Terra-Luna, that vortex of death swept through the field of Jaetech.
The screams of investors crying over their horribly broken accounts still ring in our ears.
Terra advocated a 'stable coin' whose price is fixed at one dollar.
The design is to support the price of Terra with Luna and support the price of Luna with Terra.
After hearing this explanation, the thought that came to my mind was, 'Isn't it similar to the sound of running on water if you step on your right foot before your left foot falls into the water and step your left foot before your right foot falls into the water?'
it was
It's not at all impossible.
So, there are animals that run on water.
It is a basilisk lizard.
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Basilisk lizards are small and light.
Depending on their age and size, they weigh between 2 and 200 grams.
He taps water with one foot to instantly create microscopic air pockets, then pushes the water back before the foot is submerged, using the same technique with the other foot.
Do this 20 times per second.
It can then run on water up to 1.5 meters per second.
However, it sinks after about 3 seconds, so it is said that this trick is only used in urgent situations when escaping from natural enemies.
Can a human run on water using the same technique as a basilisk lizard?
Scientists at Harvard University have done the math.
The result will be posted as a PS at the end of the article, so check it out after a while, and let's get back to the main topic for now.
How did people believe in the story of supporting the value of a virtual asset with another virtual asset and collateralizing the crisis that may be coming to the system with another virtual asset (Bitcoin), and how did people “bread” by adding debt to the money they earned through blood and sweat? ?
Why does a design that then nodded, 'Well, it's reliable' sounds like nonsense now?
This is because the market environment has changed.
When the market was overflowing with money, it seemed that 'insert money and copy money' would be endless.
The overflow of money in the market did not reveal the flaws of a coin designed on a weak credibility.
Things changed when the US started tightening the dollar's money line.
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There is a quote from the investment sage Warren Buffett:
"When the water goes down, you can tell who was swimming naked."
This time, the Terra-Luna crisis also has something to do with the ebb tide of the US Fed.
As the water level goes down, the naked body of virtual assets built on weak grounds is exposed.
In the future, the water will go down more and more, and the assets that expose the naked body will not be limited to Terra-Luna.
This is because the Fed's money-raising (rate hike) is still in its infancy.
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“By the summer of this year, the Nasdaq could be down 75% from its November peak and the S&P 500 could be as low as 45% from its January peak this summer,” said Scott Minerd, Guggenheim Partners global chief investment officer (CIO). , the Nasdaq is down 28% from its highs and the S&P 500 is down 18%.) Scott Minard also said that we are in a similar situation to the dot-com bubble burst of 2000, and the Fed will prepare for a recession and raise interest rates, helping stock investors He made a cruel prospect that he wouldn't even give.
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How much money is America trying to collect?
Since the 2008 global financial crisis, the United States has released more than $8 trillion of money to revive the economy.
The graph below shows the trend.
The part to pay attention to is the period between 2012 and 2018.
During these two periods, the Fed wonders if it will collect some money, but fails.
(The graph seems to bend slightly and then rises again.) From 2020 onwards, the money is relentlessly freed up to respond to COVID-19.
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Excess liquidity released into the market helped the global economy overcome the shock of Corona 19, but it eventually caused the prices of all kinds of assets, including stocks, real estate, and cryptocurrencies, to bubble up and push up prices.
Inflation, which is spreading like wildfire this year, is basically the result of too much money being released around the world over the years.
Supply issues, such as Russia's invasion of Ukraine and China's prolonged lockdown due to the coronavirus, acted like embers thrown into a parched forest.
The US Federal Reserve has long been operating its currency with a target of moderate inflation of around 2%.
This is based on the calculation that the US economy needs to increase in price by 2% every year, so that consumers don't wait too long, spend money, and businesses work well.
However, the US inflation rate in April was a whopping 8.3%.
Although it has slightly eased from 8.5% in March, inflationary pressure is still strong.
Rising interest rates and reducing the money supply still have a long way to go.
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In the end, you need to withdraw some money from the market (in hard words, absorb liquidity) to calm inflation.
How much money should I collect?
Federal Reserve Chairman Jerome Powell made hawkish remarks at the Wall Street Journal's 'Future of Everything' event on the 17th (local time) that he would raise interest rates until prices are firmly set. .
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In the past, the Fed Chairman often used euphemism in consideration of market shocks, but Chairman Powell's remarks today are quite strong.
"We will see clear evidence that inflation is easing (before we stop raising rates)," he said.
"It's unclear what the level of neutral interest rates will be," he said.
The neutral rate is an interest rate at a level that neither stimulates nor suppresses the economy.
In other words, Powell's words are interpreted to mean that interest rates will be raised until they feel that inflation is definitive without a set number.
Would you like to keep prices down even by damaging growth?
Chairman Powell also said the Fed's willingness to control inflation should not be questioned.
Conversely, this means that the market was skeptical of the Fed's will to catch inflation by raising interest rates.
'If it happens, the economy will be broken... The Fed will say something like that.'
In other words, there was a mentality in the market.
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It is important not to miss the time to curb inflation.
If economic agents take for granted rises in prices and wages, the real purchasing power of workers will decrease even if they receive wages, making it difficult to live, and profits will decrease because there is a limit to the ability of companies to raise prices.
It's getting harder and harder to keep up with prices.
There are already signs of this.
Criticism is growing that the Fed should have been more proactive in raising interest rates, but that it paused and missed an opportunity.
As a result, Chairman Powell seems to have had to express his will to control inflation, even if the economy is down.
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"It can be difficult to keep inflation down without a recession," Powell said.
"Growth will have to be slowed to ease inflation," "lowering inflation can be painful," etc. came from Chairman Powell.
The market's hopes that businesses would make money and the economy could make a soft landing even if the Fed raises interest rates have also been shattered.
Now, it is changing from low growth to concerns about negative growth, and from economic slowdown to concerns about recession.
The temperature difference from a month ago is also evident.
Institutional investors hoarding cash in anticipation of recession
Bank of America (BofA) surveyed 288 institutional investors (fund managers) between the 6th and 12th, and 72% expected the economy to slow down over the next 12 months.
This is said to be the most pessimistic response since the BofA started a fund manager survey in 1995.
77% of fund managers who responded expected stagflation to hit the global economy.
This is the highest figure since August 2008, during the global financial crisis.
('Stagflation' refers to a situation in which growth is not possible but prices are rising. It is the most difficult for policy makers to deal with.)
Fund managers say that the biggest threats are the hawkish Fed (31%), recession (27%), and inflation (18%). ) was selected.
In order to reduce risk, it was found that they increased the proportion of cash holdings to the highest level since the 9/11 terrorist attacks.
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Major bank Wells Fargo also said that "a mild recession at the end of this year and early next year is the basic assumption" and lowered its forecast for US economic growth this year to 1.5% from 2.2%.
Goldman Sachs CEO David Solomon also predicted a financial crisis for companies, saying that the probability of a recession in the next 1-2 years is calculated to be over 30%.
(The National Bureau of Economic Research (NBER) defines a 'recession' when real GDP declines for two consecutive quarters.)
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"Investment sentiment and confidence remain shaky, and as a result, unstable and uneven markets until we become clearer about the 3Rs (interest rates, recession, risk)," Mark Heppel, chief investment officer at UBS Global Wealth, told Reuters. will see,” he said.
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The MSCI World equity index of stock markets in 23 major countries, compiled by Morgan Stanley, a global bank, through its subsidiaries, has declined sharply this year.
It seems to be rebounding a bit, then repeating a further decline.
Investors who were tricked into following the rebound would have suffered significant losses.
Although it has dropped a lot from its peak at the end of last year, the graph is still above the pre-coronavirus level.
It seems too early to be sure of the bottom.
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American companies are losing profits
Until a few months ago, it was not uncommon to hear that the market wouldn't be too bad despite the rate hike.
Such a prospect was based on the premise that companies are still making money.
However, that premise is shaken.
US corporate earnings are slowing.
Wal-Mart, a major retailer, saw sales increase, but profits fell short of expectations due to increases in fuel costs and labor costs, resulting in a share price drop of 11.4% in one day.
Another large retailer, Target, also reported quarterly earnings-per-share fell 28% less than expected and fell 40% year-over-year.
The day after the announcement, Target's stock plunged 24.9%.
(Graph below) It is the biggest one-day drop since Black Monday in October 1987.
Their share price drop became a global bad news, shocking stock markets around the world.
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Declining profits at the big retailers show that US consumers are spending money, but their wallets are getting thinner.
It was found that more people searched for cheaper PB products and spent more on groceries instead of clothes and shoes.
The housing market, one of the important indicators of the domestic economy, has also begun to cast a shadow.
The number of housing starts in the US in April fell 0.2% from the previous month, and the number of new home permits, an indicator of future housing market trends, fell 3.2% from the previous month, the U.S. Department of Commerce announced.
As mortgage interest rates rise and building material and labor costs continue to rise, fewer houses are built.
The reason I wrote the story of the US market in detail is that, depending on the flow of the dollar, this can happen in Korea as well.
Korea is a country that makes a living on exports, and if the US economy cools down, our exports will also be affected.
There is a saying that if the US economy sneezes, Korea will catch the flu.
Shareholders are already feeling it with tears of blood.
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There is no party that never ends... It's time to get back to basics
The so-called 'fire fire' that made people of all ages excited and excited about the investment fever ended hopelessly.
There is no party that never ends.
The bubble of excess liquidity, which has been pushing up prices regardless of types such as apartment stocks, coins, virtual real estate, NFT, etc., is sinking.
The real value of the asset will be revealed after the bubble bursts.
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As if there is an uphill there is a downhill and if there is a goal there is a mountain.
In order not to repeat this pain at that time, you need to reflect well now.
Don't invest in things you don't know, you shouldn't be afraid of other people's money, you should knock over stone bridges, and don't put your eggs in one basket.
Buying is a skill, selling is an art.
Sell my money
We should not fall for the coaxing myths such as 'this time it's different' and 'this is different'.
This is true for individuals as well as countries.
Where have the people who advocated the so-called 'Modern Monetary Theory (MMT)', which states that the state can freely issue money to stimulate the economy, have gone now?
If you follow common sense and basics well, you will survive for a long time.
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[PS] What should a human do to run on water like the basilisk lizard introduced in the previous article?
Harvard University's Department of Engineering and Applied Sciences Professor James Glassine and Thomas McMahon, who discovered the mechanism by which lizards run on water, calculated the calculation in 1996.
To run on water, an adult weighing 80 kg would have to jump at a speed of 108 km per hour and spur the water with energy 15 times greater than the muscle strength that an average person can produce when climbing a hill.
That is to say, no
If someone recommends investing with the logic that if you move quickly with your left and right feet, you can walk on water, so don't be tempted and skip it.
(Composition: Hyunsik Lee, D Contents Producer / Content Design: Jisoo Ok)