Time Of Financial Marauders

At the beginning of June 2020, the total US market capitalization was around 150% of the nominal US GDP. This level is to the top 160% in February 2020. At it is a big surprise to almost all laypeople and professionals considering the pandemic and sudden drop in employment and GDP.  One clear explanation is that the Federal Reserve money may go only into the stock market because the real economic segment did not ask for such a tremendous amount of credits since 2008. The Fed's monies found their liquid way to the stock market - the only working mechanism of formal profit. The whole ocean of liquid assets brings some profit as the stock market growth. The Fed's money is credit money, however, which the debtors have to be payback at some point. When this time comes, the liquid assets have to be sold and ... Well, is it actually possible to sell stocks for 6-10 trillion dollars? When someone starts to sell the first portion of, say, one trillion, the stock market falls.

This market fall will be enhanced by the spreading COVID-19 pandemic wave worldwide, growing problems in the real economy (the USA and global), the LBM protests also conquering the US and other western societies, and the US presidential elections in November. All in all, this looks like a perfect storm approaching. All the stresses cumulate and create conditions most expected by financial marauders - the whole bulk of extra Fed money will disappear (as a soap bubble) and the first who start to sell stocks will get the largest part of cash. The bank will get extra money from the Feds - too large to fall. The poor small investors will lose everything. As always.

And as always, the marauders are the largest investors and banks (Long live to BlackRock!)

Disclosure: None. 

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