It was a down week almost across the board this week with fiscal expenditure plans failing to materialise in any concrete form. Orange Juice is back up on Coronavirus fears.
This week saw a resurgence in the Coronavirus in the United States, where it looks like the virus will take a significant hold.
A major contributing cause is something larger than the virus where half of the population is sick of technocratic overreach into their lives and the other half is that technocratic overreach, now holding protests against itself (we are the system, but the system is problematic) and scapegoating the first half for not joining their program (who feel coerced given a lose/lose political proposition and experience it as technocratic overreach).
Each blame the other, neither are fully correct or incorrect and the deep political context of every single aspect of life takes the ability from the other side to make decisive, objective and functional decisions.
With this dysfunction during an emergency, medical treatment became a political issue where a scientific/medical paper published that hydroxychloroquine was not a safe treatment (it is, and the paper was later rejected) because Donald Trump touted it, wearing masks became a political issue (rejecting the control of technocratic decision-makers became a greater necessity than protection from the virus – which was then doubted to even really exist) and in heavily affected New York where technocrats were given full powers to deal with the virus as they saw fit, the New York Governor Cuomo ordered over 4,300 recovering coronavirus patients into nursing homes. Everybody knows that older people make up almost all of the deaths and New York has 24,830 of those deaths. There was nobody in the decision-making process that stopped this from happening – there is nobody with control capable of making obvious decisions in New York.
The conclusion is thus: America was unable to abandon the demands on the enormous amount of money that goes into its political process and accepted the plague instead.
For the 2016 election, CBS News estimated costs of $6.8 billion dollars. Their article on it had the chutzpah to use the following as an opening line.
‘No one ever said democracy was cheap.’
Now obviously there is no democracy when you spent that kind of money. Donors want ROI on a 50/50 proposition where the hurdle of entry is being connected to the decision-making process. They want a multiple of that figure returned to them.
What does that kind of money buy?
What you get are Cambridge Analytica, the involvement of state intelligence services in creating domestic political propaganda, corporate sponsorship into Marxist organisations, closely managed narratives in the popular media and these delivered highly sophisticated, multi-strata campaigns to streamline power into manageable and organised pieces. They are paying for people to write social media posts to create potent political memes, there are deep investigations into decade old twitter posts to be taken out of context to force public displays of compliance by notable people in the streamlining and synthesis of power between social values and political ideology – these show trials are tactical not coincidental.
Even if people are having a hard time identifying specifically what is wrong, they know that something is broken and are withdrawing into what is familiar – even if it spreads plague.
It’s a very dangerous time when the average person is able to see the mechanisms of power operating because it means something is happening that is outside of what that society considers natural and accepted. It is always out of a sense of desperation that power is laid bare.
Although this began in ways that stepped over the line during the Bush Jr. Presidency, social media changed society and culture by creating a feedback mechanism equivalent to accelerationism for these ideas. Ideas are being framed in manipulative ways to construct false-dichotomies and lose/lose propositions. Social and cultural values and changes are being dictated by extremists who naturally encourage accelerationism. Extremists are uncomfortable with the nuance of the middle and gain a sense of control they otherwise lack without believing in a terminal ideological end-point. It’s only a question of whether the one side of extremists, who now enjoy implicit political support at the highest level can successfully raise the other side and keep each other busy while the house burns down.
Although there are efforts being made to use anti-trust rules to dismantle the outsized influence of technology giants on the cultural, social and political landscape in the US, there is little attempt to take away the influence of money on politics and we should expect these trends to gain momentum, we should assume that the coronavirus lockdown has sparked something unsettling in people that they want to resolve through political dichotomies and it may be possible that there is no way to stop it anymore.
That’s the social, cultural and political reality.
With this as a backdrop of the financial system, we do not paint a rosy picture here either. There is an accelerationism of financial intervention that began about 25 years ago.
In 1995, Bill Clinton, his ex Goldman Sachs Banker Treasury Secretary Robert Rubin, Larry Summers and repeat offender Alan Greenspan used $50 billion to solve a problem of $29 billion in bonds issued by Goldman Sachs, Morgan Stanley and Citibank to clients.
The US banks had not done due diligence and the Mexican banks were discovered to have made at least $7.7 billion in ‘highly irregular or plainly illegal’ conduct.
As part of the solution, the Clinton administration used the US Treasury Emergency Stabilisation Fund intended to support the US dollar in an action described as ‘extra-democratic’. The banks reputations were kept intact by using political leverage as opposed to doing their job. Risk as a concept was damaged by the interventionist political action.
From this, to Greenspans ultra-low interest rate that caused the housing bubble, the ‘do what thou wilt’ attitude to banking regulation that created the problem with ABS/MBS and CDO’s, the half a trillion and then trillions of dollars of quantitative easing and now the many trillions involved in the coronavirus response paint a picture that what is happening socially, of accelerationism is also happening financially towards its own terminal result.
The break-down of financial relationships was evident in late 2019 when $500 billion of liquidity was necessary during ‘normal’ operation of the global financial system.
Accelerationism in the political corruption of the financial system meant that $50 billion during a crisis in 1995 lead us into $500 billion injected in normal operating circumstances and $6 trillion in Coronavirus stimulation.
The numbers are getting larger and there is more at risk than ever.
The economy would likely not be shut down on a second wave because it can’t afford to be and the risk that we have been trying to avoid so desperately the last 20 years with these schemes to control everything is set to make a comeback.
Bitcoin has recently been developing a use-case as an institutional hedge to systematic risk, especially as a store of value equivalent to Gold.
Where Bitcoin began as an crypto-anarchists experiment, was given life as currency in libertarian marketplaces, became a speculative asset when realised as a currency and then digital gold afterwards, it gains even greater value in institutional assets.
Adding Bitcoin to a portfolio for its diversification feature, it having low correlation to other assets and as an entry to the world of digital asssets and decentralised finance changes the asset one more time. In institutional portfolio’s, Bitcoin and the philosophy of decentralised finance becomes a hedge against systematic risk and the social, cultural and political reflexivity that threatens the legacy financial system.
The Bitcoin protocol acts as a metaphysical system with inherent stability that cannot be influenced by society, culture or politics. The philosophy of Bitcoin is a higher achievement than what we see outside of it.
Bitcoin / USD on the Daily Chart
Bitcoin has broken below important levels, and is at a critical moment to potential make a move to stop-out bulls in a meaningful way.
Volume has been higher over 3 of the last 4 days, with a record options expiry occurring Friday of last week.
BTC Volatility has dropped off significantly the last couple of days. We think that with the release of the new Bitmain machine the S19 and S19+ Pro that future supply has been brought forward to today through selling call options and that this has lead to the crushing of volatility in options, as well as market structure.
As a result of this new competition, Bitcoin mining had its largest jump in mining difficulty in 29 months about 12 days ago.
Not much has changed on the sentiment front, with room for a price decline in the sentiment reading.
Our dominance chart shows Bitcoin moving through its up-trend. Most of this indicative information in Bitcoin make it look like it is ready for a significant move the next week.
With a growing acceptance for future systematic instability, Gold has enjoyed a bid the last week, respecting the up-ward trend-channel we framed it with a month or so back.
Gold looks determined to at least visit the $1800 level, but having appreciated upto 25% in 2019 does not need to do anything too dramatic once it gets there.
The strength of Gold may put fear into the rest of markets over time as a measure of sentiment of systematic risk.
US Dollar Index
The US Dollar Index has bounced off a strong base this week and looks good to continue reversing its trend.