Digital Gold? Bitcoin Rebounds From Correction While US Dollar Weakens

Yes, the US Dollar is FIAT currency (not backed by a precious commodity like gold, silver or even iron pyrite).

Bitcoin, the largest crypto-currency, has more than recoverd from the “correction” last week. It has resumed its all-time high price This is happening as the US Dollar weakens.


Here is Bitcoin relative to Gold. Check out their relative performance since September.


Is it digital gold? Well, Bitcoin is an alternative to FIAT currency like the US greenback, the Euro and the Yen. The massive expansion of Central Bank balance sheets has certainly concerned investors.


An example of an 1899 $5 silver certificate.



US Industrial Production Rises To 2.88% YoY, Capacity Utilization Rises To 77% (M2 Velocity Still Dead)

Call it rebound from the horrible hurricanes in Texas, Florida and even Georgia. The October Industrial Production numbers are out and IP YoY climbed to 2.88%.


Capacity utilization rose to 77%, although it is still below the Fed target (not spoken of recently) of 80%. The last time was 80% Capacity Utilization was during the housing bubble.


The problem is that M2 Money Velocity (GDP/Money Stock) remains at an all-time low.  Although we are seeing a stabilization in labor force participation.


The US Federal Reserve is printing currency (M2) at a rate almost twice as fast as Industrial Production growth.


Here is a photo of a young Janet Yellen contemplating print more and more money.`


M2 Money Velocity Rises Above All-time Low In Q3 ’17 (While Stock Market Momentum Increases To Highest Since Bubble)

M2 Money Velocity (GDP/M2 Money Stock) actually rose in Q3 2017 to 1.4282.


At least it rose above the all-time from Q2 of 1.428.


As M2 Money growth continues to be >2x real GDP growth YoY.


Yet momentum in the stock market is the greatest since the bubble.


Well, Fed Chair Janet Yellen keeps telling us everything is groovy.



US Treasury 10Y-2Y Slope Drops To Near 10 Year Lows (Ahead Of Fed FOMC Meeting)

It is doubtful that we will learn much from today’s Open Market Committee (FOMC). Hopefully we will get additional clarity on the Fed Balance Sheet unwind schedule (it was supposed to start in October and it is now November).

Ahead of the meeting, both the 10Y-2Y and 30Y-5Y Treasury slopes fell to near 10 year lows.

And the 10 year Treasury Note volatility index, TYVIX, remains near historical lows.

And just a reminder, core PCE prices YoY (“inflation”) is at 1.33%, well below the 2% Fed target rate for inflation.

Well, apparently Janet Yellen and The FOMC aren’t following the Taylor Rule (or ANY  rule that I can detect).

I am sure that Janet Yellen would like to lock up John Taylor (in gold) and throw away the key.

Big Bubbles: Endless Printing and Rate Suppression Have Created The Mother of All Asset Bubbles

Crooner Don Ho almost got it right in his signature song “Tiny Bubbles.” But it is now “BIG BUBBLES in the economy, make me nervous all over, with a feeling that I’m gonna lose it it all.”

Check it out. Home prices are seemingly unstoppable and the S&P500 index is relentless. The unstoppable asset price bubbles started in the mid-1990s when M2 Money Velocity peaked. The housing bubble burst then rallied back it bubble levels again, but the stock market has outpaced its former glory.


Of course, the M2 Money stock is over 3 times greater than in 1995 (that’s a lot of printing!) and interest rates have been depresssed since December 2008.


Now, The Federal Reserve is tapping the brakes by ever-so-slowly raising The Fed Funds Target Rate while at the same time slowing M2 Money Supply YoY (we are now at the slowest YoY growth rate of money since early 2011. Next up? Today’s FOMC meeting.


Big bubbles thanks to Central Banks.`tinybuubl

Bitcoin Skyrockets As Dollar Purchasing Power Wanes (Bitcoin Growing Faster Than Amazon!!)

Do you want to see why Bitcoin is so popular? I call it “The Bitcoin Smile.”

The purchasing power of the US Dollar has been waning ever since President Woodrow Wilson signed the Federal Reserve Act into law in 1913. Meanwhile, Bitcoin has been soaring.


A closer look over the past five years shows same thing.


And hard forks haven’t interrupted Bitcoin’s rally.

bitcoin fork chart

And Bitcoin is growing faster than Amazon and Apple.


What will Uber-regulator Jay Powell do if Trump selects him as Fed Chair?


US Treasury 30Y-5Y Slope Flattens To Lowest Since Mid-Nov ’07 As M2 Velocity Hits All-time Low

The US Treasury curve slope (30Y-5Y) continues to flatten and has just hit the low point since mid-November 2007, nearly a year before The Fed’s annoucement of QE1 (their first round of asset purchases).


And as of Q2 2017, M2 Money Velocity has sunk to its all-time time low.

Here is photo of The Fed announcing their QE1 asset purchase program.

titanic-leaving-belfast (1)

And here is The Fed signalling a rate increase at their December FOMC meeting.