“Love is the quality of attention we pay to things,” writes poet J.D. McClatchy. If that’s the case, then this week I loved Bitcoin and the U.S. Congress. A strange, sad combination, I know. But today’s email has plenty of opinions about both topics and if you’re only interested in one, just keep reading until you get to the other. I should also note that if you prefer to read about all the cats saved in Asia this week, I won’t be covering that hot news topic.
Last week I pointed you to an absolutely bonkers story about the digital art market and the rise of “non-fungible tokens”. Digital things are easily copied. This has wreaked havoc on everything from music to newspapers, with more chaos yet to come. Put succinctly, “non-fungible tokens” are a way to make sure something digital can’t be copied — and thus the booming market of million-dollar-plus digital pieces of art was born. If you can’t copy the digital image, that means you own the only copy, ergo it is valuable (although there are some caveats I’m skipping for brevity’s sake).
And lo! That’s what Bitcoin is — a digital thing you cannot copy, money that you cannot copy with a click of the mouse. Economists love to dismiss Bitcoin and explain how it has no intrinsic value, unlike the paper and plastic in your wallet. (If you want me to explain exactly how non-fungible tokens work, and why Bitcoin is a currency, just hit reply.)
Bitcoin, its crypto-currency competitors, and its cousins in the digital wallet industry are coming after the banking and financial sector the way craigslist came after classified ads. Already, deposit accounts at the largest bank in America (JP Morgan Chase) are roughly equal to the number of digital wallets in two major digital wallets (Venmo and Cash App). Digital wallets are entering the unsecured lending market, suggesting that traditional bank lending’s best days may be in the past. All that unused balance on your Starbucks app amounts to a loan where you are paying Starbucks 10% to loan them your own money.
Banks and the financial services industry have been screwing over the little guy for a long time, but they are also regulated and managed to protect assets. I learned this the hard way; while writing my book in 2012 (personalized, signed copies sent to all paid subscribers!) I bought Bitcoin in order to buy classified US Government material from hackers (book research, I swear!). In 2016, I lost about a third of my Bitcoin when the “wallet” (wallets being virtual banks for Bitcoin) where I had deposited my coin simply disappeared; the creator of the wallet company took everybody’s Bitcoin and vanished. This week Goldman Sachs announced it was re-activating its crypto trading desk; the last time it did that, the value of Bitcoin promptly crashed. Which is more dangerous for the consumer, sub-prime mortgages or Bitcoin?
The value of Bitcoin has staying power in part because it is the currency of choice for hackers’ ransom demands as well as transferring money out of controlled economies (notably China). Now that sneakers and pokemon cards are considered asset classes, even big banks say Bitcoin deserves a strategic allocation in institutional portfolios. Remember Rule 1: It Will Get Crazier. Over the next 24 months, “decentralized finance” (what we call the world that includes cryptocurrency and digital wallets) is going to mess with the traditional institutional banking and monetary systems in some unpredictable ways.
Which leads me to Joe Biden and Congress.
Biden is all-in on helping poor people. “Despite a better than expected jobs report“ he’s rejecting the economic orthodoxy of the last couple of decades. To quote Ezra Klein: “The American Rescue Plan is a bolder, more progressive, economic package than anything a Democratic president has proposed since L.B.J. But it is not, for now, a polarizing package. It’s less polarizing even than Biden.”
There is something shifting in the national political and policy mood. In the same week that the Biden White House passed the most substantial social policy since LBJ and announced they were keeping the Trump China Tariffs, Biden appointed monopoly-buster Tim Wu to a senior economic position in the White House. (Wu is also the author of one of my favorite provocateur essays, “Is the First Amendment Obsolete?”)
It’s not just Democrats. After a decades-long assault on government spending Republicans appear to be shifting to a more populist view of public spending, defying the sinister free market motivations chronicled in “Democracy in Chains” and “Dark Money”. Of course, every single GOP Member of Congress did vote against Biden’s pandemic recovery bill — even though Republican governors, mayors, and state legislatures were begging for it.
Republicans in Congress preferred to spend the week complaining about Dr. Seuss being “canceled” and similar fare. Biden shrugged, not appearing to give a shit. He’s got bigger fish to fry. The conventional wisdom among the establishment is that while the Republicans talk about how socialists want to destroy Dr. Seuss and everything great about America, Biden is literally putting money in people’s pockets. Surely a chicken in every pot will defeat conspiracy theories and grievance politics?
Not so fast. A central theme of this email newsletter is The Never-Ending Story. The conservative media industrial complex, from Fox News to thousands of digital publishers is so pervasive and reaches so many Americans that the very idea of “mainstream media” makes me laugh. There are two mainstream medias: the conservative one, and the old one. Point of fact: Trump’s CPAC appearance last Sunday had more TV viewers than the Golden Globes. On one side, we’ve got right-wing media. On the other side, we’ve got old media. The old media’s bias isn’t partisan; it’s a bias towards the negative story, regardless of who’s in charge. If it bleeds, it leads.
While half of America got hysterical about the so-called-canceling of Dr. Seuss, the old media was desperate to make a breathless drama of Biden’s relief package: will it pass or won’t it? The problem is that outrage over cultural issues is more exciting and more magnetic than anything even remotely policy-related. The unevenness of the emotional dynamic of these two narratives, coupled with the relentlessly critical posture of the non-conservative media, means the Biden Administration must go into overdrive to tell a big story about their sweeping social policy. But they’re not doing that, nor do they have the media infrastructure to do it.
Micah Sifry mentions the “liberal advocacy ecosystem” — I’m not sure anything such thing exists, and if it does, it is dwarfed by the behemoth of Fox News, talk radio, and social media empires of the right. This week Sifry covers a bill called HR 1, a major overhaul of democracy that the Democratic House just passed:
“But right now, though, you’d be hard pressed to know HR 1 exists, even though it passed the House Wednesday night. Did you know that Rep. Ayanna Pressley (D-MA) offered an amendment to lower the national voting to 16? I doubt it, because the liberal advocacy ecosystem wasn’t activated to buttress her. Did you know that Rep. Cori Bush (D-MO) offered an amendment to restore incarcerated felons’ right to vote? Same thing. Both proposals went down to bipartisan defeat on the House floor.
Nevertheless, HR 1 is a profound and important bill — an essential step to protecting our democracy. Two weeks ago I wrote:
“Voter suppression is particularly worrying. Democrats by and large lost state legislatures in 2020, leaving the GOP in control of the majority of state houses, and the implications are clear. So far in 2021, at least 165 proposals are under consideration in 33 states that will restrict future voting access by limiting mail-in ballots, implementing new voter ID requirements and slashing registration options. Major combat will be required if the Democratic Party wants to hold the precious ground it took this past November.”
While the Democrats passed HR 1 in the House, Mitch McConnell went straight to the Supreme Court (with a Republican majority he built with demolition derby politics and sheer determination) to ask them to obliterate the Voting Rights Act. The next decade of elections is being shaped right now by legislation and lawsuits, and there is nothing even remotely resembling a national discussion about it.
The entire Trump era has been defined by a failure of imagination about what is possible, but Masha Gessen does an admirable job imagining the possible in Trump’s Strategy for Returning to Power Is Already Clear:
“Viktor Orbán became the Prime Minister of Hungary in 1998. Four years later, with a record number of Hungarians turning up to the polls, his party lost power. The next day, Orbán’s allies claimed voter fraud and demanded recounts, and although these demands were rejected, Orbán continued to claim that the election had been stolen. In 2010, after eight years leading the opposition, Orbán and his party, Fidesz, returned to power with a supermajority — enough to change the constitution and begin rapidly consolidating autocratic power. Orbán has not left office in the decade since.”
We’re in the midst of a story war, a narrative battle between grievance and racism, and neighborly responsibility. One side is suited up for battle with big stories, loyal audiences, and strong emotions; the other has no idea the war is even happening. And in the midst of that, technology disruptions a la Bitcoin are going to accelerate the (legitimate) sense of grievance as the gap between the Two Americas grows.
All is not lost; the American Dream occasionally breaks through. A flight director for NASA’s historic Mars Perseverance mission came to the U.S. with only $300 and worked as a housekeeper to put herself through school. Meanwhile I remain obsessed with the absurdly slow chips in the Perseverance; it has the processing power of a 1998 iMac. Any mobile phone of the last decade has more juice. Talk about a chip shortage.
Lots of love, nicco
PS. Know anyone interested in applying for this job reviving the Woolly Mammoth from recovered DNA? Me neither.