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Independence Day 2.0

One of my favourite movies, though it and the prequel are a little corny now! Our American cousins celebrated 4 July last weekend though this year it was against the back drop of a resurgent pandemic mixed in with political and racial tensions, worse than for quite some time.

I have studied the Declaration of Independence and still marvel at the foresight of those 18th century thinkers. I also reflect on how little of that independence survives almost 250 years later – as written by American economists. I am occasionally reminded that I am British and a citizen since birth and should focus my efforts on the UK. However, we are influenced by what goes on over there and a lot of it does cross the Atlantic eventually. I have not been a great admirer of the US President [though I respect the Office of the President] but one thing I do share is his regular disdain for “fake news.”
 
Over the years I have built a solid list of “go to” people in most financial areas and this post, following on from my last which asked if our System was on the way out, highlights some further uncomfortable issues and news stories, the latter you may not have seen on the news. Much of what I cover is rarely on the news…
 
In the US there is growing clamour for real independence with specific reference to separating finance from the State. The objective is to create [or further develop, is more accurate] a counter-economy to eclipse the “man-ipulated” economy created by the oligarchs. This is being achieved by leveraging precious metal and digital assets, the latter numbering over 5,000 now.
 
In this era of mass protesting how long before we see tax protests, opposing what tax revenues are spent on. One American commentator was quoted as saying that without state funding there would be no further state sponsored wars. [Reference was made to wars after WW11]
 
I have covered the issue of fiat currency previously – paper money backed by nothing. If people stop using these permissory notes [also known as oligarchs permissory notes] then change will come. Change is coming.
 
Supporting this move to separate finance from the State the CEO of Shapeshift Eric Vorhees said this in 2015; “money is as fundamental to our lives as religion and for many, more so. It affects how life unfolds…and so to have an institution like money, so controlled by a central entity – by a monopoly – is absurd. It is immoral” For those in agreement, this applies in the UK and indeed across the globe.
 
The Federal Reserve has just completed its annual stress test and warned “several banks…uncomfortably close to minimum capital limits in scenarios tied to the COVID-19 pandemic” 
 
CLOs by any chance?
 
If you get the chance look up the Euro Dollar Market; this massive and un-regulated offshore market for dollar finance is worth $57 trillion – 3 times the size of the US economy…
 
The Bank of England will conduct its own stress test shortly. Chief Economist Haldane has predicted a V shape recovery; I sincerely hope he is right but the Chancellor’s measures – announced today, must work. The highlights of his “Plan for Jobs” announcement:
  • a 50% discount on eating out in August [£10 pp cap and only Monday – Wednesday] 
  • VAT on food, accommodation and attractions down to 5% to January 12th
  • the tax on buying a home – stamp duty – starting at £125,000 has been raised to £500,000 to 31 March 2021
  • Employers will be paid £1,000 for each employee taken off furlough
  • Employers will be paid £1,000 to take on a trainee
  • £2 billion is earmarked for “kick start” – to provide 25 hours of minimum wage work to the 16 – 24 year olds
  • £3 billion “green package” to make 650,000 homes more energy efficient
The furlough scheme will end in October.
 
Our banks received some good news; their friendly regulator the FCA has conveniently dropped plans to inquire into disgraceful overdraft charges and instead will “keep a close eye” on things. 
System 1 – 0 The massively over-charged.
 
Further afield, I will not dwell on the 80% drop in value of the Lebanese Pound or the IMF estimate that its central bank has lost 170 trillion pounds. Nor will I focus on food and cash shortages in Cuba which is resulting in its people piling into permissionless cryptocurrencies. I could talk about the $11 trillion of offshore assets identified as 100 countries shared information on 84 million bank accounts. 
 
No, to close I want to reference Silicon Valley’s David Spiegel, someone I have been following for a while now. He writes “disruptively” but that’s what I like so much. In a recent paper he talked about the big challenges facing millennials. Though I have no great sympathy for this age group, the issues he raised were compelling and I provide brief highlights now:
 
  • Education – he highlights the education system which was designed to produce obedient factory workers in the 19th century; it focuses on teaching facts, then testing those facts and then providing a grade. Years are spent studying text books and going into debt. All this to create a bit of paper to hand to an employer that is increasingly irrelevant
  • Healthcare: patients are over diagnosed, over treated and over prescribed
  • Tech: the market rewards monopolies that invade privacy and individual rights
  • Monetary policy: often creates recessions
  • News: skewed by corporate interests
  • Privacy/Personal DataGoogle knows everything you’ve ever bought on Amazon. Alexa is listening all the time; a FaceBook lawyer said “no invasion of privacy at all, because there is no privacy”; credit card companies sell your purchase data to hedge funds and ad agencies and finally, most companies you do business with store your credit card data
These are unprecedented times we are living in; digital advancement has surged around 10 years in a matter of weeks. People are on the move, believing they have a voice and politicians are becoming more wary. Financial institutions are under the microscope like never before.
 
In 1776 a group of enlightened, freedom loving and demanding men issued a declaration. History illustrates the power of that moment. In 2020 another Independence movement is gathering pace, one which will be reported by future historians as every bit as transformative as Independence Day 1.0 

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