Fear! Inflation Expectations Grow To 2.11% As Fed Prints (Bitcoin Backs Off High As US Dollar Rallies)

President-elect Joe Biden is scaring the world to death with his $11 trillion spending fantasy coupled with his $2 trillion Covid stimulus package. And The Federal Reserve has a lot of printing to do to pay for Biden’s spending fantasies (that Speaker Pelosi will undoubtedly approve). All has led to US inflation expectations to rise to 2.11%.

Bitcoin has finally backed-off its meteoric rise just as gold has backed-off its meteoric rise back in July.

Bitcoin rose with Fed money printing but backed-off as money printing slowed. Note: The rapid rise in money printing was pre-Biden and largely due to Covid and government shutdowns.

Bloomberg Galaxy was down 7.5% on Friday while Bitcoin is down slightly today. ZCash is the big loser today with Monero as the only gainer.

But with Biden’s prodigious appetite for spending other people’s money, we can see fear in the eyes of taxpayers.

US 30Y Fixed Mortgage Rates Tick Up To 2.79% As 10Y Treasury Yields Rise (Treasury Vol Remains Low As Yield Curve Steepens)

Freddie Mac’s 30-year mortgage survey rate ticked-up to 2.79% in the latest reading.

The US Treasury 10-year yield has been rising since August.

Treasury volatility remains low.

The US Treasury yield curve is steepening to around 100.

Here we go loop de loop. As interest rates rise.

US Average Hourly Earnings Rise To 5.08% YoY, But Home Prices Rise 7.95% YoY (BAD Jobs Report)

Today’s Covid-19 impacted jobs report was lousy. The economy lost 140k jobs. The good news is that the unemployment rate remained at 6.7%.

Another piece of good information is that average hourly earnings YoY rose to 5.1% YoY in December from 4.4% in November. The bad news is that home prices (Case-Shiller 20) rose at almost 8% YoY.

Electronic Tulip Bulbs? Bitcoin Suffers Flash Crash, Then Rebounds (There Is A Crypto Fund Named Bitwise Showing Extreme Volatility)

Venezuela currently has an inflation rate of almost 2,500 percent, according to Steve Hanke. This corresponds to Bloomberg’s Cafe con Leche index of the cost of a cup of coffee with milk (or espresso with scalding milk) which is now 1.767 MILLION Bolivars in Caracas Venezuela (or 5,790% for the last 12 months).

In 2017, with the bolivar in freefall, Maduro vowed that the nation would create a cryptocurrency called the Petro, backed by reserves of oil, gas, gold and diamonds. The Petro launched in 2018.

The Washington Post economic reporter Matt O’Brien said that “The petro might be the most obviously horrible investment ever… The petro is about creating something useless – that’s why only foreigners can buy them, but only Venezuelans can spend them“.

Which brings me to non-Venezuelan cryptocurrencies or “electronic tulip bulbs.” Like the tulip bulb craze that swept Holland in the 1600s, cryptocurrencies are a highly speculative investment. Take a look at Bitwise, a cryptocurrency fund that trades at 197.392% Fund Percent Premium. Sounds more like Pennywise, the clown from Stephen King’s “It” franchise. It fell from $139 on 12/16/2020 to $60.39 on 12/31/2020. That is a quite a loss.

Bitcoin, for example, experienced a flash crash, but has rebounded.

But while Bitcoin is down, Ethereum is way up.

Cryptocurrencies have a place for processing, for example, financial transactions. Or oil transactions like Venezuela is trying to do. And if you want to play the volatility game, cryptos may be your cup of tea … or oil.