Money For Nothing

If you’ve been holding Btc this year (in a wallet that you posses the Private Keys to), you may now also be a holder of Bitcoin Cash (BCH) and Bitcoin Gold (BTG). You may also soon receive Bitcoin Diamond (BCD), Super Bitcoin (SBTC), Bitcoin Platinum (BTP), Bitcoin Lightning (LBTC), Bitcoin God (GOD), Bitcoin Cash Plus (BCP), Bitcoin Uranium (BUM), Bitcoin Silver (BTSI), AND Bitcoin X (BCX). Wow!

What the Fork am I Talking About?

This has happened as a result of forking. WTF? If you’ve been reading about Blockchain Technology you are aware that it is the technology on which Bitcoin functions. The computer coding containg all of the ‘laws’ or protocols allowing it to function as well as the ledger of transactions processed in blocks which then form a chain… of blocks.

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IMF Head Foresees The End Of Banking.

By Tyler Durdan – Zero Hedge

[They are Shakin in their Boots…]

In a remarkably frank talk at a Bank of England conference, the Managing Director of the International Monetary Fund has speculated that Bitcoin and cryptocurrency have as much of a future as the Internet itself.

It could displace central banks, conventional banking, and challenge the monopoly of national monies. Christine Lagarde –a Paris native who has held her position at the IMF since 2011–says the only substantial problems with existing cryptocurrency are fixable over time.

In the long run, the technology itself can replace national monies, conventional financial intermediation, and even puts a question mark on the fractional banking model we know today.”

In a lecture that chastised her colleagues for failing to embrace the future, she warned that “Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies.”

Here are the relevant parts of her paper:

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R.I.P. US Dollar

By Jim Rickards – The Daily Reckoning.

The Death of the Dollar has been a long-time prediction of mine…Let’s dig in to what’s going on.

  • R.I.P. US dollar

In my 2014 book, The Death of Money, I laid out the case for the demise of the US dollar as the world’s leading reserve currency, and its replacement with one of two leading contenders – gold or the IMF’s special drawing rights, SDRs.

I expected this process to begin gradually and then accelerate to a sudden climax and possible monetary chaos.

Now in 2017, my forecast is playing out even faster than I expected…

This article describes how China, Russia, and Iran are coordinating a new international monetary order that does not involve US dollars.

It has several parts, which together spell dollar doom.

The first part is that China will buy oil from Russia and Iran in exchange for yuan.

The yuan is not a major reserve currency so it’s not an especially attractive asset for Russia or Iran to hold. China solves that problem by offering to convert yuan into gold on a spot basis on the Shanghai gold exchange.

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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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Why Bankers Dont Like Bitcoin

By Shae Russell – Markets & Money.

Bitcoin is ‘stupid’ and ‘will blow up’.

Or so says top brass at JPMorgan, Jamie Dimon. He adds: ‘If we had a trader who traded bitcoin, I’d fire him in a second for two reasons. One, it’s against our rules. Two, it’s stupid.’

Likening bitcoin’s rapid rise to the Dutch tulip mania of the 17th century, Dimon frames the crypto’s rise as ‘fraud’. He was quoted yesterday as saying, ‘It won’t end well. Someone is going to get killed.’

That’s a tad dramatic. But, unsurprisingly, the price of bitcoin tumbled after his statements.

Have a look at bitcoin’s decline in the past day…

Source: CoinDesk
[Click to enlarge]

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The Irony of a Billionaire’s Hatred for Bitcoin

By Sam Volkering – Money Morning.

When it comes to Wall Street heavy hitters, Jamie Dimon is one of the biggest. He’s the CEO at JPMorgan.

You remember JPMorgan right?


OK, here’s a refresher.

JPMorgan is the bank that helped create those really complex mortgage bond products in the 2000s. JPMorgan was one of the crooked banks that then packaged them up, bundled them together and created Collateralised Debt Obligations (CDOs).

JPMorgan was one of those banks that fraudulently engineered those products. And they were one of the kingpins of the entire 2008 debt crisis, the housing collapse in the US, and the global market crash.

JPMorgan was one of those banks that were ‘too big to fail’. Except on the brink of extinction they sat. That is until the taxpayer bailed them out. That’s right, the taxpayer. The average person helped bail out these Wall Street crooks. But did they get a choice? No. Central powers — friends of Wall Street, the government — made that decision for them.

And while taxpayer money bailed out banks like JPMorgan, who do you think was left to pick up the pieces? Who do you think was hit hardest by the debt crisis, the recession, and the housing collapse? Who was left in the wake of it all, while the likes of Dimon escaped unharmed?

Was it the bankers and the fraudsters, the ones who started the mess? No. Sure a few might have lost jobs. The million dollar bonuses dried up, for a year or two.

But did they really suffer? After creating one of the biggest financial crises in history. Do you reckon fat cats like Dimon really had anything to answer for? Of course not. That’s not how the system works.

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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:

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The Global Elites’ Secret Plan for Cryptocurrencies

By Jim Rickards – The Daily Reckoning.

Interest in Bitcoin is red hot at the moment. It’s impossible to open a website, listen to a podcast, or watch a video in the financial space without hearing about the meteoric rise in the price of Bitcoin.

Maybe you know a “Bitcoin millionaire” who bought five hundred Bitcoins a few years back for $50,000 and is now sitting on a Bitcoin fortune worth over $2,000,000. It’s true, those people actually do exist.

Yet the crypto-hysteria is distracting you from a scary truth no one is talking about. There is every indication that governments, regulators, tax authorities, and the global elite are moving in for the crypto-kill. The future of Bitcoin may be a dystopia in which Big Brother controls what’s called “the blockchain” and decides when and how you can buy or sell anything and everything.

Furthermore, cryptocurrency technology could be the very mechanism used by global elites to replace the dollar based financial system.

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How to Play the Odds in the Crypto Casino

By Callum Newman – The Daily Reckoning.

We’re living in the crypto casino now. The total value of cryptos fell 11% over the weekend. This wiped off billions in the valuations of all of them.

Why? Who knows. Maybe traders ran a big sell program to shake out the weak holders so they can buy them back cheap.

Maybe it’s the end of a massive bull run.

I think it’s a dip. News just keeps coming in to suck more people into these markets.

Already, two tokens — issued via an ‘initial coin offering’ (ICO) this year — have hit US$1 billion valuations. These two coins only began life in March and July 2017.

Both were issued at a price under $1 and now trade over $10 — despite neither of the companies behind them having a product to sell as of now.

These sorts of speculative gains in the crypto markets dwarf anything else on offer.

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