Surf Report: The Cantillon spice
Issue 40: 06.27.21 (Free Version)
INTRODUCTION
June 27, 2021
Hi everyone—I’m so glad to have you here. What a week.
Former Federal Reserve chair and current Treasury secretary Janet Yellen came out this week guns blazing with new worry of a government default:
“We can’t tolerate any chance of defaulting on the government debt, and there is a lot of uncertainty. It’s possible that we could reach that point while Congress is out in August, and I would really urge prompt action on raising the limit or suspending it.”
—Janet Yellen, US Secretary of the Treasury, on June 23, 2021
So, naturally, now people are wondering if the US government—whose Treasuries are the supposed “risk-free” rate of return—is more risk-full than previously assumed.
What she’s really saying here is: the Fed will have to continue to print money in order for the US to remain solvent, which will devalue the purchasing power of the dollar but that’s clearly a less important issue than painting over their continued irresponsible behavior and policies.
Before jumping to any conclusions it’s important to remember two things:
Both the government and the Fed are manipulative with their public statements, choosing their words and phrasings with an almost comical level of hand-wringing and deliberateness
The government and the Fed have a long, well-established history of being wrong in their predictions, explanations, and expectations of how actual human beings will react to their statements
Consider this quote from Yellen over a decade ago when she was Fed chair, speaking from center of what was to become the biggest housing bubble burst in history:
“While the decline in housing activity has been significant and will probably continue for awhile longer, I think the concerns we used to hear about the possibility of a devastating collapse—one that might be large enough to cause a recession in the US economy—have been largely allayed.”
—Janet Yellen, President and CEO of the Federal Reserve Bank of San Francisco on January 22, 2007
There’s wrong and there’s dead wrong. This level of wrong is fully deceased for sure.
But why all the incorrect predictions and what appears to be a denial of actual reality?
Well, the Federal Reserve is a cabal of elite academics and bookish model-makers whose mathematical projections are put forth and believed as being more true than the actual reality happening outside their insulated walls of Theory™
For Amazon Prime Day this week I bought exactly 3 things and they were all books, one of which is is an insider’s take on why the Fed is terrible. Author Danielle DiMartino Booth pulls no punches on this point:
“Theory is when you understand everything, but nothing works. Practice is when everything works, but nobody understands why. At this station, theory and practice are united, so nothing works, and nobody understands why.”
She’s speaking about the Federal Reserve bank of Dallas, where she was an advisor for over 8 years.
One thing both Wall Street banks and the Federal Reserve cartel do know is that it’s important to be close to money-creation machine in order to benefit most from the system. This principle is well understood and actually has a name: The Cantillon Effect, coined by an 18th century French banker and philosopher named Richard Cantillon.
His basic idea was that the closer you are to the money and the government in charge of it, the more you benefit. And the further away you are, the more you are harmed.
He wrote about what happened when a nation-state discovered a gold mine in its territory. Increasing the amount of gold in the realm did not just increase price levels but also changed who had wealth and who didn’t, since those able to get the gold first could spend it on things whose prices would rise afterward—prices the less fortunate would then have to pay.
The whole thing reminds me of the classic sci-fi book Dune.
Dune is the story of a young heir to a noble family expected to rule over a harsh desert planet whose sole export is a drug (“the spice”) that extends special life-giving powers and space travel abilities to those who can get it. It can only be made on this one planet, so despite its wasteland vibes this planet becomes the center of an intergalactic power struggle that influences everything from politics, ethics, environmental responsibility, technology, and belief systems.
If you replace “the spice” with the dollar and the “harsh desert planet” with the United States, Dune could be read as a parable of what happens when your only value to society is the creation of something that those desperate for wealth and power will stop at nothing to control regardless of the consequences to everyone else.
The US dollar is America’s primary export at this point. And as a wasteland forms with an ever-widening wealth inequality gap, perhaps it’s time for more people to think about this spice and who’s doing the mining.
“There’s a phrase non-philosophers use that philosophers never use: it’s starting a sentence with ‘My philosophy is…’ What’s going to follow is some view that the person will simply not reconsider or give up.
But that’s not what philosophy is about.
Philosophy is about noticing that there’s something you’ve been taking for granted and maybe it’s time to have second thoughts about it.”
Until next time 🤙,
“Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.” —John Kenneth Galbraith
Breaking News 🌊
⛔ Biden administration extends federal eviction ban through July, which was previously set to expire on June 30. [CNN]
💻 Microsoft reaches a $2 trillion market cap, only the second publicly traded American company behind Apple to reach such a valuation. [CNN]
👟 Nike shares surge 15%, hit record high as $50 billion sales outlook tops expectations [CNBC]
🤫 Amazon acquires secure chat app used by government agencies [CNBC]
Bitcoin News 💱
₿ NYDIG has partnered with digital bank Q2 to enable over 18 million of the bank's US account holders to buy, sell, and hold Bitcoin. Q2 powers nearly 30% of the top 100 banks in the US. [Business Insider]
₿ Citibank has launched a Bitcoin and crypto unit in their wealth management division after saying Bitcoin could one day "become the currency of choice for international trade" [The Block]
₿ China is rationing hydropower—and Bitcoin mines are getting cut off [Fortune]; Cathie Wood bought 1 million shares of Grayscale Bitcoin Trust during the dip below $30K [CNBC]
₿ PayPal, Visa Join $300M Round for Blockchain Capital [Blockworks]
₿ Bipartisan Crypto Bills Pass US House of Representatives – Again [Coindesk]
₿ Bitfarms, the North America Bitcoin mining company, has now been listed on Nasdaq with the ticker $BITF [Seeking Alpha]
₿ SEC Postpones Decision on Valkyrie Bitcoin ETF to August [Blockworks]; the first Bitcoin ETF in Latin America has launched [Cointelegraph]
₿ Paraguay announces a bill that would make Bitcoin legal tender and also to encourage mining (with renewable energy sources) [Euronews]
From The Tweetbox 🐦
“To me ‘systems thinking’ is just ‘thinking.’ if one's thinking does not naturally lead them to identifying, observing, questioning and challenging systems, IMO it's likely because they've been conditioned to think within boxes that other people have defined for them” [Thread]
“Houses are generally seen as great investments simply because people can’t easily panic-sell them. Real estate is forced conviction.” [Tweet]
“It’s honestly not that surprising that people who think in quarterly results are missing out on the biggest thing to happen in monetary history in the last 5,000 years.” [Tweet]
“Once you realize the ESG crowd neither cares about the environment or social good nor operates based on principles and it’s actually all about crafting a narrative to get more money to manage and fee, Bitcoin will make a lot more sense.” [Tweet]
“We are watching in real-time, one of the largest network hardware migrations the world has ever seen. All without leadership/coordination and zero down-time.” [Tweet]
For The Pros 😎
One founder, with a 1.5M subscriber following, says copywriting is an essential skill for entrepreneurs to practice. This is the one book he recommends: (Link available to Pro subscribers)
How to jumpstart growth. One founder used this strategy to launch his product and brought in nearly $150,000. Here are the sources he used: (Link available to Pro subscribers)
Negotiation tactics differ around the world. These charts will show you how to adapt your style: (Link available to Pro subscribers)
The power of product thinking: (Link available to Pro subscribers)
Watch This 👀
The full interview can be found here: Why El Salvador Made Bitcoin Legal Tender with President Nayib Bukele (HD)
Read This 📃
As Bitcoin adoption continues, bitcoin-based micropayments can break up closed gaming economies and enable disintermediated, bidirectional value flows between game operators, gamers, the audience and advertisers.
Harder Than It Looks, Not As Fun as It Seems
“When you are keenly aware of your own struggles but blind to others’, it’s easy to assume you’re missing some skill or secret that others have”
GIF 🖼
The aftermath of buying an NFT must feel similar to realizing you’re in Delaware.
Pods & Schools 🐬🐠
Recent podcasts + books I highly recommend, and upcoming courses + seminars that look promising
Section available to Pro subscribers
Tools of the Trade ⚒
Products I use to make money
Swan. I recently became an official Swan partner because I love them so much. So if you're like me and just want an easy, automated way to buy bitcoin on the regular with the lowest fees in the game, head to https://swanbitcoin.com/Mulvey to get $10 for free ✨
Fold. Earn bitcoin on everything. You can win up to 100% back on every purchase, and every swipe is a chance to win a whole bitcoin. I use my own Fold card to pay for almost literally everything. If you use this referral linkyou get 5,000 sats free ✨
StockCharts. I easily make back the small monthly subscription fee with the superpowers it gives me.
Carrd. I use card for all my landing page needs. Use this link or referral code 892PYX69 to start your own web empire.
Disclaimer
Nothing in this email is intended to serve as financial advice. Do your own research.