All Signs Point To Economic DEFLATION on my end; in my opinion, now is NOT the time to buy the dip: Cathie Wood’s Ark Buys $60 Million In Bitcoin, After FTX Collapse – November 23, 2022,
When Joseph Robinette Biden Jr. became the 46th President of the United States of America, it became pretty obvious to me that the United States was headed for a recession, especially after he signed all of those Executive Orders, which all revolved around adding more REGULATIONS to the U.S economy. I’m not a believer that central banks have the power many imagine them to have; I’m more of a regulations person; by that, I mean I imagine regulations to economic activity as the ROOT cause financial depressions.
Bitcoin is evidence of my claim; Bitcoin BOOMED under the Trump administration; I initially liked Trump, and even as I’m writing this post, I remember being fond of Donald Trumps REGULATORY policies, I should say fond in comparison to his predecessors, but where Trump turned out to be an idiot, was regarding central banking.
What Trump couldn’t comprehend was that his cuts to regulations would have equated to allowing the Federal Reserve to normalize interest rates, with little damage to the economy, thereby making a Joe Biden spending spree LESS LIKELY. Most financial morons tend to imagine low-interest rates as a sign of economic STRENGTH, when in fact it’s actually a sign of economic WEAKNESS.
Anyway, long story short, by hook or by crook Joe Biden beats Donald Trump in the 2020 election, and the crypto markets completely misinterpret what this means to their fortunes. When Trump attempted to humiliate Jerome Powell into lowering interest rates, it was a clear sign to financial observers that Trump was worst than SCUM. Joe Biden probably created the WORST economy in U.S. history, but to date, Biden has been silent on the Federal Reserve.
Now, I personally think Joe Biden is the dumbest President in U.S. history, but he’s smart enough NOT to get into a war of words with the Federal Reserve. The reason the Federal Reserve is raising interest rates is that consumer price inflation is running RAMPANT; under Trump, asset inflation was running rampant, but what the reader should know is that BOTH should be considered the SAME THING.
Asset price inflation is indeed CONSUMER PRICE inflation; the only difference with asset price inflation is that it allows people and businesses to BORROW MORE. So assets like Bitcoin were rising in price as Zero Percent Interest Rate Policy(ZIRP) appeared guaranteed FOREVER at the time. So if ZIRP was the new normal, BITCOIN to the moon, because one could say at the time that it was game, set, match on the Fed.
But clearly, people forget the Federal Reserve and modern central banking in the WEST revolve around preventing economic DEFLATION. Now, under Trump, ballooning asset prices would have led to higher ASSET prices, which then get passed on to consumers with ARTIFICIALLY high prices; under Biden, things are much worse because we, all the government SUBSIDIES(i.e., price controls), get undermined, once ASSET prices start to retreat.
Minimum wage laws are the root cause of manufacturing jobs leaving the United States, once those jobs are gone, the politicians NEVER create economic policies to bring them back, instead the politicians will create a whole new spending program, which is also dependent on price controls, so Joe Biden’s war on fossil fuels as an example attempts to PHASE OUT domestic fossil fuel production and apparently replace it with high paying unionized green jobs?
Ok, sure, buddy, if you say so…
But in the meantime, this Green centrally planned economy has to find a way to make these numbers work, and in case you’re not paying attention, most of these green and renewable energy companies would be BANKRUPT without government subsidies. I like to remind people Tesla Inc is still unprofitable without government incentives to “green” technologies, I know people keep calling Elon Musk the richest man. Still, he’s rich mostly because most people imagine EVs as the future, and so they’ve priced Tesla Inc into the future, but if we were to value Tesla Inc, based on the PRESENT numbers, it’s not a good investment.
Why this matters is that Bitcoin, as an example, was priced into the future, Bitcoin was priced based on a few ASSUMPTIONS, QE Infinity, and ZIRP until the system crashes. Well, the consumer price inflation is DEFLATIONARY, and because modern central banking seeks to prevent DEFLATION, the Federal Reserve has to go to war with Government spending.
As a market participant, the only time PRIVATE BANK interest rates bother me is when I can’t cash flow on the debt I borrow. Understanding this ONE mechanism should be an indicator to you that Central Banks are USELESS! Most of the money printing comes from the private sector; if the private banks DON’T want to lend or the SMART, savvy business people don’t want to borrow, it’s a clear sign something is WRONG with the economy.
The reason I tell people I do not want a GOVERNMENT Gold or even Bitcoin standard is that DEMOCRACY trumps money. What I mean by that is if there’s a gold standard for example, and there’s a perceived economic downturn, the voting public will likely vote to CONFISCATE money from the “rich.” If you’re a Bitcoin hoarder, you might say to yourself, well, the government can’t take my encrypted Bitcoin; that’s true, but they can make it DIFFICULT for you to spend it.
I’m a huge fan of having a Crypto hardware wallet because I see Bitcoin as an ASSET, but for people who want to spend or trade Bitcoin day to day and hope to have it replace the Fiat money system, I 100% disagree with that because until humanity evolves to hate tyranny, the government will OWN point of sale purchases.
All the government has to do is force businesses to report crypto transactions for the crypto revolution to be stopped. One of the reasons the central planners want to BAN CASH is that cash is DECENTRALIZED; once I take cash out of the system, you don’t what I’m doing with it. Even if I buy Gold or silver, once it’s out of the system, you don’t know what I’m doing with it. With crypto, it’s not really decentralized becasue most GRIDS are centralized.
Why I bring this up is that crypto is indeed a reflection of the economy; in fact, the declining price of Bitcoin, from my point of view, is an accurate measurement of ECONOMIC deflation; people are running out of money, so they’re SELLING their bitcoin, and I’d argue that Cathie Wood buying up Bitcoin is making the situation worse because the last thing Bitcoin needs are MONOPOLISTS.
Ethereum Whale With 720,000 ETH In Bag Awakens Suddenly After 2-Year Slumber | forbes.com
I personally don’t like the idea that there’s something called an “Ethereum Whale” that’s not a good thing; I don’t think people want to replace a ruling class with another ruling class. The FTX person was a huge donor to the Democrat Party; not a big deal, you say? Well, suppose Binance was a huge supporter of the Chinese Communist Party. Is that a problem?
Cathie Wood’s Ark Invest Bought $60 Million In Bitcoin because she imagines this is as low as Bitcoin will go. I certainly won’t buy if I think the price will go much lower, so Wood, I assume, imagines the FTX blow-up as simply mismanagement from ONE crypto-derived entity, and that’s fine; my thing is that I see the selling in FTX as a sign that people all over the world are RUNNING LOW ON FIAT MONEY to pay their bills.
If I imagine the price of something is going up, I’m not selling. Still, there’s also another type of seller, the seller who only had money to purchase crypto assets because they got their crypto money free from some sort of STIMULUS check from the government. When the government robs Peter of paying Paul, people tend to forget that Paul hasn’t earned the money he’s received, and so Paul will likely MALINVEST in the economy.
All of these incorrect pricing signals will eventually dissipate, and this is why I keep writing about AUSTERITY MEASURES because that’s what I see in the future. When I make reference to austerity, I have to point out that sometimes it takes DECADES before people realize that government regulations on economic activity are the problem, meaning that Paul will have his hands in Peter’s pockets for a long period of time until the CENTRAL planners figure out that their interventions into the economy are causing a financial DEPRESSION.
If a Depression is indeed here, I see Crypto being a CASUALTY because the government can BORROW money from the central banks for as long as people accept the fiat currency; depression can be HIDDEN while inflation continues to run RAMPANT. In my opinion, this is why I see Cathie Wood’s Ark Invest betting they’re buying the dip, a VERY risky bet.
Interesting times ahead!