The Dominoes Keep Falling part 2

4.) Stone Ridge Asset Management, a firm with $10B under management, created a $115M digital asset fund in which they purchased some 10,000 bitcoins. The Bitcoin fund was created after firm employees began accumulating Bitcoin for their personal accounts and clients increasingly wanted exposure.

Stone Ridge Reveals $115 Million Bitcoin Investment As Part Of Billion-Dollar Spinoff

Three years ago, the founders of the $10 billion Stone Ridge Asset Management had a problem. Several of the advisory firm’s founders and senior employees were buying bitcoin at such a rate it became obvious the purchases needed to be looked at more closely by the firm’s auditors.

4.) Fidelity, one of the largest asset managers in the world, released a paper focused on Bitcoin’s role in an investment portfolio. This is not surprising if you’ve followed the space for a while, as Fidelity has been a proponent of Bitcoin since circa 2013. So much so that Fidelity’s CEO, Abigail Johnson, reportedly ran Bitcoin miners in her personal office. The report touts Bitcoin for its portfolio diversification benefits. It highlights the fact that adding a small (1-5%) Bitcoin allocation to a portfolio increases risk-adjusted returns (higher returns with lower risk).

When I was originally researching Bitcoin in 2013, I noticed Bitcoin’s low or negative correlations with every other major asset class. At the time, this became the major investment thesis for me. You see, in modern portfolio theory, which is what the vast majority of asset managers practice, risk-adjusted returns are the objective. Due to its low correlation with other assets, Bitcoin improves risk-adjusted returns for almost any investment portfolio. Doing some back of the envelope calculations to estimate what the Bitcoin price would be if even 0.1% or 1% of global assets under management flowed into Bitcoin for these diversification benefits (ie better risk-adjusted returns) produced some spectacular price predictions.

I posit that in five years portfolio managers will be liable for breech of fiduciary duty if they do not have Bitcoin in portfolios (that are legally allowed to own it) given its diversification benefits. Fidelity spells it out for portfolio managers in this paper.

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5.) It now appears global central banks are planning to move to Central Bank Digital Currency (CBDC) in the next iteration of the global monetary system. A few years ago, the monetary masters at the big western central banks, the IMF, and World Bank were telegraphing a move to a Special Drawing Rights (an IMF issued form of unsound money) based system at the demise of the current monetary system. In a change of course over the past two years, central banks have been seriously considering a move to CBDC instead. So much so that they are now developing, testing, and even running pilot programs of CBDC in various countries.

In a speech this week, Jerome Powell, chairman of the Federal Reserve, spoke at length about CBDC, and said, “It’s more important to get it right than to be first.” To me, that statement confirms the Fed will indeed launch a CBDC in the future.

I was also struck by the following quote from the video (Georgieva paraphrasing Powell at about 27:00), “I don’t want to wake up one day and realize the dollar is no longer the world reserve currency because we just missed a technological change,” which was followed by nervous laughter. The monetary masters are having nightmares about Bitcoin.

Powell Lays Out The Key Reasons Why The Fed Is Moving Toward Digital Dollars

In what remains the most undercovered financial topic of the year, if not century, we remind readers that starting about a year ago, central banks around the world launched an unprecedented if stealthy attempt to overhaul the entire monetary architecture of fiat money by implementing digital dollars, a transformation to a cashless society which in recent months has also received the tacit support of Congress, which is actively drafting bills to send “digital dollars” to the unbanked.

Fed Chair Jerome Powell Emphasizes Caution in CBDC Remarks – CoinDesk

Saying “It’s more important to get it right than to be first,” Fed Chairman Jerome Powell this morning suggested the U.S. isn’t rushing to win a global race to develop a Central Bank Digital Currency.

6.) Related to the last story, it now also appears the Fed is planning to issue CBDC to Americans as a form of direct stimulus.

Presently, due to massive debt deflation as a result of the insane Covid lockdowns, the Fed is unable to create inflation needed to keep the current debt-based financial system from collapsing. For the trillions of dollars the Fed created earlier this year via Quantitative Easing to be effective, banks need to lend. The mechanics are that QE funds are deposited as reserves in accounts at the Fed for its member banks. Those reserves buttress banks’ financial positions, and are supposed to be the base against which fractionally reserved lending flows into the economy to create inflation. However, due to a deluge of loan defaults, banks have significantly increased their lending standards to a degree which almost no businesses are currently meeting in the pandemic economy, and thus are not lending at all. The QE funds are instead sitting inert in accounts at the Fed.

The Fed’s other main lever to create inflation is reducing interest rates to stimulate borrowing and conversely lending newly created money via fractional-reserve banking into existence. The Fed Funds rate is already at 0%, so they cannot reduce rates further without going negative. However, this would in turn drag down Treasury rates. Treasuries are considered the ‘risk-free rate’ that tens of trillions of dollars of assets valuation models are based on. Negative yielding Treasuries would completely upend these models, likely imploding asset and Treasury markets.

Additionally, there is this pesky thing called the Federal Reserve Act which legally limits the Fed’s powers, and prevents direct currency issuance to Americans (helicopter money) as a means of stimulus and stoking inflation.

So, at the moment, the Fed is impotent. Unless they change the rules. And it looks like Americans being issued bank accounts directly at the Federal Reserve in which they will deposit CBDC to stimulate inflation is how they plan to change the rules. Helicopter money for all.

In Unprecedented Monetary Overhaul, The Fed Is Preparing To Deposit “Digital Dollars” Directly To “Each American”

Over the past decade, the one common theme despite the political upheaval and growing social and geopolitical instability, was that the market would keep marching higher and the Fed would continue injecting liquidity into the system.

7.) Finally, the IMF is now calling for a new Bretton Woods. This seems to be part and parcel of the WEF’s Great Reset, which is being pushed harder than ever now due to Covid. Elites are telling you what they are planning if only you’ll pay attention.

A New Bretton Woods Moment

1. Introduction: ‘A sisterhood and brotherhood of humanity’ I first want to thank Dr. Ernest Kwamina Addison for his excellent remarks and contributions as Chairman of the IMF’s Board of Governors. Reflecting on the dramatic change in the world over the last year, I paid a visit to the Bretton Woods, New Hampshire, where 44 men signed our Articles of Agreement in 1944.

https://twitter.com/wef/status/799632174043561984

Do you see a trend here? The current monetary system is sinking while the Bitcoin ark is rising. Get aboard now.

All indications point to a monumental monetary shake-up coming soon. The writing is on the wall. The central bankers will probably move toward governmental CBDC funny money next, but, in the fullness of time, the world will default to Bitcoin. The Bitcoin Standard is inevitable. #BuyBitcoin