I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
This is the End and a New Beginning
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I've been thinking about this for some time.
After 21 years of writing this blog almost daily, I've decided to stop
writing the daily updates on the blog.
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Silver Deep Dive
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Silver had a memorable year (+148%). Some of this can be explained by a
decline in the dollar. I decided to do some ML analysis to look for other
insights....
Six in 10 adults say they even want to become a billionaire one day, according to a recent report.
If 60% of Americans get their wish, then hello hyperinflation. Talk about unintended wish consequences.
Some 44% of U.S. adults believe they have the available tools to become billionaires, largely fueled by speculative investments such as cryptocurrencies, according to the Harris Poll’s recent Americans and Billionaires Survey.
Gone is the old school illusion of prosperity era. All hail the new and improved delusion of prosperity era! 44% can't be wrong!!
Behold the household wealth creation of a pandemic combined with ZIRP. Broken window fallacies be damned. Break them, and break them good I say. It's a brand new era of unprecedented prosperity! And should this plan ever start to falter, look for plague, pestilence, and NIRP to save the day!!
Seriously. Other than recent bitcoin and stock market performance, there's absolutely no reason to fear downside risk or reversion towards the mean theories. Even in uncharted territory, the Fed always knows what it's doing. Always has your back!
I know I said I was serious in the last paragraph. It was gallows humor. Sorry about that. I actually just bought more I-Bonds. Not only do they track inflation as seen in the CPI, but they can never deflate. Not that many are all that worried about deflation again. Yet.
The following is a list of the recent incoming phone calls on my cell phone.
You would need to be quite the optimist to think the call from Haiti wasn't also a scam. They left a long message trying to convince me otherwise, but their warning that I have not yet renewed my car's extended warranty is something that I've been aware of for several decades. The car was purchased new in 1996.
Last year, Jim Chanos called this the golden age of fraud. Thanks in part to the easy money policies of the Fed and the new and improved speculative nature of the markets, I suspect that we've reached the platinum level. Hopes and dreams with smoke and mirrors? Be careful out there. I doubt history will be kind to those thinking there's never been a better time to swing for the fences.
If the news says interest rates are rising, that's a forward looking opinion. It is not a fact. It is a prediction. In sharp contrast, if the news says interest rates have been rising, that’s a verifiable backward looking fact.
As examples, when the temperature recently hit 110 at my home, I would never have said that the temperature is high and rising. 110 was the peak. When a submarine reaches the surface of the ocean, no sane person ever says that the submarine is high and rising. The submarine is obviously done rising.
So why does the news do it with interest rates? It’s subtle. It’s biased. And I wonder if anyone else notices that an opinion often sneaks in there where a fact should go.
If it was so easy predicting where interest rates were truly headed then we could all become heavily leveraged bond day traders and never lose money. And yet, plenty of bond traders do lose money. I suspect most money is lost betting on what the news implies is obvious, while the professionals and algorithms take the other side of those trades.
One would think that since interest rates had been falling for 40 years, the burden of proof would be on those predicting the long-term reversal to rising interest rates. And yet, for at least the past 20 years, the burden of proof has always been on the “Japanificationists” as they continue to simply predict more of the same.
And on that note, I offer my opinions and predictions of more of the same.
1. Although inflation is running temporarily hot, we are not returning to 1970s style interest rates anytime soon, if ever, at least in my lifetime. Bet on long-term interest rates north of 3% over the long-term at your peril.
2. The recent growth of inbound loaded containers into Los Angeles and Long Beach (as seen here) is ridiculously unsustainable over the long-term. The recent growth of shipping costs into Los Angeles and Long Beach is therefore also ridiculously unsustainable over the long-term. Any price inflation seen inside those fully loaded containers due to extreme growth in the number of containers and their associated shipping costs is therefore also ridiculously unsustainable.
3. I don't want to sell anything, buy anything, or process anything inside those shipping containers when a sustainable reality hits. I don't want to sell anything bought or processed, or buy anything sold or processed, or process anything sold, bought, or processed, or repair anything sold, bought, or processed. Yes, I'm having a Say Anything moment. Pent-up demand can easily lead to pent-up demand destruction. I want no part of the latter. We did overshoot to the downside as the pandemic hit. We are overshooting to the upside now. We can easily overshoot to the downside again (like a pendulum with little dampening), especially if the Fed feels the need to fight transitory inflation.
This is obviously not fantastic investment advice. If it was so easy giving fantastic investment advice then we could all become heavily leveraged traders and never lose money. Right? Seriously.
Sorry to bring up heavily leveraged traders twice in the same post. I guess I just have historic margin debt as a percentage of GDP on my mind. Shouldn't be a problem in a temporarily overheating economy filled with sure things like SPACs, NFTs, cryptocurrencies, and Tesla though. What's the worst that could happen?
This is the current weather forecast for where I live in Western Washington. I've lived in this home for more than 24 years and have never seen a more dire weather report. July and August are our hottest months, averaging roughly 78 degrees for a high. This is June and a whopping 111 is possible, if not likely.
This is our new homemade swamp cooler. It was built using a styrofoam cooler, 2 leaf blower elbow attachments, and a personal fan. Holds 16+ pounds of ice. Won't cool a room but does offer some relief if sitting in front of it. Designed for two. Each nozzle can be rotated independently.
Current estimated retail value in a world where bitcoin trades at $30k+ (and air conditioning units are in short supply) is conservatively estimated to be $15k+. That's just half a bitcoin for this truly unique and rare limited edition item. Not saying that you should embrace FOMO (fear of missing out) here, but the manufacturer will not be making many more. And don't forget to YOLO (you only live once). Item will be available on or after Tuesday. Free shipping! Personalized handwritten thank you note from the designer included with every purchase! ;)
James Bond: Yes, well, I've worked out a few statistics of my own. Fifteen billion dollars in gold bullion bitcoin weighs ten thousand, five hundred zero tons. Sixty Zero men would take twelve zero days to load it onto two hundred zero trucks. Now, at the most, you're going to have two hours before the army, navy, air force, marines move in and make you put it back.
Bitcoinfinger: Who mentioned anything about removing it?
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James Bond: I apologize, Goldfinger Bitcoinfinger. It's an inspired deal. They get what they want -- economic chaos in the West -- and the value of your gold bitcoin increases many times.
Bitcoinfinger: I conservatively estimate ten 100 billion times.
Love this advertisement. Let's zoom in for a closer look.
South Park is using obsolete old school thinking. Why limit yourself to a 100% loss? Leverage up! A 459.66% loss for the win! 20 million people can't be wrong!!
Tesla should make digital teslacoin. Each coin would buy one Tesla of your choice. Tesla would sell the coins directly and the price would initially be set to equal the most expensive Tesla currently being sold. The coins are also collectible and transferable. Only 21 million will ever be made, so they should appreciate dramatically in this environment. And if, due to the rarity of these coins, they do appreciate, investors may wish to hoard them instead of using them to actually buy a Tesla. This could transform Tesla into the first auto manufacturer that no longer needs to manufacture any cars. Investors make money. Tesla makes money. Win win.
If this idea is successful, it could spread to all the other areas of our economy. At some point, we may never need to manufacture anything real again. Just go 100% digital. Let them eat cakecoin! Everybody wins!
Some are arguing that there may be excess speculation in the markets, but I take comfort in the bitcoin to GameStop stock price ratio. It’s really starting to stabilize.
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