Bitcoin Hits All-time High (Market Cap Almost As Big As Goldman Sachs)

The crypto currency Bitcoin just hit another all-time high, reaching 5,606.

bitcoinrlly

Here is Bitcoin relative to gold.

Bitcoin’s market cap is now $93.5 billion.

Making Bitcon almost as large as Goldman Sachs in terms of market capitalization.

While not quite bigger than Goldman Sachs, Bitcoin is on its way.

But unlike Goldman Sachs, Bitcoin is NOT Too-big-to-fail (TBTF).

Here is Lloyd Blankfein, Goldman Sach’s CEO, doing his best Hyman Roth impression from The Godfather 2.

Advertisements

The Bitcoin “Smile”: Bitcoin Continues Surging As US Dollar Continues Devaluation of Consumer Purchasing Power

The Federal Reserve was created by an act of Congress in 1913 and a stroke of the pen by President Woodrow Wilson. And the purchasing power of US consumers has never been the same.

Enter Bitcoin, the worldwide cryptocurrency and digital payment system. Currently, one  Bitcoin equals $4,396.00.

bituw

While this looks like a volatility smile, it is not. It does show the erosion of the purchasing power of the US Dollar and the rise of an alternative currency: the  cryptodollar.

In a remarkably frank talk at a Bank of England conference, the Managing Director of the International Monetary Fund,  Christine Lagarde, speculated that Bitcoin and cryptocurrency have as much of a future as the Internet itself.  It could displace central banks, conventional banking, and challenge the monopoly of national monies.

This the polite version of Dennis Hopper’s preference for Pabst Blue Ribbon beer.

Hey, although he signed The Federal Reserve into existance, at least he could pitch!

1370357173woodrowwilson

BIS Hunts for ‘Missing’ Global Debt, Inflation (Try Including Housing!)

Just like global central banks, the Bank for International Settlements can’t seem to find inflation and $114 trillion in off-balance sheet FX derivatives.

ZURICH – Nonfinancial companies and other institutions outside of the U.S., excluding banks, may be sitting on as much as $14 trillion in “missing debt” held off their balance sheets through foreign-exchange derivatives, according to research published Sunday by the Bank for International Settlements.

These transactions, which resemble debt but for accounting purposes aren’t classified that way, aren’t new. Rather, researchers from the BIS — a consortium of central banks based in Basel, Switzerland — used global banking data and surveys to estimate the size of this debt for the first time.

The implications for financial stability are unclear because FX swaps are backed by cash collateral and can be used to hedge exposure to currency swings, thus promoting stability. Still, the debt “has to be repaid when due and this can raise risk,” the authors wrote.

According to the paper, published with the BIS’s quarterly update on global financial conditions, non-banks outside the U.S. owed roughly $13 trillion to 14 trillion through foreign-exchange swaps and forwards. That exceeds the nearly $10.7 trillion in dollar debt held on their balance sheets at the end of the first quarter

“Non-banks” include nonfinancial companies, households, governments, and certain financial institutions that aren’t classified as banks and international organizations.

Globally, there are $58 trillion in FX swaps and related exposures, BIS said, which equals about three-quarters of global gross domestic product.

The authors explained that “in an FX swap, two parties exchange two currencies spot and commit to reverse the exchange at some pre-agreed future date and price.” In a forward contract, parties agree to swap currencies at a future date and price. “Accounting conventions leave it mostly off-balance sheet, as a derivative, even though it is in effect a secured loan with principal to be repaid in full at maturity,” the paper noted.

This short-term funding is backed by cash and it carries little credit risk. “Even so, strains can arise,” the authors wrote, citing the funding squeeze experienced by European banks during the global financial crisis.

The BIS’s quarterly review didn’t just examine missing debt, it also examined what it called “missing inflation” in the global economy, which has helped spur risk taking and drove up financial asset values in recent months.

The implications are big for stock and bond markets that have moved largely in tandem, with bond yields staying super low while equity markets reached record highs. Whereas faster growth typically implies higher inflation and central bank rate increases, the prospect of significantly tighter monetary policy in the U.S. and other big economies has receded.

“This puts a premium on understanding the ‘missing inflation’, because inflation is the lodestar for central banks,” said BIS chief economist Claudio Borio.

Annual inflation in the U.S., measured by the price index for personal-consumption expenditures, was 1.4% in July. Annual eurozone inflation was 1.5% in August. Both are well below the 2% rate that most big central banks consider optimal. Economists typically cite sluggish wage growth, heightened global competition, low oil prices and the effects of technological changes as explanations for subdued price pressures.

“Despite subdued inflation in advanced economies, the global macro outlook was upbeat. Market commentators label such an environment the Goldilocks scenario — where the economy is ‘not too hot, not too cold, but just right,'” BIS said.

Still, there are risks if bond yields eventually start to rise on the back of firmer global growth, given the sensitivity of the private and public sectors to debt.

Thus, the absence of inflation “is the trillion dollar question that will define the global economy’s path in the years ahead and determine, in all probability, the future of current policy frameworks,” said Mr. Borio.

Dear Federal Reserve and BIS. Try including house prices which are growing at fantastic rates of growth.

globalhousepriceindex

Tell folks in New Zealand and Australia that there is “no inflation.”

indexglobal

The US almost looks tame in terms of housing pirces compared to Britain and its former colonies where housing prices are growing over twice as fast as wage growth for the majority of the population.

houresarnyoy

New Zealand takes the cake for crazy housing prices, particularly in Auckland, their largest city.

Auckland-average-dwelling-price

There BIS. We found your missing inflation. 

324145186a0d6bd3c71c69fd5ece7d4b

Venezuela’s Inflation Rate Just Hit 2,061% (6 Mo CDS At Almost 13,000)

Yes, the US economy like Europe and Japan are suffering from chronically low rates of inflation (unless you count things like home prices,. rent, college tuition, healthcare, etc).

But not Venezuela! They just surpassed the year 2017 in terms of their inflation rate: 2061%!

ven2000

Venezuela’s sovereign curve remains steeply downward sloping with short-term rates in excess of 50%.

vencurve

And Venezuela’s CDS curve is similar in that it is downward sloping with 6 month CDS at almost 13,000.

vencds

“Look amigo, I can spin the basketball just like Steph Curry!”

twirls

How Bad Is Venezuelan Inflation? It Is Giving Bitcoin A Run For Its Crypto-money

Just how bad is inflation in Venezuela? A computer game with infinitely spawning enemies has a better exchange rate than the Venezuelan Bolivar.

Venezuela has a staggering inflation rate. Thanks to Venezuela’s horrid fiscal and monetary policies. there are 8,493.97 Bolivars per US Dollar in the black market.

veninfl3

Then we have Bitcoin, the original cryto-currency. It has gone from under $1,000 in December 2016 to $2,755 as of Friday. Bitcoin was at $13.28 on January 3, 2013.

bitcoinapp.png

Of course, Bitcoin is not issued by a Central Bank like the US Dollar. And the US is experiencing low and declining inflation.

corepceprf

Except for healthcare spending per capita and college tuition.

health

Yes, the US is suffering from rapid rates of increases in healthcare spending per capita and college tuition/textbooks. But even they are no where near the ridiculous levels of Venezuela’s inflation rate.

venezuela-is-on-edge-after-a-referendum-to-remove-nicolas-maduro-was-blocked.jpg