What can you afford today? 💰
Inflation spikes in the US, Europe grapples with rising COVID cases, France attempts to solve its energy troubles, and retail investors fight to save a dying movie company.
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The surest way to lose your money is to leave it in the bank.
This isn’t just the mad rambling of your DeFi evangelist friend anymore, it’s a fact the numbers reflect. Glaringly so, as inflation in the US touched new highs, driving up prices by 6.2%. In layperson terms, the cost of living in the country just increased at the fastest rate in three decades. Essentials like food and fuel are the sectors seeing the biggest spikes.
What’s happening? The simple explanation — pandemic hits, economy tanks, money is printed in abundance as a revival effort and distributed to people, they spend said money, demand outstrips supply, supply chains are still recovering from pandemic hits, burgeoning demand and struggling supply lead to… an inflation spike.
This situation has put the US Federal Reserve in a quandary — tighten monetary policy and risk millions losing their jobs, or loosen it further and let inflation run rampant.
The government doesn’t have concrete solutions either:
And the Fed can’t do much without doing some damage either way. A stalemate looms, for the time being.
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The Deep Dive
To go beyond our simplistic explanation of everything that is going on needs a macro level look at what the major economic players and segments in the world are up to. Cathie Wood has a very timely analysis of the current situation — where she covers the motivations of the representatives involved in passing the aforementioned infrastructure bill, OPEC’s tough stance on oil supply, and draws parallels between 1989 Japan and present day China.
We’re doing great, btw! 👍
In the midst of all this less than stellar news, major central banks are actually growing their balance sheets. Rising inflation, swelling balance sheets.
We’ll leave it up to you to make of that what you will ,and what it means for the average citizen.
The bull’s not out of steam yet 🐂
Here’s a fun fact. The first issue of Forward came out on October 25, 2020. That week, Bitcoin prices hovered around the $13,800 mark. By the time our 10th issue rolled out in March 2021, Bitcoin had scaled $61,000.
Did our coverage help you build some personal wealth? Let us know by commenting or writing in to us. 🙂
This period was also a great time for Bitcoin from an institutional acceptance point of view. Major hedge funds and popular brands like Tesla bought up Bitcoin in large quantities, turning people like your DeFi evangelist friend into rockstars overnight.
This legitimacy is important, and paves the way for even further growth for Bitcoin, both as a platform and an appreciating store of value — even by conservative estimates.
If the global institutions were to adopt the 1% portfolio allocation model to bitcoin as suggested by JPMorgan Chase & Co., this would mean an additional $1.03 trillion would flow into bitcoin, which already has a $1.15 trillion market capitalization. That would probably see the price of the digital asset shoot towards the $120,000 range.
It’s not just the institutions either. We’ve already seen El Savador start accepting Bitcoin as legal tender, and now Zimbabwe is considering following suit. While large parts of the world content to rely upon shaky economics to fuel their growth continue to delay action, it might just be the nations with nothing to lose that end up embracing its potential. Exciting times ahead.
Some quick housekeeping 🏡
We’ve covered some broad themes in recent issues of Forward (if you’d like to catch up, check out our entire archive here 👇
Here are the latest updates on some of the most interesting developments we’ve covered:
Despite China (and Wall Street) assuring everyone that the Chinese real estate crisis is well contained, the bonds are telling a different story.
As energy prices in Europe continue to rise steeply, French President Emmanuel Macron sent out an indication of self-reliance, saying that France plans to start building new nuclear reactors.
COVID-19 cases are rising again in Europe and Central Asia, with the Delta variant, low vaccination rates, and mask fatigue being the likely culprits. Please consider this your overdue reminder to mask up, and stay safe.
Stuff we loved this week 👍
The pandemic has been hard on the movie business, nearly pushing iconic movie company AMC into bankruptcy. When all seemed lost however, millions of retail investors, the kind Wall Street would dismiss as ‘apes’ or ‘dumb money’ stepped in to form a collaborative movement to save the chain. It’s a fascinating David vs Goliath story, check it out here:
We’ve mentioned the Metaverse a few times on Forward, but Facebook’s new move to change its name to Meta and invest significant dollars into the idea of a metaverse has just brought the concept a step closer to reality. But how would the economy work in a world where people are content to spend time hooked into a VR/AR/MR landscape. What would they consume, what would happen to the economy? Noah Smith has some ideas.
The Metaverse may have some ways to go before it manifests itself to us, but Web3 — the next evolution of the Internet powered by crypto — is very much upon us. To get caught up on Web3 and its potential, here is a fantastic chat between three of the brightest, and most curious minds on the Internet — Tim Ferriss, Chris Dixon, and Naval Ravikant.
"To the most trivial actions, attach the devotion and mindfulness of a hundred monks. To matters of life and death, attach a sense of humor."
— Zhuangzi (Chinese philosopher)
Food for thought 💡
When you have over $9 trillion in assets under management, the amount of influence you wield over the working of the world is disproportionate, and Blackrock Capital is using this influence to push for responsible attitudes towards the environment, social, and governance issues. This is the story of how Blackrock got to where it is today.
‘An idea whose time has come’. It’s an often-used phrase across industries. The tricky thing about innovation, is that people often document their failure at something with a finality that deters others from trying again. Sometimes, it is an ignorance of this documentation that leads to new innovations happening — because their time has come.
As Morgan Housel succinctly explains in this post:
The important thing is that when something that previously didn’t work suddenly does, it doesn’t necessarily mean the people who tried it first were wrong. It usually means other parts of the system have evolved in a way that allows what was once impossible to now become practical.
We’ve given you a lot to think about with regards to money in this issue. The value, preservation, volatility, and perhaps pointlessness of its accumulation. On that philosophical note, we’ll close out this issue with this excellent video that’ll give you something more to think about:
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
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