Currency Vs. Money
You might say, currency and money... isn’t that the same thing? Well, not necessarily.
Currency is issued by the state, while money is chosen by the market. The closer the ties of currency to money the greater the level of trust in it. After all, coercion isn’t required to use something which the market is already choosing.
On the other hand, when currency is far removed from money, it is firstly ignorance and gullibility that contributes to participants using it. And when the veil of ignorance is lifted and gullibility is replaced with suspicion, it is only coercion that is left to hold it together.
When currency systems fail, pointy shoes often try to block the exits. Case in point...
From the article:
Sri Lanka will lower the maximum amount of foreign currency that individuals can possess to $10,000 from $15,000 and penalize anyone who holds it for more than three months, the central bank announced Thursday, as police fired tear gas and water cannons at thousands of students demanding the government step down for failing to solve the country’s economic crisis.
Expect more countries to follow in Sri Lanka’s footsteps in the coming months.
All Things Transitory...
Feels like a lifetime ago, when — back in February 2020 — we started warning that lockdowns will bring about inflation and shortages. Fast forward to today, and this pesky stuff is now part of our daily lives. We recently set up a dedicated inflation channel in our Insider private forum, where members can share their own experiences with all things "transitory".
This week Insider member Willycee reported about a curious phenomenon:
Had dinner at an Indian restaurant last night and the owner was telling me about the great papadam shortage. Surely a black swan event?
But as another member, Ash, commented, there might be a simple explanation for the great papadum shortage.
There’s a global shortage of chickpea, and chickpea flour is one of the main ingredients in papadum.
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According to Reuters, chickpea crop yields are anticipated to drop as much as 20 percent this year. This decrease in the quantity of the legume—an important protein source for many diets— comes as a result of both unfruitful weather conditions and Russia’s invasion of Ukraine.
Member Sean shared this photo of his Magnum ice cream:
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The new Magnum, now with an inflationary air pocket.
What To Make Of The Collapse In Oil & Gas?
In a recent Insider Newsletter issue, we highlighted a handful of oil and gas-focused ETFs. Our view is that the “collapse” of the oil and gas sector we witnessed over the past couple of weeks has opened up a fantastic buying opportunity (in case of stock picking isn’t your thing).
Take the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) as an example. It contains some 40 oil and gas stocks, more or less equally weighted so you effectively get exposure to the performance of the average oil and gas stock.
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In recent weeks, it dropped 33% but then picked up somewhat. And from a different angle, oil is up some 34% since the start of the year, while the XOP ETF is up “only” 20%.
In our view, this recent sell-off borders on insanity, especially since the price of oil and the XOP ETF tend to track each other remarkably well over time.
Week’s Humour
We’ll probably get hate mail accusing us of fat phobia/bigotism/right-wing extremism for this one, but we’re sharing it anyway.
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More By This Author:
Here A Boom, There A Bust ...Time To Get Greedy?
Time To Buy Stocks?
Disclaimer: This is not intended to render investment advice. None of the principles of Capex Administrative Ltd or Chris MacIntosh are licensed as financial professionals, brokers, bankers or even ...
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