Juggling Dynamite

Daily walks are a highlight in the COVID lockdown and, like many, I’ve been taking the opportunity to step offline and out for some air.

Yesterday, two different neighbours at different points stopped to ask me about the stock market from the other side of the street.  One walking her dog yelled,  “Are you buying Air Canada shares? Everyone I know seems to be.”  Another waved ”  A bunch of my friends are trading shares on their iPads these days. What do you think?”

A third pointed out homes that had recently sold tens of thousands over their asking price in a matter of days, “Great for us”, he said, “who knows how the young folks will get started.”

The net was a disturbing sense of deja vu reminiscent of similar unsolicited interactions in 2000 and 2007.  Then, as now, regular folks were focused on stock trading.  I still recall our children’s piano teacher urging his favourite mining picks on us in the spring of 2008.

At least then, Canadian home prices had been flat for about 15 years (following a market bust in 1989), and households were not highly levered.

Unfortunately, there’s no such comfort now.

Worthwhile discussion on the fantasy of central bank powers and the destructive behaviours they have inspired.

In this interview, Danielle discusses the evolution of the Fed through that period and how the policies developed and implemented then have played a role in everything from inequality and social unrest to asset bubbles and inflation. She also lays out several of the potential outcomes facing investors and citizens alike as the result of the fiscal dominance and monetization of the debt we are seeing today.

Here is a direct audio link.

Superinvestors and the Art of Worldly Wisdom · #38: Danielle DiMartino Booth On The Future Of The Federal Reserve

Exemplifying illiquidity:  of the existing 18.5 million Bitcoin in existence, around 20 percent–currently priced at about $140 billion–are reportedly lost or otherwise stranded in wallets that the owners cannot open.  After 10 guesses at forgotten passwords, credits typically become permanently encrypted and forfeited.

Wallet Recovery Services, a business that tries to help owners find lost digital wallet keys–says it is receiving about 70 requests a day from people trying to recover access to their credits.  See Lost passwords lock millionaires out of their Bitcoin Fortunes.

As exuberant pricing has yielded increasingly negative investment prospects for most asset classes today, financial speculation has gone beserk and even some traditionally sober institutions like pensions and life insurance companies have tossed cash at crypto bets.

All in and then some, open interest in CME’s bitcoin futures has surged by more than 250% since the beginning of October while regulators and governments are increasing their attention on the enabled crimes, wasted energy and madness unfolding.  See ECB’s Lagarde calls for global regulation of Bitcoin to prevent use in money laundering.

All of this promises to end in the usual way, see Bitcoin will break Wall Street’s heart:

Estimates by Digiconomist suggest that the bitcoin network consumes around as much electricity as Chile, 77.78 trillion watt hours on an annualized basis. Bitcoin mining is often concentrated in places with abundant renewable energy such as China’s Sichuan province and Iceland, but increasingly climate-conscious governments will nonetheless likely take a dim view of bitcoin mining’s social utility as a priority for energy use.

The prospect of more onerous regulation may take the shine off digital assets, too. The Treasury Department’s plan to make trading platforms keep more stringent identity and transaction records is just one example of how the attractive anonymity of the system could be undermined.

Also, watch Why investors are piling into Bitcoin despite the risk: