Categories
Cryptocurrency

The Bitcoin Bubble – Explained

First of all – let me make it clear – Bitcoin is good money. What I mean by that is that it can be used for purchases, it is a store of value that can’t be diluted by the creation of more bitcoin, and it can be used over both time and space- meaning that you can have it today and spend it tomorrow and you can send it across the world and in both cases it will still have value. What value? From what I can tell – the value of Bitcoin appears to be right around $6500 USD.

The chart above is looking at bitcoin over the past year. The range is normally about $5k-$7k  but last November-December – suddenly things took off. There has been a lot of analysis, a lot of speculation as to why and how, and a lot of bullshit written about the bitcoin bubble of 2017. I’d like to clear that up. First, what is the definition of a bubble:

Speculative Bubble. A situation in which prices for securities, especially stocks, rise far above their actual value. This trend continues until investors realize just how far prices have risen, usually, but not always, resulting in a sharp decline. Speculative bubbles usually occur when investors, for any number of reasons, believe that demand for the stocks will continue to rise or that the stocks will become profitable in a short time. Both of these scenarios result in increased prices.

A famous example of a bubble is the dot-com bubble of the 1990s. Dot-com companies were hugely popular investments at the time, with IPOs of hundreds of dollars per share, even if a company had never produced a profit and in some cases, had never earned any revenue. This came from the theory that Internet companies needed to expand their customer bases as much as possible and thus corner the largest possible market share, even if this meant massive losses. NASDAQ, on which many dot-coms traded, rose to record highs. This continued until 2000, when the bubble burst and NASDAQ quickly lost more than half of its value. Other famous examples include the tulip mania of the 1630s and the housing bubble in the early 2000s.

Often, people misunderstand bubbles to mean that the underlying assetts do not have value. They do…but that value is inflated at a rapid pace which creates more demand which inflates the bubble further which creates an intense ‘fear of missing out’ aka FOMO which inflates the bubble even further – and then the bubble bursts and the value of the underlying assett plummetts, often going far below the actual value. It happened with housing, beanie babies, tulips, and bitcoin.

What usually destroys a bubble assett is that supply grows with the price until supply outsrips demand. Take beanie babies and tulips for example- eventually there were more of them than buyers and so the prices had to be reduced which led to panic selling and fortunes being wiped out (Dutch fortunes and Granny fortunes). This didn’t happen with Bitcoin. It actually couldn’t happen because the number of Bitcoin can never be increased – and yet, when you look at the chart above – there was an obvious inflation and crash – so what happened.

First the facts 1)There were a large number of bitcoin that were taken ‘off the market’ after the hacking of the Mt. Gox Exchange. Many were stolen and the rest were put on ice with the trustee, Kobayashi. 850,000 bitcoin were stolen with 200k bitcoin recovered and put in trust. 2) Bitcoin was making a steady rise through 2017 which started gathering media attention in October of 2017 3) Many bitcoin that had been ‘off the market’ whether through fraud or not paying attention suddenly were woke and brought back to the market.

Now, this is where it gets interesting. You can’t create more bitcoin – but you can create similar assetts which could be thrown into the same class with bitcoin and thus profit from the FOMO that was growing around bitcoin. There had already been quite a few invented – Ethereum, Litecoin, Digibyte, Skycoin, and even a ‘fork’ of bitcoin called ‘Bitcoin Cash’. Along with these older surviving projects were hundreds of failed projects and when the bitcoin mania started bleeding into the mainstream – thousands more were to come to the forefront. This is where the real scam is.

THe real function of an assett bubble is to take good money from investors and give them soon to be worthless junk in return. Every bubble has transferred real wealth from the fortune-dreaming rubes who arrived late to the party to the savvy hucksters who figured out how to trade gold for garbage. That’s exactly what happened with the bitcoin bubble.

All of the rubes (and I’m one of them) took real money (bitcoin) and turned it into fake money (ERC-20 tokens, ICOs without tokens, exit schemes, and ponzi schemes like BitConnect). Bitcoin was always in a class by itself – yes, there is value in Ethereum, Litecoin, Digibyte and other coins and tokens – but it doesn’t have the same intrinsic value or cachet of bitcoin.

Everyone wanted to get rich from Cryptokitties or from Tron or from EOS and IOTA – and here is where the bubble comes in – to buy those other cryptocurrencies, you needed to start with bitcoin. It was a scammers dream. Create money from thin air and require real money to buy your air money. In this case, the real money was fiat currency which was then converted to bitcoin (also real money) and then to trade bitcoin for air-money and finally turn the bitcoin back to fiat while it was inflated. I don’t know if the whole thing was planned and orchestrated or not – but if it was, it was brilliant. A sort of mastermind usage of the same principles which Oliver North used to trade money for cocaine and then get the money back selling surplus weapons to the cocaine dealers.

To summarize: 1) bitcoin was rising to it’s actual value and making bitcoin holders rich 2)There were not enough bitcoin to create a FOMO panic and so ‘new’ cryptocurrencies were created and absorbed the money pouring into the space 3)Bitcoin prices soared as a result of bitcoin being how to buy in 4)Early buyers of bitcoin and long time bitcoin holders like the trustee Kobayashi brought their bitcoin to the market and began to sell at the all time highs 4) bitcoin prices crashed as a result 5)investors began to use Ethereum and Bitcoin Cash to buy into new projects hoping to strike it rich 6)the cycle repeated with the ‘alternative cryptocurrencies’ aka ‘alts’7)Bitcoin gradually returned to stasis value 8)Ethereum returned to stasis value 9) Alts returned to stasis value 10)Latecomers to the party lost as much as 90% 11) Massive wealth was transferred from the FOMO party to the creators of the mostly worthless coins and tokens of 2017/2018.

Conclusions:Does this mean that Bitcoin will always be in the $6500 range? No. As more users begin to hold and use bitcoin the price will rise. Also, every four years the rewards for bitcoin mining are cut in half (aka ‘the halving’). This combination of increased usage and decreased new supply means that bitcoin will become more scarce and more valuable. It’s my opinion that $6500 is the range that bitcoin will remain in unless there are significant increases in desirability and usage until 2020 when the next halving occurs.

Are Ethereum and Litecoin worthless? I don’t think so. My estimate of stasis for each is quite a bit higher than they currently sell for. A good range right now for Ethereum is $600-$800 per token and for Litecoin $200-$250. There are valid use-cases for both which give them an inherent value. As for other tokens and coins – there are too many to go into but I will give my thoughts on a few. I don’t think Bitcoin Cash has a future. Tron and Neo could both take off if the Chinese government gives them approval and consent. Cardano, Stellar, and Ripple all offer intriguing opportunities for a change in the way that banking is done but probably won’t yield significant results for years. Monero and ZCash might get some traction in black market and money laundering but don’t offer a real value to ‘honest’ traders or investors. EOS has some potential as a replacement for Ethereum, but unless Ethereum is revealed to have huge flaws – won’t overcome the first to market advantage. Finally, Digibyte. Digibyte seems to be everything that Bitcoin wanted to be but without the bubble. I believe that Digibyte is a superior cryptocurrency, but it might be a Betamax to bitcoins VHS.

The bottom line is that bitcoin is the gold standard.

Categories
Cryptocurrency Hardware Review Wallet

John McAfee’s Bitfi Wallet – The “Unhackable” “Hardware” Wallet – An Honest Review

For the past year, I have wanted to buy a cryptocurrency hardware wallet . I haven’t bought a Ledger or a Tresor wallet yet because when I looked into buying one or either of them, I found a lot of stories about how they were arriving to purchasers already compromised. There was a lot of FUD going around about them and I opted to look for something better.

First, I ordered a HooFoo which has still not arrived or possibly even been produced yet. I bought it more than six months ago. The crowdfunding campaign wouldn’t give me a refund and HooFoo recently contacted me to say that it will be shipped…someday. When it does, I will review it. I hope that day comes.

In late June of 2018, I started seeing John McAfee shilling Bitfi an unhackable hardware wallet. “The most unhackable hardware wallet ever made”. For those who don’t know, John McAfee is the guy who invented McAfee software and who was accused of murdering his neighbor in central America and who ran for President as a Libertarian in 2016 and who has become a sort of unwanted step-child poster boy for cryptocurrency and is now a master shiller of all things related to cryptocurrency. McAfee is the William Shatner of crypto, he’ll sell his soul if the price is right – so it wasn’t that I trusted him, it was more that I figured it like this. McAfee is known for hacking. He’s known for crypto. He’s putting his name right on this. Chances were it was a good and possibly a great product. So I ordered one.

Here’s the first announcement I saw: https://bitcoinprice.media/bitfi-and-mcafee-announce-unhackable-crypto-wallet.html

Looks pretty good? Right? Sounds pretty good.

Now, just so you know, I did ask for a free one to review and McAfee told me there were none available.So, I had to pay full price for it. This is a legitimate review with nothing given to me to influence what I would write. Which is kind of too bad for Bitfi. I think it would have worked in their favor to have me obligated. Two days after I ordered it (and ten days before mine arrived in my mailbox), the Bitfi got destroyed by motivated hackers and deconstructed by engineers and then it got hacked..in several different ways.

https://www.theinquirer.net/inquirer/news/3037057/mcafees-bitfi-crypto-wallet-has-been-hacked-inside-a-week

Here’s a snippet from that:

Ryan Castellucci, a security researcher from WhiteOps, described it as “a cheap stripped down Android phone” and strongly advises against using it.

Another set of researchers pointed out that from a secure point of view, the use of Baidu as a search engine, and the inclusion of the Adups ‘spyware’ make for an even less wholesome environment.

Bitfi has gone a bit Trumpy in its response, denying all the accusations and accusing OverSoftNL of actively working for competitors.

My Review

By the time it got to Hawai’i, I had read so many scary reviews about this thing that there was no way I would ever use it to store anything larger than what I would carry in my wallet. I feel more comfortable leaving cryptocurrency on Coinbase and Binance – because Coinbase is insured and Binance has promised they will reimburse if they ever get hacked. This thing…well…

I like technology but I’m not a hard core coder or hacker. I’m an early adopter of platforms and new technology and an innovator in the uses of tech but I’m not a security expert or a hacker – so you can find other reviews that will go into that stuff.

I’m a user of technology and part of the reason I ordered Bitfi was so I could have fun using it. Even after all the bad things I had heard, I was ready to have fun. The box was fun. It had a quote from Satoshi Nakamoto on it. It even said there was a six-sided die inside. That sounded like fun too.

The problem is – it’s not fun. It’s not fun at all. There’s nothing fun about Bitfi.

I opened the box and found what looked like the same Samsung phone I bought in Morocco back in 2012 for $50. It was in a nice blue monogram wallet. The outer box was taped with clear strapping tape. The inner box had been taped with scotch tape. In the box were a charger cord, adapter, the six-sided die, and some instruction cards. And the wallet of course.

Seriously, this thing is almost identical to my old $50 Samsung but when I turned it on, I found the touch screen to not be as responsive. It felt like garage sale technology – the kind you find at G-sales on Saturday mornings. But, I didn’t want to judge, I dove into the instructions.

The first thing I had to do was connect to wifi and then to set up an account on their website using my iphone or a computer. Then I had to sync the old phone..I mean wallet…with the website. The numbers and letters were tiny – actually hard to see with my 46 year old eyes and my fingers must be getting fat because they kept hitting the keys next to the ones I was trying to hit. There were cute instructions about how to use the six-sided die to create an unhackable pass phrase using the cyper on their website. I followed all the instructions, I got it set up, and then I went to transfer a little cryptocurrency in.

It doesn’t do Stellar, Cardano, Tron, Ripple, Eos, Iota, Ethereum Classic, or Bitcoin Cash. It does do Bitcoin, Litecoin, Ethereum, Monero, Neo and a bunch of other coins that McAfee has promoted in the past like Golem, Docademic,Bezop, etc.

So, honestly, I should have read all this before. Most of the currencies I wanted this for are safe because they aren’t supported by the Bitfi. My bad.

I was surprised at how little the wallet does. It’s basically a confirmation device for transactions which are all ran from the Bitfi website on a different device. I pretty much think that sucks. It might be great for security but my thought is this – how is this more secure than just using another website and enabling an authenticator app? Or even going further and getting a hardware authenticator like I used to use on my paypal account back a decade ago. The answer is, it’s not. I’m sure the website is all unhackable and secure, but I bought a hardware device to store my crypto on…not so I could store them on someone’s website. There’s no interface on the device so if the Bitfi site is gone, there is no way to get your funds. I know I’m a simple caveman but this seems like bullshit to me…

Look at that handsome wallet though! And, it’s got a great box. But, when it comes time to punch in your salt and your phrase, be prepared with your magnifier glasses and also make sure that you don’t pick any of the letters or numbers near the sides because this old phone doesn’t have a nimble modern keyboard that pops up – it’s like trying to use the first touch enabled devices in the late 1990s. Remember those video trivia games in all the beer joints back when people didn’t have phones to stare at? It’s like that. Expect to hit the same button a few times and make some mistakes.

On the positive side, it was only $120 including shipping and it arrived within two weeks. It has a great box, nice case, and ships with a die.

On the negative side – I pretty much hate this thing and never plan on using it for anything unless I have to. Maybe someday I can put it in the Cryptocurrency Museum if I keep it preserved good enough. I don’t like the website or interface. I don’t really want to carry this thing around with me or have it take up space in my safe deposit box. It’s already a relic.

Don’t buy the Bitfi. I’d tell you this even if they’d given it to me for free but maybe I would say it in a nicer way like “I see a really good future for the Bitfi when they solve a few early quirks that keep popping up” – and that’s true. I really like the idea of shipping an old phone with a die, but personally, I would have probably been more impressed with an eight-sided or a 12-sided die.

 

Categories
Cryptocurrency Economics

July 2018. Bitcoin Surges to $7400 and Brings All of Cryptocurrency With It.

It was a good day to be in cryptocurrency today. Bitcoin took off this morning, for reasons that are not altogehter clear and it brought it’s hundred closest friends and nearly every other coin or token with it. My personal opinion is that the disgusting and shameful performance of the U.S. President in Europe with former U.S. allies and strongman Vladmir Putin shook the faith of big institutions in the USD and traditional currency markets. There could be a lot of other reasons – but essentially, money is moving to Bitcoin and crypto (as predicted) with loss of faith in the U.S. as a stable democracy promoting the interests of the ‘free’ world.

The long and short of it is that starting at about 8 am, BTC jumped from $6700 to $7300 and the movement upwards has not stopped – as I write, getting closer to $7500 – a jump of nearly 11% in less than 12 hours. Which is awesome. A post on Twitter earlier from Charlie Lee (founder of Litecoin) gave an interesting statistic along with Charlie’s recommendation that if you don’t own at least one bitcoin, you need to make that your focus – even before owning Litecoin.  Charlie’s reasoning was thus – there will only ever be 21 million bitcoins – not enough for even each millionaire to own. Credit Suisse projects that there will be at least 53 million millionaires on the planet by 2019. Less than half of them can ever own a whole bitcoin. Bitcoin is not going to go away. I’m certain of that. The entire financial establishment is certain of that. John McAfee, the founder of McAfee anti-virus and notorious crypto bull has famously said that if a single bitcoin isn’t worth $1 million by 2020 that he will ‘eat his own dick on TV’. While I feel just as confident in the future of Bitcoin, I’m not willing to be quite that specific.

I do, however, think that the floodgates have opened and big money is already pouring in at rates that have never been seen. There will be some up and down – but mostly up for quite some time. My suggestion is that you do your own research and that you get into crypto right now.

If you want to buy or sell cryptocurrency you will need a couple of accounts:
Binance: https://www.binance.com/?ref=13319173 (I get a little bit from your transaction fees if you use this link – thanks) Coinbase: https://www.coinbase.com/join/52d742c6c60a61f2a6000033 (Use this link and we both get $10 in BTC)

If you are interested in my suggestions and are willing to do your own research and be responsible for your own buying decisions – here is what I recommend. Buy as much of a bitcoin as you can as soon as you can. In addition, I think that Ethereum, Litecoin, and Digibyte are all solid projects with long blockchains and proven records. They are not going away. Stellar, Cardano, Neo, 0x, Tron, Basic Attention Token, and Ethereum Classic are all projects that I expect will go up in the short term and the long term. If you want to get in on a couple of early projects that are still cheap and relatively unknown Docademic, Bitcoin Private, Bezop, and NoBS Crypto are all worth looking into – but as always – do your own research. For right now- my highest recommendation is to get as much Bitcoin as you can afford.

Categories
Cryptocurrency Economics

Lack of Confidence in Government? Invest in Cryptocurrency.

If you, like me and a lot of other people – look at the current state of affairs and see complete chaos on the horizon – there are really only a few ways to protect your hard earned money.

1) Buy gold, silver, or other precious metals or gems. Gold will never become worthless – but as a store of value it tends to peak when governments and financial systems are failing and fall when they have the confidence of the public.  Personally, I’m amazed that the value of gold and silver have stayed pretty steady since 2013 as the value of our economy has been artificially inflated and corrected. When one sector of the economy falls, the governments are quick to pump up another sector – there is a robbing Peter to pay Paul aspect to it that should be terrifying. Gold has hovered in the $1300-$1600 range for far too long. Silver has been in the $16-$17 range. I think that a 25%-40% rise in value is on the near horizon. I don’t recommend buying gold or silver though – the problem is fungibility – can you imagine paying for groceries with gold or silver?

2) Stock  and bond markets. Personally, I think we will se a 50% drop in all the major indexes over the next two years. Multiple large banks, big corporations, and investment funds will fail. The Russian backed Trump administration has a clear policy of not rescuing American businesses – expect catastrophic losses after a couple of months of magical looking gains.

3)

4) Cryptocurrency. When governments fail, they can’t take crypto with them. Bitcoin has a built in value creator – the number rewarded to miners halves periodically with 2020 being the next halving – this should limit supply and increase demand since there is a set number of bitcoins that will ever exist. They can’t be artificially created by governments. Bitcoin and many others are not controlled by central authorities, they are decentralized. Unless they can take your private keys, your bitcoin cannot be stolen or seized. Unless there is a way to connect your name to your public key – they cannot be connected to you. Cryptocurrency is the only failsafe in a world where governments are bound to fail. Today, as the US president all but reveals that he is a pawn of the Russian president – smart money is pouring into cryptocurrency at rates that we haven’t seen since December of 2017. As the governmental chaos continues with the disastoruous Brexit, more revelations of collusion between Russian and Republican operatives, and forthcoming revelations of financial insolvency – watch for TRILLIONS of dollars to pour into Bitcoin, Litecoin, Ethereum, Digibyte, and other decentralized tokens.

To buy stocks, I recommend the Robinhood Crypto Trading Platform
If you want to buy or sell cryptocurrency you will need a couple of accounts:
Binance: https://www.binance.com/?ref=13319173 (I get a little bit from your transaction fees if you use this link – thanks) Coinbase: https://www.coinbase.com/join/52d742c6c60a61f2a6000033 (Use this link and we both get $10 in BTC)
If you want to buy gold, silver, antiques, or art – I don’t really have any significant resources to offer you but definitely no matter where you are putting your money, do you own due diligence and remember that past performance does not guarantee future results.
Categories
Cryptocurrency

Bitcoin, Ethereum, Litecoin and Altcoins – What Are They? How can you buy and sell them?

I’ve made it no secret – I think the banking and financial systems of every country on the planet are corrupt and need to be replaced. The problem, of course, is that whatever you replace them with has the potential to also be corrupt as long as you are relying on trust. This is why I love Bitcoin and cryptocurrency. Trust is not an issue – or at least it shouldn’t be.

From the moment that Satoshi Nakamoto released his bitcoin white paper on the internet, Bitcoin has existed without the need for trust. Satoshi,  the almost (or perhaps completely) mythical creator and father of bitcoin – concieved of Bitcoiin in the wake of the 2008 financial crisis when financial institutions had once again clearly shown that the entire financial system was completely untrustworthy.

Bitcoin was born during the last economic crisis when someone (or a group of someones) saw the need for a break from trusting government and financial institutions to take care of the needs of people. Blockchain (the technology bitcoin is built on) works like this – a group of unrelated individuals (miners) use complex math to encode (crypto) multiple transactions into a permanent ledger which cannot be changed or altered and is not owned or operated by any individual entities. Blockchain is built to eliminate the need for trust. For example in regular finance: I write a check to you. You take the check to the bank. The bank takes my money and puts it in your account. We have to trust each other and we have to trust the bank – the middle man, the intermediary. Blockchain takes the bank out of the picture and makes our transaction a permanent part of the record. There is no need for trust – it is trustless. It eliminates the need for banks as well. Bitcoin is the currency built on top of that chain of transaction blocks (get it? Blocks of transactions in a chain where each transaction is necessary to validate every other transaction – a blockchain).

Ethereum (ETH) is a newer blockchain based computing platform developed by Vitalik Buterin which allowed for scripting on the network (i.e. computing and building applications aka smart contracts).

Litecoin (LTC) is a cryptocurrency started by Charlie Lee. It was a sort of clone of bitcoin with some improvements to make it faster and cheaper to conduct transactions. Lee said it was silver to bitcoin’s gold.

At this point, you now know as much or more about bitcoin and cryptocurrency than 90% of the population. It’s very early in the game. As of writing this, there are nearly 2000 additonal cryptocurrencies. Many (most actually)of them are built on the Ethereum protocol and are called ERC-20 compliant – which means if you have an ethereum wallet – you can use those tokens with it. Some well known examples are Golem, 0x, Basic Attention Token, and Ziliqa. Each of them has their own use cases and eventually will have their own blockchains.

And that is the key, each of these projects eventually has a blockchain of their own. Some well known examples of other coins with their own blockchains are Ripple, Digibyte, EOS, Stellar, Cardano, Bitcoin Cash, Tron, and Neo. To be clear, both Litecoin and Ethereum area also coins. Coins have their own blockchain, tokens use the blockchain of another project. So there are coins on the Stellar, Neo, and Tron networks – as well as on Ethereum.

Bitcoin is the one and only first blockchain project. It has a founder but no hierarchy, no controlling body, and no central authority. The Bitcoin Foundation manages governance – but, as the case with Bitcoin Cash (and Litecoin among others) when there is a schism between the nodes – it is possible to ‘fork’ and thus create a new coin with new rules. Bitcoin Cash was born of such a disagreement among miners. The Bitcoin Cash people claim that they are more closely aligned with the original vision of the Bitcoin white paper. The Bitcoin (aka Bitcoin Core) miners say that Bitcoin Cash is a centralized monster that distorts the vision of Satoshi Nakamoto.

Within all the coins above, there are privacy coins, function coins, and exchange coins. Privacy coins like Monero and Dash are built to hide the identity of the user – something which bitcoin is known for but actually doesn’t do. Function coins allow you to use the coin for a specific funtion – a good example is Docademic (an ERC-20 token) which allows you to purchase online medical advising for tokens. Exchange coins such as Binance Coin (also ERC-20 token) allows you to purchase token and pay fees with your tokens.

Coinbase, the largest exchange has not issued their own coin – yet – maybe they never will. Binance is the main exchange for most alt-coins.  A third place you can buy and sell crypto is the phone based stock trading app RobinHood. The difference between the three is that coinbase is the most highly regulated and probably the most hackproof – you can buy only Bitcoin, Litecoin, Ethereum and Bitcoin Cash on Coinbase at the moment, though Ethereum Classic (a fork of Ethereum) will be coming soon and Coinbase has announced that they are exploring adding Cardano, Stellar, 0x, Zcash, and Basic Attention Token sometime in the coming months. You can buy for fiat currency, sell for fiat currency and send/recieve to and from other wallets at Coinbase.

Binance does not have fiat currency enabled and has many many more coins and tokens. The catch is, you have to fund your Binance account with cryptocurrency from elsewhere and if you want to change for currency, you need to go to Coinbase or another fiat enabled exchange. Robinhood allows you to buy and sell a basket of cryptos but you cannot transfer to or from and you do not control the private keys of your wallets – thus – it eliminates what many consider to be the most important feature of cryptocurrency – trustlessness.

 

 

Categories
Economics

Fictional Markets and Snakeoil Salesmen

Imagine this scenario – I have a substandard product and I want to sell a lot of it at an inflated price. The problem is that no one will buy my useless thing because no one actually needs it. So I go to my bank and I say – I’m not going to be able to pay back the money I borrowed from you unless we find a way to sell my useless product and you are going to lose. The bank manager has been hearing the same thing from many other purveyors of useless shit and he is getting concerned because he operates his bank on a fractional reserve policy – meaning that while his deposits are equal to $1, he has loaned out $100 – and this is true for every dollar spent. So, he needs to figure something out – so his solution is to talk to his congressional representative and let them know that he needs to have the rules eased on the fractional reserve policy so that he can loan out $1000 for every dollar – he also needs to have the rules eases on who can borrow money because his biggest institutional clients (purveyors of useless shit) need to sell more to pay him back so that there isn’t an institutional run on the bank – the congressman agrees because the institutional clients are happy to donate more to his upcoming re-election campaign from the increased profits they get from selling useless shit to consumers who suddenly feel like they have an abundance of almost free money. Everyone wins. The congressman defeats his opponent who declares that we need less useless shit and more solutions to problems like disease, homelessness, and childhood poverty – because he calls for more free money for big institutions and easier loan requirements for banks and an increase in fractional (fictional) reserve limits. Consumers borrow, prices rise, money is easy and flowing everywhere, useless shit purveyors are becoming billionaires with lip implants and gold tone sneakers – houses go from $30k to $1 million dollars, banks loan more money on those, consumers pay $3000 for a door or a sink and don’t even blink – investors continue to pour money into companies that produce useless shit and that useless shit becomes more expensive with everything else. Wages stagnate and actually go down, but no one cares because the free money is flowing out to everyone forever and all you have to do is sign a paper. Accountants are actually getting paid to find ways to show that everything is really terrific. And it is (as long as you aren’t homeless, uninsured, part of a persecuted class, or unbanked). The whole world is awesome. My substandard product has sold millions of units. I am rich beyond my dreams. The bank is getting paid back. The congressman was re-elected. A cup of coffee is $15. Minimum wage is $8. A house bought twenty years before for $100k is now worth $1.5 million. Everyone wins! Until something happens – and it always eventually happens. A nail in the road blows out the overinflated tire. This isn’t the classic story of the bubble in equities – this is something else entirely. This is conspiracy and when the inflation bubble reaches a level where it can no longer grow – it will explode. Chaos will ensue.

I’ve been watching this for ten years. I’ve been expecting the balloon to pop. It keeps getting bigger and bigger. The question that I can’t give an answer to is whether or not they will figure out how to keep it going and if the populations of the unbanked, homeless, and those in insecure living situations will reach a critical mass and result in a revolution or whether society as a whole will become heartless enough to openly begin genocide. Or, more hopefully, whether the entire financial house of cards will simply collapse and leave people with a choice between building it again – or building something else.

My hopes hinge on the latter. This is why I find hope in decentralized digital currencies like Bitcoin and Litecoin and Digibyte. This is why I encourage people to be careful. This is why I shake my head as $20 no longer buys a bag of groceries.