Captain's Log 004:
December 21, 2020: Holy hell. There's a big storm coming for the world today, it's a tsunami of debt. The latest numbers mention $67T in global bond debt. $67T is more than 4 times the GDP of the US or China. That's a mountain of debt, it's not going to be paid off. All the federal government of the US and the governments in Europe can do, is continue refinancing their national debts at lower and lower interest rates until the rates turn completely negative.
That's a very grim scenario. If the banks set rates to zero, there is no incentive left to save money. If the banks set rates negative, that gives them the legal power to steal money from your checking or savings account. Negative interest rates are a fabrication of reality by central fiat banks. They have never resulted in growth, only shrinkage of private wealth.
I do not know whether or not the Federal Reserve is willing to go nuclear to kill off some of the speculators who have weak hands. No one wants negative interest rates, except the banks.
Bitcoin offers a way out of interest rate apartheid. When you assume responsibility for the management and safekeeping your own wealth, the fiat banks lose all value to you. A checking account at any major brick and mortar bank will yield near-zero percent annual interest, a savings account will yield even less. YTD, Bitcoin (currently at $23,036) is up 220%. That would be the equivalent of you depositing your fiat in a checking or savings account, and leaving it there, for decades, just to come near matching Bitcoin's YTD performance. Not even gold can touch Bitcoin, with only 24% YTD gains overall.
Gold has traditionally been a hedge against deflation of purchasing power and inflation of the M2 money supply. However, it has been exposed, through both legal proceedings and meltdowns in the commodities futures markets, that the precious metals markets area all rigged. I repeat, they're all rigged. The Comex, the Nymex, and any other commodities futures exchange are all rigged, and they're rigged by the same people who attempt to control the money supply.
I have never and will never buy or sell a single commodities futures contract. I see that as handing my hard-earned cash to a faceless Chicago or New York City futures trader, with the risk of getting nothing in return.
Unfortunately, the introduction of Bitcoin futures contracts by the CME a few years ago ensured that the price of Bitcoin could be pulled, with enough capital, whichever direction the powers that be may desire. Luckily, earlier this month, Bitcoin hit a new all-time-high of over $24,700 USD, breaking through all resistance that had held since December 2017.
There is news of $2.3B in Bitcoin futures contracts set to expire on Friday, Christmas Day. That will most likely bring the price down a bit, seeing as much of the call volume ranges between $15,000 and $20,000. If Bitcoin hits a new all-time-high, that would imply that all holders are now in the green, and the institutions that are buying up the entire supply of newly-mined Bitcoin, such as MicroStrategy, Grayscale, Square, and PayPal, are going to be hoarding as much Bitcoin as possible.
Why? You might ask, because you might not realize how big of black hole their USD cash holdings are on their balance sheet. We've already seen the rampant mispricings in stock price that are held back by gargantuan cash stores. Converting a part of a company's treasury from USD to BTC is a very speculative move.
It will be interesting to see how this all shakes out. I will be looking at BTC this weekend for possible buying opportunities.
Happy Investing to all!
