Friday, October 09, 2026
Bitcoin is just a bet on the US tech hype cycle. Will it ever live up to its lofty ideals?
I do not own Bitcoin, but I do like the underlying utopian ideals of citizen-controlled digital currencies out of the reach of governments, banks, central banks, taxes, regulation, intermediaries, scrutiny, hackers, etc, and I have followed developments closely since the early 1980s. BTC is touted as a means of exchange, a store of value, and a hedge against inflation, political turmoil, US default. But in practice it has turned out to be the OPPOSITE. It is an extremely volatile tool for speculation and is only a currency of choice for drug dealers, arms traders, scammers, hackers and blackmailers. Bitcoin’s price actually just follows the US tech hype cycle (except it is seven times more volatile). When the tech boom bursts, will BTC fall with it, or will it magically start reflecting its true fundamental value (whatever that is)?
Why are Australian cash rates HIGHEST in the world? Five simple reasons.
This is one of the most common investor questions I receive from advisers, and it is one of the easiest to answer. It’s fairly simple. Australians suffer the highest cash rates amongst their rich country peers (chart A) because Australia has: The highest inflation rate (chart B), The highest medium-long-term inflation expectations ie highest treasury yields (C), The highest central bank inflation target (D) – for no good reason at all, The strongest jobs market eg lowest unemployment rate (E) (apart from Japan which has a declining population and workforce), and The loosest / most undisciplined monetary and fiscal policies during and since Covid. Bottom line = locked-in structurally higher inflation
Who wants to buy US debt? – ie lend to the profligate US government? Most of the world except me!
No sign of ‘de-dollarisation’ here – most of the world loves US dollar debt, and have been buying up more! Especially UK, Japan, Europe, and even Canada and Mexico. China has been the big seller, and has halved its holdings over the past decade. But most of the rest of the world (apart from Russia), have been increasing their holdings of US debt – ie racing in to lend more to the profligate US government. The Brits have been by far the biggest fans, buying up even more than China has sold. Despite soaring US deficits and debt, there is no sign of worry from lenders (debt owners) about debt stress or default. The flood of buying across the world has kept yields US relatively low to date. What worries is me is another bond scare – like in 2022 when soaring yields caused the biggest losses on US bonds in a century. More of
How the RBA scores on its inflation goal? Somewhere between 3 & 10 out of 10. Overall 8 out of 10
Since the RBA gained ‘independence’ in pursuing its 2% to 3% target range, inflation has only been in the target range just 32% of quarters, and 36% of calendar years. It has missed its target TWO THIRDS of the time – so 3 out of 10 for short-term inflation outcomes. But it was never a short-term target. Overall inflation over the period has averaged 2.6% pa which is in the MIDDLE of its target range. 10 out of 10 for long-term inflation targeting. Measured by decade, inflation has been WITHIN its target range EACH decade. Inflation averaged 2.3% in the 1990s, 2.8% in the 2000s, and 2.1% in the 2010s. In the 2020s inflation has averaged 3.8% pa so far, but the decade is not over yet. Inflation over the past 10 years to December 2025 averaged 3%, which is within target. So, through a host of major global and local crises over the past 30+ years,&
Inflation: wealth-destruction compounds over time – even in ‘low inflation’ years
This is one of my main ‘go-to’ charts to illustrate the destructive power of inflation compounded over time. Inflation has always been a silent, government-sponsored destroyer of citizens’ wealth, even in so-called ‘low inflation’ years. In the ‘low’ inflation 2000s and 2010s, investors became complacent, but inflation still managed to destroy one third to one half of the value of our money. Even if and when inflation is brought back down to ‘target’ levels, investors need to protect themselves against the destructive effects of inflation on their wealth and future lifestyles. Life’s a lottery – each of us will have different inflation experiences during our investing lifetimes (and different real returns from all asset classes), based on when we happen to have been born.
Whitlam, Nixon, the 1973-4 crash, and how the 1970s inflation crisis changed the world
The 1973-4 share market crashes in Australia and the US featured major political crises – Nixon/Watergate in the US and the Whitlam dismissal in Australia. But the main causes of the crashes were the battle against inflation, started in the mid-1960s but worsened under Nixon and Whitlam. The 1970s inflation crisis triggered three seismic policy shifts: 1) monetary policy; 2) central bank independence / inflation targeting; and 3) the shift to a whole new economic orthodoxy which delivered four decades of declining inflation and interest rates, plus high returns. That post-1970s golden era of declining inflation & interest rates, globalisation, free-trade and hands-off government are over. Now we are into a new era – with the return of inflation, big government, protectionism. Today we have several similarities with the 1970s. <
Cash rates are already too low to contain inflation - why central bankers are in a pickle
The tremendous 2-year rally in share markets (even after this week's mini-fall) has been based on the assumption of several more rate cuts soon. Even if inflation is back to target (it isn't yet), current cash rates are already too low to contain inflation in Australia, the US, and other markets, Be careful what you wish for - the only reason for rapid rate cuts would be a sharp recession - and nobody wants that!
The house price myth: Sydney house prices -v- other Real assets part 1: Gold
House prices have soared to astronomical levels in recent years, but have they really? No. Only if you measure them in terms of the increasingly worthless paper money that governments are deliberately debasing. Comopared to other Real Assets, house prices have actually fallen in value! For example: gold. &
Australia’s big banks: Origin of the Species, or ‘Survival of the Fattest!’
Ever wondered where our big dinosaur banks came from, and how they got so big? And why they are all virtually the same? How Australia became the richest country in the world per capita - without a central bank, without a national currency, and without bank regulation? How the dozens of small, independent, competitive banks became the big-4 government protected oligopoly we have today?
Labor’s attempt to nationalise all banks in Australia!
Australians have always had a love-hate relationship with their banks. (OK, so it’s mostly hate). But it was not always the case. Believe it or not, there was a time when the Australian public loved their banks so much they kicked out a Federal government that was trying to close the banks down! Here is the remarkable story of Banks -v- Politics, Capitalism -v- Socialism right here in Australia.
Which Bank? . . is winning the Battle of the Banks?
Quick 2-question Quiz on Aussie Banks - Q1 - Which of the big Aussie banks has had the largest % share price gain this year? - No it's not CBA, despite all the media attention and hype. Q2 - Which of the big banks has been the best for shareholders over the past one, two, and three decades? - No its not CBA either, despite the widely held belief that it is!
‘What’s your Number? Part 2: 17 key factors driving ‘How much do I need’ & ‘How much can I spend?'
Here are 17 key drivers that determine 'How much do I need to retire', and 'How much can I afford to spend?' How do they work, and how do they apply to you? This handy guide will help you come up with your own Number that suits your needs and goals.
What's your Number? Part 1: 'How much do I need to retire?', 'How much can I afford to spend?'
Here we tackle these difficult questions, and similar questions like: 'When can I afford to retire?' 'Will my money last as long as I do? Here are the two key Numbers to tackle these questions. Plus two quick tests to help measure progress toward your goal.
Gold: Curious case of the '31-year itch'?
Gold is hitting new highs lately, so everyone is looking to jump in. It's time to step back for a moment and look at the big picture: Gold goes through regular 31-year cycles - so where are we now in the cycle? Why gold is a lousy inflation hedge most of the time. Is it cheap or expensive? When it is 'good value'?
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