I love it Bitcoin was all the way up to $15,361 when I looked. And, since I sold my short position in the market, I’ve been more than pleased to watch Bitcoin because it’s a sort of “coincident indicator” of the National Delusion we’re all presently living under.
Seriously? A year ago Bitcoin was what? Do I see any hands? $768. But everyone’s getting into the game now: Bitcoin to start futures trading, stoking Wild West worries.
That pencils out to just about exactly twenty-times its price of a year ago. If you think this isn’t a Bubble, may we propose rehab?
Not too many people have clarity when it comes to understanding cryptos.
True, it’s an alternative means of exchange, but so are gold and silver. What makes cryptos useful is they are hard to hack. Experts say, however, that when the first quantum computers hit the market (inside five years) the time-to-hack will drop to around a minute.
But we don’t have to wait: Digital currency exchange NiceHash says bitcoin worth nearly $64 million hacked.
The next thing to worry about is that legislation is likely. One proposal would designate Bitcoin a “bank” and that would result in government reporting and THAT would blow one of the main functions of Bitcoins – secrecy in banking. Start circumventing government intent and how you’ve got a criminal discussion.
And it gets better.
You see, Bitcoin is a limited production commodity accessible only through mining, at least from the outset.
That’s unlike the host of other cryptos that have come along. Most of these don’t go through anything like mining. There’s just a huge amount of coins set aside for the founders.
Follow this closely: because there is no mining, and the only way to get some of these is by paying cash, that essentially turns the underlying “thing” into an unregistered security. And that’s clearly illegal, even under present law.
About here, you may be wondering “With all these land mines and trip wires – and with all those sealed indictments around the country that no one knows that that’s all about…could THAT be what’s coming?”
Hell, I dunno. Could be that, maybe a massive arrest plan for South American gangs, human traffickers, kiddie-porn rings, or…who knows?
BUT one thing I was really clear on – when George Noory was so kind as to interview me on the new non-fiction book I have that’s just out (ebook and paperback, see Dimensions Next Door: Hacking Space-time) is that the market has a major Q1 problem to address in January or February.
We’re quickly running out of “good news.”
What’s in that timeframe?\
Well, the Fed’s got to crap or get off the pot on an interest rate hike. Mueller’s going to have to “put something on the board” to justify all the fishing expedition headlines. Plus? We’re moving dependents out of Korea, so that looks to blow in February or maybe early March. Toss in oil prices and the glut will begin to disappear…and earnings will begin to drop in quality….why there are all kinds of good news items for now that could FLIP.
Which get’s me back to Bitcoin.
I don’t care if there go to a trillion…they seem to me to be about the best indicator of euphoria there is. The price of BTC screams “The Bubble is Still On!” in notionals.
People I know, like my deflationist pal Jas Jain, pragmatically point at the failure of the 10-year bond to move and issue stern warnings to all who will listen.
Go over here to Yahoo Finance and look at the maximum time scale on the 10-year (^TNX) and you’ll see his case: We have been in a 36-year, long wave bond yield decline and we’re now in what I’ve described previously as the unavoidable mechanics of financial collapse.
Here’s how it works. (refer to the cocktail napkin below):
As the bond yield goes down, bond prices go up. In the summer of 1981, they were over 15.5%.
What also happens (at that extreme) is that stock prices collapse – hence the major recession in 1980-1983.
Now the other way around: When yields on bonds fall toward zero, the price of stocks can go infinitely high. Which (if you haven’t noticed) is where we are now and where I guess we could be for another year – or longer.
This is all orchestrated by the Federal Reserve which has no idea how to get out of the “box canyon” they’re ridden into, to put it in cowboy terms.
They SAY they want to raise rates. But the market obviously isn’t buying it. It’s going the opposite way. They know the Fed is BS’ing ’em.
THAT is because while the Fed talks a good game, the reality is that they have increased the money supply by more than seven percent annually.
BUT – and this is the box canyon part – they can’t just have a “come to Jesus” moment of brutal spiritual honesty and say “We have allowed the currency to become so debt-logged that it only has 4-cents of purchasing power on the dollar left.”
The reason they can’t walk Obama’s old “transparency” myth is that under Modern Monetary Theory (MMT), as long as they are making up more money than is needed, the economy will keep giving the illusion that it’s working.
I’m just reading Asset Pricing under Asymmetric Information: Bubbles, Crashes, Technical Analysis, and Herding (Markus Brunnermeir’s fine discussion) and the very first point he makes is that some market players will always have more, different, or less information related to price discovery than others.
What he doesn’t get into – but which would be a FINE PhD discourse for someone in today’s world – is How MMT effectively dampens the price-discovery oscillations.
In other words, when there’s an upward bias to the money supply, you have to start by “tilting your graphs just so” to reflect that you’re not playing in a casino with a level floor.
That, in turn, is where we refer back to the four classic information injection results described by Youssefmir, Huberman, and Hogg in “Bubbles and Market Crashes” available online here.
Flip over to their quad chart on Page 17, and you’ll see what I’m talking about.
What’s hard to integrate into viewing present-day markets is that the Fed’s application of MMT (print festival) probably has two axial effects.
First, the casino floor tilts due to the abundance of “money” coming into the system. Which isn’t a huge thing, but a factor for sure.
But the OTHER effect is it causes what in electronics would be effective “ringing” of a tuned-circuit. In this view – there would be a compression of the steepness of the curves because “money” being so easy (the Fed makes it so) that the angle of bubble ascent becomes more and more acute.
It’s obvious when you think about it: If there is no “new money” coming into a system, then in a simulation like the YHH paper linked above, you get semi-predictable results.
If money is going up at an honest rate, roughly corresponding to the growth of GDP, then bubble formation is less likely. But what if unlimited money arrived today?.
Suddenly – if each of us has unlimited money, the formerly bounded price discovery gets taken out back at executed. There is NO UPPER LIMIT with infinite money supply.
And that’s what all these models are about: YHH look at the “pure state” and then Bunnermeir looks at bubble dynamics, and Ure’s sitting here pondering what the math relationship is between excess money injections and magnitude & duration of the bubble.
I think in non-mathematical terms. But you don’t need much math if you can visualize selectivity in electronics.
A research note for Jas: See the discussion of how the Q-Multiplier in the O.G. Villard, Jr. paten is described on this page.
If you don’s have a PhD in DSP like Jas does, the notion is that as you “pull in the sides of a passband” that additional energy is translated to a “higher Q or peak due to sharp resonance” in an L/C (inductance and capacitance) circuit.
About now, I could delve into a HUGE discussion of the similarities between analog circuits and economics…gain, selectivity, Q, resonances, and the like. But, since I’m not teaching a class on interdisciplinary studies, we’ll just pass for now…
Still, the point about MMT and excess liquidity isn’t all bad: CoreLogic Reports Homeowner Equity Increased by Almost $871 Billion in Q3 2017/
So it’s back to the morning’s news flow…
Job Cut Report
Toss me the press release…
CHICAGO, December 7, 2017 – U.S.-based employers announced 35,038 job cuts in November, up 30 percent from the same month last year, when 26,936 job cuts were announced. Employers have announced 17 percent more cuts than in October 2017, when 29,831 cuts were announced, according to a report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
So far this year, 386,347 job cuts have been announced, 22 percent fewer than the 493,288 cuts announced through November 2016. This is the highest monthly total since April, when 36,602 cuts were announced. November caps the lowest year-to-date total since 376,057 cuts were announced through November 1997.
“While job-cut announcements have remained low all year, major M&A activity, such as the CVS/Aetna deal and the possibility of Amazon buying generic pharmaceutical manufacturers, could lead to a spate of large-scale job-cut announcements to open 2018, especially at Pharmaceutical, Retail, and Health Care companies,” said John Challenger, Chief Executive Officer of Challenger, Gray & Christmas, Inc. “
Hmmm…remember that the crank in the woods out in East Texas told you: Market’s going to run out of good news.
Then there’s General Electric to cut 12,000 jobs in power business revamp. That’s show up in coming months…
Oh wait….NASDAQ futures still up 41 – someone must still be crazy…you think?
Congress’s (next) Trump Gambit?
Middle East Stupidity
Hot times in HWood continue as Southern California wildfires force mass evacuations in Los Angeles.
Uh…this is rare: Man rescues rabbit from the flames
Corporate Tax Scam?
When I grow up, can I be a multinational, please?
Consider the Source
What baby talk sounds like around the world reports CNN…
(Oh boy, we’re on a roll this morning…)