CRYPTO CURRENCY MADNESS

 

CRYPTO CURRENCY MADNESS

 

I am not a professional investor, nor an economist, banker or stockbroker, financial analyst or soothsayer.  What I observe in the “financial” world around me has me baffled beyond belief.  You can guess my age when I say that I was brought up in an era that believed in hard work, saving your money and paying off your debts and that if you couldn’t afford something, you shouldn’t buy it.  Or, as my father would say, ‘When you make a nickel you can’t spend a dime.’

Crypto started out as a lark by some young enterprising minds thinking of a fun way to play with imaginary money.  I mean, playing with numbers and imaginary values, what harm can that be?  Until, someone saw the potential of turning something imaginary into the biggest Ponzi scheme ever, the greatest illusion ever perpetrated and the scam is ongoing and has grown into monstrous proportions.  A wonderful place for crooks and tax dodgers to turn real cash into invisible, traceless crypto.  Anonymous.  Safe from prying eyes, oversight and regulations, circumventing financial proprieties and regulations, dodging revenue and tax collectors.  Crypto wallets stored in crypto vaults.  Just numbers.

Thousands of people have been scammed by crypto schemes promising handsome returns.  And who doesn’t want to be rich?  Trade in your Honda for a Bentley, your apartment for a villa and why not have someone wait on you for a change?  Money has become the god of greed.  Any scammer will take your hard-earned cash in exchange for a bunch of numbers and turn it into your very own crypto wallet, and then “POOF”, to your utter dismay your money is gone when you try to cash in on your windfall.  Crypto currencies are for people who like to hide their excess cash and who don’t like to pay taxes.

The White House is now adorned by a dubious individual who bragged about not paying taxes and that he knew how to avoid them because he is smarter than anyone else.  He has given crypto a huge boost by insinuating that the United States could well establish a big crypto reserve fund.  Without oversight and regulations of course.  Just a repository for billionaire buddies who want to stash all their extra cash away from prying eyes.  I mean, if the president gives his okay and blessing, hey, why not join him?  If Putin and his merry band of oligarchs can rob their nation blind with impunity, why not Trump and his cronies?  Thievery must be contagious.

Crypto has caught on because a huge amount of extra cash is floating all around the globe, courtesy of governments who have been printing cash like mad cows to keep up with ballooning deficits, plugging the financial holes they have dug and trying to meet demands and programs they can’t keep up with.  If all that extra cash would remain in constant circulation prices for goods and assets would drop.  Crypto has given the greedy another leg up.  Manipulate the markets and prices by stashing money away in crypto reserves.  It has given rise to inflation and as a result the price of assets, goods and properties have skyrocketed.  Giving the greedy even more cash, more wealth. 

An awful lot of banks and financial institutions have joined crypto-mania.  You need cash to buy crypto, and crypto transactions are costly.  And . . . you’re playing with numbers.  Nothing gets printed or shipped, no Brinks truck, just computer savvy fingers dancing across a keyboard.  Like a slight of hand, in sight, out of sight.  An illusionist couldn’t perform a better trick.

Crypto has joined the ranks of all the other dubious financial vehicles out there.  The market has been turned into an orgy of pure speculation.  It is no longer about investing in companies and assets, about real growth based on output.  It is all about quick profits and money making schemes.

Crypto transactions are vulnerable in transit and especially with the introduction of AI and algorithms that can crack any code in record time; cyberattacks as a result will be on the rise.  Crypto vaults, like any other structure, can be attacked and destroyed, not by crypto currency holders, but by crypto-warriors hell bent on taking on a system that rewards the rich at the expense of the masses.

We’re living in a world where corruption is steadily on the rise and crypto has added another dimension.  It is pervasive, like electronic media, the internet, the dark web and the tens of thousands of scammers and hackers infiltrating the lives of ordinary people with a relentless barrage of annoying schemes aimed at ruining lives.  I don’t like crypto for the simple reason that it is used as a tool by crooks and tax evaders to hide their money.  Crypto is just another nail in the human coffin, because we are in trouble.

Despite inflated stock and property values, out of control government spending, incredible amounts of debt, and deficits reaching all-time highs, easy credit and low interest rates, we see the markets surging ahead as if they’re involved in a mad one hundred meter dash.  The market has nothing to do with poor people and governments.  Poor people and governments don’t own investments and stock portfolios, instead they owe, owe and OWE!  We’re not growing the economy, we’re not adding jobs.  The trillions of dollars in Covid-19 spending didn’t create new jobs, saw no infrastructure improvements or new business investments.  Yet, the money is gone and we’ve got nothing to show for it.  None of the monetary gains in the stock market reflect true value.  There is no real economic output to back it up.  It’s like a game of chicken.  A game of smoke and mirrors.  And behind the curtain the wizard of Oz continues to dispense advice.

What are ordinary people to make of it when some of the world’s richest people laud the current situation as a prime opportunity and that crypto currency is a safe “bet” and perhaps an even better alternative than cash?  Cash is in trouble, there is no doubt about it.  You can’t just keep printing and spending and pretending that all that borrowed cash never has to be paid back.  You can’t pretend that getting further and further into debt is a bright economic solution.  Governments have been saying for decades that all that mounting debt is an investment that will pay off in the long run.  Every new round of borrowing and printing is hailed as a stimulus that will boost the economy.  All that extra cash is making some people awfully rich and most of us are poorer because of it.  We’re also ignoring something that is called inflation.  Inflation is the result of artificially inflated values to offset the real loss in actual production and purchasing power.  We’re left with the illusion of wealth, of more money, a scheme that has the power to turn all of us into millionaires.  On paper that is.

            A line from Jeremy Grantham.  “Interest rates are paper.  Credit is paper.  Real life is factories and workers and output, and we’re not looking at increased output.”

In the midst of the Covid-19 pandemic everybody wanted a bailout, but nobody seemed to question as to who or what would be paying for it.  No big secret there.  Every citizen, every taxpayer, has always been on the hook for all the largesse and giveaways.  Some say that we’re flirting with bankruptcy, others say that technically we already are.  Historically there rarely is a clear and defining moment of a crash that comes knocking on our doors, it’s usually a gradual sliding that suddenly snowballs into an avalanche.

In the 1980s banks earned scandalous amounts of money by charging high interest rates.  It caused massive inflation and economic stagnation and huge government debts were stalling any economic recovery.  When the largest holder of debt is government something has to give.  Fast forward to today and the profit picture for banks hasn’t changed, just the methodology and approach.  Banks now charge incredibly low interest rates, but the tactic of making huge amounts of money hasn’t changed one bit.  Inflated prices have replaced high interest rates.  Now you pay up front.  The amounts people have to borrow for high-end consumer goods and housing is horrific, the amounts so large that most people will never be able to pay it back, just as all that government debt will never be paid back.

One thing hasn’t changed and that is the picture of the monkey in the middle.  Banks and governments safely parked on one side with Joe Taxpayer permanently stationed in the middle.  Even if some of our leaders stubbornly maintain that governments can afford to take on that extra burden to save ordinary citizens the pain!

Crypto currencies are computer generated and controlled, ideal subjects for cyber hacking, fraud and ransom demands.  When these currencies come crashing down the taxpayer should not be responsible for bailing out so-called investors and financial backers who without a doubt will be crying the blues when their wealth evaporates into cyber space.  The taxpayer bailed out the wealthy in 2008 and 2009 when irresponsible investment strategies collapsed.  Not a single offender saw jail time and nothing has changed in the investment industry.  The taxpayer should never be on the hook for the malfeasance of the rich.  And bailing out crypto currency holders should be no exception.

Do remember: when cash fails, so will crypto currencies.  Would you cash in your crypto for worthless cash?  Is there a difference between holding worthless paper in your hands or staring at the worthless numbers in your crypto wallet?

Crypto anyone!