Is There a New Dotcom Bubble?

[Juan]

I turned £3000 into circa £80,000 in something like 20 months. I continue to receive hundreds in interest every month plus free Netflix, Spotify, 3% card cashback on every purchase, and a free airport lounge pass on the debit card. What have the banks done for me? I'd have lost a fortune to the inflation they created if I had left all my money in a bank account. I made over $1000 on the Visa card cashback alone; it's miles better than the banks.

And now I am wondering how there's people who cannot pay rent. And people who will default on their mortage loans once rates go up just a little...

The should have bought a house on the Metaverse!

 

[Ed209]

I think the guy next door and the girl upstairs are very much in favour of a big interest rate raise, considering their salaries do not increase at all, and have not increased at all for years and years...

And how exactly does a rise of 1-2% help them with that? If we head into a recession then a lot of people will be losing their jobs, and then they will have high inflation plus no job to contend with.

Remember that we usually lower the rates to stimulate a struggling economy in an effort to avoid a recession. However, the money printing and supply chain problems have created an inflation problem on top of this. I'm repeating the same things over and over here, but the Fed are trapped; they cannot raise the rates like you want them to because of their debt-to-GDP being so high at 126%. It's not possible to do a proper rate hike, hence why they talk in basis points nowadays.

Also, higher rates will convert into higher mortgage and rent payments, and this is something people can't afford right now. The benefits people will see via their savings accounts will still not be anywhere near the rate of inflation, so the gap will not be bridged. People will still be at a net loss of over 10%. One of the ways that raising the rates works to fight inflation is that it encourages people to save more and this takes money out of circulation, but who wants to continue losing 10% plus every year in a savings account (and that's with a raised interest rate?). That's how absurd the situation has become.

They are fenced in but should be doing everything in their power to avoid a hard recession because that will screw everyone. If we do go into a particular bad recession then it may force a lot of retired people back into the workforce - right when they should be enjoying their lives - because their pensions would be hit. The competition for jobs would also increase as a result of this.

What are you expecting them to do when you say they need to raise the rates? What percentage should they go to considering the state of the world's economy?

 

[Juan]

Also, higher rates will convert into higher mortgage and rent payments, and this is something people can't afford right now.

People bought stuff they could not afford. If they have to default, so be it.

The problem is central bankers cannot create a casino economy just for people to feel good. So this is a root problem. Central banks should have never embarked on the QE and lowering rates spree, and the zero interest rate path.

Money is like any other product, it has a price, and central banks should not have set the price at zero.

Just imagine if oil companies gave away oil and said "take all you want for free", and then we were complaining about running out of oil.

The current high inflation is a result of WRONGDOING by central bankers and of applying the WRONG monetary and interest rate policies. Now there's going to be pain but it is necessary. The pain should be borne by the over-indebted, not by the ones holding cash, who did nothing wrong!

 

[Ed209]

People bought stuff they could not afford. If they have to default, so be it.

You confuse the hell out of me. One minute you say you care about people and then the next you're like "fuck 'em." What happened to being concerned about peoples jobs and wages? Don't forget that rents would also go up, and so would peoples outstanding credit card debts and loans.

The problem is central bankers cannot create a casino economy just for people to feel good. So this is a root problem.

So now you agree with me? You are repeating what I've said ad infinitum over the last few pages; that we as a society need to learn to live within our means. The issue is that people won't vote for cuts that will have a direct impact on their lifestyle, and this is what perpetuates the problem. Governments end up borrowing endless amounts of money to fund our first-world lifestyles that are increasingly becoming founded upon the cheap labour of other countries.

Central banks should have never embarked on the QE and lowering rates spree, and the zero interest rate path.

Exactly, so why do we continue to give them all of the power? Why does one man get to decide the fate of the value of everyone's money? Why isn't there a democratic vote of some sort? It's so bad now that a meaningful rate hike isn't even possible anymore anyway. At least not one that's big enough to eclipse the rate of inflation like Paul Volcker did; that ship sailed years ago and people have had no choice but to watch all these bad policies being implemented from the sidelines with no say in any of it. There is no recourse or punishment for these committees that constantly fuck everything up, and the working classes are just supposed to suck it up all the time.

Money is like any other product, it has a price, and central banks should not have set the price at zero.

Then stop supporting them. You complain but do nothing to help change the situation.

Just imagine if oil companies gave away oil and said "take all you want for free", and then we were complaining about running out of oil.

The oil companies did exactly this during the pandemic. They had so much oil that they couldn't store it all, and so it went into negative equity and they couldn't even give the stuff away. They had to start paying people to take it.

The current high inflation is a result of WRONGDOING by central bankers and of applying the WRONG monetary and interest rate policies.

It's a result of shitty policies, for sure, but it's also inevitable. Fiat currencies usually have a lifespan of around 100 years before they suffer the same fate. What's happening now is nothing new and is very much predictable based upon our history. The dollar is likely in the final stages of its natural life.

Now there's going to be pain but it is necessary. The pain should be borne by the over-indebted, not by the ones holding cash, who did nothing wrong!

You sound like Noah calling all cash holders onto the Ark. What about the poor in society? Don't they matter? What about those who work two jobs so they can pay their bills, but still can't afford their rent?

You didn't answer my question, either: if they gave you all the power, what would you raise the interest rate to, and what effect would you expect it to have on the economy now that we're heading towards a recession?

 

[Juan]

You confuse the hell out of me. One minute you say you care about people and then the next you're like "fuck 'em." What happened to being concerned about peoples jobs and wages? Don't forget that rents would also go up, and so would peoples outstanding credit card debts and loans.

This is a moral stance about how things ought to be, without manipulation. People are free to get indebted all they want, but money has a price and central banks are there to set the price of money to keep inflation in check. They have failed to do so, and now it is time to catch up. If there is economic pain, so it be.

The oil companies did exactly this during the pandemic. They had so much oil that they couldn't store it all, and so it went into negative equity and they couldn't even give the stuff away. They had to start paying people to take it.

They gave the stuff away because it was not possible for anyone to take it away, as all tankers, petrol compounds etc were full. And moving petrol from here to there does cost a lot of money.

It's a result of shitty policies, for sure, but it's also inevitable. Fiat currencies usually have a lifespan of around 100 years before they suffer the same fate. What's happening now is nothing new and is very much predictable based upon our history. The dollar is likely in the final stages of its natural life.

Let's hope for the Chinese to create a strong reserve currency. The US wants to isolate the Chinese but they do want to invest and trade with the rest of the world. The US is the past and China is the future, so soon the dollar is going to be just a historical anecdote.

The renminbi has gotten stronger and appreciated over the years. In the meantime the US printed trillions. Absurd.

 

[Juan]

These people, affected by the nonsense of the Federal Reserve, who has created an absurd housing bubble in the US, are waiting for a home in the Metaverse too (Zuckerberg, you are going to have to pay me for the publicity of your new absurd creature...)

'My car is my home': the California students with nowhere to live

https://www.theguardian.com/us-news/2022/apr/02/college-students-unhoused-school-help

That Zuckerberg should donate some money for those people in need. Or alternatively pay taxes like anyone else does.

 

[Juan]

Cannot wait for the FED's balance sheet reduction, starting in May.

95.000 millions less every month.

 

[Juan]

This is the guy who is raising taxes to others in the UK, while his wife, a billionaire, enjoys the benefits of tax havens while living in the UK. Fantastic job, Mr Sunak!

Akshata Murty Sunak's wife may have avoided up to £20m in tax with non-dom status

Labour says Sunak may have broken ministerial code over wife's tax status

You have to admit The Rishi Sunak Show is hilarious. The non-dom episode is the best yet

Sunak and Murty held US green cards while he was chancellor – reports

 

[Juan]

The US government should stop this robbery to all the other taxpayers:

In 2021 it was revealed by ProPublica that Thiel had purchased 1.7 million founders shares in the entity that would become PayPal using $1,700 in a Roth IRA in 1999. Due to the rapid growth in the value of the shares as PayPal grew and was later acquired by eBay it allowed Thiel to turn his $1700 Roth IRA into an account worth more than $5 billion as of 2019. Most of this increase in the value of the Roth was due to him re-investing his PayPal proceeds into companies like Palantir and Facebook which grew quickly after his investment. If Thiel waits till 2027 he can withdraw the entire $5 billion+ amount tax free.

 

[Juan]

I reproduce this comment from a user of The Guardian newspapers, because it is so true:

"People and the planet can't afford billionaires. They are like cancer taking up more and more resources from other cells. All it wants to do is keep growing whatever the cost to the whole organism. On top of that it reprograms other cells to help it hoard the resources. The whole organism (everything on out planet is interconnected) becomes sick, dysfunctional and it starts dying..."

 

[Juan]

So Elon, the "libertarian" (what a joke of a word!), blocks people on Twitter who do not think like him, and buys a big chunk of Twitter to manage it at his convenience:

Elon Musk's vision for the internet is dangerous nonsense

Elon Musk's vision for the internet is dangerous nonsense

Of course the guy pays less tax as a % of his earnings than me or anyone else that works for a salary... it's all very fair.

It seems the balance is oddly tipped in favour of those "libertarians" who want everyone else to be their slaves, to pay taxes for them, and to support the economy for them... because they only take and evade taxes.

 

[Juan]

 

[Juan]

Forecasts for Big Tech look pretty bad... wait till they are regulated and subject to a ton of laws that have not been approved yet. That'll be the perfect storm.

 

[Juan]

That's why the saying goes "sell in May and go away"

Andreas Clenow would say to those amateur traders: you did not "follow the trend", and now you are trapped with huge losses. NASDAQ clearly set the path for the other indexes...

And the FED and ECB have not really started to walk the talk yet... this is just the beginning

 

[Juan]

Store of value, they said. Bitcoin losing 38% in 6 months.

 

[Ed209]

Store of value, they said. Bitcoin losing 38% in 6 months.

View attachment 50057

You're looking at the wrong metrics, Juan. Crypto is still the fastest adopted technology in recorded history, and the on-chain data is only getting stronger. It's the fiat currencies that are in trouble because the central banks have monumentally fucked everything up (and the cycle continues to repeat itself). Fiat currencies always end the same way because of human tendencies; it's an inherent fault of the system.

Bitcoin's chart is no different today than at any other point during the last 13 years, and is still far and away the best investment of all time. The entire market is down because the global monetary system is in complete disarray, and there's also a war going on that's affecting the world.

This is a good time to average into some crypto positions, in my opinion, as I believe you'll thank yourself in 5 to 10 years time. There's no point trading these markets with what's going on in the world as anything could happen on a day-to-day basis. Buy, hold, and forget. You've gotta think more longterm and look at the bigger picture of what's happening.

I agree with what Kevin O'Leary says here. This is just the beginning as the money that's in crypto right now is a spit in the ocean.



P.S. When we first discussed Bitcoin on here and I said it was a buy, it was sub $10k. My friends money from that post is still up 4x, and he has outperformed the market and grown his capital more than any institution on a percentage basis. A 38% drop is peanuts if you're making thousands of percents in gains. This is part of the volatility/growth curve of a growing asset class, and those who can't stomach it should stay well away.

 

[Juan]

You're looking at the wrong metrics, Juan. Crypto is still the fastest adopted technology in recorded history, and the on-chain data is only getting stronger. It's the fiat currencies that are in trouble because the central banks have monumentally fucked everything up (and the cycle continues to repeat itself). Fiat currencies always end the same way because of human tendencies; it's an inherent fault of the system.

View attachment 50058

Bitcoin's chart is no different today than at any other point during the last 13 years, and is still far and away the best investment of all time. The entire market is down because the global monetary system is in complete disarray, and there's also a war going on that's affecting the world.

This is a good time to average into some crypto positions, in my opinion, as I believe you'll thank yourself in 5 to 10 years time. There's no point trading these markets with what's going on in the world as anything could happen on a day-to-day basis. Buy, hold, and forget. You've gotta think more longterm and look at the bigger picture of what's happening.

I agree with what Kevin O'Leary says here. This is just the beginning as the money that's in crypto right now is a spit in the ocean.

P.S. When we first discussed Bitcoin on here and I said it was a buy, it was sub $10k. My friends money from that post is still up 4x, and he has outperformed the market and grown his capital more than any institution on a percentage basis. A 38% drop is peanuts if you're making thousands of percents in gains. This is part of the volatility/growth curve of a growing asset class, and those who can't stomach it should stay well away.

Today the ECB defined cryptocurrencies as a "Ponzi Scheme", this is... a scam.

ECB executive calls for clampdown on 'lawless frenzy' of crypto trading

 

[Juan]

Crypto peddlers are so desperate that they are posting ads all over the physical world, I mean, today I went for a walk near my place and saw a chalkboard advertising the "definite course on cryptocurrencies"... this is such a scam!

Other chalkboards next to the "crypto guru" said "daily menu - 15 euros - 3 courses + a drink"



By the way, the NASDAQ is going down the drain and charts do not look good.

 

[Ed209]

Crypto peddlers are so desperate that they are posting ads all over the physical world, I mean, today I went for a walk near my place and saw a chalkboard advertising the "definite course on cryptocurrencies"... this is such a scam!

There are loads of scams surrounding crypto; it's like the Wild West out there. I'm only interested in protocols that can bring value to the world and can improve upon the current financial and data infrastructure.

We have been fleeced for far too long within the current monopoly both financially and when it comes to our data. It's a closed system where nobody gets a say in how our money or data can be used or transacted. We live under the whim of central banks who have complete authority to decide what the interest rates will be and the ratio at which new money will be issued. If you don't like the idea of 50% of the total monetary supply being issued within two years, then tough shit, because a committee will decide that for the entire world. These select few people have the power to debase the money that is being earned through people's hard labour and steal the savings from our bank accounts so that they can shrink the size of the national debt by inflating the supply. It's a system that's slow, outdated, and made to shift power from the many to the few. The Fed is half privately owned by the biggest banks in the world, and they all take a 6% dividend. It's in their interests to destroy anything that is inherently fairer because they stand to lose their stranglehold on everything.

Look at the Forex market, for example, it's slow and incredibly inefficient. Crypto could revolutionise that entire space. It could also save everyday working people a fortune in hidden banking fees that most people aren't even aware of. I made more interest last year with stablecoins than I've ever made in my entire life with banks. In fact, you could say many lifetimes. Stop giving them the power to steal your income.

This is a cyclical system and it always fails, eventually. Crypto is far from perfect, but it is still evolving.

Your previous post mentioned an article that referred to crypto as being a Ponzi scheme, which is ridiculous. It simply demonstrates that the author has no idea what the definition of a Ponzi scheme is or what it even means. If the prominent cryptos are supposedly Ponzis, then what on Earth does that make fiat?

 

[Juan]

I still think the FED can do the right thing and raise interest rates by 100 basic points in May.

 

[Ed209]

I still think the FED can do the right thing and raise interest rates by 100 basic points in May.

I like the fact that there's competition now, because competition leads to innovation and better market conditions. The fed has always been out of touch and that's not going to change in the immediate future, and I don't think it's a good idea that we as a society hand over so much power to them. They can single-handedly change the lives of millions and we can do nothing about it. Remind me again what's good about the current financial system? When in history has fiat ever been successful?

I'm not entirely sure if crypto can be a solution (nobody can be), but I'm prepared to try something new that attempts to decentralise the power structure (and I'm prepared to invest in it). Poorer people would be far better off as well.

Even the UK government has begun to see the benefits that crypto can bring. I posted this about 4 weeks ago on the investment section (which you can't see because you aren't a Benefactor of Tinnitus Talk, so I'll post the link below). Have a read through it.

Government sets out plan to make UK a global cryptoasset technology hub

 

[Juan]

My biggest concern yesterday, when I saw a course on cryptocurriencies advertised on a chalkboard, like the ones restaurants use, was whether the course also included ice cream and dessert...

 

[Juan]

Duel between crazy people: one of them wants to replace the real world and the other one wants to "augment" the world.

And the rest of mankind... well, we just want to be left alone and live in this good old real world

Snapchat's Evan Spiegel dismisses Facebook's metaverse as 'hypothetical'
Founder says his company is committed to augmenting the real world rather than replacing it

https://www.theguardian.com/technol...gel-dismisses-facebook-metaverse-hypothetical

 

[Juan]

Amazon lost 3.844 million USD in the first quarter. Results are worse than expected.

 

[Juan]

There are many signs in 2022 that are very similar to what was happening in 2008. The stock market will continue falling.

Nasdaq index marks worst monthly drop since 2008 financial crisis

Tech-heavy stock benchmark dropped 13.3% in April as investors braced for higher interest rates and slower growth

 

[Greg Sacramento]

@Juan, for those with retirement fund accounts, they will be shocked when they receive their next quarterly statements. I wrote about all the pain to come months ago. Holding my OTIC and FREQ shares and that's about it.

"Rights" and special interest groups attorneys are the cause of this mess. These attorneys are making a fortune, donating political, buying oil and shorting the rest of the market. Now these rich attorneys want their student debt canceled. This spiral of greed and legal representation of free money will add more national debt and fuel inflation more. When interest rates rise, banks will be full protection mode and depositors won't earn squat.

Special interest groups want no taxes for media journalists and teachers and there's simple answers as to why. At the same time, veterans, the elderly and those with a true disability such as tinnitus are being ignored. Just not enough money to be made for "rights" representation of the elderly, disabled or those in nursing homes. Besides, less in these groups vote.

Vote buying - giving $300 dollars monthly to every child, when there's no accountability on where that money goes. When this money was deposited to their accounts at the beginning of each month, lottery ticket sales and liquor sales increased dramatically. Lines formed at variety stores and casinos were overcrowded. Yet, the old and disabled can't afford dental and eye care.

 

[Ed209]

I still think the FED can do the right thing and raise interest rates by 100 basic points in May.

It's a bit late for a measly 1 point raise now, though. The economy shrank during the last quarter, so we could be heading towards another global recession unless things turn around somehow. This is exactly the conundrum I've been banging on about for months. The Fed, through their own sheer incompetence, has led the US into a dire position through bad monetary practices.

To stimulate growth, they ideally need to cut the rates, but how are they gonna do that? There's nothing to cut anymore because we've had years of easy money. The current inflation needs to show shows of stabilising before they can act in a meaningful way, and a drastic rate rise whilst the economy is shrinking could cause a depression and obliterate everyone. It wouldn't surprise me to see them backtrack again (like they always do) based on the current data, but I'd say the most likely outcome at the FOMC meeting next week will be a 50 basis point rise.

Another forward-looking indicator that isn't looking great is the 10 year US bond market. Take a look at the logarithmic yield chart for the last few decades:

Look at the rate the yield has been going up by. The last 2 years are by far the biggest candles, and we know there is an inverse relationship to the price of the actual bonds themselves. You can see from this chart that a range-bound trading pattern that's been happening for years has been broken:

Who would want to buy bonds now?

As I said in an earlier post, a large contributing factor to the problems we face today is the sheer scale of money printing that the Fed and other governments have done. I mean, just look at it:

It's insane. All this printing, sorry, "quantitative easing," has exacerbated the already overblown stock prices, and property prices. Throw in a breakdown of the supply chains (because of a pandemic), and now a war, and you can see that things aren't looking great.

 

[Juan]

@Ed209, governments can stimulate growth cutting taxes. That's an avenue worth pursuing: reducing the taxes workers pay, this is, income tax, to fuel consumption.

Rich people have greatly benefited from monetary expansion and also during the pandemic. They have been GIVEN a ton of our money. It is time to return some, and let workers live a bit better, this is, let salaries recover a bit of the purchasing power they've lost.

 

[Ed209]

@Ed209, governments can stimulate growth cutting taxes. That's an avenue worth pursuing: reducing the taxes workers pay, this is, income tax, to fuel consumption.

Rich people have greatly benefited from monetary expansion and also during the pandemic. They have been GIVEN a ton of our money. It is time to return some, and let workers live a bit better, this is, let salaries recover a bit of the purchasing power they've lost.

We've already discussed this before. I said in a previous post that lowering taxes is a way to stimulate the economy, but there's no way governments are going to do that now with the huge deficits and spiralling debt repayments. The debt levels around the world are unprecedented, and the US is now over 140% debt-to-GDP.

You're not thinking this through. Each taxpayer is effectively in debt for around $243k in the US, and the revenue per citizen is around $12.5k. The liability per citizen is over $500k for public spending. Where is all this money going to come from? The magic money tree again? They are running a $3t deficit.

They will have to make some cuts because it's unsustainable. They already raised the debt ceiling like 3 times last year and narrowly escaped having to default. Joe Biden raised it by about $2.5t I think it was, and that will only cover them until next year. As I said previously: those of us in the west have been living an artificially elevated lifestyle for decades (via cheap foreign labour and easy money), and this has come at the expense of our own productivity. When was the UK or the US last in a budget surplus?

The tax that the government receives has stayed pretty consistent at around 17% of GDP for the last 70 years or so, as I said in this post:

It always finds an equilibrium.

The Fed has really messed things up, basically. The lack of control over the interest rates and the reckless money printing has screwed over every citizen, and they had no say whatsoever in these catastrophic decisions.

 

[Juan]

@Ed209, governments just have to rebalance the tax burden every member of society pays. Billionaires are NOT paying tax, so they have to pay more, and the average worker, or those subject to income tax have to pay less.

So the total money collected in taxes will be the same or greater, but the tax burden is redistributed in a different, fairer, way.