The managing partner of Adamant Capital joins for a conversation about what the Protestant Reformation and the French Revolution can teach us about bitcoin.
Today’s edition of The Breakdown is an extended version of the Brief, this time covering five topics.
New Jobless claims - sticking stubbornly at ~1.5 million new claims per week, despite economist expectations
The “whack-a-mole” economy - Former Treasury Secretary Lawrence Summers predicts as much as 30% of the economy may need to close to get COVID-19 under control
PlusToken scam pressure on BTC price: Has scam selling suppressed the price of bitcoin since early last year?
Biggest ever bitcoin option expiry; more than $1 billion in notational value BTC options are set to expire tomorrow, Friday, June 26
Apple’s UX privacy triumph: Users will have to opt-in to allow apps to track them across other apps as well
Tracy Shuchart is an oil- and commodities-focused trader in the private equity space known for her wide-ranging insights on financial Twitter (FinTwit).
In this conversation, she and NLW discuss:
Why the shale revolution of the last 10 years shifted the power balance in global energy among the United States, Russia and Saudi Arabia
How easy money in the wake of the Great Financial Crisis enabled the shale revolution as much as new technology
Why after the 2014-2016 oil crash it was inexperienced private equity firms that picked up where banks left off with shale
How a growing focus on dividends and cutting costs was creating structural problems for shale even before the COVID-19 crisis
How COVID-19 coincided with a contentious negotiation between Saudi Arabia and Russia that ultimately sent prices to less than $0
New Federal Reserve research suggests reaction to Facebook’s Libra basket approach was overblown
Italian Banking Association pushing to test a digital euro
U.S. housing has worst month since 2010
Our main conversation:
Earlier this month, Messari hosted the Mainnet virtual summit. At that event, NLW moderated a session called “Macro Investors Sound Off!” featuring BlockTower Capital’s Ari Paul, Blockchain Capital’s Spencer Bogart and Arca’s David Nage.
The discussion included:
The evolution of the Fed put and how it shapes the markets
How the collision of Bitcoin’s halving and the Fed’s reaction to COVID-19 created a powerful narrative moment
Why the Money Printer Go BRR meme was so effective
Why the Paul Tudor Jones letter was hugely influential within Family Offices
Why these investors expect to see some significant announcements around bitcoin exposure from traditional investors in the months to come
The best Sundays are for long reads and deep conversations. Recently the hosts of the Let's Talk Bitcoin! Show gathered to discuss the big picture problems facing our world which make things like Bitcoin distinctly appealing despite many inefficiencies when compared to traditional, centralized systems.
On today's show we're going back to basics. While bitcoin and digital bearer assets in general are an incredibly important technology, the reason they're likely to be important to the future has little to do with the token and everything to do with the context surrounding them: The world we live in every day, where government controlled money is abused for the benefit of the few and to the detriment of the many.
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"Bitcoin is a way of achieving consensus. And consensus is a way for a bunch of people who may disagree on things to agree to a singular fact that they then execute, so imagine if Congress actually had bipartisan support to unilaterally pass a bill every ten minutes... That's basically what's occurring in Bitcoin.
There's nothing more political than money because money affects everything else, and yet Bitcoin works. I think there's a lot of people looking at trying to reform the governance structures of the places that they're in, what they really should be doing is looking at things like Bitcoin and frameworks using blockchains to say "OK, how can we come to consensus over this or that governance issue of which money would be one... But I think the most transformative and phenomenal thing it'll do is, Nakamoto Consensus and then just blockchain governance writ large is a phenomenal way to have self governance.
We see these breakdowns and these desires to federate cities and the way decisions are made, [but] maybe rather than turning to a government based political solution, a community based solution using something like a blockchain would be something with a lot greater staying power and impact." - Jonathan Mohan
Topics:
Who is the economy still working for, and who is it not serving?
What’s wrong with money that makes alternatives attractive?
Why and how is Bitcoin disconnected from the current system?
What’s the value in the US and western Europe compared to the value in less developed parts of the world?
What role does speculation play in the story of bitcoin?
Bitcoin’s been around now for more than ten years. Are we on track to make a difference? What’s the normal adoption curve for disruptive or revolutionary technologies?
What IS a disruptive or revolutionary technology? Who is bitcoin potentially disrupting?
Does being part of the bitcoin community make you politically affiliated, or represent a distinct political viewpoint?
Selected excerpts from this week's discussion:
"Money, because it's central to markets, which are central to the ways we organize societies is on of the most powerful technological tools that exists. If you then put the control of that technological tool in the hands of a monopolistic entity of any kind, whether that's facebook libra or the US dollar under the federal reserve or whatever else it is, what happens is that that tool can be used to exert power on the way society is governed and on the way resources are allocated in a non-transparent way that is not subject to political correction or adjustment by democratic means.
And when you take a tool that's that powerful and take it out of the oversight and control of democratic institutions, then it attracts the kinds of sociopaths who want to control that lever of power and they use it to distort the market in their favor. And that's the really dangerous aspect of money, because it's not simply neutral fuel for an economy or some forms of it are not neutral fuel for the economy. I've talked about this in the past as 'Money is a system of control in addition to its function of medium of exchange, unit of account, and store of value.
And when it can be used more effectively as a system of control, then it starts losing it's utility as a medium of exchange, a unit of account, and a store of value because it's power as a system of control is so intoxicating and so overpowering that it erases all other uses of it.
And that's exactly what we see. Centralized money is no longer offering useful signaling of value, no longe offering using unit of account measurement, it's not serving as a good store of value and increasingly not as an open, free, highly liquid medium of exchange because it's use as a system of control has overridden all those considerations." - Andreas M. Antonopoulos
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It seems like the past hundred years and the statements made publicly now and in perpetuity is that dollars will always go down and stocks will always go up. So there are fundamentally two types of Americans, those who have their life savings in dollars and those who have it in stocks. And the crazy thing with stocks, unless you're part of the racket every now and then they completely collapse. So even that's a rigged game.
What I like about Bitcoin is it's a way to be a part of neither game. I don't get to insider trade like a congressman, and I also don't have all of my life savings stolen from me because that 3% raise I get every year is completely wiped out by money manipulation. - Jonathan Mohan
* * *
"This entire experiment and civilization [was] founded on the idea that we have a ladder with rungs on it and a reset button. So you fall down the ladder, you hit the reset button and you can start climbing back up it. And every time the government massively overcorrects or disproportionately gives money out into the ecosystem, they're pulling out a rung from the ladder..." - Jonathan Mohan
* * *
"Capitalism without the risk of failure, isn't..." - Andreas M. Antonopoulos
* * *
"One of the most phenomenal things that America did was the idea of bankruptcy. This idea that you could fail and that your family wouldn't be debt slaves to try to repay it. This idea of a serial entrepreneur was kind of invented here because the economic concept of a reset button existed here, and what we're seeing is the death of the reset button and the way they're accomplishing that is by pulling up the rungs of the ladder. So it's a failure on two sides at the same time..." - Jonathan Mohan
Credits
This episode of Let's Talk Bitcoin features Stephanie Murphy, Andreas M. Antonopoulos, Adam B. Levine and Jonathan Mohan. Music provided by Jared Rubens and Gurty Beats, with editing by Jonas.
The big narrative in financial media for the last few weeks has been the insurgent Robinhood rally, led by the AC/DC-blaring Pied Piper Dave Portnoy, owner of Davey Day Trader Global Global (DDTG Global).
As people try to make sense of the strange retail trading phenomenon, one perspective is the participants (average age of 31 on Robinhood) are reacting to a market that has left them behind. In this view, they are assaulting the market with otherwise outrageous and ludicrous strategies because, otherwise, how will they get their piece?
This week’s Breakdown Weekly Recap looks at this in the context of some surprising (and frankly depressing) stats about the millennial generation’s current wealth, as compared to where boomers were at the same time in their careers.
From technology to aging demographics, some of the most important trends shaping the economy have been deflationary. What happens when that rapidly changes?
From technology to aging demographics, some of the most important trends shaping the economy have been deflationary. What happens when that rapidly changes?
Reddit partners with Ethereum Foundation on Layer 2 scaling
Black-In Freedom Festival reimagines Juneteenth
Our main topic:
Dr. Vikram Mansharamani is a lecturer at Harvard and author of “Boombustology: Spotting Financial Bubbles Before They Burst” as well as the just released “Think for Yourself: Restoring Common Sense in an Age of Experts and Artificial Intelligence.”
In this wide-ranging conversation, he and NLW discuss:
Why our relationship with experts and expertise is leading us astray
How COVID-19 shows the downside of both over-reliance on, and complete rejection of, experts
How the economic crisis surrounding COVID-19 is bursting bubbles and moving us from a period defined by deflation to one defined by inflation
Why “monetary debasement is here to stay”
Why the U.S.-China relationship is the key backdrop for understanding the next 10 years of global economic reality
Why inequality threatens the fabric of our economy and our society, and what might be done about it
Powell says private companies shouldn’t be involved in Central Bank Digital Currencies
According to former NSA head John Bolton, Trump told Mnuchin to go after Bitcoin
Interest around Compound driving speculation around a DeFi-driven bull run
Our main topic:
This week’s U.S. jobless report brought bad news. Whereas economists had expected new claims to fall to 1.29 million from 1.57 million the week before, claims fell just 58,000 to 1.51 million.
Continuing claims fared even worse. Economists predicted these claims would fall 600,000+ to 19.9 million. Instead, they fell a tenth of that - 62,000 - to leave total continuing claims at 20.5 million.
In this episode, NLW breaks down what we can learn from these numbers when they’re combined with the previously released May jobs report.
Mixed signals confusing analysis
Economic pain not (only) a short-term shock
Demand destruction an open question
White-collar jobs may be next
Short-term pain has long-term effects (see: 106 million loans in relief)
There is a relationship between unemployment and the markets
