Energy Cancelled

It All Balances

The global economy is not a magic bean stalk that just produces bountiful yummy consumable goods. It is a balanced system, where some flags produce more than they consume, and other flags consume more than they produce. Both sides must balance, just like in all parts of life and the universe. Everything is relative, and nothing is ever created or destroyed, just transformed.

Analog vs. Digital

Money can be split into two things. The unit of account, and the network on which this token moves. The network is more important than the unit. Let’s examine.

Twelve Trillion

As you can tell, this article focuses on finances of the sovereign, the flag, the nation state… There are much fewer entities to analyse, and their decisions are more predictable given the large notionals and impact they will have on various asset prices.

Thank you Luke Gromen from FFTT for this chart.

Position Size

As many readers know, I began my career as an equities trader in emerging markets. One of the lessons you learn quickly is that it is always a big door in, and a small door out. Therefore, you must size your position with your exit in mind. While the liquidity is great entering a trade and you might be lulled into a false belief that you can size it up, when it comes time to exit, the bid might be absent. Unfortunately in those circumstances, what on paper was a profitable trade becomes an unmitigated disaster, as there is no way to exit the position without incurring substantial losses.

Source: FRED

Flows

Diminishing Demand

The West put themselves into quite a pickle.

Finance This …

At $616 billion per year, the US current account deficit will become increasingly more expensive to finance. The US government spent 168% more than tax receipts in 2021. In 2021 the US had to sell ~$2.8 trillion worth of bonds just to pay for that year’s deficit. Don’t forget that every year debt that matures must be rolled or pay for in full, which also adds to the US Treasury’s gross issuance amount each year.

Gold vs. Bitcoin

Gold: “If you don’t hold it, you don’t own it.”

One, Two, Buckle My Shoe

For a single Bitcoin, my unit is in the millions.

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Arthur Hayes

Arthur Hayes

Co-Founder of 100x. Trading and crypto enthusiast. Focused on helping spread financial literacy and educate investors.