Who knew that a cryptocurrency that started as a joke eight years ago would be worth more than General Motors, Twitter, and FedEx? But here we are.
Dogecoin, the digital coin based on the Shiba Inu meme, recently topped 70 cents, rallying 26,000% in the last six months for a market capitalization of approximately $91 billion. Dogecoin has outpaced the percentage gains in both bitcoin and ethereum, making it the fourth most valuable cryptocurrency in the industry as of May 8, 2021.
What can explain its meteoric ascent? It is nothing more than a joke without a vision or hard cap on supply. It is comparable to those so-bad-it’s-good movies that grace the small screen at 3 AM on a Sunday morning.
But the gains investors are making is no laughing matter. Well, unless they are chuckling all the way to the bank. If you purchased $1,000 worth of dogecoin on Jan. 1, 2021, your investment would be worth more than $121,000 by now. So, once again, it is the memers, crypto kids, and TikTok crowd that are making fools out of the suits on Wall Street. And, of course, with a little help from the self-proclaimed “Dogefather” Elon Musk.
Will the rally continue? It depends. Many had anticipated the GameStop stock to flounder after the full-frontal assault by the power players on The Street. Today, shares are still trading at around $161. Unless the federal government cracks down on the crypto market, as many experts believe it inevitable, people with a few cents in their accounts would be willing to take a chance on going “to the moon.”
Mr. President, Please Stop Helping
As Liberty Nation has reported on a couple of occasions, the U.S. government’s generous pandemic benefits for out-of-work Americans are distorting the economy by keeping people out of the labor market. The U.S. Chamber of Commerce appears to agree, releasing a statement that pleads with President Joe Biden to end the $300-a-week supplemental benefit.
Executive Vice President and Chief Policy Officer Neil Bradley noted that the initial relief was necessary, but now that time is over. He wrote that “paying people not to work” is preventing stronger payroll creation and negatively affecting the overall economic recovery, alluding to the disappointing April jobs report. The U.S. Chamber of Commerce is not alone. Minneapolis Federal Reserve Bank President Neel Kashkari acknowledged in an interview with Bloomberg Television that the pandemic-related benefits structure is enabling workers to stay home and not find employment right now.
“We hear all the same anecdotes…yes of course there are people who are on the sidelines and who are getting generous unemployment and they’re saying ‘yes we understand the labor market will be strong in three or four months.’ We know that dynamic is there.”
It turns out that President Biden is not hitting the pause button. Instead, he thinks that the abysmal jobs report is evidence that the U.S. economy requires more stimulus and relief bills from the progressives in his administration. So perhaps the May snapshot will improve, and policymakers will cool it on additional or sustained monetary and fiscal expansion.
The American consumer’s love affair with credit has been well-documented. A pre-coronavirus study found that if borrowing was eradicated, the nation’s economic growth would essentially collapse. But in the early days of the COVID-19 financial crisis, the nation experienced two trends: more households saved than ever before, and many consumers saw their debts modestly fall.
It makes sense, considering that most places were closed, and a lot of Americans were placed under quasi-house arrest. Now that the nation is returning to some semblance of normalcy, consumers are making up for lost time, with U.S. consumer debt reaching an all-time high of $14.9 trillion last year. According to a new Federal Reserve report, U.S. consumer borrowing surged by $25.8 billion in March for the second consecutive month. This represented the biggest monthly gain since December 2019. Most of the credit growth was reflected in credit cards ($6.4 billion) and automobile and student loans ($19.4 billion).
Financial analysts closely monitor these data metrics since consumer spending accounts for two-thirds of the U.S. economy. But while this might be sustainable in an environment where interest rates are near zero, the debt servicing payments will inevitably rise as monetary policy begins to tighten. Household debt service payments as a percentage of disposable income already inched toward 10% in the fourth quarter of last year.
So far, the new normal is looking like the old normal, at least when it comes to consumers’ addiction to tapping, swiping, and inserting.
Read more from Andrew Moran.