False Flag at the Capitol?

A short 24 hours have passed since the invasion of the Capitol building in Washington DC, and conspiracy theories already abound. Some take the event on face value, and others are calling foul play. However, no-one can deny that there was something profoundly odd about the spectacle. Not a single one of the intruders seemed the least bit concerned about their identity. They posed willingly for photographers as if they knew they were above the law.

What time will reveal in this respect is whether they were indeed above the law, or whether they all get punished for their actions. If this whole thing dies down, with no follow up story about the intruders and their fate, we can safely assume that it was a false flag with no other intention than to harm Trump. However, if there is a follow up, much depends on how the intruders are dealt with.

If the intruders get stiff penalties, there's a good chance the intrusion was real. On the other hand, if they get pardoned, we're likely dealing with a false flag. However, none of this is certain. History is full of examples where useful idiots get dealt with in due course. There are also examples of genuine pardons made in the interest of national unity. The true arbitrator in this respect will not be what the Biden-Harris administration decides to do, but what independent investigators come up with.

Some of the intruders have already been identified as known trouble makers, and more are likely to follow. Whatever political advantage Trump's adversaries intend to make on this must therefore be done quickly, and with maximum restrictions of dissenting voices. Trump must be made mute, along with his supporters.

The fact that Trump has so swiftly been silenced is in this respect fuel for conspiracy theorists. The circumstantial evidence points heavily towards a conspiracy to defame and prosecute an outsider who dared to run for president. But the truth will only be known once we either get a full list of identified intruders along with their affiliations, or we fail to get any list at all.

US Capitol

By Martin Falbisoner - Own work, CC BY-SA 3.0, Link

Record Cold in Spain

So far, it's been a cold winter in Portugal. The first snow was registered in early December, which is technically not winter but fall. Temperatures rose subsequently to about normal for the season over Christmas, only to plunge down again into unusually cold temperatures. As I write this, temperatures in Porto range from around 2C at night to 10C during the day. This is well below the usual range of about 8C to 16C, and it's been like this for 10 days now, with no sign of relief before Sunday at the earliest.

The cold has not been confined to Portugal. As is often the case with extreme Iberian weather, Spain has been more affected. Spain registered its coldest temperature in recorded history on Wednesday, January 6 with the Catalan Pyrenees logging a bone-chilling -34.1C (-29.3F). Madrid is seeing below freezing temperatures, and snow is on its way.

Having lived in Portugal for the last 15 years, I've noticed a trend over the last few years in which summers have become increasingly mild and free of heat waves, and winters becoming correspondingly colder. Judging purely from such extremes, it very much appears that the climate of the Iberian peninsula is shifting towards something a little cooler than what we've been used to in the recent past.

My impression from friends living in other places is that they too see this kind of shift. There doesn't seem to be many places where temperatures have gone noticeably higher. Most of what I hear about are cold events. There are for sure hot days every now and again, but they are becoming increasingly rare while cold days are becoming more common.

One thing that I've noticed for myself here in Porto is that clear blue skies are becoming increasingly rare. Even during summer, when the skies used to be intensely blue, there's now more of a light haze. The ocean mist that usually lifts during the morning hours, hangs around for hours, sometimes for the entire day. While I welcome this myself due to my dislike of direct beating sun and intense heat, it's a peculiar development that no doubt serves to lower the temperatures.

Of course, none of this is very scientific. I'm just noting these things for myself. But as a result, I find all the hysteria surrounding the climate strange to observe. There's no direct evidence of any global warming, neither where I live or where my friends and relatives live. Where then is all this global warming taking place?

Climate change

By NASA’s Scientific Visualization Studio, Key and Title by uploader (Eric Fisk) - https://data.giss.nasa.gov/gistemp/maps/index_v4.html, Public Domain, Link

Aunt Augusta's Tragic Death Due to Covid

It's now official. Sonia Azevedo's sudden death was not due to the vaccine. It was due to something else. However, due to legal restrictions, we're not told what this something else might have been. People who take the vaccine in Portugal must sign a legal document of consent, and I suspect that it's this declaration of consent that contains the legal hurdle to a full disclosure of the coroner's report.

Meanwhile, two deaths in a Norwegian nursing home appear to be similar to the case in Portugal. A full investigation is currently ongoing, and I suspect that this too will be deemed unrelated to the vaccine, because the success of the vaccine rollout very much depends on this. We will be told that correlation is no proof of causation, and to think otherwise is to be paranoid.

However, no coroner was involved when my wife's aunt Augusta died of Covid a few weeks back. She had been diagnosed with Covid some time in advance of her death, and that was all it took to mark her down as another tragic death due to Covid. Correlation was sufficient. The fact that she was morbidly overweight and practically dead already was conveniently ignored.

Obesity

By Juan Carreño de Miranda - Museo Nacional del Prado, Public Domain, Link

Sonia Azevedo's Sudden Death

First, there was the case of Tiffany Pontes Dover, a nurse who fainted minutes after taking the Covid flu shot, and then disappeared, never to be heard of again. Then, there was a handful of confirmed deaths of patients vaccinated in the high risk group. And now, there's the case of Sonia Azevedo, a nurse who died in her sleep two days after taking the shot.

In addition to this, we know that the Covid flu shot has a 2.5% chance of making us ill. In light of the handful of deaths, it seems reasonable to assume that some of these illnesses are serious, making it increasingly likely that the Covid flu shot may be at least as bad as the disease itself.

Making this all the worse, is the fact that long term effects of the Covid flu shot are unknown. There simply hasn't been a long term study of the vaccine, so anyone taking the shot early is embarking on an unknown journey with possible side-effects ranging from mild discomforts to sterility and serious illness, including heart failure and death.

A nightmare scenario may develop a few months from now in which people start dropping dead for no apparent reason, with the only common denominator being the fact that they took the Covid flu shot. Suddenly, there'll be awareness among the ones that took the shot that it is a time bomb with a relatively high chance of killing them. Imagine the mental strain on those who took it if this was to happen.

However, to suggest the possibility of such a scenario is to be a heretic these days. The handful of deaths from the shot so far are brushed aside as irrelevant, and many will even claim that the deaths are unrelated to the shot. But to make such claims exposes a bias in measurements. We cannot on the one hand count those dying within a few weeks of being tested positive as Covid flu deaths, and at the same time dismiss anyone becoming ill within days of receiving the shot as somehow unrelated. Sonia Azevedo was one of 500 people who took the vaccine a week ago. She died two days later, and the only consistent way to count this would be to mark it up as related to the vaccine.

Smallpox vaccine

By Photo Credit: James Gathany Content Providers(s): CDC - This media comes from the Centers for Disease Control and Prevention's Public Health Image Library (PHIL), with identification number #2674. Note: Not all PHIL images are public domain; be sure to check copyright status and credit authors and content providers. Deutsch | English | македонски | slovenščina | +/−, Public Domain, Link

Cash is Always on the Side-Line

Whenever there is a transaction, cash goes from one set of hands to another. The seller gets the cash and the buyer gets the goods. The amount of cash before and after the transaction is unchanged. The goods are unchanged as well. The seller is happy for the cash and the buyer is happy for the goods. The only changes are the distribution of goods and cash as well as the sentiment of the actors. There's equilibrium.

Cash never moves into goods or out of them. Cash changes hands. It's therefore wrong to suggest that cash has been put into the stock market, or that cash has been taken out of it. The stock market is not a pool in which money is put for subsequent withdrawals. The stock market is not a bank account, it's a market, a place where assets are exchanged for cash. Relative to the stock market or any other markets, cash is always on the side-lines.

However, cash is not a constant. It can be made abundant through credit expansion, and it can be made scarce by credit contraction. The volume of cash on the side-lines fluctuates, affecting the price people are willing to pay for goods and services. When cash is abundant, prices of most things tend to go up. When cash is scarce, prices tend to go down. But there's no telling for sure where these moves will be seen. Price moves due to credit depend on the sentiment of the individuals involved. If there's a feeling that things have become expensive, the sentiment may be to pay down debt. Here too, there is a balance. Some people may continue to leverage up while others de-leverage.

The promise of continued cheap credit from central banks may lead us to believe that the stock market will continue up. However, it's already at an all time high relative to many alternatives. The stock market may not be the favoured place to trade with the extra cash coming in. There's no way of telling precisely what cheap credit will do in the future. All we know is that it will tend to push prices up for certain goods. But even that is uncertain. There's always the possibility that credit becomes expensive, in which case people will rush to pay down their debt, with cash becoming scarce in the process.

Going forward, we have central banks and policy makers increasingly directing their credit expansions towards Main Street where sentiment is very different from Wall Street. It's therefore far from certain that this extra cash will drive stock prices higher. More likely, we'll see credit card debt being repaid and prices of everyday goods going up.

Federal reserve note

By National Museum of American History - Image by Godot13, Public Domain, Link

No Need for Rebalancing

It's now four years since I sold my house in Asker, and two years since I last made a written assessment related to our financial progress since then. This is in tune with the general philosophy of long term investments, as outlined in my book, which holds that the key to success is to invest in mega-cycles that run for years or decades, and to stay passive for the duration of the run. True to this philosophy, our investments have not been rebalanced in any way over the four years. They have been kept entirely in gold and real-estate.

The Dow/Gold ratio was above 20 in 2018, and is now down to about 17, so our gold has outperformed the Dow. The price of our apartment in Porto has had the best run, up by 100% since 2017. Our cash holding is down due to consumption and missed pay outs from fixed income, but still sufficiently big to last us a few more years. As a result, our allocations have made the following relative moves over time:

• Jan 2017: 100 part real-estate, 200 part gold, 50 part cash - for a total of 350
• Jan 2019: 150 part real-estate, 200 part gold, 50 part cash - for a total of 400
• Jan 2021: 200 part real-estate, 300 part gold, 25 part cash - for a total of 525

Looking forward two years, I expect price inflation to move gold and real-estate up against cash, with gold outperforming real-estate. Stocks may continue up in nominal terms, but will lag gold. The Dow/Gold ratio is more likely to go down to 10 than up from present levels. In short, there's still no need for any rebalancing.

British gold sovereign

By Benedetto Pistrucci - Own work, Public Domain, Link

All Price and no Utility

Less than 12 hours have passed since Bitcoin dropped by about 10%, and it's again at an all time high, up about 15% from it's 10% dip. This proves once again that Bitcoin has no utility as money. In fact, it has no utility at all except as a lottery ticket.

This illustrates that price does not have to be backed up by utility. The value of Bitcoin is not its utility, but its promise of easy riches. People buy Bitcoin with the idea of selling it in the future for a higher price. Any other claim is either due to ignorance or delusion. Bitcoin is not money. This has been known since mid 2017. Bitcoin is not a store of value. This has been fully demonstrated over the last 24 hours. Bitcoin's only value is its volatility, making it suitable for gambling. But volatility and storage are in turn opposites. A store of value has to be stable. Anything volatile cannot at the same time be a store of value. At best, it may be more stable than paper currencies some time in the future, but this is highly doubtful. Empirical evidence indicate that Bitcoin is becoming increasingly volatile over time.

All of this illustrates in turn the distinction between utility and value. Utility is not required for something to have value. If we define utility to be real world applications outside gambling and finance, Bitcoin has no utility. In contrast, gold has utility as raw material for jewellery and various other applications. The price of gold cannot go to zero because of real world demand due to its utility. Bitcoin, on the other hand, has no utility, and can therefore go to zero.

It is this type of utility that is sometimes called intrinsic value. Other things with intrinsic value are capital goods, real-estate and shares in companies that produce goods and services of utility. A company fully invested in financial assets of no utility is itself of no utility. A company producing cars, on the other hand has at least some utility, and therefore a price that can be derived in a rational way.

Conversely, things of no utility have no other value than whatever people may think they have. The price cannot be rationally calculated. There's no way of saying where the price of Bitcoin may be at some future point, because there's no utility from which we can base our calculations. The price of Bitcoin is in its entirety derived from perception, and perception is extremely volatile.

This in turn, illustrates the distinction between investing and gambling. Putting money into something of little to no utility in the hope that it will fetch a higher price in the future is gambling. Putting money into things of utility is investing, unless directly consumed. If the price can be demonstrated to be low, the investment can be termed prudent.

For something to be an investment, it must not be directly consumed, and it cannot be without utility. There has to be the prospect of consumption over time or in the future. Buying a house to live in is therefore both consumption and an investment, and buying a house to rent out is a pure investment. Buying a house simply to sell it later is also an investment, but a speculative one, especially if there's credit involved. Beautiful furniture is also an investment. If used and enjoyed in the present, it doubles as consumption. If bought solely for the purpose of selling it later it's more speculative, but still an investment. Only things of no utility are purely speculative. Such things are not in any way an investment. They are gambling tokens with all their value derived purely from sentiment.

Brass token currently priced at about $35,000

By Steve Jurvetson - https://secure.flickr.com/photos/jurvetson/8410385932/in/photostream/, CC BY 2.0, Link