Christine Lagarde, the president of the European Central Bank, said that Bitcoin and other cryptocurrencies are worth nothing.  She said, “It is based on nothing.”  She said, “There is no underlying asset to act as an anchor of safety.”

My question:  How does this make it any different from any other fiat currency?

I’m surprised she didn’t slip up like Bush, who accidentally (or not) referred to the unjustified and brutal invasion of “Iraq” instead of “Ukraine”.

Lagarde could have easily replaced her statement with “the U.S. dollar” or “the euro” instead of “Bitcoin”.

I have been a critic of Bitcoin, even though I sympathize with many of the people who promote it.  I don’t think it is a form of money, and I don’t think it will ever be a true form of money.  Still, I like the idea of competing forms of money.

Unfortunately, Bitcoin is somewhat associated with the libertarian movement for this reason.  The biggest proponents of Bitcoin tend to be critics of the Federal Reserve.  They are right to be critical of the Federal Reserve.

I half jokingly say that Bitcoin has been pumped up by quasi libertarian tech nerds who have nothing better to do in their life.  They thrive on everything Bitcoin and blockchain.  Their whole life revolves around this.  If Bitcoin crashes and goes to nothing or close to nothing, I don’t know what these people will do.  I think some of them will need major therapy, although they won’t be able to afford it because they dumped all of their money into Bitcoin.

What’s more unfortunate is that many good libertarians have hopped on the Bitcoin bandwagon.  They don’t spend every waking hour promoting it, but they generally favor it as an investment and as a prospect for future money.

The investing side – which is really just gambling – is one thing.  I think it is ok to buy Bitcoin in this bubble economy with the hopes of making a profit (in U.S. dollars).  But it should be clear that it is a gamble.  If you are putting money (U.S. dollars) into Bitcoin, you should be prepared to lose it all.

When really good libertarians promote Bitcoin as a future money, I really get annoyed.  I think they are making a critical mistake, and the critics of libertarianism will use it against all of us in the future.  That’s why it is important for Peter Schiff and other Bitcoin critics to go on record as saying that Bitcoin is not our future.

I have no problem with the idea of the blockchain and its many possible future uses to help human beings.  But Bitcoin is not the blockchain.  The hardcore Bitcoin proponents will come back at Lagarde and say that Bitcoin is anchored by the technology of the blockchain.  But this is flat out wrong.

You can’t take your bitcoins and trade them in for “the blockchain”.  The blockchain is just a technology that Bitcoin uses.  Bitcoin isn’t backed by the blockchain the way the dollar was once backed by gold.  And it isn’t like a share of stock where you actually own a small piece of the company and can share in the profits.

So Christine Lagarde was correct when she said there is no underlying asset for Bitcoin.  I’m just not sure if the irony was lost on her regarding fiat currencies.

I have to criticize Bitcoin for two reasons.  I don’t want to pick a fight with people who are generally in the same camp with me, but I feel compelled to do it.

First, I want it to be clear for people buying Bitcoin that it is a pure speculative play.  It doesn’t offer much diversification for your portfolio, especially these days if you are invested in tech stocks.  There is nothing close to a guarantee that it will make you money (i.e., U.S. dollars) in the distant future.  It is a gamble.  It may or may not pay off.  It depends how far down the line the suckers with money go.

The second reason I criticize Bitcoin is because I want libertarian voices who are warning against it.  I don’t want the downfall of Bitcoin to be a major black eye on the libertarian movement.

I think there will always be critics of libertarianism who try to use anything they can against libertarians.  But some of the criticisms fall flat.  With this, a lot of people will agree that Bitcoin was a bad call if it goes down to something near zero.  Even if the price goes down below $10,000 and stays there for a while, it will be used against libertarians.

In terms of libertarianism, the only thing to say about Bitcoin is that people should be free to buy or sell whatever they want as long as they aren’t aggressing against others.  There should be a free market in money.  There should be no capital gains taxes on Bitcoin or gold or anything else.

It is ok to make predictions, but it should be done independently of political philosophy and with the acknowledgement of uncertainty.

After the Fed created trillions of dollars out of thin air in 2008 and 2009, many libertarians were predicting runaway price inflation.  I think that is ok, except it should be made clear that it isn’t a libertarian theory.  There are many factors involved with regard to price inflation.  The base money supply is one of several factors.

From a libertarian standpoint, using this example, it should be made clear that the massive increase in the Fed’s balance sheet was bad regardless of whether high price inflation followed.  The newly created money favors some at the expense of others, and it greatly misallocates resources which makes almost everyone less well off.

So if you are a libertarian and a Bitcoin proponent, please separate the two.  Bitcoin could easily go to near zero, and we don’t want libertarianism to get a bad name if it does.

According to the government’s own statistics, price inflation is running above 8% annually.  Meanwhile, most Americans aren’t getting a salary increase of anywhere near that much unless they are changing jobs or getting promoted.

Jerome Powell and the Federal Reserve wanted to see higher price inflation a few years ago.  When it went well above their two-percent target, they assured us that it was only “transitory”.  Now that it isn’t transitory, they assure us that they will fight inflation and bring it back down.

Of course, in trying to bring it back down, they will likely cause a recession, and they may pop the mother of all bubbles.  It can also be called the Everything Bubble because almost every asset category seems to be in a bubble.  Gold and silver may be the exception.

Let’s say that the Fed is able to bring the inflation rate back down, regardless of the impacts on the economy and the financial markets.  When the Fed and the financial media talk about bringing inflation down, they mean bringing down the rate of inflation.  And they likely don’t even mean bringing the rate down to zero.  They just want to get it back to 2%, or somewhere around there.

And to be sure, we would be much better off if we quickly return to a state of 2% annual price inflation.  But let’s be clear that this is just bringing the rate down.  It isn’t bringing the price level down.

If a particular consumer product cost $100 last year and now it costs $108 this year, that is an increase of 8% for that product.  When the Fed talks about bringing down price inflation, they aren’t saying that this particular product is going back to $100 as previously seen.  In fact, they aren’t even saying that it will stay at $108 next year.

Instead, we may get a 2% price inflation rate (if they are successful in bringing down the price inflation rate).  So the product you are now paying $108 for will cost somewhere between $110 and $111 next year.  This is what they mean when they refer to bringing down inflation.

Think about this in context of things you routinely buy.  Maybe that $108 today represents your weekly grocery bill.  If you have a family, it is probably quite a bit more than that.

You aren’t going back to your $100 per week grocery bill unless you cut something out.  You are now at the $108 level, and it is constantly going higher.  It is just a question of how much higher and how fast.

Do you think your job will give you a raise of 8% next year to make up for the inflation of last year?  In most cases, that won’t happen.  And even if it does, you are still behind.

There is almost never price deflation.  The Fed won’t really allow it to happen.  It hasn’t happened since the Great Depression.  There may have been one year in the 1950s where there was a very tiny decline in overall prices.  The norm is for prices to go higher.

Remember this when people say that inflation is declining, or that they are bringing down inflation.  The overall price level isn’t declining.  The rate of increase may be declining.

This is a generalization.  If the Everything Bubble pops (and there are signs that it may be starting, especially with stocks), then there will be asset price deflation.  Stocks and housing prices are likely to go down.  Some commodities may go down in price as well.

It is unlikely that the overall price level for consumer products will go down.  If it does, it will be very temporary, as the Fed will resort to more monetary inflation.

As Ben Bernanke once said, the Fed can always raise the price level, even just by credibly threatening to increase U.S. dollars in circulation.  He was very right on this point.  Unfortunately, the Fed has really seemed determined to create higher price inflation, especially over the last couple of years.

They got what they wished for, but they may be regretting it now.  For the first time in a while, the Fed is in a really tough position of choosing between saving the dollar and propping up the economy.

They will try to maintain a balance, but I think they will always choose to save the dollar.  They don’t want hyperinflation.  The giant bubble (the misallocation of resources) will eventually pop.

With the leak of a draft decision by the Supreme Court, the topic of Roe v. Wade and abortion has once again become one of the top social/ cultural issues in the headlines.

The leaking of the draft decision is a story itself.  It is hard to say what, if any, political effects it will have, especially with regard to the November elections.

The issue of abortion is one that divides libertarians.  I, myself, have a nuanced view of the subject.  There are moral and legal aspects to consider.  There is also the aspect of unintended consequences when involving the state.

Many people, especially on the left, are saying that abortion will be illegal if Roe v. Wade does in fact get overturned by the Supreme Court.  This is incorrect.  Roe v. Wade is a previous decision from 1973.  It is not a law.

If Roe v. Wade is struck down, then abortion won’t be made illegal or legal by the federal government.  The issue will be left up to the states to decide.  Most likely, not more than a few states would actually ban abortion without exceptions.  And some states, like California, would have it fully legalized, probably up until the birth of the baby.

My guess is that most states would be somewhere in between.  It would probably be legal for the first few months with more restrictions as the term of the pregnancy goes on.

The Moral Issue

Generally speaking, those who oppose abortion (pro life) do so because they believe that a fetus is a viable human being and that aborting it is the equivalent of murder.

The other side believes it is a woman’s right to choose (pro choice).  It is funny that most people who call themselves pro choice did not feel the same way when vaccine mandates were being pushed in 2021 (and still today).  It is “my body my choice”, unless there is a virus and we tell you it’s necessary to take the government-sponsored vaccine.

While both sides of the political aisle demagogue the issue and often use it for fundraising purposes, there are genuine arguments to be made on both sides depending on how you view the issue.  It really depends on whether you think a fetus should count as a human being.

My personal thought is that I have no idea.  It obviously seems more morally wrong to abort a fetus that is 8 months old and could easily survive outside the womb than to have an abortion two weeks after getting pregnant.

I have no idea if it is the equivalent of committing murder to have an abortion at 4 weeks.  This is why I tend to err on the side of safety and oppose abortion.

But just because I am against abortion, it doesn’t automatically settle the other questions.

Government Unintended Consequences

It is a crime to commit murder.  It is widely accepted as wrong.  It is widely accepted that murdering someone, other than in self defense, should be illegal.

With abortion, it is not widely accepted that it is murder.  Therefore, it is not widely accepted that it should be illegal.  It is largely split.  Perhaps a slight majority believes that abortion should not be illegal.

So if you make it illegal, there will be unintended consequences.  A government war on abortion could end up turning out to be like the government war on drugs.  You might be seeing shootouts in back alleys over abortions.

If abortion is illegal, what will the punishment be?  Will the doctor go to jail?  Will the would-be mother go to jail?  Will the jail term be as long as if you killed someone else?  How will this be enforced?

You can start to see some of the problems here.  But if it were widely accepted as morally wrong and a crime, then a lot of those problems would go away.

As Harry Browne said, if the government declares a war on abortion, within 5 years men will be having abortions.  (This was a comment before transgenderism really took off.)  In other words, the opposite would happen of the intended effect.

When the government declares war on poverty, we get more poverty.  If the government were to declare a war on abortion, we might end up with more abortions.

Federalism

From a constitutional standpoint, Roe v. Wade should be overturned.  It was a bad decision from day one.  There is nothing in the Constitution granting this authority to the federal government.  Just like the crime of murder should (and generally is) left up to the states, so it goes for abortion.

It is outside of the jurisdiction of the federal government to determine whether abortion should or shouldn’t be illegal.  The Supreme Court and the federal government in general has no more business telling a state like Florida what its abortion laws should be any more than it does telling China what to do.

From a decentralist perspective, Roe v. Wade should be overturned.  We don’t want 9 judges dictating the policy for 330 million Americans.

It’s funny that some on the left are saying that 5 judges shouldn’t be able to tell a woman what to do with her body.  But those judges should never have had a say in the first place.  It was never up to them to decide in the first place.  By overturning Roe v. Wade, they are effectively saying that it is none of their business.

If you are a libertarian and you don’t pay homage to the Constitution, you should still favor the decentralization of this issue.  It is removing power from the centralized government and dividing up to 50 smaller states.  That should be preferable.

Our system of federalism is supposed to work this way.  As discussed above, there are a lot of nuances with this issue.  We shouldn’t have a one-size-fits-all policy for the entire United States.

Each state is supposed to be like a little laboratory.  Maybe Alabama will completely ban abortion.  Maybe California will make it fully legal up until birth.  We will see what the results are.  We will see if there are more or less abortions in each state.

Maybe some states will determine a cutoff when a fetus is viable outside of the womb and make it illegal after that date.  Maybe some states will have stricter punishments than others.

Until it happens, we don’t fully know the consequences.  Federalism – i.e., letting states decide – will at least let us discover what is working and what is not.  It will also bring about far more harmony, as those on different sides of the political aisle don’t have to constantly go to battle.  If they do battle, it will be within the states.

It will make presidential elections a little less consequential, which is really what we should want.

Now we just have to do the same for things like education, healthcare, drugs, and retirement systems.  That would really decrease the stakes for presidential elections.

It would really be great to get to a point where presidential elections don’t mean much because most powers reside with the states or the people, as stated by the 10^th Amendment.

The U.S. House of Representatives has approved $40 billion in aid and weapons for Ukraine.  The spending bill passed by a vote of 368 to 57.  I would suggest looking up your “representative” to see how they voted.

All of the “no” votes came from Republicans.  I don’t know if this is the Ron Paul effect or the Donald Trump effect or some combination of things, but a decent segment of the Republican Party has turned towards being less interventionist in terms of foreign policy.

Unfortunately, it has gone the other way with the Democrats.  It is especially disappointing to see someone like Barbara Lee – the only dissenting vote in approving the use of force in Afghanistan in 2001 – support this spending bill that funds the military industrial complex and will likely serve to only prolong the war in Ukraine.

Even if the U.S. government hadn’t helped fund and plan the coup in Ukraine in 2014, and even if the Ukrainian-backed militias hadn’t been slaughtering innocent ethnic Russians in eastern Ukraine over the last 8 years, and even if the U.S. wasn’t entertaining the idea of admitting Ukraine into NATO and placing missiles on Russia’s doorstep, it still wouldn’t be an excuse to intervene in the matter in Ukraine.

Again, it will only serve to prolong the conflict there.  If anything, it will lead to more deaths, especially on the Ukrainian side.

If anyone in the United States or anywhere else wants to voluntarily donate their time or money to the cause of helping Ukrainians, they should be free to do so.  But we should not be forced through taxation and inflation to fund this.

Thomas Massie tweeted: “Counting last night’s rushed vote, Congress has now spent more money on Ukraine in six months than we spend on all US roads and bridges in a year.”

Donald Trump Jr. tweeted: “You can’t find baby formula in the United States right now but Congress is voting today to send $40 billion to Ukraine.  Let’s put America First for a change.”

Marjorie Taylor Greene, who is heavily demonized by the establishment, pointed out something similar in her Twitter feed.  She was arguing with another Republican in the House, Dan Crenshaw.  The establishment won’t directly admit this, but they especially despise Greene because she goes against the establishment narrative, and she isn’t a war hawk.

The establishment media is calling this Ukraine spending a bipartisan effort.  On this, they are mostly correct.  As I like to say, whenever you hear that something is bipartisan, hold on to your wallet.

So while gas prices are hitting all-time highs and inflation is vastly outpacing wages, the American taxpayer is being forced to send funds to Ukraine and the military-industrial complex.

The establishment media, of course, supports this.  They are shills for the regime.  There are a few exceptions on Fox News like Tucker Carlson and Laura Ingraham, but almost everybody else talks as though there could be no legitimate reason to oppose this spending on Ukraine.

This is actually a winning issue for Republicans who are willing to stand against the war hawks.  Most Americans don’t want to see people getting killed in Ukraine, but it also isn’t on their priority list of issues and they intuitively understand that more government spending won’t help anyway.  Most Americans are dealing with problems at home.  They want less crime, better schools, and a less expensive life.

Libertarians should also capitalize on these issues.  You can take an anti war stance and an anti government spending stance while also being somewhat of a populist.  Most Americans would rather see lower gas and food prices than see their money thrown into an endless pit in a far-off land.

The latest CPI numbers were released showing the year-over-year price inflation for April 2022 was 8.3%.  This was a slight decrease from 8.5% from March, but it was higher than expected.

The CPI for the month of April was up 0.3%.  If you strip out food and energy, it was up 0.6% for the month.

The median CPI, which tends to be less volatile, went up 0.5% for the month.  The year-over-year median CPI stands at 5.2%, which is up from 4.9% in March.

So the numbers are all over the place, but there is no question that the higher price inflation is taking a toll on American families.

Stock investors seemed to shrug off the news at first.  The report was released on Wednesday morning at 8:30 AM.  Stocks were up in the morning trading, but reversed in the afternoon.

The Nasdaq closed down over 3%, while Bitcoin fell below the $30,000 mark.

The stock bubble was built on easy money and low interest rates courtesy of the Federal Reserve.  Now the Fed is essentially forced to deal with the inflation problem that it created by hiking its target rate.  If it stays on track, the Fed is supposed to start reducing its balance sheet in June.  This is not positive news for the stock bulls.

It’s important to remember that a major downturn in stocks doesn’t have to coincide exactly with a recession.  In 2008, stocks tumbled the worst when the financial crisis became apparent in September 2008.  It was later determined that the recession actually started in late 2007.

The peak of the Nasdaq during the original tech bubble was in March 2000.  The recession officially hit in 2001.  The Nasdaq bottomed out in 2002.  While there were some big down days, it was a roller coaster.  The bear market lasted for nearly three years.

In context with today, the lesson is that the Nasdaq started falling before the recession hit in 2001.  We could be experiencing something similar today.

Also for context, the Nasdaq hit just over 5,000 at the peak of the original tech bubble.  It fell to below 1,200 over the course of about 2 and a half years.  It was about a 78% drop.

The Nasdaq now stands just above 11,300.  It had been over 16,000 at one point in late 2021.

While the bubble seems to be popping, this could just be the start of it.  The Nasdaq could easily fall by another 50% or more.  This will probably be the case because the Fed cannot easily revert to more money creation this time.

It technically can go back to easy money and lower interest rates, but then they risk losing the dollar.  They risk turning us into a third-world banana republic, which sometimes seems to be the goal of the Biden administration.

I really don’t think Fed officials want hyperinflation.  They would be destroying themselves and their own power.  They would also be destroying their pensions.

I think it is smart to plan for a long bear market.  If the Fed reverses course at some point, we can reconsider.

I read a heartbreaking story about a young lady who was injected with the Pfizer COVID “vaccine”.  It was a requirement for her to attend Union College in New York, which unfortunately is the case for many colleges and universities across the country.

After getting the second shot, she got sick and ended up in the emergency room.  She experienced nausea, shortness of breath, chest pains and vomiting, according to the article, and continues to suffer to some extent to this day.

Hopefully the young lady, Ms. Puentes, will recover and be able to move on with her life.  It isn’t as tragic as some of the vaccine stories have gone.

But the story doesn’t end here either.  Her college later required a booster shot – the one that apparently actually makes you more likely to contract COVID.  Even though her doctor said a booster shot would be ill-advised, her attempts at getting exempted were fruitless.  The college ended up dropping her classes and telling her to move out.

She was actually told by a school nurse to get the Moderna shot if Pfizer isn’t working for you.

Part of the school’s response said, “The vaccine is not associated with gastritis, which is the diagnosis you received in the ER two weeks after vaccination.  Two episodes of streptococcal sore throat in 7 months is not an indication of a weakened immune system.  There is no evidence in the literature that vaccination for Covid19 weakens the immune system.”

So first they say there isn’t an indication of a weakened immune system and then say that isn’t an effect of the vaccine.  Why did they comment in the first place on whether there is an indication of a weakened immune system because they wouldn’t have accepted that anyway?

And to say there is “no evidence in the literature” is meaningless except as an excuse.  What literature?  There is a lot of literature in the Vaccine Adverse Event Reporting System (VAERS), which lists well over 1 million reported adverse events, including over 27,000 deaths from COVID vaccines.

Are they talking about the literature specifically published by Pfizer?  Pfizer has kept most of its documents hidden.  Now that it has been forced to start releasing some of them, it isn’t looking good, especially in terms of adverse events, including deaths.  (And of course, the “vaccines” aren’t effective as was originally said and is still falsely repeated.  If anything, there is negative efficacy now.)

Let Lawsuits Fly

I am not one who is big on lawsuits, but I am surprised that I haven’t heard about more lawsuits.  At the very least, she should be suing her school to recover time and money wasted on attending college.

Beyond this, she could easily sue her college for medical damages and pain and suffering.  It isn’t clear if she got jabbed solely for the reason of attending school.  But if it was their requirement, make them pay.  The administrators at the school are part of the fraud.  They are part of the massive criminal cartel that exists in this country.

All of these vaccine pushers who have compelled people to get jabbed need to pay a steep price.  At the very least, they need to be removed out of any position of power or decision making.

I know based on the Open VAERS data that there have been many thousands of deaths just in the United States alone.  The people who reported these deaths believe that the vaccine caused the death.

Start making governments, politicians, corporate executives, school administrators, and everyone else forcing these on the public to defend it in court.  Let’s see some lengthy trials digging into the evidence that these vaccines are causing excess deaths.

If we see a few successful lawsuits, that alone could change the whole narrative.  The cowards in corporate America will fold really fast then.  The vaccine requirements will all of a sudden become optional.

Meanwhile, the executives at the vaccine companies and the politicians and bureaucrats (starting with Biden and Fauci) should be held criminally liable for the massive fraud and death that they have perpetrated on the American people.

Joe Biden said that if you get vaccinated that you are protected from COVID.  He said that if you get vaccinated, then you can’t die.  Even if we give him the benefit of the doubt and say that he meant you can’t die of COVID if you get vaccinated, he was still purposely lying.  Those two statements alone are a basis for impeaching him.

This isn’t negligence.  Some of the people pushing the vaccines are just stupid.  But don’t blame stupidity at the top.  They know exactly what they are doing.  Otherwise, why would they have pushed so hard?  Why would they have threatened people’s livelihood to get them jabbed?

Even if someone does claim ignorance, there is no excuse.  If they were ignorant on the subject, then they should have kept their mouth closed.  If you are ignorant about something, then you don’t go around preaching about it, which is what we have gotten non-stop since the beginning of 2021.

These so-called vaccines are a crime against humanity.  The criminals who pushed them and tried to force them on the public should be held liable for their actions.  At the very least, they must be held to account so that this never happens again.

The FOMC released its latest statement on monetary policy.  As expected, the Fed is hiking its target for the federal funds rate by 50 basis points, or 0.50%.  This is the biggest rate hike the Fed has done since the year 2000.

The federal funds rate will now be in a range of 0.75% to 1.00%.  This will likely have an impact on short-term rates and should lead to a flattening of the yield curve.

In his press conference, Jerome Powell said that a 75 basis point increase is not something that the committee is “actively considering.”  The stock market bulls liked the sound of this, and stocks exploded higher on this news.

I’ve long said that there is a problem when one person from the government/ central bank can speak words that wildly drive stock prices higher or lower.  In an economy of 330 million people, and more if you include the globe, does is make sense that one person or one committee has this much power to control a massive economy?

Perhaps the bigger news coming from the Fed, that receives far less attention than the rate hikes, is that the Fed will start to reduce its bloated balance sheet.  It nearly peaked at $9 trillion.  It helps to remember that it was around $4.2 trillion in March 2020.  It was under $1 trillion before September 2008.

In the Implementation Note, it says that the Fed will start to reduce its balance sheet in June by $47.5 billion per month.  This will mean selling off (or not rolling over maturing debt) $30 billion per month in Treasury securities and $17.5 billion in mortgage securities.

According to its “Plans for Reducing the Size of the Federal Reserve’s Balance Sheet”, these sell-off amounts will double after three months.  This means that in September 2022, the Fed will be reducing its balance sheet by $95 billion per month, if it sticks with the plan.

That is a big “if”.  The stock market liked the news that the Fed isn’t actively considering a hike of 75 basis points at one time in the near future.  That bullish sentiment will wear off quickly.

The Everything Bubble is built on loose money and low interest rates from the Fed.  Now that is being taken away to combat the price inflation, which is a consequence of its previous policies.

The market has already been extremely rocky this year.  Interest rates for mortgages have already gone up.  You can read all of the statistics there are, but the fact is that most of middle class America is hurting.  They are getting 8.5% (or more) price hikes with many things they buy, but they aren’t seeing an 8.5% increase in wages.

The pain is already here, and it will get worse at some time.  It is a consequence of the Fed’s previous policies.  They can try to blame Russia or whomever, but it was the easy money and loose interest rates that gave us the unsustainable boom.

The bust is unavoidable at this point.  The Fed can try to delay it as it has in the past, but that will only make it worse down the line.  The severe misallocations will be exposed.  The correction will happen at some point.  Even if the Fed doesn’t allow a “correction”, there will be severe consequences.

We should expect to see short-term rates go higher in the coming months.  The yield curve is likely to flatten more.  If we get an inverted yield curve, then it will really be time to take cover.

I recently saw a headline on CNBC television: “Bitcoin trades in lockstep with Nasdaq”.

There is also a video from a couple of weeks ago that says, “Bitcoin has been trading like an exaggerated Nasdaq”.

My friend recently noticed the same thing and asked why.

So why is Bitcoin trading somewhat in tandem with the Nasdaq?

It is far from being a perfect correlation, and Bitcoin tends to still be more volatile even with the Nasdaq’s volatility having increased.  Still, I would say that Bitcoin seems as correlated to the Nasdaq, or possibly more, than the Dow or S&P 500 right now.

We are told that Bitcoin is our future money.  We are told about all of the technological advantages of cryptocurrencies and the blockchain, even though these are two entirely different things.

Nasdaq is a market index made up largely of tech companies.  It might make sense that a few individual tech companies would trade somewhat in tandem with Bitcoin, especially if they are invested in Bitcoin or if their products are related to cryptocurrencies.

But the Nasdaq is made up of the heavy hitters like Amazon, Apple, Microsoft, Alphabet (Google), and Tesla.  It doesn’t seem to make much sense that these stocks would largely be trading with a strong correlation to Bitcoin.

I can only think of one explanation.

The Nasdaq and Bitcoin are largely the face of the Everything Bubble.

That’s right.  They are both highly speculative investments right now.  It is hard to even use the word “investments” in this context.

We are finishing up an era of highly loose money.  Price inflation is now roaring, and people who actually have money are trying to find a place to get a good return.  It sure isn’t going to happen in bonds right now.

Some people buy a house, while some people go the more liquid yet perhaps more speculative route and buy Bitcoin and/or tech stocks.

We are in an Everything Bubble.  About the only thing not in a bubble are precious metals.

The Nasdaq and Bitcoin are the big faces of stocks and cryptocurrencies.  They are the big plays.  They are highly speculative.  People take on the high risk for a potentially high reward.

This correlation will eventually be broken once the bubble pops.  Both the Nasdaq and Bitcoin have been hit hard lately.  They are both well off of their respective highs.

My prediction is that eventually Bitcoin will keep going down and the Nasdaq will bottom out.

The reason is that the Nasdaq is made up of companies that have value.  They may be highly overvalued right now, but many of them will still be profitable even after the bubble pops.

I can’t say the same for Bitcoin.  It derives its value because a bunch of semi-libertarian tech nerds declared it to be the future of money.  It caught on when some people started making money (i.e., dollar profits).  It is essentially a roulette table now.  It is just pure gambling at this point.  It may pay off for some, while others lose their shirts.

Bitcoin and the Nasdaq should fall together as the bubble pops.  They will both have periods where they start to rise again and draw some last-minute suckers into the game.  When all of the smoke clears, the Nasdaq may be a good investment again.  Bitcoin is not likely to ever become a significant form of money in society.  Calling it money is just an excuse for the speculators to speculate.

The first quarter 2022 GDP declined by 1.4%.  The most surprising thing for me was how little attention it received.

Sure, it was covered, but it didn’t seem like it was headline news for long.  Even on CNBC, it wasn’t scrolling on the screen for long.

Maybe some of the news networks downplayed it to protect the regime.  I can’t necessarily accuse CNBC of doing this because they certainly have had plenty of discussions on the high price inflation numbers.

CNBC does tend to be a bullish network.  Ironically, they probably get more viewers when markets are crashing.  But on Thursday, there just didn’t seem to be a lot of discussion about the decline in GDP.

The 1.4% decline was well below analyst expectations of a 1% gain.  But the establishment narrative (when not ignoring the news completely) seems to be that the economy is not falling into recession.  There were various factors that contributed to the decline, but we are assured that consumer spending is strong.

Of course, consumer spending isn’t what gives us a good economy.  It can be a reflection of a good economy or an unsustainable boom.  It is a common mistake in economics to confuse correlation with causation.  Consumer spending isn’t what makes us prosperous.  The productivity that allows us to spend is what makes us prosperous.

Stocks actually boomed after the news after taking a beating in previous days.  Many stock investors see the low GDP as bullish in the short run because it means that the Fed may tighten less this year than expected.

Anyway, we are being assured that this drop in GDP is just a blip.  Maybe you could say that it is “transitory”.  For some reason, they haven’t used that word to describe it.

The GDP metric has its flaws, but it is still useful.  A supposed pullback in defense spending contributed to the decline in GDP even though a decline in “defense” spending is actually a good thing.

Still, the high price inflation numbers are the elephant in the room.  The GDP is measured in real terms.  If the inflation numbers are at all understated, then the GDP numbers are even worse than what’s being reported.

When you have 8.5% annual price inflation, it makes it hard for the economy to grow in real terms.  It’s kind of like wages.  How many people are getting annual salary increases above 8.5% per year (or more if you count taxes)?

The 1970s – Or Worse?

This could be a return to something like the 1970s.  We are already nearing double-digit price inflation.  Interest rates are nowhere near that, but that is actually a problem for the long term.  It means that real interest rates are deeply negative.

If the economy continues to weaken, then we might have the Fed’s nightmare scenario of recession and high inflation.

From an investment standpoint, the period from the late 1960s up to the early 1980s was one of the worst times ever for stock investors.  Since the end of World War 2 and the Great Depression, this period in the 1970s was the worst for U.S. investors.

There were short periods in the 1970s where stocks boomed.  But overall, it wasn’t a good time period.  The problem is that when price inflation is in the double digits, you need even higher nominal returns just to get any sort of a real gain.

Think about this.  Right now, you would need annual gains of at least 8.5% in stocks just to break even.  If your money were invested in a taxable account, it would be even more.  And this means taking on a great deal of risk.

So for all of those index fund investors who think they will retire early and pull 8 to 10 percent in returns over the long run, they may be in for a great shock.

There is also a good possibility that the economic times ahead will be even worse than the 1970s.  As stated previously, real interest rates are deeply negative right now.  The debt load is far higher, and government is involved in nearly every facet of our lives.

I have to give the disclaimer that not everything will be worse.  We will still have our smartphones and our big screen televisions that mostly didn’t exist in the 1970s.  But in terms of wages, investments, and prices for basic necessities, we could be facing an even tougher time than the 1970s.

The bad GDP numbers coupled with high price inflation numbers put the Fed in an uncomfortable spot.  Unfortunately, it does the same for most Americans.

Elon Musk and Donald Trump have a lot in common.  They are both rich, although Musk is far richer than Trump at this point.  They have both had their bad points from a libertarian perspective, yet both of them know how to poke at the establishment and help expose corrupt systems.

Elon Musk is now supposedly buying Twitter and turning it into a private company.  It was difficult to turn down Musk’s offer because he was offering more than the share prices were worth at that time.  Still, I had my doubts about whether it would happen, as the establishment figures at the helm of Twitter care more about censorship than they do about shareholder value.

It was already quite obvious that the Twitter executives care more about censorship than about profits.  They shut down Trump’s account.  I can’t imagine how many hundreds of thousands or millions of people who were on Twitter just to follow Donald Trump.  So either the Twitter heads chose politics over profits, or they were being told what to do by the government.

Ever since Musk started talking about turning Twitter into a free speech platform, the left and the establishment (there is some overlap there) have gone crazy over it.  Musk has all of a sudden turned into a villain.

Remember, Donald Trump was not a villain before 2015.  He had made a few enemies and some people didn’t care for him, but he wasn’t generally hated.  He was a real estate guy who hosted a television show and was a bit full of himself, but that’s about it.  After he came down that escalator to announce his run for the presidency, things quickly changed.

And so it goes with Elon Musk.  He isn’t just buying a business.  He is making a political statement, and it is a statement that disturbs the establishment.

Elon Musk is no hero to libertarians.  He has lately sounded more libertarian than he did in the past, but we should not be fooled here.  Musk has largely gotten rich by working with the government.  Space X partners with the government and gets taxpayer funding.  Tesla is in the business of selling electric cars, which the government largely subsidizes.

Why do people get to use “free” charging stations?  You don’t get free gasoline.  And let’s remember that people were getting thousands of dollars in rebates (welfare) from the government just to buy an electric car, while the government keeps tightening the screws on companies producing non-electric vehicles.

So Elon Musk has benefitted greatly with his partnership in government.  It’s unclear how that will change based on his Twitter acquisition.

Still, Musk is obviously an intelligent guy.  He knows a lot about a lot of different things.  In this case, I’m not sure if he is in over his head.  Like Trump, he may underestimate the power of the establishment.

And yes, I do think Trump underestimated just how much the establishment/ deep state would come after him.  Was he really expecting charges of colluding with Russia to steal the election?

I was not a fan of Trump.  I am still not a fan of Trump in many ways.  He holds many positions that are in opposition to libertarianism.  Still, it is appropriate to acknowledge that he is different.

Trump has helped to expose the establishment for better or for worse.  Sometimes it has been done inadvertently, but he really does know how to draw out things that were previously hidden.

I think Musk is doing the same thing here.  He is no hero of mine, but he is disrupting things.  He is helping to further expose the agenda of the powers-that-be.  He is making it clear that the censorship is not about stopping “misinformation”.  It is about shutting people up.  And sometimes the people being shut up are the ones who are actually telling the truth.

First we have to see if this deal goes through.  I was skeptical whether Musk could even afford to buy Twitter.  I am still skeptical.  Just because you are worth a couple of hundred billion dollars on paper, it doesn’t mean you have that money sitting in a checking account.  It’s hard to say how much of the money that will be used to buy Twitter is from other sources.  I could definitely see people handing over their money to Elon to make a bet.  They are betting on Elon more than on Twitter.

If the sale does go through, don’t expect any of this to be smooth.  There are a lot of leftist flakes who work for Twitter who won’t want to work there any more.  Some of them might try to do damage on the way out of the door.  Some of them might stick around to try to sabotage things from the inside.

Let’s also consider what other establishment companies might do to try to take down Twitter.  I recently heard an episode on the Tom Woods show where Tom interviewed the founder of Gab.  Gab is a competitor to Twitter, except it generally promotes open speech as long as it isn’t used to make threats of violence.  Gab has been hit by the establishment by losing servers and payment processors.  The company has had to practically build everything on its own to survive.

I don’t know if Elon is ready for what is coming.  The establishment is gunning for him.  They will go after Twitter.  They will go after Elon Musk personally.  Nothing is off limits.  They will engage in character assassination.

Donald Trump and Elon Musk really do have a lot in common.  The big question is, if and when Musk obtains control over Twitter, will he allow Trump back on the platform?

Heads are going to spin.  Trump may be back on Twitter just in time for the 2024 election.

The power elite will not go away quietly.  Just as they gave us COVID (and probably hyped it largely to dethrone Trump), they will come at us with something else.  All sides are digging in, and it isn’t going to be pretty.

Elon better watch his back.  He has just made a lot of enemies.