Business Cycles and Government Intervention

Episode 088

The Austrian and Keynesian economist view government management of economic cycles differently. The Keynesian economist have a guiding principle that the government is there to guide and manage the economy intervening during times of growth and recession. Of course the the Austrians are of the view that the government should be hands-off.

 

News and Links

SBF Co-Conspirators Flipped

Brazil Enacts Bitcoin Payments Regulation

Ghana Halts Payments on a Large Swath of Foreign Debt (but not the IMF and World Bank!!)

EU Caps Natural Gas Prices at 180 Euros/mwh

Senators Propose Increase in Tax Threshold for Venmo, Paypal, etc

Italy Might Power Up Nuclear Reactors

 

December 25, 2022 Weekly Close (USD)

BTC – 16,841.99

ETH – 1,218.96

ADA – 0.259270

 

Podcasting 2.0 Apps available at http://newpodcastapps.com/ and the Value4Value information page available here: https://value4value.info/

I can be reached by email at mcintosh@genwealthcrypto.com and on twitter at @McIntoshFinTech. My mastodon handle is @mcintosh@podcastindex.social. Looking forward to hearing from you!

Website

https://genwealthcrypto.com

Music Credits

Protofunk by Kevin MacLeod

Link: https://incompetech.filmmusic.io/song/4247-protofunk

License: https://filmmusic.io/standard-license

The following music was used for this media project:

Music: Carol Of The Bells [Metal Version] by Alexander Nakarada

Free download: https://filmmusic.io/song/7138-carol-of-the-bells-metal-version

License: https://filmmusic.io/standard-license

Transcription

Hey, sat stackers. It’s December the 26th. This is episode 88 of Generational Wealth of Cryptocurrency. I’m your host, MacIntosh. Today’s episode is about business cycles and government intervention.

Of course, no one on this podcast is a financial advisor, and all information presented on this podcast is for informational purposes only. Now that we have the legal stuff out of the way, let’s jump on in.

Well, I hope everyone has had a good week, a good holiday. This comes out on Monday. I’m actually recording this on Friday morning, early Friday morning, late Thursday night to have this prepared, and then I’ll do the market update on Sunday night and get this posted. So we will jump on into that market update. I checked earlier for the so-called Santa rally, which a lot of people kind of thought was going to happen this week, and lo and behold, it did not happen. And in fact, basically the markets have not moved for a week. So we’ll go ahead and cover the prices. I do want to talk about, I think, what’s a fairly important topic, whether you’re a trader or not, for this week’s kind of little technical section, and then we’ll move on. All right. So Bitcoin closed at $16,841.99. That is actually up less than $100. Ethereum closed up about $40 at $1,218.96. And then ADA closed slightly down for the week at 25.927 cents. Now, so no change. Things continue to grind sideways.

I do believe in the news this week, we’ll have some information about one of the miners, in fact, one of the largest miners filing for bankruptcy. I saw a chart showing that essentially all the miners are operating at a negative, well, not at a profit. So, of course, with Bitcoin, there are really only a couple of things that are involved in the cost of mining. The hosting fees, which typically would include electricity, and they’re basically around very closely tied to electricity. The cost of the unit itself when you buy it. And that’s about it.

So a lot of it is very much driven by the cost of electricity. Of course, electricity is up. Price, on the other hand, is down. They crossed at about $20,000, where it’s costing around $20,000 on average to mine. And of course, we’re at $16,000 or $17,000 and have been for quite a while. So there you go. We’ll talk about that company that is declaring bankruptcy here shortly. I do not think they will be the last one. And I do think that will be something that helps push the market lower.

However, what I want to talk tonight about for the technical topic, if you want to call it that, is what’s called the 200-week moving average. This, in many people’s mind, defines what amounts to a bull and a bear market. I would like to take just a minute, of course, and define what a bear market is. Why it’s called a 200-week moving average. And then we’ll go from there. So a 200-week moving average very simply means a moving average is an indicator that traders, investors use to determine hopefully market direction. It’s calculated by adding up all the data by the specified time period. So this is a 200-week moving average. So every week there’s 200 data points going back 200 weeks. We add all that up. We divide it by 200. That’s our average.

I believe right now it sits at around $20,500 more or less. It’s somewhere right around there and it will vary from week to week. I do not know what it is currently. It’s just somewhere around that range. Of course, we are below that. And what that means by a lot of people’s mind, we’re in a bear market. I don’t think that’s too surprising.

Now, this isn’t just a crypto thing. Of course, this is used in the traditional stock market as well. But let’s look at, I’ve got that on here. I tweeted it out when I saw it. We have been under that. It’s actually, as I said, now this was on the 21st. This was four days ago. So this was last week’s 200-day mean. And it was at $20,500. It is certainly above us. It is representing resistance at this point.

So when we approach that point, at some point in the future, certainly that will be a point of resistance. But when we were at $69,000 back in November of 2021, certainly we were above the 200-week moving average. In fact, it looks like, I don’t have any of you up in front of me, but from this chart, I don’t have any of you up in front of me, but from this chart, oh, I can almost see that. Hang on. Well, that’s disappointing. My guess is it touched it. It crossed it probably around January, February, and we’ve stayed below it ever since. It actually came back up and touched it, which you’ll see quite often. So I retweeted this.

So if you follow me on Twitter, you can see this chart. This is actually a beautiful example, and that’s not what I intended for this to be about, but this is a beautiful example where it came down to the 200-week early in 2022. It touched it. It actually went slightly below it. It came back up. It stayed above it for a bit, and then it went below it. So it found support initially, and then after a significant period of time, probably a month, I can’t really see this chart very well, I’m sorry, but it dropped below it.

So it came back up, tested it again, and basically was immediately rejected, and then we went down down for a good long turn, which would have been into the early summer, if I remember correctly. And then, of course, we went sideways for a long period of time, and then in late fall, we went down even lower, which is where we’re at now. But the entire time since that last touch, the 200-week moving has been above us. Now, of course, it’s trending down because 200 weeks ago, that price was lower over time. So it will continue to trend down, and at some point, we will get above it, and then hopefully we will find support there, and then maybe we can start building an actual bull market.

So there you go. This week’s little technical tidbit there. So, basically, no change. I would suggest, though, taking a look at that. I retweeted Crypto Burbs’ tweet there. He’s somebody that I follow, and in general, he’s got a pretty solid head on his shoulders, and does a good job.

All right. Now, we’ll be moving into our weekly topic. Of course, this week, we’re talking about business cycles and government intervention, as we have been doing for now the last five weeks. This makes the fifth week for the last four weeks. I will be comparing and contrasting Keynesian and Austrian economics. And of course, business cycles and government intervention is an area where they do starkly differ, I believe.

I would note they both believe, of course, that business cycles happen, that we have kind of a boom bust. It’s kind of a pendulum swing thing. So, you know, we will have a time of great prosperity, and then things will slow down, and then things will pick back up. I think everybody agrees that that happens. It’s what we do, how we deal with that.

John Keynes’ view is that the government should intervene and help control that, essentially. And we’ll talk in more detail about that in just a minute. The Austrians, of course, believe that markets basically operate efficiently, and they’re going to have the best outcome over time. So, they believe in minimal government intervention, or small government, as you’ll hear the libertarians call it, or hands-off or whatever.

The Austrians, in particular, actually believe that a recession is an important and necessary part of combating imbalances. They are a response to bad things going on. After all the reading that I’ve done, I believe that the Austrians operate under this assumption because they believe that the government intervening causes more harm than good. Does the government coming in, for example, in the Great Depression, and injecting money into the economy by hiring a bunch of people, for example, with things like, I believe one of the programs was called the CCC, the Civilian Conservation Corps.

The Keynesians would say, well, look, we gave all these people jobs. The Austrians would say, you don’t understand the long-term implications of that. Yes, those people got a job. Maybe they needed that. But the government was interfering. And the reality is the government was not allowing the market to do what the market wanted to do, so to speak. And we don’t understand the long-term implications of that, or those implications are worse than those people not having a job for that period of time. I hope that made sense.

Reading about the Keynesians on the other hand, they’re like, well, if we do things like manipulate the interest rate, for example, which is effectively what goes on with the Federal Reserve, we do that because we think that’s better for the economy than not doing that. So there’s a direct contrast here. When we do a government program such as that CCC during the Great Depression, the benefit of that is obvious. Well, yes, it’s obvious those people have a job. They believe that the benefit outweighs any negativity.

And in fact, they give a value to this. What was that called? Keynesian multiplier. There’s this concept of a Keynesian multiplier. And basically it’s that government spending helps the economy. And during a time of recession, or depression, like the Great Depression, that multiplier is higher. I don’t want to get too deep into this because it’s kind of, to me, it’s weird, but they use it in their calculations.

Remember, I said that the Keynesian philosophy, it was all formula driven, essentially. This Keynesian multiplier, they’ll say, well, if the US government spends a dollar, that’s going to at least have a multiplier of one. That dollar will then be used by somebody, so on and so forth. The reality is they include government spending in what they call aggregate demand. Government spending, personal spending, there’s a third component, maybe business spending as well, I’m not sure. But they roll all that up and they include government spending in that. So yes, if the government spends money, then it helps that number.

To me, that doesn’t make sense. There are cases, certainly, where government spending helps. There are reasons to have government spending, but when you make it the central point of your economic policy, then it becomes very easy, in my opinion, for that spending to grow out of control. The Austrians will say debt is a bad thing. Debt should be avoided, maybe not at all costs, but it should be very strongly avoided. Keynesians only have a little bit of money, very strongly avoided.

Keynesians, on the other hand, don’t really talk about debt a whole lot, which I find very odd. Now, back during the 1930s on into the 40s, 50s, 60s, 70s, even early 70s, there wasn’t a whole lot of government debt. But what we’ve seen since, and I’m speaking about the United States, I think in general worldwide, this is what’s gone on as well, we’ve seen government debt balloon. I think right now we’re at about, oh man. Well, the total government debt right now is $31 trillion for the United States. I know that, which is more than the total GDP of the United States. We’re past 100%. I want to say it’s like 130% or so debt to GDP. It may be even a little higher than that. I apologize that I do not have that number available at my fingertips.

The point is government spending, government debt has gotten out of control. The Austrians would argue very strongly that this is a very bad thing. And I actually looked into this earlier tonight because I realized as I was thinking about this, the Keynesians don’t talk about debt. They talk about government spending, but the literature that I look through doesn’t talk a whole lot about government debt, and I find that odd. They just kind of whitewash it.

Well, there’s been a new branch of economics called MMT, Modern Monetary Theory, which I have not spent any time essentially talking about, but I would call it neo-Keynesianism. I would call it the successor to Keynesianism because they realized that if we have fiat money, if we have a controlled currency by a government, well, then we can just print whatever we want. And I have a quote here. I don’t want to jump ahead. I guess I am, but it’s a couple of paragraphs here. Let me read this real quick. Modern Monetary Theory, I’m going to read this kind of more academic definition and then there’s a more normal definition here. I’ll read both these. Modern Monetary Theory, MMT, is a heterodox macroeconomic supposition that asserts that monetarily sovereign countries, such as US, UK, Japan, and Canada, which spend, tax, and borrow in a fiat currency that they fully control are not operationally constrained by revenues when it comes to federal government spending. Put simply, Modern Monetary Theory decrees that such governments do not rely on taxes or borrowing for spending since they can print as much money as they need and are monopoly issuers of the currency. Since their budgets aren’t like a regular household, I don’t know how they get that, but that’s what it says. Their policy should not be shaped by a fear of rising national debt.

Now, when I read that out loud, to me, it sounds ridiculous. Now, maybe it doesn’t to you, but for one thing, I would simply say, well, if we don’t rely on taxes or borrowing, then why don’t we just print whatever we need? And please stop charging me tax because I frankly pay a lot in tax and I find it disgusting and discouraging, especially in light of what it gets spent on in large part. So according to MMT, it doesn’t matter. So why don’t we just eliminate taxes?

Oh, right, because we need those. So already out of the gate, it doesn’t even make sense. But when they say that there’s no worry about rising national debt, they mean that. They don’t care. And yet we see debt rise and rise and rise. So Japan is the leader in the world. They’re at over 200% debt to GDP.

And actually, one of the things that happened this week is that Japan raised their interest rates. Now, you could say that Japan in a lot of senses is the poster child for Keynesian economics and modern monetary theory, MMT. They have fought very hard to keep interest rates down. They have a large amount of debt, blah, blah, blah.

But on Tuesday, the Bank of Japan raised their rates from 0.25 to 0.5%, which sounds like a crazy small amount because it is, it’s a quarter of a percent and they were only at a quarter of a percent. And the problem is the amount of debt that they owe. So I don’t have the figures here in front of me, but the problem is with the large amount of debt that they have to service, that they have to pay interest on essentially, that debt becomes very difficult when the interest rates go up, but they have to raise the interest rates because of the economic conditions. And to me, this is the end game of MMT and we’re going to see it played out in real time over the next few years, I believe. And we’ll see.

Now, an MMT person would say this can go on forever. A Keynesian person would say with proper management, this can go on forever. But whether they’re Keynesian or they’re an MMT, what they don’t account for is eventually that debt must be paid. It is like a budget. At some point, a person has to pay for the debt that they rack up. They either go bankrupt or they pay the interest and the debt, the money owed. It’s plain and simple. Those are the two choices. Now, if you control the printing, yes, you have another choice. You can print more money. So you devalue the currency. And in fact, that is highly likely, in my opinion, what will happen to some of these countries, if not all of these countries, who are highly debt-ridden. And you’re talking about basically every modern economic powerhouse, the EU, Canada, the United States, China, Japan, certainly, and so on.

So we hear about countries like Argentina, and I don’t want to pick on Argentina, but they’ve had a history over the last 20, 30 years of devaluing their currency. And they’re doing that because inflation is so high and they can’t pay their debts. In that case, much of it to the IMF. What happens when the United States can’t pay its debts? What happens when our interest rates are forced higher and higher, and we can’t service our debt? Do we print more dollars and then use that to pay the debt? More than likely, that wouldn’t even happen. They’d print more dollars and then just use it for more spending.

A $1.7 trillion spending bill just got signed through the Senate. I think it still has to go through our house, but it’s insane, the spending of this country. One interesting thing that I thought about while I was looking at this is we have essentially every country in the world operating under Keynesian economics at this point, or MMT, or some derivation thereof, that the government should be interceding that it’s okay to print money. Debt doesn’t matter.

As an Austrian, I look at this and go, this can’t go on forever. When it ends, it’s not going to be fun. Some countries will do better than other countries. Who that will be remains to be seen, certainly. But overall, it will affect every country. Then we’ll find out really what’s going to happen.

Are they going to shift to a standard? It used to be gold, right? Prior to 1913, that’s what everybody used. And even up until the 1970s, virtually every country in the world had large gold reserves. That’s no longer true.

Now, we do see massive spending on gold by a few countries, and it’s probably not the ones that you would think of. I know offhand, Russia is spending a lot of money on gold. I believe China is as well, and maybe India. I’d need to look that up again and refresh myself on that. But I do remember distinctly that Russia was buying a lot of gold.

Now, to wrap this up, as we move into the new year, my next episode will be why not gold? I want to talk about that some more. I do not believe that gold will replace all these fiat systems. I hope that Bitcoin does. I hope that countries at least give it a chance. I don’t want to go into that because that’s next week’s episode. But yeah, that would certainly be one option, one standard.

I mean, we could all standardize on cows. We could do that again. I have one cow you have, I don’t know, a set of cabinets that I need, so I’ll trade you a cow for a cabinet. We could do that. It would be very inefficient and virtually impossible for people who live in a city, but we could. That could be our standard. But we need a standard.

We don’t need 200-odd countries with different currencies that are not interchangeable and not backed by anything. This world has been wracked by economic uncertainty for closing in on 100 years, in my opinion. And some of it is done, I’ve talked about the IMF. Some of it is basically a form of neocolonialism, I would call it, which I think is very unfortunate. And I think that the countries who are involved in that, countries like El Salvador, should do everything that they can to throw off those, I hate to call it this, but those chains.

Because they are oppressing those countries and they’re doing it, I believe, on purpose. Now, I’ve talked about this a little bit. I’ve not talked about it in depth. I would suggest that you go look up Alex Gladstein’s article on this because it’s an excellent review. The IMF is, frankly, rotten to the core and has been for a long, long time, if not the entire lifespan of the IMF. And I think it should be disbanded. And we have to figure out something better than that because it has continued the economic cycles of destruction for these countries. And I think it’s become very obvious if people are willing to listen.

So anyways, I don’t want to get ahead of myself. I guess I already have, but we’ll be talking about that next week. What’s going to replace all these fiat’s at whatever point that they get devalued or the country goes bankrupt? Either possibility could happen. And if it becomes devalued enough, the country will go bankrupt, period. So it all ends up in the same place.

We have a reset. We can call it the great reset. I don’t know that it’ll happen at once. Who knows? We’ll see. To finish this up though, Keynesian people, they actually think that markets are inefficient and it’s the role of the government to counteract those inefficiencies through active policies. So that’s it right there in a nutshell. Austrians believe markets are efficient and they’re the best to figure things out. Keynesians, on the other hand, believe that it’s the government. The government needs to intervene. The problem is when the government is intervening, the government is creating debt. The government is doing things with unintended consequences in my opinion. And we’re not accounting for the debt. We’re not accounting for those consequences. And so this to me is kind of the crux of everything right here. This and sound money, frankly. When the economy isn’t performing well and private spending falls, the government should take action to combat that. There you go. There’s two things that they do. Fiscal policy, increase spending by the government. Where does that come from? It doesn’t come from the gold reserves of the castle like it used to. No, it comes from, we’re going to create more bonds and sell those somehow and print more money. That’s where it comes from. To stimulate that aggregate demand, aggregate spending that I was talking about earlier. And then the second way is through monetary policy by interest rate adjustments and creating more money by money printing.

To wrap it up, there’s one other thing as I was reading through this business cycle stuff that I kept seeing over and over again. The Keynesians, and I’ve already talked about this two episodes ago back on December the 12th, but they’re deathly afraid of deflation. They think it’s just as bad as inflation. That if my house goes down in value by 10%, that’s a terrible, horrible thing. It should like be in a linear line going straight up. I’ll take a simple example, a very simple example to wrap this up. The Great Recession, the early 2008, 2010, whatever, that time period. The economic recession that created Bitcoin, by the way, direct result. Anyways, what was it caused by? It was caused, in my opinion, by the banks giving out loans to people who shouldn’t have had them because they, by government mandate, they lowered the credit ratings or whatever, the requirements. That’s a better word for it. They lowered the requirements for people to get loans. People were getting loans way too large for what they could reasonably expect to pay off. You end up with people defaulting. You end up with banks who started failing because of this. The government stepped in and did what? They bailed out the banks. There was active government intervention on both sides of it, mind you.

The government is saying, you need to make housing more affordable or whatever, so we’re going to allow people to borrow a higher ratio of debt of that house to their income. The market responded by people failing to make payments, and then that, in turn, caused the banks to default, but the government then steps in to bail out those banks. That has never sat well with me. The government never should have gotten involved, in my opinion. I do believe people should have affordable housing, and in fact, you can look at the data and see that for a long time now, for decades, our housing prices have gone up versus real income. I think that’s a real problem, but the government coming in and saying, you need to relax your loan requirements is not the answer.

Again, I didn’t even actually think about this, until right now. It caused the unintended consequences of the banks bailing out, of the government having to step in and spend a lot of money to bail them out. Then it took ten years plus for the housing market to recover. Good job, government, right?

All right, so that’s it. Next week, we will, of course, be touching on this. Again, as a final wrap-up, it will not be, well, it’ll be directly related to this, but this is kind of the end of the comparisons. I hope you found this helpful. Maybe this is not the ideal topic for everyone. I’ve tried to keep it as concise as possible, believe it or not, and as non-technical as possible.

It’s important that you understand certain things so that you can kind of grasp the ideas going on here, so there’s some level that we have to be at. The understanding of what’s going on in our market in terms of these philosophies is, I think, very important. I think you will find that the vast majority of people involved in government are Keynesian economists, whether they know it or not. Certainly, the people running the central banks of all these major countries are, and I don’t know, well, I will say that.

So, I think, to me, it’s almost like it’s a bleak outcome because you’ve got all these countries operating under these policies that they’re not going to change, and the end result, in my mind, is bound to be currency devaluation or default, or probably devaluation then default. But maybe that’s the only way out of this. I just hope, if that happens, that the countries have enough of a spine to say, enough.

We’ve tried this for a hundred years. It’s time to go back to what we used to do, to a standard, to a currency that’s going to go back to what we used to do, to a standard, to a currency that’s got backing, that means something.

All right. We will now move on to our next section with our supporters. So, here we go. This week’s supporters, one, two, three different, four different supporters, and appreciate that. We’ll go through them. I actually saw a lot of streaming this week, boosting, not boosting, streaming sats while people were listening, which I certainly appreciate. I don’t have the time to break down all of that, but this week, actually, I did get more support by streaming the boost. So, that’s certainly a big help.

We started things out with our spending versus savings episode, which was last week. 99 sats are probably a hundred. These are all 99 sats, but they’re probably a hundred. I think they’re getting rounded down by Satoshi Stream. User 537-751-072-435-6596. Appreciate that very much. Will M. Valenzuela, Valenzuela, sorry, Will M. Valenzuela, 99 sats as well for the same episode. I appreciate that. For the It’s a Dilemma, Security, Speed, and Decentralization episode, we got 99 sats from Joji, J-O-J-I. Appreciate that. And then, finally, on our overview of Austrian and Keynesian economics episode, the one that we kicked all of this off with, we had 99 sats coming in from user 694-260-285-308-3426. So, I appreciate all four of you all very much. It’s good to see that. And I do appreciate all the people who have been streaming sats as they’ve been listening, as well.

All right. News and links. We did have a fair amount of news this week. If you follow me on Twitter, I post everything on there and some extra stuff. And then I put the links into the show notes for articles and this kind of thing. I don’t talk about everything on here, as well. I skipped some stuff. Right.

So, things started off earlier in the week. Let’s see. Oh, I did see this. I should post a link to this. But one of the provinces in China is building, they’ve announced that they’re building a 28 and a half billion dollar metaverse industry. I don’t really know what that means. I would suggest that anybody should not be building, basically, a 30 billion dollar metaverse. I think that’s a bad investment, but okay. So, let’s see. That’s a bad investment, but okay. That’s what they’re doing.

All right. We started the week off on Monday with the EU solving the energy crisis. I was really glad to see this. They announced they were capping the natural gas prices at, it’s roughly $190 per megawatt hour. So, that means if you run a megawatt of energy or 1,000 kilowatts, if I’m not mistaken, continuously for an hour, that’s a megawatt hour and that costs $190. Supposedly, they’re not going to let it go above that. So, they’re going to do price control. So, this is, I would argue, well, maybe it’s not a natural reaction, but it’s a normal reaction by a government to a situation like this. Now, they created the situation themselves, in my opinion. You may argue with that and that’s okay, but I think that any country that can should have multiple sources of energy and not just rely on one thing.

Here in the United States, we are fortunate, frankly, that we have nuclear, we have coal, we have oil, not oil generators necessarily, natural gas, we do have natural gas, and also, of course, wind and solar. Most areas of the country do not depend on any one of those except maybe the nuclear plants. Those are fairly steady, of course, sources of power, don’t tend to fluctuate. But my point is that, in my opinion, no country should depend on, frankly, natural gas from Russia alone.

Now, I’m not going to get into a discussion about that. You may disagree with that, but that’s okay. I do believe that these prices are a consequence of that policy, essentially, that we’re going to shut down nuclear, that we’re going to shut down coal, that we’re going to depend on wind, solar, oh, and then we’ll have some natural gas come in from Russia, and then all of this stuff starts basically a year ago with Ukraine, so that all goes out the window, and then we’re where we’re at. But they’re going to cap prices and solve it. Oh, man.

Okay, let’s skip that one. A great quote by Gigi, Bitcoin has no CEO that can be influenced, arrested, or corrupted. It is a force of nature like the tide coming in and out, like the sun rising in the east. You could have an opinion on it, but your opinion won’t influence it in any way. I have pointed out that that is one significant difference between Bitcoin and any other blockchain. There’s no CEO, there’s no foundation, there’s no pre-mine, none of that.

All right. Ghana halted payments on, I quote, large swaths of foreign debt. So, the majority of their foreign debt they halted payments on because they’re in such bad financial shape. Here’s actually why I brought this up. The $3.5 billion that they owe to the IMF and the $4.7 billion owed to the World Bank, those two institutions that work so closely together to, in air quotes, help developing nations. They are still owed. They’re exempted from that because it was set in their agreement, I’m sure, from the start. And I’ll have a link to that in show notes. Alex Gladstein wrote an article about that, a very long article, which I highly recommend. I bring it up. I’ve brought it up basically every week since he put it out. Take the time to read that.

Just real quick, when Amazon lost a trillion dollars in market value, first company to do that, I think that’s mind boggling, actually. So, they’ve lost half their value, half their stock value. They were worth roughly $2 trillion. Now, they’re $1 trillion.

I saw a couple of memes that I retweeted about privacy versus security. One of them, for example, privacy is curtains. So, if you’ve got curtains over a window, people can’t just look in your window and see what’s going on. It’s not going to keep a burglar out. On the other hand, steel shutters over your window, that’s security. Both are critically important, but they are two different things.

I thought this was cool. El Salvador citizens received $52 billion in remittance through the Bitcoin Chivo app in the first half of the year. We’ve talked about that quite a bit. I won’t go into that, but that’s a huge savings for the citizens of El Salvador over using Wells Fargo.

This was the miner I was talking about earlier. Core Scientific has filed for bankruptcy. They are one of the largest Bitcoin miners in the world. They may be the largest. I don’t know that offhand, and they have filed for bankruptcy. I don’t know how that will end up. I suspect they will end up selling off a lot of their miners and their assets, their Bitcoin, and trying to survive. Whether they survive or not will, frankly, depend on the length of the bear market. What it will do is drive down the price of miners, which are already extremely low at this point.

I’ve probably mentioned this on here before, but at the top of the bull market, the miners were like $15,000. I just checked. You can go to Compass Mining right now and buy a top-of-the-line miner for $2,000. So, a huge difference. I suspect they will get down to $1,500, maybe even less, before this is over. We’ll see. I don’t think you can get much closer to, much less than $1,500. I think there’ll just be too much demand for buying of them.

Probably the biggest news of the week on the 21st, Carolyn Ellison, who was the CEO of Alameda Research, and Gary Wang, who was the previous CEO? Anyways, he was involved in FTX and Alameda. They both pled guilty to federal charges, and are cooperating in the criminal case against our friend SBF. So, in crime show terminology, they’ve flipped. I thought, and this has all been brought, by the way, by the Southern District of New York or whatever. It’s New York City judicial system. It’s the judicial system, system. It’s the judicial system, I should say, that’s centered in New York City. I don’t know if I mentioned it on here or not, but Carolyn Ellison was seen where she was supposed to be in Hong Kong trying to get to Dubai. Instead, she popped up in New York City. Now, if I didn’t mention it on here and I didn’t tweet about it, you have no reason to believe me.

But when she did that, I said, she’s flipping, because I knew that it was the Southern Judicial District or whatever that was prosecuting SBF. To me, it just seemed natural that they would offer her some plea deal. Hey, you won’t spend your life in prison if you’ll flip on this guy and tell us everything, which is apparently what she’s doing. And I don’t know if I have an article about this. I don’t even consider it to be news. But supposedly, well, Sam Bankman Fried has gotten out on $250 million in bail, which sounds ludicrous. First of all, I don’t even think he should be getting out on bail. But basically, from what I’m understanding, his parents put up their house, which is like $4 million, against him. And he’s under house arrest. He can’t do anything. Maybe they should keep him off the internet. Just a thought.

All right. The Brazilian Bitcoin bill for regulating usage of payment did get signed by the president. It is now in law. It goes in effect in 180 days. So, at the end of the first quarter, basically.

Oh, F.A. Hayek. Just as an aside, I’ve mentioned Hayek in the past. Actually, for Christmas, I got three or four. No, I got four between Christmas and my birthday, which my birthday was this month as well. So, they kind of run together. But anyways, I got four economic books, including two, I think, by Hayek. And I have started reading one of his views on currency. And he won the Nobel Prize for Economics in 1979, I believe. I don’t think he ever got a great deal of recognition. But then, frankly, the Austrians, of which he is certainly one of them, have been swept out of the way. So, I don’t really think that’s surprising. But in a video in 1984, and I looked this up, this actual video, there’s an actual video out there of him. He said this, I don’t believe that we, let me emphasize, 1984. Internet was around, but it was very much a government and university thing. There was really no commercial internet. We were still on bulletin boards at that point. Anyways, I don’t believe that we shall ever have a good money again before we take the thing out of the hands of government. Since we can’t take it violently out of the hands of government, all we can do is, by some sly, roundabout way, introduce something they can’t stop.

So, Hayek lived until 1992. He was born in 1899. He actually died when he was 92 years old. So, he had a long life. He did see the internet, but he never saw Bitcoin, certainly. That was almost 20 years before Bitcoin. He did not get to see what Bitcoin could do. Of course, he’ll never see what Bitcoin can do in the future, but I would argue that Bitcoin is the perfect solution to this. We cannot violently take money out of the hands of the government. It will not happen. So, maybe Bitcoin is the sly, roundabout way of introducing something they can’t stop. I just thought that was interesting. I don’t know. Okay.

Let’s see. If y’all remember PayPal, Cash App, if it’s more than $600, you have to report it to the IRS. It’s the most ridiculous thing. I think that’s actually in total. So, if you spend more than $600, you have to report all that. Either way, it’s still ridiculous. There’s two US senators, and there’s a link to this in the show notes. They have proposed an amendment to increase that threshold from $600 to $10,000, which is the same as it is for banks, which I think is at least semi-fair. Then, we probably need to have a discussion how that $10,000 was set back in the 70s. By the way, there’s this thing called inflation, which means that, really, it should be $20,000 or $30,000. I don’t remember the figure. In the 1970s, when they came up with that value, nobody walked into the bank with $10,000. I mean, people did, but it was quite rare. I can go out to the front yard and sell one of my vehicles that’s really not that new and make $10,000 off of it and take that to the bank. Then, they’re going to question me about why I’ve got that money. Or maybe, maybe I’m just frugal and I save my money instead of spending it, and then I take that down to the bank, because I’ve heard that that’s a safe place to keep it. Now, that may be incorrect, but I have heard that. So, anyways, the presumption of guilt is just, it gets me every time. We’re going to move on before I get excited.

All right. Remember Italy? I just talked about how Italy was not doing well. Italy is considering reversing their anti-nuclear policy as their electricity prices explode. Congratulations, Italy. You have a chance. By the way, Italy, one of the poorest countries in Europe pays more than all of the other European countries for energy. I say it, I say it almost every week. Cheap energy creates a foundation for a strong economy.

On December the 23rd, oh, one of those economic books I got was about the Federal Reserve. This book has got to be, I don’t know, two inches thick? It’s like 800 page. I have other books I am going to read first but I’m very interested in this one. I think the Federal Reserve and other instituions like the Federal Reserver .. They have a great deal of control in our economy. A hundred and nine years ago, on December the 23rd, the Federal Reserve was founded. Since then, the US dollar has lost over 96% of its value. So the thing that they were created to help stabilize has lost 96% of its value in a hundred and nine years. I don’t know. It seems really obvious to me. But all right, that’s it for the news.

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Thanks for being here. I hope this has been helpful and I would love to hear from you. I’m on Twitter, of course, at McIntoshFintech, I’m on Mastodon at macintosh at podcastindex.social and I can be reached by email at macintosh at jenwaltzcrypto.com. Stay humble, friends. Go out and make it a great week. And I will see you next time.

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