Cullen Roche: Pragmatic Capitalism

The FCC voted to repeal net neutrality rules yesterday. That basically means that internet service providers have more control over the flow of internet traffic into your home. The worry here is that this means they might start charging customers more for usage. This is a complex debate, but I tend to think there’s a lot of overreaction on both sides. The crazy thing about the internet is that we’ve all kind of been spoiled by it. It was designed as a government program and basically...

Oh, you bought a Tesla? Oh, you bought a million dollar home?  Oh, you bought the new iPhone X? IDGAF. That stands for I Don’t Give A Fuck. Sorry to be crude, but sometimes you need a little emphasis when you’re expressing an important point. We’re now entering silly season in the markets. People are buying cryptocurrencies that no one understands and have very little actual utility. People are chasing stocks higher on a daily basis. Emerging market stocks, tech stocks and all the other...

I am seeing a good deal of misunderstanding arise with the popularity of Bitcoin. Much of this seems to stem from a gold standard style of thinking. It can basically be boiled down to this: Government debt is bad. Banks are evil.¹ A fixed supply of money eliminates the ability of banks to be evil by expanding credit and doesn’t allow governments to issue debt as easily. Returning to the gold standard would fix these problems.² Since we’re not returning to the gold standard we’ll create...

This is Part 2 in my series on cryptocurrencies and how I think they’ll change the economy. In this post I will discuss why I think crypto will lead to a peer-to-peer economy.  In my last Bitcoin post I made a few big points: Bitcoin is the current reserve currency coin in the cryptocurrency space. Bitcoin’s lack of par settlement is a tremendous problem and potentially a fatal flaw. Blockchain tech and decentralized apps are bigly important and will transform many industries by cutting...

Over the course of my career I’ve endured endless Federal Reserve conspiracy theories. I’ve known people who stayed away from the stock market for the entirety of the last 20 years because they think the Fed caused the Nasdaq bubble, then inflated the housing bubble and then inflated the stock market with QE. But here’s the problem with that – this is mostly politics masquerading as pseudoscience. I’ve done a tremendous amount of work describing how the Federal Reserve works. The main goal...

We all have to make forecasts when it comes to investing. But how we develop those forecasts can be the difference between high probability outcomes and low probability outcomes. For instance, take a 30 year bond yielding 2.75%. No one really knows where that bond will be in 1 year. But we know that it will yield 2.75% per year for the next 30 years. So this instrument is really unpredictable in the short-term and becomes more predictable in the long-term. Now, the same basic thing is true...

Is it just me or has there been a resurgence in the number of people who worry about hyperinflation? I don’t engage in these conversations too often anymore because they’re almost always the same. That conversation usually goes something like this: Inflationista: The government has destroyed our purchasing power by printing too much money! CR: You know, the US government doesn’t really print money in any meaningful sense (see myth #1). Inflationista: Yeah, but how do you explain why our...

While we’re all digesting the passage of a tax bill that the Senate couldn’t possibly have had time to fully read and understand, I will recommend some stuff to get your mind off the charade that has become American politics:

At the risk of discrediting this article before it even begins I am going to pretend that I am an Independent Senator in the USA considering the current GOP tax plan. If you’re still reading – in my perfect world a sweeping tax plan includes many of the no-brainer policies that I’ve discussed in the past. This would include a full payroll tax cut and an increase in certain types of secondary market “investments” like capital gains and dividends. This would give every working American a tax...

“Bitcoin is capitalism, distilled. You should love it!” – Adam Ludwin I’ve tried to remain pretty balanced in my view on Bitcoin and cryptocurrencies in general. Back in 2013 I said Bitcoin was definitely money and that the ideological hatred of it was irrational. This monetary view is consistent with the general view I have on cryptos as a part of someone’s portfolio – as I said yesterday, no one really knows how this will play out so you need to be extremely cautious and avoid taking...