He built a $40M hip-hop empire from street drug dealing.

50 Cent was nearly killed by 9mm bullets.

Before 50 Cent, Curtis Jackson sold drugs.

He sold coke to worried addicts after being orphaned at 8.

Pursuing police. Murderous hustlers and gangs. Unwitting informers.

Despite his hard life, his hip-hop career was a success.

An assassination attempt ended his career at the start.

What sane producer would want to deal with a man entrenched in crime?

Most would have drowned in self-pity and drank themselves to death.

But 50 Cent isn't most people. Life on the streets had given him fearlessness.

“Having a brush with death, or being reminded in a dramatic way of the shortness of our lives, can have a positive, therapeutic effect. So it is best to make every moment count, to have a sense of urgency about life.” ― 50 Cent, The 50th Law

50 released a series of mixtapes that caught Eminem's attention and earned him a $50 million deal!

50 Cents turned death into life.

Things happen; that is life.

We want problems solved.

Every human has problems, whether it's Jeff Bezos swimming in his billions, Obama in his comfortable retirement home, or Dan Bilzerian with his hired bikini models.

All problems.

Problems churn through life. solve one, another appears.

It's harsh. Life's unfair. We can face reality or run from it.

The latter will worsen your issues.

“The firmer your grasp on reality, the more power you will have to alter it for your purposes.” — 50 Cent, The 50th Law

In a fantasy-obsessed world, 50 Cent loves reality.

Wish for better problem-solving skills rather than problem-free living.

Don't wish, work.

We All Have the True Power of Alchemy

Humans are arrogant enough to think the universe cares about them.

That things happen as if the universe notices our nanosecond existences.

Things simply happen. Period.

By changing our perspective, we can turn good things bad.

The alchemists' search for the philosopher's stone may have symbolized the ability to turn our lead-like perceptions into gold.

Negativity bias tints our perceptions.

Normal sparring broke your elbow? Rest and rethink your training. Fired? You can improve your skills and get a better job.

Consider Curtis if he had fallen into despair.

The legend we call 50 Cent wouldn’t have existed.

The Best Lesson in Life Ever?

Neither avoid nor fear your reality.

That simple sentence contains every self-help tip and life lesson on Earth.

When reality is all there is, why fear it? avoidance?

Or worse, fleeing?

To accept reality, we must eliminate the words should be, could be, wish it were, and hope it will be.

It is. Period.

Only by accepting reality's chaos can you shape your life.

“Behind me is infinite power. Before me is endless possibility, around me is boundless opportunity. My strength is mental, physical and spiritual.” — 50 Cent

A must-read for everyone

Jobs is well-known. You probably know the tall, thin guy who wore the same clothing every day. His influence is unavoidable. In fewer than 40 years, Jobs' innovations have impacted computers, movies, cellphones, music, and communication.

Steve Jobs may be more imaginative than the typical person, but if we can use some of his ingenuity, ambition, and good traits, we'll be successful. This essay explains how to follow his guidance and success secrets.

1. Repetition is necessary for success.

Be patient and diligent to master something. Practice makes perfect. This is why older workers are often more skilled.

When should you repeat a task? When you're confident and excited to share your product. It's when to stop tweaking and repeating.

Jobs stated he'd make the crowd sh** their pants with an iChat demo.

Use this in your daily life.

• Start with the end in mind. You can put it in writing and be as detailed as you like with your plan's schedule and metrics. For instance, you have a goal of selling three coffee makers in a week.

• Break it down, break the goal down into particular tasks you must complete, and then repeat those tasks. To sell your coffee maker, you might need to make 50 phone calls.

• Be mindful of the amount of work necessary to produce the desired results. Continue doing this until you are happy with your product.

2. Acquire the ability to add and subtract.

How did Picasso invent cubism? Pablo Picasso was influenced by stylised, non-naturalistic African masks that depict a human figure.

Artists create. Constantly seeking inspiration. They think creatively about random objects. Jobs said creativity is linking things. Creative people feel terrible when asked how they achieved something unique because they didn't do it all. They saw innovation. They had mastered connecting and synthesizing experiences.

Use this in your daily life.

• On your phone, there is a note-taking app. Ideas for what you desire to learn should be written down. It may be learning a new language, calligraphy, or anything else that inspires or intrigues you.

• Note any ideas you have, quotations, or any information that strikes you as important.

• Spend time with smart individuals, that is the most important thing. Jim Rohn, a well-known motivational speaker, has observed that we are the average of the five people with whom we spend the most time.

• Learning alone won't get you very far. You need to put what you've learnt into practice. If you don't use your knowledge and skills, they are useless.

3. Develop the ability to refuse.

Steve Jobs deleted thousands of items when he created Apple's design ethic. Saying no to distractions meant upsetting customers and partners.

John Sculley, the former CEO of Apple, said something like this. According to Sculley, Steve’s methodology differs from others as he always believed that the most critical decisions are things you choose not to do.

Use this in your daily life.

• Never be afraid to say "no," "I won't," or "I don't want to." Keep it simple. This method works well in some situations.

• Give a different option. For instance, X might be interested even if I won't be able to achieve it.

• Control your top priority. Before saying yes to anything, make sure your work schedule and priority list are up to date.

4. Follow your passion

“Follow your passion” is the worst advice people can give you. Steve Jobs didn't start Apple because he suddenly loved computers. He wanted to help others attain their maximum potential.

Great things take a lot of work, so quitting makes sense if you're not passionate. Jobs learned from history that successful people were passionate about their work and persisted through challenges.

Use this in your daily life.

• Stay away from your passion. Allow it to develop daily. Keep working at your 9-5-hour job while carefully gauging your level of desire and endurance. Less risk exists.

• The truth is that if you decide to work on a project by yourself rather than in a group, it will take you years to complete it instead of a week. Instead, network with others who have interests in common.

• Prepare a fallback strategy in case things go wrong.

Success, this small two-syllable word eventually gives your life meaning, a perspective. What is success?  For most, it's achieving their ambitions. However, there's a catch. Successful people aren't always happy.

Furthermore, where do people’s goals and achievements end? It’s a never-ending process. Success is a journey, not a destination. We wish you not to lose your way on this journey.

A reading list for successful people

Elon Musk reads and talks. So, one learns. Many brilliant individuals & amazing literature.

This article recommends 3 Elon Musk novels. All of them helped me succeed. Hope they'll help you.

Douglas Adams's The Hitchhiker's Guide to the Galaxy

Page Count: 193
Rating on Goodreads: 4.23

Arthur Dent is pulled off Earth by a buddy seconds before it's razed for a cosmic motorway. The trio hitchhikes through space and gets into problems.

I initially read Hitchhiker's as a child. To evade my mum, I'd read with a flashlight under the covers. She'd scold at me for not sleeping on school nights when she found out. Oops.

The Hitchhiker's Guide to the Galaxy is lighthearted science fiction.

My favorite book quotes are:

• “Space is big. You won’t believe how vastly, hugely, mind-bogglingly big it is. I mean, you may think it’s a long way down the road to the chemist’s, but that’s just peanuts to space.”

• “Far out in the uncharted backwaters of the unfashionable end of the western spiral arm of the Galaxy lies a small unregarded yellow sun. Orbiting this at a distance of roughly ninety-two million miles is an utterly insignificant little blue-green planet whose ape-descended life forms are so amazingly primitive that they still think digital watches are a pretty neat idea.”

• “On planet Earth, man had always assumed that he was more intelligent than dolphins because he had achieved so much — the wheel, New York, wars, and so on — whilst all the dolphins had ever done was muck about in the water having a good time. But conversely, the dolphins had always believed that they were far more intelligent than man — for precisely the same reasons.”

the Sun Tzu book The Art Of War

Page Count: 273
Rating on Goodreads: 3.97

It's a classic. You may apply The Art of War's ideas to (nearly) every facet of life. Ex:

• Pick your fights.

• Keep in mind that timing is crucial.

• Create a backup plan in case something goes wrong.

• Obstacles provide us a chance to adapt and change.

This book was my first. Since then, I'm a more strategic entrepreneur. Excellent book. And read it ASAP!

My favorite book quotes are:

• “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.”

• “Engage people with what they expect; it is what they are able to discern and confirms their projections. It settles them into predictable patterns of response, occupying their minds while you wait for the extraordinary moment — that which they cannot anticipate.”

• “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained, you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

Peter Thiel's book Zero to One

Page Count: 195
Rating on Goodreads: 4.18

Peter argues the best money-making strategies are typically unproven. Entrepreneurship should never have a defined path to success. Whoever says differently is lying.

Zero to One explores technology and society. Peter is a philosophy major and law school graduate, which informs the work.

Peters' ideas, depth, and intellect stood out in Zero to One. It's a top business book.

My favorite book quotes are:

• “The most valuable businesses of coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete.”

• “The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these guys, you aren’t learning from them.”

• “If your goal is to never make a mistake in your life, you shouldn’t look for secrets. The prospect of being lonely but right — dedicating your life to something that no one else believes in — is already hard. The prospect of being lonely and wrong can be unbearable.”

Wishing for Lasting Companies, Not Penny Stocks or Goodwill Write-Downs

Get me a NASCAR-style company-logoed cremation urn (notice to the executor of my will, theres gonna be a lot of weird requests). I believe in working on projects that would be on your tombstone. As the Homebrew logo is tattooed on my shoulder, expanding the portfolio to my posthumous commemoration is easy. But this isn't an IRR victory lap; it's a hope that the firms we worked for would last beyond my lifetime.

Venture investors too often take credit or distance themselves from startups based on circumstances. Successful companies tell stories of crucial introductions, strategy conversations, and other value. Defeats Even whether our term involves Board service or systematic ethical violations, I'm just a little investment, so there's not much I can do. Since I'm guilty, I'm tossing stones from within the glass home (although we try to own our decisions through the lifecycle).

Post-exit company trajectories are usually unconfounded. Off the cap table, no longer a shareholder (or a diminishing one as you sell off/distribute), eventually leaving the Board. You can cheer for the squad or forget about it, but you've freed the corporation and it's back to portfolio work.

As I look at the downward track of most SPACs and other tarnished IPOs from the last few years, I wonder how I would feel if those were my legacy. Is my job done? Yes. When investing in a business, the odds are against it surviving, let alone thriving and being able to find sunlight. SPAC sponsors, institutional buyers, retail investments. Free trade in an open market is their right. Risking and losing capital is the system working! But

We were lead or co-lead investors in our first three funds, but as additional VCs joined the company, we were pushed down the cap table. Voting your shares rarely matters; supporting the firm when they need it does. Being valuable, consistent, and helping the company improve builds trust with the founders.

I hope every startup we sponsor becomes a successful public company before, during, and after we benefit. My perspective of American capitalism. Well, a stock ticker has a lot of garbage, and I support all types of regulation simplification (in addition to being a person investor in the Long-Term Stock Exchange). Yet being owned by a large group of investors and making actual gains for them is great. Likewise does seeing someone you met when they were just starting out become a public company CEO without losing their voice, leadership, or beliefs.

I'm just thinking about what we can do from the start to realize value from our investments and build companies with bright futures. Maybe seed venture financing shouldn't impact those outcomes, but I'm not comfortable giving up that obligation.

What Is That?

Berkus is a pre-revenue valuation method based exclusively on qualitative criteria, like Scorecard.

Few firms match their financial estimates, especially in the early stages, so valuation methodologies like the Berkus method are a good way to establish a valuation when the economic measures are not reliable.

How does it work?

This technique evaluates five key success factors.

• Fundamental principle

• Technology

• Execution

• Strategic alliances in its primary market

• Production, followed by sales

The Berkus technique values the business idea and four success factors. As seen in the matrix below, each of these dimensions poses a danger to the startup's success.

It assigns $0-$500,000 to each of these beginning regions. This approach enables a maximum $2.5M pre-money valuation.

This approach relies significantly on geography and uses the US as a baseline, as it differs in every country in Europe.

A set of standards for analyzing each dimension individually

Fundamental principle (or strength of the idea)

Ideas are worthless; execution matters. Most of us can relate to seeing a new business open in our area or a startup get funded and thinking, "I had this concept years ago!" Someone did it.

The concept remains. To assess the idea's viability, we must consider several criteria.

• The concept's exclusivity It is necessary to protect a product or service's concept using patents and copyrights. Additionally, it must be capable of generating large profits.

• Planned growth and growth that goes in a specific direction have a lot of potential, therefore incorporating them into a business is really advantageous.

• The ability of a concept to grow A venture's ability to generate scalable revenue is a key factor in its emergence and continuation. A startup needs a scalable idea in order to compete successfully in the market.

• The attraction of a business idea to a broad spectrum of people is significantly influenced by the current socio-political climate. Thus, the requirement for the assumption of conformity.

• Concept Validation Ideas must go through rigorous testing with a variety of audiences in order to lower risk during the implementation phase.

Technology (Prototype)

This aspect reduces startup's technological risk. How good is the startup prototype when facing cyber threats, GDPR compliance (in Europe), tech stack replication difficulty, etc.?

Execution

Check the management team's efficacy. A potential angel investor must verify the founders' experience and track record with previous ventures. Good leadership is needed to chart a ship's course.

Strategic alliances in its primary market

Existing and new relationships will play a vital role in the development of both B2B and B2C startups. What are the startup's synergies? potential ones?

Production, followed by sales (product rollout)

Startup success depends on its manufacturing and product rollout. It depends on the overall addressable market, the startup's ability to market and sell their product, and their capacity to provide consistent, high-quality support.

Example

We're now founders of EyeCaramba, a machine vision-assisted streaming platform. My imagination always goes to poor puns when naming a startup.

Since we're first-time founders and the Berkus technique depends exclusively on qualitative methods and the evaluator's skill, we ask our angel-investor acquaintance for a pre-money appraisal of EyeCaramba.

Our friend offers us the following table:

Because we're first-time founders, our pal lowered our Execution score. He knows the idea's value and that the gaming industry is red-hot, with worse startup ideas getting funded, therefore he gave the Basic value the highest value (idea).

EyeCaramba's pre-money valuation is $400,000 + $250,000 + $75,000 + $275,000 + $164,000 (1.16M). Good.

References

• https://medium.com/humble-ventures/how-angel-investors-value-pre-revenue-startups-part-iii-8271405f0774#:~:text=pre%2Drevenue%20startups.-,Berkus%20Method,potential%20of%20the%20idea%20itself.%E2%80%9D

• https://eqvista.com/berkus-valuation-method-for-startups/

• https://www.venionaire.com/early-stage-startup-valuation-part-2-the-berkus-method/

(The author's opinions should not be used to make investment decisions or as a recommendation to invest.)

The pandemic and social media pseudoscience have made us all epidemiologists, for better or worse. Flattening the curve, social distancing, lockdowns—remember? Some of you may remember R0 (R naught), the number of healthy humans the average COVID-infected person infects. Thankfully, the world has moved on from Greater China's nightmare. Politicians have refocused their talent for misdirection on getting their constituents invested in the war for Russian Reunification or Russian Aggression, depending on your side of the iron curtain.

Humanity battles two fronts. A war against an invisible virus (I know your Commander in Chief might have told you COVID is over, but viruses don't follow election cycles and their economic impacts linger long after the last rapid-test clinic has closed); and an undeclared World War between US/NATO and Eurasia/Russia/China. The fiscal and monetary authorities' current policies aim to mitigate these two conflicts' economic effects.

Since all politicians are short-sighted, they usually print money to solve most problems. Printing money is the easiest and fastest way to solve most problems because it can be done immediately without much discussion. The alternative—long-term restructuring of our global economy—would hurt stakeholders and require an honest discussion about our civilization's state. Both of those requirements are non-starters for our short-sighted political friends, so whether your government practices capitalism, communism, socialism, or fascism, they all turn to printing money-ism to solve all problems.

Free money stimulates demand, so people buy crap. Overbuying shit raises prices. Inflation. Every nation has food, energy, or goods inflation. The once-docile plebes demand action when the latter two subsets of inflation rise rapidly. They will be heard at the polls or in the streets. What would you do to feed your crying hungry child?

Global central banks During the pandemic, the Fed, PBOC, BOJ, ECB, and BOE printed money to aid their governments. They worried about inflation and promised to remove fiat liquidity and tighten monetary conditions.

Imagine Nate Diaz's round-house kick to the face. The financial markets probably felt that way when the US and a few others withdrew fiat wampum. Sovereign debt markets suffered a near-record bond market rout.

The undeclared WW3 is intensifying, with recent gas pipeline attacks. The global economy is already struggling, and credit withdrawal will worsen the situation. The next pandemic, the Yield Curve Control (YCC) virus, is spreading as major central banks backtrack on inflation promises. All central banks eventually fail.

Here's a scorecard.

In order to save its financial system, BOE recently reverted to Quantitative Easing (QE).

BOJ Continuing YCC to save their banking system and enable affordable government borrowing.

ECB printing money to buy weak EU member bonds, but will soon start Quantitative Tightening (QT).

PBOC Restarting the money printer to give banks liquidity to support the falling residential property market.

Fed raising rates and QT-shrinking balance sheet.

80% of the world's biggest central banks are printing money again. Only the Fed has remained steadfast in the face of a financial market bloodbath, determined to end the inflation for which it is at least partially responsible—the culmination of decades of bad economic policies and a world war.

YCC printing is the worst for fiat currency and society. Because it necessitates central banks fixing a multi-trillion-dollar bond market. YCC central banks promise to infinitely expand their balance sheets to keep a certain interest rate metric below an unnatural ceiling. The market always wins, crushing humanity with inflation.

BOJ's YCC policy is longest-standing. The BOE joined them, and my essay this week argues that the ECB will follow. The ECB joining YCC would make 60% of major central banks follow this terrible policy. Since the PBOC is part of the Chinese financial system, the number could be 80%. The Chinese will lend any amount to meet their economic activity goals.

The BOE committed to a 13-week, GBP 65bn bond price-fixing operation. However, BOEs YCC may return. If you lose to the market, you're stuck. Since the BOE has announced that it will buy your Gilt at inflated prices, why would you not sell them all? Market participants taking advantage of this policy will only push the bank further into the hole it dug itself, so I expect the BOE to re-up this program and count them as YCC.

In a few trading days, the BOE went from a bank determined to slay inflation by raising interest rates and QT to buying an unlimited amount of UK Gilts. I expect the ECB to be dragged kicking and screaming into a similar policy. Spoiler alert: big daddy Fed will eventually die from the YCC virus.

Threadneedle St, London EC2R 8AH, UK

Before we discuss the BOE's recent missteps, a chatroom member called the British royal family the Kardashians with Crowns, which made me laugh. I'm sad about royal attention. If the public was as interested in energy and economic policies as they are in how the late Queen treated Meghan, Duchess of Sussex, UK politicians might not have been able to get away with energy and economic fairy tales.

The BOE printed money to recover from COVID, as all good central banks do. For historical context, this chart shows the BOE's total assets as a percentage of GDP since its founding in the 18th century.

The UK has had a rough three centuries. Pandemics, empire wars, civil wars, world wars. Even so, the BOE's recent money printing was its most aggressive ever!

BOE Total Assets as % of GDP (white) vs. UK CPI

Now, inflation responded slowly to the bank's most aggressive monetary loosening. King Charles wishes the gold line above showed his popularity, but it shows his subjects' suffering.

The BOE recognized early that its money printing caused runaway inflation. In its August 2022 report, the bank predicted that inflation would reach 13% by year end before aggressively tapering in 2023 and 2024.

Aug 2022 BOE Monetary Policy Report

The BOE was the first major central bank to reduce its balance sheet and raise its policy rate to help.

The BOE first raised rates in December 2021. Back then, JayPow wasn't even considering raising rates.

UK policymakers, like most developed nations, believe in energy fairy tales. Namely, that the developed world, which grew in lockstep with hydrocarbon use, could switch to wind and solar by 2050. The UK's energy import bill has grown while coal, North Sea oil, and possibly stranded shale oil have been ignored.

WW3 is an economic war that is balkanizing energy markets, which will continue to inflate. A nation that imports energy and has printed the most money in its history cannot avoid inflation.

The chart above shows that energy inflation is a major cause of plebe pain.

The UK is hit by a double whammy: the BOE must remove credit to reduce demand, and energy prices must rise due to WW3 inflation. That's not economic growth.

Boris Johnson was knocked out by his country's poor economic performance, not his lockdown at 10 Downing St. Prime Minister Truss and her merry band of fools arrived with the tried-and-true government remedy: goodies for everyone.

She released a budget full of economic stimulants. She cut corporate and individual taxes for the rich. She plans to give poor people vouchers for higher energy bills. Woohoo! Margret Thatcher's new pants suit.

My buddy Jim Bianco said Truss budget's problem is that it works. It will boost activity at a time when inflation is over 10%. Truss' budget didn't include austerity measures like tax increases or spending cuts, which the bond market wanted. The bond market protested.

30-year Gilt yield chart. Yields spiked the most ever after Truss announced her budget, as shown. The Gilt market is the longest-running bond market in the world.

The Gilt market showed the pole who's boss with Cardi B.

Before this, the BOE was super-committed to fighting inflation. To their credit, they raised short-term rates and shrank their balance sheet. However, rapid yield rises threatened to destroy the entire highly leveraged UK financial system overnight, forcing them to change course.

Accounting gimmicks allowed by regulators for pension funds posed a systemic threat to the UK banking system. UK pension funds could use interest rate market levered derivatives to match liabilities. When rates rise, short rate derivatives require more margin. The pension funds spent all their money trying to pick stonks and whatever else their sell side banker could stuff them with, so the historic rate spike would have bankrupted them overnight. The FT describes BOE-supervised chicanery well.

To avoid a financial apocalypse, the BOE in one morning abandoned all their hard work and started buying unlimited long-dated Gilts to drive prices down.

Another reminder to never fight a central bank. The 30-year Gilt is shown above. After the BOE restarted the money printer on September 28, this bond rose 30%. Thirty-fucking-percent! Developed market sovereign bonds rarely move daily. You're invested in His Majesty's government obligations, not a Chinese property developer's offshore USD bond.

The political need to give people goodies to help them fight the terrible economy ran into a financial reality. The central bank protected the UK financial system from asset-price deflation because, like all modern economies, it is debt-based and highly levered. As bad as it is, inflation is not their top priority. The BOE example demonstrated that. To save the financial system, they abandoned almost a year of prudent monetary policy in a few hours. They also started the endgame.

Let's play Central Bankers Say the Darndest Things before we go to the continent (and sorry if you live on a continent other than Europe, but you're not culturally relevant).

Pre-meltdown BOE output:

FT, October 17, 2021 On Sunday, the Bank of England governor warned that it must act to curb inflationary pressure, ignoring financial market moves that have priced in the first interest rate increase before the end of the year.

On July 19, 2022, Gov. Andrew Bailey spoke. Our 2% inflation target is unwavering. We'll do our job.

August 4th 2022 MPC monetary policy announcement According to its mandate, the MPC will sustainably return inflation to 2% in the medium term.

Catherine Mann, MPC member, September 5, 2022 speech. Fast and forceful monetary tightening, possibly followed by a hold or reversal, is better than gradualism because it promotes inflation expectations' role in bringing inflation back to 2% over the medium term.

When their financial system nearly collapsed in one trading session, they said:

The Bank of England's Financial Policy Committee warned on 28 September that gilt market dysfunction threatened UK financial stability. It advised action and supported the Bank's urgent gilt market purchases for financial stability.

It works when the price goes up but not down. Is my crypto portfolio dysfunctional enough to get a BOE bailout?

Next, the EU and ECB. The ECB is also fighting inflation, but it will also succumb to the YCC virus for the same reasons as the BOE.

Frankfurt am Main, ECB Tower, Sonnemannstraße 20, 60314

Only France and Germany matter economically in the EU. Modern European history has focused on keeping Germany and Russia apart. German manufacturing and cheap Russian goods could change geopolitics.

France created the EU to keep Germany down, and the Germans only cooperated because of WWII guilt. France's interests are shared by the US, which lurks in the shadows to prevent a Germany-Russia alliance. A weak EU benefits US politics. Avoid unification of Eurasia. (I paraphrased daddy Felix because I thought quoting a large part of his most recent missive would get me spanked.)

As with everything, understanding Germany's energy policy is the best way to understand why the German economy is fundamentally fucked and why that spells doom for the EU. Germany, the EU's main economic engine, is being crippled by high energy prices, threatening a depression. This economic downturn threatens the union. The ECB may have to abandon plans to shrink its balance sheet and switch to YCC to save the EU's unholy political union.

France did the smart thing and went all in on nuclear energy, which is rare in geopolitics. 70% of electricity is nuclear-powered. Their manufacturing base can survive Russian gas cuts. Germany cannot.

My boy Zoltan made this great graphic showing how screwed Germany is as cheap Russian gas leaves the industrial economy.

$27 billion of Russian gas powers almost $2 trillion of German economic output, a 75x energy leverage. The German public was duped into believing the same energy fairy tales as their politicians, and they overwhelmingly allowed the Green party to dismantle any efforts to build a nuclear energy ecosystem over the past several decades. Germany, unlike France, must import expensive American and Qatari LNG via supertankers due to Nordstream I and II pipeline sabotage.

American gas exports to Europe are touted by the media. Gas is cheap because America isn't the Western world's swing producer. If gas prices rise domestically in America, the plebes would demand the end of imports to avoid paying more to heat their homes.

German goods would cost much more in this scenario. German producer prices rose 46% YoY in August. The German current account is rapidly approaching zero and will soon be negative.

German PPI Change YoY

German Current Account

The reason this matters is a curious construction called TARGET2. Let’s hear from the horse’s mouth what exactly this beat is:

TARGET2 is the real-time gross settlement (RTGS) system owned and operated by the Eurosystem. Central banks and commercial banks can submit payment orders in euro to TARGET2, where they are processed and settled in central bank money, i.e. money held in an account with a central bank.

Source: ECB

Let me explain this in plain English for those unfamiliar with economic dogma.

This chart shows intra-EU credits and debits. TARGET2. Germany, Europe's powerhouse, is owed money. IOU-buying Greeks buy G-wagons. The G-wagon pickup truck is badass.

If all EU countries had fiat currencies, the Deutsche Mark would be stronger than the Italian Lira, according to the chart above. If Europe had to buy goods from non-EU countries, the Euro would be much weaker. Credits and debits between smaller political units smooth out imbalances in other federal-provincial-state political systems. Financial and fiscal unions allow this. The EU is financial, so the centre cannot force the periphery to settle their imbalances.

Greece has never had to buy Fords or Kias instead of BMWs, but what if Germany had to shut down its auto manufacturing plants due to energy shortages?

Italians have done well buying ammonia from Germany rather than China, but what if BASF had to close its Ludwigshafen facility due to a lack of affordable natural gas?

I think you're seeing the issue.

Instead of Germany, EU countries would owe foreign producers like America, China, South Korea, Japan, etc. Since these countries aren't tied into an uneconomic union for politics, they'll demand hard fiat currency like USD instead of Euros, which have become toilet paper (or toilet plastic).

Keynesian economists have a simple solution for politicians who can't afford market prices. Government debt can maintain production. The debt covers the difference between what a business can afford and the international energy market price.

Germans are monetary policy conservative because of the Weimar Republic's hyperinflation. The Bundesbank is the only thing preventing ECB profligacy. Germany must print its way out without cheap energy. Like other nations, they will issue more bonds for fiscal transfers.

More Bunds mean lower prices. Without German monetary discipline, the Euro would have become a trash currency like any other emerging market that imports energy and food and has uncompetitive labor.

Bunds price all EU country bonds. The ECB's money printing is designed to keep the spread of weak EU member bonds vs. Bunds low. Everyone falls with Bunds.

Like the UK, German politicians seeking re-election will likely cause a Bunds selloff. Bond investors will understandably reject their promises of goodies for industry and individuals to offset the lack of cheap Russian gas. Long-dated Bunds will be smoked like UK Gilts. The ECB will face a wave of ultra-levered financial players who will go bankrupt if they mark to market their fixed income derivatives books at higher Bund yields.

Some treats People: Germany will spend 200B to help consumers and businesses cope with energy prices, including promoting renewable energy.

That, ladies and germs, is why the ECB will immediately abandon QT, move to a stop-gap QE program to normalize the Bund and every other EU bond market, and eventually graduate to YCC as the market vomits bonds of all stripes into Christine Lagarde's loving hands. She probably has soft hands.

The 30-year Bund market has noticed Germany's economic collapse. 2021 yields skyrocketed.

30-year Bund Yield

ECB Says the Darndest Things:

Because inflation is too high and likely to stay above our target for a long time, we took today's decision and expect to raise interest rates further.- Christine Lagarde, ECB Press Conference, Sept 8.

The Governing Council will adjust all of its instruments to stabilize inflation at 2% over the medium term. July 21 ECB Monetary Decision

Everyone struggles with high inflation. The Governing Council will ensure medium-term inflation returns to two percent. June 9th ECB Press Conference

I'm excited to read the after. Like the BOE, the ECB may abandon their plans to shrink their balance sheet and resume QE due to debt market dysfunction.

Eighty Percent

I like YCC like dark chocolate over 80%. ;).

Can 80% of the world's major central banks' QE and/or YCC overcome Sir Powell's toughness on fungible risky asset prices?

Gold and crypto are fungible global risky assets. Satoshis and gold bars are the same in New York, London, Frankfurt, Tokyo, and Shanghai.

As more Euros, Yen, Renminbi, and Pounds are printed, people will move their savings into Dollars or other stores of value. As the Fed raises rates and reduces its balance sheet, the USD will strengthen. Gold/EUR and BTC/JPY may also attract buyers.

Gold and crypto markets are much smaller than the trillions in fiat money that will be printed, so they will appreciate in non-USD currencies. These flows only matter in one instance because we trade the global or USD price. Arbitrage occurs when BTC/EUR rises faster than EUR/USD. Here is how it works:

1. An investor based in the USD notices that BTC is expensive in EUR terms.

2. Instead of buying BTC, this investor borrows USD and then sells it.

3. After that, they sell BTC and buy EUR.

4. Then they choose to sell EUR and buy USD.

5. The investor receives their profit after repaying the USD loan.

This triangular FX arbitrage will align the global/USD BTC price with the elevated EUR, JPY, CNY, and GBP prices.

Even if the Fed continues QT, which I doubt they can do past early 2023, small stores of value like gold and Bitcoin may rise as non-Fed central banks get serious about printing money.

“Arthur, this is just more copium,” you might retort.

Patience. This takes time. Economic and political forcing functions take time. The BOE example shows that bond markets will reject politicians' policies to appease voters. Decades of bad energy policy have no immediate fix. Money printing is the only politically viable option. Bond yields will rise as bond markets see more stimulative budgets, and the over-leveraged fiat debt-based financial system will collapse quickly, followed by a monetary bailout.

America has enough food, fuel, and people. China, Europe, Japan, and the UK suffer. America can be autonomous. Thus, the Fed can prioritize domestic political inflation concerns over supplying the world (and most of its allies) with dollars. A steady flow of dollars allows other nations to print their currencies and buy energy in USD. If the strongest player wins, everyone else loses.

I'm making a GDP-weighted index of these five central banks' money printing. When ready, I'll share its rate of change. This will show when the 80%'s money printing exceeds the Fed's tightening.