The “Bros” Are Preparing Their Next Attack

More GameStops Coming Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] The “Bros” Are Preparing Their Next Attack - The “Bros” are getting ready to go after the “shorts” again… - More money to go pouring into Bitcoin… - A golden anchor… Recommended Link [Ten times bigger than the internet?]( [Read more here...]( A new technology revolution is beginning – and many people are completely unprepared. One former Silicon Valley CEO claims it’ll have “five to ten times the impact of the internet today”. And the Davos World Economic Forum says it is “about to change the world in ways we can’t even imagine yet”. In fact, it’s SO critical you understand this that one of America’s top tech investors recently gave America’s first ever TechX Talk on the topic. And for a limited time only – his presentation is streaming free over the internet. [Click Here To Learn More]( Portsmouth, New Hampshire March 15, 2021 [Jim Rickards] Dear Reader, Most investors have heard of the GameStop frenzy. GameStop is a brick-and-mortar retail outlet for video games, equipment and accessories. It has long been considered a dying company by Wall Street because it does not have a strong online presence. It seemed to be headed in the same direction as Blockbuster after Netflix arrived with a streaming model for movie rentals to replace Blockbuster's model of drive-to locations with physical VHS cassettes and DVDs. GameStop was heavily shorted. Then along came the Bros! The Bros (short for "brothers") are mostly millennial, mostly male novice traders who used the RobinHood mobile phone app to trade stocks (using call options with leverage) the way people bet on the Super Bowl or basketball during March Madness. GameStop went from $40 per share to over $400 per share in a matter of weeks, leaving hedge funds that had shorted GameStop with over $20 billion in losses. Of course, the GameStop pump-and-dump came crashing down, resulting in losses for the Bros also, but that's just how bubbles go. Here We Go Again? What is not as well-known is that a lot of the money for the Bro’s trading came from the $1,200 COVID relief check the government handed out last spring and the $600 checks handed out at the end of December. Many Bros were tech-savvy, unemployed and stuck-at-home, so using the government's "free money" to have fun trading stocks was a great form of entertainment during the lockdowns. Now it's happening again! Young retail investors plan to use their new $1,400 government checks from the $1.9 trillion Biden bailout bill to engage in a new round of speculative trading. For the Bros, this is more like gambling than investing. For more serious investors, there are some important implications. Once the checks are available (in about two weeks), investors should expect some enormous volatility and huge gains in whatever stocks the Bros select. It's impossible to know in advance what stocks will be pumped (they use a Reddit chatroom called r/wallstreetbets/ to exchange views), but you'll know it once the frenzy starts. The other serious economic implication is that the Bros and Americans, in general, are not planning to spend their money on goods and services. Recommended Link [Legend Who Bought Amazon In 1998 Says: Now Is The Time]( [Read more here...]( Wall street legend Chris Rowe says there’s a huge stock market event looming - and he’s revealing his #1 pick for free. [Click Here To See This ASAP]( More Debt, Less Growth The U.S. economy is about 70% dependent on consumption; savings and investment are essential, which can be beneficial in the long-run but do nothing to expand GDP in the short-run. Biden has said that we need the massive spending package "to grow the economy." But it will only slow the economy because the added debt causes Americans to save more and spend less in anticipation of higher taxes down the road. The “stimulus” actually keeps people from looking for jobs because the handouts are often more than they could be making at work. Meanwhile, the higher taxes needed to pay for the handouts also slow the creation of jobs because businesses have less money to invest or hire workers. The only sustainable way out of the COVID recession is real growth, which comes from getting people back to work and reinvesting corporate profits. It doesn’t come from the printing press or its electronic equivalent. Whether Americans save the money, pay down debt or invest in stocks (even as speculation), they are not spending. That's more evidence that the U.S. is in a liquidity trap, and the Biden bailout will not help economic growth. Others Will Buy Bitcoin While the Bros are having fun with their checks, the rest of us should not expect stronger economic growth for the foreseeable future. The Bros may be using part of their stimulus checks to buy stocks, but others will likely be using it to buy Bitcoin... It seems like only last week (because it was) that Bitcoin was priced at $50,000 per coin, but by Friday, the price had surged to $60,000, a 20% increase in just one day. The reason doesn't matter; it is what it is. The case against Bitcoin as an investable asset is long and compelling. It has no use case; there's almost nothing you can buy with a Bitcoin, and it has no return other than higher prices based on an application of the greater fool theory. A glance at the price chart shows it's clearly a bubble, the worst in history, worse than NASDAQ in 2000 during the dot.com frenzy and worse than the Japanese stock market in 1989. Recommended Link [The Biggest Transfer of Wealth in History?]( [Read more here...]( He’s the man who predicted the 2008 recession… Recognized as the #1 personal finance expert in the world… Author of Rich Dad Poor Dad with 41 million copies sold… Now, he’s coming to you to reveal EXACTLY what’s going on under the nose of every American… an urgent warning to every single American… The biggest transfer of wealth in U.S. history… It’s a disturbing new movement set-off by a group of 12 unelected officials… “secretly” siphoning money from the poor and middle class to the wealthy. Unfortunately, nobody will be able to stop this new movement… Not Democrats. Not Republicans. Not Congress… Not even the president. Unfortunately, 99% of Americans don’t understand what’s going on… But today Robert Kiyosaki will blow the lid off the entire operation and help you take 5-steps to protect & grow your wealth during the coming weeks. There’s not much time... [Click Here To Learn More]( What Good Is It? Bitcoin simply doesn’t have much practical use. It is also filling the atmosphere with CO2 because most of the "mining" (really high speed computer calculations requiring monumental amounts of electricity for processing and cooling) is done in China, where most power plants are coal-fired. Now, CO2 is a harmless trace gas that plants need to grow, so I’m not complaining that Bitcoin mining is churning out more of it. But it does require tremendous amounts of electricity. What about Bitcoin as a possible reserve currency? Bitcoin will never be a reserve currency because its capped issuance amount makes its price deflationary, which is unattractive to borrowers. Without a Bitcoin bond market, there can be no securities in which central banks can invest reserves. Worse yet, the Bitcoin price is a Ponzi scheme driven by the issuance of the stable coin Tether, which has never accounted for the billions of dollars that have been taken from naive Tether investors. That said, none of this matters. Bitcoin has become a belief system. The true believers see what they want, hear what they want and are immune to the arguments of the non-believers. Golden Anchor This points to the difference between the "content" of Bitcoin (the price history and types of features discussed above) and the "environment" created by Bitcoin (the unseen and not understood impact on thought and behavior from any new media technology). Bitcoin will never displace the dollar, but it could destroy confidence in the dollar by its all-encompassing impact. This could cause social disorder and contribute to the decline of linear, rational civilization. My solution to this conundrum is to hold physical gold. For the Bitcoin believers (and others), the solution is always... more Bitcoin. The market is becoming unhinged. Gold can be your anchor. Don’t worry about the short-term fluctuations along the way. Gold plays a long game; you should focus on the long-term... Regards, Jim Rickards for The Daily Reckoning P.S. I strongly recommend you have at least 10% of your portfolio in physical gold and silver during these chaotic and volatile times. And I recommend [Hard Assets Alliance]( to help you get started.Or if you already own gold or silver, to get more. They’re extremely trustworthy. If you think it’s difficult to get started owning your own physical gold, think again… you won’t have to deal with pushy salespeople or phone calls. You can do it all online. [Go here to open an account here with the Hard Assets Alliance today.]( It costs you absolutely nothing to establish your account. I’ve got my gold. Have you got yours? --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [James Rickards][James G. Rickards]( is the editor of Strategic Intelligence. He is an American lawyer, economist, and investment banker with 35 years of experience working in capital markets on Wall Street. He is the author of The New York Times bestsellers Currency Wars and The Death of Money. Add feedback@dailyreckoning.com to your address book: [Whitelist us]( Additional Articles & Commentary: [Daily Reckoning Website]( Join the conversation! Follow us on social media: [Facebook]( [LinkedIn]( [Twitter]( [RSS Feed]( [YouTube]( The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Paradigm Press delivering daily email issues and advertisements. To end your Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [unsubscribe here.]( Please read our [Privacy Statement](. 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