Weekly Recap - 02.10.2023

🧠Quote(s) of the week:
“The HIGHER interest rates go.
The HIGHER inflation will go. That’s because the HIGHER interest rates go, the LARGER the DEFICIT.
The LARGER the DEFICIT the FASTER the currency printer goes BRRR
The FASTER the currency printer goes #BRRR the FASTER inflation rises.
Debt Death Spiral
The HIGHER interest rates go.
The HIGHER costs go for businesses.
The HIGHER interest rates go.
The MORE people can spend yield  Based on:
-> The exponentially rising cost to finance gov’s massive deficit budget
-> The increasing cost structure for businesses
-> The increased amount of yield that can be spent into the economy.
I don’t think we are correctly “fighting” inflation.
The results will be devastating
Opt out of  with Bitcoin” – CJKonstantinos

🧡Bitcoin news:
➡️ Historically, we are now entering the two most bullish months for Bitcoin, October and November.

➡️ America’s 13th largest city mines Bitcoin. The mayor of Fort Worth, Texas says, “We want to be a city that’s at the forefront of technology innovation, energy security, and the future”. The machines are plugged into City Hall.
Texas is now the top US Bitcoin mining state with 28.5% of the national hash-rate – Foundry

➡️ The largest Bitcoin mine in America. Riot Blockchain in Texas computes 10,500,000,000,000,000,000 mathematical algorithms every second in a global race to secure the next block of the blockchain.

➡️Bitcoin mining can reduce GLOBAL emissions by up to 8% by 2030 – Institute of Risk Management

➡️ Remember what I said a while ago on politicians: “My personal opinion. Be wary of politicians who promise to give you exactly what you want. Politicians are just politicians! Bitcoin doesn’t need politicians, politicians need Bitcoin (and votes). Don’t lose the plot. And stop larping! Stay humble & stack sats.”

RFK Jr.: “30-year fixed mortgages now over 8%. No one can afford to buy now. Rents shooting up too. Time to implement my plan of tax-free, government-backed 3% mortgage bonds to make homeownership accessible again.”
Can’t fix a broken system from within the broken system.
Rule #1 of government subsidies: The thing being subsidized just gets more expensive.
RFK wants to end the Fed’s interest rate manipulation but also wants a government-backed mortgage bond fixed at 3% which will… manipulate interest rates.

➡️ Japanese car giant Honda now accepts Bitcoin. Honda enters into a significant partnership with the blockchain payment system FCF Pay to accept Bitcoin as payment for vehicles.

➡️Microsoft is building a Bitcoin and crypto wallet into XBox according to a leaked roadmap. Xbox has +120 million monthly active users.

➡️$33 Trillion U.S. ‘Debt Death Spiral’ could boost Bitcoin’s price suddenly – Forbes

➡️The murder rate in El Salvador falls from the world’s highest to the lowest in the Western Hemisphere — at 2.3 per 100k in 2023. Bitcoin + Bukele = booming economy.
Santander Bank’s research to institutional investors profiles El Salvador’s booming economy thanks to Bitcoin, falling crime, and increasing tourism.
The murder rate in El Salvador has fallen from being the world’s highest—103 per 100k in 2015—to the lowest in the Western Hemisphere, at 2.3 per 100k in 2023.
Can I say that Bitcoin incentivizes peace and fiat incentivizes war? Just a thought.

➡️Chase Bank tells customers in the UK it will decline payments for Bitcoin and crypto.
Also, Bankwest makes new conditions for credit card users Your account may be cancelled if you make a payment to a cryptocurrency exchange. Just use Peach Bitcoin or try out Relai.

➡️ Bitcoin miner Core Scientific buys 27,000 Bitcoin mining rigs for $23 million in cash and a $53.9m equity investment.

🌎Macro/Geopolitics:

👉🏽 “The 10-year Note Yield’s leap to 4.70% – a peak not seen since 2007 – is turning heads. From its low in March 2020, it’s skyrocketed by a whopping 430 basis points. And while treasury yields seem to be breaking records daily, an additional rate hike now seems less likely. Yet, with the expected hiatus until July 2024 and the influx of US Treasury bonds (thanks to deficit spending), bond markets are feeling the pressure, causing yields to soar. Could we be bracing for 8% mortgages soon? It’s a game-changer, and it’s vital for everyone to stay informed and prepared.” The Kobeissi Letter / DisruptiveBytes

👉🏽First, let’s talk about mortgages. Here is a ‘fun’ stat:
“US housing market affordability is, by far, at its lowest point in history. Even in the worst part of the 2008 financial crisis, affordability was ~15% BETTER than its current levels. With the recent move higher in treasury yields, we should see 8%+ mortgages within a week or so. This also means that the median home payment will soon cross $3,000/month for the first time ever. Homebuyers are now spending 50% of median PRE-TAX household income on house payments.” – The Kobeissi Letter

👉🏽 Second, yields. A ‘golden rule’ in monetary policy says that when US real yields rise above 2%, economic activity is severely impacted, and the odds of a recession increase accordingly.
As of Friday:
5-year US real yield: 2.38%
10-year US real yield 2.20%
20-year US real yield 2.27%
30-year US real yield 2.33%
and please brace yourself…

👉🏽Because the Bank of Japan is planning another bond-buying operation. But “the additional operations could accelerate the speed of the yen’s weakening” by preventing debt yields from rising. “It will eventually become impossible to continue with these operations” Source: Bloomberg

The Bank of Japan (BoJ) currently holds approximately 50% of the total outstanding Japanese Government Debt.
The Japanese Yield curve is now the steepest in history. This is also the fastest move in the Japanese yield curve’s history.
When debt is issued, the underlying economy operates on the assumption that it will eventually be repaid. Removing this assumption can lead to significant alterations in the behavior of economic participants.

👉🏽 The US will hit $40 trillion in total debt by the end of 2025 at the rate it’s issuing debt every quarter.
The debt ceiling was eliminated in June under the… “Fiscal Responsibility Act”
On Saturday it passed a motion for MORE funding in the next 45 days. With even more US Treasuries set to be issued, the selloff and rate spike aren’t slowing down anytime soon. – Joe Consorti

👉🏽 “Nearly one-third of all outstanding US debt is set to mature over the next 12 months. 52% is set to mature over the next 36 months, meaning this debt needs to be refinanced. However, since this debt was last financed, debt service costs have doubled from 1.5% to 3.0%. This means that maintaining this debt is now 2x as expensive and it will soon be 3x as expensive as rates rise. Headlines of US interest expense hitting $1 trillion will be gone soon. $2 trillion in annual interest expense is coming quickly.” – The Kobeissi Letter

I was shocked to learn that the US government is now spending more to pay interest on its $33 trillion national debt than it does on national defense. The US Bond Market has now been in a drawdown for 38 months, by far the longest bond bear market in history.

“Congressional Budget Office (CBO) projections show US Federal debt rising by $5.2 billion per day for the next 10 years. However, since the debt ceiling “crisis” came to an end, US debt has jumped by $30 billion per day. We have added roughly $1 trillion per month in US debt since then. Interest expense alone is on track to hit $3 billion per day. That means EVERY HOUR the US is borrowing $1.3 billion and paying $125 million in interest.” – The Kobeissie Letter

JPMorgan’s Lebovitz: “If rates continue to rise the way they’ve been rising, there will be a financial accident. Something will break and that will get the Fed moving in the other direction.”

The following article by Jesse Myers summarizes the USA debt spiral and the (limited) options available.
https://www.onceinaspecies.com/p/643-april-2023-market-update-on-bitcoin

👉🏽And it’s not only the US or Japan but also Germany:
“From the US to Germany to Japan, once unthinkable bond yields now new normal. Selloff has been so extreme it’s forced bullish investors to capitulate & Wall St banks to tear up their forecasts. Yields on 10y German debt close to 3%, a level not reached since 2011. Their US equivalent back in line w/avg from before GFC, within striking distance of 5%.” Bloomberg

👉🏽M2 money supply in the US fell 3.7% in August. The longest, deepest streak of money supply contraction in 90 years continues. Although that alone is alarming we should be a bit cautious, why? It is following the largest expansion, by far, so it’s not overly surprising we now have a money supply contraction. The main question should be: What are the effects?

-👉🏽August PCE inflation, the Fed’s preferred inflation metric, RISES to 3.5%, in line with expectations of 3.5%. Core PCE inflation fell to 3.9%, in line with expectations.

👉🏽The Canadian government, armed with one of the world’s most repressive online censorship schemes, announces that all “online streaming services that offer podcasts” must formally register with the government to permit regulatory controls. Basically, Trudeau is trying to crush free speech in Canada. May I remind you that Canada is a G7 nation.

👉🏽The Bank of England is in the process of designing lending tools that allow it to give directly to insurance firms and pension funds, after the near-death experience of the Liability-Driven Investment (LDI) crisis in 2022.
Source

It’s a bailout, but we are not calling it a bailout. They can just throw money at this issue caused by throwing money at this issue. Classic!

Credit: I have used multiple sources!

My savings account: Bitcoin

The tool I recommend for setting up a Bitcoin savings plan: The Relai app is especially suited for beginners or people that want to invest in Bitcoin with an automated investment plan once a week or monthly. Hence a DCA, Dollar cost Average Strategy.

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Check out my tutorial post (Instagram) & video (Youtube) for more info. ⠀

Get your Bitcoin out of exchanges. Save them on a hardware wallet, run your own node…be your own bank. Not your keys, not your coins. It’s that simple. ⠀⠀⠀⠀⠀⠀⠀⠀

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