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In no hurry

Good morning! According to ScoMo (SloMo?), Australia is "in no hurry" to reopen its international borders. The reality is it's out of ScoMo's hands – we're now dependent on Pfizer and how quickly it can ramp up vaccine production.

However, ScoMo did offer a vision of what a reopening might look like:

  1. first, in the second half of this year travel for "essential purposes" will be allowed – no doubt that will include people like ScoMo, who must be itching for an overseas trip.
  2. second, Australian residents will be permitted to return without hotel quarantine (they'll have to self-isolate at home instead).

Vaccinations will be mandatory for all travel and ScoMo was quick to insist that everything "will happen cautiously and carefully".

On a more positive note, the travel bubble with New Zealand officially opened today. 🥝🦘

Market Wrap

Bitcoin banned

Daily % change

AUD/USD

77.2

-0.2%

10Y Bond

1.70

1.4%

ASX200

7,064

0.1%

Brent (bbl)

66.8

-0.3%

Gold (oz)

1,780

0.8%

Iron ore (t)

171.9

-0.1%

Bitcoin

56,380

-9.1%

Note: Brent oil, gold bullion and iron ore prices are the second futures contract.

Bitcoin banned: The price of a bitcoin has fallen around 10% since Friday, following the decision by Turkey's government to ban the use of cryptocurrencies, citing possible "irreparable" damage and transaction risks. When you're dead-set on destroying your currency you need to eliminate the competition – the Turkish lira has fallen 65% against the US dollar over the past 5 years. Speaking of the US, there were also rumours that the US Treasury is considering cracking down on money laundering using digital assets.

China's back: China's economy expanded by a flattering 18.3% in the March quarter, relative to the same period in 2020. That rate of growth was achievable only because activity contracted by 6.3% in the corresponding quarter last year, before steadily recovering as China's mass lockdown was lifted. But the big China question this year is not growth but how it goes about unwinding its massive, post-lockdown stimulus.


Crypto Wrap

Nassim Taleb attacks Bitcoin

One of Taleb's tweets over the weekend.
One of Taleb's tweets over the weekend. Twitter/Nassim Taleb

Author, investor and mathematician Nassim Taleb (of 'Black Swan' fame) had a couple of choice tweets ripping into Bitcoin over the weekend. According to Taleb, "BTC  failed to be [a] currency, [it's an] open-Ponzi speculative game".

The justification: Taleb claims that because Bitcoin doesn't earn interest and is deflationary, "money made by someone is taken from someone else". To support that claim he cites some other guy on Twitter, who claims: "bitcoin has no external cashflow, because it doesn't do anything economic. So returns could only be paid out from the pool of cash from investors buying tokens".

  • A Ponzi scheme exists when fictional returns are paid out by continuously attracting new money into the scheme. It works so long as there's always a greater fool – someone to step up and 'invest' to cover both the payouts and any attempts from existing members to withdraw their funds.

The verdict: Bitcoin might have similarities with a Ponzi scheme – for example, the 'returns' paid to bitcoin miners come from people 'buying in' – but it's also missing a key marker of a Ponzi scheme, namely the intent to deceive (fraud). Yes, bitcoin is next to useless as a currency (transaction costs are high relative to alternatives). But the better comparison are assets where prices far exceed real world use-value, such as gold, rather than a negative-sum Ponzi scheme. Bitcoin will continue so long as people consider it a useful store of wealth – its true economic purpose – relative to the alternatives.


The Wrap Up

  • A future for non-fungible tokens (NFTs)? Shane Dulgeroff, a California real estate broker, is selling an NFT video of a house that includes the actual house.
  • The Maldives will soon offer visitors a COVID-19 vaccination on arrival as part of a new "3V" strategy of "visit, vaccinate and vacation". Fun.
  • Kazushige Kamiyama, head of the Bank of Japan's payment systems department, poured cold water on China's ambitions of a dominant digital currency. According to Kamiyama, "In fact, the dollar's advantage may strengthen further if the US goes with digitalisation".
  • Sony's PlayStation 5 is officially the fastest selling console in US history in both unit and dollar sales. All that idle lockdown/work from home time...
  • NASA awarded SpaceX a $US2.9 billion contract to build a craft capable of transporting astronauts to the moon as soon as 2024.
  • Italy will run the largest fiscal stimulus in the European Union in 2021. Yes, the same heavily indebted Italy that has dodged several fiscal crises over the past decade.

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