Care for some inflation? ↗
The ramifications of fast and loose monetary policy, the burgeoning billionaire class, and an unpacking of the hysteria around Bitcoin. This is Issue #015 of Forward.
There’s been plenty of talk about money printing and stimulus checks recently, particularly in the context of what it can do to the US economy, and the subsequent fallout for the rest of the world. Historically, money printing on the scale witnessed in the US over the past year, amounting to trillions of dollars, is a recipe for disaster. But will the dollar manage to dodge a bullet?
The other big narrative has been the crypto crash, fetching the expected responses from both traditional economic participants who oppose it, and ‘cultists’ who’re calling from the rooftops to ‘buy the dip’.
We’ll dive into both these themes in this issue of Forward.
But first, if you aren’t subscribed to receive our fortnightly emails in your inbox directly, go ahead and do so now. We’ll make sure to deliver Forward to you twice a month in time for Sunday morning ☕.
This cheat code could end the game
It’s safe to say that artificially propping up a crisis-stricken economy with a capital infusion isn’t the most sound solution. Unavoidable perhaps, but not ideal at scale. Just ask Zimbabwe, or Venezuela. In fact, prominent investors like Stanley Druckenmiller have been quite vocal in their displeasure of prevailing monetary policy, going so far as to state the US Dollar could lose its status as the global reserve currency.
How the game usually ends in such cases is with the onset of hyperinflation, where the purchasing power of currency plummets so rapidly it can get reduced to little more than kindling for campfires.
The US economy appears stable for the moment, but many believe the ongoing reluctance of the public to spend their pandemic savings might just be a temporary balm for pain to come.
Billionaires are just getting richer though
In the last issue of Forward, we talked about how big tech has emerged from the pandemic with an embarrassment of riches. Turns out, so have most of the world’s billionaires. In this fascinating deep dive that tracks how wealthy billionaires have become (segregated by country, industry, and even percentage of GDP), we learn about the geographical distribution and characteristics of ‘good’ billionaires and ‘bad’ ones, based on the value of the economic activity they are engaged in, the way their home countries regulate insane wealth, and public perception. Think of this as a modern day way of distinguishing between true titans of industry and ‘robber barons’
Related reading from the Yodaa blog:
Bitcoin: this generation’s rock n’ roll?
Sure, every generation has a certain irreverence to those that came before. Every generation has a uniquely personal experience that flies in the face of old assumptions and gives their life renewed meaning and purpose. And yes, we’ve reached that stage in the crypto hype cycle where Bitcoin is being compared to rock n’ roll (and Doge to disco).
Laser eyed crypto supporters are making light of seasoned investor Charlie Munger’s negative take on Bitcoin. Others are investing with conviction in a memecoin based on 19 year old financial analysts on TikTok suggesting it might hit new heights because of an upcoming public appearance by Elon Musk.
What it’s mostly about is what happens when massive amounts of disposable dollars created by government stimulus payments, enhanced unemployment benefits, and rock-bottom interest rates meet a still-limited set of opportunities to spend on traditional sources of entertainment.
It’s a mad world out there. But for all we know, Doge might be a chart topper in a decade’s time. 🤷♂️
No more fence-sitting
Whatever you think about cryptocurrencies, it’s clear that anyone interested in finance and investment can no longer afford to be ambiguous about them. With Forward, we strive to ensure our readers get adequate and balanced information to come to their own informed conclusions. (And it goes without saying that none of this is financial advice).
With that said, here are two opposing takes on Bitcoin, featuring crypto’s biggest advocate and former Coinbase CTO Balaji S, and Peter Thiel’s former portfolio advisor Michael W Green. Enter with a clear mind. 👇
“Success is largely the failures you avoid.”
Stuff we loved this week
How many Twitter followers do you have? Depending on how you think of social media platforms, it might actually make sense to view ourselves as participants of a great online game. We’ll let this excellent essay do the explaining.
Here’s your reminder that it’s a crazy time to be a market participant, and trying to catch a rocket can be a risky business. As Morgan Housel notes, we might all be wise to take a lesson from Jerry Seinfeld.
Food for thought
Time can be a funny thing, especially when you consider how banks have to do a delicate dance with our money across time zones. But how does a trustless, decentralised system like Bitcoin manage time? The answer is profound, and explains why the proof-of-work system is important.
“The Bitcoin network uses the energy equivalent of a small country.” We’ve all heard this argument somewhere. The truth, as it often turns out, is actually more nuanced.
In these trying times, we’ll leave you with a few lines from Viktor Frankl’s Man’s Search for Meaning.
“Everything can be taken from a man but one thing: the last of the human freedoms — to choose one’s attitude in any given set of circumstances, to choose one’s own way.”
If you think this newsletter made your Sunday morning a little better, please spread the love and send it to your friends. We’ll see you again in two weeks.
Until next time,
Your friends at NEO