Unlimited FED printing props up the market.
What if unlimited becomes impossible ?
No one seems to care about the derivatives market for now. Its notional value is somewhere between $600 Trillion and $1500 Trillion.
The FED has injected approximately $4 Trillion so far. That seems huge but it is very small compared to the derivatives horror show.
OK, derivatives depend on underlying assets. And those assets are supposed to be in control thanks the FED buying all junks out there.
A lot of things will go bankrupt in the next months. And those things have huge leverage ratios. It is not in the price yet since nobody really knows what derivatives actually contain.
What if the FED has to print $100 Trillion to keep the market up ?
The US government will then have to choose between hyperinflation (and a civil war due to money destruction) or… let the market crash (I mean, something like -80%).
Is there a third option ?
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.