BlackRock Predicted It 3 YEARS AGO!! Here’s What They Said…

All the way back in August 2019 BlackRock the world’s largest asset Manager published a research paper Co-authored by Stanley Fisher the former Vice chairman of the Federal Reserve now Believe it or not but this research Paper predicted much of the Unprecedented fiscal and monetary policy We saw during the pandemic just a few Months before it happened Today I’m going to unpack this peculiar Paper explain what it says in simple Terms and tell you what predictions it Makes about what comes next for the Global economy Foreign The research paper I’ll be summarizing Today is titled quote dealing with the Next downturn from unconventional Monetary policy to unprecedented policy Coordination It was published by blackrock’s Investment Institute and I’ll leave a Link to the full research paper in the Description now the paper begins with a Short summary but I’ll preface it with a Couple of key terms Monetary policy is what central banks do And include stuff like raising and Lowering interest rates fiscal policy is What governments do and include stuff Like raising and lowering taxes and yes Sending out stimmy checks What the authors argue in this research

Paper is that the next economic downturn Will require quote unprecedented Monetary and fiscal policy that will Need to be closely coordinated I’ll Reiterate that this research paper was Published prior to the pandemic which Saw exactly this occur What’s nice is that the authors outline Their argument in seven points the first Argument is that monetary policy will Not be enough to soften the next Economic downturn this is because Interest rates were already at or near Zero in most countries at the time Note that this was the case until fairly Recently The second argument is that fiscal Policy alone will likewise be Insufficient at softening the next Economic downturn this is because it is Quote typically not Nimble enough Meaning there is often a democratic Process behind each batch of government Spending and well that’s just not Efficient The authors also warn that too much Government spending could cause interest Rates to rise due to their negative Effects on the valuation of government Debt note that the interest rates on Government debt are basically used as The Baseline interest rates for other Kinds of debt in the economy the third Argument is that monetary and fiscal

Policy must work in tandem to soften the Next economic downturn the authors Cautioned that quote hoping for such an Outcome will probably not be enough Which seems to suggest that governments Need to get their central banks in line Funnily enough this was around the time That former U.S president Donald Trump Was slamming fed chairman Jerome Powell For not lowering interest rates more in The face of a slowing economy Trump even Tweeted that Jerome had quote no guts no Sense no vision what a Time now the Fourth argument of the authors is that Softening the next downturn will require Central banks to quote go direct put Simply interact directly with the Economy In the case of the FED that involved Buying hundreds of billions of dollars Worth of corporate debt a Fed first The fifth argument is that an extreme Form of going direct such as the FED Buying corporate debt would be quote an Explicit and permanent monetary Financing of a fiscal expansion or So-called helicopter money My interpretation of this is that by Doing something drastic like buying up Corporate debt central banks have opened A Pandora’s Box they cannot close in Other words similar measures will Forever have to be taken in future Downturns and could even expand to

Purchasing other assets like stocks fun Fact the bank of Japan has been buying Stocks for years The authors seem to suggest that if the FED starts doing the same quote it would Undermine institutional credibility some Would say that’s already happened with The corporate bond buying Now with the sixth argument the authors Provide a four-point plan for this kind Of unprecedented stimulus these points Are Define the unusual circumstances That justify the stimulus Set an inflation objective for the Stimulus deploy the stimulus and finally Phase out the stimulus This ties in to the author’s sixth Argument and that’s that this Unprecedented stimulus should be quote Calibrated to achieve the inflation Objective which could include making up For past inflation misses This is significant because prior to the Pandemic central banks in the United States and elsewhere were actually Struggling to meet their two percent Inflation targets This is for multiple reasons mainly Demographic decline which seems to be Why the people in power are trying to Transition to a rent-based economy more About that in the description Now if you’re wondering why a two Percent inflation Target is so important

It’s really for two reasons First when money is slowly losing value It incentivizes people to spend rather Than save this stimulates the economy And it’s ultimately why central banks Lower interest rates they want a bit of Inflation Second governments and corporations Around the world have taken on record Levels of debt If the economy were to become Deflationary then the value of that debt Would increase rather than decrease as It does in inflationary environments This is why some analysts believe the Inflation caused by unprecedented Stimulus during the pandemic was Intentional the elites need High Inflation to devalue their debts High Inflation also crushes small businesses And allows bigger businesses to eat up Their assets and market share now Consider that the authors of This Research paper effectively called for Governments and central banks to cause More inflation in response to the next Economic crisis nah it’s probably Nothing I mean it’s not like BlackRock Has incredible influence over central Banks and governments is it say did I Mention that this research paper was Co-authored by the former Vice chairman Of the Federal Reserve Anyways the first part of the report

Provides another nugget of evidence that All the inflation we’re experiencing now Is intentional this is because the Authors specify that quote bringing Inflation back to Target in a Sustainable way is still proving Challenging The authors go on to explain that quote In the Eurozone the sovereign debt Crisis and low inflation environment Ultimately led the European Central Bank To adopt many policy innovations that Have helped Stave off deflation They also complain that these policies Were held up in European courts now if You watched our video about the coming Housing market crash you might recall That housing costs in the European Union Have been increasing ever since the European Central Bank or ECB adopted These policies To clarify these policies were Introduced in the aftermath of the 2008 Financial crisis The authors then talk about all the Other measures that were taken in the Aftermath of the 2008 crisis around the World what’s fascinating is that the Authors admit that the financial Regulations we’ve seen since then are Meant to make it easier for central Banks to stimulate the economy another Way of explaining this is that Financial Regulations have centralized the

Economies of the world it looks like the End game of this centralization is a Central bank digital currency or cbdc Where central banks control the economy Itself I mean how else can they keep This Fiat Ponzi from falling apart Now in the second part of the report the Authors reiterate that quote after a Decade of unprecedented monetary Stimulus around the world actual Inflation and inflation expectations Still remain stubbornly low in most Major economies well they sure solved That issue didn’t they In all seriousness the authors speculate That inflation is low in major economies For two reasons the first is that the World has become globalized Interconnected and most importantly Technologically advanced note that Technology is a primary driver of Deflation as it makes everything cheaper Speaking of which you should know that Were it not for the constant money Printing by central banks things would Actually be getting cheaper over time Not more expensive but alas allowing the Economy to turn deflationary would do Damage to the people in power so it must Not be permitted I digress The second reason why the authors Believe inflation is or rather was so Low is because of inflation expectations The average pre-pandemic person could

See that the economy was turning Deflationary so they were spending as if It was deflationary I.E not enough If you’ve watched any of our recent Videos about the FED you’ll know that Today the people in power have the Opposite problem The average post-pandemic person sees That inflation isn’t going anywhere but Up so they’re spending in accordance With that expectation I.E way too much In theory of course The authors then provide this image of The Consumer Price Index or CPI and CPI Compared to inflation expectations not Surprisingly inflation expectations are Highly correlated to the Consumer Price Index The authors go on to explain that this Low inflation means it’s not possible For central banks around the world to Raise interest rates that’s because Raising interest rates would crush Inflation even more again the elites do Not want this to happen as it will make Their debts more expensive In the third part of the report the Authors continue discussing the issue of Low inflation they speculate that the Asian financial crisis of the 1990s and The 2008 financial crisis caused a Behavioral shift across the global Economy from spending to saving Obviously this is bad for the powers

That be once again fascinating is that The authors managed to estimate that This increase in savings corresponds to An additional interest rate of 1.5 Percent on top of whatever the central Banks had in place Not a literal interest rate but a de Facto one truly fascinating stuff The authors add that many of these Savings find their way into risk-off Assets like government debt as I Mentioned earlier the interest on Government debt sets the Baseline for Other kinds of debt in the economy by Buying up so much government debt Individuals and institutions were Effectively keeping interest rates low This is because interest rates on Government debt rise when demand is low And fall when demand is high basic Economics sort of The authors conclude that for central Banks to cushion the next financial Crisis they would have to drop rates to Minus two percent which they can’t Really do Now in the fourth part of the report the Authors turned to fiscal policy which You’ll recall is the government’s job The authors argue that governments Haven’t been spending nearly enough Money on improving their country’s Infrastructures that’s probably because They’ve been too busy buying votes hmm

Logically the authors argue that Governments should start borrowing and Spending much more and insist this is Fine because of the low interest rate Environment this rhetoric relates to the Fifth part of the report which concerns The coordination between governments and Central banks they explained that for Political and economic reasons it will Be necessary for both parties to be on The same page during the next market Downtown What’s crazy is that the authors point To Europe as an example of this Coordination this is crazy because the ECB has been struggling to hold the Eurozone together while it raises Interest rates this is because it’s Impossible to have the same monetary Policy for the different fiscal policies Of European countries The authors then suggest that central Banks buy stocks to cushion the next Financial crisis and you’ll hopefully Recall that the FED wasn’t far off from Doing exactly that at the start of the Pandemic Then in the sixth part of the report the Authors discuss the origin of the term Helicopter money and talk about how it Could likewise be used to cushion the Next financial crisis the authors stress That this kind of Extreme Action must be Enough to drive up inflation mission

Accomplished They go on to explain that helicopter Money is nothing new and that it’s Totally fine except for all the times That it ended in hyperinflation yikes The authors admit quote that highlights The main drawback of helicopter money How to get the inflation Genie back in The bottle once it has been released They also admit that history has shown That this kind of stimulus cannot be Fine-tuned for a quote modest increase In inflation it’s always either too much Or too little you don’t say Now the seventh part of the report Covers all the political challenges that Are associated with money printing the Authors start by explaining that quote Many central banks became truly Independent in the wake of the painful Lessons Learned From the high inflation And low growth environment of the 1970s In other words they pulled the money Printers away from the politicians the Last time they tried this oddly enough The authors say that this separation of Powers was a good thing but that the Central banks have again become Politicized Post-2008. the authors predicted that The central banks and governments will Become even more intertwined during the Next financial crisis and they were Right

Then the authors say the quiet part out Loud quote there is growing political Discontent across major economies and Central banks are one of the targets Widening inequality has fostered a Backlash against Elites They add that quote there are many Drivers of inequality including at its Root technology winner take all Dynamics And globalization I’ll add another Driver and that’s central banks printing Money and shoveling it in the direction Of the largest institutions on Wall Street such as BlackRock This is why I chuckled when the authors Claimed that inequality started to be an Issue after the 2008 financial crisis The truth is that inequality began the Moment the US dollar went off the gold Standard since that time money has been Printed out of thin air and allocated to All the entities I just mentioned but no It’s not the central banks or Wall Street according to the authors the Government is to blame the very same Politicians that Wall Street lobbies With printed money from the central bank The authors seem to imply that the Solution to this discontent is a strong Fiscal policy AKA Universal basic income Through the use of a digital currency Issued by a central bank that will keep The plebs from protesting until they Realize all those digital dollars are

Finding their way back to Wall Street Now to their credit the authors Underscore the risks associated with Such a route namely that it will lead to Way too much digital money printing to Appease the masses I reckon that’s what Comes after all those cbdcs are rolled Out and that’s just one of the many Negative effects cbdcs will have more About all that in the description Now after discussing what a unified Fiscal and monetary policy framework Would look like the authors provide a Template for the United States the Eurozone Japan and the United Kingdom to Implement this framework incredibly this Included notes about which laws would Need to be adjusted if any as you might Have guessed each of these economic Areas did something along the lines of What the authors suggested when the Pandemic hit In the final part of the report the Authors talk about the implications Their master plan would have on the Markets they start by saying that this Coordination of fiscal and monetary Policy would ideally take place well Before a financial crisis I wonder how They would know one was coming hmm In any case one of the many scenarios The authors outline is essentially What’s Happening Now quote Shorter run inflation expectations could

Overshoot as the Central Bank aims for Above average inflation during its price Level targeting phase naturally quote This would push up the relative returns Of inflation-linked bonds over nominal Counterparts it would also boost returns Of other real Assets in private markets Such as infrastructure and property What the authors didn’t predict however Is that we’re not just in an Inflationary environment we’re in a Stagflationary one this means that Prices continue to rise while the cost Of assets continues to fall including Infrastructure and property come to Think of it this might be a result of The governments and central banks Engaging in these emergency measures After the markets had already reacted The authors actually warn about the Issues that could arise when doing this The difference is the authors see Deflation as the primary issue arising From the incorrect implementation of a Coordinated monetary and fiscal policy I Know this sounds insane but it’s quite Possible that extreme deflation is what Comes next Once the inflation fight has Been won According to the author’s quote this Scenario would argue for a preference of Nominal bonds over inflation-linked Instruments this is interesting because So far government bonds have failed to

Be the safe haven asset they typically Are during downturns they’ve fallen in Value along with everything else Some macro analysts believe it’s only a Matter of time before government bonds Start to Rally as they should during Such circumstances I must admit I don’t Fully understand the reasoning there but It sounds like it’s the same reasoning Of the experts over at BlackRock what I’m wondering is what happens when the Financial crisis comes it’s easy to Forget that the financial crisis being Talked about in this research paper is The one that happened immediately after The pandemic hit what we seem to be Facing now is something else entirely It’s too soon to say how bad the next Downturn will be but the last time we Had a great depression the way we got Out of it was through a World War Given everything that’s been going on These days in Ukraine Taiwan and Elsewhere that’s an outcome that’s way Too close for comfort the worst part is That the only alternative is a central Bank digital currency at least as far as The people in power are concerned there Is a third way however and that’s Through crypto the question is whether Crypto will be ready to play this role I Reckon it will be when the day comes but Until then we’ll get to experience more Fiscal and monetary policy Madness no

Shortage of warmongering and a bunch of Crypto crackdowns driven by central Banks more about that using the link in The description And that’s all for today’s video about Blackrock’s predictive research paper if You found it as fascinating as I did Smash that like button if you want to Make sure you don’t miss the next Episode from coin Bureau subscribe to The channel and ping that notification Bell If you’ve already watched everything This channel has to offer head on over To coin Bureau Clips to get more awesome Crypto content if you’re too busy to Watch tune in to the coin Bureau podcast To get crypto info while you’re on the Go If you want to follow me you can do so On Twitter Tick Tock and Instagram if You’re looking for daily crypto updates Join my telegram if you want to know What I think is coming next for the Crypto Market subscribe to My Weekly Newsletter and if you want to support The channel get yourself something that Suits you from the coin Bureau merch Store lots of crypto designs to choose From and there are many more on the way So links to all these resources and more Are down in the description thank you All so much for watching and I’ll see You in the next one until then crypto

Friends this is Guy bidding you goodbye [Music]


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