There is much to discuss regarding the recent GOP tax bill, but one thing stands out: it has certainly been entertaining.
Unfortunately, the moment for genuine solutions to America’s debt crisis has long passed. Lawmakers consistently chose convenience over accountability, continually postponing necessary actions. As a result, today we face a precarious situation where meaningful options to rectify our financial predicament are virtually nonexistent.
In these challenging times, the priorities have shifted to style rather than substance. Congress and President Trump have certainly played their roles with a notable display of bravado to gain support for the bill.
For instance, just this past Tuesday, President Trump, Senate Majority Leader Mitch McConnell, and House Speaker Paul Ryan held a White House meeting, which notably featured two empty chairs in place of Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi, who chose not to attend what they deemed a “show meeting.” Their withdrawal became a spectacle in itself.
This absence exemplified the overarching theme of this political theater. As this writing unfolds (on Thursday evening), the charade carries on, with Senate voting postponed until Friday. By the time this is read, the bill may have passed—or perhaps it will not.
No matter the outcome, the tax bill holds little significance in the context of a fiat currency that has been inflated to unrealistic levels. This overextension has led to rampant financial speculation, overshadowing actual economic growth. The results of this have been bizarre and unpredictable.
Decentralized Cryptocurrencies
In a related matter, following Fed Chair nominee Jay Powell’s confirmation hearing before the Senate Banking Committee on Tuesday, Senator Elizabeth “Pocahontas” Warren noted that the Fed displayed a similar regulatory demeanor before the 2008 crash, as they have yet to act on bitcoin.
It seems Warren overlooks that bitcoin might actually reflect the Fed’s excessive intervention in credit markets. The artificial suppression of interest rates and Fed asset purchases have fueled bitcoin’s surge in speculative interest. Trying to impose regulations now is akin to attempting to implement price controls to combat inflation stirred by the Fed itself.
Additionally, what’s Warren’s underlying concern?
Among the various bull markets that emerged post-Great Recession, none stands out more than the rise of cryptocurrencies. With a valid grievance against the Fed’s policies of currency devaluation, an eclectic mix of computer programmers, skeptics, intellectuals, dreamers, and opportunists have embraced the cryptocurrency phenomenon.
Perhaps they are onto something worthwhile. Blockchain technology, which underpins these currencies, offers an innovative solution for creating efficient and permanent transaction records between parties—provided that external monitoring remains absent. It seems likely that cryptocurrencies are here to stay and will continue to capture a larger market share in society.
In fact, bitcoin and its decentralized peers may ultimately challenge and improve upon our current fiat money system.
Idiots Get Rich
Yet bitcoin isn’t the sole asset experiencing a climb spurred by Fed policies. Most financial assets have ballooned into colossal bubbles; bitcoin just captures the most attention.
Our skepticism rests not in the potential of cryptocurrencies but rather in the current environment. At present, cryptocurrencies seem to be ensnared in a monumental speculative frenzy.
Are we just beginning this epic cryptocurrency bubble or are we nearing its end? According to cybersecurity expert John McAfee, we’re just at the starting line, predicting bitcoin could reach $1 million by 2020.
Is he onto something? Only time will tell.
For now, however, it is evident that many—including you—are finding wealth through bitcoin, as well as through stocks of the FANG conglomerate (Facebook, Amazon, Netflix, and Google). Even those wagering against the CBOE Volatility Index (VIX) are seeing returns.
How does one make sense of all this?
Clearly, there’s a bull market driven by folly. And in a bull market defined by absurdities, the foolish tend to prosper.
The Complete Idiot’s Guide to Being an Idiot
Thus, to cater to the whims of the foolish, we have distilled The Complete Idiot’s Guide to Being an Idiot into its essential components:
One: Purchase bitcoin when it exceeds $11,000.
Two: Invest in FANG stocks at their current valuations.
Three: Short the VIX when it drops below 10.
These actions are undoubtedly foolish decisions. But who are we to judge? After all, history shows that fools often take the wrong action at exactly the right moment.
So, with a stroke of luck, those who heed this guide will not only be fools but wealthy fools at that. Such is the irony of life.
Sincerely,
MN Gordon
for Economic Prism
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