Stocks are in a bubble.  Bonds are in a bubble. Real estate is in a bubble. Cryptocurrencies are in a bubble.

The latest thing in the near-everything bubble is NFTs.  An NFT is a non-fungible token.  You can search for some of the stories out there showing the ridiculousness of it all, including the absurd prices of some of these things.

As described on Wikipedia: “A non-fungible token (NFT) is a unit of data on a digital ledger called a blockchain, where each NFT can represent a unique digital item, and thus they are not interchangeable.  NFTs can represent digital files such as art, audio, video, and other forms of creative work.  While the digital files themselves are infinitely reproducible, the NFTs representing them are tracked on their underlying blockchains and provide buyers with proof ownership.”

So you can “own” a digital file that is easily accessible by anyone.  So what?

For years in following the arguments for cryptocurrencies, I have heard about how the blockchain technology will have many wonderful uses in the future.  I don’t disagree that the blockchain technology will be beneficial in the future, but NFTs is not one of those useful things right now, except for those making money off it.

This is especially a joke in the year 2021 as patent laws become harder and harder to enforce. What happens when someone in China uses a piece of digital art that is “owned” by an American?  Will the American shout out on the rooftop to “stop”?  Will the Chinese government enforce the ownership of NFTs?  I think the question answers itself.

This is just the latest gimmick.  Since anyone with some computer programming skills can create a new cryptocurrency out of thin air (and there are thousands of them), I guess we are on to the latest thing of creating ownership of digital artwork and other video and audio files.

All you have to do is create something and then sell it for a lot of money, and you too can be rich.

Maybe I can find a friend who will go in on this with me.  I’ll create an NFT (of something), and he can create an NFT of something.  I’ll sell my NFT to him for a million dollars, and he’ll sell me his NFT for a million dollars. Then the value of each of our NFTs will be a million dollars.  We can be millionaires just like these fellows who created their own crypto currencies.

https://www.youtube.com/watch?v=Z4gZGHP1y8U

This mania is what happens when the central bank creates trillions of dollars out of thin air while trying to suppress interest rates to near zero.  People lose their minds.

This is Tulip mania in the 21^stcentury. At least back then, you got a tulip bulb and hopefully a nice flower later on.  At least it was an actual physical asset.

With NFTs, it is nothing.  I could sell you ownership of a square mile on Pluto, but it doesn’t mean much if you can’t do much with it.  It doesn’t mean much if you can’t enforce your property right.

Of course, I have long thought cryptocurrencies to be similar, as they are just made up out of thin air.  I have always been sympathetic to the crypto crowd because they tend to be anti Federal Reserve (or anti central bank), but I have never thought cryptocurrencies to be an answer to replacing the dollar as money.

Believe me, I wish I had bought lots of Bitcoin back in the early days.  I would be a multi-millionaire from it today from a small speculative investment.  So I can’t discount the possibility that these NFTs are going to explode in popularity and price.

There is a lot of easy money floating around out there.  People don’t want it eaten up by more inflation, and many are looking to make a quick buck.  I believe the newest craze of NFTs will last as long as the everything bubble lasts.

We are in an era of major speculation right now.  When it finally stops, it is going to stop hard.  The last suckers holding the bag will get hurt the most. This goes for NFTs and cryptos. It may also go for stocks and bonds.