Scammers and economics
They go together like peanut butter and Febreeze, but...eh. There's a joke in there somewhere.
Let’s start with the scammers
Because that’s always fun. As long as you’re not the one being scammed…
Scamming a Scammer
I’ve been sick for the last week, and wasn’t sure what I’d be writing since the market has been so crazy. I was just coughing up various body parts and minding my own business when up pops a delightful little diversion on WhatsApp. I got added to a little group that popped up oh-so-benevolently, offering free trading advice by way of trading functions (specific actions at specific times, not “buy x stock or y coin”)
Alpha groups vs scam trading
Now these aren’t like the typical “alpha” groups (also very, very often a scam – there is no benefit to offering buy or sell signals to others, much less strangers, unless you already have the stock or token and you are gathering exit liquidity for a pump and dump, or you are getting some – often illegally undisclosed – benefit for purchases).
These groups are worse. They tell you to buy or sell, often in trading pairs (like BTC/USDT), often posting incredible gains. They tell you specific times to buy and sell, and you execute in your crypto wallet or account. They may even tell you to open up your own account. However, they will require you to use a specific platform (or a specific wallet).
Why? Because they have control of your assets through that platform (or wallet).
You put money in “your” account, and execute the trades. Most will win, some may not. The account trading looks amazing. Many of these trading cons are run by real traders – but you won’t learn a thing about how or why they are trading.
Red Flags
Often you’ll see that the group “may be disbanded at any time.” The trading head will not be using a doxed name, and any website that is linked is fake – easily repeated garbage without a team, without news reports about the company itself, without information about the brokerage it’s affiliated with, etc.
Shills will be in the group. “Amazing! I can’t believe how easy it is to get money!” Deferential language is usually a giveaway. “Listen to sir.” This is not how normal people talk.
If you ask why you need to use the specific platform or account, they will lie and say the account you are using needs to be connected to their platform, or the trades won’t work on another platform, or some other type of nonsense.
My scammers
In my case, I pretended to be very new, and asked about the entire process of onboarding, and was walked through by the assistant to the trader, as everyone was. I was told to get a crypto wallet on any platform, such as Crypto.com or Coinbase, then connect it to leitcoin platform.
I told her I made a Crypto.com wallet, and she began to walk me through the leitcoin connection process.
Why, I asked. “I don’t really trade, but I think I don’t have to use your platform, do I?”
Her reply: “Crypto.com is a funding wallet and does not offer trading.”
1. That is not correct. Crypto.com (and Coinbase, and other centralized exchanges) offer trading.
2. I’ve written a book on DeFi. I’m very sure how trading functions, and that you do not need leitcoin platform (or another platform) to trade.
The scam
How does this con play out? Eventually you’ll want to take money out of your account, and you’ll find out that you can’t access your funds for 60-90 days, by which time your funds are long gone. You’re basically trading your funds for them the entire time. Every time you add more, you add to their account.
I’ve already submitted the one I screwed around with to the SEC, but hopefully you can see the structure of this con so you can avoid it in the future. I try to bring these types of scams to your attention so you can avoid them.
It’s the Economy, Stupid
The number one issue in this election season – globally – is the economy. In US politics, both sides are just selling half-assed plans full of buzz words and dog whistles, which help zero people. Personally, I’m an independent, which means I think generally both parties suck, but in different ways. I tend to vote by issue, not by party, and I fact check everything. (I did mention I’d tell you my bias, so you can judge the reasoning for yourself.)
Back to the actual discussion. We have two major forces on the US economy right now:
1. AI and automation reducing the need for jobs overall.
2. Supply chain pressure from:
Middle east uncertainty (oil and gas, which will increase the cost of producing everything, because oil and gas power our electricity plants, for the most part), and
Longshoremen strike (reduced supplies from the eastern and gulf ports, and the president has stated he won’t invoke Taft-Hartley to force the strike to break, which will increase the price of:
i. Computers
ii. Cell phones
iii. Most alcohol
iv. Machinery parts
v. Cars and car parts
vi. Oil
vii. Seafood
viii. Bananas
Why do markets do stuff?
What causes a sluggish market? When consumers don’t spend.
Why don’t consumers spend? Usually because:
a. They don’t want to spend (the benefit from saving or investing is known and incentivized – only open to the middle class, because lower classes have no money to save or invest), or
b. They can’t spend because they have no money. Given that employment is actually quite soft due to AI and automation, and household debt in the US has risen to $12.52 trillion and credit card debt has balances have risen to $1.14 trillion, while the volume of mortgages remain low – peak highs of debt and lows of new home ownership, consumers don’t have money.
What tools do we have to spur the economy?
Well, the Fed has a plan to reduce interest rates, our usual go-to strategy. In fact, they just reduced the rates a whopping 0.5% to help spur the economy. However, the interest rate reduction only helps if the reason employment is low is because companies aren’t hiring because the cost of money (capital) is so expensive. Reducing the interest rate means companies can borrow money a bit more cheaply, so the cost of getting money to hire people is not as expensive, and companies can hire more people.
Hiring more people means more people have salaries, and more money to spend, so they buy more, and the economy starts growing.
It’s gonna work right? RIGHT?!
BUT: cheaper money hasn’t meant more workers for quite some time. Neither have tax deductions for corporations. Giving companies greater access to funds usually means they can put money into more automation, more research and development, pay off any debt, and buy back more of their equity – but NONE of that puts money into the hands of consumers. In fact, some of that reduces their workforce, as Elon Musk did when he replaced most of the factory workers at Tesla with automation.
So what does this mean?
Supply chain pressure is going to increase the prices of goods, as will volatility and risk in the Middle East. But don’t look for relief from interest rate cuts, unless you don’t share the tapped out credit limits of many consumers. Remember that supply chain pressure is not the same as price gouging, but is trying to maintain a profit under rising costs.
If you want to look at the investment climate for this, remember that you can bet both for things going up (long bets) or against things going up/ for things going down in price (short bets). I tend to be a long term investor, meaning I invest in things I see going up over the long term, not against things over the short term.
But you can see how some markets will be impacted over the long and short term from this understanding of economics, can’t you?
Speaking of speaking….
1. The Pitch Space!
October 6 pitch space - Sunday October 6 at 11 am pacific. Same time every week. It’s free, and there’s nothing like it. Many people call it the most valuable space on social media.
Basics
Each pitch space starts with education for founders. This stuff is GREAT - don’t miss it!
Then we get into the pitches. The format is below, and you have to sign up in advance. I’ll link to sign up sheets once space opens up again - it goes FAST. Listen to the other pitches even if you can’t pitch – it improves your pitch!
You get feedback from real investors and VCs, and its practical. The focus is building relationships with investors and cofounders, and we talk about this a LOT. However, people have and will get funded.
Topic
The topic this week is: What to do when nothing is working. We discuss this before the pitching.
Pitch Format
Pitches need to cover these topics and these topics ONLY, in 60 seconds:
a. The Problem
b. The Solution
c. The Target Market
d. Your Competitive Advantage
e. Where you are in product development and funding
You are NOT asking for money. The point is to just let people know quickly what you are doing. We explain in the space.
REMINDER!
REMINDER: PITCH SPACES ARE LIMITED. Once you sign up, if you don’t make your pitch time, you won’t be able to reschedule for 6 weeks.
2. Market Signals. Economic, stock, and crypto
October 10 space at 11 am pacific
Breaking down market and economic signals:
- what they are
- how they work
- when they don't
Stock and crypto. It’s not just “look at the cup and handle! See the candlestick!” (facepalm). It’s a big topic, so we'll get started as quickly as possible!
3. Recorded: Teambuilding: How to build a great team.
The teambuilding discussion was last week, and a great, very useful space. The recording is linked. I’ll try to remember to put interesting discussions in here so you can find them if you weren’t able to make it.
Share!
Share this newsletter! Every time you share the newsletter to someone who signs up, you get a chance to WIN an hour of my time via zoom. That’s an $800 value! And I can help you a lot in an hour.
Drawings are once a month – more sign ups are more chances!
There’s even MORE stuff for more referrals:
For 25 referrals, I’ll walk you through a 3 minute pitch, which will become the basis of all your other pitches.
For 50 referrals, I’ll review your pitch deck with you and help you make that sucker sing - and let you know what you need your BUSINESS to do to make fundraising a snap.
Hope you enjoyed this issue!
