Hi, long time no inbox.

  • My sadly undramatic P&L

  • Finding J̶e̶s̶u̶s̶ Bitcoin: my return from profligate RobinHoody macro cosplay

  • Is BTC still beta on stahks?

  • Close with the obligatory film recommendation

Since the last issue I’ve lost money, which you’ve likely surmised. It’s only fitting that after becoming exuberantly and publicly bearish the market has done nothing, essentially, but levitate upwards. Egg find face.

The damage isn’t as bad as you might think. I’m still up a paltry $5k on the year due to the Eurodollar trade. But that I’ve somehow erased nearly all of the gains from being prodigiously bearish during one of history’s ugliest market bloodbaths is, well, embarrassing.

My complete P&L for the year, in the unlikely event that anyone still cares.

I haven’t written because, perhaps obviously, I’ve been confused. I may be dumb, but I’m self-aware enough to know when to get religion. In this case, fervent agnosticism.

I lit my brain with rotgut whisky
Till my pain was chicken fried
I've had dudes with badges frisk me
Teach me how to swallow pride

I took advice no fool would take
I got some habits I can't shake
I ain't the sharpest knife in the drawer
But I know enough to know
If you're gonna be dumb, you gotta be tough

- Roger Alan Wade

I’ll be equally unsurprised if the S&P500 rips to 3200 from here or sings a swan song to the March lows. Essentially every economic indicator in existence points one direction, while the country’s collective reliance on equity prices, and the willingness of government to support those prices at nearly any cost, points another.

The evergreen question is whether we’re lined up for a big inflation or a big deflation. Going one direction or the other seems inevitable, and so naturally we’ve done nothing but chop sideways for weeks.

I don’t have an opinion here and for the time being I’m done trading on any feigned understanding of whether markets will go up or down in the short-to-mid term. I still hold my near-worthless puts, most dated for June/July/September, but I’m sure not buying any more.

If I can’t offer intelligible commentary myself, I at least know where to point you dear reader.

Last week I listened to what might be my favorite discussion on the current macro situation: a MacroVoices interview with Lacy Hunt. Lacy is sober, fiercely intelligent, and has been around many years. He spends the conversation arguing that we are in a secular deflation which will continue for a long time:

And so the programs [CARE, et al.], while they are popular and certainly understandable from a humane standpoint, they are going to weigh the economy down. And the net result is that it’s going to produce very poor economic growth going forward. And that’s going to drive the inflation rate lower, not higher.

This is the path that Japan has taken in the last 30 years. Government debt-to-GDP rate has risen from 60% to 225%. And it’s been combined with all types of monetary policy manipulations as well. And the Japanese economy has become progressively weaker.

And that’s the path that we’re following.

He makes a convincing case for deflation. But despite this, he inadvertently convinced me that we are instead headed for a fiat-powered stagflation like we’ve never seen.

Bond Guru Who Called Last Bear Market 40 Years Ago Says Go Long ...

Lacy Hunt

Later in the conversation, the host explicitly prompts him about whether or not we’re in the midst of an MMT-fueled inflationary regime change. Hunt claims we aren’t yet, and that this hinges on some kind of perceived reverence for the letter of the Federal Reserve Act.

Well, we haven’t adopted MMT yet. The advocates are raising their voice now. But we haven’t done it. The Federal Reserve Act is very explicit. […]

Hunt acknowledges that if the Fed were to start buying US Treasury debt outright, effectively creating money and giving it directly to the government to fund deficit spending, that would signify the beginning of a shift into remarkable inflation. He says that luckily this isn’t in the cards because it would require a rewrite of the Federal Reserve Act.

What he somehow doesn’t acknowledge is that this is already happening - the Fed is already de facto monetizing the debt . I’m also not sure how he misses a clear circumvention of the Act by way of “special purpose vehicles” that the Fed is currently using to justify the purchase of junk debt ETFs. Nobody in power appears to have any qualms about this.

Once I finished listening to the conversation with Hunt, sometime close to midnight, I made a buy.


My calls on Bitcoin have been bad, and I’ve been duly thwomped as a result. I had made a bunch of sales in the $6ks, and recently ended up reverse margin-calling myself when Bitcoin passed $9k. I’d decided on this a month ago, thinking that 9k would be a reasonably conclusive sign that my view was wrong and prices weren’t going to be headed back down anytime soon.

But of course this is Bitcoin. I’ve seen this movie before and I’m sure that the market gods’ thirst for bloody irony is, unlike meat, in no short supply: invariably BTC will crash after I’ve bought back in, but I’m more or less unfazed by this.

I’ve rediscovered that there’s a kind of spiritual insurance in being positioned contra a bullshit currency; a system that bleeds the commons through inflation so that powerful incumbents can stay powerful and incumbent. A system that substituted the prospect of supporting a household full of kids on one income for the prospect of maybe being able to afford a 3BR condo if both adults work full-time on increasingly virtual jobs for dubiously worthwhile companies.

Sure, you can argue this is a vanity trade. But don’t forget that I sleep better at night knowing my value is in something provably scarce and only optionally subject to the dull gaze of customs agents and taxmen.

If Bitcoin becomes worthless, it will do so in tandem with my appetite for participation in civic life. It will mean that resisting value destruction has come to much baser ends.

My question, and Bitcoin’s major mid-term risk, is how the government responds as the market cap grows and a better understanding of its potential becomes more common. Bitcoin can and will survive a forced closure of major fiat exchanges, but how many years will that set back its adoption?

Anyway, I’m back to where I started with Bitcoin for Safety, which has aged unfortunately well in terms of its view on traditional markets:

There won’t be a crash… not in the form we’re used to, anyway. The government basically can’t let this happen. They have to keep the liquidity (read: cheap credit) flowing or else we have, basically, a complete collapse in equities and low-quality debt, and therefore in public pensions (who own large amounts of these things). This starts to get to, like, civilizational severity.

Central banks will have to keep creating money to keep credit cheap so that companies can continue to buy back their own shares and prop up the equity market. This will continue to increase the money supply and will further exacerbate bubbles in real estate and equities. These bubbles will steadily widen the divide between the have-assets and the have-no-assets in America.

The sort of recession that most people expect eventually may never come, since it can’t be allowed to come. We may have entered a new monetary regime after the fireworks in 2008.

I’ve come out of the past few months certain of only one thing: the money printing will not stop. Now that the US gov has ginned up trillions of dollars on short notice with absolutely no discussion of where it has come from or the trade-offs of its deployment, you can bet that politicians will be increasingly cavalier in blowing out M1, and citizens will be increasingly vocal about holy salvation via printing press.

I don’t want to be caught short of Bitcoin as this becomes increasingly obvious, and am happy to pay the insurance premium.

Relationship to equities

Bitcoin in purple, S&P futs in candles. Looks like beta on equities, right? Interesting that if we change the time period slightly, the percentages become much more radical. This is maybe good instruction in how chart crimes are committed.

Wow. Are we seeing a true decoupling or is this just more beta behavior? You tell me.


In any case, I deserve a little thrashing and I’m fine with taking it. I thought I could outsmart markets based on not much more than chewing up Twitter in my subconscious and expecting finely composted conclusions about money management to come out the other end. Did it end up being compost or that other thing?

I’m actually okay with paying some money for the reminder that what is really rewarded, both financially and spiritually, is the creation of tangible value: high quality creative output. Well-informed speculation does qualify for this, but like anything sufficiently abstract and high-leverage the creator is at risk of becoming ungrounded from reality pretty quickly.

Even if my speculation was “high quality” or “well-informed” (doesn’t look that way), there’s still risk. It’s perilous to make a few taps on your smartphone, get lucky (sometimes for a while), and feel like a genius. The risk, even if you win permanently, is that you forget what actual work looks like. When you’re doling yourself out serotonin on the basis of essentially having been a consumer, your chemistry isn’t as interested in doing hard work that isn’t immediately rewarding.

I watched this happen in myself after the 2017 bull run - after gorging on Twitter and green candles and increasing balances without really doing much, it was difficult to focus on longer-run creative efforts that I had previously enjoyed like writing code. I had become wired for instant gratification.

Okay that’s probably enough pontification for one issue.

On a “personal” note

I’ve very much enjoyed being in a house in the country and having space to do things in the physical world like 3d print, build a gym, work outside, shoot guns, look at trees, and make fires. I’m pretty disillusioned with city life and I don’t think I’ll be moving back to one any time soon.

I’ll be paying less attention to markets and more on making stuff.

Pump Up the Volume (1990)

Christian Slater as a high schooler in 1990s Arizona, maybe at his best, moonlighting as an angsty and obscene pirate radio DJ. Soundtrack’s got something for everyone.

As I watched this the other night it reminded me that maybe remembering to say “fuck you” once in a while and retaining a little bit of art and principle at the expense of practicality is part of being alive.

If you haven’t seen it, I highly recommend it if you can find a copy.