I wasn’t sure what black swan event would pop the everything bubble, but we now know what that pin was.  Covid-19 is that event.  This event will provide our government coverage for bailing out the entire world.  Back in September of 2019 the banking system began to lock-up.  The Federal Reserve had to step in and perform liquidity operations behind the scene to keep things running.  The Fed knew good and well that they could not continue in this manner.  We needed an excuse to perform the bailouts that congress and The President are now undertaking. 

As I stated, this will eventually lead to bailouts for everyone.  Let’s look at what bailouts have been rolled out, what’s to come in terms of bailouts, and the aftermath. 
What has been rolled out so far. Our government has rolled out a $2 Trillion stimulus package for the masses.  Much of these monies have been misappropriated.  I know it hard to believe government misappropriates monies, but they do.   Lol. 

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                                                                                                  Figure 1
               (CARES Act relief package) – From the Visual Capitalist
 
Let’s take a look at just a couple of these misappropriations from the first relief package:

• As part of the big business stimulus, airlines, like Delta received a bailout for billions of dollars.  During the last 10 years of economic growth the Delta CEO and their board approved the purchase of Delta shares. These stock buy backs increased the share prices which directly impacted the compensation of the CEO and executive team.  Instead of saving for a raining day, they participated in the stock by back plans.  We, as tax payers, are now funding the rainy-day fund for companies like Delta.  This is happening across the airlines industry as well as other industries. 
• The Ivy league schools received millions of dollars in stimulus.  Harvard received $9 Million.  Just to give you some context.  Harvard has a ~40 Billion endowment fund.  Instead of paying their employees out the is fund, they are looking for you and me as tax payers to pay them.  Update: Harvard has been shamed into giving back the monie. 

Phase II of the relief package is well underway.  Small business is getting the next phase of stimulus since they.  In reality, if anyone deserves the bailouts its small business.  I’m glad they are receiving the help.   I believe this monie has been approved by Congress and should be on its way.  It is around $500 Billion.
 
What’s next?  Here in lies the moral hazard for all the monie we have been spending for decades on bailing out bad actors. The 2008 bailouts will pale in comparison to what is to coming. When we bailed out companies like AIG and the Auto dealers, we were doing a disservice to capitalism.  

Here are a handful of troubled sectors where congress will come in, along with the Federal Reserve, and save the day.  Once again, rewarding bad behavior.

• A number of proposals are on the docket to send monie directly to individuals.  Right now, there are bills on the table to give every person 16 years or older a $2,000 payment for a 6-month period.  This proposal is for everyone with very little constraints.  Due to the Feds near zero rate strategy, no one is saving anymore. 70% of people cannot afford a $400 emergency.  Hence, most people have not saved for a rainy day.  We will see how this plays out.
• States are now beginning to cry poor when it comes to their pensions.  Even though the state governments have been under funding their pensions for decades they will expect the federal government to bail them out.  For example, the Illinois’s government finances are in notoriously bad shape. The state has well over $200 billion in unfunded pension liabilities, some $73 billion in unfunded state retiree health insurance benefits.  In addition, Illinois has not had a balanced budget since 2001.  This will be a $5 - $10 trillion bailout.  
• Student debt in the U.S now totals more than $1.5 trillion.  Today more than 44 million Americans have outstanding student loan debt.  Once the government got involved in the student loan business, Universities started raising the tuition to extraordinary heights. 
• The good old U.S. Postal Service.  From 2009 to 2019 the Post Office averaged $6 Billion dollar losses per year.  I go to my mailbox everyday and throw out the flyers that they stuff in there.  Go figure.  They are also asking congress for a bailout because of Covid-19.  The bailout is for their pensions that will never be paid.
• The global discussion has been around debt jubilees. Debt jubilees have occurred throughout history.  It’s even in the Bible… The IMF has floated the idea to give small countries debt forgiveness.  This will be part of the end game.  The U.S. will also be part of the final debt jubilee.

​These are just a handful of debt leaden sectors that will need a bail or stimulus to keep them going.  I haven’t even mentioned the unfunded liabilities (i.e., Social Security and Medicare\Medicaid) that total into the 100’s of trillions of dollars. 

What will be the aftermath of the everything bailout?  In my opinion, and I must say I am not a financial advisor, it will be the end of our monetary system.  The U.S. dollar is the world reserve currency.  This status will be challenged and eventually overturned in coming years.  What does this mean for you and me?  Look into acquiring hard assets such a gold and silver as well as cryptocurrencies such as XRP.  Do your own homework and realize time is running short.      

Our financial system has been built on a House of Cards.  While the US has dug its way out of the Great Recession of 2008, it has been accomplished via the Federal Reserve’s policy of cheap money.  An unprecedented period of near zero interest rates.   
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Like an addictive drug, cheap money has kept this consumer-based economy growing although at a slower rate of growth of between 2% and 3%.  You would have thought with monetary policies like these our economic growth would be much greater.  But over time, like any drug, our financial system requires more and more stimulus to create the same effect.  The same way a drug user has to inject more and more into their system to get the same high.  Until one day when the user over doses.  When will the US economy over dose?

​To grow an economy properly, the system should promote savings.  Saving and investing is the way to great prosperity.  

Like I mentioned in my last blog, this is the first new asset class developed in over 400 years.  The last time an asset class was created was in 1693 by the Bank of England who produced bonds. Being able to get involved with this new asset class as an investor is exciting.  But aside from that fact, there are many compelling reasons to get started now.  Let’s discuss a few of those now:

• Blockchain is Internet 2.0
• Market Size
• Adoption of Cryptocurrencies
• Market Conditions
• The Case for Ripple (XRP)

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Blockchain is Internet 2.0  
The Internet changed how we work today and really live our lives.  The Internet began in the University system.  In those days, University’s communicated with each other through green screens.  Academics would type on the command line and the computer would react accordingly.  But this was not doable for the general public.
 
To commercialize the Internet, companies such as Google (browser), Amazon (e-commerce), and all the other companies that built the infrastructure like Cisco were born. Trillions of dollars were allocated to this space to make this great transformation of our economy.  What the Internet did for information, blockchain will do for transactions.  Or what the experts refer to as the Internet of Value (IoV).
 
A Blockchain is a database that makes it possible to create a digital ledger of data and share it among network of independent parties. There are many different types of blockchains.   All three types of blockchains use cryptography to allow each participant on any given network to manage the ledger in a secure way. The decentralized architecture eliminates the need for a central authority to enforce the rules. 

1. Public blockchains – Large distributed networks that are run through the native token.  Open to anyone and has open-source code that their community maintains.  Example: Bitcoin  
2. Permission blockchains – Roles are controlled that individuals can play within the network.  They are large and distributed networks that use a native token.  They may or may not use open source.  Example: Ripple
3. Private blockchains – Tend to be smaller and do not utilize a token. These are favored by consortium's that have trusted members and trade confidential information.

 
The Internet of Value (IoV), which is built upon the blockchain technologies will derive many different Uses Cases.  And many of these Uses Cases are still being discovered. The most compelling Uses Cases I’ve seen are the transfer of money and smart contracts for real estate.  While there are too many Uses Cases to mention, these two would be a game changer when implemented. The value of the tokens are directly dependent on the problem they solve.  When looking at the value of a cryptocurrency dig deep into its Uses Case(s)  There are many cryptocurrencies that do not have a Use Case.  Just like what happened during the dot com mania whereby companies were here today and gone tomorrow, these companies will cease to exist. 
 
While the Internet generate a new generation of billionaires, this new market (I call Internet 2.0) will generate the first Trillionaire.  Keep watch. 
 
Market Size
Below is a table that shares approximate market size of each asset class. It does not include all asset classes, but some of the key markets to provide context on where this new cryptocurrency asset class sits.  Some experts believe that someday, this new asset class could be one of the largest markets in the world….
 

​Adoption of Cryptocurrencies
I posted this in my last blog, but it is pertinent to this discussion.  The best way to show where we are in the adoption of this new asset class is via the Technology Adoption Life Cycle.  Geoffrey A. Moore wrote, “Crossing the Chasm” back in the early 2000’s that describes the adoption of technology.







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​We are at the precipice of early adoption.  This is extremely exciting for us that hold cryptocurrencies like Ripple (XRP). Examining the market cap and where we are in the innovation cycle provides compelling evidence for this asset class. Being able to get into a new asset class before the mainstream is where fortunes are made.  Think about obtaining shares of Apple or Amazon before they went public. 
 
Market Conditions
The stock market is near all time highs, the real estate market has begun to lose some momentum, and the bond market has been in an up market for nearly 40 years.  Many investors will begin to review other asset classes as these markets loose favor.  Will Cryptocurrencies been one of these asset classes monie will begin to flow too?  I think so….
 
Cryptocurrencies are in a bear market.  Most of the crypto’s are down 90% or more. Crypto’s first became assessible somewhere around 2013/2014.  Since then, there have been a number of bull runs.  I believe a bull run is around the corner as these assets become legitimized by the mainstream financial system.  The mainstream media like CNBC is playing down this market.  Why you ask?  Because their buddies in the financial companies are not there yet.  They want the market to go down before they get involved.
 
The Case for Ripple (XRP)
As far as cryptocurrencies are concerned, Ripple has always been an outsider.  What do I mean by that… Most crytocurrencies that exist, particularly Bitcoin, are a statement against the establishment (e.g., banking system).  Bitcoin, a public decentralized coin, personifies this statement.  It does not collaborate with the ecosystems, but generates an alternative to these systems.  It’s truly anti-establishment.    
 
Ripple comes along and develops a blockchain platform and cryptocurrency that works along-side the current financial system.  In my opinion, this approach will produce the greatest return in the short and mid-term. You’re not going to totally disintermediate the current financial system. Any time Wallstreet and Banking are impacted financially, these industries are going to stand up and take notice.  And in the end, they will fight to the death for their survival! In fact, they will need to partner with a company like Ripple to survive. 
 
The primary Uses Case for Ripple (XRP) is cross border monie transfer.  Today, if you want to transfer monie from the US to the UK, it will take two to four days.  It would be faster to get on a plane and make a delivery yourself. With Ripple’s technology, this transaction becomes a few seconds. Besides making the transaction much faster, it’s becomes more secure with the blockchain backbone and much cheaper to implement.  The last time I transferred monie to the UK it cost me $80 for a $2000 amount.  When ripple is implemented, you are talking pennies to transfer this amount.  Also, think about the trillions or even quadrillions of dollars that are unavailable for to use for the two to four days while the monies are being transferred. It’s not a very efficient system today.     
 
Ripple continues to develop partnerships across the globe.  Particularly with Asian financial companies, which are light years ahead of the US when it comes to adopting new technologies.  They have the management team, backing by companies like Google, and the vision to be the next dominate company in the world.   
 
Breaking news…Ripple has partnered with R3.  This partnership allows for Ripple to be used in settlements on the Corda blockchain platform.  One of R3’s strategic the Real Estate Use Case.  The Real Estate market is a $200 trillion market.  This is big news!
 
Note: Just a point of clarification, Ripple is the company and XRP is the cryptocurrency.  Ripple has a platform (X-Current, X-Rapid) to build applications using their currency. ​

​Disclaimer:  MonieStorm does not provide financial advice.  We do not represent any financial institution.  I am not a Registered Representative. The information is for enjoyment purposes only.  Please do your own research. 

by Tom Livingston

There is a new asset class that is gaining momentum and validation.  The last time a new asset class was formed was over 400 years ago.  An asset class is how investors diversify their portfolios. 
Traditional assets classes include:

•  Equity (Stocks),
•  Cash Equivalents (CD, Money Market),
•  Real Estate,
• Fixed Income (i.e., Bonds),
•  Commodities (Gold, Silver, Agriculture, etc.)
•  Alternative Investments (i.e., Art, stamps, etc.)

​What is this new asset class?  It’s Cryptocurrencies.  While this asset class has not gained legitimacy with major firms, it is about too.  Look for companies such as Fidelity to embrace this new asset class in 2019 as part of their offerings. 

Where are we in the adoption of this asset class? Since cryptocurrencies are part of blockchain technology revolution, the best way to show where we are in the adoption of this new asset class is via the Technology Adoption Life Cycle.  Geoffrey A. Moore wrote, “Crossing the Chasm” back in the early 2000’s that describes the adoption of technology.



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​We are at the precipice of early adoption.  This is extremely exciting for us that hold cryptocurrencies like Ripple (XRP).  Being able to get into a new asset class before the mainstream is where fortunes are made.  Think about obtaining shares of Apple or Amazon before they went public. 
Beware of a couple things.  As you participate in this new asset category, there are huge swings in prices.  Most people follow Bitcoin which has dropped to around $4250 as of 11/29/18 from $20,000.  Also, trading these crypto's can be challenging.  Converting US dollars for these coins takes a little bit of training.  The platforms such as BitStamp.net used to trade these coins are in their infancy.  But it will be well worth it if you can figure it out!  

Disclaimer:  MonieStorm  does not provide financial advice.  We do not represent any financial institution.  I am not a Registered Representative.  The information is for enjoyment purposes only.  Please do your own research.

Since Millennial's cannot file for bankruptcy for their student loans, their filings have gone down quite a bit in the last 25 years.  On the other hand, Baby Boomers filing for bankruptcy has sky rocketed.  This is a very disturbing trend.  What do you think is the cause of this trend?  Let me know your thoughts.