FedWatch 142 - Dollar Demise or Shortage?

<p>Hosts: <a href="https://twitter.com/AnselLindner">Ansel Lindner</a> and <a href="https://twitter.com/ck_SNARKs">Christian Keroles</a></p> <p>Fed Watch is a macro podcast with a clear contrarian thesis of a deflationary breakdown of the financial system leading to bitcoin adoption. We question narratives and schools of thought, and try to form new understanding. Each episode we use current events to question mainstream and bitcoin narratives across the globe, with an emphasis on central banks and currencies. </p> <p>Find all charts and links at <a href="https://bitcoinandmarkets.com/fed142">bitcoinandmarkets.com/fed142</a></p> <p>In<a href="https://youtu.be/nghaSma83YM"> this episode</a>, CK and I examine several major economic events of the last week, that when taken in isolation, can fit a totally different narrative than when taken as a whole.</p> <p>First up is US Q1 GDP. It came in at 1.1% annualized. That is far below industry consensus of 1.9%. The main things were the inventory cycle&#39;s effects and higher than expected core PCE (&quot;inflation&quot;). This, however, fits our show&#39;s basic premise of returning to a post-GFC normal of low growth. Our low inflation call is somewhat different than PCE, which measures prices not money printing.</p> <p>Our second topic, M2 money supply shows the second half of our premise is also correct. M2 is shrinking at the fastest rate in, at least, 60 years. This is just one version of money, but it is showing signs of deflation. Taken together with the GDP update, we get our &quot;low growth, low inflation&quot; combo.</p> <p>Next we tackle one of the biggest narratives in macroeconomics today, dedollarization. We read headline after headline, that countries are starting to ditch the dollar in bilateral trade. We used a<a href="https://www.reuters.com/world/china/argentina-govt-pay-chinese-imports-yuan-rather-than-dollars-2023-04-26/"> Reuters article</a> as an example. That article has an obviously biased headline, that gives itself away in the first sentence o