Is There a New Dotcom Bubble?

[Juan]

EU tech regulation

Apple charged by Brussels with abusing its market power in mobile payments

EU preliminary findings say US group limits rivals' access to 'tap and go' technology

 

[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.

This is factually incorrect, Juan. Again, it's something we've previously discussed, and Professor Antony Davies best explains how tax breaks down at 11:34 into this presentation.



In short, only the top 40% of earners are net payers to the federal government. The rest of society are net gainers who take more out than they put in. This is why there's hardly ever a budget surplus and why so much is debt funded.

If you take this slide, he proposes what many consider to be a fair tax rate based upon earnings.

This slide shows the average tax paid in each bracket. However, this does not include transfers, so, as the money is collected, some of it is redistributed back through tax credits, social security, etc. When everything is then calculated, you get a table that looks like this:

You can see that the only people who are net providers are those in the higher earnings brackets.

Let me be clear that I'm not an evil capitalist that thinks people should suffer. Far from it. I believe that a hybrid of socialism and capitalism is probably the best we can have, and I think that healthcare should be universal and state funded, for example. However, this notion that the highest earners don't pay enough is just wrong. Sure, there will always be tax avoiders right across the spectrum, but that's just human nature for you. Elon Musk paid the largest tax bill in history not so long ago, and yet he is universally targeted as being a tax dodger that doesn't pay his way. It's absurd when you look at the facts. I'm not an Elon fanboy, but you cannot argue against the success he has brought to the US via productivity and job creation.

 

[Ed209]

When it comes to large corporations avoiding tax then I agree with you. They should be paying more and a lot of them get away with murder. It's up to the government to tighten the tax laws to stop them from using so many legal loopholes, but the problem is that they have massive lobbying powers, and the governments are essentially in their pockets. That's why I believe in the benefits of a decentralised system for both money and data, as a lot of the power can be taken back and redistributed amongst the people. Whether we can get there or not is another matter entirely.

 

[Juan]

This is factually incorrect, Juan. Again, it's something we've previously discussed, and Professor Antony Davies best explains how tax breaks down at 11:34 into this presentation.

In short, only the top 40% of earners are net payers to the federal government. The rest of society are net gainers who take more out than they put in. This is why there's hardly ever a budget surplus and why so much is debt funded.

View attachment 50122

If you take this slide, he proposes what many consider to be a fair tax rate based upon earnings.

View attachment 50121

This slide shows the average tax paid in each bracket. However, this does not include transfers, so, as the money is collected, some of it is redistributed back through tax credits, social security, etc. When everything is then calculated, you get a table that looks like this:

View attachment 50120

You can see that the only people who are net providers are those in the higher earnings brackets.

Let me be clear that I'm not an evil capitalist that thinks people should suffer. Far from it. I believe that a hybrid of socialism and capitalism is probably the best we can have, and I think that healthcare should be universal and state funded, for example. However, this notion that the highest earners don't pay enough is just wrong. Sure, there will always be tax avoiders right across the spectrum, but that's just human nature for you. Elon Musk paid the largest tax bill in history not so long ago, and yet he is universally targeted as being a tax dodger that doesn't pay his way. It's absurd when you look at the facts. I'm not an Elon fanboy, but you cannot argue against the success he has brought to the US via productivity and job creation.

That "professor" must live in some tax haven, because I live in Spain's tax hell and my effective income tax, this is, the real and effective % of tax I pay on my income, is higher than the % the "professor" shows for the 1% bracket...

If Elon paid the same effective tax rate as I do, the US would not have a huuuuuge debt.

 

[Juan]

If you offered me all the bitcoin in the world for $25, I wouldn't take it, says Warren Buffett

 

[Ed209]

If you offered me all the bitcoin in the world for $25, I wouldn't take it, says Warren Buffett

A lot of people have been mocking this as it's a silly thing to say. If one person owned all of Bitcoin, which is a peer-to-peer network, then it would be worthless anyway. The value is in the network itself. It's like saying, "if someone offered me all the dollars in circulation, I wouldn't pay $25 for it." Well, if one person did own the entire monetary supply then there'd be no one left to trade with . It's silly.

I thought this was a good interview that I saw this morning. They go over everything we've been talking about.

That "professor" must live in some tax haven, because I live in Spain's tax hell and my effective income tax, this is, the real and effective % of tax I pay on my income, is higher than the % the "professor" shows for the 1% bracket...

It refers to the US, as that's where most of our discussion is centred.

If Elon paid the same effective tax rate as I do, the US would not have a huuuuuge debt.

Then you don't have a firm grasp of economics. Politics aside - as people will either love him or hate him (I'm neither) - you cannot argue that Elon Musk is a massive contributor to the US's GDP. It shocks me how little of an understanding so many people have of basic economic principles. A person's contribution to society and their nation's GDP goes way beyond their tax payments.

If the majority were net providers in western countries, then their governments would have a budget surplus, but this isn't the case. Most people currently get more than what they put in, even though it doesn't feel like it. The deficits are huge in some cases, so the numbers speak for themselves. Remember that it's not just universal healthcare, social care, and tax credits that most civilised countries are aiming to achieve, it's also the maintenance of roads and infrastructure and a lot of other stuff that gets taken for granted. Governments create bonds to pay for the shortfall, and the public are then duty bound to pay the interest on it through future taxation. If there was no interest, then nobody would stump up the money to fill the gap. This creates a snowball effect where you end up with decades worth of compounded debt until it gets to a point where it's nearly impossible to pay back, and so governments raise the debt ceiling in an attempt to keep the party going. And when the economy starts to struggle, they artificially stimulate it by printing ridiculous amounts of money (rather than letting markets fail, which would be a lot healthier in the longrun). Then you have the constant bailouts.

In short, the global economy has become a circus run by a select few people. The masses have no say when it comes to their crazy monetary policies and ideas, even though the decisions they make are to the detriment of everyone.

 

[Juan]

All I know is no one wants to go to work and the FED is keeping rates near zero, which is plain ridiculous:

Record 4.5mn US workers quit jobs in March as labour market tightens

The number of job openings reaches high of 11.5mn as employers struggle to fill positions.

 

[Ed209]

All I know is no one wants to go to work and the FED is keeping rates near zero, which is plain ridiculous:

Record 4.5mn US workers quit jobs in March as labour market tightens

The number of job openings reaches a high of 11.5mn as employers struggle to fill positions.

It's a cycle of demand-pull inflation leading to cost-push inflation. The markets have been artificially stimulated for years when they should have allowed a natural bear market to occur instead. They kept interest rates at zero for too long and printed far too much money. They wrecked the economy and now the average workers of the world are paying the consequences of their ridiculous solutions.

EDIT

I'd say that Warren Buffett's Bitcoin comments were made because of his recent investment in Nubank not doing so well.

He invested in them to get access to Bitcoin as he didn't want to look like a hypocrite. Everyone knows that was a crypto play.

He doesn't understand technology at all; it's certainly not his forte.

 

[Juan]

The FED has done too little too late. It will not be able to reduce inflation.

The FED has spent years cooking the CPI data to make it look lower than it is, including stuff like prices of yachts in the CPI index, while consumers want to know how much the prices they pay for their typical "product basket" have gone up.

People are facing rent increases of 30% and homes are going up by 20% on average per year... and the FED is responsible for this. It's Powell's fault for being just useless as a central banker and a disgrace to the world economy.

Powell has ruined normal people by expanding the FED's balance, printing and printing money and doing absolutely nothing to fight inflation.

Another idiot who poured gasoline on to the inflation fire was the clown... that stupid Donald Trump, who publicly asked the FED to lower rates and then lower them again. This has killed the economy and has made everyone (but a few billionaires) poorer.

The FED has made the average guy poorer. The FED is ruining the middle class.

 

[Juan]

Nasdaq tumbles as rate-rise concerns collide with growth worries

 

[Ed209]

Charles is spot on here, especially at 13:30:



He is absolutely right; the world is heading towards a disaster with the current monetary policies and systems. It ain't good, and I fear for my kids' futures.

 

[Juan]

Bitcoin going down the drain and Coinbase heading towards bankruptcy:

Coinbase chief says 'no risk of bankruptcy' after regulatory filing sparks alarm

 

[Ed209]

Bitcoin going down the drain and Coinbase heading towards bankruptcy:

Coinbase chief says 'no risk of bankruptcy' after regulatory filing sparks alarm

We're in a confirmed bear market right now, so Bitcoin and alts will drop just like they did in every other bear market. There's not enough money in these assets right now to hold them at a strong mean value, which is why you see such extreme volatility.

There are also rumours of the market being purposely sabotaged by higher powers.

 

[Juan]

We're in a confirmed bear market right now, so Bitcoin and alts will drop just like they did in every other bear market. There's not enough money in these assets right now to hold them at a strong mean value, which is why you see such extreme volatility.

There are also rumours of the market being purposely sabotaged by higher powers.

Wait for the FED to continue raising interest rates... they will not curb inflation. They would have to raise the rates to 10% or more. And all along the way, the Bitcoin will continue falling.

 

[Ed209]

Wait for the FED to continue raising interest rates... they will not curb inflation. They would have to raise the rates to 10% or more. And all along the way, the Bitcoin will continue falling.

It's already priced in as it's known to the market, but Bitcoin typically corrects up to 90% after each ATH. The Bitcoin cycle is halfway towards the next halving which is what has the biggest influence over its price movements, so based on where the previous halving occured, this is typically where the bear market occurs for Bitcoin and crypto. I did say this repeatedly last year. However, there was an extended cycle theory going around that needed to be disproven first.

You can see a lot of the major corrections marked on here. I will admit, however, that if the longterm log chart changes it's trend then it will be time to re-evaluate, but that hasn't happened yet. If that pattern is broken then it could mean a multi-year bear market of some sort, but I don't think it will change the ultimate course of where it's heading in the next 10 years or so.

That's why it should be seen as a longterm investment and not a short term trade, as people who trade these markets mostly get wrecked. I outperformed every index last year by well over 2000% by just holding and doing the odd trade here and there. I am far more concerned about the fiat monetary system at this stage as it's going to take a miracle to stop it collapsing.

 

[Juan]

It's already priced in as it's known to the market

This is a typical mistake. The balance sheet reduction is never priced in, as it is an action in the market.

 

[Ed209]

This is a typical mistake. The balance sheet reduction is never priced in, as it is an action in the market.

I strongly disagree. You have risk-on sentiment and risk-off sentiment, and that's it. In a risk-on environment, money generally flows into growth stocks, and when it's risk-off, it usually goes into value stocks. Nothing else matters as the markets are illogical and are primarily driven by human psychology, and in some cases, manipulation. The numbers don't matter at all as it's all fear and greed based. Did you think some of the tech valuations were realistic, for example? It's the same as the crash in 2008 where some of the stuff I was buying was insanely undervalued because of the fear.

The idea that the market is a perfectly honed machine that reflects accurate value is laughable.

As Bernard Baruch once said, "show me the charts, and I'll tell you the news."

 

[Juan]

I strongly disagree. You have risk-on sentiment and risk-off sentiment, and that's it. In a risk-on environment, money generally flows into growth stocks, and when it's risk-off, it usually goes into value stocks. Nothing else matters as the markets are illogical and are primarily driven by human psychology, and in some cases, manipulation. The numbers don't matter at all as it's all fear and greed based. Did you think some of the tech valuations were realistic, for example? It's the same as the crash in 2008 where some of the stuff I was buying was insanely undervalued because of the fear.

The idea that the market is a perfectly honed machine that reflects accurate value is laughable.

As Bernard Baruch once said, "show me the charts, and I'll tell you the news."

You did not address anywhere the balance sheet reduction... you were completely off topic.

 

[Ed209]

You did not address anywhere the balance sheet reduction... you were completely off topic.

What about it? The markets know that they hold around $6t in treasuries and around $3t in MBSs. To get back to pre-pandemic levels, they need to offload about $4t. Quantitative tightening always crashes the markets, but the Fed shouldn't be doing these kinds of experiments in the first place. Printing money out of thin air on that scale has never worked throughout the history of mankind, and the amount they printed was obscene (40-50% of the entire M2 supply in 2 years). They now hold power over peoples life savings and pensions, etc, because they have to deleverage and stop monetising debt which has artificially kept things afloat.

The markets will fall as they taper their bond purchases as that's what has driven the prices so high. Everyone knows this, though, as that's what creates the risk-off sentiment. The way the Fed flip flops about doesn't help, and if they get this deleveraging process wrong, then people will wish they'd stuck with the risks of high inflation because it could cause all kinds of catastrophic damage. There could be a massive global fallout including loss of jobs, weaker and/or collapsed currencies, imbalanced imports/exports, reduced healthcare and social care, etc. It could get pretty ugly.

 

[Ed209]

What makes me laugh are articles like these that are currently flooding the media:

Do any of these journalists or commentators know the definition of a Ponzi scheme? It's so absurd that it's laughable. Does this mean that all non-cash producing assets are Ponzi's as well? Like art, gold, silver, precious gemstones, property, fiat money, etc.

I've spent many years of my life learning how money really works via my involvement with the investment world, so I have a much better understanding of it than the average person on the street, for example. Our currencies were much more stable when they were quasi-backed by gold because it gave greater control over a government's fiscal policies. When Nixon dropped the gold standard, he opened the world up to the fiat currencies that we see today, and let's just say that things haven't gone great since.

A lot of this is because of fractional reserve banking which I've harped on about before. The deposits banks hold don't cover what's on their balance sheet, so if everyone wanted their money at the same time then it wouldn't be possible. This is known as a run on the banks, and it's pretty common. In 2010, the banks in Greece and Cyprus had numerous runs, and it got so bad that people were restricted to a measly withdrawal limit of €60 a day (you could potentially call this a Ponzi since there wasn't enough in the bank to cover everyone's deposits)! In 2008, northern rock had a notorious run in the UK after the financial collapse, and Lehman Brothers folded after financial institutions started withdrawing their deposits from highly leveraged investment banks which led to a massive liquidity crunch. It's hypocrisy beyond belief, but people eat this stuff up.

An important aspect of fractional reserve banking is the reserve ratio, and this is decided upon by the Fed and other central banks. This is the minimum amount of deposits in liquid securities a bank must hold to meet its obligations. The money that's kept is known as the M1 money supply (or narrow money), and this includes psychical cash and other such transferable items such as travellers' cheques and cheques. So, if the reserve requirement is 5%, let's say, then 95% more money can be created as credit and then lent out. This means that a bank can lend out 20 times more than what is on its actual balance sheet. This is known as the money multiplier. When you add in all this extra leverage, which is what it is, then you have what's known as the M2 and M3 money supplies. M2 includes M1 plus savings deposits (less than $100,000) and money market mutual funds, and M3 (broad money) includes M2 plus large time deposits in banks.

The Fed can also affect the economy via the Fed funds rate, and via open market operations (the acquisition of securities by banks, etc). If they lower the reserve ratio then more money floods the market, and if they raise it, the supply contracts. The reserve requirement fluctuated between 3-10%, but when the pandemic started, the Fed dropped the reserve requirement to 0% for all banks (meaning they didn't need any reserve on their balances at all!).

Here's an illustration of how bad the gap has become between the physical money supply and the M2/M3:

They are flooding the system with money printed out of thin air, and here it is from the horse's mouth:



Once you flood the system with free money and easy credit, then it becomes next to impossible to rein it in without causing economic chaos. It also causes inflation, and potentially hyperinflation, so who are the real crooks here? And no, nobody gets a say or a vote in how these economic policies are implemented; you are merely a slave to the system, so the worth of your labour and the value of your life's savings is ultimately under the control of the central banks - which are part privately owned (work that one out).

The propaganda blitzkrieg against Bitcoin happens after every major correction, and the general public aren't really armed with enough information to truly understand what it's all about. I'm a very fact-based and grounded person, so I don't say this like it's some kind of conspiracy theory; it's just the reality of the situation.

Whether Bitcoin ultimately collapses is another matter entirely, but calling it a Ponzi scheme seems rather ridiculous in the face of how fiat currencies operate. I can see the benefits of decentralising the power away from a central authority, but at the moment, there's just not enough liquidity in any crypto for them to be used as a primary currency. As the adoption rate expands, so will the liquidity, and at some point it's likely to rival assets such as gold. That's why people invest in it, but it's a longterm thing.

 

[Juan]

Quantitative tightening always crashes the markets, but the Fed shouldn't be doing these kinds of experiments in the first place.

This is not an "experiment"... it's just going back to normal. Risky assets will be offloaded by tons, by funds, investment banks etc.

The FED was honest when saying there will be a recession.

 

[Ed209]

This is not an "experiment"... it's just going back to normal. Risky assets will be offloaded by tons, by funds, investment banks etc.

I meant "experiment" in terms of their monetary policies which they now have to undo. It would have been easier if they didn't use QE on the scale they did, as there would be no need for such a huge tightening now. Expanding and contracting the money supply the way they have is experimental, and it is completely under their control. They can counterfeit money at will, so what's the real Ponzi scheme?

As I showed in a previous post, the M2 money supply and the S&P 500 charts are basically the same. You can see where all the free money went, but the problem is that people's pensions and life savings are also mixed in amongst all that hedge fund money. The little people always get screwed at the expense of the bankers. Once they pull all that liquidity, the markets will correct, because the sentiment will turn to fear because of the risk-off nature of such a move.

I estimated in a previous post that the Nasdaq would correct around 60% if the right conditions were met, and it's now down about 30%. As I keep saying ad infinitum, the Fed have created a no-win situation, and we are heading into an unbelievable storm unless they can pull off a miracle.

 

[Juan]

This is the Ponzi scheme. Read the comments to the article. No one believes in this junk anymore:

The Big Read. The week that shook crypto.

 

[Ed209]

This is the Ponzi scheme. Read the comments to the article. No one believes in this junk anymore:

The Big Read. The week that shook crypto.

The Financial Times has always been anti-crypto, so the comments are a completely biased view that reflects their readership. It's like reading the comments on an anti-abortion website to get a feel for people's views on abortion. Pointless.

It's fascinating to me how little people know about this industry. Most people only know what's in the headlines of politically biased newspapers with an agenda, but the technological use-case goes way beyond just money. However, that's all people ever seem to talk about which shows their ignorance.

Your beliefs are not independently formed; they are given to you by the newspapers you read, and it shows in your understanding of the subject. The banking sector has significant power over the media as well.

 

[Juan]

The Financial Times has always been anti-crypto, so the comments are a completely biased view that reflects their readership. It's like reading the comments on an anti-abortion website to get a feel for people's views on abortion. Pointless.

It's fascinating to me how little people know about this industry. Most people only know what's in the headlines of politically biased newspapers with an agenda, but the technological use-case goes way beyond just money. However, that's all people ever seem to talk about which shows their ignorance.

Your beliefs are not independently formed; they are given to you by the newspapers you read, and it shows in your understanding of the subject. The banking sector has significant power over the media as well.

No arguments again...

It's sad that people peddle this cryptoshit to others... last week people were not very happy. There was a gloom atmosphere at work, as some of those fools had put money on the cryptoshit and lost a ton... of valuable hard currency, dollars or euros.

 

[Ed209]

No arguments again...

I've gone to great depths in my replies - often using hard data - to give my thoughts and opinions. You haven't answered a single question I've asked of you since the thread began. You've dodged and avoided every single one. Go back through and take a look. You have posted many articles from the Financial Times without giving any direct thoughts of your own, and this leads me to believe that your opinions are just a proxy.

It would be very different if you had knowledge of this sector, and/or first hand experience, because then your criticisms would carry a lot more weight.

It's sad that people peddle this cryptoshit to others... last week people were not very happy.

Are you conveniently forgetting the collapse of Lehman Brothers? That would have brought down the entire financial system if taxpayers weren't forced to bail out the banks. UST and Luna had a joint market cap that was bigger than Lehman Brothers, so the systemic risk by comparison was tiny. Think about that for a moment.

As far as the investors of Terra go, I feel really sorry for them as it was a truly devastating incident. There's been talk about people wanting to commit suicide because of it, so it's absolutely awful and I wouldn't wish it upon my worst enemy. But, it was a highly speculative investment; the type where you need to be prepared to lose everything that you put in if it doesn't come off. Terra had a strong backing from powerful venture capitalists, and a lot of interest from Wall Street, so I hope they do get to the bottom of exactly what happened because this incident has cast a cloud over the entire industry. Some say this could have been the motivation, but who knows?

of valuable hard currency, dollars or euros.

You do realise that the system is heading towards a collapse, don't you? There aren't any hard currencies left, and that's the point. The liquidity within crypto is not enough to challenge the major fiat currencies, but if the adoption rate continues at the same pace, and that's a big if, then a crypto could be used as a primary currency in its own right and it would remain stable. There would be no counterfeiting, no extortionate fees, no middlemen implementing their own policies, etc. It could also give identities to some of the poorest people in the world who have slipped through the cracks and currently have no access to any banking services.

What I see in the media seems like a battle between the banking elite and an emerging force that threatens to take some of the power back. That's why I don't take newspaper articles too seriously. I prefer to get my information from scientific journals and white papers, or directly from the source if possible.

 

[Juan]

As far as the investors of Terra go, I feel really sorry for them as it was a truly devastating incident. There's been talk about people wanting to commit suicide because of it, so it's absolutely awful and I wouldn't wish it upon my worst enemy. But, it was a highly speculative investment; the type where you need to be prepared to lose everything that you put in if it doesn't come off.

So this is the type of "investment" you are peddling here, like that other English chap peddles useless TRT on these forums...

 

[Ed209]

So this is the type of "investment" you are peddling here, like that other English chap peddles useless TRT on these forums...

I'm not peddling anything. What people choose to invest in has nothing to do with me, and one should always DYOR. One should never follow investment advice based entirely on posts made on the internet no matter who says it or what it says.

Now, listen up, I've got a few bangers you should follow; get a pen and write these down...

 

[Ed209]

I was just listening to this podcast with Ted Gioia and Rick Beato, and after about an hour, they started talking about web 3 and crypto. Ted is a very well educated man and has great insight into numerous things. In fact, I recommend listening to the entire podcast as it's a great listen, but it was especially interesting to hear his thoughts (and Rick's) regarding crypto and it's adoption curve. They echo many points that I've been making on here.

Listen from around 1:05:49 ish:

 

[Juan]

Binance promoted terra as 'safe' investment before $40bn collapse