Dollar 2.0 Will be Collateralized with McMansions

T-Bonds: 30 year loans to US treasury (no collateral)
T-Notes: 2-10 year loans to US treasury (no collateral)
T-Bills: 1 month to 12 month loans to US treasury (no collateral)
Mortgage-Backed Securities: loans to commercial banks (houses as collateral)

That’s from https://www.thestreet.com/mishtalk/economics/the-fed-now-owns-nearly-one-third-of-all-us-mortgages.

“The newly created Rentenmark replaced the old Papiermark. Because of the economic crisis in Germany after the First World War, there was no gold available to back the currency. Luther thus used Helfferich’s idea of a currency backed by real goods. The new currency was backed by the land used for agriculture and business. This was mortgaged (Rente is a technical term for mortgage in German) to the tune of 3.2 billion Goldmarks, based on the 1913 wealth charge called Wehrbeitrag which had helped fund the German war effort from 1914–1918. Notes worth 3.2 billion Rentenmarks were issued. The Rentenmark was introduced at a rate of one Rentenmark to equal one trillion (1012) old marks, with an exchange rate of one United States dollar to equal 4.2 Rentenmarks.[3]

From https://en.wikipedia.org/wiki/German_Rentenmark

It’s easier to collect wealth taxes on real estate, than wealth taxes on bitcoin that got lost in a boating accident. See https://en.wikipedia.org/wiki/Georgism

Dollar 2.0 (US rentenmark) will be collateralized with McMansions.

Well, at least it will be collateralized with something!

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PBOC has 500,000 bitcoin

PBOC has 500,000 bitcoin.

Following the forum link and digging into this further, I find the claim plausible.

Plustoken arrests yielded 220k btc in chinese custody and there were other scams. 2.3% of the total bitcoin supply would be a helpful hedge for the PBOC, along with gold, as they slowly divest US treasuries.

There are claims the plustoken asset forfeitures got sold, as with the silk road coin in the US. But were they? I can’t find solid information either way. Chinese language readers, I could use some help here.

I don’t like the idea of the bitcoin-hostile PBOC having 500,000 bitcoin to jerk markets around. On the other hand… adoption, I suppose.

I’d prefer it was the US fed.

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The Federal Reserve is a Non-Profit

People resent the Federal Reserve. It’s The Creature From Jeckyl Island. Who really owns the Fed? Who really owns NPR? It’s a non-profit. Who cares.

The Layer1 bitcoin mine is a for-profit.

Layer1 controls 100 megawatts. Their goal is to control 25% of the bitcoin hashrate. Scribbling on a napkin would put the total energy spend of the bitcoin network around 400 megawatts. This is off by an order of magnitude from the 7000 megawatts estimated by cbeci.org and I don’t know who’s right here, but close enough for a blog post. I’ll use layer1 numbers… So a fifth of a Hoover Dam… a 50th of Three Gorges. (For reference, total global energy spend is 1,140,00  megawatts.)

So when there are 50 Layer1s, competing for hash to collect bitcoin transaction fees, bitcoin price will be 50x higher? Could take a few years but, basically, yes.

Not in dollars though. In energy.

Stop thinking in dollars. Bitcoin may be a lot higher than 50x in dollars by the point there is a Three Gorges worth of hash mining, or maybe not, but either way it doesn’t matter. Energy is what matters. Because energy is real.

Difficulty is curently 16.8 trillion. Layer1 is profitable at $1000/bitcoin. And when difficulty hits 34T it will be profitable at $2000/bitcoin. That is a lot of buffer, because with a doubling in difficulty under these conditions we will probably see a (albeit temporary mania) 10x or 20x in price.

How much spare power is there in Texas? How much scale can be applied? When do the main line power plants start copying what Layer1 is doing?

The American retiree depends on the survival of the municipal bond market for his survival. Food, too, is energy.

When do U.S. electric utilities, which are backed by municipal bonds, which are backed by the federal credit, do the sensible thing and start hodling bitcoin?

The uncomfortable thing is, electricity may get a whole lot more expensive. Thinking about places that rely on air conditioning. When you are actually paying for what you use, in a non-subsidized coupon currency, the truth can be painful.

Puerto Rico — where 10% of electricity is stolen — could suffer a lot now that i think about it.

New slogan…. want to be able to afford air conditioning? Buy bitcoin.

People aren’t going to like this. I don’t like it. It’s not going to stop it from happening.

The truth is the Federal Reserve is a non-profit entity created for the public benefit… which private entities can parasite on… which is true of a lot of non-profits.

The Fed, along with other banks getting their arms twisted, buys things for more than they are worth. Things like corporate bonds, municipal bonds, someday soon I guess stocks.  It’s the Japanese central bank model, coming to America, coming to everywhere. Because people need air conditioning, people need to eat. There’s nothing wrong with trying to keep people alive, and there’s nothing wrong with socialism, within limits. But it’s non profit. Meanwhile someone needs to do the actual work, or people actually will die.

The not-for-profit Fed is becoming dysfunctional in the way that NGOs or National Public Radio is. You can see the future in places like Argentina or Greece. The vibe of working for a central government bank there. There is a lot of compliance, ritual, not a lot of aggression or chasing real things that generate a profit.

Think of dollar as an affinity coupon, created to support your local non-profit.

Layer1 is a for-profit.

Non-profits depend on for-profits.

Municipal bond investors, and electric utilities, and the Fed, should be talking to Layer1.

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Whiny programmer whines about bitcoin

https://www.stephendiehl.com/posts/crypto.html

Stephen Diehl starts by rightly decrying that haskell is popular among altcoin snake oil vendors, then lumps bitcoin in with the snake oil, referencing David Golumb’s whiny book from my last post.

“New religious movements like the cryptocult provide a psychological and philosophical framework that provides sense-making for a world that seems hostile and out of their control. The crypto movement fits all the textbook criteria, it provides a mechanism for determining an in-crowd and an out-crowd (no-coiners vs bitcoiners). It gives a framework for assessing the virtue of other followers based on their faith (HODLing) in the cause. It offers simple answers to complex issues in economics and monetary policy. It gives a linguistic framework of “thought-terminating clichés” and acronyms to quell dissent. It gives a mechanism of social control in which one can acquire influence and status in exchange proselytizing and onboarding more followers to buy tokens. It makes miraculous promises of wealth, not derived from effort but from faith. It presents an eschatological narrative of retributive justice about the end-times of the global financial system, in which the true believers will be reborn with a new life in an anarcho-capitalist utopia. And most importantly, it gives people a sense of a community, hope and belonging which is a powerful force that can be exploited by charismatic leaders. David Golumbia’s excellent book The Politics of Bitcoin: Software as Right-Wing Extremism outlines the rabbit-hole effect that this ecosystem is having on software engineers onboarding them into deeper forms of right-wing extremism.”

Well… then don’t buy bitcoin Stephen! Nobody is forcing you to hodl. Unlike all those people in argentina and tin pot places where you can’t freely convert the currency, and it is jail time if you try.

Once again I roll my emoji eyes…

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Whiny academic whines about bitcoin

I am too tired to argue with this so I just quote the best amazon comment I could find in under 30 seconds…

“Any time the author mentions “central banking”, he seems to only be referring to the “US Federal Reserve” as if that was the only central bank in the world. The fact is that many central banks have failed in the past, and is failing today (see Venezuela). That is not a leftist or rightist position, that is just reality. He also makes a huge and inexcusable omission of the 2008 financial crisis and the Occupy movement under which Bitcoin was created from. This omission is intellectually dishonest as the Occupy movement and “too big to fail” are leftist movements that parallels Bitcoin’s development. In summary, the author’s thesis is incorrect and over simplified. Even if he was correct, the viewpoint is so narrow (looking at Bitcoin in the current American political context) that his analysis has limited use.”

Emojipaste is broken so… emoji face with rolling eyes….

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US Banks Can Now Hodl Bitcoin

“The Office of the Comptroller of the Currency (OCC) has confirmed in a letter dated July 22, that it allows all “national banks and federal savings associations’ authority to provide cryptocurrency custody services for customers.”

https://coinfomania.com/occ-u-s-banks-can-offer-crypto-custody-services/

This could go good, if banks get invested in success of btc. Or bad, if it’s an attack vector seize bitcoin, as roosevelt seized gold.

https://en.wikipedia.org/wiki/Executive_Order_6102

I think it will probably play out as a bit of both. It’s going to critical to get proof of reserves, otherwise banks will cheat like fiends.

While I have reservations about this because of potential 6102, I’m seeing this as the best news of 2020 for bitcoin. This may not have an immediate effect on the markets, because it will take time for banks to roll out services. But in the long term it’s huge. Much, much bigger than paypal or mastercard.

Buy buy buy!

 

 

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Bitcoin is a cognitive immune system

I’ll go ahead and quote in full, verbatim, in case this gets taken offline. Plus it’s short, yay tiktok.

“The next person who has the sheer nerve, the sheer entitled *caucacity* to say all lives matter, I’ma stab you. I’m a <jab> stab you. And while you’re struggling and bleeding out I’ma show you my papercut, and say, my cut matters too.

It seems to me like papercut girl went a little off the rails here. Or maybe she’s just high spirited? Let’s say gray area. She lost a job offer over this outburst, and has more posts where she is crying over this and doubling down over her commitment to social justice, then she gets mocked by pepe, then I assume (I stopped reading) pepe is accused of hatred and racism. It’s twitter! We hate it, but we can’t stop. Maybe that’s a good thing?

Here’s a longer meltdown, crazier, framed as “ideological posession” by jordan peterson. Which I agree with.

A pretty inoffensive white guy identifies himself as “Hugh Mongous” when this crazy lady attacks him. He is being interviewed about his daughter’s drug problem. The crazy lady has a meltdown about him sexually harassing her (due to the name joke), and won’t back down even when private security intervenes. She’s pretty scary, as is papercut girl to my eyes, and one can easily see how this kind of thinking can escalate to violence, and kind of undirected mob violence at that, just letting off steam.

A lot of committed marxists starved and froze to death in the gulag. Not much due process once things get rolling.

The ideologically posessed lady from the JP video thought they should be interviewing Hugh Mongous about something more social justice relevant, involving defunding the police… it was pretty hard to understand for me to understand exactly what she wanted, and it’s not really important. As Jordan Peterson points out, when you are ideologically posessed is it’s possible to predict your speech from 5 or 6 basic axioms that free you from thought, and also give you the confidence that you can judge whether someone is good or evil with perfect accuracy based on the simple short list axiom screening. It’s dangerous to give people like this political power.

My stretch circle was offline today, so I watched the full Peterson lecture, to see how the Hugh Mongous story plays out, while I stretched alone. Turns out, someone started a social media donation campaign for Hugh, and it went viral and he got $140k. I wonder if crazy lady also got donations from other campaigns, but it’s not important. Unless it is?

In any case, paper cut lady lost a job offer. Hugh Mongous got twitter mobbed but then also got a life changing lump sum from the viral social media lottery. Hugh was a low income blue collar guy having financial difficulties, so this was life changing for him. So money is popping up here, in both cases.

In the full Jordan Peterson lecture, once the Hugh Mongous story is over, he goes to some pretty dark places, primarily the russian gulag in Solzhenitsyn’s archipelago. This is where ideological posession ultimately leads, he claims, and again I agree. Some will see this as overreaction or white fragility, or maybe male fragility. But whatever. When you give lunatics the keys to the asylum, don’t complain when you are the one that winds up getting lobotomized. (Even if you’re on the lunatic side!)

“in east germany, 1/3 of population was a government informer.” (1:09:13)

This strikes me as an important ratio. 33%. I’m going to keep it in the back of my mind moving forward.

Bitcoin is an emergent aspect of our society’s cognitive immune system. It doesn’t just protect against financial shenanigans, but also crazy forms thoughts. Cake and eat it / victim thinking / marxism.

Money is just speech, it turns out. To censor money, you have to censor speech. Free speech defends sanity (healthy thinking), and free money defends free speech.

Coincidence that social justice whackjobs that favor cancel culture censorship, also support punitive reparations and “something for nothing” redistributory economic policies that bitcoin would (and will) make impossible? I don’t think so.

https://www.cnn.com/2019/04/23/tech/jack-dorsey-trump-twitter-meeting/index.html

Trump opposes bitcoin, but wields power through twitter. Dorsey supports bitcoin, but profits from whackjobs that are ideologically posessed with hatred of trump.

If we can remember that the American bedrock value is free speech, because it’s necessary for healthy thinking, maybe we can muddle through this mess without turning into 1960s china.

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Teach for America is a social justice cult

[disclaimer for regular readers: today’s news has nothing to do with bitcoin or crypto markets.]

Background data: I applied for teach for america, didn’t get in, and then (as non teach for america) applied for and was hired as an inner city high school english teacher for one semester with not very good results. I was under prepared. I’m not proud of the work I did. I would not say my students got a good education from me.

At least i avoided jail time though.

Unlike this guy.

https://www.city-journal.org/html/how-i-joined-teach-america—and-got-sued-20-million-12393.html

Holy fucking hell. Joshua sounds like a decent human being who gave his all for his students. In return, he got far worse than my experience and i thought nothing could top john adams high school in south ozone park, nyc. 33 hours of jailtime! Hopefully that helped alleviate his white guilt 🙈

Both Josh’s and my experiences are from twenty years ago, but as the comments in the article show, if anything these problems have only gotten worse.

Maybe this is why I experienced puerto rico as a functioning society despite extreme problems like every other day blackouts and government stealing everything not nailed down. Puerto rico is not in cultural collapse.

A community that cannot protect or teach its children, is flirting with that state.

Also Martha Hephzybah Russell in the comments is despicable.

“Although I am very sadden that this young man was failed by Teach for America on their failure to train him with explicit classroom management skills as well as the administrators for not seeking greater ways to support teachers lacking the skills to manage their classrooms, I am surprise he did not decide to take on a hands off approach after being investigated the first time for physically handling a student. If two students are fighting and one is being injured and I am already being charged by administration for separating them, I would call security or send for help. This way, the administration can only write a greivance if they so want to for me not responding physically. They cannot have it both ways. Unfortunately, men tend to be accused more than women on such a charge.”

Yes. Let’s let a child get potentially seriously injured, to prove a point. (Josh was jailed for breaking up a fight between second graders.)

Disfunctional social justice warrior logic.

Also… and I’ve been wanting to say this for twenty years. Teach for america is a social justice cult.

Someone at TFA should have told Josh to get the hell out when he didn’t get the support he needed from the school administration. But that would violate the super hero mystique that gets TFA fat charitable donations from mckinsey and bulge bracket consulting houses, and the other usual suspects in corporate america.

So Josh got sued for twenty million and 3 days in a washington DC jail.

Cults don’t protect their members. They’re just fodder for the machine. Like I could have been, if I had gotten in. Or like Josh.

 

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Raoul Pal bungled bitcoin (2017)

“This revolutionary digital infrastructure [editor’s note: indian government digital cash initiative] will soon be able to process billions more transactions than bitcoin ever has. It may well be a bitcoin killer or at best provide the framework for how blockchain technology could be applied in the real world. It is too early to tell whether other countries or the private sector adopts blockchain versions of this infrastructure or abandons it altogether and follows India’s centralised version.”

https://www.mauldineconomics.com/outsidethebox/raoul-pal-paying-attention

Raoul was comparing bitcoin to gold in 2012 and continues today to be be one of bitcoin’s staunchest advocates to the hedge fund and institutional investor community. You can charge $40,000 a month for your newsletter if you are telling your readers to buy bitcoin at $130. And he did.

Raoul also called ethereum digital silver last week on an ask-me-anything.

With bitcoin even people that get it… don’t get it.

It’s ok, Raoul. I have my doh moments too.

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With current technology, Bitcoin can only run for 30,000 years

With current electricity generation technology, and figuring that renewables will require energy subsidy from nuclear power for long term functioning, the bitcoin money system can only be run for 30,000 years.

“30,000 years: Estimated supply lifespan of fission-based breeder reactor reserves, using known sources, assuming 2009 world energy consumption.”

https://en.m.wikipedia.org/wiki/Timeline_of_the_far_future

http://www.scientificamerican.com/article/how-long-will-global-uranium-deposits-last/

On a long enough time frame, maybe gold bugs are right.

 

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