WE NEED NARRATIVES TO DESTROY PAPER VALUE
By Mauro Marturano
The current financial system, being cannibalistic (I've covered this concept 765 times in other pieces, won't dwell on it here), constantly needs narratives that funnel extraordinary amounts of paper. The problem is real goods and their absolute imbalance with the paper in circulation (n times greater). As long as containers for worthless paper can keep being created, the system survives better, with less effort. That's the reason behind all these financial bubbles that have no underlying substance whatsoever, not just in real production of goods, but also in the economic numbers. And so we end up with multiples (the ratio between a company's share price and its own gross margin, for example) that are ridiculously high.
The fact that, say, AI might be useful, might be the future, doesn't mean it's normal for there to be companies trading at 100/150 times gross margin. And very often, in this sector, you can't even calculate the multiple, because the gross margin is negative. In other words... what are we even talking about? We're talking about bubbles built by design, just like the internet bubble of the 2000s was, and just like the crypto bubble will be. Worth remembering that, as things stand, there is no bubble at all, given that the sector as a whole is capitalized at under 2,700 billion (half of Nvidia alone), of which 1,600 is Bitcoin by itself. The rest is worth 0, basically. No bubble, basically.
We'll get the crypto bubble when they make us scared to keep our money in traditional banks, when they get us to see the financial system as unsafe and, above all, when circumstances cause traditional currencies to take a further nosedive in purchasing power. That acceleration will surely come alongside some really, really big mess in life. Because it's absolutely out of the question that people are comfortable holding their euros, their dollars. Whereas it's an absolute necessity, for the financial system, to bring people into the new world and, in the exchange, liquefy a good chunk of the monetary rights tied to holding the currencies of the "old" world.