The Breakdown

Today on the Brief: Stocks down on coronavirus fears Demand destruction The looming retirement crisis Our main theme:  Bitcoin is up more than 30% on the year. After a crash alongside equities, it has proved incredibly resilient. There are famous new entrants to the space like Paul Tudor Jones II.  So how can a Bloomberg editor argue the year has been bad for bitcoin?  In this response podcast, NLW argues that most of the arguments are about narrative, not the underlying fundamentals. He presents six reasons why not only has it not been a bad year, but the exact opposite is true: Demonstrated institutional uptake Demonstrated resilience  New champions  Narrative fundamentals   Need in emerging markets  End of economic orthodoxy

After a week where bankrupt Hertz pumped 890%, the question is: what is the historical precedent?  Luckily, we have finance history guy Jamie Catherwood to fill us in. In this essay "Rubbish Rallies" (written by Jamie, read by NLW), Catherwood tells the story of an 1820s scam that turned into an 1860s market mania - even though everyone knew it had been a scam the first go around.  History might not repeat, but it certainly rhymes.  This is a bonus episode of The Breakdown, recorded originally last week as part of a private beta test for new content forms. If you like this type of episode, let me know @nlw on Twitter. 

The stock market has long been disconnected from the underlying economy, but much of what happened this week - particularly the pumping of bankrupt company stocks - suggests that something new is afoot.  In this episode, NLW breaks down three long-term trends suggested by the so-called Robinhood Rally, including: The “insurgency” aspect of a generation of young professionals who are willing to play the financial game rather than have it be played for them A totally new force in financial media, which could hit like a wrecking ball in one of the stodgiest, traditional media industries  An embrace of a certain type of cynicism or nihilism when it comes to the values of financial markets  This week on The Breakdown: Monday | Why War Reporting Is the Right Mental Model for Today’s Media, Feat. Jake Hanrahan The founder of Popular Front joins NLW for a discussion about protests, media and how the people being covered tend to not reflect divisive politics. Tuesday | What the Stock Market’s ‘Robinhood Rally’ Means for Bitcoin The largest 50-day rally in stock market history and even shares of bankrupt companies are up more than 100%. What is going on? Wednesday | A Vision for Digital Property Rights, Feat. Nic Carter Most people today look at social platforms like any other private company, but what if we saw them as alternative jurisdictions with a new set of property rights? Thursday | Why the Fed Keeps Denying Its Role in Increasing Inequality The Federal Reserve expects low inflation, says rates will stay close to zero through 2022 and keeps lying about the role of central banks in increasing inequality. Friday | Bitcoin Is More Than an Inflation Hedge While fears of a “great monetary inflation” have driven the recent bitcoin narrative, other aspects like censorship resistance and peaceful protest matter just as much. Saturday | The Chad Index Versus Doomer Internet Money: The Breakdown Weekly Recap This week, the wildest, most nonsensical, volatile part of the market wasn’t bitcoin, it was the “Robinhood Rally” in equities.  

Today on the Brief: Why bitcoin sold off A bank-the-unbanked narrative for the digital dollar It’s Dave Portnoy’s world and we’re all just living in it Today’s main topic: Why inflation isn’t the only bitcoin narrative that matters. When bitcoin’s halving coincided with the most aggressive central bank policy of all time, it set a clear narrative framework for bitcoin as an inflationary hedge. This was captured by people like legendary hedge fund investor Paul Tudor Jones, who warned of a “great monetary inflation.”  In this episode, NLW argues 1) that inflation could be a dangerous narrative to focus on too closely due to a number of countervailing deflationary forces, and 2) there are a variety of other narratives that are just as important to bitcoin, including: Censorship resistance  Seizure-resistant asset Currency controls and reshoring  Nations looking to escape USD system Independent banking  Peaceful protest

Today on the Brief: Three Arrows holds more than 6% of Grayscale Bitcoin Trust New platform for censorship-resistant blogging Coinbase announces new token potentials as anti-surveillance hodlers flood out  Today’s main topic: Why the Fed keeps denying its role in inequality  Some key takeaways from yesterday’s Federal Open Markets Committee meeting: Interest rates are likely to stay near zero through 2022 Unemployment anticipated to average between 9% and 10% during last three months of 2020 Economy expected to contract 4% to 10% this year No specific discussion of yield curve control Inflation expected to be 1.0% this year and 1.5% in 2021, lower than Fed target of 2% According to Chairman Powell, inequality has nothing to do with Fed policy On this episode, NLW recaps the above and dives deeper on two of the points: Net inflation stats gloss over specifics, including food prices that have been rising at an annual rate of 17.5% The Fed’s pronounced role in exacerbating inequality by propping up artificially high asset prices, effectively locking low and middle income households out of the mechanism for economic advancement 

Today on the Brief: A record week for peer-to-peer exchanges in the developing world A digital dollar gets discussed in Congress  Previewing the Federal Reserve’s FOMC guidance  Our main topic: A brainstorm on digital property rights Here’s a radical idea. What if by virtue of the fact that you had put so much time and effort into building a following on social media and filling that following with content you had legal claim to and distinct property rights around your corner of social media platforms?  It’s wild in the context of today’s terms of service, but has significant legal precedent in the world of physical land.  In this new type of deep-dive 20-minute episode we’re calling a “Breakdown Brainstorm,” Castle Island Ventures investor Nic Carter looks at: The two schools of thought around digital property rights The historical precedent for squatter’s rights What the specific example of the USA’s Westward Expansion can teach us Why this type of approach can be highly economically generative, according to economists like De Soto How John Locke’s theories provide a moral basis for the argument  Why today’s platforms are akin to anti-democratic feudal lords How bitcoin provides a model and a mechanism for digital rights enforced on the protocol level rather than by a state or other external actor  Find our guest online:Twitter: @nic__carterWebsite: niccarter.info

Today on the Brief: Saudi Arabia injects $13 billion in bank liquidity via blockchain. China’s state TV CCTV says Binance is still allowing crypto trading in China. MakerDAO community greenlights real world collateral.  Our main topic: The “Robinhood Revolution.”  The next time someone tells you crypto markets are too irrational or volatile, point them to stock markets right now. The largest 50-day rally in history Every S&P 500 stock up from 10 weeks ago Multiple bankrupt companies up more than 100% since they declared bankruptcy This is the “Robinhood Revolution,” as a horde of day traders are outperforming billionaire investors and commanding the stock market narrative.  This episode looks at: Who is this new generation of investors  Why they’re so active right now What they’re betting will go up Why they don’t care about earnings, balance sheets or any other fundamentals Four scenarios for how this rally could have an impact on the bitcoin and crypto industry 

On today’s episode of The Breakdown, we introduce the Breakdown Brief - a look at three key topics in bitcoin and crypto. Today, the Brief covers: Brave browsers auto adding ref links to Binance.us  The disconnect between Wall Street and crypto when it comes to inflation expectations A 2018 Pentagon war game including bitcoin  Our featured interview is with Jake Hanrahan, founder of Popular Front - a podcast and independent media company covering underreported and irregular conflict with “no frills, no elitism.” Jake was previously an embedded reporter with Vice and has covered conflict in Turkey, Syria, Iraq, Palestine, Ukraine and elsewhere.  In this conversation, Jake and NLW discuss: Why Jake left Vice and decided to build an independent journalism project Why the mainstream media isn’t bad because of some political conspiracy, but because its business model doesn’t allow it to understand how real people are experiencing issues  How the protests are being (mis)covered around the world Why American protests are going global What he learned covering protests in Hong Kong last year  What situations people should be paying attention to around the world that they’re not right now   

The Breakdown Weekly Recap looks at the key themes that shaped the week. On this week’s episode, NLW discusses: The modern significance of Tiananmen Square, and why this week’s U.S. protests show why the tools of surveillance need to be applied to states, not citizens. The importance of “narrative violations,” or fighting to see things without falling into popular but often wrong conventional wisdoms  The need to resist attempts from both the left and the right to fit today’s unrest into convenient culture-war frameworks that perpetuate each group’s power.   This week on The Breakdown: Monday | The Power and Peril of the 'Bitcoin Fixes This' Meme  A look at what role, if any, bitcoin has to play in remaking the world that is being protested around the U.S. (and world) this week. Tuesday | Bitcoin, Cellphones and the Citizen Tools of Anti-Authoritarianism, Feat. Alex Gladstein A look at the anti-authoritarian technology stack, including where non-state money like bitcoin fits in. Wednesday | 5 Numbers That Tell the Story of Markets Right Now From the number of U.S. flights from Chinese carriers to S&P 500 growth in the tumultuous year of 1968, these (unexpected) numbers tell the story of today’s markets. Thursday | The Mirage of the Money Printer: Why the Fed Is More PR Than Policy, Feat. Jeffrey P. Snider An argument that the Fed is actually highly ineffectual due to the presence of the eurodollar shadow-banking system. Friday | The Biggest Realignment in the US-China Relationship Since Nixon, Feat. Graham Webster A 101-level primer on the history of the U.S.-China relationship, and why today’s bluster represents a fundamental shift.   

The U.S.-China relationship has an outsized impact on global economics and politics. As that relationship comes even more into focus in the wake of COVID-19 and a return of trade tensions, this episode provides a historical primer.  Graham Webster is editor-in-chief of the Stanford–New America DigiChina Project at the Stanford University Cyber Policy Center. He’s also a China digital economy fellow at the New America think tank. In this episode, Webster explains: Why the relationship with the U.S. has been at the forefront of Chinese policy since the People’s Republic of China was formed, but has flitted in and out of America’s focus. Why the first most significant period in the U.S.-China relationship came between the late 1960s and 1970s, as the U.S.-China relationship normalized. How Tiananmen Square undermined but didn’t destroy the relationship. Why George W. Bush came into office with an intention to focus on China but got distracted in the wake of 9/11. Why China has spent the last decade becoming increasingly illiberal. How the rise of social media contributed to the shift. Why China and U.S. policy is as much a reflection of domestic self-identity in both countries as it is a bilateral political question.  Why China’s human rights abuses present such a challenge. How COVID-19 changes the relationship. Find our guest online: Twitter: gwbstr Website: DigiChina