We're in the Best of Hands
Happy 4th!
Greetings from D.C.!
I’m here to spend some time with some friends over the long weekend/for the 4th. First time spending my country’s independence day in its capital. Should be fun!
Gonna get right to it and keep it brief this week because I don’t want to think much about markets this weekend. I want to chillllll.
This week, Fed Chair Jerome Powell made the following statement:
“We now understand better how little we know about inflation.”
I think he was serious when he said it, which is hard to believe. Maybe he was just trolling us. If so, what a jokester.
Seriously, imagine being the head of an institution that only has two mandates and admitting that you don’t know how to achieve one of them.
That’s something like being a teacher and saying, “I now understand how little I know about lesson planning” after all of his/her/their fail the class and get left back a grade. It’s actually way worse than that, but you get the point.
We’re well on our way to stagflation. We’re now technically in a recession (which is defined as two consecutive quarters of negative growth). And this economic downturn seems to be on the verge of getting much worse.
If energy prices continue to soar, we may be in the early stages of a commodities supercycle. I really don’t know enough about this to speak on it, though. I’ve noticed that even those who do have the credibility and experience to speak on this are hesitant to do so, as well.
I wrote a piece for Nasdaq on behalf of Finder this week in which I referenced famed investor Stanley Druckenmiller who recently warned about the unprecedented mix of “strong headwinds” the economy is facing. Not like you probably haven’t realized that already, though.
With that said, now doesn’t feel quite like the time to YOLO your rent money into some risky trade. Safety first. I wouldn’t try to be a hero in this market. Not financial advice (Do you have to say that when you share what you wouldn’t do? IDK).
Not All Stablecoins Are Backed the Same
If you’ve moved into stablecoins, please know that not all stablecoins are backed the same. I recently wrote a piece for Finder on the differences between USD Coin (USDC) and Tether (USDT), the two largest stablecoins by market cap. The piece still needs some tweaking, but it currently provides a solid overview of the difference between these two major stablecoins.
No Escape
If we are on the verge of hyperinflation, governments will likely continue to make it hard for people to get their money out of local currencies. We’re seeing something like this play out in countries such as Sri Lanka and Sudan now.
It will probably be some time before we have to worry about this the United States, but I’d imagine it’ll hit us eventually. (Good to get your crypto off exchanges just in case, though.)
Below are some thoughts from a notable political scientist at Columbia University loosely related to this topic. I helped him flesh his point(s) out in the comments to his tweet.
If you’re wondering, Mr. Bremmer responded with an “Ugh” but then deleted his response. To his credit, he responded further saying that he doesn’t support MMT.
If he really felt that way, I wish he’d talk to his colleagues Jeffrey Sachs and Joseph Stiglitz about the careless economic and monetary policy they support.
Yeah, yeah, I know… I have to once again go back to working on my antagonistic tendencies. They get the best of me too often these days, and it’s not good for my health.
Okay, [deep breath] oooooohhhhhhhhmmmmmm.
Happy 4th of July and Happy belated Juneteenth, everyone! I hope you are all surrounded by loved ones for the holiday.
Best,
Frank
Twitter: @frankcorva
Currently Reading: “Barack Obama Blasted for not Codifying Roe v. Wade: ‘Dem Failure’ (Newsweek)
