Crypto Currency Induced Recession

On January 4, 2018 I wrote this essay on crypto currency and the coming near financial apocalypse it would bring. I’ve even written about Amazon going under in other essays. You don’t have to take bitcoin or any other crypto currency directly to have exposure. You just have to accept some payment form that accepts crytpo.

In The Minimum You Need to Know About the Phallus of AGILE I had an improved essay titled Cryptocurrency and he Coming Financial Apocalypse. Brookings has even come around to my way of thinking for the most part. They put together a formal debate on the matter of regulating it. Even China has moved to shut down all crypto mining.

Why?

Crypto Currency isn’t green. By some measures we could all drive 8 MPG SUVs and not contribute as much to global warming as crypto.

The Hilarious Part

I’ve had some short stories where things like Bitcoin became part of the world. Mainly those all involved criminal activity. The joy of not having to actually move your money. No government could shut it down so you were never dead broke. Well, guess again. I skimmed through this article on the Top 9 Crypto Bankruptcies of 2022 and was shocked. Not that their were nine, but the fact news media doesn’t even report the $2 billion or less bankruptcies.

GOP spin-doctors keep trying to claim we are in a recession, but unemployment is low and wages are going up. Yes, stuff costs more, but it is only rich people getting screwed right now. Target is raising their minimum wage to $24/hr. You won’t be rich, but the days of $7.50/hr minimum wage are gone. I covered a bunch of this in my Unemployment Benefits Myth series. Perhaps people will actually learn from Financial Lessons the Pandemic Should Have Taught You.

Think about it. The general public has become so jaded the news media doesn’t even report those pesky little $3 billion crypto bankruptcies. That’s both hilarious and sad.

Crypto Induced Recession

The house of cards are stacked and the table is shaking.

One thing most people haven’t talked about is how student loans have been sliced and bundled into securities to be sold just like mortgages. That’s going to go just as well as the mortgage backed securities because those who were supposed to regulate it didn’t and nobody went to prison. That should move rather quick because Biden is going to forgive many of the “good” student loans leaving just the bad ones in the bundles. I don’t belive that bubble is quite as big as the mortgage bubble but it will have a ripple effect.

Cloud sell-off. Today it is Microsoft. Tomorrow it will hit the broad sector and will keep hitting it. The financial analysts are always talking about growth. Well, yes, it can’t really continue growing like it was. People are starting to develop common sense. There have been too many stories like this one where hackers breach a cloud to get sensitive/secured/private data. Hey, let’s put all of our sensitive data into some data center somewhere in the world operated by the lowest cost employees, what could possibly go wrong? The data silos of yesteryear were secure because they didn’t have outside connections. North Korean hackers had to purchase a ticket to America and physically breach your data center.

Despite what my neighbor wishes to believe, Amazon is in a downward spiral. It may be moving slow, but it is moving in that direction. Poor choices, Global warming increase caused by space tourism, laying off 18,000 workers, unsafe working conditions, it all adds up to a bad public image. That bad image leads to the CEO having to tell investors of a holiday sales slowdown. That happens to be when retail sales were actually up.

There is a tipping point. In retail, it doesn’t matter if you have the cheapest price and fastest delivery; when people don’t like you, they don’t buy from you. Given my choice I will buy from Target, Best Buy, or NewEgg.com.

What does that have to do with Crypto?

A lot. We have no way of measuring Amazon and big bank exposure to crypto. It isn’t just the multi-billion dollar exchange bankruptcies. Crypto is generally used to buy stuff. It used to be just guns, drugs, and illicit stuff on the Dark Web. If a few Cartels lost everything, who cared.

Without strict regulation we have no way to measure the global financial exposure.

Amazon doesn’t take Bitcoin, but it takes money in the form of credit from services that accept crypto currency. How many small businesses will go under because one or more of those services couldn’t pay up at the end of the month? With the FTX bankruptcy we should start seeing/hearing about some of those. A small business doesn’t need to get stiffed on 40% or more of its revenue to go under. Usually 10-20% does the trick, especially if they the type of retail that sold purchased inventory. They lost the revenue and they still had to pay for the inventory.

We watched this happen with mortgage fraud

It wasn’t a “mortgage crisis” as the media refers, it was deliberate RICO level fraud committed as a deliberate act. We could have had a nice gentle “soft landing” as they unwound the fiasco, but Gartner Group had been employed in the fraud of “Right Sizing” and off-shoring. All of the IT workers who had the income to do house flipping and gobble up foreclosed properties lost their jobs.

The realization that cloud isn’t a good idea will have the tech giants on fast deflate. The crypto currency debacle will plow into that just in time to trip over all of those student loan backed securities that students cannot pay back.

Governments won’t get regulations passed in time in 2023 to stop this. Your mutual fund manager was most likely buying all of the tech giants and student loan backed securities to juice their numbers. That’s how we all got hit last time.