Let's Talk about Text, Baby
There Are No Shortcuts to Understanding This New World of Money
I have an okay brain. It’s not great; it’s not the worst. Just pretty okay.
And I’m okay with that.
(After reading some editions of this newsletter, some of y’all are like, “Fool, you’re giving yourself way too much credit; your brain is completely broken.” And you’re probably right.)
It’s always taken me a while to grasp new concepts and to process and remember information.
In school, I had to work hard to absorb material, and I had to study hard to do well on tests. I was always envious of those kids who didn’t have to work as hard to get good grades. But I digress…
I often feel my mind stretching as I try to process what’s going on in the worlds of macroeconomics and digital assets.
I’ve found so many teachers on the internet in these worlds in that last three or four years that I find it very difficult to find the time, energy and bandwidth to learn everything that I want to.
However, despite the fact that I can’t learn everything, I know that I can still learn a good amount. And so I often find myself reading up to a point where I’m just about to get a headache. (I used to read well past that point, but have lately realized how unhealthy that is.)
I share this info because, as I’ve often stated, if you are going to invest in this new world of digital assets, you have to do your own homework and develop your own conviction.
As I’ve said since the first edition of this newsletter, I’m not a guru, I don’t have a crystal ball and I’m not your financial advisor. I’m simply here to do my best to share information about an emerging asset class that I believe will have profound effects on the world in the years to come.
But this newsletter should only be a jumping off point for you. It’s up to you to pursue further education on the topics I discuss here. IMHO, if you want to really learn how money works, the effects that it has on society and where you should best invest your money to help store the value of your labor, you’ve got to hit the texts and hit ‘em hard. (Or maybe you don’t and I’m just a maniac. That’s probably more likely the case.)
So, in this edition of the newsletter, I’m going to share some book recommendations and words from other writers in hopes that maybe they will spark your interest to read and learn more on your own. But before I do so, let me quickly share a link to an important piece that I contributed to this past week.
Was the Ethereum Merge a Good Idea?
The Ethereum Merge went off without a hitch this week. Just as I thought, it turned out to be a “buy the rumor, sell the news”-type of event.
My editor, another writer at Finder and I shared our thoughts on the pros and cons of the Merge in the following piece (also linked in the tweet below): The Ethereum Merge: Is it actually a good idea? 3 experts weigh in
(For the record: I hate being called an expert. It feels like a very fiat economist term to me.)
Fun fact about the piece: If you Googled “Ethereum Merge” in Australia on the day of the Merge, this was one of the first pieces that popped up in your search results.
Pretty wild to think that I started writing about magic internet money as a hobby a year and a half ago and now some of the pieces I contribute to are widely read by people on the other side of the world. Ah, the magic of the internet…
One last thought on the Merge before I move on:
If You Want to Learn More About Ethereum, I highly suggest reading the following books:
Camila Russo and Laura Shin were two of the first mainstream media journalists to cover crypto. They used to write for Bloomberg and Forbes, respectively. They now each have their own podcasts: The Defiant (Camila Russo) and Unchained (Laura Shin)
By buying these two books, you’ll be supporting women in the space, which is something we like to see here at the newsletter.
Macro Alf Will Stretch Your Mind
If you aren’t following Alfonso (Alf) Peccatiello (howyadoinz) on either Twitter or LinkedIn (or via his newsletter, The Macro Compass) and you are trying to understand the macro landscape, you are doing yourself a disservice.
Here’s some background on the chart above:
Translation: Not only is it likely that asset prices will continue to go down, but you may get laid off soon, too. (Great stuff.)
Now, I don’t always agree with everything Alf shares - but that’s kind of like me saying I don’t agree with Einstein’s Theory of General Relativity (not really; I’m just being HYPERBOLIC again). I barely have enough base knowledge to process Alf’s takes, much less disagree with them.
I follow him because his words stretch my mind, and I like the challenge of trying to process the info he presents. I understand a little more each time he posts, and I like how that feels.
And I do believe that most asset prices - including those of BTC and ETH - will trend lower or stagnate for another few months at least before we see any sort of notable rebound. And layoffs are probably coming soon.
Bitcoin Is Venice (Italy)
And so we bounce from the Italian Stallion above (Alf) to pre-Renaissance Italy.
I’ve been working my way through Bitcoin Is Venice: Essays on the Past and Future of Capitalism, by Allen Farrington and Sacha Meyers. It’s brilliant text (or compilation of texts), and I highly recommend that you read it.
In it, the authors discuss how bitcoin (BTC) could fuel a new renaissance, much like how the invention of double-entry bookkeeping was instrumental in the financing the original Renaissance (you know, the one where they painted the ceilings real nice and all that).
One thing I love about the book is how the authors refer to our current financial system as “degenerate fiat ‘capitalism’”. Such an apt term for how corrupt our financial system has become since August 15, 1971 when Nixon broke the Bretton Woods agreement, which stipulated that the US dollar be backed by gold, setting in motion five decades of the increased financialization of nearly everything in society (e.g., school, healthcare), which has played a massive role in the erosion of the middle class in America. (Exhale)
Farrington and Meyers make the claim that Bitcoin can serve as a definancialization agent as its rules and inflation schedule are set in stone. I mostly agree, but, again, Farrington and Meyers’ breadth or knowledge on this topic and the many others they touch on in the book is broader than mine. So, my saying I agree with them is just about the equivalent of my saying something like, “Hey, you know that Neil deGrasse Tyson guy really knows what he’s talking about when it comes to astrophysics!” (Again, not exactly, but, you know, HYPERBOLE).
Below is one of the essays from the book:
(In the book, the authors promote the unauthorized replication and distribution of the text. They’ve also chosen not to take any profits from the sale of the book. All proceeds from the sale of the book go to the Human Rights Foundation. Yet another good reason to buy it.)
My only critique of their writing is that I wish they’d use the term “market economy” instead of “capitalism,” mostly because of the negative connotation often associated with the term capitalism.
Okay, let’s go on a tangent!
Most associate capitalism with the bastardized version of it that we have today, and don’t understand that the “socialist” countries that the intelligentsia loves to love - Norway, Sweden, Denmark, etc. - are not in fact socialist. All of these countries have market economies. Quality of life is so high in these countries because they have strong welfare states. Having a strong welfare state is not the same as being socialist.
Venezuela is socialist. I used to live there. The socioeconomic situation wasn’t good then (while Chavez was still alive and in power) and it’s even worse now. Venezuela is what happens when governments take over industry.
Having a welfare state is important, especially when it comes to public health and education, but I can’t get behind government taking over industry.
Imagine if you will:
Donald Trump coming back into power and being in control of all US industry. Dude bankrupted every company he touched his whole life. I wouldn’t want him in charge of all companies in the US.
That Twitter couldn’t have deplatformed Trump (as much as I have mixed feelings about that move) because Trump would have been in charge of it. Bad stuff. (Yes, I know there are other issues with big tech having that sort of power, but let’s save that for another discussion. And if you read Bitcoin Is Venice, you’ll learn that Bitcoin might be a solution to some of the negative externalities of big tech.)
In America today, we have financial socialism - where gains are privatized and losses are socialized. This system has destroyed the purchasing power of the US dollar, which has put many people in desperate financial situations. This is what happens when the value of money is not tied to a scarce asset.
Do I think Bitcoin should become that scarce asset right now? No.
It’s still too young and volatile; this experiment is still far too new.
Do I think Bitcoin could one day become the global reserve currency? Maybe. Again, not tomorrow, though.
It will take a long time for the world to wrap its head around Bitcoin. Hell, I write about it for a living, and I’m still wrapping my head around it.
It will likely be desperation that leads most people, institutions and countries to it, as it was some degree of desperation that led me to it.
This is why it isn’t surprising to me that we are seeing that emerging markets are currently leading global crypto adoption.
The US dollar has been a wrecking ball for developing countries. Because most of their debt is denominated in USD, every time the Fed chooses to strengthen the dollar, it’s harder for these countries to pay back their debt. This leads to austerity and yada yada yada (I’ve discussed this in many previous editions of the newsletter).
I think that El Salvador and the Central African Republic were a bit early in adopting Bitcoin as an official currency because its price in fiat terms is still so volatile, but these countries could still just as well become models for other developing countries who don’t want to remain in debt servitude to the US (or China).
But let me cut my blabbermouthing short here. I’ve gone way too far off the deep end on this tangent.
Let’s recap:
Reading is important.
Engaging with texts that challenge your existing framework of knowledge is important.
Doing your own research is important.
My thoughts are simply that: my thoughts. They should not become your thesis by default.
So, my advice to you if you want to become a mature investor is to go out and have some textual relations. And then feel free to share what you learn in the comments!
Best,
Frank Corva
Twitter: @frankcorva
My apologies to those who first read this in it’s email form. So many typos. Will try to do better next time!
Cryptocurrency is very much beyond my ken. BUT! The quote by Harris Irfan was worth the read. Thanks for sharing Professor Corva, or dare I reach for it and say, thank you Frank.