| By Bill Bonner Monday, February 22, 2021 In times of profound change, the learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists. – American philosopher, Eric Hoffer RANCHO SANTANA, NICARAGUA – Here at the Diary, we know nothing. Our ignorance, of course, makes us humble. And our overweening modesty gives us an insufferable edge… What follows is the tale of how it got sharpened. Lunatic Phase Among the distractions last week was this from MarketWatch: Anthony Scaramucci, founder of SkyBridge Capital, and newfound investor in cryptos, predicted that bitcoin would hit $100,000 by year-end, but suggested that investors be cautious about buying digital assets. The SkyBridge Bitcoin Fund LP has about $500 million in bitcoins, Scaramucci said. What does the former White House mouthpiece know about cryptocurrencies? Probably about as much as we do. But bitcoin seems to be entering its lunatic phase. And who are we to argue with it? Sandbox Experiment Backing up… here’s dear reader, James F: Bill, as I recall, some time ago, at least some of your offspring were pushing bitcoin. You poo-pooed the idea. They must now be gloating. I’ve never understood bitcoin – seems like some sort of fairy dust to me. But I sure wish I’d bought some a few years ago. Okay… Here’s what happened. The boys wanted to use some of the “family capital” to invest in cryptocurrencies. Were they convinced that cryptos were the currency of the future? Not necessarily. It seemed like a long-odds bet, even to them. And your editor tried to talk them out of it. But the amount of money was relatively small… and we thought we might all learn something from their sandbox experiment. Longtime Diary (formerly The Daily Reckoning) sufferers might recall that we were way ahead of the curve on cryptos. Back in 2012, our colleague, Tom Dyson, gave us a coin. “What’s this?” we asked. “It’s a crypto coin… a Casascius.” Hmmm… This was a puzzlement. Because there it was. Hard metal. It lacked the unbearable lightness of being that was supposed to characterize cryptos. But we took the coin – then worth about $7 – in good grace, and thanked Tom. Since then, we’ve lost track of the coin. Which is a damned shame. Because it’s now worth about $55,000. [Featured: Where America Goes From Here (It's a Nightmare)] Bitcoin Mining It was around this time, too, that another of our colleagues – then living in Buenos Aires – decided to get into the business of mining. Once, working late, we noticed a low hum… a whirring noise… coming from a room at the front of the office building there. Opening the door, we found wires running across the floor to a bank of computers… with two fans blowing air on them to cool them down. What were they doing? “Oh,” explained the colleague, a bit sheepishly, the next day, “we’re mining bitcoin.” Hmmm… By that time, we had caught on to Satoshi Nakamoto’s – the alleged founder of bitcoin, who remains stubbornly anonymous – handiwork, at least in theory. But we were still very ignorant about how bitcoin might be put to use. | Recommended Link | | Welcome to an empire of debt Our credit system is currently sitting at $68 trillion. It's the largest debt ceiling in the history of the world – in fact, it's more than twice the value of every single home in America put together. It's the most crucial part of our economy. And despite stagnant wages and rising costs, America still appears to be getting richer and richer (at least on paper). And there's the problem… This massive credit system is about to collapse. But this system has a dark secret about where they're going to get money to pay off this massive debt. This will affect EVERY American citizen! | | | -- | Botched Attempt A year or so later, we found ourselves in Paris, along with an Australian colleague, Vern Gowdie. Neither of us knew much about bitcoin, but we were curious. We had both suggested that our readers might want to buy a bitcoin – then about $10 – or two, just to better understand the new money system. To that pedagogical end – for us… and for them – we decided to video ourselves buying bitcoin. “If we can do it,” Vern commented, “anyone can.” Perhaps, he was right. But buying bitcoin was not as easy then as it is now. Even with the help of our young French assistant, Claire, the two of us stumbled over the instructions and, on camera, gave up. My colleagues have helpfully kept the footage in the archive for all posterity to laugh at… If only we’d been able to master the technical details, we might have bought a few coins. And for the price of a single dinner in Paris – with canard à l’orange, for example – we could have paid for our children’s college expenses! [Featured: Hidden Time Bomb in Your Brokerage Account?] Educational Expense But while the nouveauté and complexity of navigating the crypto clouds was a setback for us, it proved no problem for bitcoin. And so it was… about three years ago… when the boys finally dragged us aboard the BTC Rocket, its price had already increased about 25,000%. They bought bitcoin at about $2,500… as we recall… along with a few other cryptos we had never heard of. We wrote off the investment as an educational expense… figuring that money was gone for good. The future, we thought, was predictable. The boys would be humbled. The old man would say “I told you so,” without moving his lips. This was a sure thing, in our opinion… an easy case of old age and treachery triumphing over youth and skill. | Recommended Link | | Jeff Brown: "Why I sold every ounce of gold I owned"
Gold's Hot… Here's Why One Renowned Investor Sold ALL He Had… Renowned investor Jeff Brown sold every ounce of gold he owns… because according to his research, he's found a new tech sector he's convinced will outperform gold… silver… and even Bitcoin over the next 12 months. In fact, Wall Street is pouring money in at a breakneck pace. | | | -- | Dangerous Lesson But lo! Here we are with bitcoin at $55,000 – and our crypto portfolio is up more than 20 times. So naturally, pater familias – although proven wrong since the takeoff – is now quite sure this plane is going down. So he called the pilot. “Shouldn’t we bail out? Sell at least half. We could buy a nice farm in Virginia with that money.” A hen that appears out of nowhere should be grabbed and put in the pot before it gets away, we argued. “Are you kidding?” came the response from the cockpit, or words to that effect. “These things are going crazy. Our Chinese crypto doubled this week.” We are all learning together. But so far, it seems to be one of those lessons that is best not learned at all. Like learning how to get drunk and fly an airplane in a thunderstorm, it is a skill we might some day regret. More to come… Regards, Bill
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MAILBAG A dear reader wonders if there’s a limit on lunacy… The title implies that there is an ultimate limit on lunacy. But, unlike peak oil, which keeps on being pumped even though we know that someday there will really be a peak, I fear lunacy will just continue to increase forever. – Robert C. Meanwhile, another argues the U.S. isn’t “flat broke”… The U.S. has unlimited assets and can sell them whenever it wants. I read somewhere that California is the fifth largest country, in terms of GDP. The solution is simple: Sell California! The buyer gets it all and it doesn’t have to impeach the governor! The results of the sale will completely erase the national debt. – Kenny G. What assets could the U.S. use to pay down its debt? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… Free stock pick There’s nothing extraordinary about this stock… except it continues to have the potential to generate money. And today, master trader Jeff Clark is giving away its name and ticker, completely free. Get it here. 
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