Trump's Money Flood: The Altcoin Setup

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There's a macroeconomic upheaval happening in Trump's America right now. Treasury cash, FAT or Federal Reserve balance sheet, and crypto. The people that are positioned before that money moves are going to have a very different decade from the people waiting on the sidelines for the paycheck to catch up. The last time, we talked about the loss of purchasing power. This time, we're going to follow the money to the other side of where this trade ends up going. With the debt load we are carrying right now and the balance sheet that's still yet to support this massive, massive upheaval, sitting in cash, being a good servant of society, and hoping your boss just notices how good you're doing will get you cooked. This is because money can leave a government account, run through the financial system, and reprice all of the assets underlying before most workers ever see a bigger paycheck. Now, that timing gap is the opportunity that I'm about to lay out for you here. A government managing a mountain of debt cares about funding cost and not breaking the bond market. The Treasury manages its cash, and the Federal Reserve manages the rates. Investors repositioned before the grocery store prices hit as a result of all of this. This is the setup people mean by a Trump money flood. The question is not whether every dollar becomes inflation or whether every policy tweak is secretly quantitative easing. What you really should be asking yourself is, where is this money going to land first? Whose balance sheet is going to change? And whether risk capital stays in Bitcoin or starts leaking into the rest of the crypto sector, especially altcoins, very, very movable projects, with a lot of money that can be made if even a hint of this capital flow makes it downhill to them. You have to start off with the plumbing. Internet loves to call everything printing, but there are really three pipes of liquidity here in the United States. You have the Treasury General Account. It's the federal government's checking account at the Federal Reserve. Taxes and borrowing fill this basket. When the Treasury decides to spend, the receipts bank deposit rises and the bank reserves rise with it. That is existing cash leaving the account. It's not the Treasury inventing new dollars in the basement and releasing them on to the open market. This may come to a shock to you. I understand that from the hyperbole that's constantly put out there about quantitative easing this, quantitative easing that, it comes in many different forms. Banks, however, work differently. When a bank makes a real loan, it creates the deposit on the other side. Banks do not lend out those reserves like jars of spare change.

The lending then creates the deposit, assuming that someone wants to actually take the loan, and the bank has the capital and the nerve to tolerate it. And then you have the Fed. When it buys a Treasury, it actually pays with new reserves.

If a non-bank sells that bond, the seller can end up with a bank deposit while the bank gets control of that reserve. Reserves are still not household cash. They're what banks hold at the Federal Reserve to settle those payments. Buying bills so that the plumbing does not clog up is not automatically quantitative easing.

QE is meant to ease broader financial conditions.

And the purpose of these money flow injections matter. Assets matter underlying. And a rising balance sheet by itself is not a victory lap for us all to take in the crypto sector by any means. So you must understand, there are three pipes to the system, three first receivers.

The popular bull case comes from a Bravo's research thread that mashes the Fed balance sheet, the Treasury General account, and the overnight reverse repo facility into a rough net liquidity proxy. Their sketch is a $7.5 trillion Federal Reserve balance sheet. Then you have to take out a $0.4 trillion Treasury General account minus essentially zero in the reverse repo market, and you end up with around $7.1 trillion.

They compare that with a claimed $5.8 trillion starting point, and the difference ends up being around $1.3 trillion. Now, this arithmetic works for those inputs, but it is not official Fed forecast. And this is definitely not cash with Crypto's name printed all over it. The $7.5 trillion gets attributed to the Federal Reserve, and that addition is still unverified. Treat this as a scenario where you're stress testing and not a policy promise for future outlook. All of this money flowing in the rise of risk assets does not guarantee that $1.3 trillion is about to walk directly into your altcoin bag. This reverse repo facility is not a vault that turns into spending money when those balance sheet falls. You hear this talked about all night, but basically eligible players park their cash overnight in exchange for securities.