The Flying Frisby - money, markets and more

Before we get started today, I just wanted to flag two articles from last week. First, my special report on helium. And, second, Dr John’s latest on bonds. Both for paying subscribers, there is lots of valuable info to be had, so please check them out.So to today’s piece … Every December Saxobank puts out ten outrageous predictions for the year ahead.It does not claim that these predictions will happen, but that they could happen. The purpose of the exercise is to stimulate thought, discussion and debate.And that is just what Saxobank has achieved because today we consider its ten outrageous predictions for 2023.The 10 outrageous predictions for 2023I went back to look at their predictions for 2022 to see if any of them actually happened. The very first was “The plan to end fossil fuels gets a rain check.” Net Zero has not yet been abandoned, but this year has certainly seen a quite dramatic change in attitude towards fossil fuels. The second was “Facebook faceplants on youth exodus”. Facebook has certainly faceplanted. But I wasn’t aware the youth were ever on it.After reading the first two, I was about to bestow Nostre Damus status on Saxobank, but the rest of their 2022 predictions did not really pan out. I won’t go through them here. They are in the past. Nobody can do anything about the past. It’s the future we need to worry about.So to 2023. Saxobank describes the year as a “war economy”. The days of low-interest rates and a harmonious world built on renewable energy, equality and independent central banks are gone. Now “sovereign economic gains and self-reliance trump globalisation”.That’s the macro. Onto the specifics.Prediction one. The pressing global energy needs drive the world’s richest to launch an “R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb”.Well, you can bet your bottom dollar that they are talking about it. But I don’t think it happens. Not just yet, anyway. Somebody would have to organise it.Prediction two says that, due to the political stalemate in France, and the rise of Marie Le Pen since the 2022 elections, President Macron resigns. I don’t see that happening either. France’s daft electoral system is what enabled him to be President. The political stalemate means he stays President. Presidents like Macron don’t resign unless they are forced to. Too big an ego. Though this McKinsey affair does seem to be hurting him.The gold price surges to $3,000Prediction three is that gold goes to $3,000. Now you’re talking my language!“As markets and central banks realise that the idea that inflation is transitory is wrong and that prices will remain higher for longer, gold is sent through the roof,” says Saxobank.To rocket, gold needs inflation expectations to be markedly higher than government bond yields - negative real rates in other words. In the US we do not yet have that. Saxobank is describing a situation where we do.I’ve got to be straight with you guys. I don’t think gold goes to $3,000 in 2023. It’s got a better chance of going to £3,000.Prediction four suggests an EU army is coming and that it forces the EU down the path to full union. We know that, despite denials, the EU has been talking about an EU army for years. With that man Mr Putin on the doorstep the need gets rather more pressing. It’s possible but it needs the US to take a backward step in its global policeman role, something President Biden and the US military-industrial complex seem unlikely to do.Like many of Saxobank’s predictions, I’ve no doubt it’s coming. Just not next year.We come to prediction number five and one that made me smile. “In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.”I’d never thought about it before, but I do think about it now and I know it’s inevitable. Under the pretence of climate change, somewhere is going to impose meat taxes. I don’t think meat production will be banned - that’s too big a political ask - but meat taxes are coming. And, if you’ve read the definitive book on taxation that is Daylight Robbery, you will know that taxes are easily imposed, often for moral reasons, but not so easily gotten rid of. Meat taxes are coming - again maybe not a year, but they are coming. It will be for your own good. And once imposed they will stay. Outrageous predictions for 2023: time to wind back Brexit? Prediction six suggests that the UK will hold a referendum to wind back Brexit. Bregret is a big thing now in the UK. A recent YouGov poll found that only 32% now think leaving the European Union was a good idea; 56% say it was a mistake. The Conservative Party have made the most almighty balls up of the opportunity. The primary reason given for voting leave was sovereignty, yet, as the people trafficking and illegal migrant crossings show, they have been unable to even police our borders. No wonder only 21% think Brexit is going well.There will be calls for another referendum. But the Tories won’t have it on their watch and I suspect Keir Starmer will be too scared of losing Red Wall votes to make it an electoral pledge. So I doubt we will see a referendum - not next year - even if the sentiment is there.Prediction seven is next and that is for widespread price controls to cap official inflation. Inflation and price controls are forever partnered, and war is never far away from the dancing duo. We have already seen plenty of new price controls this year though. Will we see yet more? Probably.The US dollar is dethronedAnd so to prediction eight - and this is one I do see coming. Well, a watered-down version. And, again maybe not as soon as next year. “OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve asset.”De-dollarisation is a big theme, especially for those nations that make up the Shanghai Cooperation Organisation - which is Russia, China, India and Iran and pretty much every nation between. They are not allies of the US and they want a non-US dollar asset they can trade with. The problem is what? (I have some ideas).I don’t see them necessarily walking out of the IMF but some non-US-dollar international asset is coming. Or they’ll use an existing one. Before the end of next year? Possibly. It might be gold. It might even be bitcoin. It might be something else.Prediction 9 - we are almost there. Japan fixes its currency to the US dollar at 200 as it overhauls its financial system. The yen has been a basket case - even worse than the pound, believe it or not. Here we see it against the dollar over the last decade. From 60 to 170 is quite some drop. (If the chart below is rising it means the dollar is getting stronger).But this is as much a function of US dollar strength as it is yen weakness and Japanese monetary policy.To go to 200 is not that big an ask, but the US dollar has pulled back quite a bit of late and may have made a long-term reversal. But to go to 200 and then get pegged. I’m not sure.Outrageous predictions for 2023: bye-bye private equity And so finally we come to prediction ten. Tax haven ban kills private equity, says Saxobank. “The OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.”The OECD has been wanting to do that for yonks. It has not been able to find a way. Maybe war gives them the excuse. I’m not so sure. The practicalities are difficult. You can’t ban Panama. You can’t ban Switzerland. Saxobank explains how it would work. The OECD would launch a full ban on the Cayman Islands, Bermuda, The Bahamas, Mauritius and the Isle of Man. “The ban means that corporate acquisitions in OECD countries cannot be made with capital arriving from tax haven entities and only from OECD countries or countries that adopt OECD transparency standards on capital, which would include the automatic exchange of information, beneficial ownership registration and country-by-country reporting”.Ouch. It would decimate private equity. You can be sure that the motivation is there. Will it happen?It depends on how nuts things get. And things are getting nuts.Thanks very much for reading. I’ll have my own predictions for you, as is always my way, at the beginning of next year.If you are interested in buying gold bullion, my current recommended bullion dealer in the UK is The Pure Gold Company, whether you are taking delivery or storing online. Premiums are low, quality of service is high. You can deal with a human being. I have an affiliation deals with them.Have you got you Kisses on a Postcard CDs yet?Please subscribe to this amazing publication.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

What are you getting people for Christmas this year?I have the solution.Forgive me for going full salesman, but read on and you’ll see why I do that. This is life mission stuff. First, there are all sorts of goodies in the Dominic Frisby shop, which I think you may like. We have CDs of all my various albums, the latest (and probably best yet) being Gammon and Proud. Digital versions are also available at Bandcamp.There is Contains Swearing, an EP of unbroadcastable songs for the discerning listener. I daren’t release digital versions of this online for fear of the repercussions. You can only get the CD.My other albums are there in the shop too.The best thing I’ve ever doneAnd so we come to Kisses on a Postcard, which is the musical based on my dad’s story of his experiences as a vacky in World War Two, that I’ve been working on for so long. It has been my life’s mission to get this made and I consider it to be, artistically, the best thing I’ve ever done or been involved with.But trying to get people to listen to it has been really hard. In the last few weeks, however, I’ve appeared on Triggernometry, James Delingpole and Lawrence Fox’s shows to talk about it and, suddenly, some real interest has ignited. I am getting constant notifications on my phone telling me we have sold another CD and I have been getting some of the nicest messages“I spent most of today binge-listening to the podcast on the Apple platform and it has been one of the happier days of my life thus far,” Daamini from Dubai“I just wanted to congratulate you on such a wonderful and beautifully touching musical. I was enthralled, I cried, I laughed, I spent my whole Sunday GLUED to this amazing show. A real quality production. I think this should be essential viewing for younger generations. It HAS to be in the West End, just HAS TO BE”. Angela from Ascot.“A heartwarming, delightful musical that keeps you right to the end. The characters are wonderful. There is tragedy, heartbreak, bigotry, compassion, courage, joy and laughter and it is narrated beautifully. Thank you for giving it to us to enjoy, a real gift”. Nat from PenrynPeople really like it - and that’s because it is really good. As I’ve said, artistically, Kisses on a Postcard is the most special thing I have ever been involved with, I urge you, if you haven’t already, to listen.A Kisses on a Postcard CD - first edition - will make the most special Christmas present, especially for anyone you know who was some way connected to the evacuation. The artwork, says Ian from from Cheltenham, is “wonderful. Such a special gift.”So I hope you don’t mind me going full salesman, but you can probably see how much I care about this project. You can find out more at the website here and you can order CDs either there or in the Dominic Frisby shop. Thank you. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Some interesting developments in the murky world of geopolitics to report on this week, as the currency wars heat up.WWIII has already started. So says US economist Pippa Malgrem, who was Special Assistant to US President George Bush for Economic Policy and a former member of the President's Working Group on Financial Markets.“We are in a hot war in cold places: Space, Cyberspace, Underwater, and high places, including the Arctic, and the Himalayas, and in proxy conflicts in places the media give a cold shoulder to like Africa.” (Not to mention the Pacific). A cold war in hot places then - as well as a hot war in cold places.We are also, of course, in a very hot currency war.Vladimir Putin goes down the bitcoin rabbit holeThis week, with the aim of limiting Russia’s ability to finance its war in Ukraine, the G7 Nations, the European Union and Australia set a price cap of $60 a barrel on Russian crude oil. This follows the EU's embargo on Russian crude imports by sea, with similar pledges from the US, the UK, Canada and Japan.As you would expect, Russia has said it will not abide by such price caps, even if it has to cut production.Meanwhile, the world’s largest oil importer, China, seems to be slowly opening back up. Cities are easing COVID-19-related restrictions in the wake of recent protests, and it seems the country is set to further relax curbs as soon as today. I think it’s fair to say that if China had not locked down, oil demand would have been a lot higher - and so the oil price would have gone a lot higher. Same goes for metals, in fact most other commodities. And then we have another part of the puzzle. Russia’s President Vladimir Putin did his best bitcoin maximalist impression last week, as he called for an international, independent, blockchain-based settlement network. (Spoiler alert: it already exists. It’s called bitcoin).“The technology of digital currencies and blockchains can be used to create a new system of international settlements that will be much more convenient, absolutely safe for its users and, most importantly, will not depend on banks or interference by third countries,” he said. “I am confident that something like this will certainly be created and will develop because nobody likes the dictate of monopolists, which is harming all parties, including the monopolists themselves.”Here’s the link to bitcoin.org, Vladimir, in case you have self-googled and are now reading this.Where is this all going?I have a few ideas. So does Credit Suisse’s answer to Led Zeppelin, analyst Zoltan Pozsar.Tell your mates about this amazing article.You want my oil? Give me your gold.“The oil market is tight,” he says. The oil price is lower than it might otherwise be not just because of China lockdowns, but because of the US release of its strategic reserves (SPR), as well as from OECD countries. But Saudi Arabia is now low on spare capacity and the SPR is finite. You can’t print oil after all. “Recent releases have brought reserves down to levels we haven’t been at since the 1980s. The 400 million barrels left in it isn’t much: it could help police prices for a year if we released 1 million barrels per day (mbpd), half a year if we released 2 mbpd, and about four months if we released 3 mbpd”.Short of a sudden new surge in supply (where from?) or a sudden reduction in demand, it would seem then that the oil price is going higher.Russian crude already sells at a $30 discount relative to Brent, which currently sits at $83, he observes with China and India the main buyers. “In the case of India, it is widely understood that Indian refiners are turning some of the imported oil into diesel for re-export. Buying Russian crude at $60 per barrel (pb) and selling diesel at $140pb makes for a nice crack spread, the petroleum market’s equivalent of 100 bps of spread in the land of OIS-OIS cross-currency bases. India and China thus serve as matched-book commodity traders (instead of Glencore or Trafigura), the former dealing in oil and the latter in LNG, keeping commodities in circulation.”But Putin may be happy to sell to India or China at that discount - he won’t however cap prices to sell to Europe on point of principle.Meanwhile, the US needs to replenish the SPR, especially if it wants to control domestic oil prices. “Gone are the days when the U.S. Deputy National Security Advisor warned India and other countries of sanctions if they bought Russian crude oil. The change in tune could be one backdoor mechanism to refill the SPR, and given the $30 dollar discount to Brent that India is paying for Russian oil, this would be below President Biden’s $75 target.”But if Russian oil is exported for the purpose of replenishing the US SPR, Putin’s not going to like that either. What to do then? Only accept payments in gold, says Pozsar, not dollars or rupees. Sound a bit fantastic? “No it is not”, says Pozsar. “Look at the tit-for-tat measures so far: you invade Ukraine, I freeze your FX reserves; you freeze my FX reserves, I make you pay for gas in rubles; the West boycotts my Urals, I’ll ship it east......the West caps the price of Urals, let them, but I’ll make them pay in gold. And if some countries re-export Urals to the West, I’ll make them pay in gold too.”Anticipating geo-politics from my desk in South-East London is probably not wise. The pub is a better location for such pontification. But we have long since argued that the re-financialisation of gold is the most powerful weapon there is in the currency wars and the Eurasian move towards de-dollarisation.The problem with gold is settlement. You can’t send it over the internet. You have to use banks or gold dealers. If only there was a form of money that you could transfer from A to B across the net that eliminated the need for trusted third parties …Oh! There is …Subscribe to this amazing publication.What are you buying people for Christmas this year? A CD of Kisses on a Postcard, the musical I have been working on about vackies in World War Two, would make a wonderful pressie. For something a bit more comic and stocking-fillery, how about a CD of funny songs? All are available here in the shop. If you are looking to buy physical gold – coins or bars – let me recommend The Pure Gold Company in London, with whom I have an affiliation deal. You can take delivery or store it safely allocated to you in vaults in safe jurisdictions. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Today we consider the coldest substance on earth.Which is?I knew you knew. Liquid helium. I have been covering helium for several years now, and it’s time to revisit the theme today. The reason? I keep reading articles about helium shortages (and these have nothing to do with the controversial cryptocurrency of the same name).Bull markets come along every few years in some niche but strategically important commodity. I’ve seen it in cobalt, lithium, graphite, phosphate, uranium, rare earth metals, tin and others besides. The story is almost always the same. Years of underinvestment have led to a shortage of supply of the said commodity. Government stockpiles are exhausted. And, now, suddenly, the commodity is essential to some new technology. Cue the bull market. What do we need helium for - and why is there a shortage?Helium is the second most common element in the universe, so how can there be a shortage?You could say the same about hydrogen and that’s even more common. There may be plenty of it up there, but there isn’t plenty of it down here and down here is where we need it.Nor is helium a huge market. Annual global demand is estimated at around 6 billion cubic feet (Bcf) or 170 million cubic metres (m3). It’s hard to establish just what the current price is because prices tend to be agreed by contract between buyer and seller, but Cliff Cain, CEO of rare gas consultancy Edelgas Group, which studies the market and consults with most of the companies operating in it, gives me the figure of $1,800 per thousand cubic feet (mcf). A year ago the price was closer to $500/mcf.The entire global market for bulk liquid helium is probably around $3bn.Demand keeps growing though, mainly from the medical, tech and aerospace sectors, and “it will keep growing”, says Cain.Helium is seven times less dense than air. Replace the air in a hard drive with helium, there is less turbulence, the discs spin better and so more discs can be packed into less space, while consuming less power. Helium-filled hard drives increase capacity by 50% and energy efficiency by 23%. Thus almost all high-quality data centres now use helium-filled high-capacity hard drives. It’s also used in barcode readers, computer chips, semiconductors, LCD panels and fibre optic cable.Another rapidly growing industry that’s gobbling up helium is the space sector. Helium is used in fuel tanks for rockets and satellites. Physics requires it in particle accelerators. Its low density means it also finds use in deep sea diving, but perhaps its most essential use is as a coolant, especially for the magnets in MRI (magnetic resonance imaging) machines. They must be kept near absolute zero to maintain the magnets’ quantum properties and not lose their potential. A typical MRI machine needs 2,000 litres of liquid helium.As someone who has recently broken his ankle, and also only discovered that I broke my neck in my younger days (it was never properly diagnosed), I can tell you the importance of MRI machines and the diagnostic clarity they bring. Some 38 million MRI examinations were carried out in the United States last year. Forbes suggests helium shortages may be the world’s next medical crisis.“Given the importance of MRI in the medical profession,” it says, “the helium crisis should be front and centre for politicians, policy makers, physicians, patients, and the general public to discuss and find sustainable solutions for. The scarcity of helium is a serious matter and affects all of us directly or indirectly.”And then there are the party balloons.Subscribe now to this amazing publication.Where do we get helium from - and why its price is going upAs Cain points out to me, if you are an aerospace company whose business relies on putting satellites in space, ideally as many as possible, or an MRI manufacturer whose business relies on selling MRI machines, you are not going to let helium shortages get in the way of your business. You are not going to stop producing the machines you produce - you are going to want to produce more and more of them. You will pay whatever price is necessary for the helium and pass the cost on. “Phones, computers, all modern life – it requires helium,” says Cain. “There’s no substitute. Without it, we go back to the Stone Age.”Helium is produced as a byproduct of natural gas refining. The world’s largest producer is the United States (roughly 40% of supply), followed by Qatar, Algeria, and Russia. However, the world’s largest single source of helium for the past 70 years, the US National Helium Reserve, recently stopped its supply. It is letting its staff go and the pressure has come off in its pipelines. “It is now at 700psi when it needs to be at 1,200 to be producing,” says Cain. The system is now for sale, at least in theory. The paperwork has met with delays in the White House, this is likely to take some time to resolve and we won’t see any market until it does. Prospective buyers should also beware of contaminated supplies and ongoing legal suits.  Russian supply from the massive new Gazprom helium plant in the eastern city of Amur is also shut down. That is unlikely to see any production before the end of 2023 as, Cain tells me, it relies on Western engineers and the West is, at present, rather reluctant to send staff to Russia. In any case, Russia will struggle to sell much beyond China and Russia. In fact, Russia has the potential to become the world’s largest producer, but it’s Russia.There were two shutdowns in Qatar earlier in the year, though these have now re-opened, and all-in-all we have what has been dubbed Helium Shortage 4.0 – the fourth worldwide helium shortage since 2006. Opportunities in the helium sector As with Helium Shortages 1.0, 2.0, and 3.0, supply disruptions in a tiny industry have caused the upset. Cain is not crazy about this idea of Helium Shortage 4.0 – he says it's just the continuation of 2.0 and 3.0, a situation Cain describes as “never-ending”.Put simply, the world needs new helium supply. The solution is to invest in prospective helium producers and developers. There are plenty out there. But, as with all natural resource companies, it’s a question of separating the wheat from the chaff. “75% of them,” says Cain, “are going to fail …” Please check out my special report on investing helium.Subscribe now to receive my special report on how to invest in helium.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

This was supposed to go out to one and all last week, but for some reason it didn’t. So today we try again - and the article can also be the Sunday morning thought piece.What problem does bitcoin solve? How does it make the world better?Merryn posted those questions on Twitter yesterday.It being Twitter, as you might expect, as well some measured, sensible stuff, it met with a barrage of outrage too, with responses ranging in scope from “it’s a Ponzi scheme” to “it’s destroying the planet” to “it’s going to give us world peace”.I thought I’d answer Merryn’s questions today, sheltered from the mania of Twitter, in the calm surroundings of this blog.I have been trying, on and off, to orange-pill Merryn since about 2014 and I think it’s fair to say, Merryn gets it. She gets fiat money, inflation, money printing, the harm it does, all that stuff. Not only does she get it, she was several years ahead of most of us on that one. She gets the need for apolitical money, lower taxes, less state, less central banking, fewer capital controls - all that stuff too. Cripes, she’s been writing about it all long enough.She just isn’t crazy about bitcoin. I don’t want to put words in her mouth, but I think her objections come, broadly speaking, under three main headers.First, she doesn’t like all the Wild West scams, blunders and ensuing losses that have accompanied this new financial technology. The FTXs, the Mt Goxs, the hacking, the extortions - and all the rest of it.Yes, these are not bitcoin, but bad actors operating in and around bitcoin, but bitcoin has still been the enabler. Two, she doesn’t like the volatility. The price needs to be more stable, if it’s to be a legitimate form of currency or cash.Three, even though bitcoin is, in theory, open to all, in practice it is only open to those technologically savvy or organised enough to be able to store keys, passwords, wallets, seed phrases and so on safely. Those - and there is no shortage of them - who are not comfortable with all of that tend to use third-party providers, which, in the unregulated world of crypto, leaves them vulnerable to those factors listed under “First” - and we are in a loop.I think/hope I’ve summarised Merryn’s core objections - there’s probably something I’ve missed. They are all though, I think, legitimate.So … here, in no particular order, are 17 ways bitcoin makes the world better.  Tell your buddies about this amazing article.1. It separates money and state.If one body in a society has the power to create money at no cost to itself, while the rest of us must expend energy to earn it, it is inevitable that body will have disproportionate power and influence within that society. If you want to know why Western states have grown so large, bloated and invasive, look no further than fiat money systems and the power they give to the state. That money goes on welfare, waste, wars, wokery, whatever. You might agree with some ways that money is spent, or you might not; depends on your politics. Doesn’t matter: fiat centralises power in state.Bitcoin removes the ability of the state, and those who operate in it, to print or debase money for their own political agenda.Money, therefore, remains money. It cannot be a political tool.2. It provides a lifelineYou tend to see high bitcoin use under regimes that have seen the greatest destruction to their national currencies - Turkey, Venezuela, Argentina. Bitcoin has provided citizens with an escape. 3. You can send any amount anywhereSending money across borders is hard, even today, whether for large amounts or small. If I want to return the five dollars that somebody in New Orleans gave me last month when I forgot my wallet, or a pound to my friend in India to buy him a cup of coffee, or a thousand pounds to my friend in Iran, I am not entirely sure how I would do all those things. There are forex and other charges. There are processing fees. There can be capital controls. There might be a lot of admin and forms to fill in. Bitcoin is international, borderless, instantaneous and cheap.4. No more capital controls.Governments cannot control the flow of bitcoin capital in or out of the economy. 5. It obviates central banking.The bitcoin inflation rate is transparent and set in code. The central bank can’t start using dodgy inflation measures. It can’t set the price of money too high or too low for too long. There is no scope for human or policy error.6. It increases financial inclusionAround a quarter of the adult population remains unbanked. Around 1.5 billion people around the world (more women than men) still do not have access to basic financial services, such as a bank account. This, more than anything, roots them in poverty. Yet almost everyone (over 90%) now has a smartphone. All you need to participate in crypto, to start sending and receiving money, is an internet connection.  Bitcoin banks the unbanked.7. It provides privacy. As the world goes cashless, your every transaction now relies on third parties, who know what you are spending your money on. This will get worse with CBDCs. It means there is no privacy. Unless you use crypto.8. The unsolvable problem of digital cashFor decades computer programmers had wrestled with the problem of how to send cash directly from one person to another online without third parties, just as Person A might hand cash to Person B in the real world. No one could solve the problem, so much so that it was deemed insolvable. Then along came Satoshi Nakamoto with his blockchain. It is a major technological breakthrough.9. Digital scarcityOne key reason the digital economy has eclipsed the physical over the last 30 years is scalability. I can upload an app to the App Store and it can be downloaded a billion times, but if I had to manufacture and distribute a billion widgets it would take a great deal more time and effort. Google can make one change to its algorithm, upload and within moments millions of people are benefitting. I can copy and paste some text, a picture, an MP3, any form of code, and send it out to millions. But if you can copy and paste money then it quickly loses its value. How then to create digital scarcity? Satoshi Nakamoto and his blockchain had the answer.10. It educatesBitcoin has got millions, if not billions, thinking about money and money systems, questioning them and their impact, in a way that has never happened in history. “In our time,” said the poet Ezra Pound, “the curse is monetary illiteracy, just as inability to read plain print was the curse of earlier centuries.” But he said that before bitcoin. 11. Excess money supplyIn a world awash with debt-based fiat money systems, the supply of which inevitably increases over time, here is a limited, censorship-resistant, deflationary (using the old definition) system of money, whose supply is finite.12. It has created an entirely new economy and asset class  Crypto didn’t exist 15 years ago. Now it’s a multi-trillion dollar economy, albeit one in a horrible bear market. Is it money? Is it a digital commodity? Is it a tech stock? It’s a new asset class.13. It has provided the young with an opportunity for revenge You know how the economy is rigged against the young, whether it’s through house prices, the tax on the future that is debt, or income tax taken to pay for Boomer retirements. Incomprehensible (to the over 50s) crypto is their revenge.14. It stops cancel cultureRemember how the Canadian truckers had their Go Fund Me support, which other Canadian citizens had donated, stopped? Or how Wikileaks had its funding turned off? Or PayPal blocked donations to the Free Speech Union? Or any number of other organisations with the wrong worldview have had their funding turned off? It’s much harder to do with bitcoin, where there is more freedom to transact. No more currency wars …15. It stops energy waste and accelerates innovationWith bitcoin’s high energy use, it is accelerating energy efficiency, innovation in production and the adoption of renewables. Roughly 60% of bitcoin mining now derives from renewable energy. It costs three times as much to store a unit of electricity than it does to produce it and around the world so much potential energy goes unused or wasted, from gas flaring to hydroelectric in times of high water to nuclear. Bitcoin mining uses energy that would otherwise go wasted to create the most powerful computer network ever known to mankind. 16. Who said and agreed to what, where and whenThis one was pointed out to me by Christopher marshall on Twitter. The unhackable and permanent database that is the blockchain roots information permanently. “A universal witness that can't be corrupted, or censored, of denial of service attacked ... The legal/financial system's ability to prove who knew/agreed to what when is limited by a set of crude adhoc verification procedures.” Bitcoin transforms that.17. It eliminates spamWas that not the original purpose of hashcash stamps, proof of and re-usable proof of work?Narratives take hold over markets, but price often leads narrative. At present, with bitcoin in one of its periodic winters and the price down 75% from its highs, negative sentiment has completely taken over. Few are talking up bitcoin now.In fact with the price down 75%, it’s easy to argue that many of the above no longer apply - what is the point of a money if it loses 75%?Fair enough. But that is also manipulating statistics. Look at the numbers over a five year period and the picture is very different. The volatility is a problem for bitcoin if it wants mainstream adoption. But then again the volatility is what attracts people to it in the first place. The narratives come next …Come for the gains. Stay for the revolution.Tell your mates.And subscribe if you haven’t already. This is a superb publication.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

You can read an update to this article here.Over the last year, I’ve lost over 2 stone - 14kg or 30lb, to be precise. I say over the last year, truth is I’ve been trying, unsuccessfully, to lose weight for three years - in fact, since practically forever. Given that most of us want to be somewhat lighter than we are, I thought I’d share my experiences with you today. They may be of some use.BackgroundWhile I don’t really like going to the gym, I do quite a lot of exercise, I always have. I run, I play football, I walked the dog, but I always seemed to be 5-6kg (about a stone) heavy than is ideal. I have a sweet tooth, but not as bad as some. I like beer and I like wine (not so much of a spirit man). I also have a tendency to eat and drink late at night, particularly coming home after gigs. I suspect it was a combination of eating too late at night and booze which left me in that semi-permanent state of slightly heavier than I would like.I’ve tried all sorts of diets in the past. I lost loads of weight on the Atkins diet back in the early 2000s - that’s basically a low carb, high protein diet - but I also felt fatigued, weak and, as soon as I stopped, I put all the weight back on again and more.I also lost loads of weight on the 5:2 diet in the 2010s. Again as soon as I stopped fasting, I put it all back on again. I would also piss off my partner on fasting days, by not participating in the communal activity that is eating.After seeing Fat, Sick and Nearly Dead five or six years ago, I did the juice diet and lost more weight more quickly than with any other diet I have done. You can lose as much as a kilo (2 pounds) a day. It’s very hard to sustain though, and your kitchen quickly gets swamped with juiced vegetable remains. Again, a few months after stopping, I was back where I was weight-wise and some.Between 2020 and 2021, I took up the 16:8 diet, where you fast 16 hours a day and eat only in 8 hour windows. I would have my first meal at lunchtime - 12-1pm and try not to eat or drink anything after 8 or 9. However, this is hard when you’re doing gigs and I often found myself breaking the rules. I lost a couple of kilos, then plateaued. It meant, though, that I got into the fasting state every day, and I got used to the feeling of being hungry. It became normal. Then I actually started putting on weight. I think it’s because my body got used to fasting, so it did all the things it did - conserve energy and calories - then I would consume too many calories in the evening, close to bed-time, and so, in this state of efficiency and fasting, the body conserved more calories than it otherwise would have and I ended up putting on weight.I was fatIn September 2021 I went the wrong side 90kg (over 14 stone or 200lb). Too much for a man of my 5ft9 frame. A change of strategy was needed. 16:8 wasn’t working, but I was convinced of the efficacy of fasting, so I went back to 5:2.Within a couple of weeks I shed 3-4kg (half a stone), but then I plateaued again. For many months. There was probably still too much of the eating and drinking in the mid to late evenings, especially after gigs, on non-fasting days. I was presenting Headliners on GB news at the time, and I would get home at 1am, not want to go to bed and often then crack open a bottle of red wine. To avoid doing this, I took up fasting on the days I was presenting Headliners. On fasting days, it’s best to go to bed early. Presenting a TV show at 11pm having not eaten all day meant I was almost falling asleep, as it ended. Not ideal.I left the show in March or April, and it was after that that the big weight loss suddenly accelerated.In my new less employed state, I had a bit more time on my hands and I took up playing tennis twice a week with a chap I met on Facebook. I had fewer late night gigs, so less late night calorie consumption. I then got involved in a swimming challenge, so I started training for that. I also continued playing football once a week.It was the combination of increased activity and fasting on the same day that made the weight fall off me. I got caught in this virtuous loop. As I started to feel fitter, on my way to tennis, I would cycle up a really steep nearby hill four or five times and get in some HIT. On non-fasting days I now found myself consuming less anyway. I would skip meals, especially breakfast, so found myself doing a mild version of 16:8 as well.England cycling coach Philip Brailsford used to talk about the “aggregation of marginal gains”. So it is with dieting. There are lots of small things you can do, but it is when you put them altogether that the big changes occur. (The same happens in reverse).So here in bullet points is the Dominic Frisby Diet.Subscribe to this amazing publication.1. Indoctrinate YourselfI would say this is almost the most important part. Find a diet that works for you. A lot of people swear by protein diets, for example. I find them too hard to practically sustain. I like fasting. It works. It’s proven to work. It’s simple: you are either fasting or you are not. On or off. And it only requires effort two days a week, which makes it sustainable.But whatever diet you choose, you need to indoctrinate yourself. Read books, read blogs, watch videos, listen to podcasts, talk on chatboards. Totally brainwash yourself about the efficacy of the diet. You have to believe in it in order to carry it out. (By the way 5:2 works).I’m sure that’s why many people on diets witter on about them so much, by the way. They have indoctrinated themselves. You have to. Turn it into a religion.5:2 works really well by the way, if I didn’t already mention that. 2 days a week you consume no more than 500 calories (600 if you’re a man). The rest of the time you do what you like.2. Habits, habits, habitsFasting is hard at first, but once you turn it into a habit, you barely notice it.Certain little things help. Drink plenty of liquid. It’s amazing how often when you think you’re hungry you’re actually just thirsty. Fill up on water. Hot drinks are especially filling. Tea, herbal tea, coffee, broth. Soups are a good food to eat on fasting days. Cider vinegar is a good appetite suppressant. Stick a desert spoon full in a glass of water when you drink a glass of water in the morning, and you won’t be hungry till lunchtime.Coconut oil does a similar trick. Stick a teaspoonful in some hot water or herbal tea.Take lots of exercise, especially on fasting days.Turn the above into habits, so they don’t require effort. You just do them.3. Commit to sportExercise is easy to avoid if you do it by yourself. But if, for example, you have a regular tennis partner, or a football team, then suddenly you have an obligation to go and play, even if you don’t feel like it and it’s cold outside.Commit to some kind of sporting challenge that you have to train for - a cycling challenge, a walking challenge, climbing a mountain, swimming a lake, doing a marathon. Create obligations for yourself, then you’ll have to take exercise even when you don’t fancy it.Try and cheat it incidental exercise wherever possible - walk instead of driving or getting the bus. Cycle to work. Cycle to meetings if you can. Cycling is a really good sport, particularly for the over 50s. You burn loads of calories (because you are using your legs and your legs are the biggest muscle group), but you don’t suffer the joint pain that comes with running. Take up cycling. And get into cycling up hills, you’ll be amazed at how good cycling up hills can make you feel.Running is great for weight loss, especially with some HIT (high intensity training) thrown in. At the end of your run, do 4 30 second sprints, ideally up a hill. Swimming is good. You don’t burn that may calories, but it is great for building muscle and you feel fab afterwards. I find it hard to run two days in a row - my joints ache too much - but you can run one day, then swim the next quite easily. I bought some scales and a fitness watch, and I am forever looking at my stats. They are good because they keep reminding you to improve. The best time to weigh yourself is first thing in the morning after you wake up - that’s the only way to get a consistent measure. Even then it’s amazing how much your weight fluctuates.But I cannot understate: the combination of fasting and taking exercise on fasting days will make the weight fall off.4. Avoid stuff that’s bad for you.There are two big evils here. The first is booze. Much as I love beer and wine, alcohol is bad for you and the less you drink the better. Drinking also makes you put on weight. Never mind the many calories in wine and beer, it’s the poor decisions that follow, which usually involve food and more booze. But not drinking is hard. Alcohol is addictive. Read Kick the Drink Easily by Jason Vale, if you want to give up booze altogether. The beauty of 5:2 is that it stops you drinking - at least on fasting days. Second there is processed food - especially seed oils. I have recently been persuaded by the anti-seed oil arguments. Why is it people are so much fatter today than we were in the 1960s or 1970s? What has been the big change in our diets? I don’t believe we are that much greedier than we were forty or fifty years ago. There must be another explanation.The answer lies in food processing and, especially, seed oils - rapeseed oil, canola oil, palm oil, sunflower oil, corn oil, vegetable oil, margarine. You can drive cars on those things. The body can’t break them down. That’s why they are so effective at preserving the shelf life of food.The big change in our diets is not sugar or carbohydrate, it is these refined fats. They are very difficult to avoid altogether because they are in everything. The food industry and those who regulate it have a lot to answer for. Cut down on seed oils as much as you can. Fried fast food - fish and chips, MacDonalds, KFC - is killer. A lot of that heavily processed vegan plant food is bad too.Don’t eat pre-prepared stuff (it’s full of those refined oils). Cook with ingredients in as natural a state as possible. Meat, fish and veg cooked in butter and olive oil.Generally speaking, up the protein intake and avoid carbs. Oh, one more food thing: nuts. I used to eat lots of nuts and raisins. I love them with yoghourt and honey - and I thought they were good for you. But I saw a video somewhere with a dude who argued that bears eat loads of nuts when they are trying to fatten up for the winter. Ergo: nuts are very fattening. Just the time my weight loss began to accelerate was when I cut nuts out. Might have been coincidence, but I thought I should mention it.So there we go. Dietary advice from someone who has no qualifications whatsoever, save having lived it. I like 5:2 because it only requires two days of effort. You can do what you like the rest of the week. And the morning after a fasting day, you feel amazing. It’s like being young again, you feel so good. It’s the opposite of a hangover. My friend Alex calls it, “the inverted hangover”. The more of those things you do and turn into habits (so they require little willpower), the more the rules of compounding and incremental gains work in your favour. It’s hard, but when you are sufficiently indoctrinated and the habits entrenched, it all suddenly gets easy. Good luck.Now comes the hard bit. Keeping the weight off.Tell people on Facebook, LinkedIn and Twitter about this amazing articleDid I mention that he big results come from fasting and exercising on the same day? Or that 5:2 works? Subscribe to this amazing publication and watch your life get 10x better overnight. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

I’m delighted to report that The Flying Frisby is now a Substack Bestseller. Thank you to everyone who supports this bestselling publication!By popular demand, today we consider bitcoin - and the amazing story that is FTX.Gosh, this is some story - it’s difficult to know where to start. The more you dig in, the more that comes out. It’s a cautionary tale of the madness that engulfs crowds during investment manias and bubbles, of greed, delusion, risk, and more besides.I’m sure many of you already know the story, even though there are new developments every day, so I’ll recap it quickly, before moving on to what it means for bitcoin.Tell everyone you know about this amazing article.The story of FTXSam Bankman-Fried was a geeky young crypto “entrepreneur”, born to an upper-middle-class Jewish family in California. His parents were both professors at Stanford Law School. Ironic.In 2017 he set up the quantitative trading firm (that would be trading based on mathematical models) Alameda Research . Then, in 2019, came FTX, a crypto exchange that became phenomenally successful, phenomenally quickly. In July 2021, barely two years into its existence, FTX raised $900m at an $18bn valuation. That was Series A. Three months later came Series B - $420m at a $25bn valuation. Three months after that, in January of this year, it raised another $400m. This time the company was valued at some $32bn.To put those numbers in some kind of context, the likes of Barclays, Soc Gen and Deutsche Bank - banks that have been around forever - all have smaller market caps in the $20-30bn range. $32bn would be more than the UK collects in stamp duty in a year. Or fuel duty or alcohol and tobacco duties. It’s roughly five times what it collects in inheritance tax.Bankman-Fried himself was worth $16bn, and at the age of 30, was on the front cover of Fortune Magazine, along with a headline asking if he was “The Next Warren Buffett?” FTX’s blue-chip and “smart money” investors included Japan’s SoftBank, venture capital firm Sequoia Capital and hedge fund Tiger Global. Even the Ontario Teachers’ Pension Plan put in $95mn. (What has your pension fund manager been doing with your money?)There were rumours of another $1bn raise in September. However, that didn’t materialise and the bitcoin bear market meant the tide was going out in the crypto industry. We would soon learn who had been swimming naked.Subscribe to this amazing publication. It’s a Substack bestseller.FTX suffers in the bitcoin bear market Some started asking questions about FTX’s accounting and other practices. Short sellers also started taking notice - they expose frauds more quickly than anyone. Negative coverage started to appear. On November 6 an article at Coindesk raised doubts about the balance sheet of Bankman-Fried’s sister company, Alameda. Then things started to unravel quickly. Changpeng Zhao, CEO of Binance (the world’s biggest crypto exchange), which had been an early investor in FTX, announced that Binance was selling all its FTT coins - as much as $2bn worth. (FTT coins are part of the plumbing of the FTX exchange). The value of FTT started to fall.Suddenly there was a scramble to withdraw assets from the exchange. It was thought to have had the assets to back the liabilities, Bankman-Fried tried assure everyone that client funds were safe, but it seemed this was no full reserve exchange and FTX didn’t have the funds to meet the run. In fact, it seems FTX had been using some of the funds - as much as $10bn - to shore up sister company Alameda, which had suffered significant trading losses over the past year. (Watch the interviews with 28-year-old Alameda CEO Caroline Ellison - said to be in a polyamorous relationship with Bankman-Fried - describing how she “doesn’t like stop losses”. Turns out she had barely any risk management at all).Chain analysts noted that FTX didn’t have the funds to cover withdrawals. On November 8th Bankman-Fried said he had “enough to cover all client holdings” and that “he doesn’t invest client assets”, but the run continued. That evening withdrawals were halted. In an attempt to restore confidence, Zhao and Bankman-Fried announced that Binance would be acquiring FTX soon after. However, the following day, Zhao said that having done his due diligence, Binance would not be acquiring FTX. A day later, FTX filed for bankruptcy. Easy come, easy go: Bankman-Fried’s net worth went from $16bn to zero in barely 72 hours. Reports are FTX had $900m in assets against $9bn in liabilities.And then, the day after that, some $600m in crypto was hacked from FTX’s wallets and syphoned lord knows where - Panama, Bermuda and Cayman, presumably. Apparently the hacker isn’t even that sophisticated and numerous Twitter feeds are now following the stolen crypto.This story’s amazing - you need to share it on Twitter, LinkedIn or Facebook.As FTX unravels stories start to emerge Since then all sorts of stories have emerged. Weird sexual goings on at the companies HQ - Alameda’s employees lived together in a luxury apartment the Bahamas and polyamory reigned. Bankman-Fried sharing the stage with Bill Clinton and Tony Blair. A key employee had run an online poker company and been convicted for cheating. Flight tracker apps showing private jets fleeing to jurisdictions where they can’t be arrested. The contagion has spread to other crypto operators such as BlockFi which have halted withdrawals. Author Michael Lewis of Big Short fame has apparently already signed a film deal - he had been tracking Bankman-Fried for six months. (Surely he must have been aware of what was going on).Bankman-Fried was the US Democrat party’s second-largest donor in 2020, donating around $37m, and pledged upwards of $1bn if Trump were to run in 2024. Given these proceeds might effectively be stolen capital, should the Democrats return the money?Heck, it’s even emerged that Ukraine had money with the business, that it has links to the WEF and that Bankman-Fried took advice from Gary Gensler of the SEC.All the while the fraud was being perpetrated, Bankman-Fried donated to what he considered good causes - and talked up his giving even more. He spoke endlessly about charity, philanthropy, altruism and utilitarianism. His talks were peppered with motivational catchphrases, all delivered with geeky, beta-male sincerity. The double standards are breathtaking, given the magnitude of this fraud and the lives he has ruined. Even now his apologies are those of an errant rich kid - he seems oblivious to the magnitude of what has happened.Illustrating the uselessness of rating agencies (as if 2008 were not enough), and ESG, FTX was given a higher leadership and governance rating than Exxon Mobil.Its brand has sponsored sporting event after sporting event - baseball, basketball, F1 - star athletes such as Tom Brady (who appears to have lost hundreds of millions).Rather like JP Morgan bailing out the markets in the Panic of 1907, Changpeng Zhao is now forming forming “an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis”.It’s all just extraordinary.What does FTX’s collapse mean for bitcoin? It’s worth remembering that in the wild west that is this new financial technology we have been here before. Many times, in fact, most famously with Mt Gox. It’s hard to emphasise just what a big deal that bankruptcy was back then.In 2014 Mt Gox was the biggest bitcoin exchange in the world, handling over 70% of bitcoin transactions, according to Wikipedia. When news broke that it had been hacked and it suspended trading, stopped withdrawals and filed for bankruptcy, the news precipitated an immediate 50% fall in bitcoin (from over $800 to $400). It would then fall by a further 50% to $200 in the ensuing bear market.This time around bitcoin has “only” fallen by 20-25%, though other coins, Solana especially (FTX held a lot), have fallen by a lot more. The beneficiaries have been coins of which FTX did not hold vast quantities (so there hasn’t been the selling pressure).These are the kinds of frauds that get perpetrated in bull markets with all the accompanying euphoria. I’d say it was very likely Alameda’s poor risk management was due to the fact that it was founded almost at the bottom of the previous bear market cycle and so they only knew bull market conditions, and that guided their behaviour. But then the bear market exposed the fraud.Bottom line: it seems FTX was doing what banks have been doing (and shouldn’t be doing) ever since there have been banks, regulated or not. It was taking client money and using it for other purposes. Fortunes have been decimated. Lives have been ruined. Many of the previous cycle’s crypto darlings are now headed for the scrap heap, if they are not already there. The list of the top ten coins by market cap is already very different to what it was a year ago. It’s completely unrecognisable from the previous cycle. But bitcoin carries on. There will be many who cannot distinguish between the sound, censorship-resistant money that is bitcoin, other dodgy cryptocurrencies and psychopathic fraudsters, tainting one with the other. There are many who will declare this the end of bitcoin. It won’t be. It’s a blow to bitcoin and crypto more generally. The optics are terrible. This is a fraud of Bernie Madoff proportions and more (estimates suggest FTX has more than one million creditors all of whom will be fighting over the scraps in the bankruptcy process). But remember just because criminals use the US dollar or cars does not mean all US dollar or car users are criminals. Bitcoin will survive and grow.Don’t keep your money on third-party exchanges. “Not your keys, not your coins” as the saying goes. And if you are one of the people who wished they got in, but never did, now is probably not a bad time to dip in your toe. There is blood on the streets. As somebody richer than you or I once said, that is the time to buy.Will this story mark the low? Nobody knows the answer to that, but let’s just say there is a lot more bad news priced in than good. The next big line of support is around $12,500.Phew, that was some article. You should subscribe.If you want to play it safe and buy gold, my preferred dealer is the Pure Gold Company, with whom I have an affiliation deal.Tell everyone on Facebook, LinkedIn or Twitter about this amazing article.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

A number of people have asked me to cover bitcoin after this week’s insanity - and I will very soon, I promise, but today we consider fossil fuels once again.While the oil and natural gas prices have not done a great deal these last six months - up a bit, down a bit, then sideways - the associated companies have done very well: the producers, the service companies and so on.Many years of bear market and belt-tightening are now paying off.However, we are not yet, I would suggest, at that point of excess and decadence that marks the end of a cycle - crazy mergers and acquisitions, insane valuations and Bacchanalian behaviour from the executive classes. So I venture today, as last week, that there is still plenty of gas left in the tank of this bull market.With that in mind I wanted to share a few charts with you today that give an idea of what is possible.Oil and gas stocks are on the rise The first of them shows the ratio between energy stocks and the rest of the market. Indeed, without energy stocks there would not be a rest of the market. A simple point that many, especially those who make policy, seem oblivious to. The world we live in today and the economic benefits we enjoy, relative to our ancestors, have been made possible by fossil fuel.So here is the energy sector relative to the the S&P 500. The higher the chart goes, the bigger the relative market cap of energy stocks. You can see that, even with the rally we have seen in energy companies since 2020, on a relative basis, energy companies are, give or take, where they were at the turn of the century, when oil itself was around $10/barrel and that secular bull market was only just getting started.You can also see that we are in an uptrend. Energy stocks are increasing in value, while the broader S&P500 is flat or falling.It’s also worth noting that the relative market cap was almost three times as large in mid 2008, when oil went to $147/barrel. The inference is that the bull market has a lot further to run.Tell the world about this amazing article.Oil versus stocksNext we consider the ratio between oil - West Texas Intermediate - and the S&P 500. You would expect this chart to trend lower over time because oil production and extraction techniques should improve over time, while broader economies and the companies who operate in them grow. Nevertheless we are below the levels we were in the early part of the century. You can see how high this ratio went in 2008 - and how low in Corona panic of 2020, when oil futures, somehow, went into negative territory.It feels a bit like, as far as this ratio is concerned, we are in late 2003.Relative to the S&P 500, oil is roughly where it was three or five years ago - I’d say it’s at its 3- or 5-year average. And it’s a lot cheaper than it was throughout that entire 2003 to mid-2014 timeframe. So even with the gains of the last two years, oil does not look expensive relative to the S&P 500. It is at the cheaper end of the range. Another sign there is more gas left in the bull market tank.Here now we look at oil relative to gold. These two - as hard commodities - tend to trade in a much tighter range over time, but my observation again is that it is in the low to middle of the 20-year range and not at one of those points of extremity whereby you might consider rolling out of one and into the other.For sure we are nothing like where we were went oil went to $147 in 2008. In fact, we are below where we were for most of the 2000s. On the basis of this chart, oil is probably the cheaper of the two.Trade of the lustrumAs regular readers will vouch, oil is a drum I have been beating since 2016 when it was $25 or so, declaring it our “trade of the lustrum”. A lustrum is a five-year period - a useful and underused word I’d say.That lustrum is now becoming a decade. We continue to beat the drum on oil, gas, coal and the related companies. Fossil fuel demand will continue to grow until at least 2030, the IEA has forecast (2040 in the case of natural gas). That means it is not just enough to maintain current production levels, they need to increase. Yet there have been seven or eight years of underinvestment - leading to today’s shortages. Partly because of ESG deterring investment, partly because so much capital has gone into green energy related companies instead and partly because of the excesses of the previous bull market still needed to be purged. The bull market conditions are still good and longer term, I think fossil fuel stocks go higher.I’m a big believer in narratives within markets. The fossil fuel story is only slowly starting to change. Many are realising just how important they are and what they have made possible. Indeed, that there is a strong moral case for them, not against them.But the narrative is not yet at end-of-cycle levels. When people start talking about Peak Oil again - that’s the sort of thing you want to be looking out for. That the need for alternative energy sources is not because fossil fuels are bad, but because we have consumed them allI don’t know what the end-of-bull market narratives will be - that’s a story that is yet to be told. But if legislators and subsidisers start abandoning electric vehicle initiatives because the ultimate source of the electricity remains the burning of fossil fuels, and it’s really quite inefficient, never mind hypocritical - that is one possible scenarioSo hold on to your positions - enjoy the ride.Subscribe to this epic publication.This article first appeared in Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Today’s missive comes to you from the Galapagos Islands out in the eastern Pacific, where two stories of noble energy initiatives reflect the broader realities of energy policy around the world. We tell these stories with a specific question in mind: how much gas, so to speak, is left in the tank of this energy bull market?The Galapagos population is only around 30,000, but, as a fully functioning society, the same dynamics observed in this small ecosystem occur elsewhere, even if less visibly, so it serves as a useful case study.So we come to the first of our two stories.Not so green transport in GalapagosIn order to limit traffic, protect the environment in this most ecologically delicate of places and protect the taxi industry, the local government made it extremely difficult to get a vehicle licence. All sorts of problematic bureaucratic hurdles had to be jumped, and most people ended up using bikes or public transport.But then in 2016 the powers that be, with a brighter, greener future in mind, decided that anyone could get a licence to own a vehicle, no permit required - as long as it was an electric vehicle. There was just one condition. The buyer had to have a family. Given that most people on the islands have relations, that was a pretty easy condition to meet, even for the single folk. There was a great deal of PR and fanfare about this new initiative: clean, green, sustainable - all that stuff - and a blind eye was turned to the increase in traffic, or of roadkill to the many tame birds on the streets of the island (this is a major problem).At this point it’s worth reminding ourselves that there are, around the world, three main areas of energy consumption - transportation, heating and electricity. While cleaner forms of energy, such as nuclear or wind, might be increasing as sources of electricity, 84% of global energy still derives from the burning of fossil fuels, as the graphic below from Our World In data shows.Even electricity, despite its green credentials, still relies on fossil fuels. The burning of the fossil fuel may be out of sight and, therefore, out of mind, but over 60% of global electricity still derives from it, as our second graphic shows. Wind and solar between them account for barely 10%.Sign up to The Flying Frisby.As we are all now discovering to our cost, despite many years of considerable investment, some might say over-investment, in green energy, there have, simultaneously, been many years of underinvestment in fossil fuel exploration and extraction, nuclear power (the use of which in electricity has, on a relative basis, been declining since the 1990s) and public grids. Hence the current energy shortages especially in Europe. The Galapagos Islands followed the international trends in this regard - which is one reason this story makes for such an interesting case study.Here on the Galapagos Islands, the majority of electricity, despite what you may read, is produced by burning diesel. And at this point we deviate to story number two.The Galapagos wind turbines.There were, once upon a time, some wind turbines built by a consortium of overseas energy corporations, looking to advertise their green credentials to the world. Said corporations conducted a one-year study of wind on the island and concluded that next to the airport (where they would also conveniently be seen by everyone arriving at and leaving the islands) was the best place to erect the turbines. The turbines were duly installed, the publicity was had - here is the world’s first airport that runs 100% on wind and solar, all that stuff - and the energy companies retired back to their nation states.It turned out that year of the study had been an outlier for winds, and they hadn’t built the turbines in anything like the windiest spot. Then the wind turbines stopped working, but nobody on the islands knew how to fix them. Nor was it clear whose responsibility they were. Ever since, the turbines have sat there, stuck - even when the wind is blowing up a storm. Ask a local for the story, and you’ll get a wry shake of the head and a smile at the stupidity of it all. Lord knows how much fossil fuel was burnt mining the necessary materials, manufacturing the turbines, transporting them to the islands and erecting them, only for them not to work, but that is, despite the good intention, what has happened. There they remain, motionless, like statues from a fallen empire. But how now to get rid of them?The episode is neither clean, green nor sustainable.Tell the world about this amazing articleSo back to story number one and the attempt to make the islands greener with electric vehicles (EVs). With the easing of regulation in 2016, the locals who had previously wanted a vehicle but couldn’t get one (a lot) piled in and bought electric vehicles, much to the benefit of the EV manufacturers.But as diesel is the major source of electricity on the islands, so more diesel than ever was now burnt. Again, neither clean nor green. In fact so much diesel got burnt, and so much electricity was consumed, that the shortcomings of the grid and the lack of investment therein were exposed. Power outages soon followed. Multiple and regular. The power outages got so bad that just three years after the EV fanfare, in 2019 a moratorium on electric vehicles was discreetly declared - no fanfare this time - and the islands went back to their old ways.I can’t help thinking that the West is travelling a similar path. As consumers,, encouraged by the green credentials, adopt more electric vehicles, has there been a concomitant investment in power grids to meet the new demand? In many - dare I say most? - countries there hasn’t. What proportion of this rising new electricity demand will entail more burning of fossil fuel, coal especially? Will there be power outages as a result?It’s stupid to expect us to consume less energy. As civilisations progress, they consume more energy. They also get better at consuming energy. A civilisation that consumes less energy is a civilisation in recession and decline. We should not be advocating the consumption of less energy, but advocating the better and more efficient consumption of energy, and that means we have to invest in the exploration and production of fossil fuels. How else is the developing world to pull out of poverty without the benefits of fossil fuels? The International Energy Agency (IEA) forecast in 2020 in its World Energy Outlook that growth in global oil demand will only end in 10 years and that “global natural gas demand growth might stop around 2040”. Those two landmark years - 2030 and 2040 - are not when we stop using oil and gas, just when the demand for them stops increasing. (And they are probably optimistic forecasts).That means that, to meet demand, not only do we have to maintain oil and gas production at current levels, we have to increase them - or prices will go a lot higher. That means greater investment in coal, oil and gas is required. And that means this bull market is far from over.The whole narrative needs to change, as it is slowly starting to do.There have been at least ten years of underinvestment in coal, oil and gas - partly because of the excesses of the last secular bull market and partly because of the powerful anti-fossil fuel story. That now needs to be corrected.There is also now a strong case for a reversion to traditional auto manufacturers, as opposed to the likes of Tesla. But that’s a subject for another day.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.Interested in buying gold? Check out the Pure Gold Company.If you are in or around London on November 24, wearing my comedy hat, I’m doing a gig with the Gilets Jaunes - that’s my band - at Crazy Coqs in Piccadilly Circus underneath Brasserie Zedel. It’s a fantastic venue for this kind of thing. It’s going to be a great night. Please come on down.Thank you for reading The Flying Frisby. This post is public so feel free to share it.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self- sufficient.But our systems of state charity - aka welfare - have too frequently had the opposite effect: they have actually created dependency. It is time to re-think the way we help people.I suggest something that may be heinous to some, but it’s this: welfare would be more effective, more varied, more widespread and affordable if there were no state involvement.People instinctively think that without a welfare state, the poor and needy would not be looked after. At such an unacceptable prospect, people then become fervent in their defence of state welfare systems. You can see the passion people feel about this erupting all over the Twitter and the blogosphere.Before we start, I want you to get your head around one thought - suggesting that the welfare system is not working and that we should do away with it is not the same as suggesting the poor and needy should not be looked after. Not at all - in fact, quite the opposite.The provision of care is a delicate, complicated and unpredictable process. Sometimes money might help the recipient towards self-sufficiency, but sometimes not. Giving money might lead to a temporary lessening of suffering, but often it can lead to greater dependency and less self-reliance. Sometimes something local is required, sometimes something practical, sometimes something psychological or emotional, sometimes something specific to the individual's circumstances - sometimes what's needed is a proverbial kick up the backside. Different circumstances require different forms of care.The dignity of the recipient also needs to be considered. It can be demeaning to receive charity. On occasion anonymity might be required - but on other occasions it might not be.How on earth can anyone hope to design a top-down, one-size-fits-all, system of state welfare that can meet all these varying needs consistently over time?Then there is the matter of the giver. He or she must also be considered.Compassion, care and the giving of charity and care are essential human functions - they are a part of human nature. People need to give as much as they need to receive. You just need to see the pleasure children get from giving as evidence of this. Even perhaps the most ruthless, murderous drug-trafficker that ever drew breath, Pablo Escobar, was a prolific giver. He built houses, churches and schools in his native city of Medellin on a scale unmatched by the Colombian government.In the charitable process, the giver has needs too. Sometimes the giver wants to be anonymous - sometimes they want recognition. Sometimes he or she likes to be involved with the recipient in some way, sometimes not.But, in the process of state care, the giver's needs are not even considered. Taxes are taken and that is it. We are given no real say in how the money we have earned is spent, bar a vote of dubious effect every five years. Often the giver is morally opposed to what his taxes are being spent on!The forced giving that is taxation actually destroys the altruistic satisfaction that people get from giving voluntarily. To help others and to share with them is part of humanity. But, in a world in which government is responsible for the care of the poor and needy, that compassion is removed from life. As a result, the state now has a near monopoly on compassion!if you find this interesting, please share .In fact it is even more bizarrely specific than that: the pro-large-welfare-state left wing has the monopoly on compassion. Anyone who doesn't agree with the concept of a large, generous welfare state is deemed heartless and selfish.While you have to pay the government through tax to provide welfare (or heathcare or education) your ability to provide any of these things for yourself or your family is reduced, because you have less money. After taxes are taken from you, you often you can't then afford to pay for your children's school, your doctor, your hospital, your home, or your charity to others - so you find yourself depending on the state help in some way. And so more and more people, in some way or other, are caught in the ever-growing dependency net.What's more, if the state is providing care to the needy, you are then absolved of the responsibility to do so.Meanwhile, government welfare, as well as being inflexible, is expensive . The large organizations, such as the NHS or the DWP, through which care is administered can be inefficient and wasteful. Worse yet, they are be prone to corruption and rent-seeking (people gaming the system in some way).If you look at food, clothing or technology - essential human needs that, largely, are not supplied by the state - we have, over the last thirty of forty years, seen dramatic falls in price and dramatic improvement in quality. Competition has driven costs lower. Yet welfare has not experienced the same improvements. Why not? Because, thanks to the state's near monopoly, there is no competition.The idea of competition in welfare is offensive to many. But we need it if we are to improve quality and lower costs.The greatest expense in our lives is not, as many believe, your house or your children's education, it is in fact government. But imagine a world with minimal state. Suddenly that expense is removed. Without the cost of the state, we have more capital to spend and invest. People are empowered. Our ability to help others is increased.In a world with no state, what's more, suddenly our responsibility to help others is also increased. If the state is not helping people, you must. Simultaneously, thanks to competition, the help we want to offer is cheaper and better in quality - organizations are competing with each other to offer better help at a lower price.The result will be more affordable welfare, more widespread and diverse welfare, more flexible welfare that can provide for specific needs, more effective welfare, more onus to provide welfare - ultimately, better welfare.Without a welfare state the poor and needy won't be looked after, you say? I suggest they will be - to a much higher standard than they are today.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.If you are in or around London on November 24, wearing my comedy hat, I’m doing a gig with the Gilets Jaunes - that’s my band - at Crazy Coqs in Piccadilly Circus underneath Brasserie Zedel. It’s a fantastic venue for this kind of thing. It’s going to be a great night. Please come on down.Thank you for reading The Flying Frisby. This post is public so feel free to share it. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe