September 2022
New Location
New location at NU Brewery, 437 Lewiston Rd, New Gloucester, ME 04260. This location is currently open 24/7 inside our trailer parked next to the brewery, offering BTC and ETH to buy or sell.
Announcement
We are expecting to receive an order of Foundation Passport 2 hardware wallets in the coming weeks and will be offering these for sale. They are not expected to last long so please contact us to reserve one if you are interested - BTC, ETH, XMR, or cash only. Final price TBA.
From: Magic Internet Money
By Jesse Berger
Calculated Risk: Expect the Unexpected
“People think I got into bitcoin because I have a high risk tolerance... actually I got in because I have a low risk tolerance for worst case scenarios.” -Jill Carlson , Co-Founder of Open Money Initiative
Generally speaking, there are two major risk categories to consider when investing in anything – unsystematic and systematic risk. Unsystematic risks are specific to a particular company, industry, or asset class, with narrow impacts typically associated with factors of productivity, such as land, labor, and physical and intellectual capital. Systematic risk, also known as “market risk,” is more comprehensive, with global implications resulting from macro-economic forces such as inflation, interest rates, exchange rates, taxes, or political and social instabilities.
To combat unsystematic risks, many investment funds and wealth managers embrace the mantra of not putting all your eggs in one basket, diversifying portfolios by mixing a variety of asset types across different industries and geographies. This allows smaller and confined risk events negatively affecting one investment to be offset by others that react differently to those same events, or that experience unrelated positive effects.
Guarding against systematic risk is more difficult. Due to the dependency of most financial assets on existing monetary infrastructure, there are fewer opportunities to hedge against it. Historically, gold had a strong track record as just such a hedge, but Bitcoin might have a stronger case. Both are monetary mediums with sound qualities, whose value and utility are not dependent on other financial systems, but only Bitcoin is provably scarce, easy to verify, and globally transferable at the turn of a digital key.
If you study the history of and current state of affairs in financial markets, it has been the kind of year when decades happen. The last few weeks of September were the kind of week when years happen. If you don't follow financial markets closely, the general air of the moment feels like the days before a major hurricane makes landfall. You know that a storm is coming, but the best you can manage is an educated guess as to where the damage will be wrought and to what extent. Parallels are being drawn to 2007 and the unraveling that culminated in a global financial crisis. Back then, it was debt backed by U.S. residential real estate that nearly brought the system to a fatal halt. Today, it is sovereign credit threatening to bust a pipe.
In response to the global financial crisis a decade and a half ago, central banks re-spiked the punch bowl. To prevent a cascade of defaults on way too much debt than could be repaid, these central banks flooded the system with money. They reduced the rate of interest that could be earned risk-free (i.e., the pure time-value of money) on their respective currencies. The major central banks doing this in tandem lessened the chance that any individual central bank would face a run on its currency or failure of its sovereign debt markets. Recently, some central banks made a sharp U-turn led by the U.S. Federal Reserve. Only a few months into this new monetary regime, and the Bank of England had to turn the money printer back on to prevent mass liquidations of its pension system.
You see, in the five years leading up to 2022 the yield on the 10-Year UK government bond averaged around nine tenths of one percent. At one point, the yield one could earn holding the British Pound "risk free" was as low as 0.17%! Managers of the UK pensions need to earn a return on their assets in order to be able to pay the increasing cost of future liabilities. While the low yields on government bonds dictated by central banks create boom conditions for government spending, this situation creates financial repression for savers like the pension funds. In this case, the pension funds found themselves resorting to leverage in order to "juice" their returns. They engaged in trading strategies involving interest rate derivatives, which only require a trader to post a small collateral deposit and bet a much bigger size on "margin" (with borrowed money).
In this new era of monetary tightening, interest rates have moved sharply against the bets placed by the managers of UK pension funds. By the beginning of September 2022, the 10-Year UK government bond yield that averaged less than 1% in the preceding five years was approaching 3%. Then, in only a handful of trading sessions, it shot from 3.3% to 4.5% last week. This change might not seem like all that much, but it was so drastic that it was apparently beyond the realm of imagination for those creating risk models for the pensions, whose fund managers did not have enough liquidity to post collateral as the interest rate bet moved against them. Ultimately, the Bank of England took the highly unusual step of buying government bonds even while attempting a course of monetary tightening. But for this emergency intervention, the UK financial system might have swallowed the nation's economy.
The world is living through a financial realignment. Nations and supranational interests vie for self-preservation and expansion amidst the power grab. Economics is a weapon of choice in this war, and the monetary order is as up for grabs as it has been in anyone's lifetime. The prudent investor seeking refuge from systemic risk would do well to save a money that, as Matt Odell recently put it, "does not require trust or permission to spend or save, that can be used privately, and that increases in purchasing power over time."