Your Delusion Doesn't Make Me A "Doomer"
Submitted by QTR's Fringe Finance
"There exists in society a very special class of persons that I have always referred to as the Believers. These are folks who have chosen to accept a certain religion, philosophy, theory, idea or notion and cling to that belief regardless of any evidence that might, for anyone else, bring it into doubt. They are the ones who encourage and support the fanatics and the frauds of any given age. No amount of evidence, no matter how strong, will bring them any enlightenment. They are the sheep who beg to be fleeced and butchered, and who will battle fiercely to preserve their right to be victimized."
- James Randi
One thing I’ve noticed over the last several weeks is that the more I stick to basic questions, basic economics, and basic skepticism, the more people accuse me of being a “doomer”.
That tells me far more about the environment we’re in than it does about myself. The foundation to my economic views hasn’t changed all that much over the years. What’s changed is the backdrop against which those views are being expressed. When you’re living through one of the most euphoric investing environments in modern history, ordinary skepticism suddenly reads like blistering, outright nihilism.
Apparently it’s now considered bearish extremism to point out that a company says one thing and then does another. It’s “FUD” to ask whether a proposed $2 trillion IPO valuation for a company trading roughly 100x sales while remaining unprofitable makes any sense. It’s negativity to observe that the Federal Reserve appears trapped between an inflationary rock and a deflationary hard place, where fighting one problem inevitably worsens the other. I’ve even written about companies that appear to have been caught engaging in outright misleading accounting practices that deserve far more scrutiny than they’re getting, only to watch investors shrug and buy more shares anyway.
None of the above observations strike me as outrageous. They’re the kinds of questions investors used to ask before narratives became more important than numbers. The fact that simply asking those questions now provokes outrage tells me something has changed.
Yesterday I nearly lost a dear longtime friend who I respect immensely because he was upset that I criticized Strategy CEO Phong Le on Twitter. The worst part is this is a friend who I agree with on literally almost everything relating to markets and monetary policy…just not on cheerleading for bitcoin as enthusiastically.
I can’t take Strategy or its CEO seriously after the company repeatedly emphasized BTC Yield as one of the defining metrics of the business. It was presented as evidence of execution, discipline, and shareholder value creation. Phong Le talked about it constantly. It became one of the pillars supporting the entire investment story for Strategy. Then, as the number began moving in the wrong direction, the company quietly stopped highlighting it. It disappeared from Michael Saylor’s tweets talking about how much bitcoin the company bought last month. And somehow I’m the unreasonable one for noticing this and calling it out as moving the goalposts (more importantly, I called my friend and we hashed it out and are fine).
Over the last several weeks I’ve also lost multiple paid subscribers to my blog. Some comments have become more cagey. Private messages have become more emotional. Discussions that used to revolve around facts increasingly revolve around motives. Apparently asking for consistency and follow through from public company CEOs now qualifies as “hate.” Ironically, I appreciate every bit of it because I don’t want an echo chamber. Echo chambers make people intellectually lazy. If everyone agreed with everything I wrote, I’d probably stop challenging my own assumptions. I like hearing opposing viewpoints. I’ve changed my mind plenty of times over twenty five years in markets. What I’m trying to arrive at isn’t confirmation. It’s truth. That distinction matters.
Part of the reason I view markets differently is because my framework has always been grounded in Austrian economics. Whether you agree with the Austrian School or not, one thing it relentlessly emphasizes is that incentives matter, prices matter, capital allocation matters, and economic reality eventually matters. Artificially suppressing interest rates has consequences. Printing money isn’t free. Debt doesn’t magically disappear because politicians or central bankers wish it away. Malinvestment accumulates. Capital gets allocated to projects that never would have survived under honest market conditions. Booms fueled by cheap money eventually collide with reality. Those aren’t particularly radical ideas. In fact, for most of economic history they would have been considered fairly obvious observations.
The Austrian framework forces you to ask uncomfortable questions like...(READ THIS FULL COLUMN 100% FREE HERE).