Category: General

Blockchain Technology is Not the Future

I just read a great article by Kai Stinchcombe. You can read it here. He makes the case that blockchain technology is not going to be implemented and that it has no future. Since the cheerleaders of bitcoin love to talk about things they know nothing about, namely economics, currencies, and finance, I figured I would give my two cents on blockchain technology outside of bitcoin. I happen to think Kai Stinchcombe is correct. Blockchain does not have a use. There are many protocols used that are far superior to blockchain. I also see articles that say blockchain will replace TCP/IP. These people have no idea what they are talking about. Blockchain will not replace TCP/IP. Microsoft has declared TCP/IP the winner of the network protocol battle. It re-architected the network protocol portion of the their network stack from being protocol-neutral to being TCP/IP-centric. Furthermore, blockchain and TCP/IP are two separate things.
It has been 10 years and I have not seen anyone implement blockchain except in cryptocurrencies.
Prediction: Another 10 years will go by without blockchain being implemented into anything useful.

President Xi Jinping Liberalization

Xi gave a speech and promised to open up China’s market and cut tariffs on car imports. He did not mention Trump’s tariffs. This was used as a catalysis for the market to propel higher. Trumps announcement on tariffs is a political move. I don’t believe there is going to be a serious trade war.

The Fed Outlook

From Powell’s speech today:

Unemployment has fallen from 10 percent at its peak in October 2009 to 4.1 percent, the lowest level in nearly two decades. Seventeen million jobs have been created in this expansion, and the monthly pace of job growth remains more than sufficient to employ new entrants to the labor force. The labor market has been strong, and my colleagues and I on the Federal Open Market Committee (FOMC) expect it to remain strong. Inflation has continued to run below the FOMC’s 2 percent objective but we expect it to move up in coming months and to stabilize around 2 percent over the medium term.
Over the next few years, we will continue to aim for 2 percent inflation and for a sustained economic expansion with a strong labor market. As I mentioned, my FOMC colleagues and I believe that, as long as the economy continues broadly on its current path, further gradual increases in the federal funds rate will best promote these goals. It remains the case that raising rates too slowly would make it necessary for monetary policy to tighten abruptly down the road, which could jeopardize the economic expansion. But raising rates too quickly would increase the risk that inflation would remain persistently below our 2 percent objective. Our path of gradual rate increases is intended to balance these two risks.
Of course, our views about appropriate monetary policy in the months and years ahead will be informed by incoming economic data and the evolving outlook. If the outlook changes, so too will monetary policy. Our overarching objective will remain the same: fostering a strong economy for all Americans–one that provides plentiful jobs and low and stable inflation.

As I have stated, they will be slow to raise rates. They will be data driven. The first sign of trouble they will hit CTRL+P.

Breakdown of US Voters


The largest voting blocks are older people in retirement (65+) or just about to retire (45-64). This is why no one dares mention the funding crisis with entitlements. When western world governments run into a financial wall, the last item they will default on will be medicare, social security, etc.

Bitcoin Mining Less Profitable

I posted a question a few months ago about bitcoin mining. If the price of bitcoin falls below cost of validation would owners pay others to validate the block chain? Now we have reports that bitcoin miners are becoming less profitable due to the falling price. This fundamental flaw in bitcoin has been overlooked by the fan boys. This problem will be the death blow to bitcoin.

Tariffs for Nationalism

The Trump administration passed the steel and aluminum tariffs under the guise they pose a risk to US national security. Sometimes facts get in the way of how people think.
Let’s start with steel. The US Geological Survey (USGS) estimates the US produced about 80 million metric tons of steel in 2017. The military uses less than 3% of that per year. This is despite the fact the US government is involved in endless wars around the world. In other words, US companies produce more than enough steel for the military-industrial complex.
Let’s us move on to aluminum.  In order to make aluminum you need bauxite. Of all the bauxite mined, about 95% is converted to alumina for the production of aluminum metal. The largest producers of bauxite are Australia (31.3%), China (24.6%), Brazil (13.2%), India (9.5%), Guinea (7.5%), and Jamaica (3.2%). You should take note that the US is not a top producer of bauxite. The US relies on imports for almost 100% of its consumption needs. Domestic ore provides less than 1% of the US requirement for bauxite. If aluminum really was an issue of national security, which it is not, than the US government would still be dependent on imports for bauxite to make aluminum.

Being Behind in Life

Ray Kroc was a milk shake mixer traveling salesman. He heard about the McDonald brothers after they bought eight of his mixer machines. Ray Kroc drove across the country to visit them in person. After the visit, he became convinced the business model the McDonald brothers had developed could spread across the country. He got the idea to franchise McDonald’s. What most people don’t know is how late in life he did this. He was in his fifties. He risked his home to open his first McDonald’s in Des Plaines, Illinois. He faced financial ruin if his McDonald’s failed. As people get older, their is a tendency to become more conservative with regards to taking risk like this. Seeing the opportunity is one thing. Acting takes a lot more courage. A lot more conviction in your idea.
Ray Kroc became the most successful businessman in the 20th century.
If you are feeling behind in life, watch one of the greatest upsets in Olympic history.

Got them in the last lap.

Gary Cohn Resigns

Gary Cohn has resigned. This was becoming more predictable each day due to his opposition to tariffs. This will leave the tariff crowd in the white house in full control. Apparently, under current law, the president can unilaterally impose tariffs. Congress has the power to stop it. Whether or not they will act on this power will probably depend on how far Trump goes. My feeling is if Trump begins to stretch his power to far congress will act. Either way the market gaped down.