San José, CA – With Bitcoin now down 70% from its record price in April of 2021, businesses based on cryptocurrencies have started to fold. The latest victim was Celsius, a crypto “bank” which stopped withdrawals from its accounts on Sunday, June 12. Celsius had more than $20 billion in assets at its peak in August 2021, drawing investors with yields of more than 18%. But Celsius is looking more and more like a high-tech Ponzi scheme that only lasted as long as new investors kept buying in.

The collapse of Celsius followed the collapse of the “stablecoin” Terra just last month. “Stablecoins” are digital currencies that are supposed to maintain a value of $1, unlike Bitcoin and other cryptocurrencies whose value can go up and down. But Terra was not backed by assets such as cash or Treasury Bills (short-term U.S. government bonds), instead it was “backed” by another cryptocurrency, Luna. The attraction of Terra was that it enabled investors to put their Terra coins into Anchor Protocol, which was paying interest rates similar to Celsius. But on May 7, Terra slipped below $1, and continued to drop, eventually losing more than 95% of its value.

The losses from Celsius and Terra are in the tens of billions of dollars, but pale compared to the losses by investors in Bitcoin and other cryptocurrencies. Bitcoin is based on solving complex mathematical problems, so it has the scarcity needed for money. The problem is that fundamentally it has little use aside criminal transactions, and even here governments are getting better at tracing and clawing back illegal crypto payments.

For decades low interest rates and low inflation have set the conditions for investors to pursue risky assets. First there was the boom and bust in dot-com stocks in companies that didn’t even have any revenue, not to mention profits. This was followed by bonds backed by risky mortgages which went into default with the bust in the housing market. Most recently there are Bitcoin and other cryptocurrencies, and a number of “DeFi” (decentralized finance) like Terra and Celsius.

But what is different today is that the economic environment has changed. Inflation, running at 9.3% (CPI-W) is the highest in 40 years. The Federal Reserve is raising interest rates to jack up the unemployment rate and bring down inflation. On June 15, the Federal Reserve raised short-term interest rates by three-quarters of one percent (0.75%), the biggest jump since 1994. On the same day, the Federal Reserve also began to reduce their $9 trillion stash of bonds by $47.5 billion a month, which will double to $95 billion a month in September. This will increase the amount of bonds on the market, pushing bond prices down and longer-term interest rates up.

This “double-barreled” increase in both short- and long-term interest rates has never been done in such an aggressive manner by the Fed. These interest rate increases are likely to begin to bring down inflation but are all but certain to bring about another recession.

#SanJoséCA #FederalReserve #inflation #Crypto

New York, NY – On the evening of January 28, hours before a nor’easter was going to hit the east coast, a few dozen people gathered in front of City Hall to demand that Mayor Adams end his relationship with Brock Pierce, a crypto currency expert.

The protest was organized by New York Boricua Resistance and Colectiva Solidaridad right in front of Mayor Adam’s office, who has already incited concern from progressives throughout the city as he’s doubled down on supporting the corrupt NYPD. However, Adam’s new project is Act 60, and the main beneficiary is Brock Pierce.

Act 60 is the short form name for “The Tax Incentive Code 60” which provides tax exemptions to businesses and investors that relocate to and/or establish themselves in Puerto Rico. They can relocate themselves for less than half a year and the U.S. tax code will exclude income made while in Puerto Rico from their U.S. gross income. The main group of people who have taken advantage of this incentive are b-list celebrities and crypto currency entrepreneurs.

The new wave of people moving to Puerto Rico has pushed local people out of their houses while crypto mining continues to bring undue environmental damage on land that has already experienced so undue stress from natural disasters.

Mayor Adams entertaining the likes of Brock Pierce are a harbinger of the wave of neo-liberal policies that will sweep NYC in the next four years.

There were speakers from different organizations, such as Dare to Struggle, Malaya Movement, Mexicanos Unidos and the New York Community Action Project.

Jessica Schwartz from New York Community Action Project brought up Mayor Adams in her speech, “Now with Eric Adams as mayor, we’re already seeing promise of heightened police presence and crackdowns on the people. He has stated that he wants to bring back the plainclothes police because he wants to bring back the ‘unpredictability’ of policing. Nearly two years after the biggest uprising against police violence in U.S. history, Mayor Adams is a slap in the face to all of us who’ve been fighting for justice. That’s why we must continue to fight back against not just the NYPD, but the whole system that puts both New Yorkers and Puerto Ricans under their greasy fingers.”

Organizers around the city have really set their target to Mayor Adams, as he promises to only bring injustice to all sectors of life. Whether it’s defending Puerto Rico or fighting the NYPD, the people of New York are ready to fight back.

#NewYorkNY #MayorAdams #BrockPierce #ACT60 #Crypto