Normal
It has happened before that the industrial blue-chip index (Dow) diverged dramatically from the tech index (NASDAQ). Things typically do not end well when this happens.Here is where we are today. The Dow Jones is being hit with massive selling pressure, producing a long string of trading days with lower highs, low lows and lower closes. Meanwhile, the NASDAQ is thrusting into new ATHs.[ATTACH=full]189744[/ATTACH]Here is where things stood just before the mortgage debacle and a 50%-plus decline in the major indexes in 2008. The DJIA topped in Oct 2007 and started down. NASDAQ rallied into a Nov 2007 top. This did not end well as the S&P Index lost 50% of its value.[ATTACH=full]189745[/ATTACH]The same thing happened before the internet stock debacle of 2000. The Dow peaked in Feb 2000 while the NASDAQ rallied into one more final high in Mar 2000. Things then did not end well.[ATTACH=full]189746[/ATTACH]NASDAQ then proceeded to lose 84% of its value in a bear market that ended at the Oct 2002 low.[ATTACH=full]189747[/ATTACH]History does not always repeat, but it often rhymes.[ATTACH=full]189743[/ATTACH][ATTACH=full]189742[/ATTACH][ATTACH=full]189741[/ATTACH][ATTACH=full]189740[/ATTACH][ATTACH=full]189739[/ATTACH][ATTACH=full]189738[/ATTACH][ATTACH=full]189737[/ATTACH]Some further thoughts on btc as a reserve asset.A neutral reserve asset means that sovereign nations cannot control the exchange value of that asset. They have to cede control to market forces.Originally gold served this purpose. The US made inroads when the GBP and USD were both 'as good as gold' and were used interchangeably with gold. Then just the USD. This all ended in 1971 with Nixon.The point being: btc if monetised as a reserve asset (and accepted by BRICS) would no longer leave the US in its current position of currency and reserve asset hegemony (not that that is the case currently anyway).BRICS and Central Banks have already re-monetised gold. The control is with BRICS as they are the manufacturing base and supply a significant percentage of commodities.The US can 'say' btc is a reserve asset, but it is only so if the BRICS agree.Trump et al are more interested in whether TETHER will expand its balance sheet to buy UST than really thinking through the issues if they try to monetise btc.If btc were monetised as a reserve asset, would the price continue to rise?It would depend on the debasement of various currencies as against btc. But the 'speculative' rush higher would end. Currently there is almost a religious fervour in 'hodle', which, in a limited issue and speculative fever, drives the marginal price higher. When institutions join and fuel that fever, we get what we have. This always ends.A further key to continued price appreciation is the ability to continue the ability to monetise btc held, not by selling, but by borrowing against it. This is the MSFT strategy that is being copied by (increasingly) others. This obviously increases the leverage in the system. High leverage with high volatility is not a great mix.We are approaching the 'Santa Rally' period.Next year when Trump takes over and Elon is let loose:The problem with DOGE is NOT that there is not a lot of waste & even fraud in US govt spending.The problem is govt waste & fraud adds to GDP in our system, just like fraudulent subprime mortgage & housing activity added to GDP 2003-07.All we need to do to drop the deficit by >$1T next year is cut rates back to 0% & issue 100% of the debt in 3m T-Bills, bought by Fed if needed. Yes inflation and asset prices will surge, but so will receipts; US deficit will be close to a surplus by this time in 2026.If DOGE is not going to cut Medicare benefits or Social Security then there are only two things big enough to cut to get to even $1T of cuts (let alone $2T of cuts): defence or Interest Expense (sharp rate cuts).Borrowing $30T since 2001 to pursue galactically stupid foreign, economic, trade and domestic policies leaves only the options of productivity miracle, significant inflation to devalue the debt, or default.There is a refinancing wall of $7 Trillion in 2025. Unless this is re-financed at close to 0% the interest payments will balloon further and faster, putting US solvency front and centre.jog onduc
It has happened before that the industrial blue-chip index (Dow) diverged dramatically from the tech index (NASDAQ). Things typically do not end well when this happens.
Here is where we are today. The Dow Jones is being hit with massive selling pressure, producing a long string of trading days with lower highs, low lows and lower closes. Meanwhile, the NASDAQ is thrusting into new ATHs.
[ATTACH=full]189744[/ATTACH]
Here is where things stood just before the mortgage debacle and a 50%-plus decline in the major indexes in 2008. The DJIA topped in Oct 2007 and started down. NASDAQ rallied into a Nov 2007 top. This did not end well as the S&P Index lost 50% of its value.
[ATTACH=full]189745[/ATTACH]
The same thing happened before the internet stock debacle of 2000. The Dow peaked in Feb 2000 while the NASDAQ rallied into one more final high in Mar 2000. Things then did not end well.
[ATTACH=full]189746[/ATTACH]
NASDAQ then proceeded to lose 84% of its value in a bear market that ended at the Oct 2002 low.
[ATTACH=full]189747[/ATTACH]
History does not always repeat, but it often rhymes.
[ATTACH=full]189743[/ATTACH][ATTACH=full]189742[/ATTACH][ATTACH=full]189741[/ATTACH][ATTACH=full]189740[/ATTACH][ATTACH=full]189739[/ATTACH][ATTACH=full]189738[/ATTACH][ATTACH=full]189737[/ATTACH]
Some further thoughts on btc as a reserve asset.
A neutral reserve asset means that sovereign nations cannot control the exchange value of that asset. They have to cede control to market forces.
Originally gold served this purpose. The US made inroads when the GBP and USD were both 'as good as gold' and were used interchangeably with gold. Then just the USD. This all ended in 1971 with Nixon.
The point being: btc if monetised as a reserve asset (and accepted by BRICS) would no longer leave the US in its current position of currency and reserve asset hegemony (not that that is the case currently anyway).
BRICS and Central Banks have already re-monetised gold. The control is with BRICS as they are the manufacturing base and supply a significant percentage of commodities.
The US can 'say' btc is a reserve asset, but it is only so if the BRICS agree.
Trump et al are more interested in whether TETHER will expand its balance sheet to buy UST than really thinking through the issues if they try to monetise btc.
If btc were monetised as a reserve asset, would the price continue to rise?
It would depend on the debasement of various currencies as against btc. But the 'speculative' rush higher would end. Currently there is almost a religious fervour in 'hodle', which, in a limited issue and speculative fever, drives the marginal price higher. When institutions join and fuel that fever, we get what we have. This always ends.
A further key to continued price appreciation is the ability to continue the ability to monetise btc held, not by selling, but by borrowing against it. This is the MSFT strategy that is being copied by (increasingly) others. This obviously increases the leverage in the system. High leverage with high volatility is not a great mix.
We are approaching the 'Santa Rally' period.
Next year when Trump takes over and Elon is let loose:
The problem with DOGE is NOT that there is not a lot of waste & even fraud in US govt spending.
The problem is govt waste & fraud adds to GDP in our system, just like fraudulent subprime mortgage & housing activity added to GDP 2003-07.
All we need to do to drop the deficit by >$1T next year is cut rates back to 0% & issue 100% of the debt in 3m T-Bills, bought by Fed if needed. Yes inflation and asset prices will surge, but so will receipts; US deficit will be close to a surplus by this time in 2026.
If DOGE is not going to cut Medicare benefits or Social Security then there are only two things big enough to cut to get to even $1T of cuts (let alone $2T of cuts): defence or Interest Expense (sharp rate cuts).
Borrowing $30T since 2001 to pursue galactically stupid foreign, economic, trade and domestic policies leaves only the options of productivity miracle, significant inflation to devalue the debt, or default.
There is a refinancing wall of $7 Trillion in 2025. Unless this is re-financed at close to 0% the interest payments will balloon further and faster, putting US solvency front and centre.
jog on
duc
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