The value of 'money', or otherwise

[Undried Plum]

I hate to be proven right when I make dire predictions. It's happened several times, and it never gives me pleasure.

In the current environment, with massive moneyprinting of baseless fiat currency, it is clear to me that fiat currency is being debased at a manic rate.

Take a look at a couple of asset prices, priced in fiat currency, not hard money.

Tesla shares:
In March of last year: $72.24
In January of this year: $883.09
A 'gain' of 1,222% in less than a year

Bitcoin:
In March of last year: $4,926.30
Today: $55,698.87
A 'gain' of 1,130% in less than a year.

That is the true rate of monetary inflation.

Forget about RPI and CPI. They are totally bogus. The true rate of monetary inflation is vastly greater than the retail indices.

Those rates of gain of TSLA and of BTC are not actually gains in the values of those assets. Instead, they are indicators of the rate at which fiat currency is sinking.

Last year a dozen or so Trillions of meringue fiat Dollars/Euros/Pounds were conjured out of thin air. More than 22% of all dollars in existence were created at a few pushes of a few buttons on a handful of computer keyboards. 14% of all Euros, same. More than 9% of all Pounds Sterling ever issued in History were created in such a fraudulent manner last year too.

I was slow to understand and to realise the extent to which we are all being ripped off.

Now it is clear that the old econometric formula of I=M*V still applies.

Thus, the economy and prosperity of the West is buggered.

When V (velocity of money) picks itself up off the bones of its arse following the end of the current Depression which is largely attributed to Cv19, the I of I=M*V (Inflation) will be ignited by the accumulated propellant of M (Money supply).

Those amongst us who are addicted to fiat currency are ****. They just don't know it.

[Alisoncc]

UP that is absolute rubbish. Seeking to compare the price of shares and crypto currencies over time is akin to pulling numbers out of a hat at bingo, and making economic decisions on your future. Share prices are entirely based on computers betting against each other. I have been tracking the DJ index over the course of the pandemic. There is absolutely no correlation with any leading indicators. The most reliable was the ambient daytime temperature in Wall Street.

Many many years ago I had a number of employment options available. All in different countries with pay in different currencies. It was the early days of spreadsheets and I attempted to compare the economics of the possibilities by comparing prices for basic commodities on a spreadsheet. Started off with a dozen eggs, loaf of bread, pound of butter, whole raw chicken, etc. etc. Working up to a suit, shoes, monthly apartment rent, etc. etc. Massive amount of effort that in the end proved nothing. Ended up taking the job with the guy who sounded the friendliest on the phone.

[John Hill]

Any time that we see money being made out of nothing we can be sure there are dark days ahead.

[TheGreenGoblin]

Your "money for nothing, and your chicks for free!"

[OFSO]

Oooh, that's dire!

[TheGreenGoblin]

"For not the stores which Troy, they say, contained
In peaceful times, ere came the sons of Greece,
Nor all the treasures which Apollo's shrine,
The archer-god, in rock built Pythos holds,
May weigh with life...
But when the breath of man hath passed his lips,
Nor strength nor foray can the loss repair."

- Illiad

[Pontius Navigator]

UP has cited two bubbles wholly comparable with the South Seas and Tulips. It is simply money chasing money. With lockdown it is acknowledged that UK household debt has been cut by billions. For many not previously in debt their personal cash piles have been increasing at a similar rate.

This is loose money looking for a home. Bitcoin and Tesla look like good bets for this surplus unneeded cash. A bet that promises more but potentially won't hurt if it fails, But it won't will it?

Some economists anticipate much of this money flowing to retailers as the lockdown is eased. But will it?

The greedy will have put it in Bitcoin, others will be content looking at the cash, and sadly others will go back into debt if they do return to the High Street.

[Undried Plum]

Want other examples of rampant monetary inflation?

Take a look at the market price of Brent crude oil:
April: $13.62
Today: $61.52
An inflation rate of 451%
WTI is even worse due to the nuttiness of fracking.

Other commodities show similar patterns of massive (ie >100%pa) price inflation.
eg copper:
March: $2.11
Today: $3.93
An inflation rate of 186%.

Gasoline:
April: $0.6089
Today: $1.821
An inflation rate of 299%.

Silver:
March: $12.11
Today: $27.21
An inflation rate of 224%.

Lithium:
July: $39
Today: $67.5
An inflation rate of 173%.

Soybeans:
March: $831.75
Today: $1,379.75
An inflation rate of 165%.

What did you think was going to happen with moneyprinting on such a massive scale? Where did you think that money was going to go? To the poor? To the huddled masses yearning to breathe free?

The central banksters hand a dozen Trillion Dollars/Pounds/Euros to the commercial banksters and simultaneously dump the wholesale interest rates to near-zero. What do you think happens next?

In the case of USG, they raised and spent more last year from moneyprinting than they raised in taxes. That differential, the budget deficit which is the expenditure minus the taxes, goes onto the national debt. Trump increased his national debt by more than all his 44 predecessors combined. That's how he funds his companies, by creating debt. The really scary thing is that they've now discovered that they don't need workers or taxpayers. They can fund the whole shebang simply by electronically 'printing' money.

The US national debt per taxpayer is now $222,190. Probably a few dollars more by the time you read this post. Who here thinks that (m)any of those taxpayers has any intention of paying their share of the national debt? BTW, that's just the headline national debt. When you factor in unfunded commitments such as pensions and medical care costs which will inevitably occur, that headline figure increases by a factor of about 3.

Fiat currency has been debased to such an extent that it is becoming increasingly worthless. It is trending towards zero at a high rate which is accelerating wildly. Worse, the rate of acceleration is itself accelerating. This ain't going to end well. Hyperinflation is never nice.

The exorbitant privilege which was conferred upon the dollar by Bretton Woods and the existence of the petrodollar is slowly coming to an end. A few nations are now paying for major commodities such as oil in currencies other than the dollar. Some very serious questions are being raised about the reason why the USG has for decades refused to permit an independent audit of the claimed gold holdings in Fort Knox. The whole thing is beginning to become unraveled.

In my unqualified opinion, now is a really good time to buy physical gold. Not paper gold such as GLD, but actual allocated physical. Paper gold is a bit of a con. The mug punter believes that his/her ounce of paper gold is exchangeable for an ounce of the shiny metal, but nearly all of those suckers would be disappointed if they tried to convert. It is known that there are more than 80 times more ounces of paper gold in existence than all of the above ground ounces of real gold in the entire world. The price of real gold is (quite literally!) 'fixed' twice a day by five guys in London who nowadays meet in a conference call. The market manipulators control that price fixing by issuing more or less of those flakey ETFs and other forms of paper gold. They mostly depress the market price of gold in order to try to beef up the perceived 'value' of collapsing fiat money such as Dollars, Pounds and Euros.

As soon as those guys lose their grip, the true balance between gold and fiat will be found by the price discovery mechanism of a free market. As soon as that happens, which it surely will one day, the fiat price of gold will explode by one or two orders of magnitude. You've seen from the numbers I've shown above that there is already a wall of hyperinflation in sight.

[Undried Plum]

UP has cited two bubbles wholly comparable with the South Seas and Tulips.

TSLA and BTC are quite different to the South Sea and the Tulip thing and The Company of Scotland Trading With Africa and the Indies. When those bubbles burst their respective prices collapsed to zero and never recovered.

When BTC does this hockeystick bubblicious thing it eventually runs out of puff and falls back from it peak by as much as 80% of its peak value. What then ensues is that it subsequently climbs back up to that giddy height and then goes on to form another hockeystick shaped surge and so on and so on. This is the third or fourth time it's done it. Each time the peak is a multiple of the previous one.

There are only two things which could wipe out BTC. One is a concerted effort by a syndicate gaining control of more than 50% of all Bitcoin in existence. That is now so exrtremly improbable that I think we can disregard it as a potential possibility.

The other potential cause of total collapse would be a concerted attack by all the central banks and all the commercial banks in the world to choke off the interface between fiat and crypto.

In Europe and America the use of BTC to pay minor bills such as for groceries or a bar tab is not at all widespread. Perhaps surprisingly, Africa is leading the world in that way. For traders doing trans-border business between even neighbouring countries, the transference of money is bureaucratic, slow and very expensive. They have discovered that using Bitcoin is exactly the opposite. It takes, at most, ten minutes, it's ultra-cheap, and there is no bureaucracy whatsoever. All they need is a smartphone and a wifi connection.

BTC will not collapse to zero. The cat is out of the bag now and the banksters would have a hell of a job to herd and capture that many cats around the world. Control of Bitcoin is in the hands of the users, not the banksters. That's why banksters and governments hate Bitcoin and are even afraid of it: they cannot control it.

As for TSLA, I cannot see how the current price can be sustained. For TSLA's mkt cap to be greater than the combined total of the top ten automakers of the world has got the word "bubble" written all over it. I'm quite certain that it won't collapse to zero. Quite apart from anything else. the firm has a low level of debt and it has several billions worth of cash reserves in the hard currency form of BTC.

[John Hill]

Nothing that a good revolution could not fix!

[Undried Plum]

[prospector]

UP,
That clip takes some watching, but there are certainly many observations of great interest as to how the world financial system has ended up the way it has, and makes historical fact relevant to that system. Tks for posting.

[Undried Plum]

1BTC = £40k!?

Are they fukkin crazy? Or am I?

Or are we looking at it the wrong way?

Is it perhaps because fiat is collapsing that the value of real hard currency appears to be going up?

[prospector]

This clip may be of some value as to the value of Fiat money.

https://www.bing.com/videos/search?q=hi ... 8FBF87A5AD

"The history of Fiat money failures is probably the most informative.

[Undried Plum]

Here's a good clip:



Actually, the whole of that documentary is very educative and well worth watching in its entirety.

[prospector]

Very Good, many of those facts are so obvious, hopefully more people are waking up to the corruption of the present financial situation.. The biggest problem to my way of thinking is the money that passes from lobbyists to Politicians. Until that can be stopped very little will change. I read an article, that I cannot find again, of the amount paid to politicians on both sides of the American Congress by the big Pharma companies, If that knowledge could be widely distributed maybe the system could be overhauled. And perhaps the legal purveyors of the addictive drugs and other illegal financial crimes could do gaol time rather than a a monetary fine that amounts to chicken feed relative to their wealth , the system will change.

Maybe bringing back the the Glass–Steagall Act would be a good start.

[Undried Plum]

A rather good educative documentary for most, though not for some here who already understand this stuff and who may feel uncomfortable about it.

[TheGreenGoblin]

I see that Elon Musk has had a bad day... I sure he will not be too worried.

Elon Musk, the maverick boss of Tesla, is no longer the world’s richest person after shares in the electric car company dropped 8.6% on Monday, wiping $15.2bn (£10.8bn) off his fortune.

Musk, who last month leapfrogged Amazon founder Jeff Bezos to take the title of the world’s wealthiest person, dropped back into second place with a $183bn estimated fortune behind Bezos’ $186.3bn.

The 8.5% drop in Tesla’s share price on Monday – the sharpest one-day fall since September – was partly fuelled by Musk tweeting that the prices of bitcoin and other cryptocurrencies “do seem high”. Tesla’s shares were down a further 6% in pre-market trading on Tuesday.

Tesla should stick to what it's good at – and that isn't bitcoin

His comments came just two weeks after Tesla bought $1.5bn of bitcoin, which sent the price of the cryptocurrency to fresh highs. Bitcoin, which reached a high of $58,000 on Sunday, has since fallen to $47,500 on Tuesday morning. The price is still up more than 500% over the past year.

Replying on Twitter to Peter Schiff, a stockbroker and gold investor, Musk said: “Money is just data that allows us to avoid the inconvenience of barter. That data, like all data, is subject to latency and error. The system will evolve to that which minimises both. That said, bitcoin and ethereum [another cryptocurrency] do seem high.”

https://www.theguardian.com/technology/ ... coin-price

[Undried Plum]

The value of gold isn't going up. The "value" of fiat currency is going down.

Here's a graph of fiat's decline within the lifetime of most or all of us here:





It's a little bit like watching the tide ebb from High Water to Low Water. The mineral-based land isn't going up with respect to Sea Level. It's the fluidity of the water which is going down.

[Undried Plum]

Let me give a personal example.

A house in the New Town of Edinburgh with which I am very familiar was built in 1809. The title deeds show it to have been sold in 1813 for £175.

In 1959 it was sold for £175. Sure, it was in poor nick by then and needed the woodworm-corroded joist replacing and the old 5Amp leccie system had to be upgraded and central heating installed. The old coal-fired range was ripped out and replaced with a modern gas boiler. The old scullery was converted into a very small modern kitchen, about the size of a Leith trawler's galley Mebbe ten grand, at most, at 1960s prices .

Today I see that Zoopla values it at North of £800k.

From £175 to £850K in very little more than the timespan of the above graph. That shows you how much the value of "money" has been degraded.

When I was a lad the phrase "money in the bank" was a positive thing. We thought it really meant something. Now I know that money in the bank is worth about as much as a steel bucket of stale piss.