What made Bitcoin special is nearly lost, and what remains is a false and constructed narrative that exists in service to Wall Street and Washington rather than in resistance.
The Bitcoin narrative must be renewed. And that will change everything.
In Epsilon Theory-speak, we use “Yay, Good-Thing!” as shorthand for a narrative that takes a linguistic construction that we all agree is a Good Thing (something like “capitalism” or “freedom” or “democracy”) and turns it into a behaviorally powerfully argument for something that is decidedly not that Good Thing, but can be painted with other behaviorally powerful words into something that sorta kinda looks like that Good Thing if you squint really hard and you say the behaviorally powerful words loudly enough.
In rhetorical construction, “Yay, Good Thing!” is a variation on begging the question (in the correct way of understanding that phrase, where the conclusion is assumed in the proposition), or if you’re in marketing or sales you would recognize this as a variation of the assumptive close. The typically-but-not-always unspoken corollary to the “Yay, Good Thing!” narrative construction is “You’re not against Good Thing, are you?”, which is the linguistic stick to the “Yay, Good Thing!” carrot.
Socrates would call “Yay, Good Thing!” sophistry, and he hated the Sophists with a deep and abiding passion. Same. In the modern world, the Sophists are powerful government and corporate interests (aka the Nudging State or the Nudging Oligarchy if we’re going to continue in Epsilon Theory-speak), and the “Yay, Good Thing!” construction is their go-to narrative weapon in the Forever War of stripping away our autonomy of mind.
If you want to read more about our take on “Yay, Good Thing!” narratives, here’s the Epsilon Theory note that started all that.
Anyhoo … I was thinking about “Yay, Good Thing!” today because of how the “Yay, Environment!” implementation of this narrative device is being used to shape the politics of two issues that we’ve been writing a lot about recently: work and crypto.
“Yay, Environment!” is now one of the primary threads in the narrative-world battle over the future of work.
It’s a very powerful narrative thread. It’s a big reason why “Remote work is here to stay!” is winning this narrative war, and you are going to see a lot more “Yay, Environment!” rationalizations for remote work policies in the future.
Similarly, “Yay, Environment!” is now one of the primary narrative threads in the narrative-world battle over the future of Bitcoin.
Here’s the latest, from Elizabeth Warren, but you’re no doubt familiar with Elon Musk’s oeuvre here, as well.
And yes, this construction of “Yay, Environment!” does indeed speak the usually silent part – “You’re not against the Environment, are you?” – out loud. And yes, you’re going to be seeing A LOT more of this narrative. Not because it’s right. Not because it’s wrong. But because it WORKS.
It’s all just another weapon in the ongoing narrative war for Wall Street control and US Treasury visibility over Bitcoin.
— Ben Hunt | June 10, 2021 | 9:24 am
It wasn’t enough for ProPublica to do actual news reporting by publishing these tax records.
The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax
No, they had to tell you how to think about their news reporting.
They had to turn news into Fiat News by constructing a metric of “true tax rate” based on unrealized capital gains, because … you know … the actual true tax rate just wasn’t damning enough for ProPublica’s purposes.
To capture the financial reality of the richest Americans, ProPublica undertook an analysis that has never been done before. We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period.
We’re going to call this their true tax rate.
What is Fiat News? It’s the presentation of opinion as fact. It’s an interpretation of factual events projected with the same authority as the factual events themselves.
Fiat News (in this case the opinion that wealth in the form of unrealized capital gains should be taxed) is to hard news (in this case the tax filings of the very wealthy) what fiat currencies are to hard currencies.
We write a lot about Fiat News. Here’s the money quote from the note that started it all, Fiat Money, Fiat News:
There’s really no such thing as “real money”, i.e., gold and silver as a medium for exchange or a store of value, in existence in the world today. That used to be the meaning of gold, but those days are long gone. Today fiat money completely and utterly dominates all global commerce and exchange. Why? Because it supports the existential aims of government: taxation (sovereignty), price control (stability), and liquidity provision (growth). Without the invention of fiat money, global GDP today would be at … I dunno, maybe mid-18th century levels? Something around there, I’d guess.
Fiat news serves exactly the same existential aims of government, just in a less overt (but more powerful for being hidden) fashion. There’s just too much at stake for status quo regimes, what with modern referenda like Brexit and national elections like we just experienced in the U.S. and are forthcoming this year throughout Europe, for regime institutions to do anything other than double-down in their embrace and promulgation of fiat news.
Ten years from now we will be awash in “news” to a degree that we can hardly imagine today. That’s what happened with fiat money, and that’s what I think happens with fiat news.
The exponential growth in fiat news is still ahead of us, not behind us.
Gresham’s Law: bad money drives good money out of circulation.
Hunt’s Law: fiat news drives hard news out of circulation.
— Ben Hunt | June 8, 2021 | 9:42 am
Yesterday, one of Softbank’s largest portfolio companies – Katerra – filed for bankruptcy.
Katerra was at the heart of the relationship between Softbank and Greensill, and I think it’s the most viable path by which the Greensill fraud and financial crimes can be shown to be Softbank fraud and financial crimes.
You can read our full take on Greensill and Softbank here …
… but the skinny is this:
in 2019, Softbank put ~$3 billion into Greensill, turning it into the Vision Fund’s private bank. In 2020, Greensill lent Softbank portfolio company Katerra $435 million. When Katerra ran into trouble, Greensill wrote off the $435 million loan in exchange for 5% of common equity. LOL. A $435 million senior secured loan – which had been packaged and sold to Credit Suisse – was exchanged for a 5% equity position in a bankrupt company.
Credit Suisse has announced that they are filing suit against Softbank over this and all of the other Softbank/Greensill shenanigans. And in the WSJ article describing the Katerra bankruptcy filing, you can see how Softbank is going to try and spin this (all caps mine).
When Katerra ran into financial difficulties last year, Greensill forgave the loan.
SoftBank, in turn, invested $440 million into Greensill, EXPECTING THE MONEY TO GO TO CREDIT SUISSE’S INVESTORS.
Instead, Greensill put the proceeds of the SoftBank investment in a bank it owned in Bremen, Germany, according to a bankruptcy administrator’s report. The report said Greensill had used money it received from SoftBank, including the $440 million, to boost its bank’s capital position and fund Greensill’s overall operations.
The Softbank defense is going to be that their back door pay-off to Greensill for forgiving the Katerra loan was really intended to be a back door pay-off for Credit Suisse, but that rascal Lex just kept the money. Who knew!
As always, the best way to rob a bank is to own a bank.
— Ben Hunt | June 7, 2021 | 11:41 am
The Deadly Theatre of corporate signaling on Pride Month continues to run rampant, with feel-good rebranding pop-ups in all the geographies where this is a marketing advantage … and nothing in geographies where it isn’t.
What is Deadly Theatre? It’s a performance that is so deeply abstracted from its source material that it has become painfully, obviously artificial to anyone who is paying attention.
And yes, there’s an Epsilon Theory note on that.
— Rusty Guinn | June 4, 2021 | 10:34 am
P&C insurer Lemonade (LMND) went public last year and now has a $5 billion market cap. They’re not just a sleepy insurance company, of course. No, no … they’re actually a cutting edge AI Company! TM.
They’ve deleted the tweet above and issued a classic non-denial denial on their blog:
Let’s be clear:
AI that uses harmful concepts like phrenology and physiognomy has never, and will never, be used at Lemonade.
We have never, and will never, let AI auto-reject claims.
LOL. So their AI Jim textbot + video recognition program (I am not making this up) isn’t using phrenology and it can’t auto-reject claims. No, no … the supervisor will reject the claim. BITFD.
— Ben Hunt | May 28, 2021 | 7:47am
In Epsilon Theory-speak, we use “Yay, Good-Thing!” as shorthand for a narrative that takes a linguistic construction that we all agree is a Good Thing (something like “capitalism” or “freedom” or “democracy”) and turns it into a behaviorally powerfully argument for something that is decidedly not that Good Thing, but can be painted with other behaviorally powerful words into something that sorta kinda looks like that Good Thing if you squint really hard and you say the behaviorally powerful words loudly enough.
In rhetorical construction, “Yay, Good Thing!” is a variation on begging the question (in the correct way of understanding that phrase, where the conclusion is assumed in the proposition), or if you’re in marketing or sales you would recognize this as a variation of the assumptive close. The typically-but-not-always unspoken corollary to the “Yay, Good Thing!” narrative construction is “You’re not against Good Thing, are you?”, which is the linguistic stick to the “Yay, Good Thing!” carrot.
Socrates would call “Yay, Good Thing!” sophistry, and he hated the Sophists with a deep and abiding passion. Same. In the modern world, the Sophists are powerful government and corporate interests (aka the Nudging State or the Nudging Oligarchy if we’re going to continue in Epsilon Theory-speak), and the “Yay, Good Thing!” construction is their go-to narrative weapon in the Forever War of stripping away our autonomy of mind.
If you want to read more about our take on “Yay, Good Thing!” narratives, here’s the Epsilon Theory note that started all that.
Anyhoo … I was thinking about “Yay, Good Thing!” today because of how the “Yay, Environment!” implementation of this narrative device is being used to shape the politics of two issues that we’ve been writing a lot about recently: work and crypto.
“Yay, Environment!” is now one of the primary threads in the narrative-world battle over the future of work.
It’s a very powerful narrative thread. It’s a big reason why “Remote work is here to stay!” is winning this narrative war, and you are going to see a lot more “Yay, Environment!” rationalizations for remote work policies in the future.
Similarly, “Yay, Environment!” is now one of the primary narrative threads in the narrative-world battle over the future of Bitcoin.
Here’s the latest, from Elizabeth Warren, but you’re no doubt familiar with Elon Musk’s oeuvre here, as well.
And yes, this construction of “Yay, Environment!” does indeed speak the usually silent part – “You’re not against the Environment, are you?” – out loud. And yes, you’re going to be seeing A LOT more of this narrative. Not because it’s right. Not because it’s wrong. But because it WORKS.
It’s all just another weapon in the ongoing narrative war for Wall Street control and US Treasury visibility over Bitcoin.
— Ben Hunt | June 10, 2021 | 9:24 am
It wasn’t enough for ProPublica to do actual news reporting by publishing these tax records.
The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax
No, they had to tell you how to think about their news reporting.
They had to turn news into Fiat News by constructing a metric of “true tax rate” based on unrealized capital gains, because … you know … the actual true tax rate just wasn’t damning enough for ProPublica’s purposes.
To capture the financial reality of the richest Americans, ProPublica undertook an analysis that has never been done before. We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period.
We’re going to call this their true tax rate.
What is Fiat News? It’s the presentation of opinion as fact. It’s an interpretation of factual events projected with the same authority as the factual events themselves.
Fiat News (in this case the opinion that wealth in the form of unrealized capital gains should be taxed) is to hard news (in this case the tax filings of the very wealthy) what fiat currencies are to hard currencies.
We write a lot about Fiat News. Here’s the money quote from the note that started it all, Fiat Money, Fiat News:
There’s really no such thing as “real money”, i.e., gold and silver as a medium for exchange or a store of value, in existence in the world today. That used to be the meaning of gold, but those days are long gone. Today fiat money completely and utterly dominates all global commerce and exchange. Why? Because it supports the existential aims of government: taxation (sovereignty), price control (stability), and liquidity provision (growth). Without the invention of fiat money, global GDP today would be at … I dunno, maybe mid-18th century levels? Something around there, I’d guess.
Fiat news serves exactly the same existential aims of government, just in a less overt (but more powerful for being hidden) fashion. There’s just too much at stake for status quo regimes, what with modern referenda like Brexit and national elections like we just experienced in the U.S. and are forthcoming this year throughout Europe, for regime institutions to do anything other than double-down in their embrace and promulgation of fiat news.
Ten years from now we will be awash in “news” to a degree that we can hardly imagine today. That’s what happened with fiat money, and that’s what I think happens with fiat news.
The exponential growth in fiat news is still ahead of us, not behind us.
Gresham’s Law: bad money drives good money out of circulation.
Hunt’s Law: fiat news drives hard news out of circulation.
— Ben Hunt | June 8, 2021 | 9:42 am
Modeling common knowledge by analyzing missionary statements and their reverberations works. Except when it doesn’t.
What do you get when you give a raccoon billions of dollars AND invisibility from regulators? Collusion and insider trading.
Most of us are under the impression that a protracted conflict within China will increase national unity. Not this time.
Recent Notes
Financing the American Home
As a non-American there are many things I don’t understand about America.
Most of all though, I don’t understand the most American of products: the 30-year fixed-rate fully prepayable mortgage.
ET Zeitgeist: Ransom Paid
The Colonial Pipeline embarrassment will accelerate the US gov’t’s efforts to control and co-opt crypto.
Binance, Kraken, BitMEX … they’re all squarely in the wrathful gaze of the Eye of Sauron now.
Wage Inflation Isn’t Coming. It’s Already Here.
Over the past four quarters, the United States has generated more wage inflation than at any point over the past 40 years.
This is not an anomaly. This is not a single quarter aberration. A wage-price inflation cycle is here.
I’m not predicting. I’m observing.
I’m Trying To Understand Hedonic Adjustments
A Honda Accord cost $12,000 in 1990 and it costs $25,000 now.
A Mustang was $9,000 and now it’s $27,000.
The BLS has new car prices close to unchanged over the past 30 years.
ET contributor Brent Donnelly tries to wrap his brain around hedonic adjustments to CPI.
ET Zeitgeist: Now Hiring
Our weekly digest on what we’re working on …
Including this article from the WSJ: Millions Are Unemployed. Why Can’t Companies Find Workers?
I dunno, if only there were some mechanism by which companies could entice people to work for them. Weird.
ET Podcast #10 – In Praise of Bitcoin
Bitcoin has been subverted by the neutering machine of Wall Street and the regulatory panopticon of the US Treasury Dept.
What remains is a constructed narrative that exists in service to Wall Street and Washington rather than in resistance.
What Sort of Business is Investment Banking?
What do investment banks do, and why are European investment banks so bad at doing it?
Great piece by new ET contributor Marc Rubinstein!
The Zeitgeist – April 30, 2021
Here’s what we’re reading and working on this week at Epsilon Theory.
In Praise of Bitcoin
What made Bitcoin special is nearly lost, and what remains is a false and constructed narrative that exists in service to Wall Street and Washington rather than in resistance.
The Bitcoin narrative must be renewed. And that will change everything.
Bitcoin Market Profile
ET contributor Brent Donnelly gives a crash course in Market Profile analysis and applies it to Bitcoin since the Coinbase IPO.
Manheim Steamroller
When we talk about and plan for inflation in our businesses and portfolios, we are usually focused on direction and magnitude. We also usually abstract away from price volatility.
We shouldn’t.
ET Podcast #9 – Make, Protect, Teach
How do we change the world? Not through corporations and political parties from the top-down, but through free-thinking citizens from the bottom-up. Not as an alienated flock, but as a cooperative pack. Not with abstractions and transactions, but with making, protecting and teaching.
Let’s gooooooo!
The Zeitgeist – April 19, 2021
Here’s what we’re reading and working on this week at Epsilon Theory.
Mailbag: ET Forum Edition
We are now more than 900 Pack members strong on the ET Forum, with more than 1,000 posts contributed by smart, clear-eyed, full-hearted people from all over the world and all walks of life. Like you.
Here, I’ll show you. Here is some of the best and most thoughtful content on the internet today.
Here is the Mailbag that we need.
Here is the Mailbag that we deserve.
What Do We Need To Be True?
Modeling common knowledge by analyzing missionary statements and their reverberations works. Except when it doesn’t.
ET Podcast #8 – Leverage and Its Discontents
Three blow-ups in three months: Archegos, Greensill, and Melvin Capital.
What do they have in common? Insane leverage employed to maximize private gain while socializing potential losses.
A Tiger Can’t Change Its Stripes
What do you get when you give a raccoon billions of dollars AND invisibility from regulators? Collusion and insider trading.
Hot and Cold
Most of us are under the impression that a protracted conflict within China will increase national unity. Not this time.
Office Hours 3.16.2021
Our March 2021 Office Hours. Talking about our latest notes and podcasts.
A Conversation with Howard Marks
ET contributor Brent Donnelly talks with Howard Marks about why traditional value investing is likely permanently impaired as a strategy and why Growth vs. Value is a false dichotomy. Boomshakalaka!