- the source for market opinions


May 14, 2021 | Today’s Money Landscape: Fantasy Wealth

Is an American author of books and articles on economic and financial subjects. He is the founder and president of Agora Publishing, and author of the daily financial column, Diary of a Rogue Economist.

YOUGHAL, IRELAND – A dear reader described today’s money landscape in stark terms.

Here’s Michael M.:

Wait, you wouldn’t pay 10 cents for a 1,700% return?! Why am I reading you?!? Lol. I call BS. If I told you I invested a few sheckles in some goofy tech startup with a sexy story and it shot up 1,700%, you’d invite me to write for one of your rags.

My stock portfolio is up/down single or double digits. My crypto portfolio is up 785%. Who cares whether I make my money at DraftKings or FanDuel?! Profit is profit, and missing out is missing out. Love ya.

Main Street – flat. Fantasy street – to the mooon.

Why would anyone waste his time trying to open a machine shop in Gary, Indiana… or an ice cream parlor in Baltimore? The internet is where the profits are.

Why bother to learn biochemistry or electrical engineering? Financial engineering is where the money is.

And why bother trying to add to real wealth at all… when fantasy wealth is so much easier to come by?

Fantasy Wealth

Money is money. And there’s a lot more fast, easy money to be made in the fantasy world than in the real world.

The trouble is, real resources – time, energy, skill, and raw materials – are limited. Put them into the fantasy economy… and the real economy is neglected.

And then, the real world, deprived of labor and capital, shrinks… while the fantasies run wild. And then, they run away.

Dogecoin was back in the news yesterday, after self-proclaimed “Dogefather” Elon Musk tweeted that he was “Working with Doge devs to improve system transaction efficiency. Potentially promising.”

This caused the mischief money to increase its market value by some $20 billion.

Ethereum (ETH), meanwhile, has risen from nothing to a market value of nearly half a trillion dollars. You could buy one coin a year ago for $187. Now, the price is about $4,000. A 2,000%+ gain in a year – not bad.

So, if you’d put the first stimmy check – $1,200 – into ETH, you’d have nearly $25,000 worth of Ethereum today.

And why work for a living if you can get a 1,700% one-week return on the latest “dog,” SHIB, as we reported yesterday?

Money is money. And in the late degenerate Bubble Epoch, even fake, “dog sh*t” money is king.

Inflation Everywhere

But watch out… the king’s currency is giving way.

First, housing accounts for almost a quarter of the Consumer Price Index (CPI). And it’s running hot. Both the National Association of Realtors and real estate brokerage Redfin are reporting 12-month house price increases in excess of 15%.

“Double digit” inflation, in other words.

And here’s the latest from CNBC on the Producer Price Index (PPI), which measures the prices paid to producers, as opposed to prices at the consumer level:

Another inflation gauge comes in hot with producer prices jumping 6.2% in April from a year ago

…the largest increase since the Bureau of Labor Statistics started tracking the data in 2010.

And about the “intermediate processed goods,” a subcategory of the PPI, the Bureau of Labor Statistics had this to say:

For the 12 months ended in April, the index for processed goods for intermediate demand rose 18.4 percent, the largest advance since increasing 18.9 percent for the 12 months ended February 1980.

Robust Denial

And now, after the worst inflation news in many years, the feds are sweating… trying to explain why it ain’t so.

Inflation is “transitory,” they say. The numbers are coming off an “extremely low base.” The plague was a “one-time thing”… and now, with the vaccines, the economy is reopening.

The feds created this inflation with their “recovery,” and COVID-19 relief spending; they can turn off the taps any time they want.

Greed First… Fear Later

But let’s not waste time on the perps. Let’s look at the crime itself.

Money is money. But money is only money as long as it acts like money. You must be able to use it to buy things… and/or to store value.

When it fails to do those things, people find new forms of money.

Already, on the streets of Buenos Aires, advertisements urge people to put their savings into an electronic cryptocurrency. Inflation there is running at about 50% per year. The peso is failing to preserve wealth. So Argentines look for alternatives.

Americans look for alternatives, too – but more out of greed than fear. So far, they are still counting their profits. Cryptos, tech stocks, houses – all are rising fast.

The fear will come later. Because the criminals are incorrigible. Every cockamamie “investment” with no hope of producing a real economic return – whether it is private or public – reduces supplies of goods and services.

And every dollar of “stimulus” – whether it goes to the elite or to the masses – increases the “demand” for them.

This is man-made, intentional inflation… not natural, cyclical inflation. And unless the criminals suddenly decide to go straight, it will continue.

Obvious Choice

All the feds have to work with is “stimulus” (aka fake money).

They can either take it away – and be blamed for a crypto crash/stock market rout/bond Armageddon/recession/depression/insurrection… and run out of Washington on a rail.

Or they can add it, and get their mugs on the cover of TIME Magazine as the saviors of Western Civilization.

What will they do? We both already know, don’t we?

So… Watch where you step!




STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the Weekly Recap.

May 14th, 2021

Posted In: Bill Bonner's Diary

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site


This site uses Akismet to reduce spam. Learn how your comment data is processed.