“Fed Watch” is a macro podcast with a true and rebellious bitcoin nature. In each episode we question mainstream and Bitcoin narratives by examining current events from across the globe, with an emphasis on central banks and currencies.
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In this episode, Christian Keroles and I catch up on the week, go through an update on the evolving Chinese financial crisis, talk about why fiat money today should rightly be called credit-based money and the side effects of that fact. Last, we dive into the bitcoin chart.
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First up is the situation in the Chinese economy. They are facing some major issues in their real estate market, economy and banking system. Currently, 28 of the top 100 real estate developers have defaulted on or restructured their debts. There is a growing “mortgage boycott,” where purchasers of unbuilt housing units in projects that are now delayed due to the pandemic, developers’ financial situation and the country’s zero-COVID policy, have refused to pay their mortgages. The boycott started with 20 projects and has since grown to 235 projects.
$9 trillion in exposure to real estate. If there was a problem with perpetually falling home prices, it could very quickly cause a solvency issue for banks. Indeed, that is exactly what we are seeing.
New unit home prices in China have fallen for the 10th straight month in June 2022.
Gross domestic product crashed in Q2 2022 to 0.4%.
The GDP chart nicely supports my personal macro predictions that the major economies are going to return to the post-Global Financial Crisis (GFC) “normal.” Since the GFC, growth in China has been slowly trending downward. Then there was the violent economic disruption and whiplash effect in the economy, followed by a return to slowing growth.
article from Nikkei Asia on the situation around recent bank runs in the Henan province. The article highlighted the abusive response to the bank run and the growing dangers of a full-blown financial crisis in China.
Next, we go through a couple of bitcoin charts. The first two charts highlight the similarities and differences in the chart during periods that resembled today’s price action. I pointed out that the current flat consolidation differs because it has higher highs and higher lows, where the previous breakout attempts did not.
There are also some very interesting observations from Twitter on cash positions in hedge funds and the bitcoin market.