€3 Trillion later: ECB Owns 66% of the Eurozone economy

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Hi everyone,

Bitcoin has stunned naysayers and denialists everywhere with its reclamation of the $12,000 landmark. The sound of silence has never been so sweet. And the best part is: bitcoin’s moment is still to come.

As legacy finance does more of the same, the European Central Bank (ECB) has now become the proud owner of 66% of the entire Eurozone economy. Though these trillions of euro-dollars have yet to have any real material effect on economies outside of propping up asset prices.

Let’s dig in.

The ECB own 66% of the Eurozone economy

The European Central Bank (ECB) balance sheet has increased to 66% of total $12.5 trillion Eurozone economy, which includes Germany, France, Italy, Spain, and 15 other countries in Europe.

The central bank’s balance sheet has reached an all-time high of €6.7 trillion as the money printers work on overdrive, with total assets increasing by another €17.8 billion.

For comparison, while the ECB’s balance sheet equals 66% of the Eurozone’s GDP, the US Federal Reserve is not far behind, owning 37% of the US’ GDP. Meanwhile, Japan is front-running all other central banks in this race to the bottom, owning 136% of GDP.

In the last four years, the ECB’s balance sheet has risen threefold, with $3-odd trillion added just this year.

Never in the history of money has there been this amount of money printing (counterfeiting by any other name), and yet, the Euro has maintained its purchasing power relatively well during this crisis as it strengthens against the dollar.

While inflation and even hyperinflation is a problem in some countries, the Eurozone is experiencing deflation, per figures from tradingeconomics.

What could this mean?

In short, this speaks of a narrative whereby money is simply “disappearing” and not trickling down towards normal people i.e. the real economy does not benefit from these trillions. If it did, consumer prices would rise and wages would grow under the current debt-based economic model. These effects are typically somewhat negated through technology, but modern monetary theory (MMT) dictates that all assets, including basic goods and services, should go up (due to targeted inflation figures).

Of course, since the central bank is the judge, jury, and executioner of the money supply, the goalposts have to be moved every couple of years so we can all pat ourselves on the back for being supreme leeches off the economy.

As with all fiat-based monetary systems, MMT hasn’t really worked, and after yesterday’s IMF meeting, it’s clear that central banks around the world will increasingly manage fiscal policy directly through the introduction of CBDCs. Some are underestimating the power of CBDCs and the effect these will have on economies, country-boundaries, and politics in general as we move into the digital age.

Behavioural economics is about to go on steroids and it would be wise to notice this change in the years ahead.

More to follow on this in the blog section shortly. Stay tuned!

Technically speaking

Bitcoin has instantiated a macro-continuation breakout above $12,200 as it grinds closer to the local $12,500 high August high.

In prior newsletters, we talked about the $13,800 — $14,000 high being the major target bulls will look to conquer on condition of a $12,000 reclamation.

The logarithmic growth chart delineated below is commensurate with bitcoin’s long-term logarithmic growth curve.

Modeled on bitcoin’s post-halving 2016 price history, this chart discounts dramatic events such as the corona-March sell-off and the euphoric blow-off top (as seen in 2019) in an attempt to realise bitcoin’s incremental price trajectory before the macro-euphoria stage begins.

It places bitcoin within an upwards-trending channel which projects a $13,000-plus bitcoin before a possible drawn-out pullback.

Given that this turn of events has come to pass, it’s only reasonable to expect follow-through towards the 2019 high in the coming days to weeks.

However, there is no such thing as a straight line up; there will be blood, retracements, and volatility as fresh weak hands join the market looking to make a killing overnight. Unfortunately, this is unlikely to happen, and anyone who has been in this game long enough has learned this the hard way.

Per the updated chart, bitcoin has yet to take out the August high at $12,500; this will be the first target bulls will aim for in order to set a higher-high over 2019 price-action (PA).

Levels to watch:

  • $12,500 melt-up suggests impulse move to $13,000
  • $11,900 support retest would confirm the breakout
  • $11,800 breakdown indicates a failed rally back into the range

Onward bitcoin Spartans.

Catch you next time.

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