![]() In pursuit of warding off an economic crisis, a perhaps unintended speculative appetite has taken root. Surveys show that among individuals who received unemployment benefits during the pandemic, some 20% of those funds have been recirculated back into American financial markets. Federal Reserve Balance Sheet – Total Assets: December 2006 to October 2020 (Chart 1)Īnd so, with professional sports leagues closed and that unique capital flow sidelined combined with stay at home orders during The Great Lockdown bolstered with fresh capital, many people – including some reading this note – turned to financial markets. These two efforts combined injected over $6 trillion of stimulus in an effort to stem the worst economic crisis since The Great Depression. That’s when the spigot opened: the Federal Reserve began to flood markets with over $3 trillion (and counting) of fresh capital, while the US Treasury announced paycheck relief programs for businesses and individuals. After all, something had to happen to those sports bettors and their $22 billion of bets since 2018 that liquidity needed to find its own level, its new equilibrium in a coronavirus pandemic world.īut for a time in March, capital markets were looking dry: companies starved of cash in the short-term were facing long-term insolvency – i.e. ![]() In March 2020, when professional sports leagues around the globe started to temporarily close their operations due to the coronavirus pandemic lockdowns, something changed in financial markets. Get My Guide Liquid(ity) Always Finds Its Own Level
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