Metacoin

Covering Bitcoin, the Blockchain, Altcoins, and Fintech

Inflation

Crypto: Down. Stocks: Down. Inflation: Up. So What Do You Buy?

Here’s yet another post with a couple blatant caveats: (1) THIS IS NOT INVESTMENT ADVICE and (2) NOBODY KNOWS WHAT’S GOING ON.

We’ve had a couple weeks here in CryptoLand. You name it, it’s down. Take our 2022 Growth Portfolio: a hypothetical $10,000 investment with $1,000 each in ten different crypto assets. Thank God it’s only hypothetical.

Screenshot from May 20, 5:30 a.m. CDT

It was a bloodbath. It still is kinda sorta a bloodbath, in that nobody knows if BTC saw the bottom, or if ETH’s move to Proof of Stake (known colloquially as “The Merge”) is going to be all that, or if stablecoins will stabilize.

And whether or not you’re better off throwing darts.

At Least the Stock Market Is Okay, Right?

Let’s answer the question in the meme with a screenshot.

Stock market, one-month performance.

The problem, though, is that to keep propping up the stock market, The Fed is going to need to thread the needle on interest rates. Too much of an increase and the stock market tanks. Too little of an increase and you can’t catch up with inflation.

So you’re painted into a corner because the stock market is so important to everyone’s 401(k) plan and the inflation rate — which is caused, DUH, by ALL THAT PANDEMIC MONEY PRINTING — is so important to everyone’s standard of living that it really REALLY stinks to be Jerome Powell right now.

Now, Let’s Talk Inflation. Cue Karen Carpenter…

“We’ve Only Just Begun…”

As David Stockman — President Reagan’s former Budget Director, native Midwesterner (shout-out to Michiana!), and future guest on my YouTube channel (call me!) — told us on Doug Casey’s Dispatch a couple weeks ago, we are collectively screwed. And it’s mostly thanks to central bankers.

That part about J-POW having a rough job is not an understatement; the corner we have been painted (printed) into is troublesome. Investors don’t know which assets to invest in, and the average Joe is more worried about real-life things like gas prices or the cost of food.

So…What DO You Buy?

We follow a few financial people on Twitter, on YouTube, and elsewhere. We’re nailing Jell-O to a tree here.

Here’s Joe from Heresy Financial, telling us (SPOILER ALERT) that Treasurys might be the way to go. Here’s another YouTuber — one we found from typing in “where to invest 2022” into the YouTube search bar, then going with the first one we found from the month of May — suggesting individual stocks. And here’s CNBC, taking a break from its “How This [NUMBER] Year-Old [JOB DESCRIPTION] Made [LARGE AMOUNT] By [ZAGGING WHEN EVERYONE ELSE ZIGGED AND/OR INHERITING MONEY]” template (shown here) to give us a whole host of ideas of where to invest in an inflationary environment.

Feel free to grab any of these ideas and batten down the hatches, right?

We’d refer you back (AGAIN) to our series called SHTF. Volume 1 is here and Volume 2 is here. But these are *mostly* crypto-related ideas (with a break for some precious metals and cash on hand). And that isn’t even guaranteed, if the last few weeks are any evidence.

TL;DR: See Elmo

Elmo Fire

Buckle Up. Good Luck.

Help With Crypto Doom Scrolling

If you’re looking for a bright spot, any bright spot, where do you look? Darn good question. We don’t know, either. But here are a couple things to help. Maybe.

It’s Not as Bad This Morning as It Was Overnight

Our 2022 Crypto Growth Portfolio

Behold, the numbers from the 2022 Crypto Growth Portfolio. The columns next to price are (first) 1-hour change and (second) 24-hour change.

Sell in May and Go Away has been replaced by “buy stuff an hour ago, watch it go up 5% on average, then sell it all and buy some foodstuffs.”

BTW, your $10,000 investment in the 2022 Growth Portfolio is now…$6702.

At Least You’re Not LUNA or UST

(If you are holding one of those or you’re part of the teams behind those…scroll on to the next subhead. Trust us.)

Here’s a chart of what happened overnight to UST.

This is after yours truly thought they had somewhat kinda righted the ship after sorta kinda having one of those weird days the other day.

Still, this is a coin that is pegged to the US Dollar and uses something called “an algorithm” to keep its price at $1.00 Or so we thought; but, as a wise man once told me, sometimes the quants get it wrong.

One year of UST

360 days of being thisclose to $1 each. And then the rug gets pulled. It’s Soros-level market manipulation (Learn more about that here: Soros.) It’s not done.

Below you’ll find a 24-hour price chart for $LUNA, which backs $UST.

We’re being nice. Could have shared the 1-year chart.

Then There’s $COIN

Oy. Coinbase is having a rough go of it, eh? Much will be discussed about the company’s growth — whether too much too quick or the post-IPO blues — but it’s really a yikes moment.

Not a good look.

(We won’t even mention the infamous “Jim Cramer Albatross” rating the stock a buy all the way up to $475.)

Carnage, Carnage Everywhere

The bubbles are popping left and right; not just in crypto. Used-car marketplace Carvana has laid off 12% of its staff. While you’d *think* this has something to do with inflation and used-car demand, you’d be slightly right but actually way wrong.

Read the thread, short the stock.

This is about that “Irrational Exuberance” that the Fed warned us about back before they became a meme.

At Least Inflation Is Better, Right?

Narrative highlights tell you it’s not so bad.

The narrative machine has kicked in already: it slowed (from 8.5% last month, but that’s year-over-year) but it actually went up (0.3% month-to-month). And Gasoline isn’t bad because the index fell, but energy prices went up year-over-year.

Now What?

“RETVRN” is a common cry among trads on Twitter. Better days ahead if we go back to what better days were like before. Or something like that.

Good luck.

Inflation.

18 months ago, right before the Presidential election, we wrote a two-part series that got a little bit of attention. In it, we discussed a strategy for when things get pretty bad.

Part One (go here for more: SHTF Part One) is probably more endemic to today’s news of an inflation rate that has the risk of spiraling out of control than Part Two.

But, to be honest, we didn’t think, even back then, that we’d see 7.9 percent year-over-year inflation. In the United States.

(Thanks to tradingeconomics.com for the chart; month-by-month figures going back to Jan. 2017.)

The U.S. Dollar Is…Get This…An Inflationary Asset!

To paraphrase George Costanza’s risk management tapes from the show Seinfeld, “in order to understand ‘inflation’ we must first define ‘inflation.'”

When you print way too much money, you get inflation. “Inflation is, always and everywhere, a monetary problem,” according to Milton Friedman. You can throw blame at whichever President or Congress you’d like (they’re all guilty, as we learn in this balanced piece from the website The Balance), or whichever crisis you’d like (though, to be fair, the Federal Government printed a metric crapton during COVID).

Don’t Believe The (Putin) Hype

Listen to Chuck D.

Don’t listen to Joe B.

The seeds were sown ages ago — like, probably three or four Fed Governors and Presidential Budget Directors ago — and the reality is that Vladimir Putin is a mere scapegoat. Gas prices are rising, but they’re not totally his fault; and the rise in food prices to come will be due, in part, to Putin’s war.

But you could get into a host of academic arguments and ask who bears the most responsibility and it won’t solve the problem.

‘Bitcoin Solves This!’

Yes, and no. And maybe.

As Putin’s War Machine and his “Evil Cronies” are learning, if you can’t use the global financial system that exists — if you’re shut out of traditional banking — you have to make do. In Putin’s case, that means calling China. In your case, that means…well, that means a few things.

First up, you’re not Putin, planning on invading another country. But you don’t know if or when you will fall out of favor with the traditional banks. (See “Trudeau, Justin” for an example of just how that could happen to you.) You also don’t know exactly how bad this inflation stuff will get — and you could find yourself using the black market (WHAT???) before you know it.

Seriously.

Venezuelan Black Market Finance

If you live in Venezuela, you have been dealing with this sort of thing for a while. There’s an official exchange rate, then there’s an unofficial black market rate. And there’s always the risk of the government revaluing the currency.

Zimbabwe had to do this, too, creating a 100 Trillion Dollar Bill back in the day.

And on and on…

Upshot: Get In The Game

You don’t know when the time will come where you need some of that stuff in the post — Cash, Precious Metals, some BTC through Coinbase or Crypto.com, and some ETH too (THOSE ARE AFFILIATE LINKS OVER THERE, WE COULD BE COMPENSATED IF YOU SIGN UP THROUGH THEM) — and you don’t know when it might…hit the fan.

But standing on the sidelines, now, is not an option.