Long Reads Sunday #87

A new narrative emerges as money printer goes BRRR

Mar 22, 2020

And just like that, a narrative emerged.

After weeks of correlation with the broader market selloff pummeled bitcoin’s “uncorrelated” and “safe haven” asset narratives, the money printers of central banks around the world started to rev.

Jack Purdy @jpurd17

Fed working on financing program to inject $4 trillion in liquidity Crypto twitter:

Happy Long Reads - NLW

Buybacks Become The Boogeyman

On Sunday, the Fed cut interest rates to 0%. In a press conference at the beginning of the week, President Trump declared that the administration wanted to “go big” on stimulus.

The question has been what form that stimulus will take. Broadly speaking, two things are being debated simultaneously: support for regular citizens and support for businesses.

The debate around citizen support has smashed open the Overton window on UBI. Part of the reason, I think, is that having watched the political response from the 2008 crisis’ bailout of the ‘too big to fail’ institutions, politicians of all colors know that they can’t get away with corporate bailouts (which most all politicians view as necessary) without also doing something for individuals as well.

Even though specifics are being debated, one thing that’s clear is that the particular fury and fire around corporate bailouts this time is going to be centered on buybacks.

Mark W. Yusko @MarkYusko

#CorporateTheft #Kleptocracy Wait, when did airlines start buying shares? After Buffett bought airlines...? The same guy who said for decades that he would never own an airline stock... 🤔A

Danielle DiMartino Booth @DiMartinoBooth

Even as airline stocks halted for trading, we have to stomach this ⁦@markets⁩ headline “The biggest U.S. airlines spent 96% of free cash flow last decade buying back their own shares” Kind of gets under your skin given the magnitude of coming bailout. ht ⁦@pboockvar⁩ https://t.co/QJOcfLgW7k

Nassim Nicholas Taleb @nntaleb

Explain to me why we should spent taxpayer money to bailout companies (airlines) who spent their cash buying their own stock so the CEO gets optionality, instead of having a crisis buffer. We should bail out individuals based on needs, not corporations. #Moralhazard

Ben Hunt @EpsilonTheory

I’m angry that I have to write about the airline industry bail-out. But the raccoons are looking to get their losses socialized and their gains locked in. Bailout the airlines and rank-and-file employees? You bet. Bailout Buffett and the CEOs? No way.

epsilontheory.comDo The Right Thing | Epsilon TheoryI’m angry that I have to write this note about the airline industry and how to structure the bail-out of United, Delta, American and Southwest. But I must, because the raccoons and the high-functioning sociopaths are looking to get their private losses socialized and their private gains locked in. …

Money Printer Go BRR

As I alluded to above, the combination of 1) bitcoin’s price leveling out and even going up throughout the week even as traditional markets continue to get pummeled; plus 2) the looming specter of trillions of dollars of monetary injections around the world have started to shape a new narrative around where bitcoin fits in the world that comes next.

Nathaniel Whittemore @nlw

I gotta say, not many better ways to make the point as #Bitcoin going through its halving right as the world's fiat currencies go through a doubling.

This has actually been a significant focus of discussion on The Breakdown podcast for the past few weeks. Check out this episode with Preston Pysh which has become easily my most downloaded ever.

Nathaniel Whittemore @nlw

MAR 13: "Imagine if you have a nation step in and buy $40B worth of #bitcoin" A health crisis? A financial crisis? An economic crisis? What about a currency crisis? @PrestonPysh joined to discuss what happens when currencies fail plnk.to/nlw/e/10004683…

I also recommend this essay by Allen Farrington on why this isn’t capitalism

Allen Farrington @allenf32

This is your brain on central banking, regulatory capture, and financialization. This is not capitalism. thanks to @nic__carter, @NickSzabo4, @aantonop, @ole_b_peters, @saifedean, @prestonjbyrne, @EpsilonTheory, and @parkeralewis.

medium.comThis Is Not CapitalismThis is your brain on central banking, regulatory capture, and financialization.

Also check out this thread from Pomp on looming issues around the strength of the US dollar.

Pomp 🌪 @APompliano

4/ When the dollar strengthens, the asset prices of equities/commodities/etc all goes down. This is what we are seeing in the market today. In order to stabilize asset prices, the dollar has to be weakened. @DTAPCAP has been all over this. You should follow him to learn more

As he mentions, this is something Dan Tapiero has been discussing quite a bit, including on The Breakdown on Tuesday.

Nathaniel Whittemore @nlw

MAR 17: #Bitcoin is the only truly free trading market." @DTAPCAP discusses policy over reactions, why dollar strength is a major problem, and why the fact that bitcoin never shuts down makes it stand out as different. plnk.to/nlw/e/10004687…

New Narrative But What Outcomes?

Even as bitcoin consolidates around the narrative contrast between its fixed supply and upcoming halving as compared to massive fiat printing right around the corner, there is still a question of how it will perform as an asset in the short-term.

Alex Krüger @krugermacro

1-2 month views: -Equities lower -Equity volatility lower -Bitcoin lower (assuming remains risk-on) -Crude oil lower 6 months views: -Equities higher -Equity volatility lower -Gold higher 12 months views: -Equities higher -Equity volatility lower -Gold higher -Bitcoin higher

Chris Burniske @cburniske

1/ $BTC' recent strength has caught eyes, and it's true the undercurrents of what's happening play to #Bitcoin and #crypto's long-term favor.

lawson : baker @lwsnbaker

If there was ever a second moment for #Bitcoin after 2008-2009, now is the time. Here is why 👇

Creeping Authoritarianism

Another new narrative coming into the conversation has to do with the rapid expansion of state power we’re seeing. The TL;DR for my take on this is that it’s not mutually exclusive to think that in times of crisis, the state does need to be able to respond to the full scale of the challenge, while also believing that there are lines that shouldn’t be crossed as well as fighting to ensure that wartime powers don’t become permanent. This is immensely difficult to do.

Balaji Srinivasan spotted this months ago

Balaji S. Srinivasan @balajis

Sometimes a solution creates the next problem. My rough forecast of the future: the coronavirus results in quarantines, nationalism, centralization. And this may actually work to stop the spread. But once under control, states will not cede their powers. So, we decentralize.

Others are seeing it around them

MIR @mir_btc

Ready... steady... Go, mass surveillance! "Facebook, Google talk sharing phone data with government to fight coronavirus"

cnb.cxFacebook, Google discuss sharing smartphone data with government to fight coronavirus, but there are risksThe government is in talks with Facebook, Google and other tech giants about sharing location data from smartphones to combat coronavirus. The news has some people concerned about data privacy.

hodlonaut🌮⚡🔑 @hodlonaut

Norway's second biggest city to implement system that: - continuously monitors people's location via phone data - if "too many" are located within a "defined area", you get an sms message to your phone telling you to disperse Hard to believe shit like this is happening here..

Others are nervously watching the requests for new power

Marty Bent @MartyBent

Crises are seen as opportunities by sociopaths who want to tighten the grip of their control over you.

tftc.ioKeep your guard upThis is why we Bitcoin. It allows us to walk away and starve the evil State.

Eric Weinstein @EricRWeinstein

This is very confusing. Also, exactly what I predicted. Okay. Spell it out: why would we ever just give up our civil liberties to the very same people who failed to prepare our emergency infrastructure? Shouldn’t we get new capable untainted people before even discussing this?

Tim Mak @timkmak

ALERT: "The Justice Department has quietly asked Congress for the ability to ask chief judges to detain people indefinitely without trial during emergencies — part of a push for new powers that comes as the coronavirus spreads through the United States." https://t.co/LDhEIJtbH1

Ben Hunt @EpsilonTheory

Ummm ... WTAF? would apply to “any statutes or rules of procedure otherwise affecting pre-arrest, post-arrest, pre-trial, trial, and post-trial procedures in criminal and juvenile proceedings and all civil process and proceedings” PRE-arrest?

politico.comDOJ seeks new emergency powers amid coronavirus pandemicOne of the requests to Congress would allow the department to petition a judge to indefinitely detain someone during an emergency.

Bully put it crisply, as usual.

฿ully @BullyEsq

Congress can shove their anti-encryption bill straight up their ass, crisis or otherwise

The Foreign Affairs Problem

One challenge of this crisis is that it is simultaneously a health crisis, a financial markets crisis and a large scale economic crisis. Add to that mix a political and foreign affairs crisis that we’ve barely begun to acknowledge.

Balaji S. Srinivasan @balajis

Meanwhile... 1) The EU has de facto broken up 2) India, Taiwan, Estonia, even Guatemala have banned visitors, including Americans 3) The left in general has dropped opposition to strict border controls 4) The right in general has dropped opposition to enormous welfare spending

This is something I’ll be returning to in the weeks to come, but for know, I highly suggest following Peter Zeihan. Start with this essay “The Geopolitics of American Fear.”

Peter Zeihan @PeterZeihan

The current Corona crisis is being felt across the world, but beyond the very real human impact and disruption lies a bigger change: the eventual American response.

bit.lyThe Geopolitics of American Fear

On The Breakdown this week:

Thanks for reading and stay safe out there!

Long Reads Sunday by @nlw

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