Socio-Economics History Blog

Socio-Economics History Blog

The Fedcoin is Coming, 8 March

by mosesman

  • The Fedcoin is Coming, 8 March
    by , https://monetary-metals.com/
    Before we talk about Fedcoins, let’s look at the old school non-digital, non-blockchain, coin. Gold. And silver. Since January 4, the price has dropped about $244. And the price of silver has fallen about $4. Are these buying opportunities? Or the end of the brief gold bull market of 2020 (i.e. Covid)?
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    It helps to return to the idea that gold is the unit of measure of value. Not as a rhetorical device to sell gold, but because it gives a clearer picture. If one thinks in dollars, one thinks that bitcoin is rising, stocks are rising (though not this week), oil is rising, other currencies are rising, etc. And gold went up, but is now coming down.
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    It’s hard to make heads or tails of this. Why would one asset go down when everything else is going up (it’s tempting to want to believe that this one asset is suppressed)? But what if that point of view is not even wrong? What if gold, not the dollar, should be used to measure things?
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    In this point of view, we’re having another little boom. Everything—as measured in money—is going up. That’s what things do, in booms. They go up. No reaching for a theory is needed. And we can look for signs that the boomlet is reaching exhaustion. Our preferred sign is the gold basis. So here is a chart going back to the start of 2020, well before Covid-mania.
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    The (continuous) cobasis—the measure of scarcity—is higher now than it’s been in a year (actually since 2016). Notice how it’s been rising steadily as the price of the dollar (inverse to the price of gold, that people insist on measuring in dollars) has been rising. One could certainly pick a worse setup to buy gold.
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    read more.

  • Silver’s scarcity is just about at its high for the year. And the last time, the dollar’s price measured in silver was a lot higher (well over 2 grams silver, compared to 1.2g). The last time it sustained levels this high, the price was over 2.1g (i.e. the price of silver, measured in dollars, was around $14.50). There are worse setups than to buy silver at this point.
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    Fedcoin: A Central Bank Digital Currency
    The Fedcoin has bipartisan support. Jay Powell, appointed as Federal Reserve Chairman by President Trump, said in October that the Federal Reserve is conducting research into issuing a digital currency, on its own and also in partnership with other central banks and the Bank for International Settlements.
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    Janet Yellen, appointed as Fed Chair by President Obama, said last week, “It makes sense for central banks to be looking at issuing sovereign digital currencies.”
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    read more.

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