Posts by Marc Nonnenkamp

Financial, Economic and Social Mood Update (December 1, 2020) If the stock, bond and real property markets no longer reflect reality and the value of fiat currency is rapidly diminishing to zero purchasing power, what can risk-averse people do to partake in the expanding market of digital electronic encrypted currencies (i.e. cryptocurrencies)?  The simplest  and lowest risk plan would be to purchase cryptocurrencies tied to 1) an existing fiat currency and 2) real physical assets.  Concrete examples thereof are the DAI Dai Stablecoin (tied closely to the US Dollar) and Paxos Gold PAXG (tied only to the price of physical gold bullion stored in vaults).  USDT Tether is tied specifically to the US Dollar – if you want to be tied to a different fiat currency, then you should search for it.  For example, XCHF CryptoFranc is tied to the Swiss Franc, BITCNY is tied to the Chinese Yuan, BKRW Binance KRW is tied to the South Korean Won, and EBASE is tied to a combination of the Euro & Bitcoin.  The next candidate, although more volatile than the previously mentioned cryptocurrencies, would have to be Bitcoin BTC (or a Bitcoin-based fund such as the Grayscale Bitcoin Investment Trust = GBTC) simply due to the fact that Bitcoin & the hundred largest cryptocurrencies comprise 98 percent of global cryptocurrency market capitalization.  Currencies directly descended from Bitcoin (such as Bitcoin Cash BCH) also fit this requirement.  Cryptocurrencies can be purchased, owned and stored on exchanges such as Gemini, Kraken or even PayPal.  You can find the largest cryptocurrencies and the largest cryptocurrency exchanges on a site such as www.coinmarketcap.com.  These exchanges tie directly to commercial bank accounts denominated in major national fiat currencies and are themselves legally registered as commercial banks. The daily trading volume for all cryptocurrencies as of November…

Financial, Economic and Social Mood Update (November 1, 2020) Real US GDP has now fallen as low as USD $5 TRILLION per year according to economist Larry Summers (75 percent less than before the pandemic began).  The Federal Government budget eats up all of this – sad proof that none of the real US economy still survives.  Annual deficit spending has reached USD $4.235 TRILLION, which equals an actual annual inflation rate of 85 percent………….the loss in purchasing power of the US Dollar (the 44th highest rate of annual currency inflation in world history).  75 percent of the American population will experience a drop in nominal income (thus an even bigger drop in real income) this month due to the expiration of stimulus, relief and other welfare programs.  Once again – “printing” or creating more worthless currency is never a good long term policy.  No economy will ever recover unless its people return to work, and no economy will ever create new jobs unless small “mom and pop” businesses survive and thrive.  Government (public sector), nonprofit organizations and large companies have never created net new jobs in any economy in the history of the world.  The report of a “record” 33 percent increase in US GDP in the 3rd quarter of 2020 (which would take the USA “back” to USD $6.65 TRILLION) is meaningless in that this is still within the realm of the federal government creating yet more money out of thin air………………..this is federal government “pumping” in the form of government contracts and “grants” to state and local governments across the USA. PayPal (spun off from E-Bay) will allow its vendors and customers to buy, sell, store and pay in major cryptocurrencies before the end of 2020 – specifically with Bitcoin, Etherium, Bitcoin Cash and Litecoin.  PayPal has…

Financial, Economic and Social Mood Update (October 1, 2020) Bitcoin has increased in value by an average 88.31 percent per year since July 2017.  Such “digital electronic encrypted currencies” are already in the process of replacing government-issued paper & physical “fiat currencies.”  Cryptocurrency exchanges (high technology companies legally chartered as banks) are already in the process of replacing commercial & investment banks.  The AI (“Artificial Intelligence”) high technology behind the cryptocurrency blockchain (a digital leger of transactions which cannot be altered) is already in the process of putting entire industries out of business.  Examples of this include ride-sharing companies such as Uber and Lyft putting taxicab companies out of business, and cryptocurrency exchanges putting commercial & investment banks out of business.  Other businesses soon to be eliminated include real estate companies and truck driving transportation companies.  Soon to be released real estate apps will unite far more potential buyers & sellers locally, regionally, nationally and even internationally.  Real estate will thus be far easier to liquidate and transaction costs will drop significantly.  Autonomous driving (driverless driving) will eventually eliminate the jobs of truck drivers.  How significant is this?  VERY – for example, the occupation of “truck driver” is the most common type of job still existing today. Bitcoin was launched as the very first digital electronic crypto-currency in April 2010.  The first Bitcoin investment fund was launched back on May 11, 2015.  Since that time, the fund has gained an average 751.45 percent per annum.  One US Dollar invested into Bitcoin at the beginning in April 2010 is worth almost USD $4 million today on the primary market – in other words, per the price quoted in the news, and based upon what one would pay at a crypto exchange chartered as a commercial bank or trust company (such as…

Financial, Economic and Social Mood Update (September 1, 2020) The stock market is at or near record all time nominal high values, which in no way reflects the reality of our world.  In any case, the nominal value of our “fiat” paper money is falling through the floor (see my commentary related to the rise of crypto-currencies toward the end of this month’s blog). The world economy has undergone an absolutely tremendous change since the global pandemic hit in late 2019.  The pandemic surfaced in China at the end of November 2019 and it reached most of the rest of world by February or March of 2020.  Much of the global economy was forcibly shut down, leading to the demise of many industry sectors, businesses and to the collapse of gainful employment.  Mainland China was quick to curtail the spread of the pandemic domestically, but unfortunately most other countries have been nowhere near as disciplined or successful in doing likewise.  For example, China has the 12th lowest per capita rate of infection among 285 countries & territories whereas the USA (which was far too slow to accept the gravity of the pandemic) has the highest absolute number of cases, the highest absolute number of fatalities and the 7th highest global per capita rate of infection with Covid-19.  One out of every 11 people in the world have been tested for Covid-19 thus far – usually people who have shown symptoms, and people in professions where they are at much higher risk due to coming into contact with many other people.  The largely worldwide martial law measures of quarantine, lock-down, social distancing and face masks show no sign of abating.  These measures have crippled most of the global economy, ruined most small businesses, led to epidemics of psychological depression & suicide,…

Financial, Economic and Social Mood Update (August 1, 2020) The stock market indices continue to remain near record high nominal values despite the fact of very few companies remaining profitable and GDP down by as much as 55 percent as of June 5th (per the Atlanta Federal Reserve Bank).  When reality sets in, expect both the equity and real estate markets to drop to near zero.  30 percent of Americans failed to pay their monthly mortgage debt in June – which now exceeds the percentage of the US labor force laid off since the start of the pandemic (54 million Americans already having filed for first time unemployment benefits = 32 percent of the 167 million people in the US labor force at the start of the pandemic).  According to a study by the University of California at Santa Cruz, up to 66 percent of businesses in the USA have shut down permanently since February 2020.  80 percent of Americans are now paying only part or none of their monthly debt servicing obligations according to the NSA (National Security Agency).  60 percent of all restaurants in the USA have shut permanently since March 2020 according to a survey done by www.yelp.com. The largest pension fund on earth is the Japanese government pension fund, and it lost 11 percent of its value in the first quarter of 2020.  Pensions worldwide (regardless of country) are in a similar predicament.  Remember that most equity funds consistently UNDERPEFORM the general stock market indices – this has been the case for decades – so much for “professional” management.  The German auto market was off by 35 percent in June 2020, but the Chinese auto market (the largest market on earth) has seen record sales for the past 2 months and is now selling new vehicles…

Financial, Economic and Social Mood Update (July 1, 2020) The subject of this month’s update is the apparent fall of the “American empire.”  America has likely never been as dysfunctional as it is today, which is represented by its utter lack of leadership on the national level.  Whatever the outcome of its national election in November 2020, America needs to rejoin the global community of nations in a fully functional manner and the world as a whole needs to work together, to cooperate, to make this world work and function much better and much more fairly & morally for all of its inhabitants, be they human or otherwise.  According to one of the regional Federal Reserve Banks, US GDP (Gross Domestic Product) has collapsed by 52 percent since the Covid 19 pandemic began – significantly worse than during the Great Depression of 1929-1941.  And the Federal Reserve is now bailing out more companies than banks, insurers, automakers – incredibly, they are now pumping money into the likes of AT&T, Walmart, Apple Computer and even the distiller Jack Daniel’s.  If even Walmart and Apple need to be bailed out, America is doomed. Official job losses equal 45 million (27 percent of the labor force).  When one includes those partially furloughed or with pay cuts, this jumps to almost 100 million people.  31 percent of Americans have stopped paying or are now behind on their bills, health insurance and debt payments.  47 percent of small businesses in the USA anticipate closing PERMANENTLY (from a survey taken by Alzo, a financial services company) – this includes 85 percent of independently owned restaurants.  As small businesses in the USA still employ 58.9 million people today (after the loss of 43 million jobs due to the pandemic) this would add yet another 27,683,000 Americans to…

Financial, Economic and Social Mood Update (June 1, 2020) This month’s update will try to make some sense of all the turmoil taking place today.  I have often written about a very widespread global demographic collapse.  The pandemic did not cause this, but it is adding to it.  Furthermore, any pandemic is yet another manifestation of negative social mood – people are not at ease, and therefore their health suffers.  Many countries have actually done a good job of containing the pandemic.  The USA has not (it is among the most infected on a per capita basis) and on top of this problem it now faces violent protests and riots in over 140 of its cities from coast to coast – evidence of a profound societal dysfunction………..the society has simply ceased to function.  The stock market is utterly disconnected from this morbid reality, but as we shall see, nominal “money” in the USA has little or no real value left. In any case, it looks like global population has been declining in the recent past and that it will continue to decline in the foreseeable future.  One very interesting site which quantifies this in clear terms is “Deagle.”  Deagle is a site dedicated mainly to update us on global military weapons system, be they for land forces, naval forces or air forces.  One of their internal links has very detailed data for global population, GDP (Gross Domestic Product), annual military budgets and per capita GDP in terms of PPP (Purchasing Power Parity).  The first set of figures is actual data for 209 countries in 2017, the second set of figures is for 183 countries forecast for 2025, or a mere 4 years from today: http://www.deagel.com/country/forecast.aspx. Their global population forecast for 2025 is 6,827,253,938 – or what it was a decade…