TradeSmith Daily

September 2020

Germany’s Expanding Debt Footprint is Bullish for Europe (and Bearish for the Dollar)

September 10, 2020John Banks

Germany is taking a historic step toward issuing more debt. This is long-term bullish for Europe, and the euro, and long-term bearish for the U.S. dollar. That, in turn, makes it a bullish development for precious metals, and base metals in general, to the extent commodities will benefit from a multi-year dollar decline. Why would Germany’s debt issuance be bullish for Europe and bearish for the dollar? It sounds strange, until we connect the dots between supply and demand issues

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How Weimar Germany Got Hyperinflation — and How America Could, Too

September 8, 2020John Banks

The Weimar Germany period is a recurring historical topic. It seems to pop up every few years. But when historians and columnists refer to Weimar Germany, they are usually focused on the years of 1930-33, when Germany experienced crushing deflation (as did most of the world, after the Crash of 1929, the Smoot-Hawley Tariffs, and the Great Depression) and the Nazis prepared to seize power. In thinking about hyperinflation, we are interested in events from a full decade earlier, as

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Hyperinflation Lessons from Weimar Germany

September 4, 2020John Banks

In a rampant monetary inflation, the rich can become super-rich, and wealthy industrialists can become out-of-this-world rich, like Greek gods living atop a financial Mount Olympus. If you sit atop an industrial empire when runaway inflation comes, and if you deploy the right strategies, you can find ways to grow your horde of treasure by 10X to 100X, or maybe even 1,000X. The opportunities in a runaway monetary inflation episode are so great, in fact, that some participants will actually

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Publicly Held Debt-to-GDP Made Headlines This Week, But Another Chart Matters More

September 3, 2020John Banks

The U.S. national debt made headlines this week, with federal debt held by the public expected to be worth more than 100% of gross domestic product (GDP) next year. This hasn’t happened since the mid-1940s, in the aftermath of World War II. According to new analysis from the nonpartisan Congressional Budget Office (CBO), the total amount of U.S. federal debt held by the public will amount to 98% of gross domestic product (GDP) for the 2020 fiscal year, and exceed

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The Meaning of Tesla

September 2, 2020John Banks

Tesla (TSLA) is a stock for the ages. But not in the way some would want. Our hunch is that, 30 years from now, Tesla will be remembered like the South Sea Company, if not something worse (think Enron). In Tesla, we are witnessing one of the greatest single-stock bubbles of all time, against a backdrop of speculative global frenzy. It is far from just Tesla, of course. Whole sections of the market are going straight up, thanks to what

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August 2020

Where Does Inflation Come From?

August 28, 2020John Banks

A reader asks a great question about inflation. Here it is, slightly edited for clarity: Your article, Money is a Social Protocol, Built on a Network, Enabled by Technology, is one of my favorites. It describes the actual essence of money, and instead of employing empty phrases like, “Money is a medium of exchange,” which is true, but is obvious and not instructive. Rather, your article discusses what money actually is to real people in real social networks in the

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Rushing a Vaccine to Market is a Terrible Idea

August 27, 2020John Banks

On the COVID-19 front, there is hope that the United States can rush a vaccine to market. Mark Meadows, the White House Chief of staff, expressed this view to the press on Aug. 23, saying the Food and Drug Administration (FDA) and National Institutes of Health (NIH) need to “feel the heat” on vaccine timing. “If they don’t see the light, they need to feel the heat, because the American people are suffering,” Meadows added. Other officials have expressed similar

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Money is a Social Protocol, Built on a Network, Enabled by Technology

August 25, 2020John Banks

Money is a social protocol, built on a network, with technology enabling the network. This goes for all forms of money, even gold. It also applies to all pre-metallic forms of money, and all manner of monetary objects that have existed through the ages. The concept of money as a networked social protocol is inherently a strange thing. This helps explain why so many people have such a hard time understanding money, in terms of what it really is and

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