Correlation ≠ Causation

For some strange reason, humans will look at two lines moving in the same direction and think that one causes the other. While this simple way of linking causes with their effects can work, more often than not, it doesn’t!

Have You Been Fooled By This Chart? QE vs Stocks

Mainstream narratives say that QE is money printing that causes stock prices to soar This is not true

The chart below has to be one of the most famous, and circulated, charts of the past decade.

Countless people have observed that both data sets dovetail nicely in an upward trajectory, and come to the conclusion that the stock market is rising because of the Fed’s massive expansion of bank reserves.

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Have You Been Fooled By This Chart? QE vs Gold

Has central bank QE really caused gold prices to soar?

Here is another famous chart, circulated widely around financial circles ever since the modern Fed first employed QE in 2009.

The chart shows gold prices soaring along with massive increases in bank reserves, the idea being that the Fed’s massive “money printing“ has led to the debasement of the USD relative to gold.

How true is this?

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Has QE Forced People To Buy Crypto? The Retail Perspective

How does QE really affect crypto prices?

QE has been a popular reason cited for the rise in cryptocurrencies.

Along with stocks and gold, the narrative compares the rise in bank reserves with crypto prices, namely Bitcoin (BTC), and concludes that BTC can only go higher.

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Has QE Forced People To Buy Crypto? The Irony Perspective

How does QE really affect crypto prices?

There is, of course, an even more important driving force behind the mind-blowing rise in the values and popularity of crypto assets – some investors actually believe in it.

Even then, QE has had some role to play in crypto’s meteoric rise… it just isn’t what everyone thinks it is.

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What You Need To Know About Low Rates & High Stock Prices

Financial markets rarely act as we expect them to

Do low rates lead to higher stock prices?

Or is this a case of correlation ≠ causation?

A common argument used to explain the link between low rates and roaring equities is that low interest rates mean higher present values, and therefore higher equity values.

What does this mean, and more importantly, is it valid?

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