There are 325 million active PayPal users worldwide. They aren’t all going to buy bitcoin, but if this turns out to be true, they will all know what it is and they will all have option when the time comes.
When are you going to buy your bitcoin, before the PayPal masses or after?
As good news go though, this is up there.
The main weakness of bitcoin is user experience, which is monumentally awful. The main strength of PayPal is they make things easy. They will absolutely put their all into making buying and holding bitcoin much easier than it is today.
Perhaps more significantly though, I doubt very much an American company like PayPal does something like this without the blessing of the US Government. Are the arrests of people running offshore exchanges two weeks ago unrelated? Maybe. America isn’t scared of giving its companies a leg up though, so nothing would surprise me.
Christmas Eve 1913
It was Tuesday December 23rd, 2013. The United States Congress was extremely anxious to head home for the holiday break but one piece of legislation stood in the way. It concerned the formation of a new institution known as the Federal Reserve. The major objections were that the new laws were incredibly favourable to banks, who had effectively designed the new system for themselves. Despite the many concerns, the expected filibuster didn’t come. The holiday prevailed and the Bill passed and became law the next day.
It’s the oldest political trick – get bad news out when everyone is distracted.
It would seem the International Monetary Fund has learned a thing or two from this tactic. They emerged last weekend from bowels of obscurity to make an extraordinary case for “A new Bretton Woods style Agreement”. A totally new monetary system for the world.
- Monetary policy no longer works. With interest rates near zero, the room for meaningful cuts is gone.
- Similarly Quantitative Easing. It only works if people spend the money, actually what’s happening is it is creating asset bubbles.
- We need a new plan and it is this:
- Create central bank digital currencies.
- This circumvents the current method of creating money via retail bank lending.
- Now monetary authorities can conduct direct transfers to citizens bank accounts. We will give you money, rather than the complicated process of government borrowing and distribution via retail bank lending.
- Similarly, money can now be taken away at the press of a button, for example, if we want negative interest rates.
Note that all of this is coincides with nearly every meaningful central bank in the world saying they are pursuing their own “Central Bank Digital Currency” (CBDC). It’s an all out currency war and the IMF clearly want in on the game.
The open questions in all of this are:
- Will $1 of CBDC be the same as $1 of old money? Perhaps this is the real trick. Initially the answer will be yes and over time it will be no.
- That would enable governments to inflate away their old debt with a new currency.
- Recall $1 today is nothing at all like $1 from 1971 which one could convert directly to gold – they are totally different currencies that happen to have the same name. Same again here.
- Will different interest rates be applied to the old and money? You can see the reason now “so much more expensive to maintain the non-digital currency, therefore you must pay”.
Any news of all of this in the financial press? I saw absolutely nothing. Bad news leaked in underneath the US election, underneath coronavirus.
It is a big deal.
Q3 at Grayscale
- A record quarter with more than US$1 billion inbound in the 90 days.
- AUM now stands at $5.9 billion.
- The Bitcoin Fund by far the largest component at US$4.7 billion, 80% of the total.
It is all the more remarkable because their Bitcoin Trust trades at a premium (of up to 30%) to the raw bitcoin price.
Once Square reports in a few weeks we will update on how much bitcoin the two of them have consumed in the quarter. You can guarantee its more than 100% of the miner supply because on these stats, Grayscale alone sold 87%.
Quite the squeeze building up.
Michael Saylor is the CEO and Chairman of US Company MicroStrategy. He entered the news recently after his company spent $450 million dollars of their corporate treasury on bitcoin. He is an interesting man, a trained US Navy pilot with a degree in aeronautics and astronautics from the Massachusetts Institute of Technology. On leaving, he began building predictive models for financial markets which led him to start analytics company MicroStrategy.
A long way of saying, he is no fool.
Since the bitcoin buy he has done a number of interviews but I found this week’s particularly compelling:
He goes on to point out that the lower value for CPI is not wrong, it simply depends on the world in which you operate. If you want to buy meaningful assets for the long term like land, property, equity, bonds and businesses then the inflation rate is huge. If you want a flat screen TV, then fair enough it’s probably 2%.
Simple choice and for most people, it will be the cheap TV.
Monday
- Board Member – Fabio Panetta
- The resurgence of infections is weakening the recovery.
- In view of the sheer size of the downside risks, there should not be any doubt about our determination to preserve price stability.
- We need to quickly return to growth: the longer it takes to return to pre-crisis levels, the greater the impact on inequality and disparity.
Tuesday
- ECB President Lagarde – interview with Le Monde
- We will keep a close watch on economic indicators throughout the autumn
- Our central scenario foresees an 8% average fall in euro area GDP in 2020. If the situation deteriorates, our projections will obviously be gloomier
- The crisis has made Europe reconsider its approach on budget balancing, debt and state intervention. It has made us realise that we are in the same boat: a weakening of already fragile economies would make stronger ones suffer too
- Board Member – Ives Mersch
- The ECB’s monetary policy amid the pandemic
- ECB President Lagarde
- Speech at ECB Conference on Monetary Policy
Wednesday
- ECB President and Chief Economist
- An event with Chief Economist and ECB President to listen to the community
- ECB President Lagarde
- Remarks on “Impact of Second Wave in Europe”
- ECB Chief Economist Philip Lane
- Interview on economic stats.
- Board Member Isabel Schnabel
- Why reliable data is important to monetary policy.
Very clearly, man your station and arm your weapons. A shower of Euros will be falling from the sky very soon.
