Is This Ever Going to End?
A brutally honest take
So much for a “Santa Claus Rally” to close out 2021. Upon embarking on a steep rally over the last week or so, the U.S Dollar had not been pricing in a financial calamity as most suspected, but the latest rotation in a neverending rotisserie of COVID-19 strains: the “South Africa” variant, codename B.1.1.529 . Or “Omicron,” if Michael Bay’s Transformers is your secret shame.
Mapping the strain’s rapid spread to almost all continents, the media’s COVID-19 machine kicked into operation, from the New York Times’ dedicated Covid tab reading: “Variant Alert From South Africa Prompts Rush to Halt Flights”, to the Wall Street Journal’s front page stating: “Omicron Identified as Covid-19 ‘Variant of Concern,’ Triggering Global Fears”. Finance goliath Bloomberg broke the news of Europe’s “patient zero” in Belgium, joining Botswana, Canada, Hong Kong, and Israel in the oh-not-this-again bucket.
Meanwhile, as investors’ Thanksgiving turkeys reduced to trimmings, risk assets already bid to the max by institutions, retail, and the passive-investing industrial complex, sold off hard and swiftly. Global stock indices, commodities, and bond yields joined the depressed corporate bond market in a sharp move lower, while Gold rallied 0.1% on the day — and out of media prohibition. Its supposed “rival” Bitcoin, however, once again proved itself to be a speculative asset, not a shield against economic uncertainty — or “FUD” for that matter — plunging 20% month-to-date.
“If after this morning you still think [Bitcoin] is a hedge against world events, or represents ‘diversification’, you must stay out of finance, & take up some other hobby s.a. stamp collecting, bird watching or something less harmful to yourself & others,” a no-filter Nassim Taleb tweeted, adding further fuel to the increasingly toxic “money culture war” of the 21st century.
As usual, Finance Twitter’s response to the market carnage was not calm, but was to indirectly signal to the Federal Reserve that it must unleash yet another obligatory pump from its monetary cannon:
Over time, as euphoric markets have turned every last bear into bulls (well, maybe not Sven Henrich), every class of investor, from gold bugs to crypto influencers to “AMC apes”, have gone straight from market expert to Oliver Twist begging mode at the first sign of turmoil, praying Fed officials will initiate the next monetary “stimulus” jamboree. The Fed’s commitment to “stable prices” has become a euphemism for a rising S&P500, turning investors into donkeys eager to reach the next carrot on a stick.
This says it all about monetary culture in the cheap money status quo. We’ve become so tied to our assets they’ve become our second child. The detachment of empathy when money comes into play has become a particular evil, and somewhat necessary in capitalism, but even more so now, as our financial futures rely on one stock market index mimicking an Evel Knievel stunt-jump. The Journal’s hopeful-but-naive attempt to address this solemn reality, via an article entitled: “Thanksgiving Covid Variant Reminds Markets of the Important Things in Life” remained futile, in the face of plummeting P&Ls and the subsequent panic.
This constant solicitation for the Fed to prop up markets has created the false impression that the U.S monetary system is somehow close to perishing, that we’re approaching some kind of major economic regime change. But unfortunately for doomers, it’s nowhere near collapse. The financial tomfoolery we’re witnessing is just another symptom of a dying economy of a hyperpower with no major rival, and one that also happens to possess the most powerful political, economic, and monetary weapon worldwide: the mighty U.S Dollar.
While we're in this global stalemate, the U.S. financial elite should be exploiting the system. Based on history, they have every incentive to abuse their power and position. Moreover, it's their actions combined with America’s unrivaled dominance which has allowed today’s “euphoric dystopia” to develop.
All this time, the path to transforming the U.S. into more of a “euphoric utopia” has been to address corruption, bribery, and lobbying in the upper echelons of society, to wring out the corrupt actors within our major monetary, social, and political institutions, except this is the opposite of how the system works today. Leaders brush this aside through divisive politics, which have become a tool to divert our gaze away from the status quo. Via propaganda and manipulation, we’re constantly distracted from addressing major issues while focusing on trivial ones at the bottom of an ever-increasing inventory.
One of those trivial issues is that we need to “fix the money,” but the fiat system — though it's hard to believe — came about through consensus and natural long-term money cycles, not via conspiracy. Yet the reverse appears true and is becoming an illusory truth, because a new religion has arisen, fueling a distaste for democracy and the nation-state, and distracting us further from demonstrably corrupt officialdom. More and more citizens have begun plowing their passion and energy into the most unfeasible solution: the dogmatic mainstream movement of “Bitcoin maximalism”.
Spread by crypto grifters, the dogma and doctrines of Bitcoin continue to perpetuate monetary myths and misinformation throughout the general populace while eliciting an emotional reaction in citizens to get them to enroll in a cult-like movement, one that hopes they have no understanding of how the modern monetary system works or how money is more than monetary i.e. it’s social and political too.
After Bitcoin evangelist and dictator Nayib Bukele held “Bitcoin Week” in El Salvador, Bloomberg interviewed crypto enthusiasts attending the event, but almost every assertion they made regarding economics and the monetary system was either inaccurate or simply untrue. When you hear members of your clan make statements like this: “Bitcoin is the escape hatch for what is fixing to happen, the collapse of the U.S. dollar, bio-weapons and extinction-level events,” you start to question if you’ve mistaken a monetary conference for a local flat earth get-together.
The article also goes on to mention how attendees: “decried the U.S. dollar and warned of pending hyperinflation.” But this happens to be the classic outdated economic fable of the 21st-century, which anyone instigating a monetary revolution should have understood as Gospel before going all “Che Guevara” on the Greenback.
#Myth 1: The U.S Dollar collapse is imminent! #Fact 1: The U.S empire has its own printing press and, providing the Fed does not print more currency than economic productivity in the real economy, it can print as much as it wants, as long as Washington D.C allows the debt ceiling to rise — which it always will. The U.S. government cannot become insolvent or default on its debt when it has access to unlimited funds and holds the global reserve status.
#Myth 2: The Fed’s money printing is causing hyperinflation! #Reality 2: Even after a 40% increase in the money supply, which is only one of many factors causing inflation, including supply chain issues and the great COVID reopening trade, inflation only stands at 6.2%. This is because the Fed only “prints” bank reserves, which can’t enter the real economy and can only be traded between banks.
#Myth 3: But the government lies about inflation! It’s more like 15%!!! #Reality 3: The 15% figure comes from ShadowStats and the Chapwood Index, which just added a random integer, with no scientific or economic methodology backing it, to the CPI index. That’s it. Despite many economists debunking this as disingenuous pseudo-economics, it has become an indisputable fact in Bitcoin circles.
Not helping these myth’s debunkings are Bitcoin’s major advocates, who have become the worst offenders of faulty modern economics. When you witness the Winkleveii brothers running rampant on Twitter, maturing into the mainstream econ thinkers, insanity will likely prevail, as a recent example shows:
Through his proprietary Winkleveii Index, Financial Times’ Jamie Powell took a well-deserved jab:
Most of this flawed rationale comes from a disastrous combination of outdated and constantly debunked economic theories, one of which was going off the gold standard because of an economic conspiracy. This was no ploy. It was the natural iteration in the long-term money cycle. Since around the start of the Axial Age (800 to 200 BCE), when global wars subside, human trust increases and takes a dump on hard money, replacing it with an elastic system of credit and debt. It’s not a coincidence that we went off the gold standard 25 years after Hitler called it quits.
Nowadays, attempting to implement ultra-hard money like Bitcoin as the global reserve currency in 2021, when we’re experiencing all-time lows in global poverty, border invasions, and war, is like trying to get Tether’s executives to complete a full audit: It's never going to happen.
With Bitcoin, unfortunately, it does not stop with bad economic theory. It's hard to believe the very movement which set out to liberate the masses from a financially repressive regime not only increased economic disinformation but fueled a misunderstood hatred for various key elements of the nation-state, the fabric that holds modern societies together. Bitcoin dogma correctly points out that many systems built for the common good have been corrupted from within, but provides the most destructive solution imaginable: give up trying to improve these institutions and eliminate them, throwing out all laws, rules, and protocols. They claim this will create a utopia, but it will bring about a dystopia akin to The Purge: Anarchy, where instead of U.S Dollars, there's Bitcoin. Sounds fun, huh.
Though most disorder originates in institutions, removing the centuries of human progress created through trial and error within them sounds great for ten seconds, then you realize it’s an insane approach. Bitcoin is just a flawed attempt at resetting human nature wrapped in techno-futurism, bolstering a neofeudalist tomorrow.
Instead, we must focus on the endless plethora of issues at hand, but the problem is where to start. Until, among other things, we revive America’s once-mighty manufacturing arm, until the financial elite fixes the shadowy Eurodollar system, until the super-rich magically start paying their taxes, until we stop corruption at the highest levels, until we stop enabling and allocating capital to grifters and psychopathic nutjobs, “etc.”, we’re well-and-truly buggered.
Worse, before we can even attempt to solve these issues to resurrect a dying empire, Covid-19 must be destroyed, as its effects on society will give the word “strain” a whole new meaning. Phony growth created by endless money conjuring will continue to replace real economic activity, fueling mass malinvestment, fraud, and wealth inequality. Products of bailout economics, rock-bottom interest rates, and an endless supply of “risk-free” debt, the likes of Elon Musk, Cathie Wood, and other accidental beneficiaries of the cheap money era, will not just survive but continue to promote fake innovation to the masses, removing capital and the limelight from real innovators who we so desperately need. And the 40% of zombie corporations in the Russell 2000 Index? Those companies will become an ominous sideshow, as major stock indices turn into zombies themselves.
Lockdowns, meanwhile, will grind on our mental health and send us back to gorging on the paradigm of sedentary living. Already under severe financial stress from years of zero custom, small businesses will continue to lose out to the path-of-least-resistance behemoths of Netflix and Amazon. Once we inevitably become bored of watching our iRobot clean up junk food wrappers we’ve been chomping on or lose the will to complete another 5,000 km on our $2,000 exercise bike complete with an oversized iPad, we’ll escape into one, two, or both of the new dystopian metaversal worlds, either Zuckerberg’s “Meta” or the crypto elite’s latest grift: Web 3.0. Primed with the latest round of stimmy checks, but starved of productive things to buy, citizens will start to succumb to pseudo-innovation, throwing their wallets at gimmicks and grifts like useless crypto tokens, anonymous “crowdfunding”, even “overpriced JPEGs”.
This sounds alarmist, but it's not doomsaying. It's the reality. It’s what’s happening now and will likely continue. We’re stuck in an ever-increasing doom loop of insanity, and there’s no way to sugarcoat our predicament. Until we find a way to exterminate this constantly mutating virus, it will continue to not just bolster but strengthen the cheap money status quo, reinforcing every sinister defect, degeneracy, and abnormality that comes with it. All we can do now is pray for a modern-day Edward Jenner — providing he or she doesn't get censored for the covid era equivalent of controversial smallpox injections — so we can at least try to resolve the gigantic mass of economic, social, and political quandaries hell-bent on plaguing society.