Seemingly overnight, the world is beyond me. Bitcoin, which to me is an “asset” based on nothing but peoples’ belief in it, is soaring to new high values. Some companies are adding it to their balance sheet. The oldest bank in America will now hold, transfer and issue Bitcoin on behalf of its asset management clients.
Jim Cramer of CNBC, whose opinion I respect, owns some Bitcoin and thinks companies should do the same. He believes it’s a hedge against the activities of central banks. It is true that in the last year the M2 measure of the US money supply has increased by $4 trillion. Obviously, this monetary policy has been in response to the effects of the damn virus. Incredibly though, more than 20% of all U.S. broad money now in circulation was created during the last year. (Thanks to Rick Rieder and his group at Blackrock for that data.) I think that Bitcoin is too volatile to be a currency, an investment or anything else, but maybe the world is way beyond me.
Vehicle manufacturers are proceeding rapidly to an all-electric portfolio in the next 10 to 15 years, even though very few people actually buy electric vehicles today. (The best estimates are that electric vehicles account for only 2%-3% of sales at present.) The cynical part of me thinks part of the motivation, particularly for Ford and GM, is they want the price of their stock to grow like that of Tesla.
I am very aware that many changes are unforeseen and of huge magnitude. Something about all of this is still quite unsettling to me.
I am appalled by the seemingly exponential growth in what I call the “Ignorant Me Me” population, which I think is fueled by “social media.” It is frightening to me how many people have zero regard or respect for anyone else. It is mind boggling that so many people listen to politicians, to actors, to athletes instead of listening to scientists. I don’t think science is perfect–it is an endeavor of imperfect people, after all–but the vast majority of scientists are just trying to understand some part of the universe better, not trying to get you to vote for them or watch their movies/TV shows.
I guess I’ve had my say, for now. I would like to read your thoughts. I’m not really going to throw in the towel, but at times I really want to.
This Corvette Blogger article has some relevance to today’s post. Unlike some who have predicted the C8 will be the last ICE Corvette, Dave Cruikshank offers his informed opinion that “the C9 Corvette will be to the C8 as the C6 was to the C5.” Cruikshank does think, though, that the C9 will be last ICE Corvette. He writes, “With all the R&D money invested in the C8’s exotic architecture, we predict that GM will want upwards of ten years of production to maximize the return on its latest brainchild. Let’s be crystal clear here though, there will not be another gas-powered Corvette developed after the life-cycle of the current car expires.”
From the piece a picture of the mid-engine Corvette Indy concept car:
Many Corvette “purists” wrung their hands and dogmatically predicted the demise of the Corvette after the announcement of the mid-engine architecture. Not all precincts have reported, but early returns suggest that they were wrong as the C8 seems to be extremely popular, especially among buyers who would not have purchased a Corvette before.
IF it is done properly, it is entirely possible that an all-electric Corvette could be very popular. It won’t sound like this, though:
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PS, from my friend of almost 40 years, Professor M:
Bitcoin is just another commodity right now, no different that the host of others. Some think it may eventually become a recognized currency, but regulation of its use and fierce competition from other cryptocurrencies will occur long before. It remains to be seen how things will turn out, but to me, Bitcoin is a fad at present.
As for the money supply, I share your concern about its recent growth. (The Fed has also changed its accounting – M1 now contains savings account balances, which were previously counted only in M2, so the difference between M1 and M2 has become barely noticeable.) However, just as in the aftermath of the financial crisis of 2008 – 2011, the velocity of money has slowed considerably. This results in more money in the economy for any given level of GDP i.e. the additional money isn’t necessarily translating to increasing aggregate demand – that’s the only reason it hasn’t been particularly inflationary (up to this point, anyway.) It’s the result of QE (quantitative easing) which is being carried out to keep longer-run interest rates low in addition to SR rates, ostensibly to fuel the economy. One of the obvious downsides to this strategy is that the low interest rates give government a greater incentive to borrow. (Quantity demanded and price are inversely proportional.) Not to mention creating a disincentive to save which sends the wrong message especially to young people.
Politics will defeat sound economics every time. Trump thought the economy meant the stock market. Biden is acting like he wants to pay for his election to office by being overly generous. Go figure.
8 thoughts on “Throw In The Towel Thursday”
An electric Corvette will make a sound as there is a Federal Motor Vehicle Safety Standard which requires electric vehicles to make sounds in order that pedestrians will be aware of the approach of the vehicle. This one: Federal motor vehicle safety standard (FMVSS) No. 141, “Minimum sound for hybrid and electric vehicles.”
The rush to electric and hybrid vehicles is seriously flawed from a strategic defense strategy. Many of the components of electric vehicles require huge quantities of rare earth metals. Most of the world’s supplies of these come from Mainland China and thus controlled by our chief economic rival China and its Communist Chinese Party. Our manufacturers should be following a long term policy of “all of the above” power trains for our vehicles just as a nation we should be following an “all of the above” for our sources of energy.
My son-in-law will probably attend a Saturday morning cars gathering for coffee and car talk at a local high performance car facility named Crown. The picture posted for the gathering shows their parking populated by at least four if not more C8 Corvettes.
Thanks, Philip. Yes, an electric Corvette will make a sound, but it won’t be like mine.
Of course, diversification is almost always the optimal policy regardless of the endeavor, but blind adherents to ideology seem to either ignore or are unaware.
The real skill is to be able to predict what the unintended consequences will be. Those who can do that will make the money.
Almost time to walk up and meet my grand daughters at the school bus stop.
This may be long and rambling, but what else is new?
A digression. When I lived in Hong Kong in 2010-11, my company pretty much paid most of my expenses, meaning I was able to bank some doreme. At the same time, the financial world was talking about a run up in silver. I watched it go from $17/ounce to $21/ounce before I stuck my toe in and bought some out of the money call options in January.
I came back home and my gf who was into economics and finance talked about Bitcoin, and its folly. At the time I think it was going between $3-30. Some guy made the news by buying a pizza with Bitcoin-I hope it was good. I was at a conference at a hospital in Baltimore when I got the alert that silver was running; I had just gotten my bonus and in the meeting bought more silver calls. During April, 2011 silver’s price ran up to $48/ounce. In one day I made $16,000 on my position. My gf and I talked about taking some off the table. I wanted to fly to a Foo Fighters concert and do the VIP thing, she talked about buying Bitcoin. We slept on both ideas as the market closed that Friday, just before my birthday.
Fast forward to that Monday, when the silver market crashed, wiping out a six figure position. As Cramer says, “Bulls make money, bears make money, but hogs get slaughtered.” Had I just taken the $16,000 in one day gains on my position, paid the short term capital gains taxes and moved the money into Bitcoin…well as the saying goes, if my aunt had balls, she’d be my uncle.
This is a long trip to say that Bitcoin is what it is. No need to fret. You can get a bag of tulips for $10 at Lowe’s if you catch my drift. It’s here to stay, and like the EVs it is the “hippest latest”. But Gold and ICEs, like Bach and Frank Sinatra, have stood the test of time.
Outstanding comment, Doc, and thanks for sharing.
Look, I’m the guy who always writes that the only constant in the world is change. I respect that, I really do. HOWEVER, new is not always better than old. The group born 1980 and later suffers, almost without exception, from an extreme case of temporal arrogance. That’s my story and I’m sticking to it.
Do NOT get me started ranting about arrogance which occurs in all age groups.
Did not mean to imply that those under 40 have a monopoly on arrogance. Most of them are temporally arrogant, though.
The need for sound in an EV became apparent to me with my 2016 Avalon hybrid. I would drive into a mall parking space where, unseen at first by me between the two large SUVs on either side, two or more people stood in the empty space chatting, not looking toward the lot. I would stop, sit and wait, sometimes for a minute or so until someone noticed that my silent vehicle was attempting to park there. I was too polite to honk the horn, and smiled when they finally noticed I was waiting for them. This happened on multiple occasions.
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