Tuesday, 22 March 2022 — Gold Coast

By Vern Gowdie Editor, The Daily Reckoning Australia

[9 min read]

• Bitcoin has a price but no real value
• Seeing bitcoin as art
• Is bitcoin an artful dodger?

Dear Reader,

Bitcoin [BTC] has a price, but does it have any value?

Is there a future income stream you can value on a discounted cash flow model?

Nope.

Are there any physical assets — plant, machinery, real estate?

Nope.

Is it a scalable and reliable medium of exchange?

From what I’ve read, the technology lacks the capability to handle large amounts of transactions in a short period. Reliable? Are you kidding? Look at the price action. It’s all over the shop. How can you enter a transaction when the medium of exchange can rise or fall $3,000 or more in minutes?

Bitcoin has limited commercial value.

So what gives bitcoin a US$40k price tag?

It’s a social construct.

Those who — with good reason — have no faith in central banks and fiat money want an alternative form of currency. One that’s free from the corruption and manipulation of the money-printing mandarins.

Belief…this is what’s holding up the price of a computer code which, by all practical valuation measurements, is next to valueless.

Seeing bitcoin as art

The whole bitcoin thing never made sense to me until I read Ben Hunt’s (of Epsilon Theory) take on it:

‘Bitcoin is good art.

‘Or better yet, because Bitcoin is elegant and beautiful fashion, sitting at the intersection of art and commerce.

‘Most importantly, because owning Bitcoin has been an authentic expression of identity, an extremely positive identity of autonomy, entrepreneurialism, and resistance to the Nudging State and the Nudging Oligarchy.

‘Good art is always worth something. But how do we measure that something…how do we put a price on the value of good art at this particular moment in time? It’s a REALLY tough question.

‘There are no cash flows to art. There are no fundamentals to art. There is no “use case” to art.

‘There is only story. There is only narrative. There is only common knowledge — what everyone knows that everyone knows — about the value of art, common knowledge that emerges from our social interaction with story and narrative.’

Seeing bitcoin as art helped me rationalise what I previously thought was irrational. There is NO value…there is only story. There is only narrative.

When you really think about art…there is also limited material value.

Canvas. Paint. Wooden frame.

Total cost…a few hundred dollars.

What gives art its value is the narrative.

This is a Rembrandt or Monet or Warhol or an up-and-coming artist.

I recall walking through the Museum of Modern Art in New York and some of the ‘art’ on display baffled me…a bullet hole in a wall and a raincoat on a coat hanger…this passes as art? Like beauty, what constitutes art or meaningless rubbish is obviously in the eye of the beholder.

Knowing bitcoin’s price, like art, is based solely on a perception derived from a narrative is somewhat reassuring.

While people believe in the story, bitcoin has a price.

Cryptos also share other characteristics of the art market. 

Fakes, frauds, thefts, false certifications.

Is bitcoin an artful dodger?

What is an artful dodger?

‘Someone who is clever and manages to get out of difficult situations and avoid answering questions.’

Macmillan Dictionary

Those controlling the crypto story and narrative (the whales) are clever.

They’ve certainly managed to get out of difficult situations — hacking scandals; Tether [USDT] being exposed by the New York Attorney General for lying about the USD backing of its stablecoin; rug pulls, etc.

When caught out and exposed, they shift the narrative and avoid answering the questions.

The 3 March 2022 issue of The Gowdie Advisory looked at:

‘How the narrative is managed

‘Digital Currency Group (DCG) is a major player in the crypto world.

‘While you may not have heard directly about DCG, you might be familiar with two of its subsidiaries…Grayscale Investments and CoinDesk.

‘According to Wikipedia:

“Established in 2013, Grayscale Investments is a digital currency asset manager. It offers funds privately for institutional and accredited investors and publicly-traded products. They are the world’s largest asset manager for digital currency and in January 2021 Grayscale reported that they were managing $20.2 billion in assets. Grayscale also manages the Grayscale Bitcoin Investment Trust (OTCQX: GBTC), which was the first publicly quoted securities solely invested in the price of bitcoin upon its launch in 2013.”

‘And…

“CoinDesk is a global media, research, and events platform that was acquired by Digital Currency Group in 2016. It reports on blockchain’s daily news, provides a Bitcoin Price Index and publishes a quarterly State of Bitcoin report. CoinDesk also hosts a conference on digital currencies and blockchain technologies titled Consensus.”

‘This is a cosy arrangement. Grayscale looks after the money and CoinDesk looks after the reporting.

‘Potential conflict of interest?

‘Wikipedia thinks so:

‘Wikipedia obviously harbours doubts over the independence of CoinDesk’s media and research.

‘When price is determined by a process of creating artificial levels of trading volume to incentivise real entities to trade and speculate, controlling the narrative is absolutely crucial to the success of the operation.

‘Finding independent and well-qualified sources offering an opinion on the real value and real risks of bitcoin, is a time-consuming exercise.

‘Therefore, it’s easy to see why people buy the industry narrative.’

For those wanting to balance out the insider’s narrative, The Gowdie Advisory looked at the…

‘Findings of US government agencies

‘When it comes to cryptos, is the US government an independent source of reference OR is it doing its utmost to protect its fiat monopoly?

‘Or could it be serving both purposes?

‘Have the agencies found sufficient proof of deception and malfeasance to act in the public interest?

‘And, at the same time, are they compiling a body of evidence (for when cryptos threaten the stability of the system) to prosecute their case for the need of an independent, transparent, and regulated central bank digital currency?

‘Yes, the US government most likely does have an agenda. But does that make the findings less truthful?

‘You be the judge.

‘On 12 November 2021, the US Securities and Exchange Commission (SEC) rejected a bitcoin exchange-traded fund (ETF) proposed by Van Eck Associates Corporation.

‘The fund intended to invest directly in bitcoin…as opposed to bitcoin futures.

‘In the Order Disapproving of the listing, the SEC stated (emphasis added):

“…[the Cboe] BZX [exchange] does not sufficiently contest the presence of possible sources of fraud and manipulation in the bitcoin spot market generally that the Commission has raised in previous orders, which have included:

“(1) ‘wash’ trading,
(2) persons with a dominant position in bitcoin manipulating bitcoin pricing,
(3) hacking of the bitcoin network and trading platforms,
(4) malicious control of the bitcoin network,
(5) trading based on material, non-public information, including the dissemination of false and misleading information,
(6) manipulative activity involving the purported ‘stablecoin’ Tether (USDT), and
(7) fraud and manipulation at bitcoin trading platforms.”

‘Look at the language being used…fraud, manipulation, misleading, hacking, malicious.

‘Is it just me or are these serious red flags people should take note of?

‘But in reality, how many people who are seriously tempted to invest in (or remain invested in) cryptos, would bother reading the findings in the 51-page SEC Order?

‘Not many.’

Buying the anti-establishment story is easier and less taxing on the grey matter.

So is bitcoin ART or an ARTFUL dodger?

For now, it’s a bit of both.

However, cryptos, unlike art, are a threat to establishment control.

Regulations are coming.

How tight will they be?

The authorities’ response will be proportionate…the greater the threat, the greater the controls.

What’s Bitcoin’s destiny?

A valuable artwork or a worthless bit in 2020s memorabilia?

If belief holds up, it’ll be the former.

But if those controlling the narrative believe the social construct is unravelling, they’ll rush the exits, and it’ll be the latter.

Bitcoin is an interesting social experiment.

One I’ll watch from the sidelines.

Regards,

Vern Gowdie,
For The Daily Reckoning Australia

By Bill Bonner Editor, The Daily Reckoning Australia

Dear Reader,

‘The fool doth think he is wise, but the wise man knows himself to be a fool.’

Shakespeare

We promised to explain the real reason for the US’s meddling in the affairs of the Eurasian steppes. This will require more space than usual, but we will just continue connecting the dots until we get a better picture.

‘What are we fightin’ for?’

We posed the question last week and were unable to come up with a convincing answer. The obvious ones — protecting the US, protecting our families, saving lives, matter of principle, making money, etc. — didn’t seem to apply.

So let us rephrase the question: Who are we fightin’ for? Now the picture becomes clearer.

What we see is the US elite…spoiled, corrupt, and incompetent. Instead of looking out for the nation…and helping its people avoid the obvious pitfalls of imperial vanity…it has joined a global caste determined to pursue its own goals. Widely known as the ‘liberal world order’, it is not ‘liberal’ at all, not in the classic sense of favouring free trade and free speech. Nor is it at all conservative. Instead, it is a caste of busy bodies who aim to reshape the world in their own image.

Let’s begin with a wide perambulation, in which we condense tomes of history, philosophy, the Bible, and the Encyclopedia Britannica into a few paragraphs. (Readers who think we are ‘oversimplifying’ are probably right!)

The right to inequality

The goal of ‘equality’ is a fraud. Nobody wants to be equal. We want to be superior. We take pride in whatever we’ve got. Smarter…more cunning…bigger muscles…a brighter smile…a flashier car…a sharper wit. Whatever it is, it marks us as ‘better’, not equal.

This desire for superiority is probably hard-wired, and probably derives from the desire to make ourselves attractive to the best possible mate, but there’s no need to go into that.

Whatever is behind it, we are a very competitive species. We’re always trying to get a leg up on everyone else. We want to win games…get richer…and make our enemies flee in terror before us.

Our ability to feel superior individually is hampered by the closeness of the facts…or a spouse. Elizabeth is so competitive that she wants to win even in a blood test. She’s convinced that her O positive is ‘better’ than our O negative. In a wine tasting, she races to pick out the flavours, identify the ‘terroir’, and guess the vintage, while her husband can barely tell the red wine from the white. Then, we look in the mirror or climb onto the scales…and we don’t feel so superior, after all.

But join with a group…and the sky’s the limit.

Humans discovered long ago that they could compete more effectively by forming cooperative groups rather than going it alone. One tribe won. Another lost. One chief puffed out his chest and strutted across the battlefield. The other lay on the ground, dead.

Cooperation was greatly amplified in the modern, civilised era. A small primitive force with bows and arrows is no match for a large army, equipped with drones and Coca-Cola. Modern cooperation — based on trade, trust, and reliable money — is what produced our prosperity…and our drones. In the modern world, in order to make money and feel superior, you have to provide goods and services to others. So the drone maker aims to make the best drones he can, not because he loves his fellow man or hates him, but because he wants his money. A whole world of people who are trying to bake better bread, build faster computers, and look better in bikinis is not a bad world!

But competition takes many forms. Sports teams mimic tribal combat. The fans feel the warm light of glory reflected upon them after a Super Bowl win. And it is not surprising that they send their boys onto the field of battle even when there is nothing really at stake, except their feeling superior.

That is why people have such contempt for shirkers, malingerers, and free-thinkers — they don’t help the team win.

Yes, dear reader, it is a wicked world as well as a wonderful one. And the mob — prone to hysteria, bred to compete, readily manipulated — is, like all of us, neither good nor bad, but always subject to influence.

That’s why an honest elite is so important. It is supposed to be wise…the ‘voice of reason’, of calm deliberation and patient reflection. It is supposed to know we are all fools, in other words, and do its best to restrain us.

Instead, in the 21^st century, the American elite led us into the dumbest, most hysterical campaigns in US history.   

Control-freak complex

In 2001, a tiny group of terrorists attacked the World Trade Centers. Instead of tracking down the perps, the US launched a war against millions of people who had nothing to do with the attack. The elite in military-related industries made fortunes. But the result was nearly a million dead…and US$8 trillion added to US debt.

In the big hysteria of the Mortgage Finance Crisis (caused by the Fed’s too-low rates for too long), Ben Bernanke, to his everlasting shame, panicked the whole nation with his absurd ‘we may not even have an economy’ remark to Congress. The big pay-off went to Wall Street, whose bonuses and stock options were protected. Rich investors, too, gained about US$30 trillion in the stock market alone. The cost: approximately US$44 trillion more debt — public and private — added since 2008.

Then, in the COVID hysteria, it was the Pharma/medical/public health/control-freak complex that hit the jackpot. Life-long bureaucrats, such as Anthony Fauci, became celebrities. Pfizer, now recommending a fourth booster shot, got richer than ever. Pfizer stock price approximately doubled after March 2020. And yet another US$8 trillion in government debt that Americans will have to pay.

Hardly had we gotten over that hysteria when the elite whipped up another one. Yes, it’s time for another boost to the empire’s military/industrial/empire/surveillance complex…with a new panic over the Russo-Ukrainian war. The US could have perfectly well sat this one out. ‘The Ukraine’ carries the article ‘the’ to distinguish it from a nation state. We do not say The Britain or The France. We say ‘The Ukraine’ because it is a place, like the Northwest Territories, the Caribbean Islands, the Argentine, the Sahara Desert, not a real country. But the elite has dropped the ‘the’…and acts as though its borders were permanent and inviolable.

Chris Hedges imagines where this will lead:

‘The roads across the earth will be clogged with desperate refugees. All dissent will be treason. The young will be sacrificed for the tired tropes of glory, honor, and country. The vulnerable will suffer and die. The only true patriots will be generals, war profiteers, opportunists, courtiers in the media and demagogues braying for more and more blood. The merchants of death rule like Olympian gods. And we, cowed by fear, intoxicated by war, swept up in the collective hysteria, clamor for our own annihilation.’

Meet the EEE

But what kind of a scammy system is this? The EEE (Enlightened Elite Establishment) comes up with one Big Threat after another. Each one brings it more money and more power. Meanwhile, the average American is worse off. Every penny that is squandered on these serial hysterias must come — one way or another — from him. Not from Wall Street. Not from Washington. But from people who sweat and bus and toil…people who make things and satisfy customers. People in Georgia or Idaho. Each hysteria costs them wealth…and freedom.

And freedom too is not just an abstract principle. It is the ability to decide. Where to live, what to do, how to spend your money and how to live your life. Take the decisions away from the individual, and they do not disappear. Instead, they go to a new decider.

Who? Yes, who. Here is the ‘who’ we were looking for. The Western liberal elite. Instead of restraining and channelling the barbarous impulses of the wild masses, they gin up a new hysteria…and use it to transfer more money and more power to themselves.

The loss of freedom is hard to measure. The money is not.

The top 1% has tripled its wealth in the last 20 years. No other group even comes close. The next richest-group — from 91% to 99% — doubled their wealth. And everybody else remains approximately flat.

The elite gained, in other words; nobody else. Who are these people? What do they want? Are they really looking out for the rest of us…or just for themselves?

Tune in tomorrow…we will name names.

Regards,

Bill Bonner,
For The Daily Reckoning Australia