You’re warmly invited to the next Chesterfield Cryptocurrency Meet-up on 18 November 2019 at 7.30pm at the Monkey Park Community Centre at 128a Chester St, Chesterfield, S40 1DN.
Too much cheap money is chasing too few assets.
This should have the effect of driving up the price of assets, leading to runaway inflation. But there’s no inflation. Or, at least, there isn’t in the real economy. Why not?
I suspect it’s because the money never quite gets there.
Pay rise settlements have started to tick up slightly recently – but only slightly. So the cheap money isn’t getting dumped into workers’ wallets.
Instead, it ends up in markets.
Bond prices have been chased up to crazy levels and world stock markets have enjoyed the longest bull run in history.
It’s particularly noticeable that earnings multiples are extended too, which means rising asset price rises, especially in the US, aren’t based on improving fundamentals. It’s just the wall of money that’s doing the chasing.
Another consequence of all this liquidity is that nobody wants your money. So interest rates at the banks are dismal.
Indeed, we read that there is now an astonishing $17trillion of negative yielding debt in Europe and Japan. This is barely believable.
It’s rather like the banks hanging a massive sign in the window saying, “Please go away”.
Perhaps even more amazingly, there are negative interest mortgages available in some countries. Regular cash is increasingly worthless.
Oddly though, so is a lot of stuff. People are drowning in Chinese rubbish and don’t want or need any more.
So stuff and cash are getting cheaper but financial assets – stocks and bonds – are getting dearer.
None of which is a great basis for long term prosperity. How or why is anyone supposed to save for the future?
Sure, stocks and bonds do present an option. I’ve heard it called the TINA strategy, standing for, There Is No Alternative. But how much longer can the party last?
An historically long stock market bull run, coupled with extended earnings multiples, does not an appetising prospect make.
As for bonds; well, Barron’s think they can hear finally hear a hissing sound coming from the direction of the bubble.
The UK still looks fair value – we have Brexit to thank for that – but there’s way too much uncertainty around the ongoing constitutional crisis here to get excited.
Because all of it misses the main point; which is that the collapse of cash demands a response.
And that response is Bitcoin.
Bitcoin is an investment in the future value of money.
Money used to be something you held when you wished to be prudent and defer your purchases.
Who knew what tomorrow might bring? Well, it didn’t matter as you’d wisely salted your savings away in a bank or building society.
Good luck with that strategy today. Banks and building societies long since ceased to play the role of sensible saving institutions. Because central banks would like you to draw that cash out and get it spent and to hell with the future.
So you are penalised with derisory interest rates for hanging on to your dough. Acquire negative-yielding bonds and the penalty is quite literal. A more irresponsible set of financial incentives is hard to imagine.
This is a world tending towards the madness of Modern Monetary Theory.
Spend, spend, spend because there’s simply no point in saving and hell, tomorrow we’ll probably die anyway.
The trouble is, of course, maybe we won’t. We are living longer, on average, after all. So – thank God for Bitcoin, which exists to restore your faith in the time value of money.
Worth just fractions of a cent only eleven years ago, Bitcoin’s value has grown exponentially, if erratically, as its scarcity has increased.
And even better, it’s about to get a whole lot scarcer, with a 50% reduction in the amount of new Bitcoin that’s automatically produced every ten minutes or so, scheduled to occur in May 2020.
Want to know more?
If you’d like to hear the full investment case for Bitcoin, come to the latest Chesterfield Cryptocurrency Meet-up on 18 November 2019 at 7.30pm.
It’ll be held at Monkey Park Community Centre at 128a Chester St, Chesterfield.
There’s even free cake, care of my wife Alison. And entrance is free.
So come and find out if cryptocurrency really can save us all from the madness of central bankers.
One day you might be very grateful you did.