Python Heatmap Technical Indicator

Heatmaps provide an instant overview. They can be used with correlations or to predict reactions or confirm the trend in trading. This article covers RSI heatmap creation.

The Market System

Market regime:

• Bullish trend: The market tends to make higher highs, which indicates that the overall trend is upward.

• Sideways: The market tends to fluctuate while staying within predetermined zones.

• Bearish trend: The market has the propensity to make lower lows, indicating that the overall trend is downward.

Most tools detect the trend, but we cannot predict the next state. The best way to solve this problem is to assume the current state will continue and trade any reactions, preferably in the trend.

If the EURUSD is above its moving average and making higher highs, a trend-following strategy would be to wait for dips before buying and assuming the bullish trend will continue.

Indicator of Relative Strength

J. Welles Wilder Jr. introduced the RSI, a popular and versatile technical indicator. Used as a contrarian indicator to exploit extreme reactions. Calculating the default RSI usually involves these steps:

• Determine the difference between the closing prices from the prior ones.

• Distinguish between the positive and negative net changes.

• Create a smoothed moving average for both the absolute values of the positive net changes and the negative net changes.

• Take the difference between the smoothed positive and negative changes. The Relative Strength RS will be the name we use to describe this calculation.

• To obtain the RSI, use the normalization formula shown below for each time step.

The 13-period RSI and black GBPUSD hourly values are shown above. RSI bounces near 25 and pauses around 75. Python requires a four-column OHLC array for RSI coding.

import numpy as np
def add_column(data, times):
    
    for i in range(1, times + 1):
    
        new = np.zeros((len(data), 1), dtype = float)
        
        data = np.append(data, new, axis = 1)
    return data
def delete_column(data, index, times):
    
    for i in range(1, times + 1):
    
        data = np.delete(data, index, axis = 1)
    return data
def delete_row(data, number):
    
    data = data[number:, ]
    
    return data
def ma(data, lookback, close, position): 
    
    data = add_column(data, 1)
    
    for i in range(len(data)):
           
            try:
                
                data[i, position] = (data[i - lookback + 1:i + 1, close].mean())
            
            except IndexError:
                
                pass
            
    data = delete_row(data, lookback)
    
    return data
def smoothed_ma(data, alpha, lookback, close, position):
    
    lookback = (2 * lookback) - 1
    
    alpha = alpha / (lookback + 1.0)
    
    beta  = 1 - alpha
    
    data = ma(data, lookback, close, position)
    data[lookback + 1, position] = (data[lookback + 1, close] * alpha) + (data[lookback, position] * beta)
    for i in range(lookback + 2, len(data)):
        
            try:
                
                data[i, position] = (data[i, close] * alpha) + (data[i - 1, position] * beta)
        
            except IndexError:
                
                pass
            
    return data
def rsi(data, lookback, close, position):
    
    data = add_column(data, 5)
    
    for i in range(len(data)):
        
        data[i, position] = data[i, close] - data[i - 1, close]
     
    for i in range(len(data)):
        
        if data[i, position] > 0:
            
            data[i, position + 1] = data[i, position]
            
        elif data[i, position] < 0:
            
            data[i, position + 2] = abs(data[i, position])
            
    data = smoothed_ma(data, 2, lookback, position + 1, position + 3)
    data = smoothed_ma(data, 2, lookback, position + 2, position + 4)
    data[:, position + 5] = data[:, position + 3] / data[:, position + 4]
    
    data[:, position + 6] = (100 - (100 / (1 + data[:, position + 5])))
    data = delete_column(data, position, 6)
    data = delete_row(data, lookback)
    return data

Make sure to focus on the concepts and not the code. You can find the codes of most of my strategies in my books. The most important thing is to comprehend the techniques and strategies.

My weekly market sentiment report uses complex and simple models to understand the current positioning and predict the future direction of several major markets. Check out the report here:

Using the Heatmap to Find the Trend

RSI trend detection is easy but useless. Bullish and bearish regimes are in effect when the RSI is above or below 50, respectively. Tracing a vertical colored line creates the conditions below. How:

• When the RSI is higher than 50, a green vertical line is drawn.

• When the RSI is lower than 50, a red vertical line is drawn.

Zooming out yields a basic heatmap, as shown below.

Plot code:

def indicator_plot(data, second_panel, window = 250):
    fig, ax = plt.subplots(2, figsize = (10, 5))
    sample = data[-window:, ]
    for i in range(len(sample)):
        ax[0].vlines(x = i, ymin = sample[i, 2], ymax = sample[i, 1], color = 'black', linewidth = 1)  
        if sample[i, 3] > sample[i, 0]:
            ax[0].vlines(x = i, ymin = sample[i, 0], ymax = sample[i, 3], color = 'black', linewidth = 1.5)  
        if sample[i, 3] < sample[i, 0]:
            ax[0].vlines(x = i, ymin = sample[i, 3], ymax = sample[i, 0], color = 'black', linewidth = 1.5)  
        if sample[i, 3] == sample[i, 0]:
            ax[0].vlines(x = i, ymin = sample[i, 3], ymax = sample[i, 0], color = 'black', linewidth = 1.5)  
    ax[0].grid() 
    for i in range(len(sample)):
        if sample[i, second_panel] > 50:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'green', linewidth = 1.5)  
        if sample[i, second_panel] < 50:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'red', linewidth = 1.5)  
    ax[1].grid()
indicator_plot(my_data, 4, window = 500)

Call RSI on your OHLC array's fifth column. 4. Adjusting lookback parameters reduces lag and false signals. Other indicators and conditions are possible.

Another suggestion is to develop an RSI Heatmap for Extreme Conditions.

Contrarian indicator RSI. The following rules apply:

• Whenever the RSI is approaching the upper values, the color approaches red.

• The color tends toward green whenever the RSI is getting close to the lower values.

Zooming out yields a basic heatmap, as shown below.

Plot code:

import matplotlib.pyplot as plt
def indicator_plot(data, second_panel, window = 250):
    fig, ax = plt.subplots(2, figsize = (10, 5))
    sample = data[-window:, ]
    for i in range(len(sample)):
        ax[0].vlines(x = i, ymin = sample[i, 2], ymax = sample[i, 1], color = 'black', linewidth = 1)  
        if sample[i, 3] > sample[i, 0]:
            ax[0].vlines(x = i, ymin = sample[i, 0], ymax = sample[i, 3], color = 'black', linewidth = 1.5)  
        if sample[i, 3] < sample[i, 0]:
            ax[0].vlines(x = i, ymin = sample[i, 3], ymax = sample[i, 0], color = 'black', linewidth = 1.5)  
        if sample[i, 3] == sample[i, 0]:
            ax[0].vlines(x = i, ymin = sample[i, 3], ymax = sample[i, 0], color = 'black', linewidth = 1.5)  
    ax[0].grid() 
    for i in range(len(sample)):
        if sample[i, second_panel] > 90:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'red', linewidth = 1.5)  
        if sample[i, second_panel] > 80 and sample[i, second_panel] < 90:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'darkred', linewidth = 1.5)  
        if sample[i, second_panel] > 70 and sample[i, second_panel] < 80:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'maroon', linewidth = 1.5)  
        if sample[i, second_panel] > 60 and sample[i, second_panel] < 70:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'firebrick', linewidth = 1.5) 
        if sample[i, second_panel] > 50 and sample[i, second_panel] < 60:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'grey', linewidth = 1.5) 
        if sample[i, second_panel] > 40 and sample[i, second_panel] < 50:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'grey', linewidth = 1.5) 
        if sample[i, second_panel] > 30 and sample[i, second_panel] < 40:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'lightgreen', linewidth = 1.5)
        if sample[i, second_panel] > 20 and sample[i, second_panel] < 30:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'limegreen', linewidth = 1.5) 
        if sample[i, second_panel] > 10 and sample[i, second_panel] < 20:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'seagreen', linewidth = 1.5)  
        if sample[i, second_panel] > 0 and sample[i, second_panel] < 10:
            ax[1].vlines(x = i, ymin = 0, ymax = 100, color = 'green', linewidth = 1.5)
    ax[1].grid()
indicator_plot(my_data, 4, window = 500)

Dark green and red areas indicate imminent bullish and bearish reactions, respectively. RSI around 50 is grey.

Summary

To conclude, my goal is to contribute to objective technical analysis, which promotes more transparent methods and strategies that must be back-tested before implementation.

Technical analysis will lose its reputation as subjective and unscientific.

When you find a trading strategy or technique, follow these steps:

• Put emotions aside and adopt a critical mindset.

• Test it in the past under conditions and simulations taken from real life.

• Try optimizing it and performing a forward test if you find any potential.

• Transaction costs and any slippage simulation should always be included in your tests.

• Risk management and position sizing should always be considered in your tests.

After checking the above, monitor the strategy because market dynamics may change and make it unprofitable.

(The author's opinions should not be used to make investment decisions or as a recommendation to invest.)

The pandemic and social media pseudoscience have made us all epidemiologists, for better or worse. Flattening the curve, social distancing, lockdowns—remember? Some of you may remember R0 (R naught), the number of healthy humans the average COVID-infected person infects. Thankfully, the world has moved on from Greater China's nightmare. Politicians have refocused their talent for misdirection on getting their constituents invested in the war for Russian Reunification or Russian Aggression, depending on your side of the iron curtain.

Humanity battles two fronts. A war against an invisible virus (I know your Commander in Chief might have told you COVID is over, but viruses don't follow election cycles and their economic impacts linger long after the last rapid-test clinic has closed); and an undeclared World War between US/NATO and Eurasia/Russia/China. The fiscal and monetary authorities' current policies aim to mitigate these two conflicts' economic effects.

Since all politicians are short-sighted, they usually print money to solve most problems. Printing money is the easiest and fastest way to solve most problems because it can be done immediately without much discussion. The alternative—long-term restructuring of our global economy—would hurt stakeholders and require an honest discussion about our civilization's state. Both of those requirements are non-starters for our short-sighted political friends, so whether your government practices capitalism, communism, socialism, or fascism, they all turn to printing money-ism to solve all problems.

Free money stimulates demand, so people buy crap. Overbuying shit raises prices. Inflation. Every nation has food, energy, or goods inflation. The once-docile plebes demand action when the latter two subsets of inflation rise rapidly. They will be heard at the polls or in the streets. What would you do to feed your crying hungry child?

Global central banks During the pandemic, the Fed, PBOC, BOJ, ECB, and BOE printed money to aid their governments. They worried about inflation and promised to remove fiat liquidity and tighten monetary conditions.

Imagine Nate Diaz's round-house kick to the face. The financial markets probably felt that way when the US and a few others withdrew fiat wampum. Sovereign debt markets suffered a near-record bond market rout.

The undeclared WW3 is intensifying, with recent gas pipeline attacks. The global economy is already struggling, and credit withdrawal will worsen the situation. The next pandemic, the Yield Curve Control (YCC) virus, is spreading as major central banks backtrack on inflation promises. All central banks eventually fail.

Here's a scorecard.

In order to save its financial system, BOE recently reverted to Quantitative Easing (QE).

BOJ Continuing YCC to save their banking system and enable affordable government borrowing.

ECB printing money to buy weak EU member bonds, but will soon start Quantitative Tightening (QT).

PBOC Restarting the money printer to give banks liquidity to support the falling residential property market.

Fed raising rates and QT-shrinking balance sheet.

80% of the world's biggest central banks are printing money again. Only the Fed has remained steadfast in the face of a financial market bloodbath, determined to end the inflation for which it is at least partially responsible—the culmination of decades of bad economic policies and a world war.

YCC printing is the worst for fiat currency and society. Because it necessitates central banks fixing a multi-trillion-dollar bond market. YCC central banks promise to infinitely expand their balance sheets to keep a certain interest rate metric below an unnatural ceiling. The market always wins, crushing humanity with inflation.

BOJ's YCC policy is longest-standing. The BOE joined them, and my essay this week argues that the ECB will follow. The ECB joining YCC would make 60% of major central banks follow this terrible policy. Since the PBOC is part of the Chinese financial system, the number could be 80%. The Chinese will lend any amount to meet their economic activity goals.

The BOE committed to a 13-week, GBP 65bn bond price-fixing operation. However, BOEs YCC may return. If you lose to the market, you're stuck. Since the BOE has announced that it will buy your Gilt at inflated prices, why would you not sell them all? Market participants taking advantage of this policy will only push the bank further into the hole it dug itself, so I expect the BOE to re-up this program and count them as YCC.

In a few trading days, the BOE went from a bank determined to slay inflation by raising interest rates and QT to buying an unlimited amount of UK Gilts. I expect the ECB to be dragged kicking and screaming into a similar policy. Spoiler alert: big daddy Fed will eventually die from the YCC virus.

Threadneedle St, London EC2R 8AH, UK

Before we discuss the BOE's recent missteps, a chatroom member called the British royal family the Kardashians with Crowns, which made me laugh. I'm sad about royal attention. If the public was as interested in energy and economic policies as they are in how the late Queen treated Meghan, Duchess of Sussex, UK politicians might not have been able to get away with energy and economic fairy tales.

The BOE printed money to recover from COVID, as all good central banks do. For historical context, this chart shows the BOE's total assets as a percentage of GDP since its founding in the 18th century.

The UK has had a rough three centuries. Pandemics, empire wars, civil wars, world wars. Even so, the BOE's recent money printing was its most aggressive ever!

BOE Total Assets as % of GDP (white) vs. UK CPI

Now, inflation responded slowly to the bank's most aggressive monetary loosening. King Charles wishes the gold line above showed his popularity, but it shows his subjects' suffering.

The BOE recognized early that its money printing caused runaway inflation. In its August 2022 report, the bank predicted that inflation would reach 13% by year end before aggressively tapering in 2023 and 2024.

Aug 2022 BOE Monetary Policy Report

The BOE was the first major central bank to reduce its balance sheet and raise its policy rate to help.

The BOE first raised rates in December 2021. Back then, JayPow wasn't even considering raising rates.

UK policymakers, like most developed nations, believe in energy fairy tales. Namely, that the developed world, which grew in lockstep with hydrocarbon use, could switch to wind and solar by 2050. The UK's energy import bill has grown while coal, North Sea oil, and possibly stranded shale oil have been ignored.

WW3 is an economic war that is balkanizing energy markets, which will continue to inflate. A nation that imports energy and has printed the most money in its history cannot avoid inflation.

The chart above shows that energy inflation is a major cause of plebe pain.

The UK is hit by a double whammy: the BOE must remove credit to reduce demand, and energy prices must rise due to WW3 inflation. That's not economic growth.

Boris Johnson was knocked out by his country's poor economic performance, not his lockdown at 10 Downing St. Prime Minister Truss and her merry band of fools arrived with the tried-and-true government remedy: goodies for everyone.

She released a budget full of economic stimulants. She cut corporate and individual taxes for the rich. She plans to give poor people vouchers for higher energy bills. Woohoo! Margret Thatcher's new pants suit.

My buddy Jim Bianco said Truss budget's problem is that it works. It will boost activity at a time when inflation is over 10%. Truss' budget didn't include austerity measures like tax increases or spending cuts, which the bond market wanted. The bond market protested.

30-year Gilt yield chart. Yields spiked the most ever after Truss announced her budget, as shown. The Gilt market is the longest-running bond market in the world.

The Gilt market showed the pole who's boss with Cardi B.

Before this, the BOE was super-committed to fighting inflation. To their credit, they raised short-term rates and shrank their balance sheet. However, rapid yield rises threatened to destroy the entire highly leveraged UK financial system overnight, forcing them to change course.

Accounting gimmicks allowed by regulators for pension funds posed a systemic threat to the UK banking system. UK pension funds could use interest rate market levered derivatives to match liabilities. When rates rise, short rate derivatives require more margin. The pension funds spent all their money trying to pick stonks and whatever else their sell side banker could stuff them with, so the historic rate spike would have bankrupted them overnight. The FT describes BOE-supervised chicanery well.

To avoid a financial apocalypse, the BOE in one morning abandoned all their hard work and started buying unlimited long-dated Gilts to drive prices down.

Another reminder to never fight a central bank. The 30-year Gilt is shown above. After the BOE restarted the money printer on September 28, this bond rose 30%. Thirty-fucking-percent! Developed market sovereign bonds rarely move daily. You're invested in His Majesty's government obligations, not a Chinese property developer's offshore USD bond.

The political need to give people goodies to help them fight the terrible economy ran into a financial reality. The central bank protected the UK financial system from asset-price deflation because, like all modern economies, it is debt-based and highly levered. As bad as it is, inflation is not their top priority. The BOE example demonstrated that. To save the financial system, they abandoned almost a year of prudent monetary policy in a few hours. They also started the endgame.

Let's play Central Bankers Say the Darndest Things before we go to the continent (and sorry if you live on a continent other than Europe, but you're not culturally relevant).

Pre-meltdown BOE output:

FT, October 17, 2021 On Sunday, the Bank of England governor warned that it must act to curb inflationary pressure, ignoring financial market moves that have priced in the first interest rate increase before the end of the year.

On July 19, 2022, Gov. Andrew Bailey spoke. Our 2% inflation target is unwavering. We'll do our job.

August 4th 2022 MPC monetary policy announcement According to its mandate, the MPC will sustainably return inflation to 2% in the medium term.

Catherine Mann, MPC member, September 5, 2022 speech. Fast and forceful monetary tightening, possibly followed by a hold or reversal, is better than gradualism because it promotes inflation expectations' role in bringing inflation back to 2% over the medium term.

When their financial system nearly collapsed in one trading session, they said:

The Bank of England's Financial Policy Committee warned on 28 September that gilt market dysfunction threatened UK financial stability. It advised action and supported the Bank's urgent gilt market purchases for financial stability.

It works when the price goes up but not down. Is my crypto portfolio dysfunctional enough to get a BOE bailout?

Next, the EU and ECB. The ECB is also fighting inflation, but it will also succumb to the YCC virus for the same reasons as the BOE.

Frankfurt am Main, ECB Tower, Sonnemannstraße 20, 60314

Only France and Germany matter economically in the EU. Modern European history has focused on keeping Germany and Russia apart. German manufacturing and cheap Russian goods could change geopolitics.

France created the EU to keep Germany down, and the Germans only cooperated because of WWII guilt. France's interests are shared by the US, which lurks in the shadows to prevent a Germany-Russia alliance. A weak EU benefits US politics. Avoid unification of Eurasia. (I paraphrased daddy Felix because I thought quoting a large part of his most recent missive would get me spanked.)

As with everything, understanding Germany's energy policy is the best way to understand why the German economy is fundamentally fucked and why that spells doom for the EU. Germany, the EU's main economic engine, is being crippled by high energy prices, threatening a depression. This economic downturn threatens the union. The ECB may have to abandon plans to shrink its balance sheet and switch to YCC to save the EU's unholy political union.

France did the smart thing and went all in on nuclear energy, which is rare in geopolitics. 70% of electricity is nuclear-powered. Their manufacturing base can survive Russian gas cuts. Germany cannot.

My boy Zoltan made this great graphic showing how screwed Germany is as cheap Russian gas leaves the industrial economy.

$27 billion of Russian gas powers almost $2 trillion of German economic output, a 75x energy leverage. The German public was duped into believing the same energy fairy tales as their politicians, and they overwhelmingly allowed the Green party to dismantle any efforts to build a nuclear energy ecosystem over the past several decades. Germany, unlike France, must import expensive American and Qatari LNG via supertankers due to Nordstream I and II pipeline sabotage.

American gas exports to Europe are touted by the media. Gas is cheap because America isn't the Western world's swing producer. If gas prices rise domestically in America, the plebes would demand the end of imports to avoid paying more to heat their homes.

German goods would cost much more in this scenario. German producer prices rose 46% YoY in August. The German current account is rapidly approaching zero and will soon be negative.

German PPI Change YoY

German Current Account

The reason this matters is a curious construction called TARGET2. Let’s hear from the horse’s mouth what exactly this beat is:

TARGET2 is the real-time gross settlement (RTGS) system owned and operated by the Eurosystem. Central banks and commercial banks can submit payment orders in euro to TARGET2, where they are processed and settled in central bank money, i.e. money held in an account with a central bank.

Source: ECB

Let me explain this in plain English for those unfamiliar with economic dogma.

This chart shows intra-EU credits and debits. TARGET2. Germany, Europe's powerhouse, is owed money. IOU-buying Greeks buy G-wagons. The G-wagon pickup truck is badass.

If all EU countries had fiat currencies, the Deutsche Mark would be stronger than the Italian Lira, according to the chart above. If Europe had to buy goods from non-EU countries, the Euro would be much weaker. Credits and debits between smaller political units smooth out imbalances in other federal-provincial-state political systems. Financial and fiscal unions allow this. The EU is financial, so the centre cannot force the periphery to settle their imbalances.

Greece has never had to buy Fords or Kias instead of BMWs, but what if Germany had to shut down its auto manufacturing plants due to energy shortages?

Italians have done well buying ammonia from Germany rather than China, but what if BASF had to close its Ludwigshafen facility due to a lack of affordable natural gas?

I think you're seeing the issue.

Instead of Germany, EU countries would owe foreign producers like America, China, South Korea, Japan, etc. Since these countries aren't tied into an uneconomic union for politics, they'll demand hard fiat currency like USD instead of Euros, which have become toilet paper (or toilet plastic).

Keynesian economists have a simple solution for politicians who can't afford market prices. Government debt can maintain production. The debt covers the difference between what a business can afford and the international energy market price.

Germans are monetary policy conservative because of the Weimar Republic's hyperinflation. The Bundesbank is the only thing preventing ECB profligacy. Germany must print its way out without cheap energy. Like other nations, they will issue more bonds for fiscal transfers.

More Bunds mean lower prices. Without German monetary discipline, the Euro would have become a trash currency like any other emerging market that imports energy and food and has uncompetitive labor.

Bunds price all EU country bonds. The ECB's money printing is designed to keep the spread of weak EU member bonds vs. Bunds low. Everyone falls with Bunds.

Like the UK, German politicians seeking re-election will likely cause a Bunds selloff. Bond investors will understandably reject their promises of goodies for industry and individuals to offset the lack of cheap Russian gas. Long-dated Bunds will be smoked like UK Gilts. The ECB will face a wave of ultra-levered financial players who will go bankrupt if they mark to market their fixed income derivatives books at higher Bund yields.

Some treats People: Germany will spend 200B to help consumers and businesses cope with energy prices, including promoting renewable energy.

That, ladies and germs, is why the ECB will immediately abandon QT, move to a stop-gap QE program to normalize the Bund and every other EU bond market, and eventually graduate to YCC as the market vomits bonds of all stripes into Christine Lagarde's loving hands. She probably has soft hands.

The 30-year Bund market has noticed Germany's economic collapse. 2021 yields skyrocketed.

30-year Bund Yield

ECB Says the Darndest Things:

Because inflation is too high and likely to stay above our target for a long time, we took today's decision and expect to raise interest rates further.- Christine Lagarde, ECB Press Conference, Sept 8.

The Governing Council will adjust all of its instruments to stabilize inflation at 2% over the medium term. July 21 ECB Monetary Decision

Everyone struggles with high inflation. The Governing Council will ensure medium-term inflation returns to two percent. June 9th ECB Press Conference

I'm excited to read the after. Like the BOE, the ECB may abandon their plans to shrink their balance sheet and resume QE due to debt market dysfunction.

Eighty Percent

I like YCC like dark chocolate over 80%. ;).

Can 80% of the world's major central banks' QE and/or YCC overcome Sir Powell's toughness on fungible risky asset prices?

Gold and crypto are fungible global risky assets. Satoshis and gold bars are the same in New York, London, Frankfurt, Tokyo, and Shanghai.

As more Euros, Yen, Renminbi, and Pounds are printed, people will move their savings into Dollars or other stores of value. As the Fed raises rates and reduces its balance sheet, the USD will strengthen. Gold/EUR and BTC/JPY may also attract buyers.

Gold and crypto markets are much smaller than the trillions in fiat money that will be printed, so they will appreciate in non-USD currencies. These flows only matter in one instance because we trade the global or USD price. Arbitrage occurs when BTC/EUR rises faster than EUR/USD. Here is how it works:

1. An investor based in the USD notices that BTC is expensive in EUR terms.

2. Instead of buying BTC, this investor borrows USD and then sells it.

3. After that, they sell BTC and buy EUR.

4. Then they choose to sell EUR and buy USD.

5. The investor receives their profit after repaying the USD loan.

This triangular FX arbitrage will align the global/USD BTC price with the elevated EUR, JPY, CNY, and GBP prices.

Even if the Fed continues QT, which I doubt they can do past early 2023, small stores of value like gold and Bitcoin may rise as non-Fed central banks get serious about printing money.

“Arthur, this is just more copium,” you might retort.

Patience. This takes time. Economic and political forcing functions take time. The BOE example shows that bond markets will reject politicians' policies to appease voters. Decades of bad energy policy have no immediate fix. Money printing is the only politically viable option. Bond yields will rise as bond markets see more stimulative budgets, and the over-leveraged fiat debt-based financial system will collapse quickly, followed by a monetary bailout.

America has enough food, fuel, and people. China, Europe, Japan, and the UK suffer. America can be autonomous. Thus, the Fed can prioritize domestic political inflation concerns over supplying the world (and most of its allies) with dollars. A steady flow of dollars allows other nations to print their currencies and buy energy in USD. If the strongest player wins, everyone else loses.

I'm making a GDP-weighted index of these five central banks' money printing. When ready, I'll share its rate of change. This will show when the 80%'s money printing exceeds the Fed's tightening.

Old power paradigm blocks new planetary paradigm

The difference between our reality and the media's reality is like a tale of two worlds. The greatest and worst of times, really.

Expanding information demands complex skills and understanding to separate important information from ignorance and crap. And that's just the start of determining the source's aim.

Trust who? We see people trust liars in public and then be destroyed by their decisions. Mistakes may be devastating.

Many give up and don't trust anyone. Reality is a choice, though. Same risks.

We must separate our needs and wants from reality. Needs and wants have rules. Greed and selfishness create an unlivable planet.

Culturally, we know this, but we ignore it as foolish. Selfish and greedy people obtain what they want, while others suffer.

We invade, plunder, rape, and burn. We establish civilizations by institutionalizing an exploitable underclass and denying its existence. These cultural lies promote greed and selfishness despite their destructiveness.

Controlling parts of society institutionalize these lies as fact. Many of each age are willing to gamble on greed because they were taught to see greed and selfishness as principles justified by prosperity.

Our cultural understanding recognizes the long-term benefits of collaboration and sharing. This older understanding generates an increasing tension between greedy people and those who see its planetary effects.

Survival requires distinguishing between global and regional realities. Simple, yet many can't do it. This is the first time human greed has had a global impact.

In the past, conflict stories focused on regional winners and losers. Losers lose, winners win, etc. Powerful people see potential decades of nuclear devastation as local, overblown, and not personally dangerous.

Mutually Assured Destruction (MAD) was a human choice that required people to acquiesce to irrational devastation. This prevented nuclear destruction. Most would refuse.

A dangerous “solution” relies on nuclear trigger-pullers not acting irrationally. Since then, we've collected case studies of sane people performing crazy things in experiments. We've been lucky, but the climate apocalypse could be different.

Climate disaster requires only continuing current behavior. These actions already cause global harm, but that's not a threat. These activities must be viewed differently.

Once grasped, denying planetary facts is hard to accept. Deniers can't think beyond regional power. Seeing planet-scale is unusual.

Decades of indoctrination defining any planetary perspective as un-American implies communal planetary assets are for plundering. The old paradigm limits any other view.

In the same way, the new paradigm sees the old regional power paradigm as a threat to planetary civilization and lifeforms. Insane!

While MAD relied on leaders not acting stupidly to trigger a nuclear holocaust, the delayed climatic holocaust needs correcting centuries of lunacy. We must stop allowing craziness in global leadership.

Nothing in our acknowledged past provides a paradigm for such. Only primitive people have failed to reach our level of sophistication.

Before European colonization, certain North American cultures built sophisticated regional nations but abandoned them owing to authoritarian cruelty and destruction. They were overrun by societies that saw no wrong in perpetual exploitation. David Graeber's The Dawn of Everything is an example of historical rediscovery, which is now crucial.

From the new paradigm's perspective, the old paradigm is irrational, yet it's too easy to see those in it as ignorant or malicious, if not both. These people are both, but the collapsing paradigm they promote is older or more ingrained than we think.

We can't shift that paradigm's view of a dead world. We must eliminate this mindset from our nations' leadership. No other way will preserve the earth.

Change is occurring. As always with tremendous transition, younger people are building the new paradigm.

The old paradigm's disintegration is insane. The ability to detect errors and abandon their sources is more important than age. This is gaining recognition.

The breakdown of the previous paradigm is not due to senile leadership, but to systemic problems that the current, conservative leadership cannot recognize.

Stop following the old paradigm.

10-sketch explanation

Choosing Tasks

Bringing News

carrying out 1:1s

providing critique

Managing Turbulence

The human brain is amazing. As more scientists examine the brain, we learn how much it can store.

The human brain has 1 billion neurons, according to Scientific American. Each neuron creates 1,000 connections, totaling over a trillion. If each neuron could store one memory, we'd run out of room. [1]

What if you could store and access more info, freeing up brain space for problem-solving and creativity?

Build a second brain to keep up with rising knowledge (what I refer to as a Digital Brain). Effectively managing information entails realizing you can't recall everything.

Every action requires information. You need the correct information to learn a new skill, complete a project at work, or establish a business. You must manage information properly to advance your profession and improve your life.

How to construct a second brain to organize information and achieve goals.

What Is a Second Brain?

How often do you forget an article or book's key point? Have you ever wasted hours looking for a saved file?

If so, you're not alone. Information overload affects millions of individuals worldwide. Information overload drains mental resources and causes anxiety.

This is when the second brain comes in.

Building a second brain doesn't involve duplicating the human brain. Building a system that captures, organizes, retrieves, and archives ideas and thoughts. The second brain improves memory, organization, and recall.

Digital tools are preferable to analog for building a second brain.

Digital tools are portable and accessible. Due to these benefits, we'll focus on digital second-brain building.

Brainware

Digital Brains are external hard drives. It stores, organizes, and retrieves. This means improving your memory won't be difficult. 

Memory has three components in computing:

Recording — storing the information

Organization — archiving it in a logical manner

Recall — retrieving it again when you need it

For example:

Due to rigorous security settings, many websites need you to create complicated passwords with special characters.

You must now memorize (Record), organize (Organize), and input this new password the next time you check in (Recall).

Even in this simple example, there are many pieces to remember. We can't recognize this new password with our usual patterns. If we don't use the password every day, we'll forget it. You'll type the wrong password when you try to remember it.

It's common. Is it because the information is complicated? Nope. Passwords are basically letters, numbers, and symbols.

It happens because our brains aren't meant to memorize these. Digital Brains can do heavy lifting.

Why You Need a Digital Brain

Dual minds are best. Birth brain is limited.

The cerebral cortex has 125 trillion synapses, according to a Stanford Study. The human brain can hold 2.5 million terabytes of digital data. [2]

Building a second brain improves learning and memory.

Learn and store information effectively

Faster information recall

Organize information to see connections and patterns

Build a Digital Brain to learn more and reach your goals faster. Building a second brain requires time and work, but you'll have more time for vital undertakings. 

Why you need a Digital Brain:

1. Use Brainpower Effectively

Your brain has boundaries, like any organ. This is true while solving a complex question or activity. If you can't focus on a work project, you won't finish it on time.

Second brain reduces distractions. A robust structure helps you handle complicated challenges quickly and stay on track. Without distractions, it's easy to focus on vital activities.

2. Staying Organized

Professional and personal duties must be balanced. With so much to do, it's easy to neglect crucial duties. This is especially true for skill-building. Digital Brain will keep you organized and stress-free.

Life success requires action. Organized people get things done. Organizing your information will give you time for crucial tasks.

You'll finish projects faster with good materials and methods. As you succeed, you'll gain creative confidence. You can then tackle greater jobs.

3. Creativity Process

Creativity drives today's world. Creativity is mysterious and surprising for millions worldwide. Immersing yourself in others' associations, triggers, thoughts, and ideas can generate inspiration and creativity.

Building a second brain is crucial to establishing your creative process and building habits that will help you reach your goals. Creativity doesn't require perfection or overthinking.

4. Transforming Your Knowledge Into Opportunities

This is the age of entrepreneurship. Today, you can publish online, build an audience, and make money.

Whether it's a business or hobby, you'll have several job alternatives. Knowledge can boost your economy with ideas and insights.

5. Improving Thinking and Uncovering Connections

Modern career success depends on how you think. Instead of overthinking or perfecting, collect the best images, stories, metaphors, anecdotes, and observations.

This will increase your creativity and reveal connections. Increasing your imagination can help you achieve your goals, according to research. [3]

Your ability to recognize trends will help you stay ahead of the pack.

6. Credibility for a New Job or Business

Your main asset is experience-based expertise. Others won't be able to learn without your help. Technology makes knowledge tangible.

This lets you use your time as you choose while helping others. Changing professions or establishing a new business become learning opportunities when you have a Digital Brain.

7. Using Learning Resources

Millions of people use internet learning materials to improve their lives. Online resources abound. These include books, forums, podcasts, articles, and webinars.

These resources are mostly free or inexpensive. Organizing your knowledge can save you time and money. Building a Digital Brain helps you learn faster. You'll make rapid progress by enjoying learning.

How does a second brain feel?

Digital Brain has helped me arrange my job and family life for years.

No need to remember 1001 passwords. I never forget anything on my wife's grocery lists. Never miss a meeting. I can access essential information and papers anytime, anywhere.

Delegating memory to a second brain reduces tension and anxiety because you'll know what to do with every piece of information.

No information will be forgotten, boosting your confidence. Better manage your fears and concerns by writing them down and establishing a strategy. You'll understand the plethora of daily information and have a clear head.

How to Develop Your Digital Brain (Your Second Brain)

It's cheap but requires work.

Digital Brain development requires:

Recording — storing the information

Organization — archiving it in a logical manner

Recall — retrieving it again when you need it

1. Decide what information matters before recording.

To succeed in today's environment, you must manage massive amounts of data. Articles, books, webinars, podcasts, emails, and texts provide value. Remembering everything is impossible and overwhelming.

What information do you need to achieve your goals?

You must consolidate ideas and create a strategy to reach your aims. Your biological brain can imagine and create with a Digital Brain.

2. Use the Right Tool

We usually record information without any preparation - we brainstorm in a word processor, email ourselves a message, or take notes while reading.

This information isn't used. You must store information in a central location.

Different information needs different instruments.

Evernote is a top note-taking program. Audio clips, Slack chats, PDFs, text notes, photos, scanned handwritten pages, emails, and webpages can be added.

Pocket is a great software for saving and organizing content. Images, videos, and text can be sorted. Web-optimized design

Calendar apps help you manage your time and enhance your productivity by reminding you of your most important tasks. Calendar apps flourish. The best calendar apps are easy to use, have many features, and work across devices. These calendars include Google, Apple, and Outlook.

To-do list/checklist apps are useful for managing tasks. Easy-to-use, versatility, budget, and cross-platform compatibility are important when picking to-do list apps. Google Keep, Google Tasks, and Apple Notes are good to-do apps.

3. Organize data for easy retrieval

How should you organize collected data?

When you collect and organize data, you'll see connections. An article about networking can assist you comprehend web marketing. Saved business cards can help you find new clients.

Choosing the correct tools helps organize data. Here are some tools selection criteria:

• Can the tool sync across devices?

• Personal or team?

• Has a search function for easy information retrieval?

• Does it provide easy data categorization?

• Can users create lists or collections?

• Does it offer easy idea-information connections?

• Does it mind map and visually organize thoughts?

Conclusion

Building a Digital Brain (second brain) helps us save information, think creatively, and implement ideas. Your second brain is a biological extension. It prevents amnesia, allowing you to tackle bigger creative difficulties.

People who love learning often consume information without using it. Every day, they postpone life-improving experiences until they're forgotten. Useful information becomes strength. 

Reference

[1] ^ Scientific American: What Is the Memory Capacity of the Human Brain?

[2] ^ Clinical Neurology Specialists: What is the Memory Capacity of a Human Brain?

[3] ^ National Library of Medicine: Imagining Success: Multiple Achievement Goals and the Effectiveness of Imagery