How to Cure Systemic Financial Corruption

In the very short term, President Trump’s health is going to drive markets.

Right now, it’s “risk on” all over the place, old-school financial assets and new-school crypto assets alike, as the reports of the leader of the free world’s condition remains positive.

There’s hope that his personal experience will somehow provide the nudge that gets a new round of pandemic stimulus through Congress. Our colleague Mike Larson set the stage this morning by tweeting:

Meanwhile, Bitcoin (BTC, Tech/Adoption Grade “A-”) is rising again after being knocked back first by the announcement of a Commodity Futures Trading Commission/U.S. Department of Justice probe of crypto derivatives trading platform BitMex, then by the president’s announcement of his positive COVID-19 diagnosis.

After trading as low as $10,437.68 early Friday morning, BTC was at $10,720.80 as of late Monday morning. This price action is probably more about correlation rather than causation, as we explained on Friday:

Crypto assets are in a long-term bull market because governments have used — and abused — their power of the printing press to try to stave off economic contractions. Not only are reckless money-printing schemes ineffective at creating economic prosperity, the only thing they do cause in the long run is widespread asset-price inflation, increasing economic inequality along the way.

This is as true now as it’s been throughout history.

The political tensions caused by the reckless mismanagement of the economy can be felt the world over, and neither of the men vying for the White House, or the political parties they represent, have any hope — or intention — of stopping these long-term trends.

Crypto is a shelter — perhaps the only viable one — against the monetary insanity that’s taken over the world’s most developed economies.

Of course, the coronavirus and government response to it continue to expose cracks in the foundations of the prevailing global order.

At the same time, old-school institutions continue to expose themselves:

Top-down, institutionalized corruption of this sort has negative consequences, though predictably mainly only for those outside the chain of power.

The good news is, crypto — more specifically, decentralized finance, or DeFi — presents a solution.

Best,

Juan and Bruce