Unemployment and Crytpo
I’m disgusted that the federal government refuses to acknowledge that its federal unemployment benefit program is killing employers. It’s simply disingenuous to claim that people would rather work for $10 an hour when they can get $7.50 an hour for doing nothing.
In my corner of the world, COVID has been virtually non-existent for the past six months. It hit us pretty hard in the second half of 2020, and I knew a lot of people hospitalized with it (and had five clients die of it . . . or something like it), but since last December or so? It has been a non-factor, but fast food restaurants can’t keep regular hours because they can’t find staff.
How bad is it? My law firm can’t find a receptionist and the workload is humongous. We have been forced to adopt summer hours. Instead of being open to the public for 45 hours a week, we are now open only 31 hours a week.
Dogecoin mania continues. I bought a small chunk at less than 4/10ths of a penny. I cashed in this week and am spending the profits as fast I can: a nice dinner, donated money to restore our local auditorium, bought Marie a very nice bike, invested in agricultural stocks, bought a leaf mulcher, bought more Bitcoin and Ethereum, gave each child some extra spending money.
As millions of Americans have experienced, Dogecoin has been great fun.
But what does it say about our economy when billions of dollars are flowing into a joke cryptocurrency (“They’re all jokes, Scheske!”)?
It tells you that there’s so much money sloshing around the system, people don’t know what to do with it. That’s why I spent my Dogecoin earnings right away. I wanted to get tangible stuff in my hands before they spike in price more. I would’ve bought a few ounces of precious metals, but I’m simply not sure what to think of PMs any more, now that there’s another type non-government money out there (Bitcoin and Ethereum).
I could be flat-out wrong on all this, btw. The only thing I know about anything anymore is: no one knows anything.
If it weren’t for the certainties of faith and the Church, I’d probably just hang everything up and join Otis at the Dock.
One of the best Dogecoin pieces of the month: Every DOGE Has Its Day.
What is Dogecoin you ask? I’m no expert in cryptocurrencies, but I know enough to be dangerous. Put simply, Dogecoin is a joke cryptocurrency that serves no purpose. It was created as such nearly a decade ago and left for dead soon thereafter. Here’s how Coinbase describes it:
“Dogecoin emerged in 2013 as a joke. It was created by Jackson Palmer and Billy Markus to satirize the growth of altcoins by making the doge internet meme into a cryptocurrency… There is no cap to the supply of coins and thus the coin can inflate infinitely.”
Here are a few other fun facts about Dogecoin. First, as noted above, the creators programmed in uncapped but fixed inflation, with potential new supply being created at an additional 5.256 billion coins per year. Second, you can’t buy and sell Dogecoin on Coinbase, presumably because it’s a little too dodgy (Doge-y?) for them. There are plenty of other crypto exchanges that will allow you to transact, including Binance and, as of this week, Gemini. The third, and I believe most interesting, fact is that Robinhood began allowing its millions of users to trade Dogecoin in 2020. For the first time, you didn’t need to leave the “traditional” financial system to speculate on this purposely worthless meme coin.
And speculate they have! Thanks to a cadre of high-profile pumpers (aka, future dumpers) led by Elon Musk, Tyler Winklevoss, Mark Cuban, and an ever-oppressive army of online bots, Dogecoin is the latest shiny new financial mania. At the time of this writing, a Dogecoin fetches about $0.66 each, which doesn’t seem like much until you consider there are about 130 billion of these things floating around the metaverse.
Does Dogecoin teach us about the collective confidence in modern fiat currencies? None other than Tyler Winklevoss himself, as CEO of Gemini, published a commentary on the explosive movements in Dogecoin this morning. Here’s a few key paragraphs:
“Dogecoin is the people’s money. It’s organic, irreverent, and fun. It’s not forced on us by a government or some other central authority, it’s chosen by us, for us — by the people, for the people. Wow.
For many, the idea of emergent money that is not mandated by fiat is hard to grok. We’re used to being told what money is. For most of our lives, paternalistic money is all we’ve ever known…until Bitcoin.
Dogecoin continues Bitcoin’s tradition of giving the control of money back to the people. Yes, it’s a meme coin, but all money is a meme. And all money is both an idea and a matter of faith or belief in it. Over the multi-millennia history of money, the majority of money (be it shells, beads, precious metals, etc.) has been what we the people say it is and believe it is.
Dogecoin is the perfect vehicle to lay bare this fundamental truth about money. And in serving this purpose, DOGE has a legitimate claim to some value. It reflects the true history and nature of money. It turns the idea of money being something that’s issued by an authority — a conceit — on its head. They say there’s some truth in every joke. Dogecoin’s value is its punchline.”
What role does Robinhood play in all this? An important one, I think. Robinhood is controversial because it employs heavy gamification and other toxic tricks weaponized by Silicon Valley to capture and keep your attention. Having played with the app myself, I can testify to how simple, fun and addictive it makes the otherwise serious job of investing feel. You aren’t really investing. You’re playing a fun game with a scorecard. A game you want to win, for sure, but most importantly for our narrative, a game you want to keep playing.
In the first Doomberg essay, Reflections from the Lake, I emphasized how the convergence of easy fiscal and monetary policy with supply chain disruptions was potentially made more dangerous by the toxic weaponization of social media by apps like Twitter, TikTok, Instagram and Facebook. I argued that viral videos and memes threatened to shorten the path from elevated to hyperinflation in a way our leaders almost certainly don’t understand. The Dogecoin phenomenon offers strong evidence for this hypothesis.
A group of highly influential social media titans accumulated a healthy helping of Dogecoins for themselves, then used their online power to amplify Doge memes and converted Dogecoin into the phenomenon we observe today. Egged on by the seductive powers of Robinhood, hordes of retail traders are piling in, happily risking US dollars for the latest speculative mania.
At a minimum, the signal I am hearing loud and clear is that if and when inflation memes replace Doge memes, and certain bad actors wish to accelerate the downfall of the US dollar, the infrastructure exists to take things to levels unthinkable by most people today…and quickly. Not even the sky is the limit. Not for this Doge.