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The year has brought breathtaking inflation as the term is traditionally defined–an increase in the money supply–with price increases flood into all kinds of asset classes. The only thing holding back mass evictions from occurring across the country is government legislation and the expectation of more transfer payments in the near future, yet residential real estate prices rocket to the moon. Good economic reports send stocks up; bad economic reports send stocks up even more, because bad numbers mean the Fed must take decisive action.

As QEternity continues to conjure an econoclysm, Bitcoin’s price has doubled in the last three months. Though it’s reasonable to be skeptical of the crypto’s ability to survive the icy grasp of regulatory death, anyone hoping for the end of the empire should be cheering its contemporary success. If there are only 21 million Bitcoins but the number of dollars is limitless, a rapid rise in the dollar price of a Bitcoin indicates dollar inflation is leading to dollar devaluation. The foreign exchange markets indicate the same thing. The dollar index is at a six year low and there is nothing but air underneath it.

So far, so good for Bitcoin’s prospects, then. While the number of Bitcoins is fixed, the number of cryptocurrencies–and cryptocurrency units–are anything but. Elon Musk, the blog’s favorite .00001%er, elevated Doge Coin and knee-capped Bitcoin with a tweet:

For those who’ve not heard of the former, it’s a joke. Or at least it was initially conceived as one. With a market cap of $600 million, real fortunes are now tied up in it. The South African shit poaster is teaching an important lesson for those perceptive enough to learn it.

This post is as much an invitation for discussion as anything else. If we were going to imagine what a speculative frenzy before the mother of all financial catastrophes occurred would look like, it’d be hard to do much better than what the real world is giving us right now.

 
• Category: Culture/Society, Economics • Tags: Econoclysm, Economics 
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  1. I see the Fed bailing states out next. The states that locked down the hardest and longest during the epidemic are going to end up with more business failures and reduced tax revenues. The voters who supported the lockdowns in those states should be willing to pay the extra taxes to make up for the reduced revenues but will try to shift the costs onto the states that are in better economic condition due to shorter and more mild business restrictions.

    Rather than doing this directly by having the federal government increase federal taxes and turning money over to the states the Fed may extend the current policy of monetizing the federal debt by buying treasury bonds and start printing up money to buy state bonds. As an alternative, the Fed could just print more money for additional giant federal stimulus packages with more money directed to the worst off states. Once this happens it will create a moral hazard problem because states that follow bad economic policies from here on out will be encouraged to do so figuring they can go to the federal government if they get in trouble. It will encourage all the other states to follow similar economic policies since the bailouts will be available to them too.

    If the Fed printing up money to bail out the federal government is inflationary, once it starts printing up even more money to bail out 50 state governments things will get much worse.

  2. What can a bitcoin do that a bitcoin sv, bitcoin gold, bitcoin diamond, ether, bitcoin classic, and 1/1000 bitcoin cannot do?

    There are limitless dollars with one organization making them, and limitless cryptos with limitless organizations to make them.

    Physically limited assets: gold and real estate. Crypto is a Ponzi scheme. It was first sold as a replacement for credit cards and other money transfers, the first of many “use cases” that failed.

    What it is good for is transferring valuable dollars into the pockets of crypto promoters.

    When you lose all your money “investing” in this scam, you can’t say you were never warned.

    • Replies: @PetrOldSack
    @Lot

    None of the "wealth definers" are tangible. They "diverge", what does not drift into the same direction is de context of planet, air, water and population counts, add your own variables ...which the "wealth" should measure. "money" includes the concept of "religion".

  3. • Replies: @anon
    @Adam Smith

    https://i.pinimg.com/736x/b3/81/7f/b3817f39c6a08759a7e3771b1933de00--dodge-doge-meme-funny.jpg

    Replies: @Adam Smith

  4. I enjoy being just millennial enough to be a day 1 investor in Doge and benefitting from the ZeroHedge Boomer rush to it now. I’m probably going to exchange the gains to BTC or the digital yuan soon.

  5. • Agree: Adam Smith
    • LOL: iffen
    • Replies: @MBlanc46
    @Buzz Mohawk

    It took me a second, Buzz, but great one.

    Replies: @Rosie

  6. Such doom porn! The welfare state aka “Entitlements” sealed the deal long ago; we were destined for default and hyperinflation. Our wise leaders saw this coming and invited many millions of Mexicans and a good number of Africans. These people are used to living on rice, flour and beans and making salsa out of whatever’s left in the garden. Those Africans know that even if you’re too weak to swat flies from your eyes, you’re never too weak to get your bonkadonk on. We heritage Americans know how to make beer and whiskey, so what’s the problem? We got a party going on while we watch China Vs. Jews for world domination!

    • Replies: @anon
    @Neuday

    Such doom porn!

    Some people just love to ride roller coasters. Other people just love scary movies. Then there are the doomer porn fans.

    It's all about the dopamine hits. Not to mention some clicks - when reading stuff online, always bear in mind that clicks matter. They always matter.

  7. anon[360] • Disclaimer says:
    @Neuday
    Such doom porn! The welfare state aka "Entitlements" sealed the deal long ago; we were destined for default and hyperinflation. Our wise leaders saw this coming and invited many millions of Mexicans and a good number of Africans. These people are used to living on rice, flour and beans and making salsa out of whatever's left in the garden. Those Africans know that even if you're too weak to swat flies from your eyes, you're never too weak to get your bonkadonk on. We heritage Americans know how to make beer and whiskey, so what's the problem? We got a party going on while we watch China Vs. Jews for world domination!

    Replies: @anon

    Such doom porn!

    Some people just love to ride roller coasters. Other people just love scary movies. Then there are the doomer porn fans.

    It’s all about the dopamine hits. Not to mention some clicks – when reading stuff online, always bear in mind that clicks matter. They always matter.

  8. When Wiemarian levels of hyper inflation are on the horizon, stock up on barter goods. Liquor, drugs, nonperishable food, firearms and ammo, medical supplies, etc., etc. are valuable barter goods. Gold, Silver, jewelry, Bitcoin, etc., etc. are not. Let the games begin.

  9. Thing is ‘dollars’ can disappear even faster than the Fed can create them. That’s “debt deflation” and it is probably the more likely outcome than hyperinflation. If loans aren’t made or rolled over because lenders see they aren’t going to be repaid or repaid with devalued money they don’t lend. This crushes the velocity of money and asset values as speculative investments stop. Governments determine what is legal tender and Bitcoin will not qualify just as gold was demonetized in the 1930’s. You could, at least, slip a $20 gold piece to a merchant in lieu of cash if he’d take it ( but that would depend on the level of risk involved) but I don’t see how you could do the same with an intangible like Bitcoin.

    • Replies: @RoatanBill
    @unit472

    We are currently experiencing the start of both deflation and hyperinflation simultaneously.

    Deflation will happen for all things not absolutely necessary to life. Planes, boats, second homes, art, etc will all deflate as people start selling their supposed assets to buy a can of beans.

    Hyperinflation is baked in the cake via currency printing, physical or electronic. Hyperinflation will ruin the purchasing power of the US Dollar to the point where a bucket full of $100 bills won't but a loaf of bread. It's happened so many times before that the outcome is fairly assured.

    The trick is to purchase the distressed property being sold for pennies on the dollar with the US Dollars that you know are going to be worthless soon. It's a giant trade of pieces of green paper for actual things.

    Replies: @Rosie

    , @Daniel H
    @unit472

    Governments determine what is legal tender and Bitcoin will not qualify just as gold was demonetized in the 1930’s. You could, at least, slip a $20 gold piece to a merchant in lieu of cash if he’d take it

    The merchant will damn well take it. As a store of value, gold has been round for over 6,000 years, outlasting every nation state/empire. We cannot trust politicians or nations to be honest, but gold will have the last laugh, and then keep on laughing. Nobody ever went broke going long on gold.

    Replies: @unit472

  10. @Adam Smith
    https://cdn.benzinga.com/files/imagecache/1024x768xUP/images/story/2012/doge_2.jpg

    Replies: @anon

    • Replies: @Adam Smith
    @anon

    http://www.slate.com/content/dam/slate/articles/news_and_politics/the_slate_quiz/authorPortraits/pronounce_doge4.jpg.CROP.promovar-mediumlarge.jpg

    Wow. Such confusing.

  11. If I could have made money from everyone who argues “the dollar will always be valuable, no amount of debt or printing will ever change that”, I would be rich.

  12. @unit472
    Thing is 'dollars' can disappear even faster than the Fed can create them. That's "debt deflation" and it is probably the more likely outcome than hyperinflation. If loans aren't made or rolled over because lenders see they aren't going to be repaid or repaid with devalued money they don't lend. This crushes the velocity of money and asset values as speculative investments stop. Governments determine what is legal tender and Bitcoin will not qualify just as gold was demonetized in the 1930's. You could, at least, slip a $20 gold piece to a merchant in lieu of cash if he'd take it ( but that would depend on the level of risk involved) but I don't see how you could do the same with an intangible like Bitcoin.

    Replies: @RoatanBill, @Daniel H

    We are currently experiencing the start of both deflation and hyperinflation simultaneously.

    Deflation will happen for all things not absolutely necessary to life. Planes, boats, second homes, art, etc will all deflate as people start selling their supposed assets to buy a can of beans.

    Hyperinflation is baked in the cake via currency printing, physical or electronic. Hyperinflation will ruin the purchasing power of the US Dollar to the point where a bucket full of $100 bills won’t but a loaf of bread. It’s happened so many times before that the outcome is fairly assured.

    The trick is to purchase the distressed property being sold for pennies on the dollar with the US Dollars that you know are going to be worthless soon. It’s a giant trade of pieces of green paper for actual things.

    • Replies: @Rosie
    @RoatanBill


    second homes
     
    I am obviously not an inflation hawk, but even I have noticed the price increases on homes. Mr. Rosie and I have always wanted a vacation place, but the prices have always seemed unsustainable to me. I thought maybe they would go down with the pandemic, but no such luck.

    One of the unfortunate consequences of vrbo and all that is that it makes it convenient and worthwhile for investors to buy up these properties and charge $200 a night. Now, you almost have to have a cash offer to get one, and the prices are prohibitive for a family vacation place.
  13. What do you do with your crypto-currency when the power goes out? I suppose you can crank up the generator and download the blockchain via satellite, assuming they haven’t turned that off. Maybe MeshNet will work … maybe not. What will you do if governments decide cryptos should be illegal, and use their powers to start blocking any and all ports they can’t easily read on the net? If they can lock millions of us physically down, locking down the objectionable parts of the internet will be a trivial task. Look at what they are doing with unfavourable election and COVID news now.

    Buy gold, take delivery (if you can’t hold it, you don’t own it), and “lose it” somewhere safe, because they will come for it as times grow more desperate. Sure, it will be hard to use it for transactions when TSHTF, but the point is to come out on the other side with something that will still be valued by most of humanity.

  14. I will stick with my Maple Leafs .9999.

  15. It’s nice of the breathtaking inflation to not hit food or fuel yet.

    I wrote a piece for ZeroHedge yesterday (“Sign Of A Top?“) describing a reasonable approach to this for investors: in a nutshell, buy what’s going up and hedge it. There’s a bit more to it than that, obviously; it’s fleshed out with a couple of examples there.

  16. @anon
    @Adam Smith

    https://i.pinimg.com/736x/b3/81/7f/b3817f39c6a08759a7e3771b1933de00--dodge-doge-meme-funny.jpg

    Replies: @Adam Smith

    Wow. Such confusing.

  17. @unit472
    Thing is 'dollars' can disappear even faster than the Fed can create them. That's "debt deflation" and it is probably the more likely outcome than hyperinflation. If loans aren't made or rolled over because lenders see they aren't going to be repaid or repaid with devalued money they don't lend. This crushes the velocity of money and asset values as speculative investments stop. Governments determine what is legal tender and Bitcoin will not qualify just as gold was demonetized in the 1930's. You could, at least, slip a $20 gold piece to a merchant in lieu of cash if he'd take it ( but that would depend on the level of risk involved) but I don't see how you could do the same with an intangible like Bitcoin.

    Replies: @RoatanBill, @Daniel H

    Governments determine what is legal tender and Bitcoin will not qualify just as gold was demonetized in the 1930’s. You could, at least, slip a $20 gold piece to a merchant in lieu of cash if he’d take it

    The merchant will damn well take it. As a store of value, gold has been round for over 6,000 years, outlasting every nation state/empire. We cannot trust politicians or nations to be honest, but gold will have the last laugh, and then keep on laughing. Nobody ever went broke going long on gold.

    • Replies: @unit472
    @Daniel H

    Unfortunately that's not entirely true. When Roosevelt demonetized gold in 1933 you could trade in your gold notes and coins and get $35 in US dollars no longer redeemable in gold. Couldn't even legally own gold except as jewelry or collectible coins for almost 50 years. If you squirreled your gold coins away you got no return on your money for decades. Your heir might have done alright when gold's price was finally market set but you would probably have died by then with unspendable gold coins.

    I can see other circumstances where failing to tender your gold to a government that wants it could lead to being given some lead in exchange if you are caught holding/hoarding gold. Think North Korea or another totalitarian regime

  18. @Daniel H
    @unit472

    Governments determine what is legal tender and Bitcoin will not qualify just as gold was demonetized in the 1930’s. You could, at least, slip a $20 gold piece to a merchant in lieu of cash if he’d take it

    The merchant will damn well take it. As a store of value, gold has been round for over 6,000 years, outlasting every nation state/empire. We cannot trust politicians or nations to be honest, but gold will have the last laugh, and then keep on laughing. Nobody ever went broke going long on gold.

    Replies: @unit472

    Unfortunately that’s not entirely true. When Roosevelt demonetized gold in 1933 you could trade in your gold notes and coins and get $35 in US dollars no longer redeemable in gold. Couldn’t even legally own gold except as jewelry or collectible coins for almost 50 years. If you squirreled your gold coins away you got no return on your money for decades. Your heir might have done alright when gold’s price was finally market set but you would probably have died by then with unspendable gold coins.

    I can see other circumstances where failing to tender your gold to a government that wants it could lead to being given some lead in exchange if you are caught holding/hoarding gold. Think North Korea or another totalitarian regime

  19. @Buzz Mohawk
    https://www.sandandsisal.com/wp-content/uploads/2013/02/tulip-bulb.jpg

    Replies: @MBlanc46

    It took me a second, Buzz, but great one.

    • Replies: @Rosie
    @MBlanc46


    It took me a second, Buzz, but great one.
     
    I still don't get it. Help a sister out.

    Replies: @Buzz Mohawk

  20. @MBlanc46
    @Buzz Mohawk

    It took me a second, Buzz, but great one.

    Replies: @Rosie

    It took me a second, Buzz, but great one.

    I still don’t get it. Help a sister out.

    • Replies: @Buzz Mohawk
    @Rosie

    Those are tulip bulbs.

    https://en.wikipedia.org/wiki/Tulip_mania

    One of the most famous investment bubbles happened in Holland in the 1600s, at the height of that country's economic power. Just as today and countless other times, "smart" investors, and others, went crazy, bidding up the prices for things of otherwise little value that they thought would continue to go up in price.

    It is a famous event and phenomenon known among those of us who work with investments.

    Replies: @iffen

  21. @RoatanBill
    @unit472

    We are currently experiencing the start of both deflation and hyperinflation simultaneously.

    Deflation will happen for all things not absolutely necessary to life. Planes, boats, second homes, art, etc will all deflate as people start selling their supposed assets to buy a can of beans.

    Hyperinflation is baked in the cake via currency printing, physical or electronic. Hyperinflation will ruin the purchasing power of the US Dollar to the point where a bucket full of $100 bills won't but a loaf of bread. It's happened so many times before that the outcome is fairly assured.

    The trick is to purchase the distressed property being sold for pennies on the dollar with the US Dollars that you know are going to be worthless soon. It's a giant trade of pieces of green paper for actual things.

    Replies: @Rosie

    second homes

    I am obviously not an inflation hawk, but even I have noticed the price increases on homes. Mr. Rosie and I have always wanted a vacation place, but the prices have always seemed unsustainable to me. I thought maybe they would go down with the pandemic, but no such luck.

    One of the unfortunate consequences of vrbo and all that is that it makes it convenient and worthwhile for investors to buy up these properties and charge $200 a night. Now, you almost have to have a cash offer to get one, and the prices are prohibitive for a family vacation place.

  22. @Lot
    What can a bitcoin do that a bitcoin sv, bitcoin gold, bitcoin diamond, ether, bitcoin classic, and 1/1000 bitcoin cannot do?

    There are limitless dollars with one organization making them, and limitless cryptos with limitless organizations to make them.

    Physically limited assets: gold and real estate. Crypto is a Ponzi scheme. It was first sold as a replacement for credit cards and other money transfers, the first of many “use cases” that failed.

    What it is good for is transferring valuable dollars into the pockets of crypto promoters.

    When you lose all your money “investing” in this scam, you can’t say you were never warned.

    Replies: @PetrOldSack

    None of the “wealth definers” are tangible. They “diverge”, what does not drift into the same direction is de context of planet, air, water and population counts, add your own variables …which the “wealth” should measure. “money” includes the concept of “religion”.

  23. speculative frenzy before the mother of all financial catastrophes

    Especially with the hysteria about the flu, it’s hard to conclude otherwise. It’s as if by keeping the world locked up watching Netflix, they can keep the ludicrous bubble inflated indefinitely – that an end might lead to an examination of it and all the other bullshit we’ve been sold.

  24. @Rosie
    @MBlanc46


    It took me a second, Buzz, but great one.
     
    I still don't get it. Help a sister out.

    Replies: @Buzz Mohawk

    Those are tulip bulbs.

    https://en.wikipedia.org/wiki/Tulip_mania

    One of the most famous investment bubbles happened in Holland in the 1600s, at the height of that country’s economic power. Just as today and countless other times, “smart” investors, and others, went crazy, bidding up the prices for things of otherwise little value that they thought would continue to go up in price.

    It is a famous event and phenomenon known among those of us who work with investments.

    • Thanks: Rosie
    • Replies: @iffen
    @Buzz Mohawk

    It is a famous event and phenomenon known among those of us who work with investments.

    Is that you, Gordon?

  25. @Buzz Mohawk
    @Rosie

    Those are tulip bulbs.

    https://en.wikipedia.org/wiki/Tulip_mania

    One of the most famous investment bubbles happened in Holland in the 1600s, at the height of that country's economic power. Just as today and countless other times, "smart" investors, and others, went crazy, bidding up the prices for things of otherwise little value that they thought would continue to go up in price.

    It is a famous event and phenomenon known among those of us who work with investments.

    Replies: @iffen

    It is a famous event and phenomenon known among those of us who work with investments.

    Is that you, Gordon?

  26. My theory is that it’s the high personal savings rate that’s doing it. All those dollars chasing stonks:

    https://fred.stlouisfed.org/graph/?id=PSAVERT

    There’s gonna be a selloff when corona ends and people can spend their money again.

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