since 2009 when our lord and savior Satoshi gave us the weapon to defeat the tradfi devil. Go long bitcoin and subsequently shit coins. The macro landscape has changed versus my baseline. Therefore, my strategy shall change as well. For the maelstrom portfolio projects, who asked for my opinion on whether to launch their tokens now or later. I say, let's fucking go, for my excess liquid crypto synthetic dollar cash,

a.k.a. Athena's USD, USDE, that's earning some fat APYs, it is time to deploy it again on convictions hitcoins. Of course, I'll tell readers what those are after I have purchased them. But suffice it to say, the crypto bull is reawakening and is about to gory thee hides of profligate central bankers. Thank you for listening to this HackerNoon story, read by Artificial Intelligence. Visit HackerNoon.com to read, write, learn and publish.