Now witness the firepower of this fully armed and operational mortgage cannon

The Grey Lady is talking about them bitcoins again. I won't bother addressing much in the article itself, because much of it doesn't matter. They discuss buying Lambos, going to the moon, and whale parties, all stuff you could've learned by existing in this subculture. They show off the exuberance and baseless arrogance of the newfound cryptobourgeoisie. The point of it is that the mainstreamiest of mainstream media just gave us some fawning press coverage and it's going to rock the markets.

Let's go over what happened last time this happened. Bitcoin went to the moon, shooting up from a few hundred dollars to $19,000 in a year, and finally the mainstream media picked up on it. That wave broke just before Christmas, as normies who took out mortgages to put into long positions on Bitcoin started hurriedly selling it, figuring that most of a mortgage is better than none. They are still working themselves out of our financial system, which is why every time Bitcoin seems to rally past $16,000 they start selling everything they have.

The practical reality is that in a capitalist framework, every new industry needs bubbles to help it grow. The dotcom bubble gave us the basic infrastructure of the internet, by giving the telecoms enough of an incentive to build out the fiber optic network. Even the tulip craze of 17th-century Holland led to the modern gardening and horticulture industries. Today, these normies with more money than common sense throw their mortgages into the common pool of wealth so that these cryptocurrencies grow while remaining fungible, so that somewhere along the line people can more easily turn their cryptocurrency back into cashy money if they choose. The easier it is to do that, the likelier it is that the long term traders won't and the stronger the market becomes.

I'm still not decided if this is a good thing for society or not. By definition, trading in assets like this is something done by people with assets to spare, even if it is just a mortgage. So don't feel too incredibly bad for those people throwing tons of money away on this market - unless it's their life savings, they'll still end up better off than most of the people on this planet. But the question is where their wealth ends up, and if the New York Times is right, cryptocurrency is even more unequal than the rest of capitalism, with 95% of the wealth held by 4% of the owners. So if we're talking about this in class terms, and we kinda can't avoid that if we're going to be honest about the world (which is the point of journalism), then cryptocurrency represents the petty bourgeoisie getting rolled for their spare cash by a new cryptobourgeoisie, with the masses of workers going along with it because their hundred-dollar investments are becoming two-hundred-dollar investments.

The implications for society don't really matter as far as investment strategy goes here, but it is a valid question to address because as the article notes, 20% are doing it for the ideology. This is a wide swath of people, mostly anarcho-capitalists and libertarians but a few anarchists of a leftist bent as well. If your ideological goals involve hiding wealth from the government and trading without government money, cryptocurrency is doing great on that front. If your ideological goals include equalizing the amount of wealth in society, cryptocurrency isn't doing that great. We'll come back to the ideological implications for society, but we have to address the investment strategy that will get us through this next wave of normies first. So if you have any long positions right now, any daytrades gone bad that you're waiting for time to make right, go ahead and hold for dear life, because the cavalry's coming. The normies will inflate bubbles all over this market and you will get your money back.

If you are waiting for a coin to go to the moon (and Lord knows I'm waiting for several) then just pick the shiniest rocket ship you can find and blastoff will occur. If the normies don't buy it, then the smart money will. Honestly I'm starting to think that the echo chamber power of our media is more important than the actual value of the coin itself in the short run, so even some do-nothing shitcoin like Dogecoin could go places for a bit with enough hype behind it. Your best picks for a moonride, then, will be well-spoken of in the crypto media, including but hardly limited to this blog.

The flipside of this is that whatever coins go to the moon will be stuck there like Bitcoin was. Prepare for the mother of all retrenchment cycles after the normies fire their mortgage cannons at us, as they try to figure out how to get their stuff back and spend at least a few months doing so. A moonshot is fine but that coin will be worthless for a while afterwards. Honestly I think the moonshots may well be sequential.

Now we get back into the ideological consequences of all this for society, because what happens when a lot of middle-class people lose their investments in America? Bitching to the government to make it all better, that's what. It's called a moral hazard and our financial systems are full of them. Capitalist economists don't like bailing out the losers in capitalism too hard because it encourages more people to lose. But get enough losers together, and they can outvote the winners, and the politicians are keenly aware of that. What economists call "moral hazards" democracy generally calls "an excuse for screwing us over" or "a threat to our economic system." Who's right depends on who has power.

This won't be the only moral hazard of our times, but in fairness it won't be the first. Wall Street's 2008 bailouts were a textbook example of a moral hazard. But they were systemically important, "too big to fail," and moreover they had Congress in their back pocket so that moral hazard was waved through. A couple more moral hazards present themselves. College students owe way more student debt than could ever be reasonably expected to pay back, and the reality of dealing with that situation will one day require debt forgiveness of a sort that would make Bernie Sanders blush and is only really comparable in scope to recent non-economic forms of forgiveness: amnesty for the Vietnam draft dodgers or amnesty for undocumented immigration under Reagan. Crypto is going to produce losers by the barrelful, which is going to require a fix. The whales may well fix it themselves, to further their ideology, or at least their pocketbooks. This is the idea behind faucets, behind Newegg accepting Bitcoin for purchases. If you give a lot of people a little bit of cryptocurrency, they'll trade it and create a market for it. The bigger the market, the more your crypto is worth. The whales may find the best way to boost the value of their holdings is to boost the usability of their money by growing the market where it gets used by figuring out ways for parts of their holdings to profitably make its way into other peoples hands.

If they don't, government policy will eventually do it for them, either by redistributing crypto somehow via taxation or by shutting it all down altogether. If either possibility seems unreal to you, remember that gold was banned for private ownership for much of the last century for essentially the same reasons that Bitcoin might get banned now, and taxes on all sorts of goods are radically higher in some places, even places we'd think of as "Western" or "developed."

The other ideological consequence of this massive mortgage cannon the normies are firing at us is that a lot of normies are going to be invested in crypto in a way that will make it politically far harder for the US government to crack down on it. We all already know how much the US government doesn't like telling rich people what's up. Well, have they tried telling rich people what's up with crypto? It'll go about as well, especially if there's a fig leaf of broad middle-class participation in crypto for the politicians to hide their toadying behind. For better or worse, that dynamic will foreclose what's happening in China from happening here.

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