"Then They Fight You"
Is that helicopter in the sky about to drop cash all over town or are they just here to spy on everyone? Yes.
There are no solutions, only trade offs. - Thomas Sowell
If you’re an advocate for cryptocurrency in America, it’s been a rough couple weeks. Right now it looks like the beef is with mixing services but the breadth of recent actions indicate it’s actually quite a bit deeper than just on-chain privacy. It’s becoming increasingly clear that the powers that be in America don’t want self-custody. Who could blame them? After all, let’s recap what has happened in the last couple weeks regarding cryptocurrency enforcement actions in the US:
The developer of crypto’s largest DEX by far was served a Wells Notice - implying impending legal action
Privacy-focused Samourai Wallet’s website was seized and its developers arrested
The FBI released a PSA nudging users away from non-KYC/AML compliant exchanges the following day
Roger Ver, one of the earliest public Bitcoin advocates and author of the recently released book Hijacking Bitcoin, was just arrested for allegations of tax evasion that is apparently nearly a decade old
It's clear where this is going and why it’s happening now. This has nothing to do with tax evasion or money laundering. If any of that stuff actually mattered, Jamie Dimon would have to atone for all of the crap JP Morgan JPM 0.00%↑ has pulled through the years. Banksters pay fines. Crypto bros get locked up. The only real difference in the crime is the technological system being used.
Here’s what I think is really happening
The days of the central bankers pretending they have things like “inflation” under control are over. Now it’s about keeping as many frogs in the water as possible by putting heads on lances publicly. But there’s a problem for the grifter class. Gaslighting only works up to a certain point. Math is still math. You can’t taper a Ponzi scheme and the elite are running out of greater fools to keep their fiat scam going. What are you prepared to do, anon?
You could become cops or criminals. When you’re facing a loaded gun, what’s the difference? - Frank Costello
In 2020, the Federal Reserve told you they weren’t even “thinking about thinking about raising interest rates” until 2023 when Fed Funds was at the floor. By the end of 2022, Fed Funds was at 4% and the banks that allocated treasury strategies based on prior guidance started breaking down less than three months later. They still are by the way!
Then last year we were told to expect as many as 6 rate cuts in 2024. Well, it’s May and not only have we not had a single one yet, but it’s looking increasingly likely that there won’t be one until September the earliest. We were told inflation was transitory even though it clearly wasn’t going to be.
Here’s the problem, we’ve allowed these people to turn themselves into guru influencers even though they, at best, don’t know what they’re talking. Which is a fine role if they’re just mouthing off on Twitter, Instagram, or even Substack like the rest of us. But they’re not. They’re in charge of setting the cost of capital for essentially the entire planet. No, they’re not incompetent. They just think you are.
They blamed inflation on supply chain bottlenecks rather than all the currency creation that they’ve been instrumental in facilitating. Stable prices and full employment? Nah. Their job is to monetize the deficit and keep the punch bowl full for the octogenarians in Washington.
This was all supposed to temporary according to Bernanke. The asset roll off would be like watching paint dry according to Yellen. Well, here we are in 2024 and the Fed has turned temporary intervention into standard operating procedure. The debt-based, fiat-Ponzi system collapses if the central bank doesn’t keep intervening. That’s the game. Recognizing what is happening is half the battle. The old adage is don’t fight the Fed. But the alternative is holding ice cubes on a sunny day.
The problem is it’s getting warm outside.
Anti-State Money
David Bailey is the CEO of Bitcoin Magazine. He’s foreshadowing even more trouble ahead and I have little reason to doubt his claim. The reason the DOJ is turning up the pressure on crypto now is because the filthy masses have escape options and Team Fiat doesn’t want people to head for the exits. Captive user base? Maybe today. Not necessarily tomorrow.
Sure, there is a case to be made for holding Bitcoin ($BTC-USD) through the ETFs and I’ve made that case recently. That said, buying through the ETF wrapper is my admission that self-custody can be pricey and additionally poses asset paralysis risk if transaction fees get too high and it becomes too expensive for an even larger cohort of holders to move assets.
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