The problem is we’re misallocating capital, resources and labor on a vast scale. That’s the problem.

Adding more currency and capacity/”growth” via programs like MMT doesn’t fix this problem; it actually makes it worse.

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• Parks chief warns of 'massive cuts, huge layoffs' as soon as 2020 (Chicago)
• No more excuses. Fix Pa. pension funds | Editorial
• Who’s Going to Pay for LA’s Unsustainable Pension Plans?
• ECB Official Warns QE Exit Could Spell Trouble for Italy's Debt
• U.S. recession chances edge up, risk Fed delivers fewer hikes: Reuters poll
• BOJ's Kuroda rules out early end of negative rate policy (Japan)
• Unthinkable?
• Bitcoin-Rigging Criminal Probe Focused on Tie to Tether
• NY BitLicense Approval, Blockchain for Energy Commodities, CFTC Enforcement, Advertising Use Cases and More

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• Scientists Warn the UN of Capitalism’s Imminent Demise
• A deadly storm is coming in Syria
• Report: Trump Admin Denying Passports to Citizens Along Border
• So Much for The Great California Bail Celebration
• Elections board takes less than a minute to reject proposal to close 7 of 9 polling places in majority-black county
• Skim reading is the new normal. The effect on society is profound
• Attention, Shoppers: Kroger Says It Is Phasing Out Plastic Bags
• U.S. court orders Trump administration to enforce chemical safety rule

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Have you moved a material percentage of your financial portfolio to cash? Have you become so concerned about the meteoric ramp upwards in asset prices that you find it wiser instead to move to the sidelines, build "dry powder", and wait to re-enter the markets at saner valuations?

If so, you have my sympathies.

The past 5+ years have been brutal for savers pursuing this strategy. I know this well, as I'm one of those folks, too.

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Executive Summary

• The critical value of scarcity
• Understanding the utility of the blockchain
• Will (can?) governments ban cryptocurrencies?
• A coming geometric explosion in the price of cryptocurrency?

If you have not yet read Part 1: Understanding The Cryptocurrency Boom available free to all readers, please click here to read it first.

In Part 1, we surveyed the exciting but confusing speculative boom phase of cryptocurrencies. Here in Part 2, we will contextualize this mad swirl by running it through two filters: scarcity and utility.

What’s Scarce? Scarcity Creates Value

Regardless of one’s economic ideology or system, scarcity creates value and abundance destroys value.  When we say supply and demand, we’re really talking about scarcity and abundance and the rise or fall of demand for the commodity, good or service.

In classical economic theory, scarcity is met with substitution: ground beef too expensive due to relative scarcity? Buy ground turkey instead.

But this model has weaknesses.  There aren’t always substitutes, or the substitutes are more expensive or problematic than what is now scarce.

As a general rule, profits flow to any scarcity of goods and services with high utility value.  We value what’s scarce and useful, and place little value on what’s abundant and of limited utility.

Currency has three basic functions: a store of value (it will retain its purchasing power over time), means of exchange (we can use it to trade goods and services, pay debts, etc.) and as an accounting mechanism to track assets, debts, income, expenses and exchanges/trades.

We assume all currency has this function, but only currency that is easily divisible and easily tradable enables easy accounting.  If a notched stick is a unit of currency, and one stick buys a pig, what do I use for purchases smaller than a pig?

In today’s world, a currency must be….

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Chapter 8 of the Crash Course is now publicly available and ready for watching below.

As a follow-on to the two previous chapters — one explaining the nature of fiat money, the other showing how money is loaned into existence through our fractional reserve banking system — this week’s video details the Fed’s near-magical ability to create money out of thin air (literally!).

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Chapter 7 of the Crash Course is now publicly available and ready for watching below.

As a follow-on to the previous chapter explaining the nature of fiat money, this week's video details one of the two methods by which it is created: fractional reserve banking. As John Kenneth Galbraith famously stated "The process by which money is created is so simple the mind is repelled."

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Money plays an incredibly large role in the world, but yet it remains poorly understood. What exactly is it? What do the pieces of paper we hold in our wallets and bank accounts actually represent?

Developing an understanding of the underlying role of money allows us to better see when it is being used properly, or abused. And history shows that abuse is more the norm than the exception: the record shows over 3,800 previous examples of paper currencies that no longer exist.

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In what is quite possibly my favorite podcast so far this year, Chris speaks with John Rubino — founder of DollarCollapse.com and recent author of The Money Bubble — about the times in which we live.

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This report lays out the investment thesis for gold. Silver is mentioned only where necessary, as a separate report of equal scope will be forthcoming on that topic. Various factors lead me to conclude that gold is one investment that you can park for the next ten or twenty years, confident that it will perform well. Timing and logic for both entering and finally exiting gold as an investment are laid out in the full report.

The punch line is this: Gold (and silver) is not in bubble territory, and its largest gains remain yet to be realized; especially if current monetary, fiscal, and fundamental supply-and-demand trends remain in play.

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