by Dave Kranzler, Investment Research Dynamics:

I want to show two quotes from commentators in related areas of financial analysis because they illustrate the difference between truthful commentary and unmitigated idiocy.

Yesterday, James “Mc” wrote in Bill Murphy’s nightly “Midas” report:

“The sexiness of Bitcoin, Tesla, Netflix, and hundreds of other techie things will become FAR less sexy in a good old fashion economic crash. Reality will quickly set in, and real stuff, made by real people will prevail. As history has shown everything else becomes superfluous. Millennials, or even Gen-Xer’s for that matter have never experienced truly hard times. Many will be shocked to learn when TSHTF a plumber is far more marketable than an IT guy. Bartering with Bitcoin might prove problematic.”

I doubt there’s anything with that statement with which anyone could dispute. Murphy prior to that made the valid points that Central Banks and sovereign nations will never incorporate Bitcoin into their currency reserves like they do with gold. The point being that, while Bitcoin is accepted as a form of currency by its users, it is not considered a wealth storage asset.

It would be tough to classify James’ comment as propaganda or fake news. Gold is the world’s second oldest form of money (silver is the oldest). Bitcoin may or may not become a passing fad but it certainly has not stood the test of time. Its use can be eliminated by shutting down the global power grid.

Here’s an example of propaganda, fake news and unmitigated idiocy from Citicorp’s “respected” strategist, Tom Fitzpatrick:

“…markets ultimately will be driven by the economic backdrop rather than by headlines. US labor and housing markets remain robust and should continue to drive growth. European growth is picking up. China remains stable in our view despite recent volatility.” LINK

China remains “stable?” I doubt anyone would disagree that China has fomented the second biggest debt and asset bubble in the world, with the U.S. bubble the largest, and its financial system rests on the precipice of systemic collapse resting on a pyramid of debt and derivatives that requires a flood of printed money and credit creation in order to defer the inevitable financial and economic implosion. That’s the truth, in contrast to Fitzpatrick’s moronic assertion.

As for the remark that the U.S. labor market is “robust.” My guess is that a majority of the 95 million working age people (37% of the working age population) in the U.S. who are no longer considered part of the “labor force” would have a different set of adjectives to describe the labor market here (they would also have a set of adjectives to describe Fitzpatrick that would make some blush).

A “robust” housing market? Total home sales are running two-thirds of the long run average and about 50% the last peak in sales. This is despite a steady long term growth in the population. Furthermore, in order to for a home to sell, in general buyers have to resort to using a 0-3% down payment mortgage and use at least 50% of their monthly income to service the mortgage. An oversupply of housing in New York City and Miami is beginning to crush those two housing markets, a dynamic that will soon spread to most major metro areas across the country. Flippers and “investors” were about 35% of all home sales in 2016.

These are unequivocally NOT the attributes of a “robust” housing market, not to mention the fact that the even the monthly manipulated home sales data series published by the Government and the National Association of Realtors have been trending lower this year. Tom Fitzpatrick’s remarks embody the attributes of Wall Street propaganda, outright fake news and total unmitigated idiocy. I hope you get rich selling lies and feel good about it, Tom.

There’s been a lot of debate over the meaning and significance of the parabolic move in Bitcoin. Allhambra Investments’ Jeffrey Snider has come the closest to the truth by equating the Bitcoin move as the manifestation of Gresham’s law.

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