Original title: Deutsche Bank: the Fed will continue to release water, and its balance sheet may soar fivefold.
The collapse of Bitcoin on Wednesday did not seem to bring pessimistic expectations to the market. on the contrary, Cathie Wood of ARK funds remained optimistic in an interview with Bloomberg that Bitcoin could rise to $500000 in the future.
This looks like Wood's style: she once predicted Tesla.The share price can rise to $3000.
In today's treacherous stock market, Wood can be forgiven for making such crazy predictions. In fact, in extreme cases, her prediction may still be correct. Jim Reid (Jim Reid) of Deutsche Bank (Deutsche Bank) believes that the Fed's water release will continue, and the market does not have to worry about the impact of the Fed's reduction in bond purchases:
Even if the Fed scaled back its bond purchases, the end of balance sheet expansion is far from over. If the Fed's debt-to-asset ratio remains at 2008 post-financial crisis levels (30% then and 38% now)So by 2050, the Fed's balance sheet will expand from just under $800m today to about $40 trillion.”
In other words, the Fed's balance sheet is expected to expand fivefoldThis kind of "releasing water" will undoubtedly damage the existing financial system. So it's not hard to understand why the Fed is also stepping up its allocation of digital currencies, while other central banks must keep pace with the Fed, or watch their currencies appreciate against the dollar. Deutsche Bank expects global central bank liquidity to reach about $100 trillion by 2050.
Here are some of Reid's views on the Fed's balance sheet:
"did the minutes of Wednesday night's Fed meeting really suggest for the first time that they were considering scaling back their bond purchases? You know, even the slightest change in Fed language could immediately cause the yield on 10-year Treasuries to fall by 7 basis points. In this age of high debt, changes in risk-free interest rates are particularly important. This suggests that the Fed may not scale back its bond purchases with great fanfare.
So I think the era of Fed balance sheet expansion is far from over, even though they have begun to gradually reduce their bond purchases. But it is hard to imagine how high the level of debt will be in the future if the Fed's balance sheet does not continue to expand significantly. "