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Kudlow: Radical progressives will try to regulate digital currencies

'Kudlow' host gives his take on the performance of cryptocurrency and weighs in on digital currency regulations......»»

Category: topSource: foxnewsMay 13th, 2022

Republican senators want to ban Apple and Google from hosting apps that accept China"s digital yuan stablecoin

Marco Rubio and Tom Cotton are two sponsors of a bill that would bar Apple and Google from hosting apps that accept digital yuan as a form of payment. Marco Rubio is one of the sponsors of a bill that would ban app stores from hosting apps that accept China's digital yuan stablecoin.REUTERS/Mike Segar Republican senators have drafted a bill that would ban China's digital yuan from app stores. Apple and Google would be barred from hosting apps that accept digital yuan as a form of payment. Marco Rubio and Tom Cotton are two of the bill's sponsors. Three Republican senators have launched a bill that would ban Apple, Google, and other app store providers from hosting apps that accept China's digital yuan stablecoin as a form of payment.The bill, which is referred to as the Defending Americans from Authoritarian Digital Currencies Act, is sponsored by Florida senator and former presidential candidate Marco Rubio, Arkansas senator Tom Cotton, and Indiana senator Mike Braun.The digital yuan is a central bank digital currency (CBDC), meaning it's pegged to the Chinese renminbi and issued by the Chinese central bank. It's already used in at least 15 cities after being rolled out at the 2022 Beijing Winter Olympics.This isn't the first time American lawmakers have tried to regulate the digital yuan. In March, US senators Bill Cassidy and Marsha Blackburn proposed the Say No To Silk Road Act, which would require some government agencies to report on the CBDC.The three senators said the bill is necessary to prevent China surveilling Americans' financial activities."The Chinese Communist Party will use its digital currency to control and spy on anyone who uses it," Cotton, who is a proponent of a digital dollar, said. "The United States should reject China's attempt to undermine our economy at its most basic level."Read more: Cryptocurrencies, stablecoins and central-bank digital currencies are all the rage. We break down what they are and what you need to know about them"It makes no sense to tie ourselves to the digital currency of a genocidal regime that hates us and wants to replace us on the world stage," Rubio added. "This is a major financial and surveillance risk that the United States cannot afford to take."Read the original article on Business Insider.....»»

Category: topSource: businessinsider15 hr. 57 min. ago

Luna and Terra"s stablecoin UST are both crashing: Here"s a guide to tether, USD Coin, terra and other reserve-backed cryptocurrencies

Terra's algorithmic stablecoin UST appears to have entered a death spiral. Here's a guide to the largest stablecoins and the issues in the ecosystem. Tether, USD Coin, and Dai are the three largest stablecoins by market capitalization, according to the price-tracking website CoinMarketCap.Muhammed Akan/Shutterstock Stablecoins are cryptocurrencies whose value is pegged to a reserve asset like a fiat currency or gold. They're supposed to offer investors an accessible entry and exit point into the crypto market without the volatility. But Terra's UST has decoupled from its 1:1 dollar peg and plunged below $0.50 in what could be a "death spiral". Terra's algorithmic stablecoin is the biggest story in crypto right now.UST, which is supposed to be pegged to the dollar, has seen its price crater in recent days against a backdrop of significant volatility in the crypto market.On Saturday, UST started to lose its peg to the dollar and the ecosystem's governance token LUNA, which plays a role in maintaining the stability of UST, fell 15% in 24 hours.Having traded at around $80 on Friday, LUNA has since plunged 95% to $2.50. UST, which is supposed to trade at $1, is currently trading around $0.50, according to data from FTX.Stablecoins derive their value from being pegged to another asset, which is supposed to make them much less volatile than other cryptocurrencies like bitcoin and ethereum. Some stablecoins, like UST, use a combination of algorithms and reserves to maintain the peg.UST's plunge could potentially provide ammunition for stablecoin critics. Back in September, Securities and Exchange Commission chair Gary Gensler compared stablecoins to casino "poker chips".Insider has compiled a guide of our stories on the largest stablecoins, the key players in the market, and Terra's crash below.So, why is Terra's UST crashing?The algorithmic stablecoin UST uses a burning mechanism and a reserve of digital assets, such as bitcoin, to maintain its peg to the dollar.Some crypto investors love the concept of algorithmic stablecoins, because using an algorithm to maintain the peg keeps the asset outside the scope of regulators and governments. Others hate them, because it's a complex process to maintain the crypto asset's price stability.Read more: Algorithmic stablecoin UST has struggled to maintain its peg amid the crypto crash. We spoke to 6 crypto-investing heavyweights who are sounding the alarm on the project — and one who's making a bull case.Read more: TerraUSD stablecoin plunges to $0.30 as traders warn of 'death spiral' and investors await rescue planRead more: A crypto trading behemoth lays out how UST remains a 'material tail risk' that could continue to send prices falling through a 3-part self-destructive cycle — and 2 ways its positioning for further volatility ahead of a key market eventUST isn't the only stablecoin, right?Terra's UST is one of many publicly-listed stablecoins. The two largest by market capitalization are tether (USDT) and circle (USDC), which are allegedly backed by fiat reserves, although tether has faced significant scrutiny after an investigation found it had overstated its US dollar backing.Some stablecoins are backed by other fiat currencies, or by precious metals like gold and silver.Read more: Tether's tech chief shares his expectations for crypto regulation as Evergrande's debt crisis spotlights the quality of assets in stablecoins' reservesRead more: The Circle founder Jeremy Allaire explains why he thinks bitcoin will eventually surpass gold to hit $1 million — and charts his route to testifying before Congress last year as one of crypto's 'grown-ups'Read more: The founder of a gold-backed cryptocurrency breaks down why now is the perfect time for investors to buy stablecoins - and explains his prediction that inflation could become "even worse than the 1970s"What even is a stablecoin, and should I buy them?The stablecoin landscape can be confusing with new projects continually launching  and governments from all over the world making attempting to regulate the ecosystem.Investors currently have almost no protection if their stablecoin collapses, which is bad news for UST holders if it continues to plummet.Read more: A guide to the top 3 stablecoins by market capitalization, as the debate rages whether these tokens are the future of crypto or unregulated 'poker chips'Read more: Cryptocurrencies, stablecoins and central-bank digital currencies are all the rage. We break down what they are and what you need to know about themRead more: Crypto billionaire Michael Novogratz lays out the 'excesses in crypto that should be swatted down' — and joins Sam Bankman-Fried in sharing his vision for the future of stablecoin regulation as scrutiny intensifiesRead the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 11th, 2022

Terra"s stablecoin UST is crashing: Here"s a guide to tether, USD Coin, terra and other reserve-backed cryptocurrencies

Terra's algorithmic stablecoin UST appears to have entered a death spiral. Here's a guide to the largest stablecoins and the issues in the ecosystem. Tether, USD Coin, and Dai are the three largest stablecoins by market capitalization, according to the price-tracking website CoinMarketCap.Muhammed Akan/Shutterstock Stablecoins are cryptocurrencies whose value is pegged to a reserve asset like a fiat currency or gold. They're supposed to offer investors an accessible entry and exit point into the crypto market without the volatility. But Terra's UST has decoupled from its 1:1 dollar peg and plunged below $0.50 in what could be a "death spiral". Terra's algorithmic stablecoin is the biggest story in crypto right now.UST, which is supposed to be pegged to the dollar, has seen its price crater in recent days against a backdrop of significant volatility in the crypto market.On Saturday, UST started to lose its peg to the dollar and the ecosystem's governance token LUNA, which plays a role in maintaining the stability of UST, fell 15% in 24 hours.Having traded at around $80 on Friday, LUNA has since plunged 95% to $2.50. UST, which is supposed to trade at $1, is currently trading around $0.50, according to data from FTX.Stablecoins derive their value from being pegged to another asset, which is supposed to make them much less volatile than other cryptocurrencies like bitcoin and ethereum. Some stablecoins, like UST, use a combination of algorithms and reserves to maintain the peg.UST's plunge could potentially provide ammunition for stablecoin critics. Back in September, Securities and Exchange Commission chair Gary Gensler compared stablecoins to casino "poker chips".Insider has compiled a guide of our stories on the largest stablecoins, the key players in the market, and Terra's crash below.So, why is Terra's UST crashing?The algorithmic stablecoin UST uses a burning mechanism and a reserve of digital assets, such as bitcoin, to maintain its peg to the dollar.Some crypto investors love the concept of algorithmic stablecoins, because using an algorithm to maintain the peg keeps the asset outside the scope of regulators and governments. Others hate them, because it's a complex process to maintain the crypto asset's price stability.Read more: Algorithmic stablecoin UST has struggled to maintain its peg amid the crypto crash. We spoke to 6 crypto-investing heavyweights who are sounding the alarm on the project — and one who's making a bull case.Read more: TerraUSD stablecoin plunges to $0.30 as traders warn of 'death spiral' and investors await rescue planRead more: A crypto trading behemoth lays out how UST remains a 'material tail risk' that could continue to send prices falling through a 3-part self-destructive cycle — and 2 ways its positioning for further volatility ahead of a key market eventUST isn't the only stablecoin, right?Terra's UST is one of many publicly-listed stablecoins. The two largest by market capitalization are tether (USDT) and circle (USDC), which are allegedly backed by fiat reserves, although tether has faced significant scrutiny after an investigation found it had overstated its US dollar backing.Some stablecoins are backed by other fiat currencies, or by precious metals like gold and silver.Read more: Tether's tech chief shares his expectations for crypto regulation as Evergrande's debt crisis spotlights the quality of assets in stablecoins' reservesRead more: The Circle founder Jeremy Allaire explains why he thinks bitcoin will eventually surpass gold to hit $1 million — and charts his route to testifying before Congress last year as one of crypto's 'grown-ups'Read more: The founder of a gold-backed cryptocurrency breaks down why now is the perfect time for investors to buy stablecoins - and explains his prediction that inflation could become "even worse than the 1970s"What even is a stablecoin, and should I buy them?The stablecoin landscape can be confusing with new projects continually launching  and governments from all over the world making attempting to regulate the ecosystem.Investors currently have almost no protection if their stablecoin collapses, which is bad news for UST holders if it continues to plummet.Read more: A guide to the top 3 stablecoins by market capitalization, as the debate rages whether these tokens are the future of crypto or unregulated 'poker chips'Read more: Cryptocurrencies, stablecoins and central-bank digital currencies are all the rage. We break down what they are and what you need to know about themRead more: Crypto billionaire Michael Novogratz lays out the 'excesses in crypto that should be swatted down' — and joins Sam Bankman-Fried in sharing his vision for the future of stablecoin regulation as scrutiny intensifiesRead the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 11th, 2022

Who"s Afraid Of Elon Musk?

Who's Afraid Of Elon Musk? Authored by Stephen Moore via The Epoch Times, Not long ago, Elon Musk was regarded as a liberal superhero with a cape because of his support for green energy and electric cars. But now that he’s the new owner of Twitter with his estimated $40 billion to $50 billion acquisition, the left is as angry as hornets. Hundreds of employees are threatening to quit and many thousands say they are dropping their Twitter accounts. But why exactly? Here is what Mr. Musk said upon his successful Twitter takeover: “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated. … Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it.” Does that sound threatening to you? Who could object to more openness and free-wheeling debate on social platforms? The answer is the slice of America that has been captured by a radical agenda that refuses to tolerate anyone with contrary ideas or opinions. What’s especially disheartening is that some of the most vicious attacks against Musk’s mission of inclusion for Twitter come from the American Civil Liberties Union and Amnesty International. They even criticize him for being a “free speech absolutist.” Once upon a time in a far-off galaxy, these groups were vigilant guardians of free speech absolutism. Now, they are terrified that someone somewhere at sometime might engage in speech that offends them. Do they not understand that no one has a Constitutional right not to be offended by what someone else says or writes. I’m offended by half the things I hear and see on MSNBC and CNN. But I’d fight to defend their right to say what they do. The First Amendment is precisely FIRST in the Bill of Rights to protect every person’s right to express their opinion—even when it might be controversial or even wrong. How else are we going to have honest and thought-provoking debates ever again in America with this new muzzle policy? Some on the left worry that Donald Trump will soon be back on Twitter spouting off three or four times a day. If you don’t want to see that, delete his tweets from your platform. I have a right to talk; you have a right to not listen. I wish Mr. Musk the best of luck with his ambition to create an open and honest social media platform that advances civilized and informed conversation/debate. It’s frightening that the progressives on the left are so afraid of that. They claim that their goal is to shut down “hate speech.”  Just two weeks ago an Army veteran who put herself through college with her own hard work said on LinkedIn that rather than having a taxpayer bailout of student loan debt, everyone should feel honor-bound to pay their own student loans—as she did. This was labeled “hate speech” and was taken down. Perhaps what is happening here is that the left doesn’t want to engage in any debate because they know that they can’t win the argument if the other side is allowed to speak. Tyler Durden Thu, 04/28/2022 - 12:45.....»»

Category: dealsSource: nytApr 28th, 2022

Whither Bitcoin?

Whither Bitcoin? Authored by Eric Yakes via BitcoinMagazine.com, The world stands on the precipice of a monetary restructuring, with bitcoin seemingly the most likely to be adopted... albeit slowly. INTRODUCTION The world is reorganizing. People are attempting to comprehend the implications of recent events across a variety of dimensions: politically, geopolitically, economically, financially and socially. A feeling of uncertainty has eclipsed global affairs and individuals are developing an increased reliance on the thoughts of those bold enough to attempt comprehension. Experts are everywhere, but the expert is nowhere. I am not claiming to be an expert on anything, either. I read, write and do my best to piece together an understanding of vague and complex concepts. I’ve spent some time reading and thinking through various concepts and believe we are witnessing an inflection point of global trust. My goal is to explain the framework that led me to this conclusion. I’ll generally avoid discussing geopolitics and focus on the monetary and financial implications of this shift we are witnessing. The best place to start is understanding trust. THE WORLD RUNS ON TRUST We are witnessing a shift in global trust, setting the table for a new global monetary order. Consider Antal Fekete’s introduction from his seminal work Whither Gold?: “The year 1971 was a milestone in the history of money and credit. Previously, in the world's most developed countries, money (and hence credit) was tied to a positive value: the value of a well-defined quantity of a good of well-defined quality. In 1971 this tie was cut. Ever since, money has been tied not to positive but to negative values -- the value of debt instruments.” Debt instruments (credit) are built on trust — the most fundamental construct of organization. Organization allowed humanity to genetically eclipse its ancestors. Relationships, whether between individuals or groups, hinge on trust. Societies developed technologies and social structures to reduce the need for trust through reputations, security and money. Reputations reduce the need to trust because they represent an individual’s pattern of behavior: You trust some people more than others because of how they’ve acted in the past. Security reduces the need to trust that others will not hurt you in some form. You build a fence because you don’t trust your neighbors. You lock your car because you don’t trust your community. Your government has a military because it doesn’t trust other governments. Security is the price you pay to avoid the costs of vulnerability. Money reduces the need to trust that an individual will return a favor to you in the future. When you provide an individual a good or service, rather than trusting that they will return it to you in the future, they can immediately trade money to you, eliminating the need to trust. Stated differently, money reduces the need to trust that positive outcomes will happen while reputations and security reduces the need to trust that negative outcomes won’t happen. When money became entirely unanchored from gold in 1971, the value of money became a function of reputations and security, requiring trust. Before then, money was tied to the commodity gold, which maintained value through its well-defined quality and well-defined quantity and therefore didn’t require trust. Trust at a global level appears to be shifting across reputations and security, and thus credit money: Reputations — countries are trusting each other’s reputations less. The U.S. government’s reputation throughout recent history has been a global pillar of political stability and standard of financial and economic prudency. This is changing. The rise of U.S. populism has hindered its reputation as a politically stable country that allies depend on and rivals fear. Unprecedented economic and financial policy measures (e.g., bailouts, deficit spending, monetary inflation, debt issuance, etc.) are causing international powers to question the stability of the U.S. financial system. A hindrance to the reputation of the U.S. is a hindrance on the value of its money, to be discussed below. Security — countries are witnessing a contraction in global military order. The U.S. has been reducing its military presence and the world is shifting from a unipolar to a multipolar structure of order. The U.S.’ withdrawal of its military presence abroad has reduced its role as the monitor of international order and given rise to the military presence of rival nations. Reducing the assurance of its military presence internationally reduces the value of the dollar. Money — countries are losing trust in the international monetary order. Money has existed as either a commodity or credit (debt). Commodity money is not subject to trust through the reputations and security of governments while credit money is. Our modern system is entirely credit-based and the credit of the U.S. is the pillar upon which it exists. If the global reserve currency is based on credit, then the reputation and security of the U.S. is paramount to maintaining international monetary order. Trust in political and financial stability impacts the value of the dollar as does its holders’ demand for liquidity and stability. However, it’s not just U.S. credit money that is losing trust; it’s all credit money. As political and financial stability decline, we are witnessing a shift away from credit money entirely, incentivizing the adoption of commodity money. U.S. DEBT IS NOT RISK FREE Most recently, the reputation of U.S. credit has declined in an unprecedented way. Foreign governments historically trusted that the U.S. government’s debt is risk free. When financial sanctions froze Russia’s foreign exchange reserves, the U.S. undermined this risk-free reputation, as even reserves are now subject to confiscation. The ability to freeze the reserve assets of another country removed a foreign government’s right to either repay its debts or spend those assets. Now, international observers are realizing that these debts are not risk free. As the debt of the U.S. government is what backs its currency, this is a significant cause for concern. When the U.S. government issues debt, and demand from domestic and foreign buyers of it isn’t strong enough, the Federal Reserve prints money to purchase it in the open market and generate demand. Thus, the more U.S. debt countries are willing to buy, the stronger the U.S. dollar becomes — requiring less money printing by the Fed to indirectly enable government spending. Trust in the U.S. government’s credit has now been damaged, and thus so has the credit of the dollar. Further, trust in credit is declining in general, leaving commodity money as the more trustless option. First, I will examine this shift in the U.S. which applies specifically to its reputation and security, and then discuss the shifts in global credit (money). U.S. Dollar Dominance Will foreign governments attempt to de-dollarize? This question is complex as it not only requires an understanding of the global banking and payment systems but also maintains a geopolitical background. Countries around the world, both allies and rivals, have strong incentives to end global dollar hegemony. By utilizing the dollar a country is subject to the purview of the U.S. government and its financial institutions and infrastructure. To better understand this, let’s start by defining money: The above figure from my book shows the three functions of money as a store of value, medium of exchange and unit of account, as well as the supporting monetary properties of each below them. Each function plays a role in international financial markets: Store of Value — fulfilling this function drives reserve currency status. U.S. currency and debt is ~60% of global foreign reserves. A country will denominate its foreign exchange reserve assets in the most creditworthy assets — defined by their stability and liquidity. Medium of Exchange — this function is closely tied to being a unit of account. The dollar is the dominant invoicing currency in international trade and the euro is a close second, both of which fluctuate around ~40% of total. The dollar is also 64% of foreign currency debt issuance, meaning countries mostly denominate their debt in dollars. This creates demand for the dollar and is important. Since the U.S. issues more debt than domestic and foreign buyers are naturally willing to buy, they must print dollars to buy it in the market, which is inflationary (all else equal). The more foreign demand they can create for these newly printed dollars, the lower the inflationary impact from printing new dollars. This foreign demand becomes entrenched as countries denominate their contracts in the dollar, allowing the U.S. to monetize their debt. Unit of Account — Oil and other commodity contracts are often denominated in U.S. dollars (e.g., the petrodollar system). This creates artificial demand for the dollar, supporting its value while the U.S. government continually issues debt beyond amounts domestic and foreign buyers would be willing to purchase without the Fed creating demand for it. The petrodollar system was created by Nixon in response to a multi-year depreciation of the dollar after its fixed convertibility into gold was removed in 1971. In 1973, Nixon struck a deal with Saudi Arabia in which every barrel of oil purchased from the Saudis would be denominated in the U.S. dollar and in exchange, the U.S. would offer them military protection. By 1975, all OPEC nations agreed to price their own oil supplies in dollars in exchange for military protection. This system spurred artificial demand for the dollar and its value was now tied to demand for energy (oil). This effectively entrenched the U.S. dollar as a global unit of account, allowing it more leeway in its practices of money printing to generate demand for its debt. For example, you may not like that the U.S. is continually increasing its deficit spending (hindering its store of value function), but your trade contracts require you to use the dollar (supporting its medium of exchange and unit of account function), so you have to use dollars anyway. Put simply, if foreign governments won’t buy U.S. debt, then the U.S. government will print money to buy it from itself and contracts require foreign governments to use that newly printed money. In this sense, when the U.S. government’s creditworthiness (reputation) falls short, its military capabilities (security) pick up the slack. The U.S. trades military protection for increased foreign dollar demand, enabling it to continuously run a deficit. Let’s summarize. Since its establishment, the dollar has served the functions of money best at an international level because it can be easily traded in global markets (i.e., it’s liquid), and contracts are denominated in it (e.g., trade and debt contracts). As U.S. capital markets are the broadest, most liquid and maintain a track record of secure property rights (i.e., strong reputation), it makes sense that countries would utilize it because there is a relatively lower risk of significant upheaval in U.S. capital markets. Contrast this idea with the Chinese renminbi which has struggled to gain dominance as a global store of value, medium of exchange and unit of account due to the political uncertainty of its government (i.e., poor reputation) which maintains capital controls on foreign exchange markets and frequently intervenes to manipulate its price. U.S. foreign intervention is rare. Further, having a strong military presence enforces dollar demand for commodity trade per agreements with foreign countries. Countries that denominate contracts in dollars would need to be comfortable trading away military security from the U.S. to buck this trend. With belligerent Eastern leaders increasing their expanse, this security need is considerable. Let’s look at how the functions of money are enabled by a country’s reputation and security: Reputation: primarily enables the store of value function of its currency. Specifically, countries that maintain political and economic stability, and relatively free capital markets, develop a reputation for safety that backs their currency. This safety can also be thought of as creditworthiness. Security: primarily enables the medium of exchange and unit of account functions of its currency. Widespread contract denomination and deep liquidity of a currency entrench its demand in global markets. Military power is what entrenches this demand in the first place. If the reputation of the U.S. declines and its military power withdraws, demand for its currency decreases as well. With the shifts in these two variables in front of mind, let’s consider how demand for the dollar could be affected. OVERVIEW OF THE GLOBAL MONETARY SYSTEM Global liquidity and contract denomination can be measured by analyzing foreign reserves, foreign debt issuance, and foreign transactions/volume. Dollar foreign exchange reserves gradually declined from 71% to 60% since the year 2000. Three percent of the decline is accounted for in the euro, 2% from the pound, 2% from the renminbi and the remaining 4% from other currencies. More than half of the 11 percentage point decline has come from China and other economies (e.g., Australian dollars, Canadian dollars, Swiss francs, et al.). While the U.S. dollar decline in dominance is material, it obviously remains dominant. The primary takeaway is that most of the decline in dollar dominance is being captured by smaller currencies, indicating that global reserves are gradually becoming more dispersed. Note that this data should be interpreted with caution as the fall in dollar dominance since 2016 occurred when previous non-reporting countries (e.g., China) began gradually revealing their FX reserves to the IMF. Further, governments don’t have to be honest about the numbers they report — the politically sensitive nature of this information makes it ripe for manipulation. Source: IMF Foreign debt issuance in USD (other countries borrowing in contracts denominated in dollars) has also gradually declined by ~9% since 2000, while the euro has gained ~10%. Debt issuance of the remaining economies was relatively flat over this period so most of the change in dollar debt issued can be attributed to the euro. Source: Federal Reserve The currency composition of foreign transactions is interesting. Historically, globalization has increased the demand for cross-border payments primarily due to: Manufacturers expanding supply chains across borders. Cross-border asset management. International trade. International remittances (e.g., migrants sending money home). This poses a problem for smaller economies: the more intermediaries that are involved in cross-border transactions, the slower and more expensive these payments become. High-volume currencies, such as the dollar, have a shorter chain of intermediaries while lower-volume currencies (e.g., emerging markets) have a longer chain of intermediaries. This is important because it is these emerging markets that stand to lose the most from international payments and for this reason alternative systems are attractive to them. Source: Bank of England If we look at the trend in composition of foreign payments it’s evident that the dollar's share of invoicing is materially greater than its share of exports, illuminating its outsized role of invoicing in proportion to trade. The euro has been competing with the dollar in terms of invoicing share, but this is driven by its usage for export trade among EU countries. For the rest of the world, export share has been, on average, greater than 50% while invoicing share has remained less than 20% on average. Source: Journal of International Economics Lastly, let’s discuss the volume of trade. A currency with high volume of trade means that it is relatively more liquid and thus, more attractive as a trade vehicle. The chart below shows the proportions of volume traded by currency. The dollar has remained dominant and constant since 2000, expressing its desirability as a liquid global currency. What’s important is that the volume of all major global reserve currencies have declined slightly while the volume of “other” smaller world currencies has increased from 15% to 22% in proportion. Source: BIS Triennial Survey; (Note: typically these numbers are shown on a 200% scale — e.g., for 2019 USD would be 88.4% out of 200% — because there are two legs to every foreign exchange trade. I’ve condensed this to a 100% scale for ease of interpretation of the proportions). The dollar is dominant across every metric, although it has been gradually declining. Most notably, economies that are not major world reserves are: Gaining dominance as reserves and thus world FX reserves are becoming more dispersed. Utilizing the dollar for foreign transactions in significantly greater proportions than their exports and limited by a long chain of intermediaries when attempting to use their domestic currencies. Hurt the most by long chains of global intermediaries for their transactions and thus stand to gain the most from alternative systems. Increasing their share of foreign exchange volume (liquidity) while all the major reserve currencies are declining. There exists a trend whereby the smaller and less dominant currencies of the world are expanding but are still limited by dollar dominance. Pair this trend with the global political fragmentation occurring and their continued expansion becomes more plausible. As the U.S. withdraws its military power globally, which backs the dollar’s functions as a medium of exchange and unit of account, it decreases demand for its currency to serve these functions. Further, the dollar’s creditworthiness has declined since implementing the Russian sanctions. The trends of declining U.S. military presence and creditworthiness, as well as increased global fragmentation, indicate that the global monetary regime could experience drastic change in the near term. THE GLOBAL MONETARY SYSTEM IS SHIFTING Russia invaded Ukraine on Feb. 24, 2022, and the U.S. subsequently implemented a swath of economic and financial sanctions. I believe history will look back on this event as the initial catalyst of change towards a new era of global monetary order. Three global realizations subsequently occurred: Realization #1: Economic sanctions placed on Russia signaled to the world that US sovereign assets are not risk free. U.S. control over the global monetary system subjects all participating nations to the authority of the U.S. Effectively, ~$300 billion of Russia’s ~$640 billion in foreign exchange reserves were “frozen” (no longer spendable) and it was partially banned (energy still allowed) from the SWIFT international payments system. However, Russia had been de-dollarizing and building up alternative reserves as protection from sanctions throughout previous years. Now Russia is looking for alternatives, China being the obvious partner, but India, Brazil and Argentina are also discussing cooperation. Economic sanctions of this magnitude by the West are unprecedented. This has signaled to countries around the world the risk they run through dependence on the dollar. This doesn’t mean that these countries will begin cooperating as they are all subject to constraints under an international spiderweb of trade and financial relationships. For example, Marko Papic explains in “Geopolitical Alpha” how China is heavily constrained by the satisfaction of its growing middle class (the majority of its population) and fearful that they could fall into the middle-income trap (GDP per capita stalling within the $1,000-12,000 range). Their debt cycle has peaked and economically they are in a vulnerable position. Chinese leaders understand that the middle-income trap has historically brought the death of communist regimes. This is where the U.S. has leverage over China. Economic and financial sanctions targeting this demographic can prevent growth in productivity and that is what China is most afraid of. Just because China wants to partner with Russia and achieve “world domination” does not mean that they will do so since they are subject to constraints. The most important aspect of this realization is that U.S. dollar assets are not risk free: they maintain a risk of appropriation by the U.S. government. Countries with plans to act out of accordance with U.S. interests will likely start de-dollarizing before doing so. However, as much as countries would prefer to opt out of this dollar dependency, they are constrained in doing so as well. Realization #2: It’s not just the U.S. that has economic power over reserves, it’s fiat reserve nations in general. Owning fiat currencies and assets in reserves creates uncertain political risks, increasing the desirability of commodities as reserve assets. Let’s talk about commodity money vs. debt (fiat) money. In his recent paper, Zoltan Pozsar describes how the death of the dollar system has arrived. Russia is a major global commodity exporter and the sanctions have bifurcated the value of their commodities. Similar to subprime mortgages in the 2008 financial crisis, Russian commodities have become “subprime” commodities. They’ve subsequently declined materially in value as much of the world is no longer buying them. Non-Russian commodities are increasing in value as anti-Russia countries are now all purchasing them while the global supply has shrunk materially. This has created volatility in commodity markets, markets that have been (apparently) neglected by financial system risk monitors. Commodity traders often borrow money from exchanges to place their trades, with the underlying commodities as collateral. If the price of the underlying commodity moves too much in the wrong direction, the exchanges tell them that they need to pay more collateral to back their borrowed money (trader get margin-called). Now, traders take both sides in these markets (they bet the price will go up or that it will go down) and therefore, regardless of which direction the price moves, somebody is getting margin-called. This means that as price volatility is introduced to the system, traders need to pay more money to the exchange as collateral. What if the traders don’t have more money to give as collateral? Then the exchange has to cover it. What if the exchanges can’t cover it? Then we have a major credit contraction in the commodity markets on our hands as people start pulling money out of the system. This could lead to large bankruptcies within a core segment of the global financial system. In the fiat world, credit contractions are always backstopped — such as the Fed printing money to bail out the financial system in 2008. What is unique to this situation is that the “subprime” collateral of Russian commodities is what Western central banks would need to step in and buy — but they can’t because their governments are the ones who prevented buying it in the first place. So, who is going to buy it? China. China could print money and effectively bail out the Russian commodity market. If so, China would strengthen its balance sheet with commodities which would strengthen its monetary position as a store of value, all else equal. The Chinese renminbi (also called the “yuan”) would also begin spreading more widely as a global medium of exchange as countries that want to participate in this discounted commodity trade utilize the yuan in doing so. People are referring to this as the growth of the “petroyuan” or “euroyuan” (like the petrodollar and eurodollar, just the yuan). China is also in discussions with Saudi Arabia to denominate oil sales in the yuan. As China is the largest importer of Saudi oil, it makes sense that the Saudis would consider denominating trade in its currency. Further, the lack of U.S. military support for the Saudis in Yemen is all the more reason to switch to dollar alternatives. However, the more the Saudis denominate oil in contracts other than the dollar, the more they risk losing U.S. military protection and would likely become subject to the military influence of China. If the yuan spreads wide enough, it could grow as a unit of account, as trade contracts become denominated in it. This structure of incentives implies two expectations: Alternatives to the U.S. global monetary system will strengthen. Demand for commodity money will strengthen relative to debt-based fiat money. However, the renminbi is only 2.4% of global reserves and has a long way to go towards international monetary dominance. Countries are much less comfortable utilizing the yuan over the dollar for trade due to its political uncertainty risks, control over the capital account and the risk of dependence on Chinese military security. A common expectation is that either the West or the East is going to be dominant once the dust settles. What’s more likely is that the system will continue splitting and we’ll have multiple monetary systems emerge around the globe as countries attempt to de-dollarize — referred to as a multipolar system. Multipolarity will be driven by political and economic self-interest among countries and the removal of trust from the system. The point about trust is key. As countries trust fiat money less, they will choose commodity-based money that requires less trust in an institution to measure its risk. Whether or not China becomes the buyer of last resort for Russian commodities, global leaders are realizing the value of commodities as reserve assets. Commodities are real and credit is trust. Bitcoin is commodity-like money, the scarcest in the world that resides on trustless and disintermediated payment infrastructure. Prior to the invasion of Ukraine, Russia had restricted crypto assets within its economy. Since then, Russia’s position has changed drastically. In 2020, Russia gave crypto assets legal status but banned their use for payments. As recently as January 2022, Russia’s central bank proposed banning the use and mining of crypto assets, citing threats to financial stability and monetary sovereignty. This was in contrast to Russia’s ministry of finance, which had proposed regulating it rather than outright banning it. By February, Russia chose to regulate crypto assets, due to the fear that it would emerge as a black market regardless. By March, a Russian government official announced it would consider accepting bitcoin for energy exports. Russia’s change of heart can be attributed to the desire for commodity money as well as the disintermediated payment infrastructure that Bitcoin can be transferred upon — leading to the third realization. Realization #3: Crypto asset infrastructure is more efficient than traditional financial infrastructure. Because it is disintermediated, it offers a method of possession and transfer of assets that is simply not possible with intermediated traditional financial infrastructure. Donations in support of Ukraine via crypto assets (amounting to nearly $100 million as of this writing) demonstrated to the world the rapidness and efficiency of transferring value via just an internet connection, without relying on financial institutions. It further demonstrated the ability to maintain possession of assets without reliance on financial institutions. These are critical features to have as a war refugee. Emerging economies are paying attention as this is particularly valuable to them. Bitcoin has been used to donate roughly $30 million to Ukraine since the start of the war. Subsequently, a Russian official stated that it will consider accepting bitcoin, which I believe is because they are aware that bitcoin is the only digital asset that can be used in a purely trustless manner. Bitcoin’s role on both sides of the conflict demonstrated that it is apolitical while the freezing of fiat reserves demonstrated that their value is highly political. Let’s tie this all together. Right now, countries are rethinking the type of money they are using and the payment systems they are transferring it on. They will become more avoidant of fiat money (credit), as it is easily frozen, and they are realizing the disintermediated nature of digital payment infrastructure. Consider these motivations alongside the trend of an increasingly fragmented system of global currencies. We’re witnessing a shift towards commodity money among a more fragmented system of currencies moving across disintermediated payment infrastructure. Emerging economies, particularly those removed from global politics, are postured as the first movers towards this shift. While I don’t expect that the dollar will lose primacy anytime soon, its creditworthiness and military backing is being called into question. Consequently, the growth and fragmentation of non-dollar reserves and denominations opens the market of foreign exchange to consider alternatives. For their reserves, countries will trust fiat less and commodities more. There is a shift emerging towards trustless money and desire for trustless payment systems. ALTERNATIVES TO THE GLOBAL MONETARY SYSTEM We are witnessing a decline in global trust with the realization that the age of digital money is upon us. Understand that I am referring to incremental adoption of digital money and not full-scale dominance — incremental adoption will likely be the path of least resistance. I expect countries to increasingly adopt trustless commodity assets on disintermediated payment infrastructure, which is what Bitcoin provides. The primary limiting factor to this adoption of bitcoin will be its stability and liquidity. As bitcoin matures into adolescence, I expect this growth to increase rapidly. Countries that want a digital store of value will prefer bitcoin for its sound monetary properties. The countries most interested and least restrained in adopting digital assets will be among the fragmented developing world as they stand to gain the most for the least amount of political cost. While these incremental shifts will be occurring in tandem, I expect the first major shift will be towards commodity reserves. Official reserve managers prioritize safety, liquidity and yield when choosing their reserve assets. Gold is valuable in these respects and will play a dominant role. However, bitcoin’s trustless nature will not be overlooked, and countries will consider it as a reserve despite its tradeoffs with gold, to be discussed below. Let’s walk through what bitcoin adoption could look like: Source: World Gold Council; Advanced reserve economies includes the BIS, BOE, BOJ, ECB (and its national member banks), Federal Reserve, IMF and SNB. Since 2000, gold as a percentage of total reserves has been declining for advanced economies and growing for China, Russia and the other smaller economies. So, the trend towards commodity reserves is already in place. Over this same period gold reserves have fluctuated between nine and 14% of total reserves. Today, total reserves (both gold and FX reserves) amount to $16 trillion, 13% of which ($2.2 trillion) is gold reserves. We can see in the below chart that gold as a percentage of reserves has been rising since 2015, the same year the U.S. froze Iran’s reserves (this was ~$2 billion, a much smaller amount than the Russia sanctions). Source: World Gold Council. Reserves have been growing rapidly in China, Russia and smaller economies as a whole. The chart below shows that non-advanced economies have increased their total reserves by 9.4x and gold reserves by 10x, while advanced economies have increased total reserves by only 4x. China, Russia and the smaller economies command $12.5 trillion in total reserves and $700 billion of those are in gold. Source: World Gold Council. The growth and size of smaller economy reserves is important when considering bitcoin adoption among them as a reserve asset. Smaller countries will ideally want an asset that is liquid, stable, grows in value, disintermediated and trustless. The below illustrative comparison stack ranks broad reserve asset categories by these qualities on a scale of 1-5 (obviously, this is not a science but an illustrative visualization to facilitate discussion): Countries adopt different reserve assets for different reasons, which is why they diversify their holdings. This assessment focuses on the interests of emerging economies for bitcoin adoption considerations. Bitcoin is liquid, although not nearly as liquid as fiat assets and gold. Bitcoin isn’t stable. Standard reserve assets, including gold, are much more stable. Bitcoin will likely offer a much higher capital appreciation than fiat assets and gold over the long run. Bitcoin is the most disintermediated as it has a truly trustless network — this is its primary value proposition. Storing bitcoin doesn’t require trusted intermediaries and thus can be stored without the risk of appropriation — a risk for fiat assets. This point is important because gold does not maintain this quality as it is expensive to move, store and verify. Thus, bitcoin’s primary advantage over gold is its disintermediated infrastructure which allows for trustless movement and storage. With these considerations in mind, I believe the smaller emerging economies that are largely removed from political influence will spearhead the adoption of bitcoin as a reserve asset gradually. The world is growing increasingly multipolar. As the U.S. withdraws its international security and fiat continues to lose creditworthiness, emerging economies will be considering bitcoin adoption. While the reputation of the U.S. is in decline, China’s reputation is far worse. This line of reasoning will make bitcoin attractive. Its primary value-add will be its disintermediated infrastructure which enables trustless payments and storage. As bitcoin continues to mature, its attractiveness will continue to increase. If you think the sovereign fear of limiting its domestic monetary control is a strong incentive to prevent bitcoin adoption, consider what happened in Russia. If you think countries won’t adopt bitcoin for fear of losing monetary control, consider what happened in Russia. While Russia’s central bank wanted to ban bitcoin, the finance ministry opted to regulate it. After Russia was sanctioned, it has been considering accepting bitcoin for energy exports. I think Russia’s behavior shows that even totalitarian regimes will allow bitcoin adoption for the sake of international sovereignty. Countries that demand less control over their economies will be even more willing to accept this tradeoff. There are many reasons that countries would want to prevent bitcoin adoption, but on net the positive incentives of its adoption are strong enough to outweigh the negative. Let’s apply this to the shifts in global reputations and security: Reputations: political and economic stability is becoming increasingly riskier for fiat, credit-based assets. Bitcoin is a safe haven from these risks, as it is fundamentally apolitical. Bitcoin’s reputation is one of high stability, due to its immutability, which is insulated from global politics. No matter what happens, Bitcoin will keep producing blocks and its supply schedule remains the same. Bitcoin is a commodity that requires no trust in the credit of an institution. Security: because Bitcoin cannot trade military support for its usage, it will likely be hindered as a global medium of exchange for some time. Its lack of price stability further limits this form of adoption. Networks such as the Lightning Network enable transactions in fiat assets, like the dollar, over Bitcoin’s network. Although the Lightning Network is still in its infancy, I anticipate this will draw increased demand to Bitcoin as a settlement network — increasing the store of value function of its native currency. It’s important to understand that fiat assets will be used as a medium of exchange for some time due to their stability and liquidity, but the payment infrastructure of bitcoin can bridge the gap in this adoption. Hopefully, as more countries adopt the Bitcoin standard the need for military security will decline. Until then, a multipolar world of fiat assets will be utilized in exchange for military security, with a preference for disintermediated payment infrastructure. CONCLUSION Trust is diminishing among global reputations as countries implement economic and geopolitical warfare, causing a reduction in globalization and shift towards a multipolar monetary system. U.S. military withdrawal and economic sanctions have illuminated the lack of security within credit-based fiat money, which incentivizes a shift towards commodity money. Moreover, economic sanctions are forcing some countries, and signaling to others, that alternative financial infrastructure to the U.S. dollar system is necessary. These shifts in the global zeitgeist are demonstrating to the world the value of commodity money on a disintermediated settlement network. Bitcoin is postured as the primary reserve asset for adoption in this category. I expect bitcoin to benefit in a material way from this global contraction in trust. However, there are strong limitations to full-scale adoption of such a system. The dollar isn’t going away anytime soon, and significant growth and infrastructure is required for emerging economies to utilize bitcoin at scale. Adoption will be gradual, and that is a good thing. Growth in fiat assets over Bitcoin settlement infrastructure will benefit bitcoin. Enabling a permissionless money with the strongest monetary properties will spawn an era of personal freedom and wealth creation for individuals, instead of the incumbent institutions. Despite the state of the world, I’m excited for the future. Whither Bitcoin? Tyler Durden Fri, 04/15/2022 - 13:00.....»»

Category: dealsSource: nytApr 15th, 2022

Countdown To US Government Default

Countdown To US Government Default Authored by MN Gordon via EconomicPrism.com, Central Bank Digital Currencies (CBDC) are coming.  And they’re coming much faster than most people care to think about.  Are you ready? At the moment, roughly 90 central banks – including the European Central Banks and the Federal Reserve – are either experimenting with, or are in varying stages of CBDC implementation.  Moreover, these CBDC friendly central banks include all G20 economies.  And together, represent more than 90 percent of global GDP. What’s important to understand is the adoption of a CBDC in your country of residence would accompany the abolition of cash.  This would be for your own good, of course.  To eliminate nefarious transactions and black markets. If you value financial privacy and the liberty to spend your money as you please, then the rapidly approaching rollout of CBDCs is a major red flag.  Compulsory use of a CBDC, like a digital dollar for example, would give central planners complete oversight and control over your finances. You see, under a CBDC regime – free of cash – all of your transactions would be subject to government surveillance.  All remnants of financial freedom, privacy, and anonymity would be destroyed.  But that’s not all… CBDCs would allow control freak, power mad central planners to do much more than spy and surveil your financial transactions.  CBDCs would allow them to control how and when you spend your money. This may sound crazy to a sane person, who operates with a modicum of modesty and integrity.  But, in truth, this is one of the main intents of CBDCs.  In fact, several years ago Bank for International Settlements General Manager Agustin Carstens outlined the extraordinary powers CBDCs would afford central planners.  Here are the particulars from Carstens himself: “There is a huge difference [between CBDC and cash].  For example, with cash we don’t know who’s using a 100 dollar bill today.  We don’t know who’s using a 1,000 peso bill today.  A key difference with the CBDC is the central bank will have absolute control under rules and regulations that will determine the use of that expression of central bank liability, and we will have the technology to enforce that.” Do you get it?  The central planners want absolute control over how you spend your money.  This includes the U.S. government too… Traceable And Programmable On March 9, the Biden administration released an executive order (EO) requiring several federal agencies to study digital currencies and to identify ways to regulate them.  A big part of the EO is focused on blockchain based cryptocurrencies like bitcoin and ethereum. However, within the EO, Biden also directs the federal government and Federal Reserve to lay the foundation for a potential new U.S. currency, a CBDC – perhaps, a digital dollar. Specifically, the EO directs the U.S. Treasury, and other federal agencies, to study the development of the new CBDC and report back within 180 days of the potential risks and benefits of a digital dollar.  The EO also directs the Treasury Department, Office of the Attorney General and Federal Reserve to produce a ‘legislative proposal’ to create a digital currency within 210 days, about seven months. The digital dollar is coming, and it’s coming quick. To be clear, the adoption of a digital dollar by the U.S. government, as Biden intends, would be one of the greatest expansions of federal power ever made.  The digital dollar would be much different than a digital version of the existing U.S. dollar.  It would also be much different than cryptocurrencies like bitcoin and ethereum, which are decentralized. Digital dollars would be traceable and programmable. The Federal Reserve, or some other government agency, would have the ability to create digital dollars at whim.  Moreover, the digital dollars could be programmed to have various rules and restrictions governing how and when they are spent. Earlier this year, in Federal Reserve published report about the development of a CBDC, the Fed provided examples of possible ‘design choices’ for a digital dollar, including that “a central bank might limit the amount of CBDC an end user could hold.” Biden’s EO plan for a digital dollar also includes design choices that will give the federal government total control over financial freedom and the economy.  The EO even states the CBDC and other policies governing digital assets must mitigate “climate change and pollution” and promote “financial inclusion and equity.”  This is a major focus. From this, we can speculate that financial inclusion and equity means wealth redistribution.  And climate change mitigation means restrictions to fossil-fuel use.  These, and other government dictates, like the direct subtraction of taxes and fees from your account, would be programmed into the digital dollar. Why now… Blowback U.S. and European Union sanctions against Russia, including cutting Russian financial institutions off from SWIFT and preventing the Russian Central Banks from using its foreign currency reserves, may prove to be a strategic blunder.  The blowback potential is real, and is already happening. Europe, which depends on Russia for 40 percent of its natural gas, is now reaping the whirlwind.  According to Bloomberg, Putin has signed a decree demanding payment in rubles for Russian gas supplies starting April 1 (today).  Will Europe submit? There are rumors European nations are already covertly buying rubles.  The ruble’s increase on the foreign exchange market to pre-invasion levels certainly hints something is in the works. Regardless, the U.S. is losing control over the international financial and payment system.  By freezing Russia out SWIFT, Putin is being forced to look for other alternatives.  Specifically, China has been developing its own Cross-Border Interbank Payment System (CIPS) as an alternative to SWIFT. Sanctions against Russia may further accelerate the use and adoption of CIPS by nations that are opposed to western influence.  Cryptocurrencies and blockchain technology also offer banks and individuals ways to move payments without using dollars or SWIFT. The very success of the weaponization of the legacy financial system by the U.S. and Europe is driving Russia and others into such alternatives.  Hence, fewer international transactions in dollars could undermine the dollar’s reserve currency status.  This would have serious implications for the U.S. economy, as the dollar would likely suffer a significant devaluation. In the U.S. consumer price inflation (official) is already at a 40 year high.  Unofficially, it’s higher than it has been in over 100 years. Between the financial war being waged, raging consumer price inflation, a $30 trillion national debt, trillion dollar deficits, and unfunded liabilities running into the hundreds of trillions, something’s got to give… …namely, the U.S. dollar. Countdown to U.S. Government Default The popular American myth is that the U.S. government has never defaulted on its debt.  Quite frankly, that’s unadulterated hogwash.  The U.S. government has (unofficially) defaulted on its debt twice within the last hundred years. Executive Order 6102 of 1933, which forced all American citizens to turn in gold coins and bars, was, in fact, a default.  Gold ownership in the United States, with some small limitations, was illegal for the next 40 years. Under EO 6102, Americans were compensated $20.67 per troy ounce of gold.  They were paid with paper dollars.  Immediately following the government’s gold confiscation, the price of gold was raised by the Gold Reserve Act of 1934 to $35 per ounce.  Just like that, American citizens were robbed of over 40 percent of their wealth. The second default occurred in 1971, when President Nixon “temporarily” suspended the convertibility of the dollar into gold. Prior to 1971, as determined by the Bretton Woods international monetary system, which was agreed to in Bretton Woods, New Hampshire, in July 1944, a foreign bank could exchange $35 with the U.S. Treasury for one troy ounce of gold.  After the U.S. reneged on this established exchange rate, when foreign banks handed the U.S. Treasury $35, they received $35 in exchange. In both instances, the U.S. government didn’t overtly default on the debt.  Instead, it changed the fundamentals – the terms and conditions – of the dollar.  By all honest accounts, these are defaults. Similarly, the issuance of a digital dollar (a Fed issued CBDC), which is traceable and programmable, changes the terms and conditions of the cash dollar. Make no mistake.  This is a default…and you won’t like it. Moreover, per Biden’s EO, this default could happen as soon as T-minus 210 days from March 9 – or as soon as October 4th. If that doesn’t give you a warm and fuzzy, we don’t know what will. *  *  * The window to protect your wealth and financial privacy is closing.  And it’s closing quick.  I don’t like it one bit.  But I’m not going to stand around powerless as Washington’s control freak sociopaths destroy everything I’ve worked so hard for.  For this reason, I’ve dedicated the past 6-months to researching and identifying simple, practical steps everyday Americans can take to protect their wealth and financial privacy.  The findings of my work are documented in the Financial First Aid Kit.  If you’d like to find out more about this important and unique publication, and how to acquire a copy, stop by here today!] Tyler Durden Sun, 04/03/2022 - 18:30.....»»

Category: smallbizSource: nytApr 3rd, 2022

10 Cryptocurrencies To Buy and Hold for the Next 10 Years

In this article, we will discuss 10 cryptocurrencies to buy and hold for the next 10 years. If you want to skip reading about how blockchain technology is set to revolutionize the digital world, and how cryptocurrencies are gaining popularity and acceptance, you can go directly to 5 Cryptocurrencies To Buy and Hold for the […] In this article, we will discuss 10 cryptocurrencies to buy and hold for the next 10 years. If you want to skip reading about how blockchain technology is set to revolutionize the digital world, and how cryptocurrencies are gaining popularity and acceptance, you can go directly to 5 Cryptocurrencies To Buy and Hold for the Next 10 Years. Blockchain is The Future The world is headed towards a digital transformation, with the metaverse, NFTs, and cryptocurrencies being all that is talked about. At the very center of these future technologies is blockchain. According to the Blockchain Technology Market Report 2022, the global blockchain market was valued at $4.93 billion in 2021 and is projected to reach $1.43 trillion by 2030, registering a CAGR of 85.9%. This is primarily because blockchain technology is the backbone of cryptocurrencies like Ethereum and Bitcoin, and the demand for these currencies has been sky-rocketing ever since they started gaining global recognition and acceptance. The Rising Popularity of Cryptocurrency Data provided by TripleA shows that as of 2021, global crypto ownership rates averaged at 3.9%, with more than 300 million people around the world having some stake in cryptocurrencies. More than 18,000 businesses have added cryptocurrencies to their payment options. According to the Cryptocurrency Market Forecast 2022, the global cryptocurrency market was worth $1.78 trillion in 2021. The market is projected to reach $32.42 trillion by 2027, registering a compound annual growth rate of 58.4% over the forecasted period. Crypto Gaining Acceptance Governments around the world have started working on the regulation of these digital tokens. Last September, El Salvador adopted Bitcoin as legal tender and became the first country to accept cryptocurrency in exchange for everyday goods and services. On March 9, 2022, the Biden administration issued orders to regulate the trade of cryptocurrencies, as the number of crypto-users in the U.S. exceeded 16% of the country’s adult populace. Other countries that are moving towards legalizing digital currencies and working on laws to monitor them include Japan, Switzerland, the European Union, and Australia. Financial companies like Visa Inc. (NYSE:V), PayPal Holdings, Inc. (NASDAQ:PYPL), Mastercard Incorporated (NYSE:MA), and JPMorgan Chase & Co. (NYSE:JPM) are expanding their portfolio by incorporating blockchain technology and bringing transparency to crypto-trade. Source: PixaBay Our Methodology To determine 10 cryptocurrencies to buy and hold for the next 10 years, we identified projects that were rising in popularity. We then did extensive research to understand the project’s underlying technology, the problem it is designed to solve, and what is its target industry. We also looked at value and performance metrics for each currency. We believe the market capitalization of a currency is a key indicator of its current value, and the projects that the currency is working on, and its target industry can hint towards its utility and sustainability in the future. Cryptocurrencies To Buy and Hold for the Next 10 Years 10. The Sandbox The Sandbox was developed in 2011 by Pixowl as a mobile game rival to Minecraft. The game proved to be a success back in the day. In 2018, the founders of Pixowl decided to deploy the game on a blockchain that would give users a 3D open-world metaverse environment. The game was released in 2020 and gave users an immersive experience where they could create, buy, and sell digital assets in the form of non-fungible tokens in the game. The players transact in the game using its native SAND token, which has a maximum total supply fixed at 3 billion. As of March 22, 2022, The Sandbox has a market cap of $3.60 billion. This March, HSBC Holdings plc (NYSE:HSBC) joined JPMorgan Chase & Co. (NYSE:JPM) in investing in the metaverse. HSBC Holdings plc (NYSE:HSBC) purchased its virtual plot in The Sandbox network. Moreover, as of this March, The Sandbox has reached over two million registered users. HSBC Holdings plc (NYSE:HSBC) was a part of 10 hedge fund portfolios at the end of the fourth quarter of 2021. Of these, Renaissance Technologies is the dominating shareholder in the bank holding company, having stakes of $89.34 million. The investment covers 0.11% of Renaissance Technologies Q4 2021 investment portfolio. The Sandbox exhibits long-term potential and is here to stay because of its involvement in the gaming industry and its projects in the NFT space. One of the most prominent backers of the metaverse and NFTs is Meta Platforms, Inc. (NASDAQ:FB). Here’s what Davis Funds had to say about Meta Platforms, Inc. (NASDAQ:FB) in its fourth-quarter 2021 investor letter: “Within the traditional growth category, growing euphoria has led to bubble prices for many companies, most especially those with new and unproven business models such as those discussed above. In contrast, our research focuses on a select handful of proven growth stalwarts whose shares still trade at reasonable valuations. For example, because of concerns about future litigation and regulation, several dominant internet businesses, including Meta (formerly Facebook), trade at steep discounts to many unproven and unprofitable growth darlings that, in our view, trade at euphoric prices. While we expect a continued barrage of negative headlines around the company, as well as increased regulation in the years ahead, we do not expect a significant decline in its long-term profitability.” 9. Bitcoin Cash Bitcoin Cash was forked from Bitcoin’s source code in 2017. Forking code means copying code but modifying it in such a way as to enhance the program. Bitcoin Cash was developed to solve the notorious scalability problem of Bitcoin. The block size for the child coin was increased to 8 megabytes, while that of the parent coin was 1 megabyte. This change allowed for faster transactions, lower transaction fees, and reduced wait times. This March, it was announced that Bitcoin Cash might gain the status of legal tender in Sint Maarten, a country in the Netherlands. Rolando Brison, the head of the United People’s Party, believes in the potential of Bitcoin Cash and also became the world’s first elected official to accept his salary in the form of the currency’s tokens. Bitcoin Cash is gaining popularity and acceptance and is therefore worth considering for a long-term investment in cryptocurrency. Prominent backers of blockchain technology and the metaverse include Alphabet Inc. (NASDAQ:GOOG),  Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB). By the end of the fourth quarter of 2021, 262 hedge funds held stakes worth $75.66 billion in Microsoft Corporation (NASDAQ:MSFT), up from 250 hedge funds in the preceding quarter with stakes amounting to $65.87 billion. Here’s what Saturna Capital had to say about Microsoft Corporation (NASDAQ:MSFT) in its fourth-quarter 2021 investor letter: “Only two companies remain from 2010’s top 10 list: Apple and Microsoft. Going back to 2000, only Microsoft remains. We expect that Microsoft will maintain its position as the dominant global provider of personal and business software, while growing its cloud business and potentially being a key provider of augmented and mixed hardware and software. US Technology companies have been the equity market’s biggest winners in recent years. Because of the Amana Income Fund’s objective of current income, many of these zero- or low-dividend companies do not suit the Fund’s mandate. One that does — Microsoft, which returned 46.03% for 2021 — was the Fund’s second biggest contributor to returns during the year. While Technology no doubt underpins much of the current economy and its future potential, Tech stocks have also benefited from low inflation, globalization, and valuations that are near historic highs. With globalization backsliding and inflation worries escalating, we believe companies in other industries with strong financial positions, competitive advantages, strong management, attractive dividend yields, and reasonable valuations can offer investors diversification in the context of equity markets increasingly concentrated in a handful of very large Technology firms.” 8. Chainlink Chainlink is a decentralized blockchain network built on Ethereum. Chainlink makes use of smart contracts to gather data from off-net sources, real-world data and brings it onto the blockchain in a tamper-proof manner. It achieves this by the use of oracles, which are computer programs designed to facilitate the transfer of secured data from off-chain sources to on-chain smart contracts. The network’s native token is LINK, and as of March 22, 2022, it boasts a market cap of $7.28 billion and has a maximum supply fixed at 1 billion tokens of which 467 million are in circulation. Last September, Chainlink announced that it will be collaborating with Cardano to develop smart contracts for Cardano’s decentralized finance applications. Even though LINK’s supply is far from how much is met, crypto investors are bullish on the token and are being encouraged to invest after looking at the network’s dedication to development. Investors looking to buy and hold LINK should also consider going long in companies working in the digital finance space, such as Visa Inc. (NYSE:V), PayPal Holdings, Inc. (NASDAQ:PYPL), Mastercard Incorporated (NYSE:MA), and JPMorgan Chase & Co. (NYSE:JPM). By the close of the fourth quarter of 2021, 110 hedge funds held stakes in PayPal Holdings, Inc. (NASDAQ:PYPL) worth $9.93 billion. Of these, Ken Fisher’s Fisher Asset Management was the dominating shareholder having stakes worth $2.72 billion in the company. Here’s what Harding Loevner had to say about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q4 2021 investor letter: “Within IT, PayPal reported slower growth outside its core US market and lowered its earnings guidance for 2022 just enough to catch the wrath of the expensiveness vigilantes. Viewed by sector, IT and Health Care were the biggest detractors in the quarter. Within IT, PayPal reported slower growth outside its core US market and lowered its earnings guidance for 2022 just enough to catch the wrath of the expensiveness vigilantes.” 7. Polygon Polygon is a blockchain network that solves the blockchain trilemma of security, scalability, and decentralization. MATIC is the native cryptocurrency of the network. The Polygon network achieves consensus via proof-of-stake, but it does so by using a series of side-chains that allow for the main chain to stay free and therefore promote faster and more scalable transactions. It beats the scalability and expensive transaction challenges faced by Ethereum. The Polygon network has an Ethereum Virtual Machine, EVM, which allows it to be compatible with Ethereum-based applications. The network has currently achieved a speed of 65,000 transactions per second, which can be scaled to millions of transactions as the number of nodes grows. As of March 22, 2022, Polygon boasts a market cap of $11.69 billion and has a fixed maximum supply of 10 billion tokens, of which about 7.69 billion are already in circulation. Polygon is gaining popularity in the crypto space because of its EVM compatibility and speedy transaction finality. The network is expected to grow in the years to come, with the main challenge being Ethereum 2.0. However, Ethereum 2.0 will not be releasing any time soon. Investors looking to hold long positions in crypto should consider polygon since it is one of the few projects aimed at solving the notorious scalability problem. Investors bullish about cryptocurrencies like Polygon should also look into investing in financial companies that are looking into moving their operations on blockchains such as Visa Inc. (NYSE:V), PayPal Holdings, Inc. (NASDAQ:PYPL), Mastercard Incorporated (NYSE:MA), and JPMorgan Chase & Co. (NYSE:JPM). By the end of the fourth quarter of 2021, JPMorgan Chase & Co. (NYSE:JPM) was spotted on 107 hedge fund portfolios. The total stakes of these funds amounted to $6.58 billion, up from $5.63 billion in the preceding quarter with 101 positions. Miller Value Partners, an investment management firm, mentioned JPMorgan Chase & Co. (NYSE:JPM) in its fourth-quarter 2021 investor letter. Here’s what they said: “I remember writing about the attractiveness of JP Morgan (JPM) right before it lost about a third of its value in the third quarter of 2011 (which didn’t please some of my colleagues!). I believed JPM was a high-quality bank whose prospects were undervalued due to the overhang on the space. It made money every year through the financial crisis. In the decade-plus since then, JPM has beaten the market nicely (+417% versus SPX +345%) despite significant headwinds for banks (S&P Financial Sector +286%) and value stocks. Low market expectations are a key ingredient to attractive long-term returns! An earthquake after-shock metaphor helps to explain the situation. Earthquakes relieve tension in physical systems, but aftershocks are common. These aftershocks aren’t as serious as the original event because stresses have been relieved. The financial crisis alleviated tensions in the financial system as weaker players either perished or were shored up with capital. Lessons learned impacted behavior (lower risk-taking behavior and higher propensity for monetary authorities to intervene supportively), which reduced future risk. Those realities didn’t matter in the short term, but they sure did in the long term.” 6. Avalanche Avalanche is an open-source proof of stake blockchain network that offers smart contract functionality. The network’s native token is AVAX. Avalanche is faster than Ethereum in terms of transaction speed, even though both achieve consensus through the same method. Avalanche uses subsampled voting to validate blocks on the blockchain. Avalanche can process 4,500 transactions per second and has a finality clock of 3 seconds. The network is active in the NFTs and gaming space. This March, the Avalanche foundation announced that it will be financing the development of the Avalanche Multiverse with a capital of $290 million. The Multiverse program will be working on Web3 gaming projects and NFTs. As of March 22, 2022, Avalanche has a market cap of $23.05 billion. Investors looking to initiate long positions in crypto should consider Avalanche, as the network is proactive on the metaverse scene and is innovating in the NFT space. Moreover, the network is gaining popularity in the corporate world. Last November, the Ava Labs research team announced that it will be collaborating with Deloitte to develop a new disaster recovery platform that uses the Avalanche blockchain to help governments get federal emergency funding. Moreover, In December 2021, Ava Labs announced that it will be collaborating with Mastercard Incorporated (NYSE:MA) to join the Mastercard Start Path Crypto, which will explore new blockchain technology development opportunities. The hype around the utility of blockchain technology and the development of decentralized applications is growing each day. The most prominent tech companies that are making inroads into the crypto eco-system include Alphabet Inc. (NASDAQ:GOOG),  Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB). Tao Value mentioned Alphabet Inc. (NASDAQ:GOOG) in its Q4 2021 investor letter. Here’s what they had to say: “Our top contributors this quarters included Yet Alphabet (NASDAQ:GOOG), adding 125 bps respectively. As of the end of this quarter, our top 3 positions also includes Alphabet (NASDAQ:GOOG). Alphabet (NASDAQ:GOOG) seemed to defy such impact and still delivered strong results, beating both revenue & earnings expectations.”   Click to continue reading and see 5 Cryptocurrencies To Buy and Hold for the Next 10 Years.     Suggested articles: 10 Best Cryptocurrencies Redditors are Buying 10 Biggest Companies and Hedge Funds Bullish on Ethereum 10 Best Cryptocurrency Startups to Watch Disclosure: None. 10 Cryptocurrencies To Buy and Hold for the Next 10 Years is originally published on Insider Monkey......»»

Category: topSource: insidermonkeyMar 24th, 2022

Where The World Regulates Cryptocurrency

Where The World Regulates Cryptocurrency Some countries declare Bitcoin to be official legal tender while others announce outright bans on cryptocurrency. The world map below, created by Statista's Katharina Buchholz - based on data collected by the Law Library of the U.S. Congress - shows where countries have been trying to stop the cryptocurrency hype and where crypto has been given more or less free reign. You will find more infographics at Statista One example of a country embracing cryptocurrency is El Salvador, where Bitcoin was declared an official currency in September of 2021 by populist president Nayib Bukele. The country also taxes and otherwise regulates cryptocurrency. El Salvador is in a special position because it does not have its own currency and instead relies on the U.S. dollar, like some other countries in the region. Other countries which are applying laws to regulate digital currencies probably wouldn't go as far as El Salvador. Rather, these places - which are most typically developed countries - have been investing in projects to launch their own central bank digital currencies. This is arguably a very different approach to using blockchain technology than that of original cryptocurrencies, which are explicitly independent of any state control, but can be very volatile as a result. Among those exploring the concept are the U.S., European countries, Russia and Australia. India and Thailand, both of which are also broadly regulating cryptocurrency, already have more concrete plans to issue their own digital currencies. Ukraine was also among the countries which have been regulating cryptocurrency, but the nation went one step further on Wednesday when legislating a framework for the cryptocurrency industry in the country. The nation made the move after it received donations in crypto following its invasion by Russia. Rules like having to register or acquire a license for a crypto exchange also exist in the EU, the UK, Canada, the U.S., Mexico, Chile, Japan and Korea, among others. China was the first major economy to start issuing its national currency on the blockchain in early 2021. The country has taken a more extreme approach to regulating cryptocurrency by issuing an absolute ban on it. According to the Law Library of Congress, nine countries had so far taken this measure, while many more were implicitly banning the use of cryptocurrency through their other laws. This practice was most common in Africa, the Middle East and Asia. Tyler Durden Sat, 03/19/2022 - 23:00.....»»

Category: smallbizSource: nytMar 19th, 2022

Russia"s biggest bank Sberbank gets permission to exchange crypto, as sanctions hobble transfers of dollars

A day after the license was given, Sberbank said sanctions had restricted foreign currency transfers in Russia and abroad. People queue outside Sberbank to withdraw cash.MICHAL CIZEK/AFP via Getty Images. The Bank of Russia gave Sberbank a license to issue and exchange digital assets on Thursday. The country's largest bank said sanctions have limited some forex transfers in Russia and internationally. Some regulators have raised concerns that Russia could use crypto to undermine the impact of sanctions. Russia's central bank has granted Sberbank a license to issue and exchange crypto as sanctions hit its forex transfers.The country's biggest bank said that Western sanctions targeting Russia had restricted the foreign currency transfers in Russia and abroad. Sberbank said the list of currencies available for transfer to Russian and other banks had been limited.Sberbank said it would use blockchain technology which would guarantee the safety of digital transactions and allow companies to issue their own digital assets, purchase those issued within Sberbank, and make other transactions, Reuters reported.The Bank of Russia granted the license to Sberbank just two months after it called for a ban on crypto usage, mining, and trading in the country. Regulators have raised concerns that Russia could use crypto to circumvent sanctions.In October, the US Treasury warned that decentralized digital assets could dampen the impact of sanctions.Some US Democratic senators wrote earlier this month to Treasury Secretary Janet Yellen and raised their concerns that cryptocurrencies could undermine sanctions. "These concerns have become even more urgent given the sanctions imposed on Russia after its invasion of Ukraine," Sen. Elizabeth Warren and three of her colleagues wrote following the invasion.Earlier this month, US Federal Reserve Chair Jerome Powell spoke of the need to regulate crypto and was asked if Russia could use digital currencies to evade sanctions."I just think it underscores the need, really, for congressional action on digital finance, including cryptocurrencies," he told the House Financial Services Committee on March 2. "We have this burgeoning industry which has many parts to it, and there isn't in place the kind of regulatory framework that needs to be there."However, a panel of experts from blockchain analytics firm Chainalysis told the US Senate on Thursday that there was no evidence of Russia using crypto to evade sanctions, Marketwatch said.Sberbank had applied for a license with the Bank of Russia to launch its own digital currency in January, according to CoinDesk.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMar 18th, 2022

10 Signs The War In Ukraine Is Part Of The Great Reset

10 Signs The War In Ukraine Is Part Of The Great Reset Via WinterOak.org.uk, Welcome to the second phase of the Great Reset: war. While the pandemic acclimatised the world to lockdowns, normalised the acceptance of experimental medications, precipitated the greatest transfer of wealth to corporations by decimating SMEs and adjusted the muscle memory of workforce operations in preparation for a cybernetic future, an additional vector was required to accelerate the economic collapse before nations can ‘Build Back Better.’ I present below several ways in which the current conflict between Russia and Ukraine is the next catalyst for the World Economic Forum’s Great Reset agenda, facilitated by an interconnected web of global stakeholders and a diffuse network of public-private partnerships. 1. The war between Russia and Ukraine is already causing unprecedented disruption to global supply chains, exacerbating fuel shortages and inducing chronic levels of inflation. As geopolitical tensions morph into a protracted conflict between NATO and the Sino-Russia axis, a second contraction may plunge the economy into stagflation. In the years ahead, the combination of subpar growth and runaway inflation will force a global economic underclass into micro-work contracts and low-wage jobs in an emerging gig economy. Another recession will compound global resource thirst, narrow the scope for self-sufficiency and significantly increase dependence on government subsidies. With the immiseration of a significant portion of the world’s labour force looming on the horizon, this may well be a prelude to the introduction of a Universal Basic Income, leading to a highly stratified neo-feudal order. Therefore, the World Economic Forum’s ominous prediction that we will ‘own nothing and be happy’ by 2030 seems to be unfolding with horrifying rapidity. 2. The war’s economic fallout will lead to a dramatic downsizing of the global workforce.  The architects of the Great Reset have anticipated this trend for a number of years and will exploit this economic turbulence by propelling the role of disruptive technologies to meet global challenges and fundamentally alter traditional business patterns to keep pace with rapid changes in technology. Like the pandemic, disaster preparedness in the age of conflict will rest significantly on the willingness to embrace specific technological innovations in the public and private spheres so that future generations can supply the labour demands of the Great Reset. A recurring theme in Klaus Schwab’s Shaping the Future of the Fourth Industrial Revolution is that groundbreaking technological and scientific innovations will no longer be relegated to the physical world around us but become extensions of ourselves. He emphasises the primacy of emerging technologies in a next generation workforce and highlights the urgency to push ahead with plans to digitise several aspects of the global labour force through scalable technology based solutions. Those spearheading the Great Reset seek to manage geopolitical risk by creating new markets which revolve around digital innovations, e-strategies, telepresence labour, Artificial Intelligence, robotics, nanotechnology, the Internet of Things and the Internet of Bodies. The breakneck speed in which AI technologies are being deployed suggest that the optimization of such technologies will initially bear on traditional industries and professions which offer a safety net for hundreds of millions of workers, such as farming, retail, catering, manufacturing and the courier industries. However, automation in the form of robots, smart software and machine learning will not be limited to jobs which are routine, repetitive and predictable. AI systems are on the verge of wholesale automation of various white collar jobs, particularly in areas which involve information processing and pattern recognition such as accounting, HR and middle management positions. Although anticipating future employment trends is no easy task, it’s safe to say that the combined threat of pandemics and wars means the labour force is on the brink of an unprecedented reshuffle with technology reshaping logistics, potentially threatening hundreds of millions of blue and white collar jobs, resulting in the greatest and fastest displacement of jobs in history and foreshadowing a labour market shift which was previously inconceivable. While it has long been anticipated that the increased use of technology in the private sector would result in massive job losses, pandemic lockdowns and the coming disruption caused by a war will speed up this process, and many companies will be left with no other option but to lay off staff and replace them with creative technological solutions merely for the survival of their businesses. In other words, many of the jobs which will be lost in the years ahead were already moving towards redundancy and are unlikely to be recovered once the dust is settled. 3. The war has significantly reduced Europe’s reliance on the Russian energy sector and reinforced the centrality of the UN Sustainable Development Goals and ‘net zero‘ emissions which lies at the heart of the Great Reset. Policymakers marching lockstep with the Great Reset have capitalised on the tough sanctions against Russia by accelerating the shift towards ‘green’ energy and reiterating the importance of decarbonisation as part of the ‘fight against climate change’. However, it would be very short-sighted to assume that the Great Reset is ultimately geared towards the equitable distribution of ‘green’ hydrogen and carbon-neutral synthetic fuels replacing petrol & diesel. While UN SDGs are crucial to post-pandemic recovery, more importantly, they are fundamental to the makeover of shareholder capitalism which is now being vaunted by the Davos elites as ‘stakeholder capitalism’. In economic terms, this refers to a system where governments are no longer the final arbiters of state policies as unelected private corporations become the de facto trustees of society, taking on the direct responsibility to address the world’s social, economic and environmental challenges through macroeconomic cooperation and a multi-stakeholder model of global governance. Under such an economic construct, asset holding conglomerates can redirect the flow of global capital by aligning investments with the UN’s SDGs and configuring them as Environmental, Social, and Corporate Governance (ESG) compliant so that new international markets can be built on the disaster and misery of potentially hundreds of millions of people reeling from the economic collapse caused by war. Therefore, the war offers a huge impetus for the governments pushing the reset to actively pursue energy independence, shape markets towards ‘green and inclusive growth’ and eventually move populations towards a cap-and-trade system, otherwise known as a carbon credit economy. This will centralise power in the hands of stakeholder capitalists under the benevolent guise of reinventing capitalism through fairer and greener means, using deceptive slogans like ‘Build Back Better’ without sacrificing the perpetual growth imperative of capitalism. 4. Food shortages created by the war will offer a major boon to the synthetic biology industry as the convergence of digital technologies with materials science and biology will radically transform the agricultural sector and encourage the adoption of plant-based and lab-grown alternatives on a global scale.  Russia and Ukraine are both breadbaskets of the world and critical shortages in grains, fertilisers, vegetable oils and essential foodstuffs will catapult the importance of biotechnology to food security and sustainability and give birth to several imitation meat start-ups similar to ‘Impossible Foods’ which was co-funded by Bill Gates. One can therefore expect more government regulation to usher a dramatic overhaul to industrial food production and cultivation, ultimately benefiting agribusiness and biotech investors, since food systems will be redesigned through emerging technologies to grow ‘sustainable’ proteins and CRISPR gene-edited patented crops. 5. Russia’s exclusion from SWIFT (The Society for Worldwide Interbank Financial Telecommunication) foreshadows an economic reset which will generate precisely the kind of blowback necessary for corralling large swathes of the global population into a technocratic control grid. As several economists have opined, weaponizing SWIFT, CHIPS (The Clearing House Interbank Payments System) and the US Dollar against Russia will only spur geopolitical rivals like China to accelerate the process of de-dollarisation. The main benefactor of economic sanctions against Russia appears to be China which can reshape the Eurasian market by encouraging member states of the Shanghai Cooperation Organisation (SCO) and BRICS to bypass the SWIFT ecosystem and settle cross-border international payments in the Digital Yuan. While the demand for cryptocurrencies will see a massive spike, this is likely to encourage many governments to increasingly regulate the sector through public blockchains and enforce a multilateral ban on decentralised cryptocurrencies. The shift to crypto could be the dress rehearsal to eventually expedite plans for programmable money overseen by a federal regulator, leading to the greater accretion of power in the hands of a powerful global technocracy and thus sealing our enslavement to financial institutions. I believe this war will bring currencies to parity, therefore heralding a new Bretton Woods moment which promises to transform the operation of international banking and macroeconomic cooperation through the future adoption of central bank digital currencies. 6.  This war marks a major inflection point in the globalist aspiration for a new international rules-based order anchored in Eurasia. As the ‘father of geopolitics’ Halford Mackinder opined over a century ago, the rise of every global hegemon in the past 500 years has been possible because of dominance over Eurasia. Similarly, their decline has been associated with losing control over that pivotal landmass. This causal connection between geography and power has not gone unnoticed by the global network of stakeholders representing the WEF, many of whom have anticipated the transition to a multipolar era and return to great power competition amid America’s receding political and economic influence and a pressing need for what technocrats call smart globalisation. While America tries desperately to cling to its superpower status, China’s economic ascent and Russia’s regional ambitions threaten to upend the strategic axial points of Eurasia (Western Europe and Asia Pacific). The region in which America previously enjoyed uncontested hegemony is no longer impervious to cracks and we may be witnessing a changing of the guard which dramatically alters the calculus of global force projection. Although China’s ambitious Belt and Road Initiative (BRI) has the potential to unify the world-island (Asia, Africa and Europe) and cause a tectonic shift in the locus of global power, the recent invasion of Ukraine will have far-reaching consequences for China-Europe rail freight. The Ukrainian President Zelensky claimed that Ukraine could function as the BRI’s gateway to Europe. Therefore, we cannot ignore China’s huge stake in the recent tensions over Ukraine, nor can we ignore NATO’s underlying ambition to check China’s rise in the region by limiting the sale of Ukrainian assets to China and doing everything in its capacity to thwart The Modern Silk Road. As sanctions push Russia towards consolidating bilateral ties with China and fully integrating with the BRI, a Pan-Eurasian trading bloc may be the realignment which forces a shared governance of the global commons and a reset to the age of US exceptionalism. 7. With speculation mounting over the war’s long term impact on bilateral trade flows between China and Europe, the Russia-Ukraine conflict will catapult Israel – a leading advocate of the Great Reset – to even greater international prominence.  Israel is a highly attractive BRI market for China and the CCP is acutely aware of Israel’s importance as a strategic outpost connecting the Indian Ocean and the Mediterranean Sea through the Gulf of Suez. Furthermore, the Chinese government has for many years acknowledged the primacy of Israel as a global technology hub and capitalised on Israel’s innovation capabilities to help meet its own strategic challenges. Therefore, Naftali Bennet’s mediation between Moscow and Kiev is likely to factor the instrumental role of the Belt and Road Initiative (BRI) in expanding both China and Israel’s regional and global strategic footprint. Israel’s status as among the leading tech hubs of the future and gateway connecting Europe and the Middle East is inextricably tied to the web of physical infrastructures, such as roads, railways, ports and energy pipelines which China has been building over the past decade. Already a powerhouse in auto-technologies, robotics and cybersecurity, Israel aspires to be the central nation in the millennial Kingdom and the country’s tech startups are predicted to play a key role in the fourth industrial revolution. Strengthening its evolving relationship with China amid the Russia-Ukraine crisis could help propel Israel into a regional hegemon par excellence with a large share of centralised economic and technological power converging in Jerusalem. As Israel embarks on efforts to diversify its export markets and investments away from the United States, it begs an important question. Is Israel in the formative stages of outsourcing its security interests away from the US and hedging its bets on the Sino-Russia axis? 8. It is now common knowledge that Digital IDs are a central plank in the World Economic Forum’s Great Reset agenda and are to be streamlined across industries, supply chains and markets as a way of advancing the UN 2030 SDGs and delivering individualised and integrated services in future smart cities. Many have cottoned on to how such a platform can be used to usher in a global system of technocratic population control and compliance by incorporating humanity into a new corporate value chain where citizens are mined as data commodities for ESG investors and human capital bond markets and assigned a social and climate score based on how well they measure up against the UN SDGs. This seamless verification of people and connected devices in smart environments can only take place once our biometrics, health records, finances, education transcripts, consumer habits, carbon footprint and the entire sum of human experiences is stored on an interoperable database to determine our conformity with the UN SDGs, thus forcing a monumental change to our social contract. Vaccine passports were initially touted by public-private partnerships as an entry point for Digital IDs. Now that such a logic has run its course, how might the present geopolitical tensions contribute to scaling what is the key node in a new digital ecosystem? Ukraine has traditionally been called Europe’s breadbasket and alongside Russia, both nations are major global suppliers of staple grains. Therefore, the war has all the makings of a black swan for commodities and inflation. With an economy teetering on the brink of collapse due to a global supply crunch, I believe the resulting economic tremors will trigger wartime emergencies across the world and the public will be told to brace themselves for rationing. Once this takes place, the multilateral adoption of Digital IDs which interface with Central Bank Digital Currencies can be touted as the solution to efficiently manage and distribute household rations under an unprecedented state of emergency and exception. The Bank of England has already floated the prospect of programmable cash which can only be spent on essentials or goods which an employer or government deem sensible. Once the issuer is granted control over how it is spent by the recipient, it will become nigh impossible to function adequately without a Digital ID, which will be required to receive food parcels and obtain a basic means of subsistence. Think UBI (Universal Basic Income). If food inflation continues on an upward trajectory with no signs of abating, governments may institute price controls in the form of rationing and ration entries could be logged on blockchain ledgers on the Digital ID to track our carbon footprint and consumptive habits during a national emergency. 9. Europe is directly in the line of fire once a hybrid war between NATO and the Sino-Russia axis is underway. It would be remiss to ignore the clear and present danger posed by a cyber attack on banks and critical infrastructure or even a tentative and tactical nuclear exchange with intercontinental ballistic missiles (ICBMs). I can’t see how any warring party will not be limited by the doctrine of mutually assured destruction so a thermonuclear fallout is unlikely. However, the use of remote access technologies to erase system memory from the SWIFT banking apparatus or Cross-Border Interbank Payment System can potentially render much of the international economy non-operational and send the dollar into a tailspin. If an event of such cataclysmic proportions was to occur, it will undoubtedly lead to increasing demands to overhaul cyber security. The fallout from such an event could very well establish a new global security protocol according to which citizens must possess a Digital ID as a necessary national security measure. One can imagine how accessing the internet or public services in the aftermath of a nationwide cyberattack may require citizens to use a Digital ID to authenticate that their online activities and transactions are from a legitimate and non-malicious source. There are few coincidences in politics. 10. The economic implications of this war will be so disastrous that governments and the public sector will require a significant injection of private capital to address the financing shortfall.  This will effectively render the traditional separation of powers between central banking institutions and governments obsolete, as the former will be positioned to disproportionately influence the fiscal trajectory of nation states, whose sovereignty will be hollowed out by the wholesale capture of governments by the central banks and hedge funds. Therefore, the nation-state model is gradually being upended by a global technocracy, consisting of an unelected consortium of leaders of industry, central banking oligarchs and private financial institutions, most of which are predominantly non-state corporate actors attempting to restructure global governance and enlist themselves in the global decision-making process. Therefore, the future of international relations and the social, economic and political transformation which the world is presently undergoing in light of the pandemic and Russia-Ukraine conflict will not be decided through multilateralism and elected representatives of sovereign states. Rather, it will be decided through a network of multi-stakeholder partnerships which are motivated by the politics of expediency and not accountable to any electorate or beholden to any state and for whom concepts like sovereignty and international law are meaningless. Tyler Durden Mon, 03/14/2022 - 23:40.....»»

Category: blogSource: zerohedgeMar 15th, 2022

Will Biden"s Executive Order Put Crypto ETFs in Bright Spot?

The Russia-Ukraine war, stock market volatility and the latest executive order by President Biden to regulate the crypto market should boost retail investors' interest in crypto currencies and the related ETFs. After a volatile year, things are falling in places for cryptocurrency ETFs. The cryptocurrency, infamous for its high volatility (down 25% past year), may see some support in the coming days as President Biden has signed an executive order that will coordinate efforts among financial regulators to study the risks and opportunities associated with digital assets. Bitcoin, one of the world’s most popular cryptocurrencies, jumped 9% on Wednesday having reacted to the news, according to Coin Metrics.About 16% of American adults have invested in, traded or used crypto, the administration said, per a CNBC article. Digital assets, including cryptocurrencies, surpassed $3 trillion in value in November, according to a White House fact sheet, the CNBC article noted. So, this federal oversight was necessary. The new order is the administration’s most-important attempt yet to control a fast-growing industry and protect stakeholders.Apart from this, the Russia-Ukraine war is also acting as tailwind for the cryptocurrency space. The ongoing Russian-Ukraine war has sparked huge discussions amongst market enthusiasts over whether cryptocurrencies are a safe-haven asset. The discussion was triggered by the fact that assets like bitcoin act as digital gold.  The rally of more than 22% in major crypto coins like bitcoin and ethereum in the late February and early March period aided the narrative.The rally has strengthened because Ukraine allowed the acceptance of cryptocurrency. Ukraine, which grabbed the fourth position in the blockchain data platform Chainalysis' 2021 Global Crypto Adoption Index, has been collecting donations for support during the war in the form of bitcoin, ethereum and tether and the country raised $100 million in crypto donations. Now, with Biden’s executive order, trading in crypto should be smoother and safer for retail investors.Against this backdrop, below we highlight a few cryptocurrency ETFs that are gaining and may come across as lucrative investments in the coming days.Cryptocurrency ETFs That Are GainingProShares Bitcoin Strategy ETF BITO— up 9% on Mar 9ProShares Bitcoin Strategy ETF is the first U.S. bitcoin-linked ETF offering investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way. The fund seeks to provide capital appreciation primarily through managed exposure to bitcoin futures contracts. BITO has amassed AUM of $1.11 billion and charges an expense ratio of 0.95%. Also, ProShares Bitcoin Strategy ETF has an average daily trading volume of about 7.7 million shares.VanEck Bitcoin Strategy ETF XBTF — up 9% on Mar 9The VanEck Bitcoin Strategy ETF seeks capital appreciation by investing in bitcoin futures contracts. The Fund is actively managed and offers exposure to bitcoin-linked investments through an accessible exchange traded vehicle. XBTF has an AUM of $26.8 million with an expense ratio of 0.65%. VanEck Bitcoin Strategy ETF trades in average daily volume of about 34,000 shares.Amplify Transformational Data Sharing ETF BLOK — up 6.8% on Mar 9BLOK is an actively managed ETF that seeks to provide total return by investing at least 80% of its net assets in equity securities of companies actively involved in the development and utilization of blockchain technologies. The fund has amassed $998.2 million in assets and charges an expense ratio of 71 basis points. BLOK has an has an average daily trading volume of about 563,000 shares. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports ProShares Bitcoin Strategy ETF (BITO): ETF Research Reports VanEck Bitcoin Strategy ETF (XBTF): ETF Research Reports To read this article on Zacks.com click here......»»

Category: topSource: zacksMar 10th, 2022

Free Bitcoin

Free Bitcoin Authored by Marty Bent via The American Mind, It has been a bit over thirteen years since Satoshi Nakamoto emerged to introduce the world to an idea he had been working on: Bitcoin. A Peer-to-Peer Electronic Cash System. Since that announcement, the protocol has attracted a great deal of attention, capital, and scrutiny.  As it stands today, the market cap of Bitcoin is $1.25 Trillion. It is beginning to be accepted by many across the world as something that will not be going away any time soon. As many in power begin to come to grips with the fact that Bitcoin isn’t going away, they are beginning to ask themselves, “How do we regulate this thing?” I am here to politely ask those who would like to “regulate Bitcoin” to resist the urge and instead turn inward and reflect on the damage that has been wrought by compounding decades’ worth of abysmal regulatory policy decisions, which have done little to stop crime and a whole lot to erode individual privacy, civil liberties, and safety. What is Bitcoin? To set the stage for a diatribe against US banking regulations in the context of Bitcoin, it is probably advantageous to describe Bitcoin in the context of American values as put forth by the Founding Fathers. Put simply, Bitcoin is the greatest extension and written preservation of Natural Rights since the Bill of Rights was passed by Congress in 1789. The peer-to-peer cash system that Satoshi launched allows any individual with access to the internet the ability to opt in to and audit a free-market monetary system, uncontrolled by any central bank. The world has been in desperate need of this for well over a century. By creating a private-public key pair specific to the Bitcoin network, an individual can receive, send, and secure the world’s first digital bearer instrument all by themselves. By creating a 12- or 24-word representation of their private key, anybody who so wishes can walk around naked with the access key to their wealth memorized in their head. There is no more need to trust a bank to grant you access to your wealth, nor to lug a heavy metal like gold across borders to transport your wealth if and when you decide to seek greener pastures. Bitcoin brings these functions into the 21st century and supercharges them in a way that is going to change our markets and culture for the better. Since money is the base-layer protocol of economic exchange between humans the world over, it is a very important tool. I would take it a bit further and argue that money is the most important tool that humans use. Either way, it would be in our best interest to ensure that we are using the best version of that tool possible.  Unfortunately we have been forced to use very poor monetary goods running through very centralized systems. Most do not realize this because most do not understand money or the concept that there can be free market monies. They simply accept that government-issued monetary goods are the only monetary goods. Satoshi understood the inherent problems with government-approved, central-bank-controlled monetary systems. He described them succinctly in an email to the P2P Foundation mailing list a little over a month after Bitcoin was officially launched: The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible. Humans are driven by incentives. Central banks create an inherently perverse incentive that drives those in control of the monetary spigots and plumbing to abuse that control to benefit a very small group of connected cronies at the expense of common citizens. This abuse comes in two dominant forms: unfettered seigniorage on a macro level, and subjective censorship on a micro level. Unfettered seigniorage is a stealth tax on individuals’ savings as an increase in the money supply inevitably leads to increased prices. No matter how much those in power manipulate the Consumer Price Index in an attempt to make you believe otherwise, money printing unduly affects those who find themselves on the lower rungs of the economic ladder as the purchasing power of their labor (measured in paychecks) decreases gradually, then suddenly over time. Those higher up on the ladder benefit greatly, as they are able to invest in the assets that newly printed money typically gets funneled into: stocks and real estate.  There will never be more than 21 million bitcoins. And so this endless, whimsical kind of seigniorage is impossible under a Bitcoin Standard. The common citizen will be able to invest his life force into a monetary good that has a capped supply. The payment rails that have been erected on top of the central bank monetary systems enable those in power to unilaterally decide who can and cannot receive and send money. This power is used to disempower those who exhibit wrongthink or conduct business that is deemed unacceptable by the regime. Making Things Worse Despite more than a decade of screeching from “experts” across academia, economics firms and think-tanks, and Washington, D.C., Bitcoin is still here enabling peer-to-peer digital cash transactions for anyone who can access the network. After almost 13 years of uninterrupted uptime, more and more people and governments are agreeing that Bitcoin is here to stay for the foreseeable future. This has led to a change in posturing from the expert class. They acknowledge that Bitcoin isn’t going away, so now they need to regulate it. They don’t even know enough to understand what they’re attempting. Bitcoin in itself cannot be regulated. Centralized companies who have built businesses that leverage the Bitcoin network can certainly be regulated, and the individuals using Bitcoin can be pressured to report their usage. However, at the end of the day it is impossible for these centralized authorities to regulate the rules of the Bitcoin protocol outside of convincing the network of globally distributed node operators to download software with their regulations included. And I can promise you that this is highly unlikely. Furthermore, we know that the focus of their efforts to regulate will revolve around importing existing Know Your Customer/Anti-Money Laundering (KYC/AML) laws to the Bitcoin network. These laws find their roots in the Bank Secrecy Act of 1970, which thrust a dragnet surveillance apparatus on top of the banking system. Despite their best efforts, the Bank Secrecy Act and the KYC/AML regulations that have been created in its wake have done little to stop criminals from partaking in criminal activity, while objectively putting law-abiding citizens in harm’s way and creating compliance costs that make it extremely burdensome for competition to enter the banking sector. By forcing companies to collect and store the personal information of everyone they allow to access their services, these ineffective laws and regulations have created massive data honeypots that are constantly being hacked…by criminals who use that data to impersonate people so they can engage in fraud. In a world transitioning to a Bitcoin Standard, the continued collection of personal information like email addresses, home addresses, and phone numbers is foolish and dangerous. Bitcoin is a digital bearer instrument in the middle of its monetization phase. Creating centrally controlled databases of bitcoiners, where they live, how to contact them, how much bitcoin they’ve bought over time, and whether or not they’ve moved their bitcoin to personal storage does little more than put tens of millions of individuals at risk of harm. And how much longer will we burden companies with expensive compliance practices that do nothing but put their customers at risk? Getting people to ask this simple question is a great first step when it comes to saving bitcoiners from regulation. Individuals need to realize that these regulations are causing far more negative outcomes than positive outcomes. Another avenue that will save bitcoiners from over-regulation is the well-calibrated incentive system embedded in the social layer of the protocol, particularly the incentives around mining bitcoin. There is a very strong narrative permeating regime-controlled and allied media that bitcoin is bad for the environment because of how much energy is dedicated to securing the network. While it is true that the Bitcoin network uses substantial energy, as befits a culture where investments of time and energy are at the root of property and property rights, what you’ll find when you zoom in is that miners are typically using energy resources that would typically be wasted or stranded. This is because miners are looking to drive their electricity costs as low as possible, and previously wasted and/or stranded energy sources provide those low costs. In that sense Bitcoin miners are driving humanity toward peak energy efficiency. No joules left behind! There are many states that have stranded and wasted energy assets within their borders. It is only a matter of time before a forward-thinking state (my satoshis are on Wyoming) invests in bitcoin mining infrastructure that leverages previously wasted energy and rolls the mining profits into a permanent fund. Bitcoin mining permanent funds will enable states to keep their in-state taxes extremely low while providing them significant leverage against the federal government. This leverage provides another safeguard against burdensome regulation of bitcoin businesses. The revenues realized by mining and the services made possible by well-funded permanent funds will incentivize state governments to make sure that bitcoin businesses aren’t over-regulated. Judging by current events in the US and abroad, it is highly likely that the federal government will react out of fear as Bitcoin rises to prominence, enacting regulations that make it extremely hard for bitcoin businesses to operate without collecting insane amounts of data and impossible for users to use Bitcoin in a peer-to-peer fashion. Bitcoin is anathema to the central bank digital currency system, a mechanism of total surveillance fused in unholy union with social and financial credit, that the regime would like to herd us all into. Such a scheme enables complete control over every aspect of our lives. The only sufficiently powerful digital alternative to this system is Bitcoin. My hope is that enough people wake up, realize the madness of technologically establishing anti-human and anti-freedom policies, and use Bitcoin to build fresh institutions that preserve both our freedom and our humanity.  *  *  * Marty Bent is the founder of TFTC.io, a media company focused on Bitcoin, beauty, and freedom in the digital age. Tyler Durden Thu, 02/24/2022 - 20:20.....»»

Category: worldSource: nytFeb 24th, 2022

Three More Countries To Adopt Bitcoin As Legal Tender In 2022?

Bitcoin will be adopted as legal tender in three more countries in 2022, predicts the CEO of a game-changing global financial giant. Q3 2021 hedge fund letters, conferences and more The ultra-bullish prediction from Nigel Green of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, doubles down on […] Bitcoin will be adopted as legal tender in three more countries in 2022, predicts the CEO of a game-changing global financial giant. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Icahn eBook! Get our entire 10-part series on Carl Icahn and other famous investors in PDF for free! Save it to your desktop, read it on your tablet or print it! Sign up below. NO SPAM EVER (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more The ultra-bullish prediction from Nigel Green of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, doubles down on one made on Sunday by the President of El Salvador. More Countries To Adopt Bitcoin As Legal Tender To his 3.2 million followers, Nayib Bukele tweeted a series of predictions about Bitcoin, including “2 more countries will adopt it as legal tender.” Amongst the others were that the cryptocurrency will hit $100,000 this year. El Salvador made history in September by becoming the first country in the world to make Bitcoin an official currency alongside the U.S. dollar. Mr Green says: “I’m confident that the young, maverick President, Nayib Bukele, is correct about other countries adopting Bitcoin as legal tender in 2022. “But I would go further still than he did. I believe that it’s likely that three more nations will follow El Salvador’s pioneering, future-focused lead into the digital age.” He continues: “Low-income countries have long suffered because their currencies are weak and extremely vulnerable to market changes and that triggers rampant inflation. “This is why most developing countries become reliant upon major ‘first-world’ currencies, such as the U.S. dollar, to complete transactions. “However, reliance on another country’s currency also comes with its own set of, often very costly, problems. A stronger U.S. dollar, for example, will weigh on emerging-market economic prospects, since developing countries have taken on so much dollar-denominated debt in the past decades.” Benefits Of Adopting Cryptocurrency As Legal Tender The deVere boss goes on to add: “By adopting cryptocurrency as legal tender these countries then immediately have a currency that isn’t influenced by market conditions within their own economy, nor directly from just one other country’s economy. “Bitcoin operates on a global scale and therefore is impacted by wider, global economic changes.” In addition, he notes, cryptocurrencies could also help “bolster financial inclusion for individuals and businesses” in developing countries as they “can circumnavigate the biases” of traditional banks and other financial services providers. Following President Bukele’s bold tweet about more countries adopting Bitcoin as legal tender this year, his followers posted opinions about which nations they believe would be likely to do so. These included Tonga, Turkey and Bolivia, to name a few. For his part, Nigel Green says: “Due to their similar reliance on remittances, amongst other factors, other countries, including Panama, Paraguay, Guatemala and Honduras, could also adopt Bitcoin. “Just after El Salvador’s adoption back in September, Panama announced a bill to make the cryptocurrency legal tender in the country. Also, Congressman Gabriel Silva tweeted that this could create jobs in Panama and lure investment from other nations. “A Paraguayan bill moving to regulate the trading and mining of Bitcoin and cryptocurrencies in the country passed the Senate last month. Is this the first step to making Bitcoin legal tender?” The central banks of Honduras and Guatemala are both eying digital currencies too, according to officials, but they are – for now - taking a different approach. “They’re currently studying central bank digital currencies (CBDC). This demonstrates, again, that they too are confident that the future of money is digital. “However, I think they will ultimately embrace an existing cryptocurrency as a legal tender, as El Salvador has done,” says Nigel Green. He concludes: “President Bukele is right. Other countries will indeed follow El Salvador’s example and make Bitcoin legal tender in 2022. “How many remains unclear, of course. But when it happens, it will be a snowball effect.” About deVere Group Twitter: @PriorConsults deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement. Updated on Jan 4, 2022, 11:37 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJan 4th, 2022

3 Payment Stocks Poised for Continued Momentum in 2022

Payment stocks like MA, V and AXP are expected to gain in 2022, courtesy of growing inclination toward digital payments, accelerated economic recovery and a solid M&A strategy in place. Backed by a diversified product and solutions suite, the payment industry remains well-poised to capitalize on the prevalent inclination toward digital means. This transition globally, which was triggered by the COVID-19 pandemic, is here to stay and will continue even in the post-pandemic era. Per Mastercard’s MA 2021 Recovery Insights report, 20-30% of the pandemic-induced shift to digital commerce worldwide is expected to be permanent.The payment space has witnessed mergers and acquisitions (M&A) often as the companies made every effort to bolster their capabilities. The industry has also been undertaking significant technological investments aimed at modernizing the digital payments space.With a couple of days left for 2022 to begin, the digitization trend is expected to continue benefiting payment stocks like Mastercard, Visa V and American Express Company AXP. A recovering economy resulting in improved consumer spending is also likely to act as a tailwind for the stocks.Although risks related to new variants of the COVID-19 virus continue to linger, the following factors are expected to provide a boost to the payment stocks in 2022.Transition to Contactless Payment MethodsDigital payments’ popularity has grown in leaps and bounds, courtesy of its numerous benefits such as convenience, no physical contact, flexibility and security. Increasing Internet penetration and higher smartphone usage will continue to drive the global digital payment market growth in the days ahead. Per MarketsandMarkets, the worldwide digital payment market is anticipated to witness a CAGR of 15.2% over the 2021-2026 period.Thus, payment stocks have been making every effort to rethink payment methods in sync with the evolving needs of consumers. With cash and checks taking a backseat, the stocks started investing in several flexible payment options encompassing cryptocurrency, biometrics, and QR code.Rebounding Global EconomyFollowing multiple setbacks since the onset of the COVID-19 pandemic, 2021 marked the gradual turnaround of the global economy. The resumption of business activities remains underway. Severe supply-chain disruptions led to pent-up demand and increased savings that paved the way for higher consumer spending, which is good news for payment stocks. Massive pandemic-relief packages by governments and widespread vaccination programs globally have been aiding the recovery process. Increased rates of vaccination make consumers more confident about stepping out of their homes, thereby bolstering the in-store sales, which earlier took a hit due to the pandemic-induced restrictions.The trend is likely to continue in 2022 as well. Management of J.P. Morgan Global Research forecast above-potential global growth in 2022 driven by increased consumer and corporate spending, strong equity market performance, and rise in vaccination rates and easing of supply-chain challenges across certain nations.Mergers and AcquisitionsSolid capital position and reopening of economic activities are likely to bolster a company’s spending capability and aid it in pursuing increased M&A deals. Companies in the payment industry are focused on M&A strategy, which is aimed at diversifying product offerings, boosting business scale and expanding geographical presence. Exploring one’s capabilities beyond niche areas can actually help a company in creating multiple revenue streams and a varied customer base. Also, diversification is crucial these days to strengthen one’s market position. Per a BTI Consulting Group report, M&A activity is expected to increase and remain at peak levels in 2022.Consistent Technological AdvancementsThe payment stocks are not only striving to offer seamless contactless payment processes for accelerated checkout experiences but also investing extensively in technology to enhance services. The companies have been making continuous technology investments and devising a comprehensive portfolio of fraud detection solutions, as a surge in contactless payments prompted severe payment frauds. These advancements are anticipated to result in cost savings and automation in processes, which are expected to drive the stock’s margins in the days ahead.3 Top Stocks to WatchHere we pick three payment stocks that carry a Zacks Rank #3 (Hold) and exhibit great potential to retain a purple patch going forward. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Headquartered in Purchase, NY, Mastercard is a technology company in the global payments industry. Partnerships with several well-established organizations, the launching of cost-effective solutions to capitalize on the current prospects in the global digital payments space and substantial technology investments are expected to continue benefiting Mastercard in the year ahead.MA’s bottom line beat estimates in each of the trailing four quarters, the average surprise being 10.74%. The Zacks Consensus Estimate for Mastercard’s 2022 earnings suggests growth of 26.3% from the year-ago reported figure, while the same for revenues indicates an improvement of 19.5%.In a year, shares of Mastercard gained 4% against the industry’s decline of 18.9%.Image Source: Zacks Investment ResearchBased in San Francisco, CA, Visa continues to utilize advanced technologies for rolling out newer payment solutions. V has been striving to integrate blockchain technology with its payments platform. The presence of a trusted payment facilitator like Visa, which has more than 25 digital currency wallets linked to its systems, further encourages increased usage of crypto and digital currencies. These factors keep the company well-poised for growth in 2022.Visa’s earnings surpassed estimates in each of the last four quarters, the average surprise being 9.81%. The Zacks Consensus Estimate for V’s 2022 earnings suggests 19% growth from the year-ago reported figure, while the same for revenues indicates an improvement of 16.9%.In a year, shares of Visa inched up 1.5% against the industry’s decline of 18.9%.Image Source: Zacks Investment ResearchAmerican Express, a globally integrated payments player with headquarters in New York, will continue to benefit on the back of a number of tailwinds. AXP continues to launch innovative card offerings and upgrade the existing ones to cater to the evolving needs of its card members. Additionally, American Express pursues a series of initiatives focused on technology advancements, the introduction of secure digital solutions and assistance in businesses to regulate payments.The bottom line of AXP beat estimates in each of the trailing four quarters, the average surprise being 35.38%. The Zacks Consensus Estimate for American Express’ 2022 earnings suggests growth of 1.1% from the year-ago reported figure, while the consensus mark for the same has moved north by 0.3% in the past 60 days. The expected long-term earnings growth rate of AXP is pegged at 20%, better than the industry’s average of 17.2%.Shares of American Express have climbed 39.2% in a year compared with the industry’s growth of 17.6%.Image Source: Zacks Investment Research Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through November, the Zacks Top 10 Stocks gained an impressive +962.5% versus the S&P 500’s +329.4%. Now our Director of Research is combing through 4,000 companies covered by the Zacks Rank to handpick the best 10 tickers to buy and hold. Don’t miss your chance to get in on these stocks when they’re released on January 3.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA): Free Stock Analysis Report Visa Inc. (V): Free Stock Analysis Report American Express Company (AXP): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksDec 28th, 2021

China isn"t the only nation nixing crypto. 50 other countries have placed bans on digital currencies to date.

Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, and Tunisia have outlawed crypto, according to the Library of Congress. Bitcoin and China. NurPhoto/ Getty ImagesNurPhoto/ Getty Images A Library of Congress report found 51 countries have total or near-total bans on crypto.  That's more than twice as many as three years ago when the last report was published.  China roiled markets earlier this year with a sweeping ban on activity in the crypto sector. Sign up here for our daily newsletter, 10 Things Before the Opening Bell. China isn't the only country to ban cryptocurrencies. In fact, another 50 countries have placed bans on crypto, according to a report from the Global Legal Research Directorate of the Law Library of Congress. Ther publication was first reported by Decrypt.The November report found the number of countries banning crypto "increased significantly" since the research first came out in 2018. Now, nine countries have an absolute ban, which makes crypto illegal, and 42 have an implicit ban, which prohibits financial institutions from dealing with crypto. That brings the current total to 51 countries -- more than twice as many as in 2018 when just eight countries had an absolute ban and 15 had an implicit ban. Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, and Tunisia are the countries that have outlawed crypto, according to the report. China, the world's second largest economy, roiled crypto markets with its clampdown earlier this year.Though the country has been making moves against digital assets for years, its crackdown on financial institutions transacting crypto and on crypto mining in May and June caused a steep drop in the price of cryptocurrencies. By the time it banned all crypto transactions in September, experts said the ban was already priced in for bitcoin. Tim Frost, CEO of fintech platform Yield App, told Insider previously that there's "no shortage" of other countries embracing crypto, offsetting moves by countries like China that have been hostile toward digital assets. The crypto market has ballooned to more than $2.5 trillion this year, according to CoinGecko data, and briefly eclipsed $3 trillion this quarter. With explosive growth, more countries are bringing crypto into the tax regime, as well as enacting laws meant to counter money laundering and the financing of terrorism, the report found. The report marked the United States, which is still grappling with how best to regulate the market, as having both tax law and anti-money laundering and terrorism financing laws in place. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 23rd, 2021

"No Longer Tenable" - Biden"s Marxist "Lenin Award"-Winning Banking Pick Pulls Out

"No Longer Tenable" - Biden's Marxist 'Lenin Award'-Winning Banking Pick Pulls Out Saule Omarova, the committed anti-capitalist and former "Lenin"-award-winning academic who has written about ending banking "as we know it", has withdrawn her nomination to be President Biden's comptroller of the currency after several influential Senate Democrats joined Republicans in opposing her nomination. That Omarova was ever selected by President Biden and his administration shows just how much influence progressives have on his agenda. Just last year, Omarova authored a paper proposing a new banking system where private banks were abandoned in favor of Americans transacting directly with the Fed using a digital dollar. Just the idea of this spooked the industry which rallied its lobbyists to oppose her nomination. During her first hearing before the Senate, John Kennedy, a Republican from Louisiana, tore her apart in this now-infamous exchange where he grills her about being a member of the "Young Communists", as he put it. "I don't know whether to call you professor or comrade," he added. While her backers, chiefly Warren and Sen. Sherrod Brown, accused Omarova's critics of resorting to "McCarthyism", Republicans have insisted that her background in the Soviet Union, and her writings since arriving in the US, suggest she's a far-left socialist who she can't be trusted to regulate America's biggest banks. But they've also drawn attention to things she has written and said to back their claims that her policy views are way outside the mainstream. For example, in addition to demolishing the banking industry, Omarova has said she wants oil and gas giants to go bankrupt in an attempt to address her climate change agenda, not thinking for a moment about all the chaos this would unleash. In a letter to the White House on Tuesday, Omarova said it was "no longer tenable" for her to seek the position of comptroller of the currency. President Biden called Omarova a strong advocate for consumers and a "staunch defender" of the financial system while accepting her request. "Saule would have brought invaluable insight and perspective to our important work on behalf of the American people," he said in a statement. "But unfortunately, from the very beginning of her nomination, Saule was subjected to inappropriate personal attacks that were far beyond the pale." But it's not just her policies that raise questions: Omarova also has a troubling record of shoplifting, as we discussed a few months back. Still, none of this stopped Sen. Brown from vigorously defending Omarova while smearing his GOP colleagues who sunk her nomination of engaging in a "relentless smear campaign". "Dr. Omarova is one of the most qualified nominees ever for this job because of her experience as a policymaker, in the private sector, and in academia,” he said. Powerful interests had “distorted” Ms. Omarova’s views, Mr. Brown added. "In a relentless smear campaign reminiscent of red scare McCarthyism, they have shamefully attacked her family, her heritage, and her commitment to American ideals,” he said. Although one could argue that she certainly made it easy for them. We're starting to wonder if Biden ever actually believed she would be confirmed by the Senate. Tyler Durden Tue, 12/07/2021 - 17:05.....»»

Category: blogSource: zerohedgeDec 7th, 2021

Facing The Chasm: The Future Of Bitcoin And The Metaverse

Facing The Chasm: The Future Of Bitcoin And The Metaverse Authored by Sebastian Bunney via BitcoinMagazine.com, Bitcoin will play a pivotal role in the transfer of information from the physical realm to the digital... We tend to think of the world as the past, present and future, and as these distinguished moments in time. However, we intuitively know that this is not the case. Instead, we are always in a state of flux, this slow progressive evolution in order to suit humanity’s growing needs, knowledge and demands. However, with change comes adjustment, and what we are facing right now is an adjustment to the digital realm, the world of Bitcoin and our digital identity: a crossing of the chasm, a state of change away from the physical realm of traditional finance, legacy structures and the world as we know it. This article is meant to highlight some of these critical hurdles brought up by Raoul Pal and Robert Breedlove in an effort to get the collective consciousness thinking about how we can transition to this digital realm with minimal volatility and entropy. WHERE DO WE START? One thing Raoul and Breedlove bring up many times throughout the talk is the metaverse. Therefore, let’s first ensure we are on the same page when it comes to the metaverse. We often hear the metaverse is the future; however, what most deep down the rabbit hole may argue is that the metaverse has been blossoming into existence since the birth of the internet. However, we are only just starting to define it now. Let’s go deeper ... Most of us tend to interpret the metaverse as this digital environment where we hang out in a virtual world- the world Mark Zuckerberg is pushing with his Facebook ads, i.e., Meta. But, I would argue that the metaverse is not this virtual world that it is made out to be, but rather a digital interface to one’s digital self. It is our digital identity where we interact with our online social community, manage our digital possessions and store our digital wealth, to name a few aspects which are currently easy to identify. With that being said, this osmosis into the metaverse is not a movement of people away from the physical world into the digital world, but rather a transfer of wealth and identity from the physical realm to the digital realm. Although many people already do and will continue to spend time in digital worlds in video games and social platforms, most of us will still very much be rooted in the physical world for the time being. Building on this idea, what will happen to physical assets? An asset’s value is subjective and is worth something usually because it provides value to us in some way or another. At the moment, our physical assets offer greater perceived value than our digital assets. This explains the discrepancy between the value of physical versus digital assets globally, e.g., real estate is worth over $300 trillion while the complete cryptocurrency market cap sits at $2.5 trillion (recently as high as $3 trillion). The question now is, how does this value shift over into the metaverse? This, I believe, is a demographic shift. As our population ages, those in earlier generations with limited exposure to the digital realm (i.e., digital identity, digital assets or digital possessions), will slowly bequeath their wealth to their offspring, which will find greater value as technology evolves in the metaverse. However, it should be noted that you will find utility and value in different areas and offerings within the metaverse depending on your age, values, interests, gender and location. Some people may choose to stay primarily in the physical world if the metaverse doesn’t seem to provide ample value to them. Others may dive in headfirst. Where are we now? We are currently in a state of limbo, one toe in the digital plane and the rest of the body out. Most of us have exposure to the metaverse when it comes to our digital identity, but only a handful of us find greater value in digital assets over physical assets, although this is quickly changing. However, as we see greater adoption, we will also encounter greater hurdles (technological, political, financial etc.). Taking this into account, this shift towards the metaverse isn’t something that will happen overnight. As previously mentioned, it is a generational demographic shift that has been underway since the invention of the internet. The transition from handwritten letters to email and social media was just the start. Now we should continue to see the transition of wealth, jobs, and identities to the digital plane. When can we safely say the metaverse is our reality? Just like inflation impacts everyone differently, as it is dependent on your consumption habits, what you classify as the metaverse is unique to you. There are many ways to measure your presence in the metaverse, i.e., by time, wealth, reputation, interests, job, hobbies or knowledge. With that in mind, some people may argue that we are already in the metaverse due to the amount of time we spend engrossed in technology. On the other hand, others may say we haven’t reached that inflection point just yet, or that the metaverse will become our reality when: We spend more time connected to the digital realm than the physical realm When digital wealth surpasses physical wealth When we’re able to vote for our politicians in this digital world When the majority of jobs are in the digital plane When we can digitally upload one’s consciousness ...and some will say the metaverse will never become our reality. My personal belief is that the metaverse is supplemental to our physical existence, and it is not one or the other. The metaverse eases our physical existence by dematerializing our limitations and constraints, such as distance, time, aging, wealth, connection, etc. However, there is and will continue to be an abundance of value in the physical world. But ultimately, this decision of whether we are or aren’t or what is versus what isn’t the metaverse is not for me to decide. I’ll pass that one onto you. Opinions aside, although the definition of what constitutes the metaverse may be subjective, what's not so subjective is that we are and will continue to face hurdles as we see greater adoption. THE CHASM Every new technology has to “cross the chasm” to reach mainstream adoption (the chasm is detailed in the image above). During this crossing of the chasm, we see creative destruction take hold, where legacy systems collapse and new technology changes the way we interact with the world. All new technology has some form of disruption. It’s just that some technology is more disruptive than others. Source With the introduction of the digital camera, we witnessed the dismantling and disruption of the traditional film market. But from this, we saw the boon of photography and documentation. However, when it comes to cryptocurrencies, we have only just started to scratch the surface of what is possible. Here is an example of some of the sectors this new technology has the potential to disrupt: The financial system (banking, remittances, micropayments, credit markets, to name a few) Social media and digital interaction The internet (our digital footprint) Voting Insurance From everything mentioned so far, it should be evident that we are in the middle of a major global state change, a transfer of identity, wealth, possessions and interactions from the physical realm into the digital realm. As Raoul and Robert eloquently explain, with this state of change in place, we have to overcome some major hurdles. We need to ensure we are heading in the right direction collectively. Therefore, we should ask ourselves, how do we get there safely, without a consolidation of power or the crippling of our economy? These are a few key questions we have to figure out before conquering the chasm of adoption. Let’s touch on a few key hurdles we have to face: TRANSACTION If an asset, such as bitcoin, is our primary currency and store of value and it is wildly outperforming the majority of other investment opportunities, then we will be disincentivized to transact and spend with it. Yes, there will be occasions here and there, but in general, the majority of the world we know will be starved of capital. This will push central banks to intervene and over-regulate in order to stop this capital flight from traditional assets to digital assets, but in doing so, it’ll only lock people into our failing system, delaying the inevitable and amplifying its negative effects down the line. Eventually, if we can predominately move across into the digital realm, this problem of capital flight will be solved. At this point, bitcoin will reach market saturation, similar to gold today, where it protects purchasing power but is no longer an asymmetric bet on technology and a failure of the current system. But in the interim, how do we take advantage of bitcoin’s positive properties while also promoting the exchange of bitcoin between one another? TAXATION In the short term, if we were to see a seismic shift of capital away from traditional assets and into digital assets, this starvation of capital from traditional assets would create sizable losses. Suppose traditional assets start facing major losses, while at the same time, there is a lack of transacting in digital assets, creating a reduction in realized gains; then we’d have a problem on our hands. We could see a significant decrease in capital gain revenue and an increase in capital losses, further eroding the tax base. This could push policymakers to implement overbearing regulation, resulting in measures such as taxation on unrealized gains. This would stifle the prosperity in the metaverse and limit the transition of individuals to the digital realm. In the long term, if we embrace a currency such as bitcoin as a legal tender: 1. The government will no longer receive capital gains tax from any appreciation in the value of bitcoin. This would be in line with the fact that a country’s legal tender is not subject to taxation if/when it appreciates/depreciates. 2. We live in an inherently deflationary world, whereby technological advancement allows us to get more for less. Over time this advancement increases productivity and efficiency, causing the cost of goods, services and assets to decline slowly. However, this is only possible under a currency with a fixed money supply (such as bitcoin). The lack of monetary expansion causing dilution would allow the currency to capture these technological gains. This may sound positive; however over time, most assets may decline in price, resulting in increased capital losses, reducing tax revenue. With that being said, one could argue that by adopting a currency such as bitcoin, the government will no longer be spending in a currency that loses purchasing power one day to the next. Therefore, all tax revenue will go further, making up for this reduction in tax revenue. If that is the case, then this may all come out in the wash. However, we should still be conscious of these potential taxation issues. With that in mind, how do we ensure that assets such as bitcoin are taxed appropriately, but as not to restrict their potential as a solution to our fragile system? And, how do we take into account an increase in capital losses? SUPPORT We are in the middle of one of the biggest revolutions in human history, and alongside this revolution, we face an assortment of immense deflationary forces such as: Demographics (an aging population with limited purchasing power) Our major debt burden consuming productive capital Technologies such as artificial intelligence (AI) and robots consuming jobs Competition in the workforce due to overcrowding of what jobs remain Currency debasement, destroying our purchasing power Monetary intervention suppressing interest rates and traditional asset returns Capital flight into the digital realm putting strain on the traditional system As these forces become more pervasive, it becomes harder and harder for the lower- and middle-income segments of the population to survive. This is a big issue! The majority of the population is under immense pressure as they are being squeezed from all angles. How do we give them a voice, meet their needs and stop them from revolting? One potential option Raoul proposes is embracing central bank digital currencies (CBDCs), allowing easier implementation of fiscal stimulus such as universal basic income (UBI). By doing so, we could redirect the flow of the capital away from asset owners and into the hands of the most at-risk individuals. This will aid in bridging the gap between the physical and the digital realm for the lower- and middle-wealth percentiles, allowing them to support themselves as these deflationary pressures take hold. My worry with this view is that CBDCs have the potential to give governments globally immense power and control. If this power is used in the ways mentioned above, then I am all for it. However, if CBDCs are used with the interests of the few in mind, this will only further consolidate wealth and power and could potentially end this utopian decentralized vision of the metaverse. Therefore, is there a way to implement CBDCs but somehow define the boundaries for which they can be used, preventing misuse and the centralization of power? However, regardless of which route we chose to bridge the chasm, Raoul does bring up a good point: if we are able to transition over to a decentralized metaverse and democratize this incredible technological boon in productivity and innovation, then we may be able to implement a natural form of UBI, where we could monetize our own digital identity. Although this is currently not possible, as our online corporations’ current structure is to capitalize off of our data by monetizing our every move, a decentralized metaverse shifts this power and revenue generation into the hands of the user. DECENTRALIZATION As technology advances, we are and will continue to see robots and AI replacing our jobs. Additionally, as energy costs slowly trend to near zero, we should see the cost of living slowly decline. Adding in the fact that we are witnessing a giant demographic shift where people have fewer children due to the costly environment we live in, this should cause gross domestic product (GDP) per capita to skyrocket. This could mean we are about to face one of the most productive periods in human history. However, with costs slowly working their way to near zero and jobs being replaced by technology, resulting in more time on our hands, will this considerable increase in productivity bring about: 1. A decentralized open-source world where we push for equality of opportunity and where technology is shared freely? If so, this could result in a renaissance period with a focus on culture, art, and science leading to immense prosperity, innovation, and growth; Or, 2. A darker, more centralized productivity boon where the vast majority of the patents pertaining to this powerful technology that now governs our lives is under the control of a few key players? In this case, we would most likely see significant poverty and some of humanity’s more challenging times ahead due to the centralization of power and wealth. On top of all that, we are currently seeing major global exploitation of our digital identities. Not only are we seeing our online data being used in for-profit activities, but we are also seeing targeted media leading to psychological manipulation allowing these large monopolistic entities to sway the population. Unfortunately, with everything mentioned above, the free market isn’t going to solve these hurdles we face in the way we want. It is going to solve them with the total accumulation of wealth in the hands of the few. Therefore, what can we do to ensure this powerful technology of the future is in the hands of the people while also promoting the continuation of free markets? With all that being said, how we approach these tough questions will define our future. Will crossing the chasm result in a: a) Decentralized Metaverse? This would be a bright future where creative destruction is encouraged: Where there is a dispersion of power within a decentralized metaverse, brought about by rules and regulations that prevent the destruction and manipulation of the free markets, all while suppressing the overbearing powers of monopolies that asphyxiate competition. It should be noted that we may still have nation-state fiat currencies, but globally, we’d embrace an immutable decentralized asset as our world reserve currency. This would lower the cost of living and democratize technology and finance, reducing wealth inequality. But more importantly, it would restrict the centralization of power with a technology that complements our deflationary world. b) Centralized Metaverse? This would look similar to the current state of play, where a handful of large corporations have overwhelming control over our data and access to vast sums of capital, allowing them to lobby, protect their interests, and influence politics. In addition to the suppression of creative destruction, will we follow in China’s footsteps and see the rise of CBDCs and social credit scores? This would give the government unfettered access to all our personal data, laying the foundation for the destruction of free markets and suppression of capital flows into any technology that poses a threat to the government’s power. Or will we walk the middle ground just like we have done many times throughout history, experiencing a give-and-take between centralization and decentralization? CONCLUSION We tend to think that when new technologies, — such as Bitcoin and the metaverse — appear, we all jump on board, and everything is hunky-dory. However, the reality is, if certain events had not happened the way they did, we might not have many of the innovations and advancements we see today. These technologies don’t just appear. They are years in the making, a culmination of previous technological progress and human endeavours. They emerge from our experiences, needs and desires, and they are a byproduct of decisions we made ten, fifty, one hundred years ago. With this in mind, coming together as a collective, and understanding the unintended consequences of our choices will help guide us in making more efficient and productive decisions for the future. The future is bright … if we make it. Tyler Durden Mon, 12/06/2021 - 20:20.....»»

Category: blogSource: zerohedgeDec 7th, 2021

Leapfrogging Legacy Banking To A Bitcoin Standard

Leapfrogging Legacy Banking To A Bitcoin Standard Authored by Mitch Klee via BitcoinMagazine.com, How looking at the history of technological adoption can give us insights into where Bitcoin could be embraced the fastest... INTRO Throughout time, technology has proven to change our lives by leveraging efficiencies in energy. New ways in how we hunt have saved time and energy for innovation and to live more intentionally. Currently, Bitcoin presents an immense opportunity to change the lives of those who are burdened by old forms of manipulated money and preserve their time and energy. It is the first self-sovereign, programmable money that is proving to destroy expectations of every “expert” imaginable. At the intersection of money and technology, Bitcoin's network effect is spreading like a mind virus to all corners of the globe. This is not a coincidence but the manifestation of a zero to one moment; a radical new technology that will change nearly everything it touches. This article explores the idea that some regions and nations have a higher susceptibility to adoption in new monetary networks. Specifically, I will outline how the unbanked populations of emerging countries can leapfrog legacy systems, straight into a new monetary standard. But first, let's lay the groundwork for understanding how this can happen with some concepts. DEMOCRATIZATION OF TECHNOLOGY To understand leapfrogging, let’s first look into something that naturally happens when humans produce technology: the democratization of technology. As we make technology, the cost reduces, while the ease of production increases. Our tools get better, people’s skills improve, securing the material for production gets easier, logistics improve, and everything is less costly as humans continue increasing the output/yield over time. Simply put, cost goes down, while production goes up. Figure 1. A great example is the printing press. Before this innovation, each book had to be typed out or written one by one and distributed almost by osmosis. This means books were more expensive and were only in the hands of the few. After the printing press, people were able to automate a portion of the process by creating blueprints of the books. This cut down labor costs, and there was a huge explosion in printed material. This may have put people out of work; but it also introduced better dissemination of information to a wider group of people and new opportunities to produce more books for less cost and effort. Another example is photography. Historically, taking photos on film took hours to produce in a dark room. The film had to be brought to a local expert and it would take several days to get back the finished product. Smartphones and photoshop technology made this essentially free. It was then possible to download an app or use the built-in app on smartphones, take pictures, and immediately process them. Democratization of technology has been happening across every single aspect of human society since the beginning of time. Humans create tools to make it easier and cheaper to survive. Each tool becomes better, we then expand and evolve with less energy improving the quality of life. Fast-forward to the internet age. Emerging countries are just now tapping into the power of the internet. Although there are many factors underlying the reasons for expansion, one thing that is known is that technology builds on itself, making each successive technology easier to produce. Not only is there growth, but there is exponential growth. Certain times throughout history, technology has made such a large leap forward that it allows extremely poor countries to skip the legacy technology and quickly adopt the new one. This is called leapfrogging. LEAPFROGGING EXPLAINED Leapfrogging is when the cost to produce one technology is too great for a population, so when a new, drastically cheaper technology is created it’s quickly adopted and the old tech is skipped. This is the coexistence and benefit of separate populations within society. Let's look at the mobile phone revolution as a way to explain leapfrogging. Some societies did not have the wealth or infrastructure to adopt landlines and phone communication when it was brand new, but when the mobile phone was introduced, this gave mostly everyone around the world the ability to opt-in. Figure 2. Landlines in the U.S., 1900–2019. Figure 2 shows the number of landlines in the U.S. population from the 1900s to 2019. Throughout the entirety of the 20th century, the landline was being adopted in the U.S. Consequently it only took a decade to dethrone this old technology. The decline started when the benefit of cell phones outweighed the cost compared to landlines. This is where democratization hit the tipping point and we saw a huge jump from one technology to the next. Now it’s extremely cheap to use technology that is 100 times or even 1,000 times more advanced than the previous. Mobile phones usurped landlines because they were more affordable, easier to use and more mobile. Figure 2 shows how quickly a society can adopt a technology that has significantly more benefits than the previous, even in an advanced society. A similar thing is happening with television and the internet. Netflix came out and disrupted how people consume media on the television. As more platforms emerged, and people realized they could pay a fraction of the cost for a Netflix subscription rather than $100 for cable and a bunch of commercials, the switch was easy. Legacy systems were bogged down by all of the brick-and-mortar stores and overhead costs. They could not compete and pivot quickly enough, so they lost their seat at the table. Figure 3. Number of telephone subscriptions in the U.S. versus worldwide. When comparing fixed telephone subscriptions to other countries, the U.S. was way ahead of most. Many factors were contributing to this. Wealth played a huge part, but much of it was the production and first movers’ advantage. The U.S. was the first country to set up telephone lines from Boston to Somerville Massachusetts and expanded from there. Other countries did not have this opportunity, so they were laggards in the technology simply by default. It also made it easy to have a grid to run on top of, being a technologically advanced country with a power grid. Because it was so resource-heavy to set up this grid, this took over 30 years to build up the infrastructure. Figure 4. Landline subscriptions compared to GDP per capita, 2019. One of the main reasons why it was so hard to increase telephone subscriptions in other countries is because of the initial cost. You can’t just tap into a telephone line, there needs to be a large grid, infrastructure and companies/governments willing to build out this grid. Figure 4 shows that there is a rough line at a GDP per capita of $5,000 to get off zero and start communicating via landline. As the GDP per capita grows in a country, it is more likely they adopt fixed landlines. This is a huge barrier to entry as they try and compete to be a part of the 21st century. With telephones, it brings an easier flow of information across long distances quickly. These are important technologies that helped first-world countries advance quicker than their counterparts. This technology could mean the difference between surviving and thriving in the modern era. Figure 5. Mobile phone subscriptions versus GDP per capita, 2019. Things get much different when you start looking at mobile phones in Figure 5. To have a mobile phone is drastically cheaper than having a landline, all costs considered. Before, you needed the infrastructure and everything that came with installing a landline phone. But with mobile phones, even at a GDP per capita of less than $1,000, you get ~50% penetration of adoption within the population. All of the countries that were left out of communication with landlines, now have leapfrogged the old technology, right into a new standard of mobile phones. People benefit, businesses benefit and countries benefit immensely from these technologies. With mobile communication, people have higher leverage over their energy output. Businesses and life in general are more efficient, in turn creating a higher GDP for the country. It is a feedback loop that is good for all of humanity. When one group of people creates new technology, everyone benefits at one point or another. FROM LANDLINES TO MOBILE PHONES TO INTERNET-CONNECTED SMARTPHONES Not only are poorer countries leapfrogging into mobile phone communication, but they are, in turn, jumping right into the internet age. On top of that, (Android) smartphone costs are dropping significantly every year, with the average cost down by 50% from 2008 to 2016. With the growing ability to connect with the rest of the world comes more opportunities to learn and grow with the rest of the world. An incredible amount of information is available on the internet, and the benefit of being on the network is immeasurable. Figure 6. Mobile versus landline subscriptions, worldwide, 1960–2019. When comparing the numbers of mobile phone users to the numbers of landlines, you get a huge disparity in the pace at which they were adopted. Fixed landlines were around for almost 50 years before they started to see some real competition. Thinking back to our Figure 5, this makes sense, because the cost to build infrastructure is drastically higher than that of mobile phones. The opportunity a landline brought to civilization was immense, but the cost-effective mobility of cell phones transcends previous communication technology by a longshot. As of September 2021, the world’s population was ~7.89 billion people. Of that, there are 10.5 billion cell phones with network connections. That is 2.52 billion more activated phones than there are people. This becomes thought-provoking when adoption data starts to reveal where mobile phones are headed next. As people adopt mobile phones, smartphones are becoming cheaper and more abundant. The cost of production for smartphones is less and less each year, and soon there will be little reason to have a cell phone without internet connection because the cost difference will be so minuscule. Smartphone abundance is allowing people around the world to tap into the internet and it is estimated that “by 2025, 72% of all internet users will solely use smartphones to access the web.” Figure 7. Share of the population using the internet, 1990–2019. Currently, the world is in a transitionary period of communication. Not all of the world has access to the internet, only 65%, with an increasingly rapid pace of adoption. Because it is so inexpensive to get a mobile phone, and the benefits are immense, the world is being onboarded at an incredible rate. To answer the question “What is Leapfrogging?” we can look directly at mobile phones. But it’s not just one leapfrog, it’s more of a continuous onboarding to the digital revolution for the entire human population. Things are getting cheaper, and technology is moving exponentially forward, toward a more connected future. Soon, everyone will have access to the internet and will bring about new and exciting opportunities for the world to grow. With the high rate of adoption in communication technology, mobile phones swept across low-GDP countries allowing information to spread. Smartphones are a small hop away from mobile phones. With smartphones comes all sorts of opportunities not to mention the connection to the world's internet. In developing countries, the internet is starting to hit its hockey stick moment. Adoption continues to grow and as smartphones get cheaper, more people in the world have access to the internet, connecting them to their local and global economies and new innovations will come about in unforeseen ways. This begs the question, what monetary network will they use to transact in the digital age? It's taken years to get the legacy banking system up to speed. We’ve bootstrapped and “Frankensteined” many different ways to connect the internet to a centuries-old banking infrastructure, but these newly onboarded countries have the opportunity to skip that altogether. With no legacy banking infrastructure rooted within the nation, this leaves the door wide open for a new legacy. LEAPFROGGING ONTO A BITCOIN STANDARD It seems the stage is set for a paradigm shift. A perfect storm is brewing in populations that lack bank accounts and access to store their wealth. Coupling this with connection to the internet, and 21st-century e-commerce and monetary system, it is impossible for countries not to adopt it. Because bitcoin is a global asset with no intermediaries, its infrastructure is inherently global. Any improvements to the network, the entire world will benefit automatically without having to update the old tech. Unlike landlines, there is no infrastructure to build, and the barrier to entry is almost zero. You just opt in with a bit of hardware and an internet connection. As of 2017, according to the World Bank, there are 1.7 billion adults in the world without a basic transacting account. Most of these countries with higher rates of unbanked are poor, have high rates of inflation and lower currency stability, not to mention a disconnected state government ripe with problems. This is extremely common when looking at currencies in other low-GDP countries. So, what are some of the biggest factors in which people would want or need to adopt Bitcoin? If we can answer this question, then maybe we can quantify and pinpoint which countries have the biggest opportunity and most to gain from adopting a Bitcoin standard. Figure 8. World’s most unbanked countries (Source). Figure 8 shows the top-10 most unbanked countries as of February 2021. The Oxford dictionary defines “unbanked” as “not having access to the services of a bank or similar financial organization.” Much like building the infrastructure for landlines, it’s expensive to build banks and serve the local economy. Not to mention, many of the people living in these countries don't have the amount of money that would warrant the cost of owning a bank account. Some even share bank accounts with members of their families to save on costs. There is a huge opportunity to solve the problem of banking in low-GDP countries, but many of the digital banking companies around the world are constrained by regulation and geographical jurisdiction. It may be hard to grasp the importance of a bank account having never lived without one, but without a bank, citizens cannot secure funds safely. Without secure funds, the future is uncertain. This is where Bitcoin can solve some of the problems in these less developed and emerging countries. There are three specific ways in which these problems could be solved. 1. Bank the Unbanked Bitcoin gives everyone the ability to be their own bank with something as little as a cell phone. All that's needed is to be connected to the network and accept funds. The smartphone does all of this. It allows people to download a bitcoin wallet, connect to the internet and start transacting. There are many ways in which one can use this wallet. Coincidentally, the countries above who have low banking numbers within their population, also have mobile phones and high internet penetration. This is an open door from a technological standpoint, allowing people to opt into Bitcoin and secure their funds digitally. In addition to using the Bitcoin network to transact on your phone, you can also use it as a cold storage solution. Cold storage is similar to a savings account. This savings account or cold storage is disconnected from the internet, making it harder for people to steal your funds. With the old technology of banks, you would have to pay for this solution, but with Bitcoin, it's free, just download the software and/or buy a hardware wallet. There are some cold storage solutions where you can pay for a hardware device, but creating a phone wallet and securing your keys, gives the people an entry point and on-ramp to storing their wealth in a digital bank. 2. Securely Store Value Over Time The second opportunity is the store of value function. Many of the countries that have unbanked populations and poverty issues are a result of a currency problem. In my previous article, “Bitcoin As A Pressure Release Valve,” I wrote that certain countries have hyperinflated currencies with no option but to turn to the black market. Most of the time, these countries use the U.S. dollar to transact since it holds its value better relative to their currency. Strictly from a monetary standpoint, bitcoin is scarce. It is the most scarce form of money there is. There will only ever be 21 million bitcoin in existence and when the value rises, the production does not increase. This is called elasticity or the lack of elasticity in bitcoin’s case. Unlike fiat money, no government, central bank or agency can print more. And unlike gold, silver or any other commodity, when the demand rises, the amount that is mined stays the same. The first completely inelastic asset in existence is a result of preprogrammed architecture, with consensus in the network that’s default is to not change the protocol. People that live in countries where the money is known to be manipulated, understand Bitcoin almost immediately. When the idea of something that can't be manipulated is presented, the concept of scarcity and 21 million is understood. With the reality of incorruptible money, the current regime in power can't stuff their pockets without alienating the population through force. These people understand this idea because they have experienced it firsthand. When food prices rise faster than people can spend a weekly budget on groceries, it is immediately apparent the importance of a completely scarce, un-manipulatable asset. In developed countries with low levels of unbanked, people have ways of storing their wealth. They have a 401k and IRA, and most people own property. This is a way of storing value over time. It may not be completely efficient, but it is sufficient enough to escape some level of inflation. The alternative would be to keep your dollars in a savings account, and the real yield of that is negative and not a smart way to store money. These countries put money in financial devices, because it is the smart thing to do and it preserves time and energy. Unbanked countries have no way of storing long-term value. It is degraded and evaporated through manipulation and high levels of money printing. Emerging countries cannot store time and value into financial instruments. There is no Apple stock or S&P 500 to put money into. They are stuck with low levels of wealth that are stolen away on an ever-moving treadmill. There is no way of truly saving value or energy spent over time. For the first time, Bitcoin gives the world, particularly those in emerging countries, the ability to hold their value in a closed system that cannot be inflated. Much like the opportunity the mobile phone brought to change communication, bitcoin is the first “store of value'' that is available for low-GDP countries to buy and hold. It allows them to securely transfer their wealth over time, without fear of inflation or confiscation. Add on top of that, if they need to transfer wealth out of the country and flee an oppressive regime, bitcoin is the first asset that gives the ability to do so. Large amounts of gold cannot be taken on a plane or property and homes cannot be transferred to another country. Bitcoin gives people the freedom to do what they want with their earned value, without fear of a centralized power removing it. Bitcoin preserves the fundamental human right of property. 3. Connection to the Digital Economy The third problem Bitcoin solves is connecting and transacting digitally. Being a digitally native asset, bitcoin smooths the rails of commerce allowing low-GDP countries to join the 21st century of commerce. This is huge, and what cell phones did for communication, digital commerce will do the same. It immensely increases our ability to transact and exchange value. Bitcoin allows anyone, anywhere, to join a digital transacting network and exchange value natively over the internet, whether in person or without knowing them at all. Digital economies move at the speed of light, while old-school economies move at the speed of osmosis. This brings more time and efficiency for people on both ends of the transaction. Businesses spend less time on transactions, widen their addressable market, and start putting more time and effort into other things that can improve their work. It is the difference between transacting daily in cash and using a preprogrammed point of sales system. It is simply better. Not only does Bitcoin make things easier and frees up more time, but it is programmable money. Like the internet, Bitcoin can be built in layers. Each layer brings a new way to use it that widens the possibilities and use cases. What the internet did for communication, Bitcoin will do for money. Combining all three of these factors, you get a massive magnetic pull toward adoption of the new technology. It is hard to slow the movement of technological adoption and impossible to stop. Like throwing a match on a tinder-filled hillside, years of opportunity build up in countries that lack technology where innovation and adoption prepare to explode at the right moment. QUANTIFYING BITCOIN ADOPTION IN LOW-GDP COUNTRIES Figure 9. LocalBitcoins and Paxful Vietnamese dong (VND) combined volume in Vietnam (Source). Looking at every one of the top-10 countries from Figure 8, they all have meaningful adoption in Bitcoin and it is growing every week. Not only is Vietnam number two on the unbanked list, but it is also number one on the “Chainalysis 2021 Global Adoption Ranking.” In fact, looking at Figure 10 of adoption through LocalBitcoins and Paxful, USD volume shows that every one of the countries in the top-10 list of unbanked have meaningful adoption. Figure 10. LocalBitcoins and Paxful Vietnamese dong (VND) combined volume. What does this tell us about Bitcoin adoption in unbanked countries? It tells us that it's working. Continuing to see these trends improve will be good for Bitcoin adoption and not to mention the countries in which they are adopting it. All the ingredients are there. Most are unbanked with high internet access and an unreliable currency that isn't natively digital. All you need is time for the adoption to take hold. There are also some concerns that come up when thinking about Bitcoin adoption. Like, “How can they adopt bitcoin when it is so volatile?” Well, there are a few solutions to this problem. The first is that when a population has no choice, something as volatile as bitcoin could mean the difference between losing 30% or losing 90% over the span of one year. Keep in mind that bitcoin is already solving three of the major problems listed above, we are just remedying the problem of volatility. First, look at just bitcoin and its use cases today. For some countries, their currency is just as volatile if not more volatile than bitcoin. Not only that, but it is volatile to the downside, continuing to lose value as the government steals and prints away spent time and energy. If bitcoin were to be used, sure it might be volatile, but this volatility is either short lived, or it’s to the upside. Now look at bitcoin while using it for everyday transactions through Strike, as a more technical solution. This solution is currently available now in El Salvador as a test case and is starting to roll out to more and more countries. People use the Bitcoin and Lightning rails every single day but transact in USD, choosing to either save in bitcoin or not. This solution gives the best of both worlds. One, a population has the ability to transact short term in a currency that isn't volatile, like other emerging countries. Two, this gives access to the payment rails of Bitcoin and the ability to save in the most scarce asset in existence. Looking back historically, bitcoin has grown at a 200% compound annual growth rate and this has the opportunity to conserve and grow wealth immensely. For someone in a developing world, this is life changing. As this trend of adoption in underbanked countries continues, new and exciting ways where Bitcoin is used will emerge. For the first time in history, countries have the ability to store wealth in something that cannot be stolen. It gives the opportunity to transact freely without the permission of the state or government, and it allows people to break free from imposed serfdom. Bitcoin is here and it is only getting bigger. There is a change in the tides of time, and Bitcoin is a once-in-a-millennia technology that is pulling the shores. Tyler Durden Fri, 12/03/2021 - 18:20.....»»

Category: blogSource: zerohedgeDec 3rd, 2021

Latest Treasury, Fed, & BIS Reports Confirm: All Twisted Paths Lead To Gold

Latest Treasury, Fed, & BIS Reports Confirm: All Twisted Paths Lead To Gold Authored by Matthew Piepenberg via GoldSwitzerland.com, The facts keep piling up, and recent BIS, Treasury and Fed reports confirm that all twisted paths lead to gold. In a recent article, I posed the rhetorical question of when will policy makers finally stop lying and allow honest facts and natural market forces to return? Lying is the New Normal Unfortunately, as we examine the two latest working papers from the Fed/Treasury Dept cabal and the Bank of International Settlements, each confirms that lies are officially the new normal. Over the years, we’ve tracked popularized delusions masquerading as policy with evidence rather than awe, addressing such topics as the open fictions of CPI inflation reporting and its “transitory” myth to the latest sample of double-speak spewing out of the Fed or White House. Frankly, these well-masked fibs happen so frequently we never run out of material, including Biden assuring us earlier—and once again last week– of an “independent Fed.” He’s trying a bit too hard to convince us, no? History (Debt) Repeating Itself History’s patterns confirm that the more a system implodes under the weight of its own self-inflicted extravagance (typically fatal debt piles driven by years of war, wealth disparity, currency debasement and political/financial corruption), the powers-that be resort to increasingly autocratic controls, distractions and automatic lying. The list of such examples, from ancient Rome, 18th century France, and 20th century Europe to 21st century America are long and diverse, and whether it be a Commodus, Romanov, Batista, Biden, Franco or Bourbon at the helm of a sinking ship, the end game for bloated leaders reigning over bloated debt always ends the same: More lies, more controls, less liberty, less truth and less free markets. Seem familiar? As promised above, however, rather than just rant about this, it’s critical to simply show you. As I learned in law school, facts, alas, are far more important than accusations. Toward that end, let’s look at the facts. The Latest Joint-Lie from the Treasury Department & Fed Earlier this month, the Fed and Treasury Department came up with a report to discuss, well, “recent disruptions” … The first thing worth noting are the various “authors” to this piece of fiction, which confirm the now open marriage between the so-called “independent” Fed and the U.S. Treasury Dept. If sticking former Fed Chair, Janet Yellen, at the helm of the Treasury Department (or former ECB head, Mario Draghi, in the Prime Minister’s seat in Italy) was not proof enough of central banks’ increasingly centralized control over national policy, this latest evidence from the Treasury and Fed ought to help quash that debate. In the report above, we are calmly told, inter alia, that the U.S. Treasury market remains “the deepest and most liquid market in the world,” despite the ignored fact that most of that liquidity comes from the Fed itself. Over 55% of the Treasury bonds issued since last February were not bought by the “open market” but, ironically, by private banks which misname themselves as a “Federal Open Market Committee” … The ironies (and omissions) do abound. But even the authors to this propaganda piece could not ignore the fact that this so-called “most liquid market in the world” saw a few hiccups in recent years (i.e., September of 2019, March of 2020) … Translated Confessions of a Fake Taper The cabal’s deliberately confusing response (and solution), however, is quite telling, and confirms exactly what we’ve been forecasting all along, namely: More QE by another name. Specifically, these foxes guarding our monetary hen house have decided to regulate “collateral markets and Money Market Funds into buying a lot more UST T-Bills” by establishing “Standing Repo Facilities for domestic and foreign investors” which are being expanded from “Primary Dealers” to now “other Depository Institutions going forward” to “finance growing US deficits” by making more loans “via these repo facilities (SRF and FIMA).” Huh? Folks, what all this gibberish boils down to is quite simple and of extreme importance. In plain speak, the Fed and Treasury Department have just confessed (in language no one was ever intended to understand) that they are completely faking a Fed taper and injecting trillions more bogus liquidity into the bond market via extreme (i.e., desperate) T-Bill support. Again, this is simply QE by another name. Period. Full stop. The Fed is cutting down on long-term debt issuance and turning its liquidity-thirsty eyes toward supporting the T-Bill/ money markets pool for more backdoor liquidity to prop up an otherwise dying Treasury market. Again, this proves that the Fed is no longer independent, but the near exclusive (and rotten) wind beneath the wings of Uncle Sam’s bloated bar tab. Or stated more simply: The “independent” Fed is subsidizing a blatantly dependent America. Biden Doubles Down on the Double-Speak Of course, as evidence of increasingly Fed-centralized control over our national economy now becomes embarrassingly obvious (yet deliberately hidden in “market speak’), it was imperative to roll out Biden from his nap-time and compel him to say the exact opposite. In other words: Cue the spin-selling. No shocker there…  Just 2 days after the foregoing and joint Fed/Treasury “report” went public, the U.S. President, talking points in extra-large font on his prompt-reader), announced that he is “committed to the independence of the Fed to monitor inflation and combat it.”    That’s rich. First, it’s now obvious that the Fed is anything but independent. They might as well share the same office space as the Treasury Dept. Second, the way the Fed “monitors” (aka: lies about) inflation has been an open joke for years. Inflation, as accurately measured by the 1980’s CPI scale, is not at the already embarrassing 6% reported today, but more honestly at 15%. Ouch. When compared against a current (and artificially suppressed) 1.6% yield on the 10-Year UST, that means the most important bond in the global economy is offering you a real yield of negative 13.4%. Think about that for a moment… Thirdly, the Fed is not about “combating” inflation, but rather encouraging more of the same to inflate away debt via negative real rates, as we’ve warned all year. And boy are they getting a nice dose of negative real rates now… In short, if Biden or other political puppets spoke plain truth as opposed to optic spin, his words would translate as follows:  “We are committed to unfettered dependence on the Fed to subsidize our debt and lie about inflation while encouraging more of the same.” Yellen—The Queen of Lies Meanwhile, Yellen chirps in during that same week promising to never allow a repeat of the 1970’s inflation level. Again, nice words; but when using the same CPI scale to measure inflation that was used in the 1970’s, the U.S. is already experiencing 1970’s like inflation. Recently, of course, Yellen openly blamed all our inflation problems on COVID rather than her own reflection. Again, the ironies do abound. Now, on to more acronyms and more, well, lies from above… Enter More BS from the IBS as to CBDC As if the spin coming out of DC was not enough to upset one’s appetite for candor, the Bank of International Settlements (BIS) has been busy telegraphing its own move toward more globalized central controls under the guise of a Central Bank Digital Currency, or “CBDC.” In a recent working paper, the BIS literally produced a graph whereby it foresees central banks issuing CBDC as legal tender issued directly to consumers. Read that last line again. And here’s the BIS’s own graph (or skunk in the woodpile) to prove we’re not making this crazy up: This literally confirms that despite Yellen, Biden and Powell’s recent promises to “combat” inflation (which they hitherto denied even existed), the BIS is now anchoring a new (i.e., more fiat) digital currency system which will send inflation to the moon—not to mention control and monitor the way consumers receive, use and spend “money.” Of course, this is quite convenient to the centralized power brokers. In one CBDC “swoop,” they can now create inflation while controlling consumers at the same time. Welcome to the twisted new normal. Thus, when it comes to the banking elite, it’s far safer to watch what they’re doing rather than trust what they’re saying. As we’ve warned for months, the banking/political cabal want more not less inflation. Why? Because that’s what all historically debt-soaked and failed regimes have wanted and done for centuries—inflate their way out the debt-hole they alone dug. All Twisted Roads Lead to Gold Needless to say, more liquidity, and more inflation, joined by more rate repression, truth destruction and currency debasement means gold’s recent bump north is just the beginning of the ride up and to the right for this “barbourins relic.” As we’ve said with consistent conviction and hard facts, not to mention spot-on inflation reporting, gold’s golden era has yet to even begin. As global currencies fall deeper toward the ocean floor in a sea of excess liquidity, gold, like an historically faithful cork, makes its way to the surface to get the final word. In short: It’s not that gold is getting stronger, it’s just that the currency in your wallet, bank and portfolio is getting weaker. Tyler Durden Wed, 11/24/2021 - 06:30.....»»

Category: blogSource: zerohedgeNov 24th, 2021

Returning To Sound Money

Returning To Sound Money Authored by Alasdair Macleod via GoldMoney.com, With the threat of dollar hyperinflation now becoming a reality it is time to consider what will be required to stabilise the currency, and by extension the other fiat currencies which regard the dollar as their reserve. This article takes its cue from Ludwig von Mises’s 1952 analysis of what was required to return to a proper and enduring gold standard —metallic money, particularly gold, having been sound money for thousands of years, to which everyone has always returned when government fiat currency fails. When Mises wrote his 1952 article the dollar was nowhere near the state it is in today. But Mises had had practical experience of what was involved, having advised the Austrian government during and after its hyperinflation of the early 1920s, making his analysis doubly relevant. As a remedy for the developing collapse of the dollar, this article can do little more than address the major issues. But it shows how an economic and monetary collapse of the dollar can be turned to advantage - the opportunity it creates through the destruction of Keynesian and other inflationist fallacies to secure long-term economic and monetary stability under which economic progress can be maximised. Introduction There are two charts which sum up why the dollar and fiat currencies tied to it will collapse if current monetary policies persist, shown in Figure 1. The growth in the M1 quantity since February 2020 has been without precedent exploding from $4 trillion, already an historically high level, to nearly $20 trillion this September. That is an average annualised M1 inflation of 230%. It is simply currency debasement and has yet to impact on prices fully. Much of the increase has gone into the financial sector through quantitative easing, so its progress into the non-financial economy and the effects on consumer prices are delayed — but only delayed — as it will increasingly undermine the dollar’s purchasing power. The more immediate impact on the High Street is also alarming, shown in the second chart. A combination of the covid lockdowns and Federal Government money ending up in consumers’ pockets has driven their liquidity relative to goods purchases to unprecedented and unaccustomed heights. This is the more worrying chart because it quantifies the immediate fuel for a potential crack-up boom. A crack-up boom is the condition whereby consumers finally discard the currency, spending it to just get rid of it. We are not there yet, but clearly, if consumers take the view en masse that prices will continue to rise, then they will attempt to reduce their cash balances all at once by bringing their future purchases forward, thereby driving prices up even further and more rapidly, and therefore the purchasing power of the currency down. But for the moment, it is mostly creating a scramble for real assets, such as housing, which for the moment can be bought with mortgage finance fixed at deeply suppressed interest rates. Given supply constraints, rising commodity prices, and other production costs rising as well as unaccustomed levels of consumer liquidity, the rise in prices can only accelerate. Unless there is a fundamental change in monetary policy, which requires the expansion of currency to be stopped completely, there will come a point where consumers finally realise that it is not prices rising but the purchasing power of the currency falling. This is a difficult concept for most people to grasp because they are used to regarding currency as always possessing the objective value in their transactions. The history of monetary inflations confirms that ordinary folk have always been reluctant to understand that the currency is declining until too late. But today, a significant minority of the population has already been alerted to this development by their participation in or observation of cryptocurrencies such as bitcoin. And if the wider population learns the same lesson and acts accordingly all hope for the currency will be lost. The reason that changes in the quantity of currency recorded by narrow measures such as M1 must be closely watched is that it is the underlying base upon which bank credit is expanded. When interest rates inevitably begin to rise, rates paid to bank depositors are likely to lag, improving lending margins for banks. Improved lending margins will encourage the banks to expand credit, for the benefit of government and agency bonds, and for speculators such as hedge fund managers looking to arbitrage the difference between borrowing rates and the dollar’s future purchasing power. The narrow currency quantity therefore has a multiplier effect with respect to bank credit when it begins to expand. A dispassionate consideration of these established facts leads the independent observer to conclude that unless today’s fiat currency system is secured with a sound money regime a collapse of everyone’s circulating medium is inevitable. Putting to one side minor central banks, the most egregious debaser of currency is the Fed, as the charts above attest. But with the dollar as the world’s reserve currency, where the dollar goes, so will all the other western currencies. Fixing the dollar must be the priority. In a revised 1952 edition of his The Theory of Money and Credit, Ludwig von Mises added a section on The Return to Sound Money. Mises, who had cut his teeth as an economist dealing with Austria’s 1920s inflation made proposals which are still relevant. Under the influence of Keynesianism, the monetary situation facing America today is rapidly deteriorating towards the circumstances faced by Austria in 1920-22, but with technical differences. This article attempts to update Mises’s section on the return to sound money for current conditions to provide a framework for the benefit of monetary stability and long-term prosperity. The intractability of current inflationism Central banks and their governments like to say that the reasons for an acceleration of monetary expansion are short-term and justified by being expedient. But these policies, often termed extraordinary measures to validate them, become normal as we have seen with quantitative easing. We can reasonably assume therefore that no meaningful attempt to rein in currency debasement will occur, more extraordinary measures will be invented, and that the explosion in the M1 quantity is far from over. Changing the official mindset is proving an impossible task so long as currency expansion is available. The Federal Government relies on it as a growing source for its funding, which allows it to ignore budget deficits. The state employs bureaucrats who agree with this policy and is advised only by economists who are prepared to justify it. The whole establishment is in groupthink mode and brooks no criticism over its inflationism. Furthermore, the administration has been democratically elected on a platform of continuing to provide free and easy money. This is not a sudden phenomenon, being progressively ingrained in the establishment’s mindset for a century. It commenced with the establishment of the Fed before the First World War, which then fuelled an artificial boom in the 1920s after the brief post-war recession. The American state gradually subsumed control over money, removing it from transacting individuals and finally replacing it with completely fiat dollars in 1971. The course that the state had set itself was bound to lead to where we are now; the expansion of dollar currency getting out of control. Nowhere in the Fed’s regular FOMC statements is there any mention of monetary policy per se. It is as if the quantity of currency in circulation is irrelevant to its purchasing power. It is an important cover-up, because if the relationship between the quantity of money and its purchasing power was admitted, then the Fed would have to exercise control over it. And not only would an admission of the relationship be a public acknowledgement of currency mismanagement, not only would the US Treasury come down on the Fed like a ton of bricks for jeopardising its source of non-fiscal revenue, but inflation of the currency would no longer be freely available as a policy tool. One likes to think that there are policy makers with an understanding that inflation is of the quantity of dollars in circulation and not its effect on prices. But for a long time, it has not been in anyone’s interest to think this way — anyone who did so has been re-educated, sacked, or left the building. This is the essence of groupthink. It is worth noting that elsewhere, Jens Weidmann who is a well-known inflation hawk is resigning from the Bundesbank. And Andy Haldane has resigned as Chief Economist from the Bank of England, with a parting shot on inflation. Both these gentlemen appear to have decided it is a fight they cannot win. The only chance of reform is from circumstances leading to the final abandonment of the neo-Keynesian policies that have promoted statism over free markets. And that is unlikely to occur before economic and currency destruction has become too obvious for anyone in control of economic and monetary policy to ignore. We cannot be certain that this realisation in official circles will occur before the public finally loses all confidence in the currency. But so long as any hope for its recovery lingers, it seems unlikely that monetary policy will be reformed. To statist economists, the argument for sound money and its adoption would not only be a negation of everything they have come to believe, but it will be seen as destroying all their so-called scientific progress, particularly since the adoption of Keynes’s General Theory as the economists’ vade mecum. Additionally, the use of statistics to guide policy, particularly of GDP and CPI, will have been found to have badly misled policy makers and markets. Along with statist management of the dollar, they must be abandoned. They are primarily tools for imposing state control on economic activity. The objective of the reformed approach is to return to free markets and sound money, which means handing responsibility for their actions back to economic actors, those who divide their labour and use money as the bridge between their production and consumption. These are a volte-face from current policies and are sure to be strongly resisted even in the face of contrary evidence. Monetary reform is bound to be delayed until the last possible moment. The state’s preference is always to retain and build on the control it already has. This is why there are plans to introduce central bank digital currencies, which, it must be noted, are designed to continue with inflationary stimulation by other means. But as revolutionary France discovered, the substitution of one fiat (the assignat) by another (mandat territoriaux) merely leads to the more rapid failure of the second. Once public trust in the state to not debauch the first currency is gone, it cannot be restored for a succeeding unbacked state currency. We can only assume that at some point in the dollar’s descent towards worthlessness the US Treasury will be prepared to mobilise its gold reserves to stop it becoming completely worthless. We shall now look at the measures that are required from that point to return to sound money, that is to back the dollar credibly with metallic money, only gold and silver coinage — anything less will not be a permanent solution. Initial actions to stabilise the currency At the time when monetary stabilisation becomes a practical proposition, interest rates and bond yields will have already been driven to previously unimagined levels, reflecting the currency’s collapse thus far. Write-offs from non-performing loans and losses on bond valuations will have almost certainly wiped out all the equity of weaker banks, and the survivability of the stronger ones will have become questionable as well. The Federal deposit insurance limit of $250,000 will have become meaningless and a banking crisis will become integral to the currency collapse as depositors attempt to flee from bank deposits into goods and gold. A collapse of the fiat banking system was not a material factor when Mises tackled the problem in 1952. He was absorbed with preventing the currency’s collapse in the future, a future which was some way off but is now almost upon us. The first action must be for the Fed to cease expanding the quantity of money and to introduce regulations to stop the expansion of total bank credit. The former is a simple task. In practice, controlling bank credit is also not difficult. If one bank increases its balance sheet, the increase must be matched by a decrease in the balance sheets of the other banks. This means that new loans can only be extended with the permission of the central bank centralising the information on bank and other licenced credit providers’ balance sheets. And net drawdowns of existing credit facilities must similarly be matched by repayments of others. This is intended as an interim measure pending further reform of the banking system. But the consequences for surviving banks will be significant and immediate. The stabilisation of the currency will lead to increased savings. The allocation of these increased savings to investment capital will be routed through bond markets instead of across the collective balance sheets of the banking system. It will be up to savers and their agents to decide individual borrowing terms. And all taxes on savings must be removed to enable them to recirculate into productive investment. However, these measures will be consistent with the plans for subsequent bank reform described below. The US Treasury will be competing for savers’ savings and will no longer have unrestricted access to bank credit. A bank wishing to increase its exposure to Treasury stock be able to do so by disposing of other assets, Alternatively, if other banks reduce their balance sheets permission might be obtained from the Fed on the lines described above. Whether buying Treasuries is a sensible commercial decision must be left to the individual bank, and Basel-originated regulations designed to give preference to government bills and bonds over other classifications of assets must be repealed. The objective is to permit the government and its agencies to borrow but only on a non-inflationary basis, with the investment decision purely decided by investors, their agents, and bankers making their own risk assessments without regulatory bias. It is doubtful at this stage of the hyperinflation that economic activity would suffer overall from the loss of state intervention. The economy will already be in the deepest slump in living memory, with interest rates at unimaginable heights and beyond the Fed’s control. Anyone going bust will have most probably done so already. In these conditions there cannot be a better time to ensure the state withdraws from economic and monetary intervention and to introduce plans to stabilise the currency. But on their own measures to halt currency and credit expansion would be insufficient to stabilise the dollar and dollar interest rates beyond a temporary basis without further measures, which must be our next consideration. The return to a gold standard To stabilise the dollar the US Treasury must recognise that gold is money and the dollar an inferior currency. Accordingly, all taxes on physical gold and silver must be removed, and both metals be permitted to be freely exchanged by the public for dollars. Given that the circumstance of the reintroduction of a gold standard are likely to be those of a last resort, we can assume that the market will have already repriced the dollar in gold terms. That being the case, the exchange ratio between gold and the dollar can be fixed along with the arrangements permitting gold coin and the dollar to circulate together, with the dollar and dollar-credit being converted into reliable gold-backed substitutes. Legislation would have to be enacted to enshrine gold convertibility as an inalienable property right, never to be taken away from the public in future. This must also remove future devaluations as a government option, and even in the event of a crisis, such as a war, full convertibility must be maintained. A new body must be established, or the role of the Exchange Stabilisation Fund amended to act only as the custodian for the relationship between dollars and gold, with the nation’s gold reserves transferred to its control. We shall call this fund the Exchange Stabilisation Fund (ESF) hereafter. Dealing in foreign currencies and SDRs by the ESF must cease, and no other government or central bank entity be permitted to deal in gold. After acquiring its initial reserve from the Treasury, the ESF cannot be permitted to initiate gold transactions. Only dealings initiated by the public, exchanging gold for dollars or dollars for gold are to be permitted. Thenceforth, the expansion of dollars in circulation must be backed 100% by gold to be held transparently in a special account for that purpose. The basis of convertibility must be on coins freely demanded by holders of dollars without limitation. Legislation must be passed for gold coins to be struck in suitable currency denominations to ensure their practical circulation. Silver coins must also be reintroduced by law for smaller amounts, and the issuance of paper notes suited for smaller purchases must be rescinded to ensure that silver coins and the smaller gold coins circulate. The purpose of coin circulation is to permit the public to continually vote on the government’s adherence to the new rules. The slightest indication that it is considering breaking them will, in accordance with Gresham’s Law, drive the good money out of circulation: in other words, gold coin will be hoarded, and its paper substitutes disposed through spending. The knowledge that this is so will discourage politicians from considering watering down the standard. The gold/silver ratio should be struck to give silver coins a minor premium over their bullion value to ensure they remain in circulation and are not diverted for industrial use or arbitraged into gold. This will avoid the pitfalls that plagued bimetallic standards in the past. The introduction of a working gold coin standard on these lines will lead to a rapid fall in borrowing rates from their hyperinflation highs. The sooner it is operating and the currency stabilised, the quicker the economy can return to normality, which will be an obvious benefit for those persuading the public the merits of sound money. Interest rates will then correlate with the general level of wholesale prices. The reason for this correlation is that sound money allows producers to calculate for their business plans with a high degree of certainty about final prices. With that certainty in mind, they can then assess the rate of interest they are prepared to pay savers for an enterprise to be profitable. The disciplines of a working gold coin standard will also require other changes to take place. Government reform The time during a currency collapse when it might be adapted into a proper gold standard is also the most dangerous politically. The population will be suffering real hardships and dangerously disaffected from the establishment that steered them onto the economic and monetary rocks. The middle and professional classes will have lost nearly everything. It is a political situation ripe for violent revolution. It drove the French revolution and following the First World War drove Germany into Nazism. It is the setting described by Hayek in his The Road to Serfdom. The departure from proper economics and the move towards increasing state control over the people militates for yet more socialism and violence, with a total monetary collapse being the excuse for total oppression of the people by the state. If that happens, the outcome is a different course of events from the constructive one proposed here. But we must assume that the great American nation, for all its recent faults and having lost its way with economics and socialist drift, pulls back from the brink of the abyss. Unlike Germany following its hyperinflation of the 1920s, America’s population is ethnically diverse, comprised in the main of the descendants of refugees from political and economic oppressions elsewhere. We should accept that when the outlook is darkest, a Hayekian-described dictator might not emerge, but a statesman instead, like an Erhardt, who emerged for Germany in the late 1940s. Paradoxically, public support for a reform of the American currency system probably offers a better chance of success than similar measures taken elsewhere. We must proceed with that assumption. The popular mandate for the role of government in the economy to be radically revised will therefore become available. Without the cover of inflationary financing, an economy based on sound money is more obviously incompatible with a high-spending government, which must then reduce its burden on the productive economy to the minimum possible. At its most fundamental, its obligation to provide mandated welfare must be strictly curtailed. The ambition is to reduce the role of government to framing and upholding the law and maintaining national defence — not to be confused with funding military adventures abroad. Foreign policy must return to that of Britain in the days of Liverpool, Castlereagh, and Wellington following the Napoleonic Wars: never to interfere in another nation’s internal affairs. And regulations must be rescinded to permit free markets to regulate themselves. It will require economic understanding, statesmanship and perhaps a few years to fully achieve all these objectives. But given that the purchasing power of the dollar will have already depreciated substantially, the costs of welfare, such as state pensions and unemployment benefits, will have already degenerated in real terms. Furthermore, the population will be staring into an economic and monetary abyss, reducing their opposition to substantial cuts in state spending. Only in these circumstances will it be possible to take the necessary action, and the opportunity will be there. An initial target of reducing Federal government spending to under 20% of GDP and cutting taxes accordingly should be followed by a target of less than 15% of GDP in due course. Banking reform Following extensive debate between the currency and banking schools, England’s Bank Charter Act of 1844 was the watershed that validated bank credit cycles. The destabilising effect of these cycles led to Walter Bagehot’s concept of the role of The Bank of England being the lender of last resort, the excuse for central banks in the future to increase their powers of intervention. By the time of the 1844 Act, banking law and double entry bookkeeping had established the method of credit creation, which is different from that which is commonly understood. A bank commences the expansion of bank credit by making a loan to a customer, which appears on its balance sheet as an asset. At the same time, double entry bookkeeping demands a contra entry, which is achieved by the bank crediting the customer with a matching deposit, which continues to balance as the loan is drawn down. The bank’s balance sheet has expanded without its own capital being involved. The expansion of credit is monetary inflation, which eventually feeds through to rising prices, leading to increasing interest rates. Economic calculations made earlier in the credit cycle begin to go awry, and bankers eventually become cautious, contracting their balance sheets mindful of the gearing ratio between their equity and total liabilities. Alternatively, carried away by the apparent improvement in trading conditions, banks speculate in areas where they lack expertise or became overexposed and lack an exit. These were the respective reasons that Overend Gurney in 1866 and Barings in 1890 failed. Whatever the cause of their contraction, these cycles of bank credit lasted about a decade on average. A reformed gold coin standard must be complemented by the elimination of bank credit cycles. To eliminate it entirely would require banking to be segregated into two distinct functions, one to act as a custodian of deposits with ownership remaining with the depositor, and the other to act as an arranger of finance for fees or commission. This would eliminate bank credit entirely. The evolution of modern finance has led to the development of shadow banking, some of which has led to the creation of credit off-balance sheet by the banks or by unregulated entities. Measures should be taken to identify and end these practices. But given that shadow banking is the product of the interaction between the growth of fiat money and purely financial activities, shadow banking is likely to decline, or possibly even disappear with the end of fiat and the introduction of a gold standard. Furthermore, the speculative bubble in cryptocurrencies, whose rationale is purely to hedge against the relative expansion of fiat currencies, will lose the reason for their existence beyond the purely technical innovations, such as the blockchain, that they bring. The ending of these speculative activities generally will reduce even further the perceived need for bank credit expansion, particularly for those banks funding purely financial activities. Once the public and foreigners are confident that the dollar’s gold standard is firmly established it is likely that gold will flow back into the Exchange Stabilisation Fund, giving it yet more cover for future dollar redemptions and therefore credibility for the standard. The benefits and workings of a new gold standard With the dollar on a credible gold standard, there can be little doubt that other fiat currencies will develop similar monetary policies. The whole world works with the dollar as the international currency, even Russia whose energy earnings are paid to her in dollars, and China whose raw materials from abroad are sourced nearly entirely in dollars. The replacement of fiat dollars with dollar-denominated gold substitutes will change currency priorities for all other nations. They will confront the same issues that faced the European nations in the second half of the nineteenth century, when Britain with her empire dominated global trade. Not only was there a drift towards free trade (for example, the Cobden-Chevalier Trade Treaty between France and Britain in 1860) but the European nations adopted similar gold standards. If America establishes a credible gold standard, any nation not following suit is likely to see its currency collapse. Critics may say that instead of operating their own gold standards, other nations will simply operate dollar currency boards, throwing the burden on America to provide a global monetary standard. This would not be a problem, so long as the rules of 100% backing are followed by America. A country adopting a dollar standard for its own currency will have to acquire dollars, which it can only do for gold submitted to the Exchange Stabilisation Fund. By providing a simple solution to other national currency problems the ESF would therefore see substantial gold inflows, further securing its domestic and international currency position. The key is for the ESF to administer the new monetary rules, enshrined in law, to the letter. Once the new gold standard is fully established, demand for circulating dollars will be set by markets and can be met by the ESF issuing dollars only on a 100% gold backed basis. Imports must be paid for in gold-backed dollars, and because monetary discipline will force government deficits to become a thing of the past, trade deficits will tend to be as well. Changes to gold’s domestic purchasing power might be expected through changes in the savings rate, being the allocation between consumption and deferred consumption. Variations in the savings rates may be expected to drive price differentials between nations, but this would be an error. This is because a rise in domestic savings will tend to reduce domestic prices and increase exports, leading to an importation of gold. But the extra gold or gold-backed dollars in circulation from an export surplus will have a contrary effect, supporting prices so that there would be little change. By way of contrast, a fall in the savings rate would be expected to lead to a tendency for domestic prices to rise and therefore to an increase in imports, and a corresponding outflow of gold. But the outflow of gold will then tend to act to reduce domestic prices, thus stabilising the effects of increased domestic consumption. In terms of cross-border trade, the benefit of a gold standard and its associated rules is to eliminate trade imbalances and price differentials as a cause of economic disruption, depoliticising global trade and promoting overall price stability. The peoples of individual nations can therefore set their savings preferences without affecting the general price level. It permits producers to make business calculations with a high degree of certainty of output prices, not only for domestic markets, but international ones as well. Gold supply factors Unlike proposed distributed ledger cryptocurrencies acting as the future form of money, the merits of a working gold standard are found in its flexibility. The growth of the amount of above-ground gold has tended to match the increase in the world’s population over time. But not all gold is held for monetary use, with more than half of it being estimated to be in jewellery, and a smaller amount allocated to industrial use. But much of the gold jewellery is quasi-monetary, being regarded as a reserve store of monetary value particularly among the populous Asian nations. There is, therefore, a flexible stock of non-monetary gold available through market mechanisms to support a global monetary standard. The difference between a gold or gold exchange standard and fiat currencies is that the allocation of gold between its uses is determined by people through markets, and not by governments and their monetary policies. This means that the course of prices both generally and for individual products are set only by supply and demand. Price stability is the outcome, with competition, improved production methods and technology tending to reduce prices over time and rising living standards for all. This is the background which encourages savers to put aside some of their earnings, knowing that their savings’ purchasing power will be maintained, and even likely to increase over time. For these savers, financial asset values will no longer be driven by excessive quantities of fiat currency. With the infinite feed of fiat currency removed, outright speculation will become a thing of the past, replaced by genuine risk assessments of individual bond issuers and of equity participations. The expansion of fiat currency will no longer be available as the principal fuel driving financial asset values. It will be a different monetary environment, where capital will be scarce and therefore valued. Capital will be less wasted on spurious projects. It will be the basis for recovering economic progress, so sadly lost at an increasing pace since the dollar became purely a fiat currency. It is apt to end by quoting von Mises’ concluding paragraph to his 1952 addition on currency reform in his The Theory of Money and Credit, the inspiration for this article: “Cynics dispose of the advocacy of a restitution of the gold standard by calling it utopian. Yet we have only the choice between two utopias: the utopia of the market economy, not paralysed by government sabotage on the one hand, and the utopia of totalitarian all-round planning on the other hand. The choice of the first alternative implies the decision in favour of the gold standard.” Tyler Durden Sat, 11/20/2021 - 08:10.....»»

Category: blogSource: zerohedgeNov 20th, 2021