Special Alert: Recession avoided! Today, the federal government (Bureau of Economic Analysis) released third-quarter gross output (GO), the top-line that measures spending at all stages of production. Real GO rose 3.1%, a substantial improvement from previous quarters, and equal to real gross domestic product (GDP) for the third quarter. This is good news. Assuming the fourth-quarter GO is positive, it looks like the United States avoided a recession in 2023. Business-to-business (B2B) spending also rose 2.9%. Expect a press release later today at https://www.grossoutput.com/.
This just in: My paper, “GO Beyond GDP,” which explains what GO is all about, has been ranked the #1 most downloaded paper by the Social Science Research Network (SSRN). To read it, here is the link: GO BEYOND GDP: INTRODUCING GROSS OUTPUT, THE “TOP LINE” IN NATIONAL INCOME ACCOUNTING – The Schumpeter Lecture by Mark Skousen :: SSRN
“Bitcoin is the most transformative invention in the history of technology.” — Michael Saylor, CEO, MicroStrategy
“Bitcoin is a bigger bubble than the dot-com boom of the 1990s.” — Peter Schiff
Bitcoin is once again in the headlines, hitting an all-time high of $106,000 in the past week. Several positive stories came out:
Larry Fink, CEO of BlackRock, the world’s largest money manager, now recommends that clients should hold 1-2% of their portfolio in Bitcoin.
That would give the cryptocurrency, with a market cap of about $2 trillion, a risk level similar to companies like Nvidia, Amazon or Apple.
On Monday, MicroStrategy was added to the Nasdaq 100. CEO Michael Saylor is a true believer, whose goal is to acquire one million Bitcoin, and is doing so through selling company stock and convertible debt securities. It’s a high-risk bet that is paying off as long as Bitcoin keeps rising.
Finally, President-elect Donald Trump announced that he is toying with the idea of creating a Bitcoin Reserve Fund valued at $200 billion or more. No final decision has been made.
Four Types of Investors
When it comes to the new world of crypto, there are four kinds of investors.
First, the fanatics. They include Michael Saylor (CEO, MicroStrategy), Cathie Wood (president of Ark Investments) and Anthony Scaramucci (Skybridge Capital). They recognize that digital currencies like Bitcoin have created a decentralized asset that can be transferred privately and efficiently. Michael Saylor has said several times that he will be buying Bitcoin at the top for as long as he has money.
Second, the opportunists. They include Larry Fink (BlackRock) and Jamie Dimon (CEO, JPMorganChase), who have been skeptical in the past but see an opportunity to make money by recommending Bitcoin in their investment accounts.
Third, the converts, such as Donald J. Trump who used to criticize Bitcoin but now endorses it in an effort to increase his political supporters and gave a keynote address at the annual Bitcoin convention earlier this year.
Last, the holdouts. They include Peter Schiff (EuroPacific Bank), Alex Green (Oxford Club) and John Mackey (former CEO, Whole Foods Market). Alex and John have debated the topic twice now at FreedomFest. To watch the latest 2024 debate click here.
Green and Mackey make the point that it’s impossible to value Bitcoin like you would a publicly traded company; and it’s unsuitable as a medium of exchange given its volatility and the fact that it can only handle seven transactions per second compared to the thousands per second by Visa or Mastercard. They maintain that Bitcoin is used mainly by drug dealers and criminals.
Citadel founder and CEO Ken Griffin is skeptical, wondering how useful Bitcoin and other digital currencies are. He asks, “What problem does it solve for our economy?”
Peter Schiff is convinced that Bitcoin is a bigger bubble than the dot-com boom. Critics say it’s a tulipmania. Yet the tulipmania lasted only six months; Bitcoin is still going strong after 15 years. Mackey thinks it’s because Bitcoin is an international market and can therefore last longer before collapsing.
We’ve had sessions on Bitcoin at FreedomFest since 2014, when it was selling for less than $400 per coin. It’s been one of the most spectacular money-makers in history. As this chart demonstrates, Bitcoin has been the top performer in eight out of the past 11 years — and it is again the best-performing asset in 2024:
My view is that Bitcoin and other cryptocurrencies are providing a service, a decentralized financial marketplace that does not depend on an irresponsible government. It also offers privacy and ways to avoid exchange controls imposed by totalitarian regimes. Bitcoin transactions have been lifesavers for individuals who want to transfer assets out of Venezuela or Russia.
Granted, Bitcoin and other digital currencies are not typically used as money or a medium of exchange. There are two reasons: First, the price of Bitcoin is volatile; and second, every time you use Bitcoin to make a purchase, the sale is taxable in most countries.
Make Bitcoin legal tender and you would see a dramatic increase in Bitcoin use as money. President-elect Trump is considering this possibility.
Signs of a Bubble
Skeptics also point to the huge number of useless crypto tokens in the marketplace, including Dogecoin and Peanut the Squirrel that were created as jokes. It reminds me of the dot-com boom, where thousands of internet companies were created that had no sales or earnings.
But that does not mean that legitimate digital currencies like Bitcoin, Ethereum and Solana won’t survive and prosper after the inevitable collapse of the useless tokens. Yahoo! survived long after Stamps.com disappeared.
Legitimate Uses of Crypto
Cryptocurrencies and blockchain technology have great potential once the clouds clear.
Bitcoin is the leader because of its true decentralization. No one is at the helm, unlike every other crypto project. No one can control Bitcoin, which makes it a “trustless” system. When you don’t have to trust some controlling entity, like the Federal Reserve, money is truly democratized and honest.
Add to that, Bitcoin can’t be counterfeited. It can’t be hacked directly. Its latest version has been running since 2013 and has never once had an outage.
And while it is similar to gold as a storage of value, it has advantages over gold like easy and cheap transfers, safe and inexpensive storage, borderless transferability and a truly limited supply of 21 million total Bitcoins.
The Blockchain Revolution
But blockchain technology is what created a revolution in crypto and is why we have so many additional legitimate cryptocurrencies. Ethereum made the first advance by making blockchain blocks programmable with what are called “smart contracts.”
This technological advance allows people to program blockchains to make decentralized banks that lend money (DeFi) secure websites without the need of a firewall (Web3), and even make digital assets unique and uncopiable (NFTs), like we see in the collectables markets of first edition books or works of art.
Since the smart contract breakthrough, other cryptocurrencies have aimed to improve on Ethereum like Solana, Cardano and Polkadot to name a few, with faster networks and cheaper fees.
Meanwhile, Ripple (XRP) has been an alternative payment system to rival Visa and Mastercard since 2012, but faster and cheaper. No wonder the Securities and Exchange Commission (SEC) sued Ripple Labs in an effort to stop it and protect the big credit card companies with their varying lobbyists.
We’re also hopeful that blockchain will transform the real estate market. Already title insurance companies are embracing e-closings, e-docs and e-signatures, which will reduce the cost of real estate transactions.
Though it’s taken a few years, we began seeing the adoption of cryptocurrencies by institutional investors this year with the approval of spot exchange-traded funds (ETFs) for Bitcoin and Ethereum, with more on their way.
And that’s why I invest in one of the most popular ETFs that invests in companies that do business in crypto and blockchain technology. These companies have a bright future, and that is why I’ve been recommending this ETF for over a year now.
It has doubled in value so far in one year. To find out more about this ETF, go to my website or call 1-800-211-7661. Introductory first-year subscription is only $77.
FreedomFest Holiday Special: Early Bird Discount Ends on January 31, 2025!
Take advantage of the holidays to make your plans to come to the greatest libertarian show on earth: FreedomFest, June 11-14, 2025, at the Palm Springs Convention Center in California. The beautiful Renaissance Resort Hotel is right next door.
Good news! We have just confirmed Larry Sanger, the co-founder of Wikipedia (he came up with the name), who will speak on “The Threat of Centralized Control of Social Media and What Can Be Done About It”…
I will also be debating John Tamny, publisher and editor of RealClearMarkets, on his dangerous new book “The Deficit Delusion.”
We are also happy to welcome back Marc Eliot, Hollywood’s biographer, who will talk about Hollywood’s love affair with Palm Springs as THE getaway for the jet set; he will be leading a tour of the secluded homes of Frank Sinatra and other celebrities.
Plus, hundreds of speakers to be announced soon.
See you in Palm Springs in June!
Take advantage of our “early bird” discount, only $400 per person, by going to www.freedomfest.com, or call Hayley at 1-855-850-3733, ext. 201.
Good investing, AEIOU,
Mark Skousen
You Blew it!
These 100 Economists Were Proven Wrong about Argentina
By Mark Skousen
“Milei’s policies would be deeply damaging for Argentina and very unfortunate for the entire continent.” – Petition by Thomas Piketty and 99 other economists
Late last year, Thomas Piketty, economics professor at Paris University, joined in a petition of 100 economists warning that the “shock” policies of Javier Milei, the new president of Argentina, “overlook the complexities of modern economies, ignore lessons from historical crises, and open the door for accentuating already severe inequalities.”
They added, “a major reduction in government spending would increase already high levels of poverty and inequality and could result in significantly increased social tensions and conflict.”
It’s a year later and the radical economists’ predictions have proven to be off the market by a large margin.
While poverty and inequality are still a problem, Argentina has made incredible progress. After laying off unnecessary federal workers, cutting back government spending and decontrolling the economy, the peso has strengthened, inflation has fallen dramatically, new jobs are being created and billions in flight capital are returning to Argentina.
And for the first time in a year, the economy is growing again. According to JPMorgan, Argentina’s economy fell 3% last year, but it just announced its third-quarter GDP growing at 3% and it is projected to growth 5.2% in 2025.
Plus, the Argentine stock market is near an all-time high, the best performing market in the world in 2024.
The free market triumphs!
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