Bitcoin: Drawing the Line Between Investors and Gamblers


People who bought and held their .01 bitcoins from 2010 could have enjoyed an increase in value of 119,999,900 percent. If you spent $100 on the most popular digital currency then and didn’t sell or lose your fortune to hackers, your electronic coins might be worth about $120 million today. Those are pretty incredible returns, and few people regret buying a few bitcoins back in the day, holding onto them, and reaping the benefits. Of course, none of that offers any guarantees that the value of this or any other digital currency will continue to rise like this or even continue to increase at all.

Is Buying Bitcoin Investing or Gambling?

In fact, it’s possible to argue that the very thing that maintains today’s value is past performance. As you should know from reading any prospectus, past performance doesn’t ever guarantee future returns. If you can afford it and want to spend some money on digital currency, that’s your choice. However, you really should first spend some time considering what it really means to buy bitcoin.

When you buy some bitcoin, are you investing or speculating? In order to figure this out, you first have to decide if bitcoin qualifies as an investment. This question usually sparks a lot of contentious debates among people who are considered financial experts. Aswath Damodaran teaches at NYU’s Stern School of Business. He’s often referred to as the “Dean of Valuation” for his work valuing various assets.

Professor Damodaran divides all investments into four main categories:

  • Assets
  • Commodities
  • Currencies
  • Collectibles

He says it’s easy to dismiss digital currency like bitcoin as an asset, commodity, or collectible. This digital currency doesn’t generate income on its own like a rental property, an asset that you can touch. You can’t consider bitcoin a raw material like a commodity. It certainly isn’t a collectible.

If nothing else, Damodarian is willing to say that bitcoin might be a type of currency, but he also has gone on to comment that bitcoin isn’t a very good currency. These are some reasons that bitcoin hasn’t yet become a good currency even if it might be loosely classified as one:

  • It’s not that easy to trade nor commonly accept by most vendors.
  • If you do find vendors who accept it as payment, they probably won’t give you an actual price until the moment you want to make a trade just because the value is very volatile.

If bitcoin is an investment, it’s hard to classify. You might call it a currency just because it really isn’t anything else.

Professor Damodaran is not at all a fierce critic of electronic currency and doesn’t believe it’s any sort of fraud or Ponzi scheme. He just says it’s impossible to value right now. You can only trade it or price it. You can find many tougher critics than Damodaran, so it’s worthwhile to consider the words of a fairly unbiased scholar and recognized expert in the field.

He does say that if future technology makes it easier to spend bitcoin or other electronic currencies, he might offer a revised opinion. Still, it might be that blockchain technology and not the electronic currency that really has the value. If that’s true, another electronic currency or even a different kind of technology could replace bitcoin.

Should You Regard Bitcoin as an Investment or Speculation?

Just as you know, you should never sell in a panic, it’s also prudent to be wary of buying in a panic. Right now, you might regard bitcoin as something that’s interesting to study or even risk whatever you can afford to lose. If you want to invest in order to secure your retirement, earn profits, or meet other financial goals, you should probably look for something that’s easier to classify as an investment. More important, you will probably be prudent to find an investment that’s easier to value.

If experts are having a hard time telling if or when this will all come crashing down, it can be easy to see this as a gamble. Some people are fine with putting their savings on the line in hopes that things will go the way they guess, but more savvy investors will typically take the “boring” route and put in the hard work required to ensure their financial growth.

Now you know


Why Keep the Mortgage Interest Deduction Intact for Now


Arguments over the mortgage interest deduction are not new and arise from both sides of the political spectrum. It’s important to remember that when Congress first imposed a federal income tax, they made all interest payments deductible. At the same time, the Tax Foundation contended that Congress wasn’t thinking about middle-class homeowners in the early part of the 19th Century. They excluded the first $3,000 for individuals and $4,000 for married couples, so only about one percent of the population of the country paid federal income taxes back then.

In those days, Congress may have considered business or farm interest but probably not typical home mortgages. As time passed, notions about interest deductions and exactly who would be impacted have obviously evolved. Today, the home interest deduction and the related property tax deduction remain as the two sacred cows in the tax code. It’s fair to say that they remained intact after other interest-related deductions had been gutted because lawmakers believe that they provided incentives for homeownership, and because homeownership was something that Congress hoped to encourage.

Why Keep the Home Mortgage Deduction Intact?

First, the latest tax code proposal doesn’t ask to completely do away with these two deductions, so it’s important to look at the latest bill to learn exactly what it does do.

This is a brief summary of the changes for home mortgage deductions:

  • You cannot deduct interest on a second home but only a primary residence.
  • You can still deduct home interest on any loan or part of a loan up to $500,000.
  • It’s worth noting that the related deduction for home property taxes would be capped at $10,000.

Arguments in favor of these changes usually underscore the additional revenues that the government can collect by eliminating these home deductions. Since the proposed changes aren’t eliminating all home deductions, it’s also easy to argue that they won’t impact the majority of Americans who only have one home, don’t have a mortgage over half a million dollars, or who pay more than $10,000 for property taxes each year.

How Could Changes to Housing Deductions Impact the American Economy?

A lot of Americans may not think that this sort of change to the tax code will impact them that much. Such expensive homes are rare in most counties and probably don’t represent more than four percent of all American homes. It would be possible to apply a similar argument to the property tax deduction. Lots of homeowners don’t pay $10,000 in property taxes every year, and many of those don’t even pay enough to allow them to itemize deductions.

However, the CBS report pointed out a couple of impacts that the news of the tax code has already had on the U.S. economy:

  • Home builder stocks: For example, the SPDR fund dropped by over five percent on the news reports. Even home-improvement retail chains like Home Depot and Lowes lost value.
  • Vacation homes: An analyst for Cowen named Jaret Spielberg said that his firm found the news negative for the market of vacation and second homes. Obviously, the tax code will also impact more homeowners in pricier markets. For instance, home prices average around $276,000 in Austin, Texas but over $1 million in San Francisco. This change may impose an additional burden on people who already struggle to afford housing in more expensive cities. Even if the old deductions get grandfathered in, the change is still likely to impact future home sales, and thereby the availability of different financing options. This, in turn, may affect the ability of these expensive housing markets to attract new people.

Also, the tax proposal included an increased standard deduction. It’s not accurate to only view the way these changes will impact future home buying decisions at the top end. More people with modest homes in areas that don’t have such high property taxes may also find that homeownership doesn’t give them the tax benefit that it used to.

In any case, the National Association of Realtors felt strongly enough about the impact of these changes on the real estate market to speak out. Because it can eliminate the tax incentive of purchasing a home for many taxpayers, they believe it will weaken the real estate market and result in higher taxes for many Americans. According to NAR’s president, William E. Brown, the changes would result in a “one-two punch” that would end up reducing America’s homeownership rate, which has certainly never been a goal stated by the political platform of either party.

A key resolution to consider…. If the intent is to make America greater than ever.


The Looming Public Pension Fund Crisis


The United States’ public pension funds are in a terrible predicament. As of August 2017, Bloomberg reported that 43 out of 50 States have had a disturbing increase in their funding ratio gaps, with only District of Columbia being overfunded out of all 50 states. The PEW Charitable Trusts reports that overall, the public pension fund system is underfunded by more than US trillion, with a record number of Baby Boomers going into retirement. These events spur not only financial, but social crises. If retirees have learnt no wealth creation and preservation techniques other than a dependence on pensions, the U.S. may face a widening of socioeconomic strata en masse.

Initially we blame local and state governments for failing to meet tax dollar fund contributions, and rightly so. Wayne Winegarden, Sr. Fellow at the Pacific Research Institute, states that from 2001 to 2015 total state contributions only met 88% of total nationwide contribution requirements. Full contribution is not expected in the short term, due to increased pension liabilities. States such as Oregon, Minnesota and Colorado have funding ratios gaps of more than 10%; Minnesota’s funding ratio worsened by a whopping 26.6% for FY 2016. That is terrifying from an economic standpoint, filled with nationwide implications reminiscent of Detroit’s 2013 bankruptcy filing. As Winegarden clearly points out, there are three fiscal policies that can mitigate worsening funding gaps:

  1. Cut promised pensions;
  2. Levy future tax increases;
  3. Reduce future government spending.

In addition to these fiscal mitigating policies, public pension funds need to adjust fund return expectations. From the late 1990s to 2000 both private and public pension funds had similar return projections approximating 8%. However, while private pension funds have adjusted fund expectations to consider the tech crash and Great Recession repercussions, public pension funds by and large have not. Indeed, private pension funds now have an adjusted return of approximately 5%, while public pension funds still have expected returns of 8%. Yet, the funding ratio gap widens for 86% the United States’ public pension system.

Second to consider is the change in asset allocation within public pension funds over the past decade. Public pension funds have made a marked shift to alternative investments for portfolio diversification, which have heightened risk and reward implications. The Pew Charitable Trusts (PEW) April 2017 report, State Public Pension Funds Increase Use of Complex Investments, give a thorough overview of issues and challenges regarding the state pension fund system. According to the PEW report, public pension funds have undertaken a stronger portion of alternative investments within fund portfolios that require customized expertise, different from stock and bond management. From a governance perspective, the PEW report states that overall most public pension fund boards may have been lacking in expertise to be part of investment decisions of such complex caliber.

The PEW Charitable Trusts report does not purport that alternative asset allocation is the reason behind our failing public pension system. The PEW report relates that there was no solid correlation between the use of alternative investments and fund performance. However, the PEW report found that pension funds with “long-standing alternative investment programs” outperformed similar funds that made trigger decisions to add alternative investments to the portfolio, where the original strategy consisted of mainly conservative investment vehicles. For instance, the Washington Department of Retirement Systems (WDRS) has one of the strongest track records in fund performance, and has had an alternative investment strategy since 1981, with 36% alternative asset allocation. Conversely, the South Carolina Retirement System (SCRS) quickly changed its fund portfolio to 31% of high yield alternative investments based on a 2007 state stipulation, with 10 year returns decreasing from 8% to 5%, even with a higher risk/reward objective. In addition, public pension fund valuation reporting for both fixed-income, public equity, and alternative investment portfolios has led to confusion in fund performance evaluations.

Third and the most insidious issue is the gargantuan rise in investment fees which public pension funds have faced. The PEW Charitable Trusts clearly delineates that public pension fund allocation to alternative investment vehicles has increased fund investment fees to aggregate US$10 billion as of 2014. Reported fees as a percentage of total assets have increased by 30% to date. And, these figures pertain to reported fees. Unreported performance fees carve a hefty portion of gross fund returns and can remain undisclosed depending on state fee disclosure requirements. According to the PEW report, unreported fees may amount to US$4 billion per annum. Public pension funds need to invest in higher yielding assets, since on the fiscal side contributions are sorely lacking. However, if total investment fees outweigh net returns, we have a further exacerbated public pension liability position.

The PEW Charitable Trusts give specific recommendations to begin the process of effective internal governance within the public pension fund system. Highlights of these recommendations are as follows:

  1. Public pension investments now have higher risk in portfolios comprising bond, stocks and alternative investments. Investment policy statements must be made fully accessible online for all stakeholders. All statements must fully disclose investment strategies.
    1. Include performance results by asset class, to highlight the performance and cost of all utilized investment strategies.
  2. Performance reporting is extremely inconsistent within state public pension funds. Some states report gross of fees, while others report net of fees. All public pension funds should report both net and gross of fees regardless of positive or negative returns.
  3. Public pension funds do not report comprehensive undisclosed fees such as carried interest. Include line itemization of fees paid to individual investment managers in comprehensive fee reporting.
  4. Most public pension funds report returns in a 5 to 10 year window. It is recommended to increase fund performance reporting to a 20 year horizon to get a fuller understanding of long-term strategies.

A combination of strong fiscal and governance policies at the state and local level are immediately needed to restructure the public pension fund system, and curb the worsening funding ratios over 43 of all 50 states. Public pension funds need to fully admit the glaring issue of underfunding, and possibly look to successful funds such the Oklahoma Teachers Retirement System or the Washington Department of Retirement Systems for replication of certain investment strategies. State and local overspending on aesthetics and mismanagement needs to be curbed and channeled into the basics, such as pension fund contributions. We cannot depend solely on the U.S. federal government to prevent such a financial catastrophe as possible public pensions default. It is up to the state and local governments to take a long, hard look at current mismanagement and ineffective governance, and bring pension contributions back to positive. We cannot have a replay of Detroit’s 2013 pension fiasco pan out over 43 states.



U.S. Healthcare: The Most UnAmerican Industry


In the past three decades, the U.S. healthcare industry has evolved to resemble a poorly regulated market, where financial incentives are set to default to the most expensive treatment option possible. Through the Affordable Care Act (ACA, ObamaCare) President Obama compromised with the medical industry to pass a bill that aimed to cover all Americans; the compromise entailed a complete lack of cost control and treatment accountability for patients. As a result, the United States health care system is the most expensive in the world, but consistently underperforms on most dimensions of performance when compared to other countries. Worse of all, it is bankrupting our country at a rapid pace.

The United States now spends $3.3 Trillion per year on its healthcare system under the Affordable Care Act. In comparison, the U.S. spends $660 billion per year on our military (the largest and most advanced military in the world; this budget is also bigger than the next 8 countries’ budgets combined), and $230 billion per year on our education system. Even when the cost is calculated per capita, the U.S. spends at least twice as much as Canada, and three times as much as Italy. Worse, the Commonwealth Fund’s report on international health system efficiency, ranked the United States last of 11 developed nations, on quality, access, efficiency and equity of care. The current healthcare solutions, administration and financing, are dysfunctional to say the least. Most urgently, this atrocious healthcare system is funded without end by the U.S. government, under the Affordable Care Act. The $3.3 Trillion per year makes up 16.5% of the U.S. total debt of $20 Trillion.

National health spending is projected to increase from 18 percent of GDP to about 25 percent by 2037. The root of the ridiculous high costs of healthcare lay within Obamacare’s faulty incentives. Insurance companies pay their executives as a percentage of premiums. Thus, the more they pay for their insured, the higher their salaries. If doctors charge hundreds of thousands of dollars for simple procedures (as it is now happening more often), insurance companies usually have no problems paying for it. Doctors know this; thus, it is not rare to find three or four doctors billing the same patient as if they each did a procedure, when in fact, most of them just walked by and said hello. These instances are documented, as they happen all the time. While Obamacare was hailed as a victory for the consumers, it truly is a payday for healthcare professionals. Universal coverage under Obamacare does not mean anyone in the U.S. can be treated. It means anyone in the U.S. can see a doctor and be billed for it, whether they are healed or not. As a result, the U.S. is becoming sick and broke. Obviously, this demands urgent, decisive action. While President Trump is fighting to repeal Obamacare with the persistence of a honeybadger, the private sector must be ready to provide new, innovative healthcare delivery models.


  1. Repeal Obamacare ASAP First, the Trump administration must do everything and anything to repeal Obamacare as soon as possible. Shifting federal spending to private individuals, employers and states doesn’t solve the healthcare problem, but spending our way into bankruptcy is not the solution, and should not even be an option. The first step to lowering the costs of healthcare is to stop paying for it indiscriminately. In an industry where prices rise to whatever the market (i.e. the government and insurance companies) will pay, it is counterproductive to write blank checks to healthcare providers. This is why our average annual healthcare spend per capita is triple that of other OECD countries.
  2. Make Healthcare Competitive Again Second, the Trump administration must roll back regulations and mandates, and adjust laws that allow healthcare to become a competitive market. Such a market would adhere to the concept of “value based purchasing,” which states that providers only get paid if they fix the problem. This means hospitals and doctors cannot bill simply because they applied a procedure, whether it was successful or not; the patient must be healed. Value based purchasing dictates that providers take responsibility for the patients’ health. Also, this new, competitive market would naturally favor healthcare providers who achieve triple aim: lower costs, improve quality, and improve patient satisfaction. Instead of the government setting prices for health care commodities, providers need to compete to offer the lowest price.Regarding physicians, the Trump administration must counter restrictive state laws to allow nonphysician providers (i.e. advanced-practice nurses) to practice to the full extent of their training. This would expand the workforce supply, increase competition, and lower prices.
  3. Adopt Blockchain Technologies Lastly, the Trump Administration needs to make it a priority to adopt blockchain technologies, which will allow the private sector to accelerate their use of blockchain technology. Since the private healthcare industry works so closely with government institutions, one cannot fundamentally evolve without the other side making some fundamental changes as well. It takes two to Tango.


While the Trump administration is fighting to repeal the catastrophically expensive Obamacare, the private sector must take ownership and deliver bold, innovative, and profitable solutions. Healthcare entrepreneurs must focus their efforts and capital on 1). inventing new healthcare delivery models, and 2). adopting blockchain technology.

  1. Create New Healthcare Delivery Models: Specifically, we need solutions that revolutionize the large institutions, such as hospitals. It currently costs $1,200/day in fixed costs to keep a hospital bed available (regardless of whether there is a patient in it or not). Hospital bills make up 40-50% of the yearly $3.3T spent; extremely inefficient. The solution is not found in inventing models that reduce the cost by 10%, but rather by inventing brand-new healthcare delivery systems, such as ambulatory surgical centers (ASCs) and home-based micro-hospital units. For example, ASCs provide cost-effective surgeries in a convenient environment that is less stressful than hospitals, while home-based micro-hospital units utilize the most recent advances in technology (telehealth, wearables, sensors and systems) to reinvent the way patients are treated, in a more efficient and cost-effective way: in their own homes. The U.S. healthcare industry will depend almost entirely on capable entrepreneurs willing to reinvent these ancient, costly, inefficient care delivery practices.
  2. Digitization of Healthcare and Adoption of Blockchain Technology The single biggest innovation coming to the healthcare industry is the adoption of blockchain technology, as it is the best solution available to streamline all healthcare data, processes and infrastructure. Blockchain is the great equalizer, because it can absorb information from hundreds of types of software and programs lurking in the healthcare industry, and organize it in a decentralized, nationally/worldly distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. Hundreds of systems into one system.The competitive advantage blockchain offers to any healthcare institution that adopts it early will slash through the administrative and operating costs. Issues of billing, coding, collections, coordination, etc., will begin to disappear from the industry, as a nationally distributed ledger will accurately and permanently verify and track all data as it is created. No more reconciliations, duplicate data entries, and endless confusion.Lastly, the adoption of blockchain technology in the healthcare industry will revolutionize the outcomes for patients as well. In the past two decades, digital technology fully transformed most aspects of our lives, such as communication, banking, entertainment, shopping, etc. Healthcare is the exception.Most technology investments in healthcare did not translate into better outcomes for patients. For example, in the past few years, the U.S. government invested more than $30B to digitize hospitals and doctors’ work. The result? Doctors and staff now spend the majority of their time behind computers, frustratingly managing data, instead of having more time for their patients. An Ipsos Public Affairs survey recently found that most doctors (83%) are spread so thin that they aren’t able to spend enough time with their patients. Endless paperwork, inconsistent software, unavailable data, etc., is keeping doctors, providers and staff focused on bureaucracy rather than delivering care to patients. The digitization of healthcare (from paper records to electronic health records) and subsequent adoption of the blockchain technology will truly improve the cost, quality and patient satisfaction.In conclusion, President Trump must continue to fight to repeal Obamacare. He is doing so not because he hates people, as the media will have you believe, but because this horrific policy is bankrupting our country, while offering a mediocre excuse for healthcare. Costs are out of control, and no entity is responsible for healing patients. It’s a bad deal, plain and simple. The Trump administration must also be ready to assist and match the private sector in adopting blockchain technologies as quickly as possible. Healthcare entrepreneurs must employ the latest advances in technology, including blockchain, to reinvent healthcare delivery models.



Understanding and dealing with bubbles – a review of the state of the art


Take a close look around you. There seems to be today bubbles boiling up everywhere.

There are bubbly stock markets like India, Brazil, and the U.S. Lots of bond bubbles: U.S. Treasuries, U.S. corporate bonds, global bonds in general, subprime auto bonds.

There’s talk of a bubble in the international art market, solar energy, venture capital, lithium and U.S student loans. Another looming one is the bitcoin bubble too.

There’s also evidence of real estate bubbles around the world: Vancouver, Auckland, Sydney, Toronto, San Francisco and London, for starters. There’s a reported bubble in “nine-figure real estate listings.”

Chinese bubbles are a class of their own: Real estate, iron ore, cotton, garlic, eggs and soybean meal are some recent ones. Of course, China’s stock market bubble burst last summer.

Then there is discussion of “the mother of all bubbles” also known as “the everything bubble,” which infers that a global debt bubble feeds all the other bubbles. With so many bubbles, it’s hard to keep track.

Possibly a Bubble ETF is needed, composed of the many bubble markets, so that there’s an efficient way to track and trade the world of bubbles.

Yet, despite the fact that speculative bubbles are popping up everywhere, it can often be hard to tell you’re in a bubble until it pops. It would help to know how to tell a bubble is forming.

Luckily there are about four centuries’ worth of speculative bubbles to study for answers.

The first widely known and the most famous market bubble of all time was Tulip Mania, which occurred in Holland in the early 17th century. The Dutch became enamored with tulips that had flaming colors on their petals. They coveted the bulbs that grew into these unique tulips.

As demand for the bulbs increased, along with their value, a market in tulip bulbs developed. As word of profitable speculation spread, more people piled in. Prices moved continuously higher.

Then from December 1636 to February 1637, the price of premium tulips surged by 200 percent. At the height of the mania in 1637, the market price of a single prized bulb was sufficient to purchase one of the grandest homes on the most fashionable canal in Amsterdam – when that city’s homes were among the most expensive in the world.

Needless to say, these prices were not an accurate reflection of the true value of a tulip bulb. In February 1637, buying tipped over into selling, and a domino effect of cascading lower and lower prices took hold. Speculators saw that they had spent vast sums to buy plants that were little more than glorified onions, and liquidated their tulip bulb holdings without regard for price. As wealth evaporated, pandemonium engulfed Holland. A deep economic depression followed.

Tulip mania established a pattern that has since been repeated over and over in speculative bubbles ever since. Despite advances in economic theory and the increasing sophistication of markets, market bubbles, and human psychology, haven’t changed much since the 1630s.

In 2008, Jean-Paul Rodrigue, a Canadian transportation scholar, conducted a study of the history of bubbles, and published a model of bubble stages:

  1. Stealth Phase. The initial bubble stage is where a new market opportunity, or paradigm, is cautiously recognized by early smart money investors.
  2. Awareness Phase. As market prices rise, more investors are attracted to the new investment story. The media begins to cover the story, adding to the momentum, and investors become increasingly interested – and increasingly less sophisticated.
  3. Mania Phase. Now everyone notices the rising prices. The media is touting “the investment of a lifetime.” Price becomes detached from underlying economic reality. Euphoric, irrational investors project recent price gains into the future. Enthusiasm spreads like a contagion between investors. A feedback loop ensues – rising prices amplify stories that seem to justify high valuations, which attract an ever increasing number of buyers.Even cynical traders join the buying, expecting to sell to “greater fools.” Price gains become nearly parabolic. Paper fortunes are made. Greed rules. Meanwhile the smart money is selling to the dumb money.
  4. Blow-off Phase. At some point buying abates and a paradigm shift slowly – or sometimes quickly – unfolds, as market participants realize something has changed. Sellers now find few buyers and prices fall quickly. Leveraged speculators face margin calls and are forced to sell. The decline becomes a crash.

Everyone now views the market as “a house of cards,” and prices plummet at a rate much faster than when the bubble was inflated. Often, prices fall below pre-bubble levels. The market becomes universally hated. But eventually the smart money starts buying again, recognizing the  panic has created an opportunity to buy assets at bargain prices.

This classic bubble pattern is apparent in the most notorious bubbles of the modern era, including some very recent ones.   Another example is the Shanghai Composite index just last year. Starting in August 2014, the index gained 125 percent in 10 months. This was fueled in part by easier margin lending rules, which allowed Chinese investors to borrow more to invest.

This amplified the speculation and buying, so prices kept going higher. Thinking that buying stocks was an easy way to make money, less sophisticated investors entered the market and mania ensued.

But eventually the bubble popped. Investors realized stocks were way overvalued and the market collapsed and fell 32 percent in less than a month.

Over 400 years of market bubbles have shown a recurring pattern: A smart investment idea gains a following, and prices rise. The media discovers the story, ever more investors join in, becoming increasingly excited, and prices rise even more. Valuations lose connection with economic reality. Sooner or later the bubble bursts, prices crash, and many investors are ruined.

With potential bubbles in so many different markets across the globe, it’s a good time to study this historical pattern. Knowing what stage a market bubble is in can help you avoid taking a bath when the bubble pops. And bubbles always pop.

Learning to control the emotions that can cause us to get caught up in market bubbles is also important.

Next bubble?

I am afraid the next bubble will be due to cheap money…

Ever since the Fed (and other money printing entities throughout the world) started to print money at record pace after the 2008 crisis, there has been a lot more money in the economy.

What the central banks were trying to do (and it has worked a little) was stimulate economies by injecting money into industries that were hanging on by a thread.

Unfortunately, this has caused many assets to be inflated in price because of the larger volume of dollars (or whatever currency you use) in the market.

This large volume of money allowed people to pay higher prices for things like homes, businesses, cars, education, or really anything that can be bought with borrowed money.

As we continue down this road of more money printing, we are just like a drunk at the bar, who is drinking more and more. We think we are getting better and better at dancing all over the tables, and hey, maybe we are! But… the next morning we are going to have a mean hangover.

So, anything that is financed through borrowed money is at risk of being in a bubble. Real assets that cannot be financed are the few things that wealthy people will start transitioning into as this bubble gets larger. Things like metals, art, collectibles or foreign real estate.

Given the current state of our economy, the only thing worse than a new bubble would be its absence.

Now you know….

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