YOUGHAL, IRELAND – When the money goes, everything goes. Today, we look at what went last week.
Yes, Dear Reader, at this late, degenerate stage of the Bubble Epoch, nothing is so crazy… so absurd… or so appalling that it isn’t front-page news.
And from Capitol Hill last week came the usual pernicious headlines.
First, the Democrats say they want to pack the Supreme Court, to make it easier for them to do any fool thing they want.
Second, they want to pave the way for giving reparations to people whose families suffer – allegedly – from a wrong done to their ancestors 170 years ago.
And that doesn’t include all the other nonsense on the agenda – forgiving student debt, providing regular stimmy checks, another $2.3 trillion “infrastructure” boondoggle, etc., etc.
Arbitrary Rearrangement of Wealth
When money is no object, no object is too asinine to spend it on. Economist John Maynard Keynes described it in 1919:
By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.
[…]. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
Some get rich from the government’s “arbitrary rearrangement” of wealth. Those on the receiving end – contractors, connivers, and cronies – do well.
But the disorder soon spreads to the rest of the economy, where money itself… and the process of getting and spending it… becomes a joke.
In this respect, Billy Markus and Jackson Palmer must be viewed as great visionaries.
On December 6, 2013, they launched Dogecoin – a cryptocurrency that was apparently half serious and half spoof. From the very beginning, the one-liners kept coming.
Two weeks after the launch, the crypto money went up 300% in 72 hours – to be worth $0.00095 each!
Six days later, the system was hacked. Millions of coins were stolen.
By 2017, the Dogecoin market was worth $2 billion.
January, 2020 – a price spike sent the coin up 800% in 24 hours, after Tesla CEO Elon Musk began posting mysterious tweets. “No highs, no Lows, only Doge,” quoth the oracle.
Last week, a big runup put Dogecoin up almost 8,000% for the year.
“Hey guys. I just became a Dogecoin millionaire,” announced one Reddit user. Another anonymous enthusiast (perhaps with the initials, EM?) apparently now has a $15 billion fortune – based on his Dogecoin holdings alone (assuming he has not lost the key to his wallet.)
Missing the Point
What do you do when you have that kind of money? It is strange “wealth,” neither clearly the fruit of win-win nor of win-lose. It is more like win – huh?
What can you do with that kind of “win-huh?” money?
How about buying a Non-Fungible Token (NFT)? Last week, too, set new records in the NFT market. Here’s ABC News:
An NFT called The Pixel — an image of a single pixel — was also up for auction, fetching $US1,355,555 million after a 90-minute bidding battle.
The artist is known only as Pak, with the Twitter handle @muratpak.
NFTs are an almost perfect match for cryptocurrencies. They provide what we like to call a safe space for the digital fantasists (SSDF).
Normally, things (and people, too) are judged on two basic criteria. They are either useful or decorative. If they are neither, they have no value.
But in this new SSDF, weird money meets weird consumer items – neither of which has any physical form – and they live happily ever after.
NFTs have no utility. Nor are they much fun to look at. The Pixel piece is just a square of gray.
And if you’re looking for value in an NFT like The Pixel… or in Dogecoin… or in the hundreds – maybe thousands – of publicly traded, money-losing U.S. companies… or in the U.S. dollar… or in federal financial policies – you are missing the point.
They are valuable precisely because they have no value. They have neither utility nor aesthetic value. They destroy real wealth; they don’t create it.
But the more wealth they destroy, the more important they become.
Does that make sense? We didn’t think so.
Who Gets It?
But we’re trying to connect some pretty slippery dots – like beads of mercury in a hot skillet – so stick with us.
When the money is fake, people change their attitudes towards it.
If you are a politician… whether Donald Trump or Elizabeth Warren… you want to “go big” with some monumental program – like the Great Pyramid of Giza – that will signal your greatness for years.
If you are an artist, you create an NFT. Even cooler, you sell it, letting it be known that you think the buyer is a moron. Cooler still, you buy it… And coolest of all if you pay far too much money for it.
You say to your friends, “I paid a million dollars for this.”
And your friends think you are an idiot.
But you’re a very cool idiot… one who “gets it” and can afford to throw away a million dollars to prove it.
Gets what? That “money” no longer represents real worth. And that by spending it recklessly, he is throwing swill before swine.
A man can buy a box at the Super Bowl without honest toil, without saving, without starting a business, nor by increasing the world’s wealth with useful or decorative output.
He might have simply bought Dogecoin… or got a stimmy check… or put his money in the stock market and let the Federal Reserve make him rich.
The meaning of “wealth” itself has evolved towards what the Fed has made it – a gamble and a lottery.
But also a fraud.
And it is such a big fraud that – one way or another, winner or loser – we are all in on it.
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