Economic History · Federal Government · investing · Personal Finance

What Happens To Bitcoin Post-Dollar?

This is more of a thought piece than anything else, though I’m sure it will rile up a lot of Bitcoin HODLs and “technical analysts.” Much as I own (not enough) of the shiny algorithm coin,  the entire way we go about perceiving future currency seems rather warped. It’s a question requiring a bit beyond the typical wide-eyed enthusiasm of liberty advocates and the general freedom rabble.

For a long time, the theory of Bitcoin promoters has been that its limited cap of 21 million units serves as a safe store of value versus the highly-inflated dollar, which shows no signs of stopping its brrr-a-thon. Coin baggers predict that their currency will continue to rise as governments spend and borrow, perhaps at some point replacing the classical concept of “fiat” or paper money. Folks who have bought or continue to purchase before Bitcoin’s rise to a dominant financial position will be rich, while others are left with largely worthless investments.

But there’s one problem of sorts. These Bitcoin pumpers are basing their wealth and success on its exchange rate with the U.S. Dollar. In other words, to be a Bitcoin “millionaire,” you must assess its value in accordance with the same fiat currency that is supposedly unstable. Selling out of Bitcoin to realize some of this wealth means holding large amounts of an inflationary currency which continues to rise along with the president’s signature on spending bills.

Now, a skeptic could argue he will buy gold with his Bitcoin, but this is highly inconvenient for global transfer and transactions where the price point is less than a full ounce of yellow metal. Furthermore, gold itself is giddily valued in line with the dollar, despite the fact that its supporters believe fiat to be unstable and inflationary. A goldbug I knew even tried to diminish the validity of S&P 500 returns by claiming they were based in dollars instead of gold, despite arguing for gold on the basis of dollars.

This brings us to an important query: what happens if the dollar actually collapses, or ceases to exist? Does gold continue to “store” value? Is Bitcoin still worth a lot of money relatively, or does it adopt a dominant position attune to the dollar, albeit with less inflationary tendencies? And what happens to the people who failed to purchase crypto when it was cheaper in dollar terms? Are they doomed to scraping out an existence with whichever fiat currencies remain, or trying to collect a monthly check of 0.00000000001 BTC to afford the good consumerist lifestyle?

No one can really know. The future might be crypto, but that scenario could end up being unpleasant, depending on who possesses a bigger account.   

Economic History · Federal Government · investing · Uncategorized

Break Their Fall

The older I get, the less enjoyable or exciting any “black pill” realization becomes. It might speak to the sad state of affairs currently showcased, but in reality a cosmic manifestation of elitist gall is the culprit. Rather than hiding their malevolence, the dominant players of our time have settled into an open, unapologetic method of communicating intent. Thus we as observers are left to endorse rather blasé attitudes in the face of searing rain, at once feeling the discomfort but taking solace in the fact that its arrival could be predicted from a long ways off.

A perfect example of this lies in the wondrous implications of the Dodd-Frank legislation signed by President Obama in 2013. The landmark legislation was celebrated for supposedly raining in the excesses of Wall Street (a highly dubious claim), and is regularly cited by leftists to show the successes of 44. At the same time, the mammoth bill put forward some rather interesting features that drop hints about what is to come.

In reaction to the controversy over government-funded bailouts of banks, the legislation permits such institutions to maintain solvency by pursuing a strategy of “bail-ins,” an option which involves seizure of a large percentage of customer assets to keep the firm afloat. Due to protections bolstering derivatives on the totem pole of importance, users with regular checking and savings accounts might well be subjected to the experience of people in Cyprus, who lost tremendously after a financial crisis on the island.

What’s really lamentable about the whole matter concerns how little attention it has received. The stock market continues to return stimulus-induced profits, Congress is just barely approaching a COVID deal after months of haggling, and an incompetent geriatric is poised to become president in January. But this bit of legal scribbling, which stands to produce disastrous effects in the very real future, is remanded to the likes of The Epoch Times, an alleged “fake news” paper.

I suppose the natural response is to dive deeper into Bitcoin, yet even on that front the waters are becoming murkier. Mnuchin the Moocher has taken first blood, and I would not expect Yellen to be much different. The steady swill of power and corporate greed seems to overtake everyone, no matter the designs of their sacred oaths and professed beliefs.

Perhaps we should buy land.

Economic History · Federal Government · investing · Personal Finance

The XRP Smackdown

There has been much gnashing and simping over the announcement of an SEC lawsuit against Ripple, one of the more controversial cryptocurrencies on the market. For some, the move is confirmation of their fears that XRP is a scam, and carries with it an advisement to purchase Bitcoin. Others are holding the line, suggesting the storm will work itself out and leave Ripple stronger than before.  

I tend to be in the latter category, perhaps driven in part by my long-time holding of the currency, but also because the lawsuit itself seems rather like a rather flimsy last-ditch attempt at relevance by Jay Clayton, the outdoing SEC chairman and historical big bank shill. Take a look at the government’s statement:

“We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.”

The SEC’s argument hinges around the idea that Ripple should have been registered as a security (like a stock) rather than a currency, and thus their practices are problematic under federal law. They claim that the coin’s coming into existence with an existing trove of units rather than gradual mining of new ones pushes it outside the cryptocurrency category, as buyers were purchasing coins from the company itself.

Much as this might seem devastating to XRP’s future, it runs up against an obvious issue: the government previously granted Ripple the status of a currency, and thus will have to go against its prior declarations. While the SEC has won lawsuits against other altcoins in the past, this was following the release of a 2017 directive on their part, a rule which post-dated the ICO of Ripple. Thus Jay Clayton and Co. will need to prove XRP was running afoul of existing rules despite the relatively uncharted waters of cryptocurrencies in federal code.

Another obstacle for the federales surrounds the openness of the global community. Although Uncle Sam might well crackdown on firms like Ripple, other jurisdictions could opt for looser restrictions, or perhaps adopt XRP for themselves. It is not beyond the realm of possibility that smaller countries begin to use Ripple, and geopolitical opponents may well do the same. In any case, the nature of crypto makes it difficult for a single bureaucratic move to put the kibosh on all hope.  

Of course this could just as easily be investment white-knighting on my own part, but at least the cheap price of Ripple makes any future collapse largely nonthreatening.

Culturalism · Economic History · investing · Personal Finance

What Value Money Really Has

One of the most annoying aspects of reading historical texts involves being exposed to concepts which are simultaneously exciting and depressing, on the latter point because you realize the information will likely never have widespread acknowledgement. Such truths remain distant and untouched, at best exposed on occasion by the lone examiner to his motley crew, who may not actually be interested. But still he must do so, because otherwise the wisdom will be lost to a larger portion of the population.

I admit to feeling this way following my run through several political works by Feder. Although somewhat dogmatic at times, he manages to break down the question of currency and usury in a manner which countless lolbertarians and Marxists fail to do, despite their public acceptability. What’s more, the discourse doesn’t demand an excessively unmerciful slog through the miseries of Das Kapital, or any “free market” equivalent.

At the heart of Feder’s advocacy is the notion that debt-financed capitalism (which he calls Mammonism) creates slaves out of people and destroys nations. Folks are tethered to their debtors and spend long swaths of life attempting to serve the objectives of the banker class, in many cases falling into utter destitution during the process. Even traditional socialism is blamed for this, insofar as Marxists make deals with private corporations to issue interest-paying loans for state projects.  Thus the outcome remains subservience and poverty on the leftist front as well.

In contrast, Feder demands the eradication of all interest on loans, replacing such private measures with offerings by the State, with only the principle to be repaid. The implications of such policy are substantial, even in the context of our modern age. If the government cannot borrow on interest, it seems probably that our debt would be much lower, as U.S. interest on liabilities alone was $404 billion last year. Furthermore, interest-free loans by the government would have certainly softened the 2008 crisis, when many people lost their homes due to the machinations of the Adjustable Rate Mortgage.

On money itself, he describes paper currency as essentially a voucher representing – but not holding within – the value of what labor has been performed. So in effect a person who pays for their car to be washed is actually purchasing the value innate in the service, which can then be exchanged by the washer for other goods or services. The result is more of a barter system than the “money is money” arguments we see strewn across popular discourse. From here we get to the nationalist concept of a currency being backed by labor or productivity, as opposed to gold or merely the printing press.

Towards the end of his tract, Feder endorses a wealth tax, and makes an interesting argument about inheritances. He dismisses the concerns of those who might not be able to pass on wealth by suggesting what they should care about is raising their children well enough to live successfully in the world. Taken in the context of the “Affluenza ” case some years back, his logic is quite interesting.

Because the info is unique, I may find a way of including it in the possibly upcoming book on Rightist socialism. Time will tell.

Federal Government · investing

Can Bitcoin Be Regulated?

One of the great cultural nuances of the internet is how everyone can be right. Providing you are convincing, or at least look the part, most effective dissent will get chucked out the window, along with any need for respect. In point, we have the prototypical messaging of the Bitcoin-promoting community, which often argues that digital currency is beyond government regulation or control due to algorithms and encryption. They have some credibility, but as with all things deemed to “beat the system,” there are major exceptions which must be considered.

To start, the idea that crypto transactions can simply fly under the radar is muddled by known IRS actions. The federal government has already issued warnings to thousands of people about failure to report crypto gains to the IRS, and significant penalties lurk for those who flaunt such warnings. We also have the recent indictment of John McAfee for allegedly hiding cryptocurrency assets. Thus from a reactive standpoint the State is already gearing up for the long haul fight.

Perhaps more immediately, reports suggest the government seized around $1 billion worth of Bitcoin connected to the controversial Silk Road marketplace, whose founder Ross Ulbricht was given a life sentence for numerous alleged crimes. That’s a small but noticeable chunk of the overall coin value, and it’s not the first time Uncle Sam has held a stake. Other governments such as Bulgaria have snapped up digital currency in the past, with the leaders in Sofia holding 200,000 bitcoins at one stage.

Ruling out these sorts of criminal situations, what of the more obvious methods for centralized regulation? Governments could begin requiring trading firms like Coinbase to meet specific standards of licensure and tax reporting, much as investment companies are required to do. They might also go after crypto miners, placing restrictions or taxes on their Morian mainframes These are hardly out of the question when we examine the history of the State, and its insatiable desire for money.

By this I don’t mean to suggest crypto is a bad idea; in fact, I own a great deal and will continue adding. Just avoid becoming too drunk on the swill of lolbertarianism. As Ronny boy might say, “The government wants what it wants.”

Culturalism · investing · Personal Finance

The Cost of Prosperity

For at least the past thirty years, allegiance to market liberal economics in the West has been colored by a mostly bipartisan support structure. Conservatives embrace capitalism wholeheartedly, while mainstream leftists operate under the Clinton-Blair-Renzi deluge of “Third Way” thinking. Skeptics do exist, yet even they carefully align criticisms to fit the neo-liberal sphere, certifying that the principal concept of meritocratic expansion is not too harshly eradicated. Because for all of its faults, the liberal economy is seen as the “best of the worst,” just like democracy seems to be the safe option for nation-state organization.

The threat of such ideological complacency rests with petty dismissal, not only of opposing viewpoints, but individual human lives. We see this most vividly with the destruction of traditional agriculture. After India liberalized its markets in the 1990s, the country saw a wave of suicide on the part of farmers reaching over 250,000 people, with the cause attributed to their inability to compete. Although free markets allegedly make products cheaper – allegedly – they also contribute to the conditions under which smaller producers may struggle to survive. This is due to the manner in which neo-liberalism causes farmers to compete with large, GMO-empowered companies who strive to corner the market with expensive seeds and equipment that drive agriculturalists into debt. All it then takes is a drop in commodity prices for the little guy to lose his family farm and fall into despair.

On the latter point, the “it’s good for the economy” argument related to pricing of goods hides major cynicism. Cutting out pesky regulations and tariffs may result in cheaper products for the world at-large, but these basic (and typically lower quality) items look rather toxic when they come at the expense of one’s livelihood. In line with the India example, Syrian farmers were left destitute after Bashar Al-Assad signed a free trade agreement with Turkey that flooded the Damascus world with cheap imports. Think too of Midwestern Americans being able to afford a fancy smartphone thanks to globalization, while working a minimum wage job to replace the factory’s closure. Goods may be cheaper, but so are wages, or employment itself.

Where quality is concerned, the issue goes beyond a thing’s basic utility. GMOs and preservatives might have theoretically allowed us to feed much of the world by diminishing the risks inherent to poor harvests or malnutrition, but are the costs worth it? America for example has incredible rates of deadly disease tied directly to the typical Burger’s horrendous diet. Greasy and processed foods seem convenient, and still the outcome is destructive. We have lost sight of concrete natural cycles in order to feel like nothing impedes the bustling of everyday lives, and our jobs which have no meaning.

Affordability can also reduce the value of an item, even for the classes who are better-positioned to enjoy it. The more we accumulate, the less individual possessions matter, leading some down the path of aggrandizing products simply to extract value from a paycheck. “I have money so might as well spend it,” becomes the zeitgeist of distilled existence. Then on the opposite spectrum we see those made poor by liberal prosperity, who must compensate by describing their own lifestyle as a dynamic dungeon escape towards the mythical land of Minimalism.

Imagine if instead those souls worked the soil they stood upon for the food in their mouths, the love under their roof, and the belief clasped to their hearts.  

Culturalism · investing · Personal Finance

Does Gold Really Have “Intrinsic” Value?

Hanging around investing circles results in the brain being peppered by a plethora of loaded talking points. These might include specimens such as “Value Investing,” or “Contrarian Growth,” themselves miniature tribes to help organize the sphere of economic debate. An especially lovable variety is the claim summarized as, “Gold is better because it has intrinsic value.”

Yet does this argument stand up in the real world? The term “intrinsic” is defined as “belonging to the essential nature or constitution of a thing” by our frat bros at Merriam-Webster. Applied to gold, the concept becomes a little bit dicey, to say the least. To be clear, Burl Ives’ beautiful metal can be employed to build a variety of modern technologies, so in that realm its naturalistic state may hold value, providing of course that no replacement substance is found. Other metals such as silver enjoy similar advantages, although they do not necessarily track the same price levels as those bright yellow blocks.

That being said, as a firm medium of exchange versus the mocked “fiat currency,” gold’s worth should be called into question. Currencies or assets are ultimately worth something based upon how individuals (or large groups) value them. In the United States, our government has long since adopted a policy of monopoly money inflation, but this doesn’t mean people ignore a $20.00 bill lying on the sidewalk. The piece of paper holds value due to perceptions of the institution behind it. Because America remains a major world player with powerful military resources, we have not been relegated to the status of the Zimbabwean Dollar or Argentine Peso, even against eternal criticisms by Austrian-leaning economists. Inflation is of course real in the United States, but our country’s position prevents it from becoming as  visibly horrible and destructive as it might otherwise be. Were the nation to lose its international standing, or if large swaths of the population suddenly reject paper money, this would of course change.

Gold on the other hand appears safe because there is a limited known supply on earth, and it cannot be printed by central banks. True, but technology exists allowing scientists to create the metal in a lab, and while it is presently cost-prohibitive for businesses, could a powerful government with the ability to print endless sums of a (valued) currency not pursue the endeavor, and succeed in flooding the market? There is also the possibility of more sophisticated approaches being developed to reduce the expensive nature of the process, which would radically disrupt the metals bazaar.

Placing all else aside, gold like any paper currency retains value largely due to how people perceive its worth. If we take the extreme scenario of inflationary and societal collapse peddled by libertarians, the glistening doubloons will only matter for those who wish to have them, or folks seeking to construct things from the metal. Most people are liable to be interested in bartering for guns and food, two resources less popular in the Wonderful World of Mike Maloney. Not to mention the influence of private armies who could well issue their own currency, enforced as always by the barrel of a gun.

With all this I seek not to dismiss the importance of precious metals in an investment portfolio. My own includes them (but more so silver), and concentrating your resources into one asset alone is risky. It is however crucial to not drink deeply of the popular swill pushed by gold marketers. Last time I checked, most (if not all) are taking payments in that crisp-smelling green paper doomed to make our bank accounts absolutely worthless.  

Stay safe and take the Gold Pill.   

Culturalism · Federal Government · investing · Personal Finance

Is Economic Decentralization Actually Good?

Among libertarian circles in the United States, there is a stalwart love for the concept of the gig economy model. The late politician Harry Browne openly advocated that employers should sack their workers and rehire everyone as independent contractors, while Gary Johnson was arguing for the Uberization of everything just a few years back. Their logic holds that getting outside government restrictions allows individuals to earn more, and companies to spend less. It sounds almost like a win-win scenario across the board.

Of course things are far more complicated in the applied economic sphere. As much as 1099’s and “zero hours contracts” are streamlined to begin with, the State has not cooperated with matters going forward. Contractors are thus left having to put aside money throughout the year in anticipation of a tax charge that would otherwise be taken out from the regular employee paycheck.  The result is people (especially the more youthful) getting shafted when they forget or fail to accumulate enough in savings to meet the annual tax bill. In theory the model is more efficient, but also dangerous to the average person’s financial picture.

Being off the hook for standard deductions can also increase the chances of having to purchase health insurance directly as a consumer, without any employer subsidies. Again, the model sounds great, though participants need to be careful about the type they buy. Cheaper health insurance plans and health sharing programs can elect for special rules to delimit their liability for conditions otherwise insured by federal mandate. An example of the shortcoming centers on the story of a diagnosed cancer tumor being deemed a preexisting condition, allowing the Medi-Share plan to deny financial support for medical services. The patient managed to successfully appeal, but at the cost of stress from a five-figure treatment bill.

High personal costs are often accompanied by unimpressive pay for gig workers. Although a top-performing delivery or rideshare driver can theoretically bring in over $1,000 per week, this is liable to demand long hours and no off days due to the nature of the market. Of course none of the money totals are guaranteed like a regular worker’s paycheck, so the pressure level can be astronomically higher, leading to mental health issues. Tie everything to the need to maintain one’s own car, and the picture becomes solidly grimmer.

The other issue with gig mania is the propensity for the leading firms to suppress individual freedoms. While Uber and Lyft have long been heralded as a way for the market to beat back the corrupt taxi union cartels and their big government supporters, they also permit a few silicone nerds to control service access. Uber itself recently admitted to banning 1,250 riders from the app for not observing corona mask restrictions. That’s over a thousand people who can no longer use the taxi service because their name and info has been blacklisted, and doesn’t include the political figures banned from their cars as well. A traditional cab would allow you to pay in cash, hence even those marked for derision would have the option to ride.  

So yes, decentralization has granted us enhanced freedoms, but in a twisted, cynical way. No longer must we tangle with the machinations of payroll; instead, one can simply stress and struggle to conserve money before STILL filing taxes amidst those April flowers. Hours are flexible, but so is the ability to even make a living. The greasy, unkempt medallion taxis have been replaced by loyal contract vehicles, but watch what you think, or they’ll pass on by.  

Ahh, the taste of liberty!

Culturalism · investing · Personal Finance · Self-Improvement

How Long Will The Simple Yet Be Mocked?

Sometime back I produced a video concerning the problems entailed by our dalliance with modernity and technological progress. My penultimate suggestion was for people to re-embrace nature, opting for smaller communities with solid values over the cosmopolitan sprawl, or farms instead of NYC apartments. In response, lurid and sarcastic replies bubbled up from the happy Ethernet cords wrapped around the electric maze of the world. They smugly advised, “Practice what you preach,” the comfortable retort that allows irritated lumps to quickly resettle into the brain-destroying digital resort without feeling a call to change.

For the record, I have already made leaps and bounds in the “less-grid” direction. I own a decent plot of land with two well systems, a garden, and a large walnut tree. Composting is a regular practice, and I am gradually shedding processed foods from the dietary plane, in many cases creating consumables from scratch. My skills with crafting clothes by hand are not immaculate, but they improve on the regular.

None of those disclaimers should matter insofar as the thrust of history is concerned, however. Recent reports, which are only surprising to the uninformed and socialist, suggest Wall Street is now delving into futures contracts involving water. The development has tickled many concerned senses because of projected water shortages, with two-thirds of the planet’s population expected to face supply issues by 2025, with many already experiencing the unpleasantness.

Enlightened folks have seen this coming for years. The incessant push for growth, for globalization and free movement of peoples, all in the name of economic profit, can lead but in one direction. As basic natural resources shrink and the gluttonous thirst to build more continues unabated, there will be further attempts to buy up valuable land and lord it over the poorest of creatures. Even the homeless squatter in the woods may find himself litigated out of existence so some sycophantic corporation can expand its quarterly earnings report. The dreaded sludge seeps on.

What can any lone man do? Resist with lifestyle choices. Take your wallet and carefully consider where to settle, hopefully escaping the pollution and scum-populated urban areas for distant peace. If funds are not available for a house, buy the land itself, preferably with access to fresh water. Get a camper or a van to start with. Look into solar and gravity-powered technologies. Learn to cook. Respect natural systems and work to preserve them. Read so you understand the problem.

As for investment options, look into Xylem and PIO as starting points, along with others. The former has experienced a decent run, and I’ve witnessed its penetration on a local basis too. PIO thus far hasn’t wowed anyone, but that could change. Watch out for that pricey expense ratio, which currently clocks in around 0.75%.

More than anything, be prepared to swim, even if you dance amid the sands of a dry wasteland.