Spot The Horse

Authored by Kevin Muir via The Macro Tourist blog,

http://themacrotourist.com/images/2017/07/MartyJul1817.png

Yesterday after writing my piece about Tesla and Bitcoin, I received an email from one of the smartest guys I know.

“Funny that you wrote about shorting Elon’s science project and GBTC. I just bought both this morning. Thanks for the extra liquidity. Always appreciative of those willing to sell me more on the cheap.”

I had to laugh. We hadn’t talked in a while, and yet here we were on the opposite side of the trade on the exact same day. And to give my pal credit, he was mature enough to not bother calling me an idiot, but instead realized that having someone on the other side of his trade is essential (See you on the Board), so he welcomed my skepticism.

My buddy is a big crypto currency bull. I am talking Ghostbusters-Stay-Puft-Marshmallow-Man size bull. He is so convinced that crypto currencies are headed to the moon, he is involved in creating another bitcoin listed fund. So when he gave me the next tidbit of information, I was smart enough to listen,

“I agree with your short term views on the valuation of both (TSLA and GBTC), but I will let you in on a little secret. There are not a lot of BTC bitcoin funds in the queue, and since we are one of them then I think I speak with a little more insight.

If my pal is correct, then that is indeed good information. I had assumed there was a huge lineup of Winkelvii type bitcoin ETF’s waiting in the wings, but if I am wrong, then maybe the GBTC premium will persist for longer than I imagined.

And some of my astute readers correctly noted that the borrow fee on the GBTC is quite excessive, so the perceived premium to NAV is not as “capturable” as I made out. Full Circle tweeted that the 80% premium was roughly the annual cost of borrow.

http://themacrotourist.com/images/2017/07/FullCircleJul1817.png

That means that if you were short GBTC, and the NAV was unchanged over the course of one year, even if the premium fell to zero, the borrow would negate your profits. Here is a pro-tip for the Bitcoin bulls out there. If you are long GBTC, then consider enrolling in a program where the borrow earned by the broker is shared with the client. I am not sure how many brokers offer this option, but Interactive Broker has a program called the The Stock Yield Enhancement Program that enables clients to participate in picking up extra yield by allowing their shares to be lent out. Obviously, that carries risk, and you should spend some time understanding the details of the program, but hey, why let the broker earn all that extra juice from the expensive borrow?

Other plugged in readers have emailed to pass on whispers about a certain big dog of a client, enamoured enough with cryptocurrencies to offer the ability for their employees to pay for their lunch in bitcoin, as the persistent buyer of GBTC. That makes sense. Right now there is no way for most funds to be long bitcoin outright, so buying the one listed instrument is the only real option. These fund buyers are probably not going away anytime soon, so the premium on GBTC might persist longer than I forecasted.

Back to my pal, the Bitcoin bull. He finished up his crypto call with the following warning:

“BTC going to 500k or higher….short BTC for a trade but don’t fight the GBTC premium. Most of the big guys have to buy it by ETF, or closed end fund, because they are not allowed to own the crypto itself.”

I know what you are thinking. And no, my pal is not notorious tech entrepreneur John McAfee (who is also so confident that Bitcoin is heading to $500,000 that is willing to do the following if he is wrong):

http://themacrotourist.com/images/2017/07/JohnJul1817.png

WTF? I know this guy is a piece of work, but good god man, can’t you come up with a better line than that? What the hell is he smoking in between tweets?

When I asked my buddy if I could use his email commentary in my post today, he agreed with the following caveat. He insisted I include the following details:

From the Institute for International Finance:

  • Global Debt US$217 trillion
  • Global Debt to Global GDP 327% (implies global GDP of US66.4T which I think is low but keeping the stats consistent…)
  • So the only solution out of the debt spiral is inflation (i.e. FIAT currency depreciation) unless Global growth is greater than the coupon on the debt by a factor of 3.3X (which is essentially an impossibility).

And with this comment, you can instantly see why he is my kind of guy. He had a look at the absurd global debt situation, and instead of concluding that it will end in a 2008 style deflationary collapse, instead deduced that an inflationary reset is the most likely outcome. And this point is where we completely agree. He thinks you should own crypto currencies to hedge against this reset, I happen to think there will be other, better assets. But we are both concerned about the same end game.

A year ago we had an email exchange, and his comments hit home so much, I saved them:

As a trader who has spent 25 years trading junk and distressed corporate credits, I can tell you with no hesitation that the worst “true” credits I have ever traded are G-7 government debt. Look at the operating cash flow/interest coverage ratios of any G-7 credit and it will land squarely in the mid single B range based on S&P “credit metrics”. The only strength of the government is they can tax (which one can argue we have now reached a point of diminishing returns) or they can print money.

Moreover with total debt/GDP levels approaching 100% in most g-7s and 250% in Japan, UNLESS THE ECONOMY GROWS FASTER THAN THE INTEREST COST then the debt spiral will continue. It’s only math.

So the solution is to lock in long term funding at these low rates and then inflate, inflate, inflate. The burden will be borne by the idiot 30 year lender whose capital loss on the term debt will fund the circular logic so that the math works.

This is just a derivative of the Brady Bond solution for LDC debt from 30 years ago.

Yup, spot on. We are completely on the same page, he just expressed it so much more eloquently.

My pal is much more courageous than me, grabbing onto crypto currencies as a means to hedge this inflationary reset. And who knows? It could be that I will be clinging to my barbarous yellow rock while he enjoys the coming fiat currency reset that sends Bitcoin to the much talked about $500k target.

But it is not surprising that he has embraced bitcoin as he is a believer in disruptive technological change. His other big theme is the death of gas cars. Basically, his argument centers around the fact that human beings always underestimate the rate of change at important turning points.

He is fond of reminding investors that in 1905, New York City was filled with horses ferrying everyone around. If you look closely at the picture below, you will notice there is one car in a sea of horses.

http://themacrotourist.com/images/2017/07/1905Jul1817.png

But look at the next picture, taken 8 years later. The horses have all been replaced by cars, except for the one lonesome horse.

http://themacrotourist.com/images/2017/07/1913Jul1817.png

And this is why although my pal will admit Tesla’s valuation is expensive, he argues that it is justified given the change our society is about to experience. There are a bunch of counter arguments, but I don’t want to turn this into a post about Tesla’s long term investing merit. Instead I just wanted to take a moment to highlight my buddy’s thinking. Between Bitcoin and Tesla, he is much more of an outside the box thinker than anyone I know.

As soon as I wrote yesterday’s post, I worried that I sold the hole. When my pal emailed me to say he was on the other side of my trades, I became even more concerned.

Will his views prove correct? I don’t know. I just thought they would be nice to share. His thinking requires the ability to imagine the world as a much different place. Is he mad, or genius? You decide. But I will remind you of one thing - “poor people are crazy, the rich are just eccentric.”

Comments

Pinto Currency tmosley Wed, 07/19/2017 - 00:13 Permalink

Bitcoin is going to the moon and then to zero.  Feel lucky? AS for Tesla, electric cars are extremely inefficient. They  convert 5 to 10% of the energy from natural gas, used for electrical generation, into motion while gasoline engines convert 20 to 30% of the energy in gasoline into motion. Electrical cars aren't efficient and upgrading the grid for electric car use would cost further $trillions. http://www.nov79.com/elvp.html 

In reply to by tmosley

Mr 9x19 The Forecast C… Wed, 07/19/2017 - 04:58 Permalink

nice overview, but wrong reason.the gasoline is not done because of electric cars, the reason is the cost of the extraction, there is not enough economy running to support a 100usd barrel, only actual ( decreasing ) inventory  that cost less than actual 45 usd range.world economy cannot pay high energy price.there is no alternative to green energy, world have no choice but to go full green energy.trump choice is a buffer to keep ressources for a geostrategic side of the collapse management. ressources to make batteries at world scale are way more scarse than crude oil. to me, 2020 - full electrical world development.2025 - begin of hyper inflation of green energy cost because of the lack of infrastructure to put all transport on actual grids.2030 - massive energetic conflic. set an AI to manage ressources, the moment it understands without power it dies, you will have deal with some serious power outage for humanity. food affair is for humans.power affair do not belong to humans in the mid century. do not say you have not been told. 

In reply to by The Forecast C…

All Risk No Reward DontGive Tue, 07/18/2017 - 22:36 Permalink

>>So the only solution out of the debt spiral is inflation (i.e. FIAT currency depreciation) unless Global growth is greater than the coupon on the debt by a factor of 3.3X (which is essentially an impossibility).<<<WRONG!  And it won't happen.  Why?  Because government is not in control, rathering it is the handmaiden of the Debt-Money Monopolists.“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”~Napoleon Bonaparte"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."~Lord ActonWhat will happen, of course, is that the Debt-Money Monopolist debt paper and net money -holders will call in the debts.  Their Mega-Corporate fronts are TBTF&J and society has bought into it already.When they call in the debts, THEY ASSET STRIP ORDINARY PEOPLE.  THEY ASSET STRIP GOVERNMENT (and pay off the Pelosis and other modern day Sophist Debt-Money Monopolist quislings who have sold their soul for their 30 sheckels of silver).=================================================================Resources:"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."~Lord Acton"Power corrupts. Absolute power corrupts absolutely."~Lord ActonHow To Be a Crookhttps://www.youtube.com/watch?v=2oHbwdNcHbcPoverty - Debt Is Not a Choicehttps://www.youtube.com/watch?v=t7BTTB4tiEURenaissance 2.0 The Rise of [Debt-Money Monopolist] Financial Empirehttps://www.youtube.com/watch?v=96c2wXcNA7ADebunking Moneyhttps://www.youtube.com/watch?v=5iBSBVew-3YKrugman (and each MIT economist professor - THEY KNOW AND THEY OCCULT!) is a Goebbelsian propagandist as he covers the crimes of wolves with his fake sheep suit and lisp.Krugman to Lietaer: "Never touch the money system!"https://www.youtube.com/watch?v=Q6nL9elK0EYAnd don't think Steve Keen is any better. He was called to the carpet for not admitting the system is a fraud when it was explained EXACTLY HOW THAT FRAUD WORKED... and he tucked tail and ran away PRETENDING he was responsive...The Principal And Interest On Debt Myth (technically correct, but practically reveals inherent fraud as exposed CLEARLY in the comments section)https://www.forbes.com/sites/stevekeen/2015/03/30/the-principal-and-int… line - Steve Keen won't "touch the money system" either. He learned well from his Debt-Money Monopolist Overlords.30 sheckels of silver over THE TRUTH."The best way to control the opposition is to lead it and/or finance it."~Yours truly, based upon Vladimir Lenin's quote"If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."by: Robert Hemphill, Credit Manager of Federal Reserve Bank, Atlanta, Ga.Source: In the foreword to a book by Irving Fisher, entitled 100% Money (1935)

In reply to by DontGive

All Risk No Reward DieselChadron Wed, 07/19/2017 - 01:26 Permalink

BY DEFINITION, a sovereign government can't borrow money from another entity.

Is your child sovereign when he depends on you for money?

Is your parent sovereign when he depends on you for money?

No and no.

Why? I can't improve upon Napoleon's insight...

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
~Napoleon Bonaparte

If a government, like a child, depends on someone else for money, BY DEFINITION, that government is a vassal to the Money Power and NOT THE SOVEREIGN.

Period... not matter the Kabuki theater employed to trick you into believing otherwise.

I know, the programming is really hard to break, but break it we must.

In reply to by DieselChadron

Jimmy Jimmereeno All Risk No Reward Tue, 07/18/2017 - 23:15 Permalink

Your view rests on a false premise.  You equate the gold-standard world of Bonaparte and Acton with the global fiat-standard world of the present."...the Debt-Money Monopolist debt paper and net money -holders will call in the debts...".  Just what will they, in your words, "call in" ? You have no conception of the meaning of irredeemable currency.

In reply to by All Risk No Reward

All Risk No Reward dussasr Wed, 07/19/2017 - 01:21 Permalink

BTW, I'm not saying that a hyperinflation isn't the ultimate end game. I think it probably is.

But, and pay close attention here - this is KEY, the Debt-Money Monopolists won't decide to hyperinflate while they are holding the majority of the debt-paper and the cash.

Only an idiot would do that.

No, they will stop the Ponzi debt-money generation scheme, this will create a pancaking demolition of bankruptcies and asset seizures, and then, after they've bled the ordinary American turnip dry of all its blood (and the Banksters are out of the cash and paper), they will almost certainly hyperinflate (after stealing nearly everything from people in debt - almost everyone) and "balance their books."

The point is that you've been blinded to the deflationary spiked pit that is a trap to asset strip planet Earth for the benefit of the Debt-Money Monopolists.

The only other choice is for the Debt-Money Monopolists to blow themselves up to bail out ordinary debtors...

Come on... seriously... you think Rothschild, Rockefeller, European Royalty, Jamie Dimon, Lloydd Blankfein, et. al. are going to blow themselves up to save people like us from their demonic criminal debt-money systems of treasonous fraud?

Kick another field goal, Charlie Brown.

Not.

Gonna.

Happen.

In reply to by dussasr

East Indian Jimmy Jimmereeno Tue, 07/18/2017 - 23:38 Permalink

The "creditors" will take in kind - they will repossess the physical assets in return for their thin-air money. Then they will rent it back to you so that youu can work and support them on your back.That is what happened in Japan. A few oligarchs own the entire nation, and suck the entire surplus, leaving the population barely covering its necessities. And the necessities are what the bankster says they are. They can decree iPhone to be a necessity, and then voila! you will get iPhone on zero credit; they may decree food to be a luxury, and voila! you will struggle hard to get hold of a morsel for your kid. And then they will wonder why the economy stagnates...We are all going back to the feudal age, all of us, all over the world. Join the ruling class, or kill it. Else, your progeny will not survive. 

In reply to by Jimmy Jimmereeno

All Risk No Reward East Indian Wed, 07/19/2017 - 01:14 Permalink

East Indian has it spot on, except the ruling class isn't taking applications.

A Sun Tzu Art of War tactic is to pretend inferiority.

Or, shall we say, pretend incompetence.

They aren't incompetent and creating zero-sum debt systems hidden in plain sight, are they? They aren't incompetent at poisoning your school system and making you pay double for it. They aren't incompetent at selling sick maintenance as "health care," are they? They aren't incompetent at putting their quisling lackies in office to control the Presidency and Congress for over 100 years running.

They are like a magician. Most people are looking at the right and left hands while the real action is going on in another room that you can't see.

In reply to by East Indian

NoBillsOfCredit East Indian Wed, 07/19/2017 - 08:16 Permalink

The first thing we need to do is educate the people so that they know that loans are denominated in dollars but no dollars are ever loaned out. Because Federal Reserve notes are not dollars. With the principal that fraud vitiates all contracts, the jurors could simply rule that all loans of Federal Reserve notes claiming to be dollars, are fraudulent and therefore void. That would eliminate the claim of the creditors who created money from thin air. The jurors are the people with the power when they know the truth.

In reply to by East Indian

All Risk No Reward NoBillsOfCredit Wed, 07/19/2017 - 21:34 Permalink

An educated mass of caring people is the anecdote to this.

The problems are...

1. Most people don't care... at all.

2. The Debt-Money Monopolists hijacked the schooling system completely about 100 years ago. Very few people are educated. Most are schooled "intellectual idiots" that couldn't think their way out of an establishment propaganda paper bag if their life depended on it (AND IT DOES!).

3. Almost all of the very few that are educated don't care, so they sell out for mammon.

4. And ordinary people that are educated and do care... well, they tend to be despised by the masses. It wasn't but a couple days ago that a guy on Zerohedge said he'd kill me if I was in his community.

In reply to by NoBillsOfCredit

All Risk No Reward Jimmy Jimmereeno Wed, 07/19/2017 - 01:09 Permalink

>>Your view rests on a false premise. You equate the gold-standard world of Bonaparte and Acton with the global fiat-standard world of the present.

"...the Debt-Money Monopolist debt paper and net money -holders will call in the debts...". Just what will they, in your words, "call in" ?

You have no conception of the meaning of irredeemable currency.<<

First of all, thanks for offering an opinion so we can discuss this.

JP Morgan once said:

"No problem can be solved until it is reduced to some simple form. The changing of a vague difficulty into a specific, concrete form is a very essential element in thinking."
~J. P. Morgan

Yes, they are evil, but no, they aren't stupid. They are quite smart, actually.

So I'm going to reduce the problems to a simple form without losing the underlying mechanism that is in play near globally.

I'm the Debt-Money Monopoly and you represent everyone else in society.

I lend you $20 @ 5% interest. In one year, you will owe me $21 due to double-entry bookkeeping adjustments that add $1 interest liability to your balance sheet (which you'll see on your statement) and and $1 interest asset to my balance sheet (which you won't see).

At the end of one year, you will have $20, you will owe me $21, and I CONTROL THE $1 YOU NEED TO PAY BACK THE DEBT in this zero-sum debt-money game.

Now, you ask, what will I call in? Your $21 debt. Or it could be $21 million, $21 billion, or $21 trillion, it doesn't matter, YOU MATHEMATICALLY CAN'T PAY ME BACK.

All I have to do is to stop inflating the debt-money I create and your $20 can't pay me the $21 you owe.

So what, you say?

There is a show on Netflix called "Can't Pay? We'll TAKE IT AWAY!"

https://en.wikipedia.org/wiki/Can%27t_Pay%3F_We%27ll_Take_It_Away!

Most homes in society are collateral for these debts that can't be paid. Many vehicles are in debt. Many businesses are in debt. Many businesses need debt to operate. International trade needs debt to function.

The government has effectively put up their national parks, their roads, their parks, etc... up as collateral to the Debt-Money Monopolists.

Can't Pay? The Debt-Money Monopolists WILL TAKE IT ALL AWAY!

That's the game at play, and I'm stunned so many people are COMPLETELY BLIND TO IT.

Ask the farmers who lost everything in the Great Depression to the Mega-Corporate Banksters of the day what was "called in."

They'll probably tell you their lives.

In reply to by Jimmy Jimmereeno

AGuy Déjà view Tue, 07/18/2017 - 23:59 Permalink

Yup, Americans can barely afford cars, they certainly can't afford the premium costs for an Tesla. The Average car loan duration is about 6 years. Its likely that most americans will be forced to hang onto their clunkers or do without.

I think the photos will be not about cars, but lack of jobs as brink and mortar retail implodes. These low end retail jobs are the last safety net for many Americans that saw there good paying jobs vanish over the past decade. I see a lot of people that had good middle class jobs, end up in retail having not other employment options. Its likely that 1/3 of all jobs will go the way of the buggy whip factories.

In reply to by Déjà view

OverTheHedge AGuy Wed, 07/19/2017 - 01:00 Permalink

According to Tyler's post of the other day, we are currently reliving 1969. I lived through the 70s, and flaired trousers were no fun, I can tell you. Kipper ties and wing collars, floppy hair (all over) and galloping inflation. In the UK, huge social upheaval, 3 day working week, power cuts, semi-annual cost-of-living wage increases, because INFLATION!!!The UK finally went through its post-empire bankruptcy in the 70s, but at the time it was a fairly homogenous, well-behaved and polite society. Can the US say the same? Does the US have the same blitz / Dunkirk spirit to pull together and "keep calm and carry on"?Our current wealth is based upon borrowing against housing. Boomers are all about to retire, and downsize, but millennials can't afford to buy, so something will have to give. Either there will be a colossal property crash a monster deflation, or TPTB manage an inflation for the base to catch up. At this point, I don't know who is going to win, but my money (what's left of it), is on the bankers and inflation. Deflation kills the banks, inflation kills the people. What do you think is going to happen?Oh, and we don't need hyperinflation madness for it to all work out: 20%pa would do just fine, if it runs for 10-15 years. I once paid a mortgage rate of 15%, and I think that inflation that year might have been 25%, but it was a while ago and I am hazy on the dates. Still, a year or two one way or the other hardly makes a difference.Now, currently I have no debt, which is bad in inflationary times, but I will have no income either,come high inflation times, which is bad if you have debt to repay. What to do....?

In reply to by AGuy

AGuy OverTheHedge Wed, 07/19/2017 - 02:09 Permalink

"At this point, I don't know who is going to win, but my money (what's left of it), is on the bankers and inflation. Deflation kills the banks, inflation kills the people. What do you think is going to happen?"

My guess is more stagflation. Wage growth will remain non-existent, while living costs continue to increases.

1. Most people will lose thier health insurance because of Obozocare. People simply won't have the money, and the deductible will be so high, you need major surguery before insurance pays out.
2. Death of Retail jobs. Probably 50% of more of retail jobs will disappear
3. Much higher taxes as entitlments and gov't pension outlays soar.
4. More banker bailouts and more QE, but probably not hyper-inflation, simply because americans won't have two nickels. Seems unlikely that the rest of the world will dump the dollar since most of the world's industrialized nations are dependent on exports. Banks will become the landlord and own most of the housing. Technically the banks already own most of the homes and apartments via loans. The Early boomers are able to cash out of their homes and downsize, but the later boomers/Gen-X won't be able to cash out. They will be stuck with a home that they can't sell. Many will default and other will kling to their homes. I can tell you that in the NorthEast US, their are a lot of homes for sale and the RE market is close to dead. In other parts (SouthEast) homes are moving as people companies relocate out of the NE to the SE as well as boomers relocating south for retirment.
5. More social unrest as the have-not become increasily angry. Perhaps a few civil wars in weaker nations. Eventually their will be another World War, The Great Depression of the 1930's led to WW2.
6. A lot more chaos in Europe. The Refugee/Migrant crisis is going to deteriate. They are not going to intergrate/adapt to western culture, They are going to bring the Middle east and the violence with them. I would not be surprise to see genocide & facism in Europe again. Europe is going to burn.

"Now, currently I have no debt, which is bad in inflationary times, but I will have no income either,come high inflation times, which is bad if you have debt to repay. What to do....?"

I can't tell you what you should do, but I can tell you what I am doing: Going Galt and self-reliant. I bought a big rural properly last year and working on becoming self-reliant for food, shelter & energy. I can't fix or change the system, but I can distance myself from being reliant on the system and distance myself from the masses. I am also pissed off and tired of paying +50% in taxes (Fed + State + local). No point in working hard to earn dollars when the gov't taxes more than half of it. I refuse to be a wage slave anymore!

As I see it, the more the gov't continues to take and meddle, the more and more people will drop out of the labor force. Some will have to work, but I suspect those that must work, will work just enough to get by and not bother trying to get ahead. Male 25-45 workforce participation rate in the USA is at a all-time low. I suspect a good chuck of the drop outs is because they are giving up. At some point stuff starts to break (from infrastructure, to food distribution - very slo-mo Venzuela like degradation)

"I lived through the 70s, and flaired trousers were no fun"

Ha, I take the bell-bottoms over the Polyester clothes anyday. While the bell-bottoms are an eye-sore, it nothing like wearing polyester clothes that makes your skin crawl.

"Does the US have the same blitz / Dunkirk spirit to pull together and "keep calm and carry on"?"

Nope. We expect the Chinese to continue to ship us everything we need. For latinos to harvest the food we eat, and for the Middle East to ship us cheap oil indefinantely. For the gov't to continue to send us gov't checks for the Trillions in unfunded entitlements. There are no other alternates for the majority of Americans.

In reply to by OverTheHedge

dussasr deimos178 Tue, 07/18/2017 - 22:21 Permalink

Re: Has anyone ever HELD a bitcoin in their hands?Who cares?  What about all the other intangible property you might own or use?  An article like the one we are commenting on used to be printed on paper and you could hold it in your hand.  Now it's digital.  100 years ago when most trade was conducted in person one could hand a gold/silver coin over and receive goods.  Now commerce happens over the internet.  Gold coins aren't very good for ordering stuff from Amazon.

In reply to by deimos178

fnord dussasr Tue, 07/18/2017 - 23:52 Permalink

Can I name it the Cult of Digitality? I'm not against cryptos. But I'm also not particularly well versed in them and have seen nothing to make me embrace them. I see a place for them in transaction processing. But I also see blockchain bloat...talk of slow transactions/confirmations. Nothing that can compete with the speed of verifying funds available in a single account though. But as moneydump or investment, that's where I see it as going digital just for the sake of going digital, as opposed to going digital for the efficiency. Electricty is cheaper than paper and moving said paper, at least I think. BTC is currently cheaper than interchange (mining still, so no % of transaction to my understanding) but at the cost of time. I'm all for undermining the banks, but don't see the current crypto paradigm doing so.And lets not forget the fiat balance beam. Too little debt issued mean's coupons can't be paid & fiat value falls. Too much & it's diluted. I think both situations are prefaced with major deflation before the printing press is fired up. But even if I'm wrong, in both situations you have valuable assetts (beans, bullets, water, electricity) unavailable at any price. Liquidation of the useless assetts driving their cost down in order to eat. My theory is we reach this point the internet and maintaining the current blockchains are going to be the least of our concerns. I hold metals, and I hold them as a gamble, not a safety net. I know they won't protect me, they're a gamble that I can survive the inevitable debt-money shitshow and come out in a relatively better position than before the shitshow. I'm not so sure it will work out.Thing I'm sick of in these posts & the comments (I'm guilty too, fuck you Tylers) is the baiting of one opinion to consider themselves brilliant and the opposing opinion to consider those of the first opinion ignorant. And vice versa.

In reply to by dussasr

AGuy dussasr Wed, 07/19/2017 - 02:55 Permalink

" Now commerce happens over the internet. Gold coins aren't very good for ordering stuff from Amazon."

Neither is BitCoin. I am pretty sure you can't order from amazon using the BTC blockchain. It can take a hours to a full day to complete an actual BTC transaction. 99.9999% of all Internet commerce uses FIAT. When the FIAT Goes so goes Internet and all of its commerce.

Not sure PMs will help much either, but PMs will certainly better to conduct a transaction when the cell service is down and there is no Internet accessible because the infrastructure is not working. So if you think BTC is going to save your bacon when the FIAT collapse, you will be sadly mistaken. No way that the infrastructure and internet remains stable when the USD collapses. When the USD goes so will services and the distribution systems that bring food to the supermarkets and fuel to the gas stations. BTC is only viable as long as the Dollar holds value.

BTC is in a classic bubble, just like canned cod in prison. It only works as long as people have faith that it has value. Most of BTC rise in value is from desperate Chinese trying to get capital out of China before the SHTF in China. That are only using it as short term means to get capital out. Once they get their money overseas, they either convert it into Western currencies or by property.
At some point that window is going to close and BTC will implode faster than McMansions in late 2008. that said its possible that the BTC bubble will go on for years.

In reply to by dussasr

adr aloha_snakbar Tue, 07/18/2017 - 23:24 Permalink

Actually they did. Allan Mullally used his Boeing government connections to raid the treasury for nearly six billion in DOE loans, the same as Tesla. You know the 1% interest special alternative energy loans. Ford "spent" six billion dollars on the electric Ford Focus, and didn't use a dime for anything else. Yeah fucking right they did. 

In reply to by aloha_snakbar