➡ Despite fears of a market crash due to economic indicators like the yield curve inversion and slowing home sales, the best indicator for asset prices is currently showing a positive sign. This is related to the U.S. government’s Treasury General Account (TGA), which is like its bank account. When there’s more money in the TGA, it’s bad for markets, but when it’s low or drained, it’s good because it’s like injecting fresh money into the economy. The government expects the TGA to slightly increase by the end of Q3 2024 and decrease by the end of Q4, which could impact asset prices.
➡ The article discusses the concept of Quantitative Easing (QE), where the government injects money directly into the economy, increasing household net worth and bank reserves. This allows banks to loan out more money, increasing liquidity in the system. The article also warns about the potential risks of keeping Bitcoin on an exchange and recommends using a Trezor device for security. Lastly, it discusses the upcoming debt ceiling showdown, where the government will decide whether to increase its debt limit, and the potential impact on the economy.
➡ Around 750 billion dollars could be injected directly into the economy, potentially leading to increased spending and a boost in asset prices like Bitcoin, tech stocks, and real estate. However, this increase in money supply could also decrease the purchasing power of dollars, meaning that even if asset prices rise, you might not necessarily become wealthier. This process, which could take about 140 days, is expected to happen in the next few months and could result in a turbulent economic period.

With the recent crash in markets and the coming election and potential wars, many investors are really scared. They’re expecting a big market crash to come any day. And of course, it’s no wonder. We have many economic indicators like the yield curve inversion, weakening unemployment, we have slowing home sales, and they’re all showing us that recession is imminent. But while those might be really good indicators of where the economy is going, they’re not good at showing where asset prices are going. And the best indicator for that is right now flashing a giant green arrow.

Well, at least you know what you’re looking for. So in this video, I’m going to break down the event that’s coming this year in 2024. That’s going to have the biggest impact on asset prices. And no, it’s not the election, right? I’m going to show you the prices, I’m going to show you the levels, I’m going to show you what’s expected to happen. But we’ll look at the data, we’ll look at the facts of other previous cycles, like the one that’s setting up right now. Now, once you see this data, and you understand its impact on asset prices and markets, you’re going to have a completely different view than, you know, all the talking heads that are peddling their fear for you.

So let’s go. All right, so jumping right in, we are going to look at the money. It’s always about the money, right? So we’re going to look at the money. And as I talk about all the time now, liquidity. So liquidity, when there’s more money in the system, more liquidity in the system, then prices tend to go up. And when there’s less liquidity, then prices tend to go down. Now, it’s very simple, but it’s not, it’s not that easy to understand all the millions of reasons why pricing go up or down.

But let’s look at a giant one right now. And this is the United States government’s piggy bank. Sort of like this, a little bit different than you have when you’re a kid. Now, of course, the government, sort of like a business has income, right, taxes, and they have expenses that they spend, and they keep the difference, their money, their piggy bank, and they keep it in the bank. Not Wells Fargo, JP Morgan, not Citibank. They keep it at the Federal Reserve, of course. All right. And this is known as the TGA, or what we call the Treasury General Account, right? Now, a lot of people don’t know what the TGA is.

It’s the government’s bank account. Okay. And what we can see is that there’s a lot of money sitting in that bank account. But the important piece that we’re going to break down is how much money is there? How has that money been used in the past? What have we seen through other types of cycles? And what do we expect is going to happen based off of the information they’ve given us? And what’s historical? Now, I do want to just give a quick shout out here to Thomas. Thomas writes these great tweet threads over on Twitter.

And so I’ve taken some of the charts from his Twitter thread. We’ll link to it down below in the description if you want to read the entire thread that he put together is pretty good. But just real quickly, you can go on to pretty much anywhere trading view or whatever this is from the Fed directly. And you can look at the treasury general account. Now it did get really high in 2020, like everything else did, right? So you can see we sort of have this baseline around here. This was this 2020 anomaly.

Now, these red arrows that I put on the screen here is a tax time. This is April of 2022 or 21, April 22, April 23. And you can see that there’s these spikes every year, right? When we get that when the taxes come in. But what we can see right now is that this level has pretty much been flatlined here, which is sort of rare, you can see it’s usually pretty volatile, right coming in from taxes, spending down up from taxes, spending down. And we’ve had this pretty flat area, there’s about $770 billion, little less than a trillion, we might see some of the peaks, about $770 billion in that.

Now, one thing to understand is the mechanics of how this works. When the treasury TGA when the treasury account is full, cash is out of the market, it’s on the sidelines. It’s a it’s dormant, as I said, right? So it’s like money in the bank, it can be spent whenever they want to spend it. But it’s not actively incentivizing spending at that time. Now, if we will look at the TGA, Treasury General Account levels, we can start to get a sort of better idea of where things are at now. And more importantly, where they might go historically.

Now, typically, you might think that as the TGA account is rising, as there’s more money piling into the account, that’s typically bad for liquidity levels. So, you know, tax time, as I showed you how it starts to spike around tax time, well, it has to go from my account, my personal account, my business account or yours to the government. And that means that I now have less money to invest into my business or to spend for my family or whatever it is. And so that money is being sucked out of the economy.

And it’s going to the government. I like to say that the government cannot give something that it has not taken. The government doesn’t create all it does is redistribute. So it’s literally taking it away from you and I productive members of society, and it goes into their account. So that is typically bad. It’s sucking liquidity out. When we see TGA is draining, then that is good for liquidity. That means that now the TGA that the government is now pushing the money back onto Main Street, because remember, the government redistributes, they take it from me and you from my business, and then they give it to whoever they want.

So they’re taking it sucking out, giving it back, pushing it back. So that would be good. Good for liquidity anyway. All right. Now, what we can see is the TGA, the government estimates where they expect their bank account levels to be. So they said that by the end of Q3 2024, they expect it to have about 850 billion, which is about 770 billion right now. So they expect the TGA to go up between now and the end of Q3, which is pretty interesting because we don’t have any, you know, big tax dates coming up.

And they expect by the end of Q4. So by the end of this year to be at about 700 billion, which is a little bit lower than we’re at today. Now, this estimate is completely wrong. Just like every other estimate the government puts out, the treasury also puts out their borrowing requirements every quarter. And yeah, they’re wrong. Every single one, they have to go back and revise them when no one’s paying attention. All the economic data, the BLS puts out, it’s always wrong. They go back and revise that. And these numbers are way off.

And we’re going to take a look at that and why this is important. Now, just to kind of put this into perspective with a chart that you can see, again, this goes back to the TGA account. And so we’re right here at this blue dot. And they’re expecting that the end of Q3 were here a little bit higher. And by Q4, we’re here a little bit lower. So we’re going to stay right in this range, apparently, according to them. Now, you can just look back here. That has not been the case. We that’s where they say we’re at.

Now, to get an idea of how this works, the TGA account works. So let’s just break this down. This is from Macroalf. And he says right here, why does draining the TGA matter that much for markets and the US economy? So when the TGA is high, it’s bad for markets. When the TGA is low or drained, it’s good. So why? Why does it matter for markets and the economy? And he says, because draining the TGA, taking the money and pushing it back into the market is akin to throwing fresh money at the economy, just dumping money into the economy, similar to deficit spending, which we’ve been doing a lot of that as well.

So deficit spending as well as TGA spending, and also adding new liquidity to the interbank system, similar to QE or quantitative easing. So this whole time, no, we’re tightening, we’re tightening no quantitative easing. Well, maybe technically, but there’s lots of ways that we get liquidity into the system. So how does it work? Well, he goes on to say it’s sort of like this one, two punch. So step one is the government drains down its TGA at the Fed. So right now, 770 billion, they could drain that money down, hence lowering its equity position, but then injecting this fresh new money into the real economy.

Like this is the most inflationary can be, you know, analysts will argue that QE isn’t really inflationary because it doesn’t really get money into the actual market or I’m sorry, to the economy. QE just gives money to the banks, but the banks don’t necessarily put it into the economy. Supposedly, that’s a whole nother topic for another video. But here, it’s literally injecting this fresh money directly into the economy. That’s what the government does. The economy equals households, net worth goes up, household net worth goes up, people have more money to spend.

Step number two, households now have more money, that’s good, in the form of bank deposits, which end up back into the banking system. So if you get money, where do you put it, of course, you put it into the bank. And hence, banks also sit on a larger amount of reserves. So now the banks take the deposits, they have more reserves. What do banks do when they have more reserves? When how they’re able to loan out even more money, which means even more liquidity in the system. The Fed’s balance sheet squares with less TGA, perfectly offset by a higher amount of reserves.

So now you can see how powerful this monetary mechanic combination is. So when they drain the TGA, it’s literally throwing money directly into it. But they’re saying that they’re not going to drain it. They’re saying by the end, it’s actually going to go up. And by the end of the year, it’s going to be about even. That’s what they say. But should we take them at their word? Or should we understand this a little bit more? We just saw the markets going to a tailspin in panic when Japan raised rates and this thing called a carry trade started to unwind.

Now, doesn’t really matter about that. But what we did see was brokerage accounts were frozen. And we saw people unable to withdraw their Bitcoin from their exchanges. Now that was a warning. But the reality of that happening is real. And so don’t trust your Bitcoin on an exchange, secure it yourself, secure it properly. Now I know it can seem overwhelming, but if you use a device like this, it can be very easy. This is a Trezor hardware device. And basically what this does is keeps your private key secure. And when you want to use it, you plug it into your computer.

When you don’t want to use it, you unplug it and put it back into your safe. I’ve been using this device Trezor for I don’t know, six, seven years, because I think it’s the easiest to use. And if it’s complex, that creates problems on its own. It’s easy to use. It’s fast to really set up and it’s open source. So you can trust the software on there. So check out this Trezor device. It’s the easiest. It’s the fastest way to secure your Bitcoin. Take custody of it yourself and protect your private property.

Check it out. There’s a link down below. Okay, so if we take the historical event view, now I want to go back in history to understand where we’re going in the future, but I do want to just let you know, I don’t really care about the end of Q3. I don’t really care about the end of Q4. Typically, I’m looking at least a year out. Most of my stuff, I’m looking three, five or 10 years out. But let’s just take a look at where we’ll be in 2025. Alright, so that’s sort of what I’ve been talking about a lot with my Q wave thesis, this quantitative leap that we’re taking forward right now is really through the end of 2025.

So right now we’re looking at that. And if we want to know where we’re at in 2025, we have to see well, what’s going to happen before we get there. And there’s a really big event coming up that you might have heard of before. And this is the debt ceiling showdown. The government gets together and says, we need more debt. Of course, we do, because we can’t afford the debt we have. So we need more debt. President Biden was on the news saying, well, we need to have more debt because the US has never defaulted.

And if we don’t get more debt, how do we pay the old debt? Sort of like the definition of a Ponzi scheme. So the debt ceiling showdown comes and they argue over if we’re going to raise it or not. Both sides grandstand about not wanting to spend more. There’s some concessions made in every single time it’s been raised. Now, there has been some times where it’s got very close. We’ve seen some credit downgrades because of this, but this is basically what happens. And in this event, it almost always seems to happen. It’ll probably happen this year before the election is that they can’t come to an agreement.

And so what happens is without passing an agreement, then there’s no more debt available. There’s no note, no more funding developed for the government. So what happens in that event? Well, don’t worry. The government has a piggy bank called the TGA. During that time, they will do what they call extraordinary measures. And they’ll use the government bank account, the TGA to actually fund that gap where they can’t get the debt ceiling. This happens most of the time. Now we can see this in this chart right here. Here’s the TGA account again.

And what we have right here in this first dotted line is where the debt ceiling showdown begins. This is where they start fighting and we can see they start spending down the TGA account down, down, down, down, down, right here. This line right here is where an agreement is finally reached. Now this time frame is about 140 days. Now we fast forward. The TJ gets replenished kind of has this sideways action. And this dotted line right here is where they start fighting about the debt ceiling again. We’re not going to raise it.

We need to raise it, et cetera. And then they start spending down the TGA until they finally make a deal right here about another 140 days. Now it went up. Here it goes up. It starts walking sideways. And this dotted line right here is guess what? Where the next debt ceiling showdown is going to begin. Now what’s interesting is this is January of 2025. Now they predict that the TGA will be higher by the end of the year. So maybe it’ll be somewhere in this range, but when the debt ceiling debate or starts happening, what do you think happens based off of this? Most likely it starts trending down.

Let me show you another chart. This is a little bit different of a historical lens. Again, thanks to Thomas. I’m stealing his charts. We got these off of Twitter. I’m going to link to his full thread down below. What we can see here is when this happened, you can see it dropping right here. And each time we got to about a hundred billion same level. So it’s important to understand what happened in this mechanics right here, but it’s also important to understand the sort of empty level that they draw down to. Because if we want to know where we end up here, what level will we be at? Oh, about a hundred billion.

Now a hundred billion. How much did they say would be in there by the end of the year? Now we can do some math. All right. Now, I also want to show you for historical purposes that this is where the government said we would end up. So again, we have these dotted lines where the debt ceiling debate started. Here’s where it ended up. Now what’s important is this is where we ended up. However, what the treasury had forecasted where we’d end up was right here. Same thing here. We get to here. They forecast we would be here, but we ended up down here.

Now they’re forecasting. We’re going to be here, but where do you think we’re going to be? Well, if history is our guide, we’re going to be right here in this range. The same thing. Now, why does all this matter? Well, it matters because we need to figure out where we’re going in the form of liquidity. And the first thing we have to kind of figure out is where do we go? What are the lawmakers going to do now? We have to remember, as I said, take into consideration that we’re also in an election year.

So this is going to make this even more volatile, meaning, um, you know, is it going to be Republicans or Democrats are going to take over the presidency? Who’s going to retain the Senate, the house? I would imagine there’s going to be even more grand standing than we normally see fighting over budgets, different parts of the budgets. And so if anything, this could probably exacerbate the situation. It could probably make the treasury funded for longer than they typically have. And if so, then they will have to continue to inject the money. So the question is how much will they have to inject? We know that they’re here now.

We know that they say they might build it up a little bit. And the question is how far will they drain it down? Well, back to the math. If we’re typically down to about a hundred billion each time, and we have about 800 billion, 850 billion, they draw it down to a hundred. That means there’s about 750 billion that could get injected directly into the economy for you and I to spend. So what does that mean? Well, if we have 750 billion injected, not into the banks like QE, I’m talking about being injected directly into the economy, directly into stimulus, into building programs, into more welfare, things like that.

It goes directly to the economy. Now to put this into perspective, just to kind of normalize ourselves, because these numbers get so out of whack. In 2008, during the great financial crash, where the entire global financial system, not just the US global finance system was melting down the same time, the Fed stepped into action to save the world. And at the time, it was 700 billion that was spent in this TARP program to do that 700 billion. This is more than that. It is most likely coming our way in the next couple of months.

So again, what happens if we see this, it takes about as we saw history is about 140 day process of shoveling this money in 750 going directly to Main Street. What do you think is going to happen? Well, I put some arrows here. This is asset prices. Now, look, this is good and bad, right? I’m not saying the economy is going to be fixed by this. Now, a lot of people that are losing their jobs, a lot of businesses that might suffer, they’re going to get some help, right? They’ll get stimulus that will be coming their way.

So it’s good for them. Overall, it’s bad for the economy. But for asset prices, Bitcoin, tech stocks, real estate, I expect all this to go back up. Now, not everything moves up at the same time. And we do have to keep in mind that as more money is created and as more money is injected in the system, it just diminishes the purchasing power of those dollars. So just because assets are going up doesn’t necessarily mean you’re getting richer. So for example, as I break this down in the investing black hole, the S&P 500 is basically just keeping your nose above water just barely.

But there’s certain assets that will go up one times, five times, nine times what this liquidity will do. I broke it all down to this other video called the investing black hole. I’m not going to go through it right now, but if you want to watch the investing black hole video, I’m going to put it right up here for you. Go watch that video, because it’s really the only place that you should be investing. But this is what I’m expecting. I’m expecting a massive liquidity increase. So don’t get tricked. Don’t get faked out over the next month or two, the next quarter or two.

Keep your eye on the next, I don’t know, nine months, 12 months, because it’s going to be a wild ride. Let me know what you think about this video in the comments down below. Of course, as always give me a thumbs up if you like it. If you don’t give me a thumbs down. That’s okay. Either way, at least tell me what you think of the comments. Subscribe if you’re not already subscribed. And that’s what I got. All right. To your success. I’m out. [tr:trw].

See more of Mark Moss on their Public Channel and the MPN Mark Moss channel.