Fed President Admits: [We’re Shitting Ourselves!]

James Bullard, St. Louis Fed President, is the latest old banker to ring an alarm bell of sorts stating in a fairly emotionally charged use of words that new inventions, such as blockchain technology, cryptocurrencies and ICOs, might “eviscerate” big banks if regulators do not do something about it.
Referring to Dodd-Frank, he said “we are fighting the last war,” before adding that growing competition from fintechs has become the “number one issue.” He says:
“We need to speed up our consideration of the fintech issues and think harder about what is the regulatory environment that is going to be appropriate. I think we have been complacent so far.
That is the battleground for the next ten years. It is not the same as the battleground for the previous ten years.”

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Bitcoin Jesus – A Bitcoin Country!

Thats right you heard correctly. A Frikin Country! You know, with land, people, infrastructure..

By Amy Castor – Bitcoin Magazine
Imagine a country where you could live free without a central government telling you who to be, what to do and how to act. Roger Ver [AKA Bitcoin Jesus], does, and he is inviting people to join him on a ground level in plans for creating a libertarian utopia.

Ver, who is founding the project along with Olivier Janssens, another early Bitcoin investor, stated he has already raised $100 million, but hopes to raise plenty more. “We were planning to have an ICO, but the regulators have kind of gotten in the way of that at the moment…we are working out the details as to how people can participate directly,…Thanks to cryptocurrencies, now there is a way to fundraise for people all over the world who are interested in this. Myself and my other friends all have a fair amount of capital now because of cryptocurrency. Dying with a pile of money isn’t any fun, so let’s make the world a better place”.
                                                                              Blockchain Government?
“….instead of laws, there will be guidelines similar to what someone might agree to before joining a condominium homeowner’s association. Everybody can do whatever they want within the guidelines, and they will be agreeing to the guidelines by the time they purchase in. There will not be a government. It will all be private institutions and private organizations,”

The idea is to purchase land from a government that will allow sovereign behavior. “…I think the main answer is there isn’t going to be some centralized institution imposing these rules. That is what we are trying to escape.” He also emphasized that there would be no taxes. People would need to raise money for roads and other projects on their own.


Bank Inefficiency

By Simon Black – Soverign Man
Just today I received a payment to the bank account of our agriculture company here in Chile; the wire transfer originated in the United States, yet took three days to arrive. Along the way, the banks took around $500 in fees. Around $150 of that was the wire transfer fees charged by the sending bank, receiving bank, and correspondent bank, plus another $40 in fees charged by SWIFT, the international payment messaging service.

On top of that, the sending bank charged a fat fee to convert the funds from dollars to pesos even though we explicitly instructed them to NOT convert. Then the receiving bank charged another fat fee to fix the mistake and convert the funds back from pesos to dollars. Unbelievable.

A cryptocurrency payment over the blockchain, on the other hand, would have taken minutes… maybe an hour or two at most. And cost less than $1. As I’ve ranted about in the past, the crypto market is full of bubblicious irrationality at the moment. But the underlying technology is still revolutionary and highly disruptive. But crypto’s power and potential is not in conflict with gold. Both represent a decentralized form of money. Both represent an alternative to the banking and monetary system.

The Global Elite’s Crackdown on Bitcoin

By James Rickards-Daily Reckoning.
Many advocates of bitcoin and other cryptocurrencies have a naïve belief that their digital assets are ‘beyond the reach of governments’, ‘cannot be traced’, and ‘cannot be frozen or seized’. But it’s really not true.

..using bitcoin on the dark web is a haven for criminals, arms dealers, tax evaders, and state enemies of the US. How long will it be before the US joins the effort to shut down, interdict and disrupt bitcoin message traffic on the dark web and the bitcoin exchanges themselves? ..Governments enjoy a monopoly on money creation and they’re not about to surrender that monopoly to cryptocurrencies like bitcoin.

..Governments don’t want to kill it; they want to control it..They seek to do so using powers of regulation, taxation, investigation, and, ultimately, more coercive powers, including arrest and imprisonment of individuals who refuse to obey government mandates with regard to blockchain.

..the blockchain depends on critical infrastructure, including servers, telecommunications networks, the banking system and the power grid, all of which are subject to government control, ..That’s the back door governments will use to regulate and control the blockchain. ..If the power grid goes down for whatever reason ..good luck accessing your bitcoins. Bitcoin may have made you a millionaire on paper. But what good does it do if you can’t access it when you need it most?

India’s Central Bank Plans to Digitize Rupee-“Not Comfortable” with Decentralized Cryptos

The RBI is looking into creating a fiat cryptocurrency to replace the Indian rupee according to its executive director Sudarshan Sen, Economic Times reported. “Right now, we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian rupee, so to speak. We are looking at that closely,” Sen said at the India Fintech Day conference. He further expressed that the country was not comfortable with Cryptocurrencies that were decentralized… “As regards non-fiat cryptocurrencies, I think we are not comfortable,” Sen said, adding “Bitcoins for example. That’s a private cryptocurrency.”

..The government of India has previously announced its “Cashless India” initiative, a vision to transform the country into a digitally-empowered society and knowledge economy. Some predict India’s digital economy will reach $1 trillion by 2022, from $270 billion today. A key component of this forward-thinking vision includes the India Stack, an ongoing project to create a unified platform to bring India’s population, banks and payment providers into the digital age.

Earlier this month Coinivore reported the Institute for Development and Research in Banking Technology (IDRBT), founded in the 1990s by the Reserve Bank of India (RBI), is seeking to create a spectrum of banking-related services on top of the new proposed blockchain technology. Historically India has embraced going digital more than any other country and we may see India being the first country to do so. In November of last year, Prime Minister Narendra Modi pushed for withdrawing the Indian rupee bank notes. Modi later double-down on his plan, calling for India to embrace digital money a month later. Then the Indian government went on to begin amending legislation to further those plans. With the director of India’s central bank coming out speaking about digitizing the Rupee plans are moving forward in India to fully make a digitized economy a reality.

Fintech Picking Banks’ Pockets

By Ryan Dinse – Money Morning.

I got some good feedback from Wednesday’s article on how fintech is a big threat to the banks.

Good feedback in that it was interesting, even if some of it wasn’t positive! There were some very good points, which I think need to be addressed.

David wrote:

This article misses the point.

The banks do not make most of their money from providing a platform for exchange of funds between governments, businesses and natural people. Blockchain technologies may well replace this role of banks as financial intermediaries but this is a peripheral business.

The banks make their real money from their monopoly right to create credit out of thin air, literally nothing, and charge interest on the money thus created that had prior existence whatsoever.

Very few people grasp this fact although it is fully explained on the Bank of England’s website in their series “Money in the modern economy”.

Until this magical power of money creation is removed from Banks or given to rival organisations who in effect would play the role of banks in money creation, they will always be profitable as long as they remain prudent in their leading practices.’

Let me start by saying that I agree with David’s comments.

To an extent…

To quickly summarise the original article…

I started by saying that Open Data policies, as seen in the UK, could drive an increase in bank switching.

Australia’s big four banks are the most profitable in the world. Their customers are generally not happy. But they stay due to the difficulty in moving banks. Part of this difficulty is rooted in psychology.

Because the original decision to choose a bank requires a lot of effort to research the right information and set up accounts, this ‘sunk cost’ has a value to us. A value that makes us less likely to move banks. Mandated ‘Open Data’ policies and new financial technology reduce the effort required to compare and switch. Thus making customer more likely to switch. This will mean banks have to be more competitive in their pricing. Thus reducing profits.

That was point one and is more to do with fintech putting pressure on the very high — by world standards — profit margins enjoyed by Australia’s big four. But the broader point David makes is that the license to create credit underpins banks’ profitability. And fintech wouldn’t make a dent in this fact. It’s a valid point. And it will not change in a hurry. But it could eventually. How?

Let me explain.

The power of fractional reserve banking

David’s right to point out that the fractional reserve banking system is the key driver of bank profits.

This is the system whereby a bank can lend out a multiple of what it takes in from savers.

A blockchain future that is simply a better ‘piping’ mechanism for making transfers doesn’t dent this advantage.

I’ll get back to this shortly…but first, fractional reserve banking.

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“If you were a drug dealer, a murderer. . .” open an account at JP Morgan

By Simon Black – Soverign Man.

On Tuesday afternoon, Jamie Dimon, the CEO of banking giant JP Morgan, let loose on Bitcoin.
He was speaking at the Barclays Financial Services conference, and when asked whether his bank employs any Bitcoin traders, he responded-
“If we had a trader who traded Bitcoin, I’d fire them in a second,” calling any trader who deals in the cryptocurrency “stupid”.
He went on to say that Bitcoin is a “fraud” and “won’t end well”.
Now, Dimon is a brilliant executive and banker. He knows his stuff. But… fraud? Really?
My dictionary defines fraud as “wrongful or criminal deception intended to result in financial or personal gain.”
That term seems to more aptly describe the banking industry that Dimon represents.
From Wells Fargo’s illegal opening of fake customer accounts to the constant manipulation of interest rates, exchange rates, and asset prices, outright FRAUD is standard practice among big banks.
Dimon also stated that Bitcoin is primarily appealing for criminals– “if you were a drug dealer, a murderer, stuff like that. . .”
Again, this is a totally baseless and confounding statement. 10+ million Bitcoin users are drawn to the cryptocurrency for a multitude of reasons.
For some, the fact that it is decentralized is a major factor. For others, it’s the low transaction cost.
Sending an international wire transfer through the banking system, for example, can take three days and cost $100. With Bitcoin it takes an hour and costs less than a dollar.
Sure, criminals might use Bitcoin. They also use Amazon.com gift cards and government bonds.
Ironically for Jamie Dimon, criminals even use JP Morgan bank accounts to launder their money, considering that the bank has paid BILLIONS in fines over the last few years for failing to detect their customers’ illegal activities.

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Have the Banks Had Their Kodak Moment?


By Ryan Dinse – Money Morning.

Fintech is coming…

And the banks are in big trouble. Especially Australia’s big four.

I’m going to put some facts on the table. Then I’ll explain why the big four Aussie banks might have already lost the fintech war to come.
But first, let me briefly recount Kodak’s tale of woe, and explain why it’s so relevant today.

You see, it all stemmed from one moment. The invention of the digital camera. And what’s worse, they invented it!
Founded in 1878, Eastman Kodak [NASDAQ:KODK] was once a global technology powerhouse. Big, dominant, unassailable. The Apple Corp. [NASDAQ:AAPL] of its day.

It had retail film developing locations all over the world, and employed over 145,000 people.
Like me, you might remember the old days of taking photos on holiday, then taking the film to get developed when you got home.
The results were often surprising. My Nana always managed to cut the head off my Dad, her son-in-law.  No one was ever sure if it was deliberate or not…

Anyway, with the benefits of digital clear, the Japanese companies took over the camera revolution. This spelled the end for Kodak as we knew it.
It still exists today, but is a shadow of its former self, and was even in Chapter 11 bankruptcy in 2012.

Why didn’t Kodak just switch to selling the very product they invented, digital cameras?

It seems easy in hindsight, but you have to remember this: they made fat profits from the old way of doing things.
They had thousands of branches around the world making regular profits from the development of film. They owned 90% of the film market.
What CEO in their right mind would be brave enough to turn off that lucrative tap?

By the time Kodak realised the digital camera revolution was happening with or without them (and they were losing film sales rapidly), it was too late to change course.

Decline of Film 13-09-17 Source: HBS.org

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The War on the US Dollar Could Crash Stocks

By Jim Rickards – The Daily Reckoning.

Over the last couple of years I’ve been all over TV…from Fox News to CNBC, CNN and Bloomberg.

I’ve been telling our fellow private investors all over the world, the US to the UK to Australia, that the financial global elite is planning to issue their own globalist currency called special drawing rights, or SDRs.

And that those elites would use this new currency to replace the US dollar as the global reserve currency.

I’ve even written about this extensively in my best-selling books The Road to Ruin and The New Case for Gold.

I’m sure some people in the mainstream media think I’m out of line — but the United Nations and the International Monetary Fund (IMF) have both confirmed this plan to replace the US dollar is real.

I’ve made this warning many times, but it seems to be falling on deaf ears. That’s why I’m writing directly to you.

Here’s an example that the US dollar is under attack, right in front of our eyes:

The UN said we need ‘a new global reserve system…that no longer relies on the United States dollar as the single major reserve currency.’

And the IMF admitted they want to make ‘the special drawing right (SDR) the principal reserve asset in the [International Monetary System].’

More recently, the IMF advanced their plan by helping private institutions, such as the UK’s Standard Chartered Bank, issue bonds in SDRs.

Although our mainstream media ignored this major event, the UK media reported:

This is all happening.

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With Scumbags like this, it’s easy to understand why Bitcoin is at $4600…

By Simon Black – Soverign Man.

File this one away under ‘utterly repulsive.’
As you probably heard, yesterday the US-based credit reporting agency Equifax announced a massive cyberattack that affects as many as 143 million consumers.
Names. Birth dates. Addresses. Social Security Numbers. Even some credit card numbers were stolen.
Literally over one third of the entire US population is at risk of identity theft now thanks to Equifax’s bungling.

Bear in mind this is the THIRD TIME in 16 months that Equifax has been hacked– there was another breach earlier this year, and another in May 2016.
Even worse– this wasn’t an overnight attack. Hackers spent MONTHS probing the Equifax network, burrowing deeper into the system and gaining access to more and more data with each attempt.
Yet Equifax’s defenses failed to detect anything.

Finally on July 29, a whopping TEN WEEKS after the attacks started, Equifax realized that something was wrong.
Senior executive responded to the data breach by… selling their stock.
Yes, in the days following their discovery of the hack, three of the company’s executives sold nearly $2 million worth of stock.

Remember, these “insider sales” have to be reported to the Securities and Exchange Commission, so there is a public record every time a company executive sells stock.
These executives would have known this, and that the public would find out they sold their stock right after the data breach was discovered.
This suggests to me that these guys are either complete idiots… or they simply don’t care… both of which seem par for the course at Equifax.

Moreover, given that the company is responsible for making the SEC filings, it’s obvious that Equifax knew about these executives selling their stock. Clearly they don’t care either.
In another weak, spineless, immoral decision, Equifax waited six weeks between discovering the hack and informing the public.
I find this appalling.

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