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Cryptos Are Challenging Traditional Monetary Policy, And The Economic Expansion Roars On

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Includes: AMZN, FB, JPM
by: Frank Holmes
Summary

Jamie Dimon once called bitcoin buyers stupid. Now JPMorgan is starting client trials of its own digital currency, the JPM Coin.

The current economic expansion has reached a record 121 months - June 2009 to July 2019.

Amazon turned 25 years old. Last month, it was announced that the Federal Trade Commission agreed to scrutinize Amazon and Facebook for antitrust violations.

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Economic conditions have improved in the cryptocurrency ecosystem, with bitcoin surging as high as $13,764 late last month. Meanwhile, Facebook's (FB) upcoming Libra coin is drawing fresh attention to digital currencies as a concept.

That includes attention from Congress. In a July 2 letter, lawmakers on the House Committee on Financial Services requested that Facebook and its partners halt development of Libra, as they fear the coin could lead “to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar.”

Agustín Carstens, head of the Bank of International Settlements (BIS), also weighed in on Facebook’s announcement, telling the Financial Times that “many central banks” were working on developing their own cryptocurrencies.

“It might be that it is sooner than we think that there is a market, and we need to be able to provide central bank digital currencies,” commented Carstens, a harsh critic of cryptocurrencies.

This is quite an admission. But if you recall, it wasn’t so long ago that JPMorgan (JPM) CEO Jamie Dimon was calling people who buy bitcoin “stupid.” Today, his bank is starting client trials of its very own digital currency, the JPM Coin.

Economic Expansion Hits 121 Months

Other notable milestones took place last week. For one, the current economic expansion reached a record 121 months. This is enough to beat the previous record holder, the period between March 1991 and March 2001. As I’ve said before, business cycles die not of old age but by the Federal Reserve. We’ll see if the Fed chooses to lower rates next week, though the better-than-expected June jobs report makes that look less likely.

After 25 Years, Has Amazon Become Too Large?

Also of note, Amazon (AMZN), another American success story, turned 25 years old. Jeff Bezos founded the book seller - now the world’s largest retailer, having surpassed Walmart (WMT) - amazingly at a time when very few people even had access to the internet. Less than half a percent of the world’s population was online in 1994, according to the World Bank.

A lot has changed since then, as you well know. Bezos’ nearly $1 trillion empire has completely redefined how we shop and consume media. It’s given us the Kindle, Prime, Alexa and much more. Today, it’s the eighth-largest grocer in the U.S., having bought Whole Foods in August 2017. It’s even started selling tiny modular homes, some of which go for as little as $5,000.

For many investors, Amazon has been life-changing. A $100 investment in the company’s initial public offering in 1997 would have been worth a whopping $120,762 in August 2018, when the stock hit an all-time high of $2,039.

But can the momentum continue? Like its digital peers Google (GOOGL) and Facebook, Amazon’s tremendous success may also be its greatest obstacle going forward. Calls to break up the online retailer are intensifying, with some antitrust authorities citing previous cases such as Standard Oil and AT&T (T). Last month, it was announced that the Federal Trade Commission agreed to scrutinize Amazon and Facebook for antitrust violations, while the Department of Justice (DOJ) took on Google and Apple.

“I think it is inevitable that they'll get broken up,” Stacy Mitchell, co-director of the advocacy group Institute for Local Self-Reliance (ILSR), told CNET. “You can't mask the kind of structural power that these companies have and maintain that power in a democracy.”

The company’s antitrust troubles aren’t confined to the U.S. Last Friday, the United Kingdom’s Competition and Markets Authority ordered Amazon to halt its acquisition of food delivery service Deliveroo.

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