Gold is not a safe investment--it's a commodity

 There are a lot of myths about gold, which just aren't true.

 One is that you can't lose money on it, which isn't true. As Isaid, it's a commodity with all the associated risks and benefits of a commodity investment.

Crypto is a scam.

Nothing I haven't said before. Just don't pay attention to people selling "get rich schemes" (e.g., crypto, gold, etc.).

 

The US has the best government Cryptocurrency can buy.

I've already said that cryptocurrency is shady. This is a really good run down on why that is so. 

The US government needs to look into Trump's corruption and how cryptocurrency enables crime. 

Cooperatives in Italy: the alternative to monopoly, vulture capitalism

 I posted about these previously here, and just had the experience of visiting one recently on a trip to Italy: La Cooperative di Cortina. 

Not sure if you have a negative connotation of socialism and cooperatives, but this was a rather nice department store in Cortina, Italy, It was on the league of John Lewis Partnership in the UK, or something like a Macy's in the US.

It was a pleasant surprise for me to realise that I was in a cooperative.

And it came after seeing dogs in the stores. Although, I have gotten accustomed to seeing them in restaurants. 

Unfortunately, mine were left at home for various reasons: the major one being this was a ski vacation. We were usually out all day.

Anyway, the quality of the items was great and the prices were reasonable.

But the best part is that the workers, and some customers are members. I'm not sure what my membership with REI  (Recreational Equipment, Inc.) is, but I have belonged since I lived in Washington, DC in the late 1990s. REI brands itself as a consumer cooperative.

So, Cooperatives aren't totally alien to the US. They definitely aren't to the UK. 

On the other hand, dogs everywhere is definitely still alien in the US, but I hope for not much longer.

And here are a couple of happy pups in Cortina. 

I'm tossing in this video about Scotland's Community Wealthbuilding law, which sort of ties into the concept of cooperatives.

We Found A Solution To America's Inequality. It's Not Where You'd Expect.

"Often we accept something because it is part of our culture. They make us think it's the only possible world. The factory is closed and you have to look for another job. The end.

I invite a person who lives in America to try and question their own system, because if we don't question our system, we cannot change our system."

Yet another reason to dislike Cryptocurrency: Donald Trump.

I'm getting blown away watching Donald Trump since he's giving us some really great reasons for a rework of the US Constitution. And it's not just the republicans: it's the duopoly

 

Cryptocurrency explained.

 

If Cryptocurrency Was Honest | Honest Ads

This is a humourous take on why crypto is a scam. 

And Robert Reich giving a more serious take on this issue.

We Went to a Crypto Conference: We Left Terrified

You can't trust banks or financial institutions, but you trust something which is based on computers?

What type of stupid are you?

CRYPTO CRASH: THE REAL REASON FTX COLLAPSED

OK, I've been saying that cryptocurrencies are a bad investment and generally not a good idea. But this is really interesting since he's saying that the Chinese have cornered the crypto market, caused a "run on the bank", and don't allow for cryptocurrencies in their country.

To quote Mr. Spock: "Interesting."

Wanna buy some tulips? How about an NFT of the Brooklyn Bridge?

The Rich Get Richer (a coming crash?)

 So, Warren Buffet is selling bank stocks for cash because of an impending crash in business real estate.

Maybe that's not the best way to summarise the situation, but it hits a bunch of fallacies.

First off, once someone gets into the millionaire class, they tend to make more money doing nothing than most people do by working. Especially if they are in the Warren Buffet league.

Next is the dislike of fiat currency for something commodity based, which is loaded with fallacies. First, commodites ARE volatile: just do a search on "economic crash commodities" for an eye opener. The Panics of 1869 and 1893 saw quite a bit of controversy around gold and gold reserves. Fiat currency is based upon the stability of the issuing body (usually national, but the European Central Bank issues the Euro, so multinational and definitely governmental). 

But the bottom line is that currency is basically a tool for commerce. The best example of this comes from Terry Nation's show Survivors from the 1970s, where a man has a suitcase he is very protective of. He dies during the night and we find out that its full of paper money, which is pretty much useless since most people have died from the plague. The world of Survivors is the libertarian's dream.

Seriously, while many people don't like central banks, they do a fairly good job of keeping the economy running along. Of course, any realistic discussion of avoiding crashes requires that we talk of things that the right likes to term "socialistic" because there is governmental intervention in the economy and people are supposed to play by the rules (e.g., competition laws).

Pew Charitable Trust on Cryptocurrencies

46% of Americans who have invested in cryptocurrency say it’s done worse than expected

Among the 16% of U.S. adults who say they have ever invested in, traded or used a cryptocurrency such as bitcoin or ether, 46% report their investments have done worse than they expected. By comparison, 15% of these Americans say their investments have done better than they expected; 31% say they’ve worked out about the same as they expected. The overall share of U.S. crypto users is unchanged since September 2021. 

• About half of Americans have heard about NFTs, but few have ever bought one

 

Is Crypto Really Going To Crash? (Yes) | Robert Reich

I'm not sure what to think about Robert Reich these days. OK, I have always liked him.

On the other hand, he is pretty much saying the same thing I have. Not sure if I would call this a Ponzi Scheme. I would go more with "pump and dump".

But Bob is usually pretty good in his analyses.

Please give this a squiz since it is worth it.

He surprises me that he aligns himself with the Democrats: especially post-Bernie.

The Crypto Crisis

Cryptocurrencies and Non-fungible tokens (NFTs) remind me of the stereotypical scam of buying the Brooklyn Bridge. NFTs could actuallty put that scam into practise since they are a digital asset that represents real-world objects like art, music, in-game items and videos.

I've got an NFT of the Brooklyn Bridge: you want to buy it?

Something about fools and money anyone?

Anyway, there has been a Cryptocurrency crash which has become public with Bitcoin, the largest cryptocurrency by market value, having a recent fall of more than 72 percent since its November high.

There is a great article on this by Trevor Jackson in Dissent, The Crypto Crisis. This pretty much sums up the problems with Crypto Currencies:

[At one time,] there were about 19,000 cryptocurrencies in existence. By the time you read these words, many of them will have failed. If you have heard of only one cryptocurrency, it is almost certainly Bitcoin. Bitcoin is a decentralized peer-to-peer network with no single clearinghouse and no equivalent to a central bank or money-issuing authority. Bitcoin the platform issues currency units called “bitcoins,” whose value is determined by supply and demand on several different exchanges. There is no single price of bitcoin. Demand is driven by its use in transactions. Supply is determined through “mining”: using computer processing power to solve increasingly complicated math problems. The inventors of Bitcoin have consistently maintained that there will be a finite supply of bitcoins, alleviating the danger of inflation and creating instead an intentionally deflationary system. All transactions are anonymous, and bitcoins are held in a digital “wallet.” A bitcoin spent in a transaction is really a unique code and a series of past transactions of that code in a kind of digital ledger, known as the blockchain. Imagine if every dollar you spend came with a list of every past transaction that dollar had been used in, thereby proving that you obtained it legally. It’s a way to verify transactions while preserving anonymity. Once a transaction happens, notice of it is sent to the entire Bitcoin network, and all the “miners” in the system race to verify the ledger of past transactions. If you win the verification race, you are awarded with new bitcoins.

He then gets into how problematic the crypto currency system happens to be, which is very.

As I said, if you don't like Fiat Currencies, you should avoid crypto like the plague. Fiat currencies at least have something backing them up. Crypto isn't even a commodity based currency, which also have their problems.

Crypto is the commidity.

And it's one that only exists in cyberspace.

You know I'm not a fan of bitcoin or cryptocurrencies: here is the best argument about why you shouldn't be as well.

I just finished watching Russell Brand discuss bitcoin, which he didn't understand. The concept intrigued him for the obvious reasons--cryptocurrency poses as something which is outside the banking and economic system.

That's not really true. I know enough about these things to know that they are not what they pretend to be. Which is why I suggest this e-book on the subject:

https://www.mybloggertricks.com/2018/06/bitcoin-is-scam.html

The person who wrote this knows a whole lot more about the subject than I do, which is why I recommend it. You don't really need to know a lot about the topic to sense that it is not what it purports to be.

On the other hand, knowing what exactly it is makes it far more scary than fiat currencies.

Bottom line is that commodity based currencies are volatile. Fiat based currencies values are determined by central banks. But cryptocurrencies aren't really either. If anything they combine the worst of both worlds.

But, hey, it's your money: not mine.

Barely do I do a post about Bitcoin when...

 The BBC does a piece on whether the blockchain is unsustainable.

It seems that the price of Bitcoin cannot stop increasing, but how sustainable is Bitcoin itself? With such huge energy demands to keep Bitcoin mined, are some countries risking the stability of their electricity supplies to take advantage of the Bitcoin boom? Financial economist and founder of the blog “Digiconomist”, Alex de Vries is on the show to answer these questions. He says, in his paper published in the journal Joule, that the entire Bitcoin blockchain network consumes as much energy per year as all data centres across the world.

If you don't like Fiat Currency, you should avoid Bitcoin like a shitcovered plague

 One of my hobbies is collecting hyperinflated currencies, I have old German Marks, Yugoslavian Dinars, and Zimbabwe dollars. I bought some "fake" bitcoins. Those things that get pictured when people talk about the Bitcoin since Bitcoins have no real physical form. I tossed in mention of the Euro as well since it had no real physical form until 2002, but there's a difference between the Euro and bitcoin.

Doggone has been asking me to write something about Bitcoins and why they are dangerous. I have been procrastinating about this in my usual style until the Wire article "Bitcoin’s Greatest Feature Is Also Its Existential Threat" popped up on my radar. There are three types of currency: one is currency backed up by a commodity which is usually gold or silver, Fiat currency which is where a government prints money and gives it value, and now cryptocurrency which isn't issued by a government. Cryptocurrencies are probably closer to commodity based currencies in that they get their value from the market. 

Yet Cryptocurrencies' market value isn't based upon a commodity. It's based upon something called a block chain, which makes it somewhat similar to Fiat currency in that there isn't some form of actual value to either one. Fiat currency at least has a government backing it up. The blockchain is far more fragile and dangerous.

"See footnote for Hitchhiker's Guide Quote"

But let's get down to a really basic history of what "hard cash" money is. Basically, an economy is based upon trade. I have grain and you have bricks, or some such. Maybe bricks aren't available where I live and I can't trade directly with you. So, a commodity was chosen to make trade easier. The commodity was made into coins. Currency came about when banks wrote promissory notes to pay the value of the note.

Cryptocurrency gets its value from something called a blackchain and isn't really backed up by anything other than that. Blockchains are fairly complex topics. I'm not going to get into what exactly the blockchain is, but it is actually quite fragile. It's based upon a key, and woe upon you if you lose that key. I was trying to find the story about the person who died taking his bitcoin key with him. A story titled "$66,500,000,000 in Bitcoin Is Lost and Will Never Be Recovered, Says Crypto Intelligence Firm Chainalysis" was one of many that showed up.

That gets me back to the Wired story which led to this being written:

It’s best to avoid explaining the mathematics of Bitcoin's blockchain, but to understand the colossal implications here, you need to understand one concept. Blockchains are a type of “distributed ledger”: a record of all transactions since the beginning, and everyone using the blockchain needs to have access to—and reference—a copy of it. What if someone puts illegal material in the blockchain? Either everyone has a copy of it, or the blockchain’s security fails.

In other words, anything which can corrupt the blockchain will result in bitcoin literally being nothing. Those fake bitcoins I have will be worth more than a "real" one. Toss in that cryptocurrencies require a lot of computer power, or eat up a lot of electricity, to store those blockchains. This comes from a very cryptocurrency friendly article:

Cryptocurrency mining, by its very nature, requires a lot of electricity and sophisticated computers. In a paper published this week in the journal Joule, data scientist Alex de Vries — correctly — argues bitcoin mining is likely to exceed an annual consumption of 101 terawatt-hours (TWh) of electricity as the price fluctuates.

The Wired Article is much better about the fragility of cryptocurrencies. The best way to remind someone of the danger of bitcoin is to point to things like Tulip mania. In other words, commodities, whether physical or not, can be subject to DRASTIC fluctuations in price. People who advocate for commodity based currency based upon their stability are ignorant of economic history. There were severe depressions when commodity based currencies existed. 

Bitcoin isn't even commodity based. it is based upon the integrity of the blockchain. And if you don't trust a government, You really shouldn't trust a blockchain. Bitcoin’s self-positioning in opposition to fiat monetary systems is misguided, because the established system relies less on fiat than Bitcoin itself.

See also:

• The Fragility of Bitcoin.
• Beat Weber: Bitcoin and the legitimacy crisis of money
  

 Footnote:

"The Triganic Pu is a unit of galactic currency, with an exchange rate of eight Ningis to one Pu. This is simple enough, but, since a Ningi is a triangular rubber coin six thousand eight hundred miles along each side, no one has ever collected enough to own one Pu. Ningis are not negotiable currency, because the Galactibanks refuse to deal in fiddling small change."

Robin Hood revolution

I've not really paid that much attention to The GameStop thing, but it points out something I have been pointing out about how the current "market capitalism" works: Or Las Vegas on Wall Street.

The short form is that a group on reddit decided to invest on GameStop since the Hedge Funds were looking at it. Their purchases were aided by a broker called Robinhood Investing, which offers no fee trades. I have some idea of how hedge funds work and it sounds as if the reddit crowd were doing something which the "big players" have been doing for a while.

The big problem is that it was a group of small investors making money instead of the few, wealthy getting rich(er).

That goes against the rules. The powers that be are upset that people outside their circles are using their methods to make money.

It also highlights that the people in power are the ones who caused the problems with the economy of a while back. And they were the ones who got bailed out: not the little guy. 

The current US political situation is also run by pretty much the usual suspects, which is one of the many reasons why I demexited in 2016. I see the power people circling their wagons to put down the revolution.

Unfortunately, the dam has broken.

The powers that be had their opportunity to make a clean transfer of power, but their bets were on the status quo. Unfortunately the best way to handle a revolution once one gets started is to try and control it. Try to keep the forces of change in control.

The problem is that is an option which is being applied FAR too late in the game. The time for real change was 2016, but the powers that be opted for the status quo.

Now it's going to be hard to blame any of the mess ups on anybody else than the people running the show.

Herman Cain, You Are TOO IGNORANT to Be President

from Last Word with Lawrence O'Donnell, MSNBC.com :

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So........how simple, how transparent, how much EASIER is this 9 9 9 plan of Herman Cain? NOT AT ALL. It is superficial, and ill conceived, and the numbers don't add up - yet again, more Republican math failures, with dumb ideas masquerading under the bogus label of common sense solutions. 

Let me point out that O'Donnell has put in his time in and around Congress; he was a key aide and senior advisor to Senator Moynihan for six years, and the staff director for an additional two years was the staff director of the Senate Committee on Finance.  So, O'Donnell knows his subject, clearly better than either Herman Cain, or Cain's chosen advisers.

from the Wikipedia entry on O'Donnell:

From 1992 to 1993, he was staff director of the United States Senate Committee on Environment and Public Works, then chaired by Senator Moynihan. And then from 1993 to 1995, he was staff director of the United States Senate Committee on Finance, once again under Senator Moynihan’s chairmanship. He thus led the staff of the Senate's tax-writing committee during the consideration of President Bill Clinton's first budget, which Congress enacted in the Omnibus Budget Reconciliation Act of 1993.

Herman Cain doesn't understand his own economic policy; he is far too easily stumped by simple, softball questions.

Koch Brothers and Economic History: a Surprising Letter

This epitomizes corrupt and dishonest intellectual discourse, and how money can buy an expert to say anything they want said.  Who?  Who else - one of the egregious Koch Brothers!

Charles Koch

From the Dylan Ratigan Show on 9/29/'11, MSNBC.com:

Ideas for sale September 29, 2011 “The Nation” magazine’s Mark Ames and co-writer Yasha Levine discuss an investigative report revealing that billionaire Charles Koch bought and paid for an anti-Social Security and Medicare stand.

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The original article appears HERE in the Nation Magazine.  It is written by Mark Ames and Yasha Levine.  The source of this letter is the collected papers of Friedrich von Hayek, in the Hayek Archive at the Hoover Institution, Stanford University, where it was an indexed part of the collection. From the article referenced above:

The private correspondence between two of the most important figures shaping the Republican Party’s economic policies—billionaire libertarian Charles Koch and Nobel Prize–winning economist Friedrich Hayek, godfather of today’s free-market movement—were obtained by Yasha Levine from the Hayek archives at the Hoover Institution at Stanford University. This is the first time the content of these letters has been reported on.

The documents offer a rare glimpse into how these two major free-market apostles privately felt about government assistance programs—revealing a shocking degree of cynicism and an unimaginable betrayal of the ideas they sold to the American public and the rest of the world.

"Publicly, in academia and in politics, in the media and in propaganda, these two major figures—one the sponsor, the other the mandarin—have been pushing Americans to do away with Social Security and Medicare for our own good: we will become freer, richer, healthier and better people.

But the exchange between Koch and Hayek exposes the bad-faith nature of their public arguments. In private, Koch expresses confidence in Social Security’s ability to care for a clearly worried Hayek. He and his fellow IHS libertarians repeatedly assure Hayek that his government-funded coverage in the United States would be adequate for his medical needs.None of them—not Koch, Hayek or the other libertarians at the IHS—express anything remotely resembling shame or unease at such a betrayal of their public ideals and writings. Nowhere do they worry that by opting into and taking advantage of Social Security programs they might be hastening a socialist takeover of America. It’s simply a given that Social Security and Medicare work, and therefore should be used."

The authors of the article have posted a digital copy of the letter here at the Nation, and here, at the blog Exiled.com, if you care to see it for yourself.  This is just a taste, a 'tease'.  The authors understood this surprising discovery, and they explain the significance of it very eloquently.  I encourage our Penigma readers to follow the links, and inform yourself more fully on WHY the discovery of this document is significant in the larger context of American economics and politics.