POITOU, FRANCE – First, let us begin with an echo from last week…

“Hey, Dad, bitcoin went over $4,000 yesterday. An all-time high. I made another $20,000. Not bad.”

Pride goeth before a fall, of course. Profits go before losses. And marriage front-runs marriage counseling.

We have faith in ourselves, our institutions, and our gods. Until we file for divorce.

As we noted last week, cryptocurrencies such as bitcoin are still in the experimental stage.

They may become the coin of the realm. We may one day worship them as we revere other forms of mammon today. Or maybe not. We wait to find out along with everyone else.

If bitcoin or one of its rivals turns out to be the 21st-century wampum that proponents suggest, early adopters could become very rich. If they don’t perform as expected, on the other hand, late arrivals will lose money.

Myth and Mystery

Meanwhile, we spent the weekend in mud. We laid clay tile – recycled from another old building – in our “chapel.”

Clay tile from Bill’s “chapel”

And we raised the level of a chimney hearth in the gatehouse.

Bill does some masonry work over the weekend

These weekend projects are a source of great satisfaction. The reason is simple: There’s something to show for it. Something real. Something solid.

Monday through Friday is spent in myth, mystery, and misconception. Fed policy. Democracy. Market trends. Taxes. GDP. Declining marginal utility. The invisible hand. The news. The opinions. Trump. Forecasts and false gods. Lies and confusion… vanity and delusion… including things everyone knows to be “true.”

If we had a stroke, it would disappear. But our new fireplace hearth would still be there.

In ancient Egypt, people believed Pharaoh was a god. Then, when Cleopatra put an asp to her chest on August 12, 30 BC, it was all over.

Cleopatra claimed her son Ptolemy XV, nicknamed Caesarion, was the fruit of her union with Julius Caesar.

After only 11 days as pharaoh, Octavian – Julius Caesar’s adopted son and heir – had Ptolemy XV executed to make sure the Ptolemaic line was extinguished.

Ancient Gods

Gods give good service. Often for centuries… or even millennia.

In Egypt, dynasties came and went. But Anubis, Egyptian god of the dead, lived for 3,000 years.

And what happened to Athena, Artemis, Demeter, and Dionysus? They went to join their Egyptian brethren – Amun, Amunet, Anhur, and Anput.

By the first century, the heavens were already full of dead gods.

There were the Assyrians – Adad, Ashur, and Bel… cavorting wickedly with the Babylonians – Marduk, Anu, Apsu, and Enlil. And there were the old Chaldeans – Nisroch, Ea, Sin, and Shamash… rollicking with the Canaanite deities – Astarte, Attar, Asherah, and Anat.

In the corners, the goddesses of love – Qetesh, Cliodhna, and Turan ­– flirted shamelessly with the gods of fertility – Himeros, Min, and the phallic god Freyr – while the others averted their eyes.

The Hittites had their gods – Hannahannah, Hapantali, and the daughter of the sea Hatepuna. The Celts had their pantheon, too – with Belenus, Borvo, and the god of the winds Borrum.

Somewhere in the bleak, empty spaces of heaven, the gods of war must battle it out, too. From the Semites’ bloody sword swinger, Agasaya, to Zroya, the old Slavonic warrior, we counted 104 gods of slaughter and strategy on a list at the website Thought Catalog.

Every one of them had been slain or forgotten.

Pre-Columbian civilizations of South America alone account for dozens of them, and probably hundreds more who never made it onto the list. Those still alive when the Spanish arrived were soon put to the sword, along with thousands of their flesh-and-blood believers.

The parking lot in heaven must have really filled up with the arrival of so many so fast – Ekeko, Inti, Kuka Mama, Mama Cocha, Illapa, Chasca, Mama Quilla, Pachacamac, Pariacaca, Supay, Viracocha, and the god of rain Kon.

And those were just the Incas.

In came the Aztecs, too. And straggler gods from the Maya, Olmec, Cahokian, Nascan, Zapotec, Toltec, Mixtec, Mazatec, Izapa, Moche… and many more defunct cultures.

We bow to our gods. But we bend to our bricks.

Regards,

Signature

Bill

 

Market Insight: Is Bitcoin the New Tulip Mania?


BY CHRIS LOWE, EDITOR AT LARGE, Bonner & partners


bill bonner

“More like tulip bulbs than real money (and at least you can plant tulip bulbs).”

That was colleague and cryptocurrency skeptic Chris Mayer in a recent email to Bill about what’s going on in the crypto space right now.

Chris was referring to the tulip bubble that gripped the Netherlands in the 17th century.

At the peak of the bubble, in March 1637, tulip bulbs were selling for more than 10 times the annual income of a skilled craft worker.

Then, when tulip traders could no longer find any wealthy buyers, the price of tulip bulbs collapsed – ruining those who had bought in at the top of the bubble.

Could the same kind of mania now be gripping cryptocurrency buyers?

Today’s chart suggests that the crypto market is extremely frothy.

As you can see, since the start of the month, bitcoin – the world’s most valuable cryptocurrency by market cap – has shot up 59% to an all-time high of $4,320.

The problem is that it shot up in more or less a straight line. And as the old-timers say, “Nothing goes straight up forever.”

Chris Lowe

P.S. If you think bitcoin’s gotten too expensive, remember that it’s not the only cryptocurrency out there. My colleague and cryptocurrency expert Teeka Tiwari recently identified another crypto that costs a fraction of the price of bitcoin with even more upside. You can see Teeka’s favorite “ground floor” alternative to bitcoin right here.

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Mailbag

In today’s mailbag, the debate over cryptocurrencies continues…

I recently saw this headline: “Bitcoin Value Surge Sign of Criminal Activity.” This headline is akin to prior headlines like “Weapons of Mass Destruction.” They are useful in focusing the ire of the self-righteous, the American public, and the truly frightened. Although some criminal activity is inherent in all human activity, the fact is that the masses are waking up to the possibility of cryptos being the first honest form of money (beyond gold). This is the motivating force behind the value proposition of cryptos. We contend that the dark element of commerce made possible via cryptos is an evil worth suffering. Major financial institutions are witnessing the centralized trust basis of their business model crumble.

Big foundational change is afoot; alas, most of your readers are missing the critical value proposition that cryptos bring to the table. Every single fiat currency that has existed in all human history has been subverted and inflated into extinction. The current population of global currencies can stake no better claim to immortality than any of the 3,000 or so currencies that have preceded them. They too will succumb to the siren song of the printing press that all politicians ultimately succumb to.

And the value proposition of cryptocurrencies is simply this: Cryptos are finally a form of money that cannot be subverted by politicos. Some cryptos are inflationary and some are deflationary.

We are now witnesses to the evolution of money on planet Earth. Great change is coming; fasten your seatbelt.

– James P.

I’m often amused as I read your daily word ramblings, and indeed I silently cheer, as you bring up the benefit of win-win choices. First you seem to champion win-win, and investing in quality products that you have adequately researched so that you have at least a passing understanding. Then, we read about cryptos that let us “get rich quick.”

I guess I will never be rich. I do not invest in ethereal things that I do not understand, and often base my decisions on investing in companies producing products that I feel are legitimate. Even better, if they are produced by someone in my nation, then I feel I am doing my bit to help keep my neighbors working, and thus keeping the economy strong.

– Bill P.

When a person is hungry and food is not available, something to eat is more valuable than paper currency, bitcoin, or gold. When a person is thirsty and nothing is available to drink, any drinkable liquid is more valuable than any type of money. Circumstances best dictate what commodity has true value and not hype!

– Leonard H.

I read your article on cryptocurrencies and [Palm Beach Letter editor] Teeka Tiwari mentioned that bitcoin miners make the whole operation go. Without them it can’t work. They crunch the numbers because they get paid in bitcoin. But as you said yourself, bitcoin is limited in quantity. What happens when there is no more bitcoin to mine?

– Mike L.

Exchanging dollars for bitcoin is like trading ice cream for ice. They will both melt and leave no value. They’re only as good as the temperature of the times.

– Doug M.

You might inform your son on something I would suppose he already knows being your son. The value of these things is determined “at the margin.” That is to say there isn’t $54 billion out there ready to exchange for bitcoin or some other cryptocurrency. They aren’t dollars until you sell them, and when you do, if you’re a citizen, your government is entitled to a portion of the profits according to that government’s laws.

When people convert their bitcoin to dollars to pay for things, taxes become due and government’s going to get all the bitcoin it wants, or at least the value thereof. I agree it’s a mania. A mania driven by false, unbacked money we call fiat currencies. There undoubtedly is a fair value for these instruments but where that value falls… who can say?

– Mike R.

Two glaring fallacies in crypto “currencies,” first temptation to manipulate grows exponentially as value increases, such that you can bet the ranch and then some that crypto hackers including hordes of them in North Korea, China, Russia, and Iran will find ways to replicate bitcoin.

Second, the alleged “limit” of 21 million bitcoins is pure fallacy. Please define “one” bitcoin. I doubt you can without relying on the dollar or any other digital currency sponsored by nations. Therefore, “one” bitcoin can be sliced and diced into gazillions of mini bits. Sure, you can ride the wave for now but this all ends badly… very badly for those who get in not long before the eventual wipeout.

– John M.