Fantasy Investing and Other Modern Money Madness

We ended last week as we began it…with our gast flabbered by the news.

The week was dominated by the debt ceiling hoax…in which one party earnestly tried to save the nation…while the other was determined to send it into a dark spiral of default and catastrophe.

At least, that’s the way the elite press described it.

Actually, there was never any danger of default. The feds get plenty of money from taxes to cover debt payments.

And there was never any real danger that they would fail to raise the debt ceiling. After all, debt — selling US bonds to the Federal Reserve (aka ‘printing money’) — is mother’s milk to both Republicans and Democrats…and the whole ruling elite. None of them want to be weaned.

And we looked more closely at how this affects its big beneficiary — Wall Street.

As intended, low interest rates forced investors to take their money out of real investments and move them to options, tech fantasies, memes, and razzmatazz speculation.

Last year, for the first time ever, option trading exceeded stock transactions.

Dick’s Sporting Goods has doubled over the last 12 months. Tesla has almost completed the double, too.

Of course, Elon Musk, of Tesla fame, has famously disrupted everything. We’re not sure what Dick has disrupted…but we’re sure he’s got a good racket going, too.

No sad faces

We looked at how profitable investing in the stock market has been — with the S&P 500 up nearly 30% over the last 12 months…and some university endowments up over 50%.

But since the economy is growing at…maybe…5% — using our estimate of GDP growth as the measuring stick — these gains cannot possibly be coming from real increases in profits or win-win wealth.

Instead, they must be casino-style winnings…from a win-lose, zero-sum game…where one player wins and the other goes home with a sad face and an empty pocket.

It caused us to wonder. With so many happy faces in view…where are all the sad ones?

Oh, dear reader, you know…don’t you? They’re in tomorrow’s news, aren’t they? When stocks crash…and consumer prices soar.

The Fed added about US$4 trillion to its balance sheet (new money!) since March 2020. Someone will have to pay for it.

Federal Reserve's Balance Sheet

Source: Federal Bank of St. Louis

[Click to open in a new window]

Pied Piper of Tesla

Returning to Elon…of course, he is a great showman…and has become a kind of pied piper for the frenzied players. When he puts the pipe to his lips…the casino goes quiet…and then, all dance to his tune.

All he’d have to do would be to mention that he likes tacos…and there’d be a run on salsa verde.

Think we’re joking?

Here’s Joanna Ossinger at Bloomberg:

The Shiba Inu cryptocurrency is now the world’s 20th-biggest by market value and has more than tripled in the past week, partly fueled by Elon Musk’s latest tweet about his own puppy.

The SHIB token, centered around a breed of Japanese hunting dogs, is up another 69% in the past 24 hours, according to CoinGecko pricing, putting its market value above $10 billion. […]

A tweet by Tesla Inc.’s boss late Sunday night U.S. time with a picture of a dog and the comment, “Floki Frunkpuppy”, may have also contributed to the frenzy. That followed a tweet in June that said, “My Shiba Inu will be named Floki” and one last month that read “Floki has arrived.”

Artful dodger

Meanwhile over in the art market…something amazing happened. Logical…almost inevitable…but still insane. CNN reports ‘A museum lent an artist $84K — so he kept the money and called it “art”’:

When an exhibition about the future of labor opened at a Danish art museum on Friday, visitors should have seen two large picture frames filled with banknotes worth a combined $84,000.

The pieces were meant to be reproductions of two works by artist Jens Haaning, who previously used framed cash to represent the average annual salaries of an Austrian and a Dane — in euros and Danish krone respectively.

But when the Kunsten Museum of Modern Art in Aalborg took delivery of the recreated artworks ahead of the show, gallery staff made a surprising discovery: the frames were empty. Rather than being the handiwork of thieves, the loaned cash was missing thanks to Haaning himself, who says he is keeping the money – in the name of art.

He’s got a point. Art is whatever they say it is. If you will pay thousands of dollars for a blank canvas…why not pay as much for no canvas at all?

HOODWINKED! Why Australia’s ‘miracle’ economy is a farce

Fantasy investing

Meanwhile, the non-fungible token (NFT) market imitates neither art nor life. Neither fish nor fowl. Neither animal, mineral, nor vegetable. Neither stock nor bond.

When you buy an NFT, you get nothing other than the record, entombed somewhere on the blockchain, confirming that you were the dope who bought it.

And thanks to a new NFT platform called Visionrare, you can pretend to invest in start-up stocks…but as a pure game.

You do not actually own the stocks. You just bet on whether they will go up or down in a complicated, fantasy league kind of approach. TechCrunch’s Lucas Matney explains that the idea is to…

…take the gamification of investing to its furthest end, mimicking the appeal of fantasy sports leagues and giving users a way to compete with friends by betting on startups they think will be successful. Users can bid on NFT shares of hundreds of different startups at auction and compete to build the best performing fake portfolio.

Does that sound like fun? No, not to us anyway.

The gamblers didn’t seem to like it either. The concept — fantasy football meets start-up investing — looked like a loser from the get-go.

And for its sponsors, tomorrow came quickly…

Less than 24 hours after it began, Visionrare was pronounced dead.

Today, the long faces are expected to gather at the grave.


Dan Denning Signature

Bill Bonner,
For The Rum Rebellion

PS: The Rum Rebellion is a fantastic place to start your investment journey. We talk about the big trends driving the Australian Economy. Learn all about it here.

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries.

A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities.

Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally.

With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance.

Bill has been a weekly contributor to The Rum Rebellion.

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