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Overstock.com is one of the few companies in recent memory who understand the debt-based model and the risk associated with it. Long ago, they began accepting various types of currency for their products and diversified away from holding too many debt-based dollars. The CEO, Patrick Byrne, is a skeptic of the fiat-based model and harsh critic of the Federal Reserve. Overstock Chairman Jonathan Johnson is also a harsh critic of the bubble economy that pops time and time again. Johnson even speaks at the UPMA (United Precious Metals Association), which is located in Utah. The UPMA takes Federal Reserve notes and converts them into gold- and silver-backed accounts. Johnson told the UPMA that they foresaw the crisis of 2008 and that QE3, QE4, and QE(n) will cause another financial crisis. Here is the eye-opener from Johnson:

“One thing that we do that is fairly unique, we have about $10 million in gold, mostly the small button-sized coins, that we keep outside of the banking system. We expect that when there is a financial crisis there will be a banking holiday.”

He went on to say that the $10 million is in small denominations so that they can make payroll. Overstock also has 3 months of food for every employee when the system freezes up.

Bringing blockchain technology into Overstock’s repertoire is another way for CEO Patrick Byrne to hedge Wall Street’s naked derivatives positions. This will be interesting going forward, as cryptocurrency futures markets are being developed. Last week, Overstock announced that it would be changing its cryptocurrency investment strategy from holding 10% of the Bitcoin received to holding 50% of what it receives.

“I mean we can keep it in either Bitcoin or some sort of assortment of cryptocurrencies. So you’ll see a portfolio emerge there,” he said.

He also stated that the spike in the price led to an increase in Bitcoin spending, which is roughly $50,000 per week. In its second quarter earnings call, Overstock reported a $3.3 million loss before taxes on its Medici blockchain business. Patrick mentioned the loss as a necessity as they continue to develop its crypto trading platform.

 

I don’t know about you, but I respect the management team at Overstock, as they have complete coherence. This is harder and harder to find in our Keynesian debt model, with PhDs running the show. A major company that actually cares about its employees and their well-being is one that I will do business with. Overstock.com is overstocked with knowledge, Bitcoin, gold, silver, and food for the day when everyone else is understocked on tangible assets.

Cheers,

Colin

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