New Home 21

In Praise of Bitcoin

By Ben Hunt | April 28, 2021 | 56 Comments

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.

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“Yay, Environment!”

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

Fiat News in Action

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

A Disturbance in the Force

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

Deadly Theatre

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

Shot … Chaser

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

ZG-item-cap-black

“Yay, Environment!”

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

Fiat News in Action

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

What Do We Need To Be True?

By Rusty Guinn | April 6, 2021 | 42 Comments

Modeling common knowledge by analyzing missionary statements and their reverberations works. Except when it doesn’t.

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A Tiger Can’t Change Its Stripes

By Ben Hunt | March 30, 2021 | 30 Comments

What do you get when you give a raccoon billions of dollars AND invisibility from regulators? Collusion and insider trading.

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Hot and Cold

By Rusty Guinn | March 23, 2021 | 26 Comments

Most of us are under the impression that a protracted conflict within China will increase national unity. Not this time.

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Recent Notes

A Different Game

By Rusty Guinn | January 21, 2021

The light research poured into sentiment analysis misses one rather important fact: that’s the game we used to play. Today’s Fiat News is a different game altogether.

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UK-Variant SARS-CoV-2 Update

By Ben Hunt | January 20, 2021

The spread of B117 in a Covid-fatigued country like the US is a profoundly deflationary, risk-off, dollar higher, flight to safety event in real-world.

Does it matter to market-world?

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Office Hours – 1.19.2021

By Harper Hunt | January 19, 2021

Check out the January 19 Office Hours, where Ben and Rusty talk with you about the latest ET notes.

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ET Podcast #3 – The Ireland Event

By Ben Hunt | January 14, 2021

In episode #3 of the Epsilon Theory podcast, Rusty and I discuss the spike in Covid cases in Ireland and the risk of seeing a similar “Ireland Event” here in the US.

The time to act is NOW, not with indiscriminate lockdowns, but with strong restrictions on international and domestic air travel to contain the UK-variant virus while we accelerate vaccine delivery.

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The Ireland Event

By Ben Hunt | January 12, 2021

I believe there is a non-trivial chance that the United States will experience a rolling series of “Ireland events” over the next 30-45 days, where the Covid effective reproductive number (Re not R0) reaches a value between 2.4 and 3.0 in states and regions where a) the more infectious UK-variant (or similar) Covid strain has been introduced, and b) Covid fatigue has led to deterioration in social distancing behaviors.

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Reap the Whirlwind

By Rusty Guinn | January 11, 2021

There is a brief window where I think we have the opportunity to commit to building a common national identity together. Seizing this opportunity will mean leaving a lot of anger we will feel is entirely justified at the door.

Not seizing it, I fear, will mean that we all reap the whirlwind.

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Just a Fantasy

By Peter Cecchini | January 8, 2021

ET contributor Pete Cecchini isn’t buying the reflation / small-cap rally narrative, even with a mini Blue Wave.

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“Suicide Bomber” vs suicide bomber

By Ben Hunt | December 29, 2020

On Christmas Day, Nashville was attacked by a suicide bomber terrorist. But not by a “Suicide Bomber”. Not by a “Terrorist”.

Why not? Because his terrorist goals didn’t fit neatly into a useful political narrative like “Antifa!” or “Proud Boys!”

Here’s what this looks like in the Narrative Machine.

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ET Podcast #2 – Personal Finance

By Ben Hunt | December 24, 2020

A conversation with Brian Portnoy, author of The Geometry of Wealth, about the role of money in shaping a life of meaning. How do we give better advice about money to others … and to ourselves?

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Whatever It Takes

By William | December 18, 2020

As Monty Python would say … and now for something completely different.

It’s JPow fanfic day here at Epsilon Theory! Or “every day” as they refer to it on Wall Street.

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Office Hours – 12.15.2020

By Harper Hunt | December 14, 2020

In which Ben and Rusty discuss the Long Now, hedonic treadmills and swap SPAC stories.

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The ZIRP Paradox

By Rusty Guinn | December 14, 2020

It may seem ironic that a narrative about the long-term could be deployed to distort the rewards of effective, market-based long-term capital allocation for short-term benefit.

This is, I think, the heart of The ZIRP Paradox:

The myth of infinite horizon investing is the enemy of long-term investing.

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An Old Joke

By Rusty Guinn | December 9, 2020

So an agent for a new over-the-top variety act finally gets a meeting with the biggest producer in the world. I mean, maybe ‘the world’ is selling it short. Word on the street is this guy’s even got God’s ear, if you can believe it.

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ET Podcast #1 – Is That All There Is?

By Ben Hunt | December 8, 2020

In this kick-off Epsilon Theory webcast, I’m joined by renowned cryptocurrency miner and trader @notsofast for a wide-ranging conversation on Bitcoin and crypto. Here’s the core topic:

Can Bitcoin preserve its revolutionary potential after a Wall Street bear hug?

I’m highly skeptical, but @notsofast has some ideas on how to make this work.

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The Merger Is Complete

By Peter Cecchini | December 8, 2020

The merger between the Treasury and Fed is now complete with Janet Yellen’s apparent appointment as the Secretary of the Treasury. Let the self-fulfilling market narratives begin!

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Russian Nesting Deals

By Rusty Guinn | December 3, 2020

Sometimes complicated is complicated because it has to be. But this nesting doll of a SPAC deal with Dyal (Neuberger Berman) IS weird and worthy of more than usual scrutiny, especially if you are an LP in one of these funds.

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The Ghosts of Commentary Future

By Rusty Guinn | November 30, 2020

These are The Ghosts of Wall Street Commentary Future. And if their chains are not already clanking around in your inbox, they will be very, very soon.

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Ten Times Faster Than The Sun’s Beams

By Ben Hunt | November 25, 2020

The Wall Street narrative machine is in overdrive to create a “Yay, Value!” rally here at year-end.

Like any effective advertising campaign, it will work. I’m not saying this rally isn’t real.

I’m saying that you should reconsider what “real” means.

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AMA? BITFD!

By Ben Hunt | November 24, 2020

The American Medical Association is not a charitable organization.

The American Medical Association is not an educational organization.

The American Medical Association is a tax-exempt hedge fund and licensing corporation, designed from the ground up to enrich its executives and serve its own bureaucratic interests.

Burn. It. The. Fuck. Down.

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Office Hours – 11.17.2020

By Rusty Guinn | November 17, 2020

It’s the November 17th Office Hours, where Ben and Rusty discuss all things narrative in an interactive format.

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