You Just Wouldn’t Understand

November 23rd, 2014

The International Psychoanalytic Congress came along about the same time as the Fed.  Maybe that explains it.  Can you pick out Freud and Jung in the crowd? 


I’ve probably said that my dog understands me..

I’ve probably cried to my wife… “You’re the only one who understands me”… sniff… sniff…

I write this blog in hope… in hope that maybe, just maybe… you’ll understand Dave.

When all along, it was Bitcoin.  “Bitcoin understands”… at least according to its latest paid spokesperson and inside cronyist Arthur Levitt.  Bitcoin understands the imperative of investor protection.  I guess that means we’re throwing out “In God We Trust” with the fiat bathwater.


If you’re a securities investor and you’re looking for protection, you may have looked for this symbol in the past.  Well, according to Levitt you may want to start looking to Bitcoin.


Whenever you hear someone say “Pay Attention”, you may want to consider the following concepts:

1.  Pay

Okay…. you’re paying.  In one form or the other you are paying just like when you Trade With Dave… you pay with your time.  In the example of the shell game below you pay with cash.  In the example of Bitcoin you pay for network access and you prepay with what what Dave refers to as the prebit.

2.  Attention

Like Arthur says … give Bitcoin your attention.  That’s where you make the key mistake.  You look at the wrong thing.  In the following example (see video below), you look at the shells and you look at the ball when what you should be looking at are the operator’s pants.  You see, if you look at his pants, you will notice that the right knee is particularly worn.  You will also notice a couple of times that he wipes his right hand on the right knee of his pants.  What is going on here exactly?

Well, to start with the right hand is doing most of the work so it’s getting sweaty and the operator needs for the hand to remain dry because he uses it to conceal the yellow ball.  If his hand is wet the ball will fall out when he’s palming it.  Furthermore he has a particular pair of blue jeans.  Not only are they worn on the knee but they have a seam across the knee.  This seam provides that added friction when he is wiping his hand across the jean knee to help dry and rough the interior of his palm to make picking up the yellow ball easier.

So, while Arthur Levitt is telling you to “pay attention” to Bitcoin, what you really should be doing is paying attention to the S&P 500.  You should be paying attention to the Bank of Japan’s outright monetization of the markets and how they engaged in this precisely the same day that the Fed “stopped” their quantitative easing.  You should be paying attention to China’s surprise cut in interest rates.

You should be paying attention to the disappearing act of Ebola from the media like it never even happened.  You should be paying attention to the introduction of institutional-only buyers of Co-Co bonds as promoted by Andy Haldane on behalf of the Bank of England.  These bonds have a baked-in debt-for-equity swap provision that bypasses the bankruptcy system in the same way that a Bitcoin blockchain smart contract is self-enforcing and non-reversible.  This will allow for the quick and convenient extinguishment of all shareholders in the institutions that issue these bonds and the value of these banks will be rolled up into next-gen super-sovereign entities controlled by the likes of whoever owns the Federal Reserve in an engineered market collapse.

So, is David saying buy Bitcoin, sell Bitcoin or wait and see?  The way Dave sees it, and I’m no financial advisor, you can no longer hedge against these market conditions.  You can only purchase insurance because the recursion boundary is so deep that it will not only swoop down and take out all positions because from all appearances the Fed is manipulating the VIX so you won’t see the storm coming and it will be instantaneous.

The rub is that you can’t purchase insurance against long positions owned by insurance companies that will be wiped out. In what will most likely be a collapse in excess of 75% (or whatever it takes to cause every hardworking 401(k) holder and grandma to liquidate with the maximum penalties), there’s no place to hide in any electronic or paper-based system and if you think real estate is safe from deflation and state-enabled property taxing authorities you need to think again.  The quantum nature of Dodd-Frank’s inability to address the swaps as insurance issue has resulted in a well-worn can that has been kicked all the way to London with the advent of yet another debt mechanism and this one has an automatic shareholder water canon extinguisher built right in “taking policy coordination to the next level.”

A tsunami of deflation followed by a tsunami of inflation for tangible, portable wealth such as gold, silver, bitcoin and dog food will occur simultaneously that a distribution of direct monetization to the populace in the form of U.S. Treasury checks appear in every mailbox in hopes that the payments circle back to the banks in an effort to reduce household debt. Good luck with that one… even if the checks are subject to having any outstanding taxes automatically deducted. As Dudley said “We’ve gotten past that” and the social contract… well, it’s been Grubered.

When you consider less than $20 for a silver eagle and more than an $18 billion valuation for Uber you start to understand what values are being expressed by our society.  Convenience is providing a great yield, but is technology enabled convenience a scarce commodity?  Are overexposed “brands” (that overexpose their users privacy) truly that valuable when Abercrombie is self-immolating its prostituted brand identity?  At some point, there will be a rebalancing between convenience yield, store of wealth and common sense and when that happens the U.S. dollar is going to have to answer the question about whether it is a trend… or a fad.

And finally, who understands the volatility trade? Hugh Hendry alludes to it.

Trade With “Good Culture” and “Goldman’s Reputation”

November 22nd, 2014

Who cares about the rule of law… it’s reputational risk that we’ve got to support.

Are you having a tough time explaining the definition of moral hazard to your kids? You know… the rule of law, justice being blind and stuff like that.  Well, here you go.  Size matters when it comes to morality.  I guess a judge can still be blind as they have a scale that they can weigh reputational risk on.

From Huffington Post:

“We were not willing to find those firms guilty before, because we were worried that if we found them guilty, that could somehow potentially destabilize the financial system,” Dudley said. “We’ve gotten past that and I think it’s really important that we got past that.”

If you ask me, Dave can’t tell where the tail ends on this thing and the head begins. You didn’t build that, but if you keep eating it eventually the entire operation will just disappear.

Don’t Funge Me Bro!

November 22nd, 2014

A policy debate on the fungible nature of pain.

Dave’s been waiting to get this fungibility party started… If I had to summarize my sentiment on this debate, I would modify Peter Todd’s statement about laundering by saying the following. Judicial process in its current form is fundamentally devolved into form of laundering (Citizens United vs. FEC, the bailout, JPM, GS, etc.) which Dave describes as the Himpton Doctrine.

The problem is, in regard to the advent of cryptocurrencies and their super-sovereign nature (global internet kill-switch withstanding) in particular, that relative to our current justice system the utility of the blockchain, and in particular smart contracts, functions ultimately a poison pill for the judicial branch of government. As we moved from a credit-based system through a debit-based system and finally into the prepaid model of a prebit-based system such as virtual money and cryptocurrencies, the functional value of civil law as we have come to understand it in Western Civilization is moot.








Debt Won’t Let You Down ~ OK Go

November 20th, 2014

Between the hydrogen-powered Toyota and the Honda unicycle, maybe Abe’s direct monetization of all debt won’t let you down…

Trade Transparency for a Lack of Transparency

November 18th, 2014

That was easy…

The Case For Case

November 18th, 2014

Trade Ideas With Dave, Steal Ideas From Jon

November 18th, 2014

“Stolen liberally” from “some of the brightest minds in academia.”

Stolen literally from some of the stupidest minds in America.

And there goes that respect issue again.  This time it’s from Harvard economics degree holder Melissa Francis.

Drive With Dave… Powered By “Garbage”

November 18th, 2014

If you live in the Northeast Corridor and enjoy the subsidies such as Amtrak’s Acela, you will most likely be able to take advantage of hydrogen refueling stations popping up near you.  If you don’t live along the NY~DC corridor or in parts of California then you’re probably out of luck for at least a few years.  When you consider the breadth and depth of Toyota’s sales and service organizations, it makes you wonder just how this strategy aligns with Tesla.

Trade Cadillacs With Dave

November 17th, 2014

I haven’t seen Jonathan Gruber?

Have you seen Jonathan Gruber?

Respect? I resemble that remark…

Barbarians At The Relic

November 13th, 2014

10 year gold price per ounce

For months the Yen has been tracking in near lock-step with the GLD.

The St. Louis Fed explains why you don’t want to hold Japanese Yen, if holding Japanese Yen equates to holding gold. As of this morning 15 “folks” have watched this video.


Who else is planning to be in lockstep, but this time with the GOLD rather than the GLD?


Charlie Munger exhibiting traits of Relic-palooza as expressed by ISIS “jerks” applying the moral obligation of gold.  Work it.

“I don’t have the slightest interest in gold. I like understanding what works and what doesn’t in human systems. To me that’s not optional; that’s a moral obligation. If you’re capable of understanding the world, you have a moral obligation to become rational. And I don’t see how you become rational hoarding gold. Even if it works, you’re a jerk.”

Here’s what “The Treasury Department” had to say: