Are we allowed to talk about Bitcoin?

Except we are in an everything bubble. They pumped so much liquidity in, leveraging just about anything that trades in a market, that nearly everything is now correlated. But in the broad sense, you are correct. While a number of the hightest flying NASDAQ stocks are down 80 or 90 percent, the broader index is only down 33 percent from its peak. Of course the Cathie Wood type stocks have led the way. But there is a lot of work still be done elsewhere if yields keep rising and they can't keep the bubble propped up. Their problem. ... they stoked runaway inflation that is on fire beyond the casino everyone was focused on. And they are being forced to pretend they can deal with it, without tanking the economy. They meet on Wednesday, they have a 50 basis point hike built in, but they are leaving real rates deeply in negative territory and moving way too slowly, because they are f'd. They just started letting a small amount roll of that massive balance sheet they used to put their thumb on scales of finance and blow a bubble. ... and this is what we are getting. We can't afford higher interest rates with the massive amount of debt those idiots passed off as economic growth. But the tradeoff became runaway inflation. And their half measures in make believe land has left the bond market to lead them around like blind mice. Right now, the 10 year is up around 3.3 percent. I didn't think we would get even that far without them crashing the casino. The yield curve is inverting. And junk debt is showing cracks. Since the financial crisis, these moments were when they stepped in and poured more gasoline on the fire to keep the fantasy going. Now? Their hand is being forced because of the inflation. They (and we) are so f'ed, and that goes beyond anyone who bought a pet rock for $100,000.

 

Kind of lame at this point. Seriously.

Forget, bitcoin, dogecoin, NFTs, which I posted about.

When the Netflix bubble was being blown, I posted on a thread pointing out how fundamentally batshit crazy it was. It was running up massive debt and losing money on every new subscriber everyone was excited about. I got posts like this, ranging from good-natured, to some people just wanting to be dicks toward me, rather than just trying understand what I was suggesting and engage me that way. The stock kept running because the Fed went crazy with the pandemic as an excuse and blew out the bubble. Since it peaked . ... down more than 75 percent.

When everyone was excitedly talking about the Coinbase IPO, I posted about the insane valuation it was coming public @ and tried to explain it was because a central bank had pumped in so much liquidity to destroy all price discovery and create a casino. Since it peaked, down more than 85 percent.

It came up on Roblox stock when it was coming public, essentially the same conversation, I tried to tell someone that whether they realized it or not, they were betting not on anything fundamental about that company at that valuation, they were betting on a Fed put. Since it peaked, down more than 80 percent.

All, simply because of FEAR that they can't keep making money cheaper than free with pressure on them to deal with the inflation they stoked, even as they are so paralyzed that they have done essentially nothing yet.

How soon, will be soon enough for you?

 

I didn't understand that. Sorry. Forgive me?

But since I got myself rolling. ... My posts shouldn't be distilled to a prediction about X happening on Y day, and I have gotten so many responses like that, I was being sensitive, I guess. The speculative excesses all around us are due to a central planning authority that has taken full control over the price of money without pushback, and has spent a very, very long time making it cheaper and cheaper to create a fantasy (at the behest of the politicians it benefits and appoint them and give them their power).

You can be certain that at some point, a lot of people who got sucked into things (because their neighbor was getting rich) are going to get hurt. The same way every leverage-induced bubble ever has ended the same way.

And more broadly, this is going to end with a broader credit crisis -- we have never seen anything like the last 2 decades in history with trillions of dollars of very mispriced debt now permeating just about every institution, private and public. At which point their instinct will be to try to answer a debt mess with bigger debt levels, which means destroying price discovery in the debt markets even more to try to stave off failures. The thing that may be different than the past few times this has come up and they chose to try to do more. ... inflation. They seem to be backed into a corner, now.

But it's like trying to guess when the Soviet Union would collapse, or anything where prices are being administered rather than being reached via price discovery. The illusions of prosperity they create are Potemkin Villages, and when the fantasy ends, there is a price to pay for what you did.

 

I know nothing about the RV market, but I can't imagine how many sales were financed @ variable rates where people were looking only at their monthly payment, and are now seeing that monthly payment jump quite a bit on them and they are staring at defaults if rates keep going up. And that is without the Fed doing what it really needs to do if it was serious about trying to address the inflation monster it unleashed.

There are so many areas like this. The whole "buy now, pay later" craze should have sent sirens blaring (well, it did, just that the people pointing it out got ignored). It's going to end up amounting to buy now, pay never for a lot of people.

But I am sure politicians will fix it by waving a wand and making everyone's debts go away.

You're a smart man. But it's a shame you have to make decisions that way. How many people have wanted to buy their first home for years now, but because the Fed was buying mortgage-backed securities hand over fist with freshly created money, and in the process driving up home prices on the back of a debt bubble, they were being priced out of their first home. ... unless they were willing to jump in with financing that will put them under water if interest rates normalize at all? People's life decisions shouldn't be subject to that and for the people who either didn't understand what was going on the way you did or jumped in anyhow because life goes by. ... the consequences they are going to face in a world in which rates can't be artificially administered in negative territory in real terms are going to be serious. It sucks.

 

The worst part of that (other than it's kind of funny on one level listening to those two idiots giving people asset allocation advice) is that their bullshit about how their legislation is going to create safety and transparency lulls people into an elevated sense of complacency / stupidity. Either bitcoin has some intrinsic value or it doesn't. And if it does, there is nothing saying that the value of one bitcoin right now should necessarily be $60,000 or $24,000 or $5. Buyers and sellers should determine that based on all known information, not someone sitting in the Senate chamber. And if excessive leverage on the back of mispriced debt markets blew it up to $60K (as I'd content) when those buyers and sellers would have found equilibrium at a much lower price, everything Lummis said could be true .... but you are still screwed if something puts a pin prick to the excessive leverage and ends the fantasy.

The regulatory mess they will foist on those markets will cost people, not protect them from anything. But I'm not even talking about that. Maybe the worst thing about them is that people actually think that those idiots, whose only skill in life is bullshitting people and getting them to vote for them, can create something from nothing by passing a law. That mindset in the aggregate has created a nation of people who are incapable of valuing things for themselves and assessing risks.