Remember Davos? The big pow wow for the rich and famous in the Swiss Alps.

Well you haven’t heard about it because this year it happened on Zoom. That’s right, Davos is now called Zoom. Without the private jets, the skiing and the parties it’s lost a bit of its cachet I’m afraid. So much so that almost nobody is talking about it, but I absolutely insist that we must.

Apparently, over 1200 delegates from 60 countries “attended” according to the website. Well not really, they turned on their computers, like they do every day and then went and did something more interesting. It wasn’t the same and they were pretty sad about it was my guess.

The website was upbeat though, declaring phenomenal interest:

Virtual events in 430 cities? How is that possible? Surely being virtual discounts a physical location? It virtually happened though and you better not question it.

All these virtual events came up with the same virtual solutions. As follows:

Really? Wow. Personally, I still mill my own grain and ride a horse to work. Then I scratch hieroglyphics onto a stone and tie it to a large pigeon hoping for best with delivery. I don’t use the wheel at all actually, too modern.

We do? I thought it was just about ripping people off, inflating away their savings, taxing them all the way to death and then pretending that’s not what you have done. I thought it was about massive bureaucracies of complete imbeciles standing in the way of progress and flying to the Swiss Alps to congratulate each other on doing so. Most importantly, I thought you had to get elected and to do so you had to take a load of money and promise some favours in return and then when you retire they get repaid in speaking fees? I must have had it wrong.

• The most important tools are education and technology

The whole thing was an absolute delight, because it didn’t work. It does not work without the luxury location, it simply is not sexy on Zoom. You need the planes, you need who is talking to who, you need the supermodel waiting staff and the generally ridiculous levels of excess and privilege. Without it, nobody cares. It was in Davos for a reason – we are rich, we are powerfu, look at us and listen. If nothing else the complete failure of this year absolutely validates their previous business model of egregious excess.Everything they talked about, technological innovation, superior energy solutions, an economy that isn’t rigged. It will happen, but it will happen in spite of them. It is happening in bedrooms and small offices around the world every day. The people that will make the difference are actually making the difference and not talking about it with political sock puppets on an inferior video conference facility.

The strangest thing of all, they don’t see it. They just do not see it, in exactly the same way that evil people truly believe they are doing the right thing.

I hope they stay on Zoom forever in a permanently closed loop of political catchphrases and mutual back scratching.

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During the lockdowns of March last year the United States government launched an unprecedented stimulus package that was so large, personal incomes actually rose.

The red line above shows “permanent income” while the orange line includes income and the government’s temporary stimulus. As we can see, consumption spending tracks permanent income very closely and ignores stimulus.

Make of this what you will, but it is some comfort to know that people are not as stupid as the government would have us believe. Wherever this money went, it wasn’t straight back into the economy and clearly people saved it waiting for conditions to improve.

The idea that government can turn taps on and off having material impacts on the economy is largely false. They are fiddling at the edges and most economic participants appear to be correcting for government action. It’s an enormous waste of resources because the price mechanism does this work for us, but if you interfere with it, particularly with the price of money, you get wild outcomes that you cannot really anticipate.

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In the fallout of the GameStop drama, one question stands out. How many shares are actually out there?

Hedge funds were 130% short the stock, which while technically possible still makes the average person wonder.

What about every other stock though? Does anyone have any idea how many claims there are on Facebook for example? Does that correlate with outstanding number of shares. All it takes is a few dishonest brokers not fulfilling orders and there must be some out there. All a client ever sees is shares on a screen saying 1000 shares in XCo. Have you ever checked that the claims you believe you have on a company’s stock are actually claims? Are you on the share register? Is the share register complete? Nobody checks. We just trust the broker and the regulator and because of that it would be perfectly possible that there is a fractional reserve system running in equities whereby there are far more claims on equity ownership than existing equity. Everyone I have discussed this with this week has totally dismissed this possibility, pointing to “the CHESS system”, “the custodian”, “the SEC”, “doesn’t work like that”. All of them though haven’t actually checked – nobody has.

The whole GameStop incident has demonstrated something clearly, you cannot trust anyone and nor should you. That is the purpose of decentralised systems, they assume zero trust. You will validate your claim and you are able to do so easily. In bitcoin for example, we can check the exact supply at any time and we can also check that our claims on that exact supply exist and are valid. It is an incredibly powerful capability that is still little understood.

Again, how many claims on Facebook, Google, Tesla stock are actually out there? How many US Dollars are actually out there? We have no way of knowing other than to trust some intermediary and hope that they are doing their job properly in a very complex world. Even if they are, errors will likely be happening on a daily basis.

Right now at block 669,037 there are 18,618,906.65 bitcoins in circulation, 88.66% of the total eventual supply. We can further confirm that our claims on that supply exist, without relying on anyone at all. You can perform the check whenever you wish, as often as you wish for no cost and it takes seconds. Now try it for your Facebook shares, or your Australian Dollars. Good luck.

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• The important areas to me are the blue and yellow. Yellow in particular are the recent entrants who intend to hold. We can see how much greater those blue and yellow sections are in 2021 than they were in 2018. Blue and yellow has gone from 10% to almost 40%.
• There will always be trading, but the active pool looks consistent around 20%
• The grey and black areas are consistently getting bigger now, we should start to see this reach all time highs soon. 40% held for greater than 3 years would be something

More than anything this is a chart of tightening supply. When blue starts exceeding yellow in size things might be very exciting. Perhaps the earliest that happens is 2022 into 2023.

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