Learning Our Terms: "FUD"
Gather 'Round for Our Word of the Day
In the world of investing, particularly in the digital asset space, you will often hear people throw around the term “FUD”. So, kids, our word of the day today is “FUD… ‘F.’ ‘U.’ ‘D.’”, and FUD stands for “Fear, Uncertainty, and Doubt". Stoking FUD is a weapon that the likes of Jamie Dimon like to use to scare you away from purchasing valuable assets, while he and his bank acquire these assets quietly behind the scenes.
Just this week, Dimon and his crew at JPMorgan put out a memo that Ethereum (ETH) should be trading at a price of $1000 (based on the size of its network), which is over 75% lower than the price at which it is currently trading. And do you know why they issued such a statement? It’s quite simple actually. It is because Jamie Dimon and the analysts at JPMorgan are pieces of shit. That’s right - fragments of human excrement.
Making a statement that ETH should be valued at $1000, when, in reality, it is undervalued at $4200 as one of the main building blocks of the decentralized internet, something that has the power to unseat Amazon Web Services (AWS), is a prime example of FUD. A statement like this, much like Dimon’s many warnings to stay away from Bitcoin, are meant to induce fear and cause panic. It’s meant to make Wall Street Journal and New York Times readers say, “See, I told you. This whole cryptocurrency things is just one big scam!” It’s meant to scare people away while Dimon and his team fill their bags with (buy a lot of) ETH. Then, what they will likely do is share a memo in a few months stating something to the effect of “Ethereum is undervalued; what an incredible asset!” Then, everyone will jump on board and buy some, while Dimon and his gang sell the asset to these people at an inflated price.
Oh, but Frank, Dimon seems like such an upstanding gentleman and JPMorgan is an all-American institution! Why do you have this wicked tendency to be so hyperbolic! These banks wouldn’t do such things to us! They care about us; we’re their clients! To this, I say, JPMorgan lives up to the name of the man who founded it, a robber baron monopolist who put a countless number of smaller, independent businesses out of business. And slavery is also an all-American institution, so do yourself a favor and wake the fuck up.
I actually heard a great analogy for Dimon in a recent video by Scott Melker. Melker stated the following in the video:
“Jamie Dimon is like Gustavo Fring from Breaking Bad or he’s like the drug kingpin who works at a bank. He’s all buttoned up and he seems like all established and whatever. And then he’s got like his soldiers and dudes down on the corner secretly slinging rocks. They’re like, “Yo, son, come over here, I got that good Ethereum, I got those Doge options, I got that ETH. I got that ETH [to] get you high man.” We all know that JPMorgan is deep, deeeep in crypto, and they just want to see lower prices so they can buy more. They’re such assholes. They’re such assholes. They’re talking exactly the opposite of what they’re doing, and they have been since the beginning.”
Some of the other FUD you’ll hear Dimon and those of his ilk spread is the “Bitcoin is only used by criminals for money laundering and illicit activity” FUD. This is a cute one consider that it most often comes from the mouths of unprosecuted criminals. What we like to call this type of talk in the field of psychology, ladies and gentleman, is projecting. Projecting is when you claim that someone else is doing the very thing that you are doing. (See: “JPMorgan and Deutsche Bank Named in Money Laundering Report” (The Street) or “How a Big US Bank Laundered Billions from Mexico’s Murderous Drug Gangs” (The Guardian). So, whenever you hear from someone from a major financial institution talk about how crypto is only used for illicit activity, remember that the same person spreading this FUD works for an institution that regularly partakes in this type of illicit activity. Luckily, this type of FUD is starting to taper out, though.
But the FUD that just never quits is the “Bitcoin boils the oceans!” FUD. In fact, did you know that Bitcoin was on track to consume all of the world’s energy by last year? Yeah, seriously. Newsweek even wrote an article about it. Yet, oddly enough, I was able to charge my computer to write this piece. Weird. Now, I will admit that the Bitcoin network does require an incredible amount of energy, and I won’t pretend that it doesn’t do some damage to the environment, but if you’d like a more nuanced perspective on the topic, I recommend reading this article from the Harvard Business Review. I’ll likely write an entire piece on Bitcoin and its impact on the environment in the near-ish future.
The last, and most classic, type of FUD I will mention is the “Bitcoin is Dead!” FUD. Each of the red dots in the chart below marks a headline from a major publication that declared Bitcoin dead. I recommend clicking on the source below the chart/Tweet to read through the timeline of headlines. How dramatic (and wrong) the media tends to be.
(Source - bitcoinisdead.org)
(If you would like to read an even funnier version of a collection of takes of just how wrong people have been in declaring Bitcoin dead, you can also check out bitcoinisdead.lol.) “.lol”. So good.
Now, if you really want something to be scared about, I’d recommend reading the words of one of the most well-known investors of all time, Stanley Druckenmiller, as he recently shared his thoughts on what is currently happening to the U.S. dollar:
“We (the U.S. dollar) will lose this reserve currency status and all the benefits that come with it within 15 years. At present there is no alternative because of lack of trust in a communist dictatorship in China and the mess that Europe currently is. My best guess is the biggest threat is a crypto derived ledger system…”
And then take a moment to listen to what he has to say as a follow up in the video below.
“Five to six years ago, I said crypto was a solution in search of a problem…The problem has been clearly identified. It is Jerome Powell and the rest of the world’s central bankers. There is a lack of trust.”
So, like I said, if fear is your thing, I would be scared of the Federal Reserve, the number one driver of inequality in our society. I’d like to say more about this here, but I will likely write a more detailed piece on this idea as a part of a follow up to my take on Biden’s capital gains tax proposal that I plan to write.
So, what did we learn today, class? We learned that bankers, the mainstream media, and a whole apparatus of major institutions love to stoke fear, uncertainty, and doubt - FUD. And they do this largely because they are trying to sideline you while they acquire certain valuable assets before the price of these assets skyrocket. So, remember that Dimon and his all-American pose is just an illusion (much like the soaring prices of so many assets and the idea that the Fed’s printing money is meant to help the little guy). The central banks and the puppets that head them are what should stoke true FUD within you.
So, remember to do the reading I’ve assigned for homework, and next week we’ll talk about what it means to “ape in” to a trade.
Best,
Frank
Twitter: @frankcorva
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P.S. About eight months ago, I told some friends and family members that, by April, you’d begin to here everyone talking about Bitcoin. I was off by about a month.
The money laundering and criminality argument is so absurdly dumb. This joke comes to mind: With a gun you can rob a bank, but with a bank you can rob the world.