Passive? Crypto? Hell, yeah!

Top 10 Crypto Passive Income Strategies of 2022

In 2022, it is predicted that the crypto market will be worth $1 trillion. This means that people who are invested in cryptocurrencies will be extremely wealthy. However, becoming a millionaire from cryptocurrency trading is not as easy as some people may think. Here are 10 cryptocurrency passive income strategies for 2022. 1. Buy and hold One of the easiest ways to become a millionaire from cryptocurrency trading is to simply buy and hold. This means you will buy tokens and hold on to them, regardless of the current price. If the price of a token goes up, you will make money. If the price of a token goes down, you will still make money as long as you are still holding on to your tokens. 2. Make money through cryptocurrency arbitrage Another way to make money from cryptocurrency trading is to do cryptocurrency arbitrage. This means you will buy tokens from one exchange and sell them on another exchange, Making a profit in the process. 3. Invest in a cryptocurrency security Another way to make money from cryptocurrency trading is to invest in a cryptocurrency security.

This is something that is still in its early stages, but has the potential to grow into a very lucrative investment. Here are some tips on how to make this work:1. Invest in 

Peer-to-Peer (P2P) Lending

Peer-to-peer (P2P) lending platforms are the latest trend in the world of online finance. These platforms allow people to lend money to other people in exchange for interest. Recently, a crypto lending bot has emerged that is taking advantage of this trend. P2P lending platforms are popular because they offer a convenient way for people to borrow money. The platform allows people to borrow funds from other people without having to go through a traditional lending institution. This is because P2P lending platforms are decentralized, meaning that there is no single institution that controls the platform. Crypto lending bots are a recent development in the world of P2P lending. These bots allow people to borrow money in exchange for cryptocurrencies. This is a clever solution because cryptocurrencies are becoming more and more popular. Cryptocurrencies are decentralized, meaning that there is no single institution that controls them. This makes them attractive because there is no risk of fraud. Cryptocurrencies are becoming more and more popular, and this is why crypto lending bots are becoming popular. This innovative solution offers a convenient way for people to borrow money in exchange for cryptocurrencies.

Decentralized Lending

The crypto market is full of money-making opportunities, and investing in crypto trading bots is one way to take advantage of those opportunities. In this article, we will teach you how to create a decentralized lending trading crypto bot, and then explain how it works. Crypto bots can be incredibly lucrative for investors, as they allow you to access profitable trading strategies without having to rely on human intervention. Crypto lending trading bots are a particular type of crypto trading bot, and allow you to make profitable investments in various cryptocurrencies by lending them out to investors. To create a crypto lending trading bot, you first need to create an account on a crypto trading platform. Once you have an account, you will need to set up your bot’s settings. In particular, you will need to set up your bot’s settings to allow it to borrow money from investors. Once your bot’s settings are set, you will need to find a pool of investors who are willing to lend money to your bot. To find investors, you can either run a recruitment campaign or contact existing investors who are interested in crypto trading bots.

Liquidity Mining

Cryptocurrencies are all the rage these days and many people are looking to get in on the action. One way to do this is to use a cryptocurrency trading bot. This is a software that uses computer algorithms to buy and sell cryptocurrencies on behalf of you. What’s great about these bots is that they can do the work for you and help you make lots of money. However, there are a few things to keep in mind if you want to use one. First of all, you need to be comfortable with the cryptocurrency market. There is a lot of technical information involved, and you need to be able to read it and understand it in order to use a trading bot. secondly, it’s important to have a trading strategy. If you don’t have one, a bot will probably take you through some trades that might not be in your best interests. So, make sure you know what you’re doing before you start using a bot. finally, make sure you have a solid computer setup. A bot will require a lot of horsepower to work properly, so you need a computer that can handle it.

Crypto Savings Accounts

CryptoSavingsAccounts.com is a website that allows users to trade cryptocurrencies and other digital assets. CryptoSavingsAccounts.com provides a trading bot that allows users to trade cryptocurrencies and other digital assets automatically. The trading bot can be accessed through the website’s user interface. The trading bot is designed to allow users to trade cryptocurrencies and other digital assets within a short period of time.

Dividend-Earning Tokens

Nowadays, there are many companies that offer dividend-earning tokens (DET). These tokens represent future dividends paid out by the companies. As the company increases profits, the value of the DET may increase. This type of investment is especially popular with cryptocurrency enthusiasts. Some of the benefits of this type of investment include the potential for capital gains and the opportunity to diversify your portfolio. There are a number of platforms available that allow investors to trade DETs. Some of these platforms are trading platforms, while others are automated money managers. Trading platforms allow for hands-on trading. This is important for those who want to make sure they are getting the best possible price for their DET. Automated money managers, on the other hand, are ideal for those who want to invest without having to worry about the day-to-day fluctuations in the market. There are a number of different factors to consider when trading DETs. This includes the company’s financial performance, the DET’s liquidity and the valuation of the underlying company.  
 

Top 5 Crypto Passive Income Generators for 2022

1. Cryptocurrency Trading Bot Trading bots are essential for anyone looking to make serious money from the cryptocurrency markets. They allow you to leverage your technical analysis and trading skills to make consistent profits. 2. Cryptocurrency Mining Bot Mining bots are a powerful way to make money from cryptocurrency mining. They allow you to control your mining rig and make profitable investments while you sleep. 3. Cryptocurrency Arbitrage Bot Arbitrage bots are a great way to make money by exploiting price discrepancies between different exchanges. By trading on an exchange and then Sell on an exchange that has a lower price, you can make a substantial profit. 4. Cryptocurrency Exchange Bot Exchange bots allow you to automate your trading by using complex algorithms to identify the best opportunities. They allow you to focus on your trading strategy and leave the market trading to the bot. 5. Cryptocurrency scalping Bot Scalping bots allow you to make extremely profitable trades by buying low and selling high on the cryptocurrency markets. They allow you to make quick and easy profits without any technical knowledge.  
 

Ways to earn passive crypto income

Cryptocurrency trading can be a lucrative way to make passive income. Here are five ways to do it: 1. Join a cryptocurrency exchange. Some of the most popular cryptocurrency exchanges offer a variety of features, such as margin trading and crypto bots. You can also trade on these exchanges independently of a bot, but many users find that using a bot improves their trading experience. 2. Use a cryptocurrency bot. There are a variety of cryptocurrency bots available, and some of them are even free. These bots automatically execute trades on your behalf, so you can focus on other things. 3. Buy and hold cryptocurrencies. This is probably the least active way to make passive income from cryptocurrencies, but it’s still a viable option. If you can stomach the volatility, buying and holding cryptocurrencies can be a profitable investment. 4. Mine cryptocurrency. Mining cryptocurrency is another way to make passive income. It’s not as passive as buying and holding, but it’s less volatile. 
 

Proof-of-stake (PoS) staking

Cryptocurrency trading bots have made a huge impact on the market in recent years. Some people view these bots as a way to make quick money, while others see them as a way to help improve their trading skills. Cryptocurrency trading bots can be used for a variety of reasons, but one of the main reasons people use them is to make money. How do cryptocurrency trading bots work? When you use a cryptocurrency trading bot, the program will run autonomously. This means that you won’t need to keep track of the bot’s movements, as it will do all of the work for you. The bot will search for the best cryptocurrency to trade, and it will do this based on a number of factors. These factors include price, volume, and historical data. Why use a cryptocurrency trading bot? Cryptocurrency trading bots can be a great way to make money. They allow you to trading without having to worry about the details, and this can give you a significant advantage. Additionally, most cryptocurrency trading bots are capable of doing a lot of the work for you.

Cloud mining

Cryptocurrencies are a type of digital asset which use cryptography to secure their transactions and to control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Since then, many other cryptocurrencies have been created. Cryptocurrencies are traded on decentralized exchanges and can also be used to purchase goods and services. While some cryptocurrencies are used as investment vehicles, others are used for day-to-day transactions. Cryptocurrencies are not backed by any physical assets, but by trust in the coding that underlies them. Cryptocurrencies are often volatile, which means their price can change rapidly. Cryptocurrencies can be mined by using specialized computer equipment. Mining cryptocurrencies entitles users to receive new units of the cryptocurrency as a reward. Mining is not profitable on a daily basis, but it can be profitable over time. Anyone with the right equipment and enough patience can mine cryptocurrencies. However, mining is not without risks. In the event that the cryptocurrency value decreases, a miner may be able to sell their mined cryptocurrency for less than

it cost them to produce it. This is due to the fact that there is a supply and demand for cryptocurrencies, and mines that were profitable at one point may not be so profitable now. This makes it important to do your own research before investing in a cloud mining contract. Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution regulation. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often traded on digital exchanges and can also be used to purchase goods and services. Cryptocurrencies are volatile and may be affected by various news events. Investors should be aware of the risks associated with investing in cryptocurrencies and should consult with a financial advisor before making any investment decisions. A miner may be able to sell their mined cryptocurrency for less than it cost them to produce it. This is due to the fact that there is a supply and demand for cryptocurrencies, and mines that were profitable at one point may not be so profitable now. This makes it important to do your own research before investing.

Interest-bearing digital asset accounts

Since the invention of cryptocurrencies, there has been a growing demand for digital asset accounts trading bots, which automate the process of buying and selling cryptocurrencies. These bots can save a lot of time and money for cryptocurrency enthusiasts, as they can quickly and easily trade cryptocurrencies in a variety of ways. Cryptocurrency trading bots can be used in a variety of ways. For example, some bots allow you to automatically buy and sell cryptocurrencies, while others allow you to trade cryptocurrencies using a set of predefined trading rules. One of the most popular cryptocurrency trading bots is Coinigy. This bot is available in both desktop and mobile versions, and it allows you to trade cryptocurrencies using a variety of trading strategies. Cryptocurrency trading bots can also be used to make profits. For example, some bots allow you to trade cryptocurrencies using margin trading, which allows you to increase your portfolio’s value by borrowing money from a financial institution. There are a number of other benefits to using cryptocurrency trading bots. For example, they can reduce the Risk and Time involved in cryptocurrency trading. Additionally, they can help you to become more accurate and efficient when trading cryptocurrencies.

NFTs on Instagram and Facebook: How to Show Off Your Digital Collectibles

Collectible trading is a booming business on social media platforms like Instagram and Facebook. In fact, the market for digital collectibles is so large that it has its own acronym: crypto bots. Crypto bots are digital trading programs that use algorithms to buy and sell cryptocurrencies. They’re used by cryptocurrency investors to make small profits from fluctuations in the market. There are many different crypto bots, but the most popular ones are called HMAC Crypto Bots. These bots use a combination of technical analysis and human judgment to make trading decisions. To get started with crypto trading, you first need to create an account with an online exchange. After you have an account, you need to download a crypto bot. There are many different bots available, but the HMAC Crypto Bot is the most popular. The HMAC Crypto Bot is easy to use. First, you need to set up your account with the bot. Next, you need to input your login information and your trading preferences. After you have set up your account, you need to input your trading strategy. The HMAC Crypto Bot uses a variety of technical analysis tools to make trading decisions.

Crypto Flashcards & Glossary

What is a Crypto Flashcards Glossary? Crypto flashcards are a great way to keep track of the different terms and concepts related to cryptocurrency trading. In addition to being a handy tool for educating yourself about crypto trading, a crypto flashcards glossary can also be a valuable resource for anyone wanting to learn more about trading crypto. What are Crypto Bots? Crypto bots are computer programs that are designed to trade cryptocurrencies. They are usually installed on a user’s computer, and they use a variety of algorithms to make trades. Crypto bots are becoming increasingly popular, as they allow users to make relatively quick and profitable trades. What is Bitcoin? Bitcoin is a cryptocurrency, or a digital asset that uses cryptography to secure its transactions and to control the creation of new units. Bitcoin was created in 2009 by an unknown person or group of people who called themselves Satoshi Nakamoto. What is Ethereum? Ethereum is a cryptocurrency similar to Bitcoin, but it has a more complex and advanced blockchain network. Ethereum is popular among traders because it allows for more complex transactions than Bitcoin.  0
 

Top 3 Crypto Bots

Cryptocurrency trading bots are some of the most popular trading tools on the market. They automate trading and make it easier for traders to enter and exit trades quickly and with less risk. Crypto trading bots are also known as “crypto bots.” 1) Cryptocurrency trading bots are one of the most popular trading tools on the market. 2) They automate trading and make it easier for traders to enter and exit trades quickly and with less risk. 3) Crypto trading bots are also known as “crypto bots.”

The ART of MONEY LAUNDERING

(Mini Documentary)

Let’s say you’re a criminal with millions or even billions of dollars, but you have one big problem: Transferring large sums of money or carrying suitcases full of cash will raise eyebrows. You need to launder the dough to make the dirty money appear to be clean money, so that then it can be spent anywhere in the world (say, on real estate, luxury yachts, strip clubs) no questions asked. Fear not. With a little financial detergent, your dirty money can become more or less untraceable. China leads the world in this ancient art. Between 2002 and 2011, some $1.08 trillion departed the country illegally, despite currencycontrol laws that require people to obtain a permit to exchange more than $50,000 a year worth of yuan into any foreign currency.

But this is a truly international pastime. Corrupt politicians, drug cartels, alimony deadbeats, nearly everybody’s doing it. When it comes to money laundering there are three main steps to doing it right. The first step is the placement. Placement is the stage when the money enters the financial system for the first time. In this step, the money may be deposited in a bank, added to the accounts of an existing business or disguised as a transaction. The placement is usually achieved through a series of regular small transactions. If you are a criminal and you make the mistake of a large amount of cash you are probably gonna get caught right away. Of course, many people who attempt money laundering schemes have no past experience and don’t know what behavior is likely to be flagged. This step is widely considered to be the riskiest.

If the deposits are scrutinized at this stage, none of the justifications that will exist. later in the scheme will yet be in place.. The second step of money laundering is the layering. . Layering is the stage where the illicit money is put. together with legitimate money or placed in constant motion. Layering usually involves. generating so many intricate transactions that the dirty cash disappears into them.. Illicit money can be used to gamble, then placed into stocks, then shuffled around in. different currencies and then used to buy financial products like life insurance policies.. Layering can work in dramatically different ways depending on the scheme. In all schemes,. however, the purpose of the layering stage is to make it difficult for even a skilled. accountant to differentiate between money that came from legal transactions and money.

That came from funds that were placed for laundering. While layering is typically a safer stage than placement, those who are not careful often can still be caught easily if they make mistakes. For example, if a business that averaged $5,000 in transactions a day for years were to suddenly start processing $10,000 in transactions a day, it might attract scrutiny. The third and last step is integration. Integration is the stage where the money reenters the legitimate economy. When the money appears to come from legal businesses or investments, or the trail has become too difficult to follow, the money can then be placed into largerscale investments.

Integrated cash is often placed into luxurious assets, properties, longterm investments, and new businesses. Integrated cash may be used to purchase assets that can be used to facilitate future money laundering more safely. There are several types of money laundering, like casino schemes, cash business schemes, smurfing schemes, and foreign investment schemes. A complete money laundering operation will often involve more than one of these as the money is moved around to avoid detection. For instance, proceeds from cash businesses can be gambled, just as the success of a cash business that has been infused with placed cash can be used to justify investments or loans, which come from cash placed offshore.

Let’s talk about casino scheme. The casino scheme works by funneling the money through gaming. The money is converted into chips, which are then briefly played with and then transferred back into cash. Those chips are usually converted by the launderer. Often, the casino where the money is being laundered is in a different nation than the launderer’ s nation of origin. This makes it difficult for law enforcement in either country to gather evidence that might reveal proof of the money laundering. When we talk about the casino scheme, the placement stage happens when the money is delivered to the proxy who will take payment in cash and then change it into chips. In some countries, travel agencies provide casino chips as part of their packages. Paying for these in cash can be a smart way to avoid getting your cash moved without electronic records.

The Layering step is when the money is laundered through gambling, the layering stage happens when the cash or chips are carried into the casino and used for gambling. Usually, very few of the chips are used for gambling because of the risk of losing. Instead, the chips are lightly used for several hours and then converted back into cash. The receipts from the cashout are used as evidence of the cash’s legitimacy. There is no record of how many chips were carried into the casino, so the launderer can plausibly claim that small amounts were carried in and the larger sum comes from winnings. The money laundered through casinos is relatively easy to integrate. Once the winnings have been reported and any taxes have been paid, the money can be used for any other purposes.

The cash business scheme is one of the most. used and popular schemes for laundering large amounts of physical cash. Even today, there. are a lot of businesses who handle most of their transactions in cash. Illicit cash can. be inserted into these transactions at a fast or slow pace.. Laundering money through cashintensive businesses. was the preferred method of the famous gangster Al Capone. He evaded investigators for years. by funneling the money his crimes generated through his small empire of laundromats.. The term money laundering was coined by the agents investigating him.. The placement for a cashintensive business scheme involves direct cash payments to the. owner or manager of the establishment. The money to be laundered for the day is brought. to the premises of the business. It stays in a safe place until it can be added to profits.

For the day through one of several methods. When the money is laundered through cash businesses, the layering stage takes place when fake transactions are slipped into the books throughout the day. These transactions may take the form of fake customers, or through extra services tacked onto legitimate transactions, with the difference added from the placed money. Cashintensive business schemes often extract the cash through daily profits. This scheme requires the money to be laundered kinda slowly, but a decent amount is ready every single day, so, it’s making it more liquid for the launderer. Taxes are paid on the reported profits, and the money can now be used for any purpose. Now let’s talk about the smurfing scheme.

The term smurfing refers to the practice of distributing small amounts of a larger cash. amount to a series of partners who then deposit the money in incremental amounts. Smurfing. is used to get around the currency reporting requirements that banks are required to observe. in a lot of countries. Small quantities that come from many partners are less likely to. trigger an automatic report.. The placement stage starts with the cash being distributed through a network of people, smurfs,. who can be trusted to deposit the money back again on schedule. Larger criminal organizations. are more likely to use this strategy because they already possess a big network of obedient. members. The layering stage for this type of scheme. happens as the money is deposited back into one or many different accounts. More advanced.

Smurfing schemes will try to make sure that the money is deposited in ways that avoid. automatic detection. The cash must not just be deposited in small amounts, but in varying. amounts and at different intervals. The money can be extracted as it is moved. back into the account. While this scheme avoids automatic detection, it is not as safe as. the other schemes. If the deposits do come under scrutiny, it could be difficult for. the launderer to explain why the deposits were made.. The foreign investment scheme. A lot of countries are allowed and encouraged. to invest in US businesses. However, the IRS has little power to account for how the money. used in these investments was accumulated. In some cases, the money comes from illicit. activities. The launderer delivers the cash to the foreign investor, who then returns.

It by making an investment into the launderer’s business.. The placement happens when the cash is delivered. to the foreign partner. In most successful schemes, the launderer will not appear to. have any prior contact with the investor who is holding the money. For all intents and. purposes, the money appears to be the property of the foreign partner. . The layering stage happens when the foreign business invests into. the legitimate, legal business using money that was placed with them. These amounts are. usually larger than in other schemes, but difficult to prove illegal.. The money in this scheme can be more difficult to extract, in spite of the fact that large. amounts can be moved. Investments into a business must be credibly used within that business. and for that business. The money can be extracted from the profits that the investment generates,.

97% Owned | Creation of Money

Finance Documentary | Debts Explained

How is money created? Where does it come from? Who benefits? And what objective does it serve? What is a money system? What is the money behind the money system? For centuries the mechanics of the cash system have remained hidden from the prying eyes of the populace. Yet its impact, each on a national and international degree, is probably unsurpassed, for it’s the monetary system that gives the foundations for worldwide dominance and nationwide management. Today, as these very foundations are being shaken by crises, the necessity for open and sincere dialogue on the method forward for the financial system has by no means been greater.

This financial disaster is type of a cancer. If you just wait and wait, considering this is going to go away, identical to a most cancers it goes to develop, and it is going to be too late. What I would say to everybody is, get ready. This isn’t a time right now for wishful pondering that the government is going to type issues out. The governments do not rule the world: Goldman Sachs guidelines the world. “We’re on the verge of an ideal storm”. In opposition lie corrupt and entrenched interests that lurk in the corridors of energy, for whom there aren’t any causes to relinquish privileges that they really feel are justly deserved.

Has he got a reform plan for the NHS? Has he obtained a police reform plan? [No!] Has he received a plan to cut the deficit? Order! Misorder! Order! Do you belief the government? Try to relax and behave like an adult, and if you’ll be able to’t, if it’s beyond you, leave the chamber. Get out. We’ll handle without you! “This is the banking fraternities feeding station. There’s no coincidence that growth and bust turned an actual cyclical problem round about the 1700’s, when William Paterson founded the Bank of England. This is insupportable behaviour so far as the general public is anxious. No, it isn’t funny! Only in your thoughts is it funny. It’s not humorous in any respect, it’s disgraceful.

One Solution, Revolution! The system is inherently unstable on account of the worldwide energy it provides to the dominant parties, for at the heart of it lies the idea of; how can I get something for nothing? Statistical analysis has discovered that each time an empire begins to close its personal demise, you’ll find that its forex will be debased. There isn’t any guide to how this entire system operates. To provide you with an example, a researcher on the BBC working on a Robert Peston documentary went to the Bank of England and said, “Can you give me a guide to how cash is created?” And they only stated, “No”.

This documentary will investigate and explain this ever altering system, and the impression it has both on a nationwide and international stage. 97% Owned How is money created? Notes and coins In 2010 the entire UK cash supply stood at 2.15 trillion pounds. 2.6 % of this whole was physical cash, 53.5 billion. The relaxation, 2.1 trillion, or ninety seven.4% of the total cash supply was commercial bank cash. The 3% of money is created via the central financial institution and that cash basically, when you created a £10 notice you could sell that to a bank to place into their ATM and the bank must repay that £10 or buy it for £10.

There can be no interest charged on that money, however that money is then essentially transferred to the Treasury and it is a type of fundraising for the government. It’s called seigniorage. Seigniorage: Profit made by a authorities by issuing forex. The difference between the face worth of notes and cash,

and their production costs. When the Bank Of England creates a £10 observe, it prices it about 3 or four pence to actually print that note and it sells it to a excessive avenue banks at face value, so for £10 and the profit, the difference between printing the note and actually selling it for £10 goes on to the treasury.

So, in impact all the profit that we get on creating bodily cash, bank notes, goes to the Treasury and it reduces how much taxes we have to pay. Over the final 10 years, that is raised about £18 billion. In 1948 notes and coins constituted 17% of the entire money provide. This was one contributing issue within the government’s capability to finance postwar reconstruction. This included the establishment of the NHS. In only 60 years notes and cash have shrunk to less than 3%. Prior to 1844 financial institution notes have been created by private banks and the federal government did not revenue from their creation. Preindustrialisation there was a quantity of types of money co-existing, and so the rise of governmentsponsored fiat money is a comparatively recent phenomenon.

In the 1840s there was no regulation to cease banks from creating their very own financial institution notes. So they used to concern paper notes as kind of a representative of what you had in the checking account. Instead of you taking your heavy steel cash out of the bank and then going and paying somebody with them you can get your paper which stated how much money you had within the bank and you could give that to someone and they may use that to go and get the heavy metallic cash from the banks. Now over time these paper notes became pretty much as good as cash. People would use paper notes as an alternative of going and getting real cash from the financial institution and obviously as quickly because the banks realised that what they had been creating had turn out to be the dominant sort of money within the economic system, they realised that by creating extra of it they might generate profits.

They can just print up some new notes lend it and get the curiosity on prime of them. And they did that up until the 1840s. In the 1840s they pushed it just a little bit too far and that triggered inflation, destabilising the economic system. So in 1844, the Conservative Government of Robert Peel really handed a legislation that took the power to create cash away from the business banks and introduced it back to the state. So since then the Bank of England has been the only organisation authorised to create paper notes. Since then every thing has gone digital and what we now use as money is the digital numbers that commercial banks can create out of nothing.

The problem was that they did not embrace in that legislation the deposits, the demand deposits, held in banks by individuals or electronic forms of cash which basically is what those demand deposits are. Today most of the cash in circulation is electronic cash, it’s bank demand deposits that sit in our accounts. So in a means the laws’s obtained to meet up with the developments in digital money and the way that banks really operate. Money held in bank accounts are known as demand deposits. This is an accounting time period the banks use after they create credit score. Banks comply with the identical course of after they create loans. All cash held in bank accounts is an accounting entry.

Commercial financial institution cash The reality is now that most cash just isn’t paper and it isn’t steel coins it is digital. It’s simply numbers in a computer system. It’s your Visa debit card. It’s your electronic ATM card. It’s this plastic. It’s numbers in a computer system, you progress cash from one pc system to another. It’s all a big database and this digital money is what we are now utilizing to make payments with. It’s what we actually use to run the financial system. I think lots of people in the UK in all probability think that the federal government or the central bank is in control of most money in circulation and points new money into circulation, however that is not the case.

It’s non-public banks that create the vast majority of recent money in circulation and likewise decide the method it’s allotted. The official terminology for this accounting entry is business bank money. When banks issue loans to the public, they create new commercial financial institution money. When a customer repays a mortgage, industrial financial institution cash is destroyed. The banks maintain the curiosity as profit. There’re lots of misconceptions about the greatest way banks work. There was a ballot carried out by the Cobden Centre the place they requested folks how they thought banks truly operated. Around 30% of the general public assume that if you put your money into the bank it simply stays there and its protected, and you may perceive why as a outcome of each child has a piggy financial institution the place you retain placing money in after which when it is a rainy day you smash it and you take that cash out and also you spend it.

So a lot of people maintain this concept of banking it’s somewhere protected to maintain your cash in order that it’s there for whenever you want it. Another, the other 60% of people assume that when you set your money in, that money is then being

moved throughout to somebody who needs to borrow it. So you have a pensioner who retains saving money her entire life and then her life financial savings have been lent to some young people who need to purchase a home. But truly banks don’t work like that. “It’s principally an accounting trick.banks create cash. They don’t lend it …when a bank gives out what is called a mortgage, it mainly pretends

that you’ve deposited the money… it has to invent the liability…

this is how the money provide is created.” At the second within the UK money creation and control is basically in the palms of private banks.

About ninety seven to 98% of money that’s created is created as bank “debt money” you would name it, when banks issue cash into circulation as loans primarily. This is a very poorly understood fact. It’s not a conspiracy concept, it’s not a crackpot concept, it’s the best way the Bank of England describes the method. When banks make loans they create new cash. by far the largest role in creating cash is played by the banking sector…When banks make loans they create additional

deposits for those that have borrowed the cash.

A few economists will realise the way the money system works however when you do not realise the finest way that money works and also you suppose that everybody saving goes to work properly for the economy, what actually happens when you understand the way the money system works, is that if everybody starts saving the amount of money in the economy shrinks and we now have a recession.

Most economists don’t have this full image. They do not perceive all the weather of the system. They rely on assumptions, on obtained knowledge without truly going into the main points and cash is the centre of the economy. If you do not perceive the place it comes from, who creates it and when it will get created then how can you perceive the whole economy? When the overwhelming majority of cash that we use now just isn’t cash however electronic money then whoever’s creating the electronic cash is getting the proceeds of creating that money and obviously creating electronic cash is far more profitable than creating money because you haven’t any manufacturing cost in any respect.

So whereas we’ve got £18 billion over the course of the decade in revenue from creating money, the banks have actually created £1.2 trillion. Between 1998 and 2007 the UK cash provide tripled. £1.2 trillion was created by banks, while £18 billion was created by the Treasury. A lot of individuals assume after I say this or whenever you say this or when Positive Money say this, that we are all a bunch of nutters. But on the ninth of March in 2009, the governor of the Federal Reserve, Ben Bernanke, gave the first ever broadcast interview the Governor of the Central Bank of the United States of America had ever given.

The day before that he had bailed out AIG, which is an insurance coverage firm not even a bank actually, to the tune of about US$160 billion. So the journalist says to him: “Now Mr. Bernanke the place did you get $160 billion to bail out AIG?” Is that tax money that the Fed is spending? It’s not tax cash. The banks have accounts with the Fed, a lot the same method that you’ve an account in a industrial financial institution. So to lend to a bank we merely use the computer to mark up the scale of the account they’ve with the Fed. So it’s much more akin, although not precisely the identical, to printing money than it is to borrowing.

Banks create new cash every time they prolong credit, buy present assets, or make payments on their very own account, which mostly involves increasing their assets. When a bank buys securities, similar to a Corporate or Government Bond it provides the bond to its belongings and increases the company’s financial institution deposits by the corresponding quantity. New industrial bank cash enters circulation when folks spend the credit that has been granted to them by banks. I found that talking on the door step from August 2009 round to the general election, knocking on the doors, is that when we tried to explain how the money system works, there’s an virtually inbuilt refusal of individuals to simply accept that such a bizarre scenario could really exist.

“Ah no, it can’t presumably. What do you mean? It can’t banks cannot…banks don’t create money out of skinny air. That’s ridiculous. They can’t do that. They lend out their depositors’ money.” Most folks have an thought of how cash is. They are used to their very own way of handling money and they try to implement their very own thought of how their small family financial system works into the nationwide financial system. And of course it simply doesn’t work out at all. By 2008 the outstanding mortgage portfolio of bank created credit, also called commercial bank cash, stood at over 2 trillion. As just lately as 1982 the ratio of notes and coins to financial institution deposits was 1:12.

By 2010 the ratio had risen to 1:37. That is for each pound of Treasury created money there have been 37 kilos of financial institution created cash. In the 10 years prior to the 2007 disaster, the UK industrial bank money supply expanded by between 7% to 10% every year. A growth rate of 7% is the equivalent of doubling the money provide every 10 years. The sum of money they’re creating out of nothing is simply unimaginable, 1.2 trillion within the final 10 years. That cash is being distributed based on the priorities of the banking sector, not the priorities of society. The banking sector itself grew from 1980 $2.5 trillion to $40 trillion by belongings.

In 1980, global financial institution assets were worth 20 occasions the then international financial system. By 2006 they have been worth seventy five occasions, based on the UN. As the next chart shows, complete bank belongings of UK banks as a share of GDP remained comparatively steady at 5060% up to the end of the Nineteen Sixties. After that they shot up dramatically. And the real cash on the earth to be made today isn’t by producing anything at all. It’s just by types of speculating basically being profitable from money. That’s probably the most profitable and by far and away the largest type of economic exercise that exists in the world today. Today, banks are now not restricted by how much they’ll lend, and as such, how a lot new credit score they’ll create out of nothing. They are restricted solely by their very own willingness to lend.

The issue with permitting banks to create money there’s two major points. Firstly the truth that they create this money once they make loans, so it guarantees that we have to borrow all our money for the economic system from the banks. As such, to have a wholesome growing financial system, the Government must put in place methods to permit for everincreasing debt. The only method the Government can create additional purchasing power is by getting itself and us into more debt. The second big concern with allowing the banks to create money is that they have the incentive to always create extra. They create more money if they concern a mortgage.

They get the bonuses, the commissions and the incentives to lend as a lot as potential. You need to develop a sales tradition. What did they do? They recruited an incredible guy, a lovely guy, Andy Hornby, who got here from Asda to show the bank into a supermarket retailing operation. If you belief bankers to control the cash provide, the cash supply will just develop and grow and grow, as will the level of debt, until the purpose the place it crashes, when some people cannot repay the debt after which they’re going to cease lending. You hear politicians and journalists saying We’ve been dwelling past our means. We’ve turn out to be dependent on debt. We must reign in our spending and stay within our means.

It’s not possible within the current system. The purpose why everyone is in debt now isn’t as a outcome of they’ve been recklessly borrowing. We haven’t borrowed all this money from a military of pensioners who’ve been saving up their complete lives. Money in the present system is debt. It’s created when the banks make loans. So the only way, within the present system, that we will have any money in the economic system, the only way we can have cash for enterprise to commerce, is if we have borrowed it all from the banks. And it is the very reverse of what the Tory Party is arguing right now, which is that you have to create financial savings earlier than you probably can help the National Health Service.

And it is as a outcome of economists have utterly confused those things, each in financial policy terms, but additionally in economic considering, and because most individuals still harbour the old fashioned view that you want financial savings before you’ll be able to make investments, that we’ve the mess that we’re in right now. Now, one of the the purpose why we find it obscure the banking system and credit creation, is that we leave school without any money and we go and get a job working as an apprentice to a plumber. We work actually hard all month and at the finish of the month anyone puts money in our financial institution, and so for us the logic is: you’re employed and you then get money, you get savings.

In reality you’d by no means have got that job if credit hadn’t been created within the first occasion. It’s a very important conceptual misunderstanding and it isn’t one thing that the general public just is guilty of. Economists do not perceive these items. Money doesn’t come out of financial exercise. A lot of individuals I’ve come throughout type of assume that if you have got companies and you have individuals doing issues, that somehow cash emerges out of the process of individuals doing things, making things and growing things, selling things and producing issues, that one means or the other money just emerges. It’s not. It’s like oiling a automobile. You have to put it in.

When I see David Cameron speaking about how we need an economic system not primarily based on debt, however we’d like an financial system based mostly on financial savings, he just does not know what he is saying. It’s ridiculous. It’s completely absurd and it shows his complete lack of understanding of how our cash system actually works. What he’s basically saying is that We need an economy with no money. If everyone was saving we might have mass disappearing of cash, which is actually what a financial institution writeoff is folks defaulting on their debt – which basically is simply cash disappearing. But if people weren’t taking on the debt then it’s simply such a joke.

It’s such an newbie understanding of how our economic system works and how the monetary system works and the way cash is definitely created. So I actually do get a laugh out of watching what individuals are truly saying. They are all just regurgitating what they have learnt off one another and you just hear the same issues and it simply actually gets on my nerves when I hear people speaking about ‘Yeah, we need extra rules, we need to regulate the greatest way banks are literally and the bonuses’ It’s all just one huge smoke display screen and working on all the signs of a larger illness which is actually you should have a look at the cash system the finest way money is created.

If we do not want any debt then we’re basically saying We don’t need any cash and we want a moneyless economic system excluding the 3% that is created debt free. You know, it is a paradox underneath the current system. If we as the general public go into further debt then that’s going to put more cash into the economic system and we’ll have a boom. When you’ve a increase, it’s simpler to borrow, so individuals get into even more debt. And eventually this cycle continues. It gets simpler and simpler to get into debt till some people get overindebted and then they default. They cannot repay their mortgage. That’s what happened first in subprime America. And then it brings through a wave of defaults, which will ripple throughout the whole economic system. The banks go insolvent.

Then we’re right into a monetary disaster and then the banks cease lending. They were excessively lending in the growth and then they cease lending and that makes the recession even worse. People lose their jobs and then they turn out to be even more depending on debt just to outlive, basically. You know we have a system the place we’ve to borrow so as to have an financial system. We have to be in debt to the banks. That guarantees a massive profit for the banks. This is the boombust cycle. And I’ve said earlier than, Mr Deputy Speaker, no return to increase and bust. Net financial institution lending should endlessly improve. We are paying curiosity on each single pound. Even when you assume the money belongs to you, someone somewhere is paying interest on that money.

The banking system has such a large effect on the world, but solely as a end result of it supplies our nation’s cash supply. We have to protect them. We need to subsidise them. We have to allow them to continue as a result of the disaster of a bank collapse impacts us all in an enormous method. Anyone who says that we should not have bailed out the banks does not quite perceive the character of our monetary system. That’s like eliminating an enormous chunk of our cash. But also bailing out the banks is perpetuating a system which is never going to work anyway. So no matter we do we are always going to have this cycle until we separate how money is created and the actions of banking. Then the banks may do as they want.

They’d be a normal business like everybody else. There’s a major democratic concern right here as properly. You have these personal profitseeking banks creating as a lot as £200 billion a 12 months and pumping that into the economy wherever they want, principally, wherever it fits them, whether or not they’re pumping it into these toxic derivatives, or placing money into housing bubbles, just making housing costlier. £200 billion in 2007 of recent cash coming into the economy, created out of nothing and where that will get spent determines the form of our financial system effectively. So if we are going to permit anyone to create new cash out of nothing, then we ought to always a minimum of have some democratic management over how that money’s used.

I imply, would we rather have had that money used for well being care, or to take care of a number of the environmental points or to scale back poverty, or would we somewhat have it to make homes more expensive so none of us can afford to reside in a house. You can see it as a subsidy, a particular super subsidy to the banks, for the right to create cash, which should be for the good thing about the public and spent through a democratic process. Central bank reserve forex There’s additionally another type of cash, which is successfully an electronic model of cash and it’s a sort of cash that the industrial banks use themselves to make payments between one another.

The excessive street banks don’t want to be carrying round huge portions of money as a end result of it’s dangerous, inconvenient and expensive. You have to hire safety guards for that sort of cash. So what they do is that they pay each other in what’s an digital version of money which in the trade is named Central Bank Reserves. They maintain this electronic money in accounts at the Bank of England. But as a member of the basic public you probably can’t entry this digital money, you presumably can’t get an account with the Bank of England. What they do is they successfully promote this central financial institution cash to the banks they usually do that by creating it out of nothing and utilizing this cash to pay for bonds, to buy bonds from the excessive avenue banks.

So, the high street bank will come along with a bond which is effectively government debt and it will give it to the Bank of England and in return the Bank of England will type some new numbers into the bank’s account on the Bank of England. So successfully they’re creating central bank reserves out of nothing. The Bank of England creates Central Bank Reserves by growing the available credit score in the settlement financial institution’s account with the Bank of England. The settlement bank in return posts bonds, or sells assets as collateral for the reserves. A whole of forty six banks hold Central Reserve Accounts on the Bank of England.

Smaller or foreign banks hold accounts with considered one of these forty six banks to permit them to just accept or make funds in kilos sterling. Prior to March 2009, the Bank of England would ask every of the most important settlement banks how a lot reserve foreign money they wanted. The settlement banks would then swap a bond for the reserve currency and comply with repurchase the bond for a sure quantity at a specified future date. The settlement banks would then receive interest at base or policy fee for the central financial institution reserves they held. Since the disaster, settlement banks central reserves have shot up dramatically. Significance of central bank reserves When financial institution clients switch funds from their account to another particular person’s account, a course of known as IntraDay Clearing happens.

The amount of central reserve forex Bank A has on the Bank of England is reduced by the corresponding amount that Bank B receives. This is the significance of central reserve forex to banks. Before the credit crisis, if a bank was short of central reserves on the Bank of England to fulfill its obligations, then the financial institution would have to mortgage reserves from other banks with curiosity. Only central financial institution reserve foreign money is moved, business bank cash is just deducted and added. If you promote one thing on eBay, you know that that deal just isn’t full till you get some cash put into your account. Most folks truly wish to see the money of their account before they’re joyful to shut on a deal.

Now the banks are just about the identical, but they wish to see the cash in their account on the Bank of England before they consider a deal complete. So for instance, if you are shopping for a house from anyone who banks with a special bank then what’ll occur after you have spent 1 / 4 of a million on a home is you’ll inform your financial institution to switch some money to the home vendor’s bank and what the bank will do is definitely instruct the Bank of England to maneuver £250,000 from their account at the Bank of England to the bank of the home seller. And that money will actually transfer throughout between the accounts on the Bank of England.

When that money has moved across, then the banks will think about that that cost has been settled. They do not actually deal in the sort of cash that we’ve in our accounts, they deal in this particular money that can only be used on the central bank. There are tens of millions of individuals across the nation, all transferring cash to one another utilizing only a few major banks. These banks can maintain a tally on their computer methods and often many of the movements cancel one another out on the finish of the day. The five main banks RBS, Lloyds, HSBC, Barclays and Santander maintain over 85% of all deposits. As there are a restricted number of banks in the system, the central reserve money can solely be moved around them in a closed loop.

The money is just circulating through this system over and over again and if you concentrate on it, a one pound coin could be used to make a billion kilos of funds if it was circulated a billion occasions. And that is successfully the system that you’ve now, is you could have a small pool of actual money that’s simply going round and around the system and it’s being used to make an enormous amount of funds on our behalf. Just before the disaster there was only 20 billion within the accounts at the central bank. If they don’t have enough of this central financial institution money, then effectively they can’t make payments and if that occurs then fairly shortly the entire system seizes up.

So the Bank of England has the accountability of making positive there’s sufficient of this cash in the system. The requirements for banks to carry a certain amount of reserves has modified many instances since 1947. At that point, banks wanted to carry a minimal ratio of 32% of reserves, cash or Treasury Bonds to deposits. In 2006, the Corridor System was introduced, during which banks could set their own reserve targets each month. The guidelines modified once more in March 2009 when the Bank of England launched quantitative easing. Quantitative Easing in impact, gives settlement banks the central reserve forex free of charge.

The Central Reserve Currency is what’s known as the real money in the fractional reserve model. however the truth is banks can have as a lot of this as they need.. And Central Reserve Currency itself is a type of fiat money which is backed by nothing.. As a consequence there is no longer a meaningful fractional reserve.. A short history of cash. If you look over the historical past of the last a hundred and fifty years or so,. you begin off with a growth of a gold standard that actually involves the fore within the 1880s/1890s. where primarily countries peg themselves to a selected outlined worth of gold. after which they have an agreement to fix that value, to hold that worth,. and to commerce gold amongst themselves to make sure the balances are all there. and likewise to try to restrict or broaden or contract activity in their own economies to make certain that the stability,.

That explicit mounted value, is maintained. That disintegrates after the First World War. This is the place the complete thing breaks apart, a really main dislocation within the international financial system at that point, not really resolved until you get Bretton Woods agreements on the finish of the Second World War by which every thing is pegged to the dollar and the greenback is pegged to the gold. So you’re sort of one faraway from the gold backing or saying that there’s a definite you understand kind of strong commodity cash behind the paper cash and the credit score cash that we’re all utilizing over right here. You are type of one removed from it.

After Hiroshima, Tokyo wondered when the following atom bomb would fall. They didn’t wonder lengthy. In 1944, at Bretton Woods, the US and the UK began to negotiate tips on how to govern the world economy, the world monetary system and got here up with the World Bank and the IMF and a series of other establishments designed to manage the global foreign money and there was still a gold standard, however this gold commonplace was going to be tied to the dollar. All of the world’s gold had moved from London to Fort Knox, and the entire world’s currencies had been tied to the dollar. This system was designed to manage the sorts of imbalances, to avoid credit score crunches, or for international locations, credit score crunches are generally recognized as balance of commerce deficits i.e. once they cannot pay their bills and their forex collapses.

The currencies had been managed and the system was secure, as lengthy as the Americans performed the position of oversight. Now, who is aware of the nice story about how that each one got here to an end? The amount of money that was needed to pay for the Vietnam War, that’s precisely what I was making an attempt to get at. Oil shocks had been one other one. That meant that the Americans were not respecting their position or taking half in their function governing the financial system. They were inflating the worth of their very own foreign money that ostensibly was meant to be tied, tied to gold and to each different currency. So what did the French do? The French have been somewhat bit nervous that President Nixon wasn’t completely honest.

And they were worried that exactly what we described, that Nixon was printing cash when he should not have been, was happening. And they were worried there wasn’t enough gold to honour the exchange rate of the French Franc, so they despatched a gunboat to New York harbour to ever so politely ask for our gold back please. Did they get their gold back? Go on, guess! They did not. And the Bretton Woods system came to an end. And that is the purpose at which we enter the trendy period of the monetary system. Fiat money: A medium of trade, which the issuer doesn’t promise to redeem in a commodity,

and is predicated on confidence.

Historically, money creation was pegged to a commodity, typically gold, but at present it is pegged to nothing. Which means there might be nothing backing our money. This piece of paper is only a piece of paper. Where does this depart us? If money is based on nothing, why do we think it has any value? Sorry? Because we will nonetheless go and change it. What? Somebody else was going to shout. Great little Latin fact, the word for credit score comes from? belief. Correct. Credere = to believe Since the collapse of the greenback gold standard in 1971 and the deregulation of the monetary system, money creation has grown exponentially.

The World Economic Forum assembly in Davos these days have referred to as on a need for the credit score within the financial system, the global economic system, to be expanded by US$100 trillion. A trillion is 12 noughts so 100 trillion, if you need to imagine is a 1 followed by 14 noughts. They consider this credit score enlargement will create a increase because there’s now more cash in the financial system with which to make investments. It’s fascinating this emergence of digital currencies, the method it’s reworked everything really. Because it simply fully unleashed non-public banks to dominate and create the money system that works for them and works for the people who run personal banks.

Growth and inflation If you want a rising economy underneath the current setup we have to have rising debt. This is one thing very, very few folks actually perceive especially not the politicians who’re managing the financial system which is a scary thought. GDP Gross Domestic Product: The market worth of all ultimate items and services

produced in a country in a given interval. As the money supply grows more cash is available which can be invested in productive avenues. However it can additionally be used to gamble and drive up asset costs. An increase within the cash supply = A probably relative improve in financial exercise.

The effects of fast credit score expansion Inflation is a rise in the general level of the prices of products and services in an economy over a period of time. When the general worth degree rises every unit of currency buys fewer items and services. As the money provide grows and there’s more forex obtainable, extra money is on the market for investment which can lead to development, but more cash can additionally be available for purchases of goods and hypothesis which leads to inflation. Essentially, inflation is what occurs when an excessive quantity of money is chasing too few items and companies, so there might be too much money for the actual output of the economy.

In the seven years between the years 2000 and 2007 the cash provide doubled and the central bank, the Bank of England was under the impression at this time that they had it under control as a end result of they have been saying that costs weren’t going up that much. Of course they had been solely looking at prices in your native nook store. They weren’t trying at the worth of housing and housing is the largest expenditure that most people will make. Many western countries heavily subsidise agricultural production, which has the

effect of keeping prices and inflation low. Increasing home costs, it could make you are feeling such as you’re changing into wealthier, however as your wealth will increase the effect is that your youngsters’s wealth is actually lowering.

So in reality there is no web acquire in wealth as a end result of your youngsters are going to have to pay even more once they need to buy a house. So in effect there is no net improve. They are going to should earn even more. They are going to have to enter much more debt. So rising house prices don’t create further web GDP worth to the economic system. Actually what they do is they redistribute wealth in path of these people who have already got houses i.e. wealthier folks and take away it from poorer individuals who cannot afford to get on the housing ladder. So it is another example of a very regressive policy to permit home costs to simply inflate.

It makes everybody feel like issues are going well and people spend money on different stuff, they take equity out of their houses however it’s not creating new jobs. It’s not enhancing the quality of the economic system. It’s not helping our steadiness of commerce. It’s not serving to the general public deficit. It’s a zero sum sport. As of August 2011, 85.5% of consumer financial institution lending was secured as mortgages on dwellings. If you have somebody creating money that can only be spent on one factor, which is housing then the worth of that thing is going to go up. Between 2000 and 2010 they created over a trillion kilos of recent money £500 billion just within the three years before the disaster. That’s why home prices went up they means they had been.

There’s nothing special about houses. It was simply all this humorous money being pumped into that market. If money is spent into the economy some huge cash goes into homes for instance into mortgages that’s an increase within the amount of money in the economic system and not using a corresponding enhance in exercise in output, in GDP. It’s nonGDP primarily based spending. That’s what causes inflation. In the UK we have had it in spades. We’ve had this huge housing boom. The primary cause for the housing growth, in my view, is the huge amount of speculative credit created by the banks to go into homes. If homes have been cheaper, they would be easier to build. More of them could be constructed.

There can be less huge houses, with hardly any people in them. London wouldn’t be the centre of a kind of very wealthy speculative orgy, the place all of the richest individuals in the world wish to get a property in London, as a result of it’s seen as an excellent asset. Houses can be seen as places to stay primarily, somewhat than seen as places to speculate. The essential thing to assume about is, in case you are a financial institution and you have to make a loan, you have choices. You can give that mortgage to a small business and you may know that the risk to you of that mortgage failing, defaulting, is definitely quite excessive, as a end result of that small business, the house owners of that business, have limited liability, which means if that business goes bust you as a bank get nothing again basically.

So that is kind of excessive risk, compared to loaning your money to anyone with some collateral, with a house behind them, like a mortgage. So there is a simple incentive for banks to choose placing cash into housing than into a small enterprise. Now that is a real downside if you widen that out throughout an entire financial system, as a outcome of it means there’s an incentive to place money into speculative somewhat than productive funding. So once more, we’ve to consider how we create our financial system that is extra balanced between these two kinds of speculative and productive investment. The authorities is showing enormous reluctance to regulate the housing market and to again regulate the amount of money that banks put into homes.

We don’t determine who creates credit for what. No. We go away that to a few chaps in a financial institution to resolve principally. A short history of bubbles A bubble occurs when there could be very high inflation in the value of a selected good or service over a brief time frame. The first recorded bubble was the tulip bubble of 1637. The concept of the tulips and their relevance is that you saw the first ever monetary bubble and crash. The craze for tulips black tulips being a legendary perfect of what someone may genetically engineer through cultivation after many generations grew to become a mania within the Netherlands in the 1630s.

What they didn’t realise was that many of the very, very rare patterns on tulips bulbs have been attributable to a virus and weren’t genetic at all. But they traded them to the extent that tulip got to the purpose the place they had been value ten occasions the common annual wage of an individual working in the Netherlands. There was a futures market in tulip bulbs as a end result of obviously you plant them now however you do not know what goes on to come out of the ground. So we see already, four hundred years in the past, that a money system or a financial system isn’t one thing that exists within the summary, somewhere on the market in the ether, however one thing that was to do with states, power, commerce and the way they interact with one another.

Unlike tulips, that are a disposable luxurious, homes are each a necessity and a luxurious. And as such, they are best as a vehicle for money and bubble creation. A dwelling is perhaps the most prized possession of value most people aspire to. Inflating house costs in this means permits a nation to increase its money provide with out affecting inflation knowledge. The extra buying power created increases the perceived wealth in relation to other nations and thus it creates relative energy. It is a way of increasing monetary energy with out investing in the productive development of industry. Certainly should you look at Britain and America as outstanding examples of this, these are countries with very excessive charges of private home possession so you’ve got received a good base to try and carry out this sort of coverage off the back of.

I think it was fairly deliberate within the case of the US, nearly specific, as Alan Greenspan as head of the Federal Reserve when confronted by a inventory market crash at the finish of the Nineteen Nineties quite deliberately slashed interest rates to virtually zero. Everyone can borrow very, very cheaply, in particular its very simple to borrow against a house as a end result of that is an asset and is doubtlessly one thing that the financial institution can say Well, OK we’re not simply lending you cash unsecured, you really do have a home in order that’s nice as a end result of we are able to repossess it. They will not inform you this whenever you take the mortgage however they’ll do that and that bubble is then what fuels enlargement similar to it is, contained in the US and inside the UK where something related takes place for the next decade or so.

I assume it is also a mirrored image of an underlying weak point in these governments that they simply lack the need and possibly the ability, but I think it more comes down to a will, to problem monetary markets, to challenge big capital and say We’re going to do one thing totally different now. And you are going to need to associate with it as a result of we have been democratically elected and you lot frankly haven’t and we now have a mandate to do that and we’re going to make this occur. Just bear in mind it’s all a part of the plan. What are you yapping about you voted for it! In Holland or the Netherlands what we had over a period of attempting to get independence initially from Spain and making an attempt to boost money to get a military to free themselves was monetary innovation.

They innovated public lotteries to get cash collectively. They had public subscription. This was the concept led to the thought of public shares a chunk of the action that anyone could invest in that meant that something like two thirds of the inhabitants was investing in tulip bulbs by the 1630s. After independence these instruments had been utilized to financing enlargement. Why was such a small country in a position to hold its personal towards so much greater countries for instance Spain and Portugal that had the advantages of their empires for over a century in respect of the Netherlands? Why might they compete? On what resource basis? Well that they had a more environment friendly, a more advanced and a broader based mostly monetary system with these devices that they’d innovated that allowed them to bring more money to bear at one point then anyone else, extra rapidly.

Incredible But True. How to avoid inflation Now, inflation could be avoided if the amount of money that goes into the financial system is regulated in a way that it does not exceed the actual activity that is happening in the financial system. Now, the greatest way to do this, for my part, is to be positive that money is issued into the financial system just for productive funding, for productive goods and services, so cash goes in to assist a small business to begin out up which creates jobs, which creates extra purchasing energy which implies there is no inflation. During their historical past nearly all central banks have employed forms of direct credit regulation.

The central bank would decide desired nominal GDP development then calculate the required amount of credit score creation to realize this. And then allocate this credit creation both across the various banks and sort of banks and throughout the commercial sectors. Unproductive credit score was suppressed. Thus it was tough or inconceivable to obtain financial institution credit for large scale, purely speculative transactions similar to today’s large scale bank funding to hedge funds. The World Bank recognised in a 1993 research that this methodology of intervention in credit allocation was on the core of the East Asian financial miracle.

There’re all sorts of issues that governments have carried out up to now, very successfully in numerous circumstances and sometimes not unsuccessfully in this nation but the examples that spring to mind like South Korea, Japan, often in East Asia the place governments have been quite targeted about how they are going to rebalance the economy, picking sectors and deciding where the investment should take place, I suppose that has to start happening in the UK as a result of we’re in a demand aspect recession somewhat than taking a look at crisis of supply. You have to have a system the place credit score is put into productive avenues, where credit score is put into constructing excessive pace rail links, the place credit is put into constructing houses quite than giving people money to inflate the worth of houses.

So it is quite easy actually in that way and the current system is just set up not to do this principally. The creation of money by personal banks for nonproductive usage causes real inflation and as such it is a tax on the buying power of the medium of change. Decrease in the standard of living The figures for the UK are quite stark really. The common median real incomes for most individuals declined during the last eight years. They are actually in fairly sharp decline as we go into recession the sharpest really since concerning the 1930s so real income is declining. Bank created fiat currency allows the private banks to suck wealth from the economy and over time results in a gradual decrease in the usual of residing.

As people turn out to be poorer they become much more depending on debt and this at a time when efficiency and mechanisation have improved dramatically. If you return to the 1960s and we were anticipated to, we were looking ahead to an age of leisure, tv programmes saying What are people going to do with their spare time? And now we’ve obtained more people working more durable than ever, spending more than ever, which looks nice, everyone is spending more, but should you’re not really benefiting from what you’re spending, should you’re having to spend the money on childcare costs on commuting prices and so forth, prices that people did not in the past used to have to pay because you could stroll to work and one member of the family was capable of stay at home and be a permanent homemaker, then you’re not actually any better off.

Everyone is under such enormous pressures these days. I am acutely aware that my 4 nephews and nieces are going through troublesome times. They’re just going to search out themselves having to work very onerous just to keep a roof over their heads, to get a roof over their heads. People are getting poorer in real phrases. It’s because prices are at all times going up as a outcome of all this new funny money is being pumped into the system by the banks and they’re creating all of it as debt so simultaneously prices are going up and things are getting more expensive, we’re getting additional and further into debt and our wealth and the return that we get from truly working is getting much less and less all the time.

You cannot deal with poverty when you may have a financial system and a money system that distributes money from the poor to the very rich. Any distribution that you just attempt to do in the reverse direction is successfully pissing within the wind. If you take a look at points like increasing inequality one obvious approach to sort out inequality is to have, for instance, a redistributive tax system. You tax the wealthy you give some cash to the poor. You transfer a bit of cash down the dimensions. That’s all very well however if you completely overlook the reality that there’s another redistributive system which is taking money from the poor and giving it to the rich, you then’re not likely going to sort out this inequality and the way in which a debtbased money system works it ensures that for every pound of money there’s going to be a pound of debt.

That debt is usually going to end up with the poor, the lowermiddle lessons, these people end up with the debt and so they end up paying curiosity on that money which then goes back to the banking sector and gets distributed to the individuals working in the City or in Wall Street. What this technique does general is it distributes cash from the poor to the rich essentially, distributes cash from the poorer areas of the UK back to the City of London and it also distributes money from all of the small companies, all the little factories around the UK and distributes that cash again into the monetary sector.

We have a system whereby the activity of actually supplying our nations money happens underneath the very same roof as the identical organisation that is liable for taking benefit of putting collectively debtors and lenders i.e. a bank. So, a financial institution creates our nation’s money supply as nicely as making loans for revenue. The government cannot allow the banking system to fail as a end result of if it did over 97% of all money would disappear. This is why within the occasion of a disaster the risk is transferred to the taxpayer. But even throughout normal times banks receive numerous guarantees and benefits beyond the best to create money.

Bill, by the finest way, I know the Bank of America is a very massive financial institution, it occurs that I truly have $32 there myself. Just between us what assurance do I really have that this money is safe? Well, all deposits as much as $10,000 are insured by the Federal Government in Washington. That’s my guarantee? Yes sir. Have you heard that the Federal Government is about $280 billion within the hole? Banks receive large security nets from the federal government. The taxpayer ensures eighty five,000 pounds as deposit insurance coverage. And the Bank of England supplies liquidity insurance in case a financial institution runs out of reserve currency. Someone wrote that an enormous investment financial institution is like a Giant Vampire Squid wrapped across the face of humanity.

Hypnotising politicians. Who throw money on the banks. No strings connected. No matter what damage is done. Trashing the planet. Forcing cuts to issues that make life higher. Goodbye faculties. Goodbye playgrounds. Goodbye jobs. The bankers that we bailed out then gave themselves bonuses that have been larger than the primary wave of public spending cuts. Britain alone gave the banks more money than it value to place a person on the moon 6 times over. Where did our cash go? Who let the banks get away with it? Why? Can Vampire Squids ever be useful? No Government but is brave sufficient to tame them maybe they need a plan.

Take again our banks Ever growing debt The spending cuts agenda is an try by the federal government to shift debt from its account to that of the common public. This is the Government’s response to the bank bail outs and is necessary in a debt based mostly financial system where increased buying power is the outcome of growing debt and where a diversification of debt offers general stability and market confidence. Policies such as pupil payment increases and the privatisation of public services, property and business observe the same mannequin. The drawback we’re facing is that there is this transference from the general public debt to private debt which is actually a way of transferring danger, away from UK plc and the Government on to the heads of people and it will be essentially the most weak individuals who are going to have essentially the most debt.

Thus it is a very regressive coverage framework that the Government’s embarking on where the chance is moved on to those who are most weak and if there is one other financial shock, if there’s an oil shock for instance, the people who can pay the penalty are the poorest individuals in society or owners for instance who will fall into adverse equity if interest rates go up even 1 or 2 % there will be actually huge problems. So I don’t think it’s a sensible means ahead for us in the intervening time at all. It’s regressive and it’s certainly not truthful within the phrases that the Government is speaking about and it’s actually not a case of We are in this together.

As more of the country’s sources and industries are privatised the non-public sector takes on more debt. As a outcome extra money is created and there’s a boom. Some personal equity firms have taken this principle to the intense, engaging in a apply often known as a Leveraged Buy Out, where a company is purchased at an often inflated value and the purchase price is transferred to the business as a debt. The firm turns into liable for the funding of its own buy. These debts are often so nice that the company needs to cut back workers, salaries and research actions. When you must factor interest as a enterprise, if you want to issue interest reimbursement into your goods and companies, then you must charge a perpetually greater value as you take on more and more debt.

An improve in the diversification of debt ends in a rise in the money provide. When the cash provide will increase extra money is available for productive actions and consumption which is the situation for a increase. It’s questionable whether or not we’re going to get out of this recession or whether we’ll just keep ticking alongside the way the way that we at the second are. However if we do, then when we come out of this recession and when growth begins once more look at what happens to debt. It will rise and it will hold rising and the quicker the economy is rising, the quicker the debt will rise after which give it one other three to five years we’ll be back the place we were.

The debt will turn out to be too much people will start defaulting again. It’s sort of the system that we’re locked into now may be that we gained’t develop the economic system without growing the debt and the debt is the very factor that can deliver down the economic system. The only option going forward is to reform it to cease banks from creating cash as debt. By fixing the financial system we are in a position to stop the banks from ever inflicting another financial disaster and we will additionally make the current public service cuts and the tax rises and the rise in nationwide debt unnecessary. The current financial system permits the banking sector to extract wealth from the economic system, while offering nothing productive in return.

Why is it that we have got all this technology, all this new efficiency and yet it now requires two people to finance a family whereas within the 50’s it solely wanted one individual working? The reason for that’s not as a result of these washing machines and every little thing are more expensive. It’s due to all of the debt and since the banking sector is effectively creaming it off from everybody else. So a growing banking sector isn’t a great factor. If the banking sector is growing it’s either that it is changing into less environment friendly or it is turning into a parasite on the remainder of the economy. We can talk about the banking sector changing into 4%, 5%, 6% of GDP, what’s happening to the rest of the economy? It’s changing into 96, ninety five, 94% of GDP.

We’ve received to get switched on to this now. If we want to have an opportunity of tackling any of the opposite big social issues, you have to determine the money issue. The poorest on the planet pay for crises even once they’ve not benefited from the often reckless and speculative booms, just like the housing boom in Ireland that preceded that crisis. Over the final 30 years we have seen income differentials improve in order that the wealthy have gotten much, much richer and ordinary people haven’t, they’ve stayed the same or they’ve got poorer. One of the ways in which the financial system was saved going was by offering low-cost credit score, offering debt to these very individuals who couldn’t actually afford things anymore, in order that they kept shopping for and when it collapses it’s those self same people that need to pay once again although in some ways they had been the victims the primary time.

As a result of the disaster the Bank of England has purchased company debt and repackaged it at lower rates of interest. Yet the common particular person is being requested to pay more than ever to borrow on overdrafts and credit cards. Debts between the very wealthy or between governments can all the time be renegotiated and always have been all through world history. They’re not something set in stone. It’s typically talking when you have debts owed by the poor to the wealthy that abruptly debts become a sacred obligation extra essential than anything else. The thought of renegotiating them turns into unthinkable. Can you pin down precisely what would keep traders joyful, make them really feel extra confident? That’s a tricky one. Personally it would not matter. See I’m a dealer I don’t actually care about that sort of stuff.

Pay your taxes! Were you born in England? If I see a possibility to make money, I go along with that. For most traders, we don’t really care that much how they will fix the economy, how they are going to fix the entire scenario. Our job is to generate income from it and personally I’ve been dreaming about this second for 3 years. If you realize what to do, you also can make a lot of money from this. I actually have a confession which is, I go to bed every night I dream of one other recession, I dream of another moment like this. I dream of another recession, I dream of one other moment like this. You can make some large cash from this.

Bruno, Virginia harm somebody actual bad, you oughta assist her. Incoming! The method in which you may have the ability to look throughout Europe now and see that the new Prime Minister of Greece, not elected, basically imposed, Papademos former employee of Goldman Sachs. The new Prime Minister and Finance Minister of Italy Mario Monti former worker of Goldman Sachs. The new President of the European Central Bank former worker of Goldman Sachs. You see these individuals popping up absolutely all over the place. That’s the best way to vary what we now have, take all power and all freedoms away from the people and acquire every little thing into the hands of one small group with absolute power.

From the people, without the people, against the folks. What’s been fascinating out of all this is the question of democracy that is been opened up very starkly in Europe, that you’ve got got a authorities of bankers basically imposed upon you. It’s bankers who kind of got us into this mess to place it somewhat crudely, however that is a great first approximation and you then say OK, Bankers are the individuals who therefore are going to get us out of it and incidentally there going to run your country now. There’s a critical question of democracy that has opened up right here. By the way, the banking disaster drove more than a a hundred million people again into poverty.

The mortality statistics of folks who go into poverty rise hugely for a whole vary of reasons.. So the banking crisis isn’t nearly becoming poorer it was about killing folks as nicely.. And guess what? We have not actually received to the underside of it.. We by no means held anybody to account and we’ve not carried out the novel reforming job that we really wanted to do. because we mistakenly thought If we destabilise the place any additional, it will make matters worse.. And guess who took the decisions? All the people who had been there in the first place.. “I assume you ought to know, that the enterprise of one of these businessmen is homicide.”. “Their weapons are trendy, their considering: two thousand years out of date.”. International features. Look, I was there when the Secretary and the Chairman of the Federal Reserve came those days.

And talked with members of Congress about what was going on. It was about September 15th Here are the facts, and we do not even talk about these things on Thursday at about 11 o’clock in the morning the Federal Reserve observed an amazing draw down of cash market accounts within the United States to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to assist, they pumped $105 billion into the system and shortly realised they might not stem the tide. We had been having an electronic run on the banks. They decided to shut the operation, shut down the money accounts and announce a guarantee of $250,000 per account so there wouldn’t be additional panic on the market, that is what actually occurred.

If that they had not carried out that their estimation was by 2 o’clock that afternoon $5.5 trillion would have been drawn out of the money market system of the United States. It would have collapsed the complete financial system of the United States and within 24 hours the world economic system would have collapsed. When cash is withdrawn internationally from one foreign money to another the reserve forex shifts from the nationwide financial institution of 1 nation to the reserve account of the overseas bank. Foreign banks have relationships with local banks that enable them to hold overseas reserve currencies whilst not being a half of the central bank scheme at the local central financial institution.

For instance when 1,000 kilos is transferred into euros a UK bank will agree an change price with a Euro area bank, perhaps 1.15 euros to the pound. The UK financial institution will then switch £1,000 of the central reserve forex to the UK companion bank of the European bank whilst the European financial institution will switch 1,150 euros of reserve foreign money to the European associate financial institution of the UK bank. What occurs when currencies and the exchange price system is now not managed, what are some of the first consequences? Devaluations. Speculation. Imbalances. Where some countries would accrue increasingly and more of what? What will they accrue? Other currencies, different currencies.

The reserve forex must be spent within the country of origin or exchanged into other currencies. Most international banks wouldn’t have deposit taking accounts outside of their national borders and as such the overseas reserves they maintain do not come back to them within the type of deposits. When a country accumulates commerce imbalances it either accumulates international reserve currencies in the case of surplus or spends its own reserves in the case of adverse commerce balances. Balance of trade is mainly the distinction between what you’re promoting overseas and what you’re buying from abroad. Now, the characteristic of the UK is that for a very lengthy period of time it is had a deficit of something called a visible stability of trade which is trading issues you could see.

So that’s items that you just’d recognise, stuff you’ll be able to put in containers, it’s vehicles, computer systems, issues that you’d see in a shop. That’s been a considerable deficit. I suppose it opened up in the early 1980s and basically it hasn’t gone away since if anything it is got wider and wider. Foreign exchange reserves can’t be directly used for home spending. The money can only be spent overseas or on imports. A country with a big stability of commerce deficit depends on its creditors to spend the imbalances accrued in its own market. There have been proposals in the past to try to create a mechanism for these imbalances to match up.

For occasion John Maynard Keynes at the end of the Second World War his authentic proposal for what turned Bretton Woods and the set of institutions settled there like the IMF and World Bank was that there could be a type of worldwide clearing union. This notably associated to the trade facet quite than the monetary aspect immediately but the precept was that when trade balances had opened up everybody would financial institution by way of an international clearing bank and that might kind of force everybody to eventually reconcile the imbalances that appeared in the real economy. But no such mechanism exists. The accrued internet commerce imbalance of the UK is round 800 billion kilos.

Currency wars In essence what has occurred is that over a few years some countries have had big commerce surpluses and others huge commerce deficits. The countries with trade deficits have been spending more than they have been incomes so they’ve needed to borrow from abroad they usually’ve been doing this year after 12 months. Countries like that, the United States, ourselves and another nations in Europe that can’t go on and there are two ways by which this could come to an end. Either and we have seen this in a number of the international locations in Europe, if they can’t find new methods to become aggressive then their capacity to repay the debts known as into question.

Another method of doing it, which we adopted is that we’ve a credible plan to repay our debts and the value of sterling has fallen by 25% to make our exports more competitive and enticing to overseas buyers and to be more attractive for British customers to buy from British producers quite than abroad producers. That is what we now have accomplished to place in place a framework to rebalance our financial system and I’m positive that’s the best method to do it. Currency war, also called aggressive devaluation, is a condition where countries compete in opposition to each other to achieve a comparatively low exchange fee for their currency.

As the value to purchase a particular forex falls so too does the real value of exports from that country. Domestic industry receives a lift in demand both at residence and abroad. It’s made British exports appear quite cheaper so they recovered a little bit but because the remainder of the world is trying really quite ropey they’ve started to fall again down once more. So what we’re looking at is something that’s virtually like a sort of anarchy and in a means an rising anarchy. This is what’s happened over the final few years the place the Brazilian Finance Minister has been probably the most vocal about this, talking about currency wars, speaking about the need of national governments when confronted by a significant recession they think If we could export extra we can dig ourselves out of this recession.

If we wish to export more we depreciate our foreign money. That makes our items cheaper everyone else buys them and we’ll all be higher off. The issue right here is if you depreciate its like everyone else appreciates against you. Their stuff becomes more expensive so they are not joyful about that. They also need to depreciate and that is where you presumably can see a competitive round of devaluations breaking out. To decrease the worth of its national foreign money a nationwide central financial institution sells reserve foreign money into the market. It creates this currency out of nothing by typing numbers into a computer. i.e. a central bank buys foreign reserve foreign money.

The quantity a central financial institution can create just isn’t restricted as a outcome of there is not a outlined commodity behind

the reserve currency. During the long part of commodity cash, the trade fee would rely upon the quantity of gold, silver or copper contained within the coins of every nation. Similarly after the arrival of paper cash and the gold standard, the change price trusted the amount of gold the federal government promised to pay the holder of the financial institution notes. These quantities didn’t range significantly within the quick time period and as such change charges between currencies were relatively stable. After the Second World War currencies have been pegged to the dollar and the dollar was backed by gold, this system got here to an end in 1971.

So, we now have a contemporary financial system where cash is now chaotically organised, there isn’t a trade rate as a end result of there is no gold commonplace system to maintain it, so we do not want it. In reality we believe the market will resolve all the issues of trade whether your foreign money must be value greater than mine is a reflection of your financial system relative to mine and if that modifications the currency and change fee can change and if we need that to happen it’s going to happen magically by the effectivity of market and revenue looking for. You guys know the rest I suppose. A foreign money’s value in relation to a different foreign money is decided by the market.

If extra folks need to purchase a forex than sell it its worth will increase. If more people wish to sell, its value decreases. The worth is ready by individual banks as they purchase and sell currencies they may adjust the change rate. The last examine I read in 2007 every day on foreign money markets $3.2 trillion are traded, every day. Who knows what the worldwide GDP is? $50 trillion 50? Again Brucey, higher! 60; that’s nearer. The point is consider that change taking place every single day there’s about 260 enterprise days a year. It takes a number of weeks to match the global worth of each economic transaction that happens everywhere, daily, in a yr. It takes a few weeks.

Obviously all of us commerce forex pretty frequently. If you go overseas you change into another foreign money. That’s a type of forex buying and selling you are swapping your kilos or euros or yen no matter it may be. That occurs fairly often and that’s a standard part of the buying and selling course of. Large companies have to do this on an everyday basis. Where it becomes something that folks query and the place you get individuals saying Well grasp on, that is speculation! is whenever you get people realising that currencies move round subsequent to every other and in the event that they move round in worth next to one another there’s always an opportunity to attempt to make money out of those modifications in value and due to this fact you can speculate on it.

That’s the more questionable finish of the market, that’s the bit of the market that issues like a financial transactions tax will attempt to chop away at as a result of the idea there and it is type of not incorrect is that it just produces instability for everybody else. These folks want volatility out there because that’s how they make their money. They wish to encourage it they usually do encourage it by buying and selling and speculating in the greatest way that they do. By 2010 the international exchange market had grown to be the most important and most liquid market on the planet with a median of $4 trillion of forex being exchanged daily.

Volatility creates a necessity. What does it do to international locations, particularly maybe small ones like creating international locations, if there are all of a sudden large and immediately fluctuating monetary flows? What do they have to do to cope? Increase the production of the merchandise they’re promoting and promote extra Lowering the price And becoming presumably even poorer. Once you start talking concerning the international system it becomes actually fairly a peculiar factor in that plenty of it depends on simply sentiment and beliefs about what an economic system is like rather more than it is determined by anything the economy would possibly or might not truly be doing and that can shift very rapidly because if it’s just somebody’s perception about a currency is supportable then you realize they can keep it up believing this till whenever If that perception changes it can change very quickly in a monetary market.

The process of financial contagion can happen in simply minutes or seconds even. You can simply move from being an apparently quite a secure robust economic system to being one that suddenly sentiment has turned towards you and you find that the markets are selecting on you. It can usually be not much more than you’re merely the next door neighbour of a rustic that is presently in hassle. Many of the world’s financial crises prior to now thirty years have been caused by speedy withdrawals of a nation’s forex or the currencies of an entire area. This sort of activity is also known as financial warfare.

It’s benefited major establishments really quite considerably, like Goldman Sachs for example, or any giant financial institution has accomplished somewhat higher out of this set of arrangements than it will have accomplished in a far more regulated environment. It’s made folks very, very wealthy. It’s allowed financial markets to expand absolutely enormously. Anybody concerned in that is eager on seeing a deregulated world. In the case of the UK you could have a authorities which has been quite overtly and intentionally and aggressively arguing in opposition to any forms of regulation being imposed on those financial markets. But it isn’t the case that there’s somebody behind the scenes pulling the strings this is how issues work fairly deliberately, overtly, in entrance of you. That’s the world as it is.

It is making some folks very rich. They’re quite pleased with it. I think it’s a type of financial warfare. Much of the change in the finest way that the worldwide financial system works over the past thirty years result from this debt, this third world debt because it is given wealthy nations and banks and the monetary sector enormous quantities of energy and control over the poorer bits of the world where a lot of the resources are that we like utilizing and that’s being used in a means that many people have compared to a type of colonialism. It’s a really actual direct form of energy that’s being used over those nations to drive those nations to do what are really in the pursuits of the richest segments of the world that they do.

And as a end result of that not only have firms become absolutely big,. made big quantities of profit and completely huge and all pervasive,. however the monetary sector has turn into even larger than that and the actual money to be made in the world today. isn’t by producing something at all its purely by types of speculating. Making money from cash. that is probably the most profitable and by far and away the biggest form of economic exercise that exists on the planet today.. To protect themselves, weak international locations have to accrue currency from rich nations. who create these currencies out of nothing.. The Netherlands, first Governor General of Indonesia the man who constructed the trade routes,. fortified them, what I mean by that is built forts along them and fought Spanish fleets and British fleets,. mentioned about the growth of the Netherlands Empire and Netherlands commerce was ‘We can’t make commerce without struggle, nor war without commerce.’.

Money and power. Financial Imperialism So reserves have turn out to be the greatest way in which you can insure your self in opposition to what? Speculation. Speculative attack. Falling markets. Bubbles. When a rustic succumbs to a speculative assault it’s requested to decontrol its markets and conform its monetary system to that of the dominant celebration. The big problem that is confronted by most creating countries who’ve obtained into a debt crises was that they had been advised by the powers that be on the planet, the International Monetary Fund, which in many ways governs the global monetary system, that the way in which to get out of debt is to begin with to restructure your economy.

Especially to increase your exports so that you’re incomes more dollars and then you’ll find a way to repay your debt which is generally in dollars or some other international currency. Unfortunately time and time once more that was proved to not be the case in any respect. Actually nations reduce their public spending to the bone so they stopped growing; they stopped having any potential for growth and what they did produce was aimed on the export market, was geared toward creating dollars and so on. They have been paying off their money owed but they weren’t creating their own financial system in any respect. They have been paying way more in debt repayments than they had been spending on health or schooling or the rest and their debts just kept getting larger and bigger.

The nation turns into a vassal state permitting large companies to take benefit of its pure sources and workforce. Financial Imperialism: Expanding and sustaining imperial energy by way of financial dominance. It’s not even shadowy. There’s no great thriller about what’s occurring right here and how the world operates. It’s quite blunt. For the last thirty years you’ve got received something pretty much all over the place that generally gets labelled NeoLiberalism this idea that you should have floating change rates, weak regulation significantly of financial markets, minimal government interference or involvement in what the market does and it is roughly how the world operates.

And then there are institutions the excellent one at this level is the IMF that may actively attempt to implement this state of affairs. So it isn’t greatly shadowy, that there are individuals behind the scenes someplace attempting to govern stuff, this is really quite overt. This is occurring and this is the way it has been for my entire grownup life. This is how the world is operated and it is made some individuals very wealthy, it’s produced enormous concentrations of wealth. So when the International Monetary Fund is obtainable in, in order to try to alleviate a international locations debt problems, it imposes a set of conditions.

In the 1980s and 90’s they called that set of circumstances a Structural Adjustment Programme and it tends to take very similar types wherever it happens. Indeed we can see structural adjustment programmes in essence taking place right now in international locations like Greece and Portugal and Ireland where international locations are instructed to lower the quantity they spend on the common public sector, they’re instructed to liberalise their commerce market and liberalise their capital market so money can far more easily come in and out of their economic system. The concept is that it will encourage investment to return in from richer elements of the world and that all of their issues might be solved from this investment.

In actual reality that is proved time and time again to be utterly without basis. In actual truth what happens is it destroys fledgling industries and capacities in these growing international locations and creating nations turn into utterly depending on goods and companies from developed international locations and also from capital from developed international locations. One of the issues the International Monetary Fund may be very keen on is telling nations to lower the taxes that ought to be paid by multinational corporations after they come and operate in a country as a outcome of you then’ll encourage extra multinationals to come in.

Of course what it also means is the profits which are made by those multinational firms go away those international locations just as quickly the nation itself does not profit. Today you could have many growing countries which have got nearly no tax base. They’ve not developed a tax base in any respect and they also’re much more depending on international capital markets, on the cash markets, on creating debt and that’s why you’ve so many nations in the world which have really been robbed of their sovereignty, and it’s extremely troublesome to see how democratic societies can evolve or perform when actually a government is extra dependent on the diktats of the International Monetary Fund and the money markets than it is on their own folks.

Financial instruments What we have seen for the reason that Seventies is a dramatic improve in a collection of phenomena which have had a stimulative effect on the adjustments in the financial system which have introduced us to the gleaming and shiny metallic and metal business that is over there. In case you don’t know that is the City of London I’m pointing at. To compensate for the dearth of an outlined commodity primarily based worth underlying currencies, financial establishments developed securitisation as a way to manage danger. You develop securitisation as a way to try to stabilise the whole system this is a set of financial processes and monetary innovations that actually accelerate from the seventies, eighties onwards.

You had a chaotic system that wanted to handle threat and also you needed to innovate. You needed derivatives, choices, futures. You have new markets in volatility management instruments. Who knows what the time period hedging is? Spreading your risk. Managing your danger, insuring against it, precisely. Up till very lately, till the 1960s the Securities and Exchange Commission would be quite clear that derivatives that weren’t primarily based on real products like agricultural merchandise so pork belly futures or no matter would in fact be basically a sort of playing and due to this fact you weren’t allowed to trade them. That changes in the sixties. Everyone can trade foreign money futures, issues that aren’t based mostly on actual products being traded at some point in the future however are based mostly on the movement of foreign money prices.

Once you have the system of mounted exchange rates breaking down clearly this accelerates enormously so as you get the rollback of presidency regulation right here, you get the market taking up with its personal merchandise here and the idea is that the market is better at regulating itself, its more stable than when you have a authorities interfering all the time. The environment friendly markets speculation the concept you have set up a financial market, they’re quick, everyone in them is well informed, they all maintain a very cautious eye on what everybody else is doing it’ll due to this fact be very secure and mirror actual modifications within the financial system.

It’s not going to be driven by panics, manias, speculative bubbles. None of this is really going to happen. If there’s motion up and down it’s because one thing real is going on and merchants and buyers in monetary markets are responding to it. So that’s the efficient markets hypothesis. The practice I assume what you see in 2008 is the top of that course of the appearance of a crisis so main that belief that it’ll merely be selfstabilising and self-regulating really cannot keep on. The practice carries on anyway but you can’t really argue in the same method that you simply used to It’s good or It’s necessary or This is OK for the world.

In the last decade we had a model new innovation one thing known as a credit default swap.. A method of buying for insurance coverage against an organization you invested in going bust. and in 2002 they have been price less than $1 trillion. In 2007 they have been value $60 trillion.. That’s five years.. Everybody is suddenly sitting there saying Oh! These CDO’s we’ve made do not actually present the sort of stability that we thought.. The maths that is inside them is complete nonsense it turns out.. There’s way more threat hooked up to attempting to securitise danger and securitise debt. in the method in which that we’ve accomplished this than we thought. And we now assume these items are now worthless!. The try and get increasingly advanced methods of regulating and shaping a monetary market. and trying to make a quick buck out of it as well actually helped produce the opposite impact to what its apologists stated.

Which is, it led to a spectacular crash. What we saw on account of this very different state of affairs was one phenomenon above all, one sector above all grew, and that was the monetary sector. While the monetary sector benefits enormously from the current monetary system, the system is neither secure nor honest. The assumption in what the Bank of England does right now might be that the cash that we hold is backed up by authorities debt. The government can again up its promises by the reality that it can tax the public. So what they’re implying is that money is backed up by authorities debt, when government debt is backed up by the power of the federal government to get cash from the common public.

Time and time once more over the previous thirty years we have seen private money owed being reworked into public debts, and finally the value of that debt is being paid by the basic public in the debtor nation. This is why spending cuts are necessary. The system is designed to make certain folks very wealthy at the expense of a nation’s residents and tax payers. The system lowers the usual of living of the bulk and distributes this wealth amongst the privileged. So what we are left with is a financial system because the early seventies that has no fixed change rates that abruptly has more and more open financial borders, that has central banks having to handle without having any management as a end result of there’s nothing right here the place the gold was once.

Chaotically they have to ease quantitatively. They have to lend as a lender of final resort. Throughout historical past financial techniques had been designed to offer the dominant worldwide power an advantage and this power is fiercely defended and expanded on. International currency reform What I wish to see is a brand new kind of forex that is backed by one thing that is scarce and that we really need and we really worth. Something like vitality or renewable power, for instance, a kilowatt hour backed foreign money could be very interesting to me. We want to begin valuing things which may be most scarce and that we want to survive as a human race in the lengthy run.

Backing an international currency with something like that may generate monumental funding in,. for example, renewable energy, if that is the first international unit of account that’s getting used.. Another option is a basket of currencies so you combine up the worth of various currencies. to create a very stable foreign money that folks trust in.. Perhaps even higher could be a basket of commodities with which to back up worldwide currencies.. Now if it was potential, internationally, a way or another, to get all these increasingly competing nationwide economies collectively. and say We’re all going to sit down and write out an agreement, considerably just like the Bretton Woods settlement. which can allow for, in contrast to Bretton Woods, some currencies to be pegged towards totally different baskets of goods. more acceptable to their nationwide economies. If you can organize for that to happen then that would be nice.

And you probably can see how that would start to create a sort of order within the worldwide macro economy which is otherwise lacking. The actual difficulty there is simply political who on Earth is going to do this? Who is the pressure that’s going to make this factor happen? Creating a financial system which is both truthful and secure is feasible and can be achieved. What are international organisations for if not for such a purpose? Part of the voiceover for this documentary was taken from the e-book, “Where does money come from.” This is George. George labored in an enormous bank within the City of London. But at some point with out warning George’s financial institution went bust. Luckily, the federal government rescued the financial institution and George kept his job however the grasping government wanted one thing in return for their help.

They demanded a better tax on George’s salary and bonus. For somebody with a excessive cost life-style like George, a shock like this might be devastating. Now George struggles to afford the hire on his riverside apartment in central London. The tyres on his Aston Martin are carrying skinny and are barely street authorized. Unless George’s state of affairs improves or except somebody such as you helps him then George could even be pressured to stroll to past the following Saville Row tailors and purchase his suit from Topshop or Next. Even if George had something to celebrate he can no longer afford the champagne to have fun with. George just isn’t alone. Countless others are struggling like him. Noone is conscious of how long it’s going to be until the great occasions return.

But with your assist George can turn his life around. A easy monthly donation from you can deliver a little bit of sunshine back to George’s life. Just £395 will assist him celebrate minor achievements with a magnum of Cristal champagne. As little as £900 will assist George buy a new set of tyres for his Aston Martin. £2000 might help George get well his selfesteem with a go properly with from a prestigious Saville Row tailor. But even a small quantity will help. Just £200 will buy a meal for George and his girlfriend Experience. Just £200 additional will purchase the drinks. By adopting a banker you will not simply be supporting someone like George in a time of need you will also be supporting the trendy wine bars of the City of London, the luxury automobile makers of Italy and the tailors of Saville Row.

How to Get Away with Stealing

MALE SPEAKER : Whoa, TONY SALES: My name’s Tony Sales. I’m 37 years of age. It’s been said that I’m one of Britain’s biggest fraudsters. In my time as a fraudster, I accumulated between 10 to 30 million pounds. I spent six years of my life on the run, of which at the end I served a prison sentence. I’ve now set up a company called RID Fraud Ltd., which combats the sort of frauds that I used to do to help this growing epidemic that’s happening throughout the UK. I could sell rice to the Chinese. Committing fraud was as easy as that for me. The London fraud network is huge, starting with young fraudsters- MALE SPEAKER: The police couldn’t give two flying pigs about fraud.

I’ve only had one encounter, and I managed to fraud that. TONY SALES: -To major organized criminal gangs stealing multimillion pounds through elaborate frauds and scams. MALE SPEAKER: People don’t want to appear silly. That’s why they don’t ask questions. MALE SPEAKER: All your name has to do is just pop up on one of our computers, and it’s done. That’s you. MALE SPEAKER: Money means nothing. Buy now, pay never. TONY SALES: I’d put this telephone number down for a number for my nan to contact from the school. So if I decided to hop the wag or play truant, she could ring this number, and I would answer the phone and say, “Hello, Halstow School, can I help you?” I was 11, 12 when I was doing that.

We’d go to every single one of those flats that were up in there and get people to sign our sponsorship form for a pound. They’d phone a number, and they’d say, “Hello, is the sponsorship form real?” And again, we’d say, “Yes, the sponsorship form’s real. It’s from Halstow School.” But when your belly’s hungry, and you need to eat, and you want to buy yourself a nice pair of trainers that all the other kids have got on, they’re the only things you can do. And that’s how you learn the trade. YOUNG CEE: This isn’t really the life. You’re not making as much money as you possibly can, legally. As soon as you apply for a job, you have to wait forever.

And while waiting, you’re on the streets, doing nothing. If you’re not doing nothing, then you’re doing the daily grind, which is shotting a little weed. CALLEY: You have to commit these offenses in order to eat your food for the day. Obviously, there are risks involved in doing them things. I’ve been shot at, and someone tried to stab me. In my opinion, violence ain’t the answer. I would prefer to do the fraud scams. ALIAS: I’m just going to try and find a nice pair of trainers for myself. Yeah, these are bad, innit? You can get card details from hotels. You can get them from secret fraternities online.

Getting hold of it is easy. First got into it when I was a teenager in secondary school- 16, I would say. EBay scam. And I got some wrestling figures. I mean, people would just ring me up and say, mate, can you order me some Indian, please, or a pizza? I’m fucking starving. I’ve done stuff for people, and they haven’t looked after me in return. With that being done, I know everything about them. I’ll just go and take a credit card out in their name. I’ve even done it to a girl. She deleted me off of Facebook and I put her arse into debt for doing that. That’s what happens when you delete me off Facebook.

Top websites to completely annihilate if you’re low on money, need clothes, want food. At number two is Harrods. The security in Harrods is actually a pile of poo. I remember me and my Slovenian boys, we raped it every single day for a month. They just went back to Slovenia with all state of the art stuff. And out there, they were getting top dollar for it, as well. At number one is Tesco, it’s my favorite. This is what we help the neighborhood out with. For the single mums that don’t have as much money as they would like to, they give us a bell and we just order them shopping to their house. The security on Tesco’s is rubbish.

But I’m happy that it’s rubbish, because it’s helped a lot of people. So I bought myself shitloads of DVDs because I want to start a little pirate industry. Give the little youngers something to do. This is just pleasurable. Warhammers, I love this stuff. Limited edition Warhammers. Wicked. I mean, this is just this week alone. Welcome to the life of fraud. TONY SALES: London’s full and diverse of all different types of frauds going on continuously. I think the most bizarre one I ever heard of and know about is the Nigerian 419 scam of what they call black money. The black money scam just basically cons people into believing that there’s a pot of gold at the end of the rainbow.

MR. GOLD: My name is Mr. Gold, and I’m here to talk to you about what we call Wash Wash. And basically, what I want to show you now is how we can turn $300 into maybe $300,000. Sometimes we’ve targeted underworld people because, number one, they’re the only people who will have a substantial amount of money sitting down at home, unaccounted for. Yes, we have taken money from the IRA. We’re not intimidated by them at all. Maybe I’ll say I’m the assistant to bin Laden. I have exclusive access to his hoard of money. The job now is to move the money from where it is to the West, where it can be dealt with properly.

But then when I tell them that, unfortunately, the money has come defaced. But it’s not an issue, because this is how security services normally move the money. And there are chemicals available in order to wash the money. The idea now is for him to buy enough chemical so that we can do his wash by the end of the week. We can never tell him what the secret chemical is. It’s not really expensive, but we will tell him it’s very, very expensive. It’s only available to governments, and whatnot. Magic. So you give them this. So, there you go, Mr. Client. Go down the road, go buy yourself McDonald’s.

By the time they come back, the chest will be gone, everything will be gone, everything will be clean. Do people actually believe it? Yes they do. They believe it. To be honest with you, I could not be in the room because I would laugh. I’ve got a nice house, yeah, and the cars, the women, the whole shebang. And it’s a lifestyle that has been bought with this kind of business. Cut. TONY SALES: Key still works. Let’s have a look. This is just bank statements, a couple of wage slips, couples of passports. Absolutely everything in there. Mortgage offers. A lot of this stuff would have been given to people at a proper company to disperse of it.

You know? And maybe the guy who drove the van or works in the company, who don’t get the wages that he should be getting for the job that he’s doing, thinks, well, I can have a little tickle, here. And he sells it to the wrong person who then would try and get hold of someone like me. This is a mortgage application in here. We got a copy of someone’s passport. We got a copy of someone’s P60, so now we’ve got a national insurance number. We’ve got Barclay’s bank statements with the account number, sort code, everything else on it. This is how easy it is, yeah? You make a utility bill. You can make a national insurance card, because you got the national insurance number.

All these things are really easy to make once you’ve got the right equipment. So you go into the bank, with all the stuff that you’ve made up now, and you just draw the money out over the counter. Once you knew how to do all this stuff, we was instant millionaires. We could have whatever we wanted, whenever we wanted it. A4 pieces of paper are cash if you know how to make them into money. The final piece of the jigsaw is ID. The best possible form of ID you can get is a British passport. People die on boats and stuff for this passport. And they climb over mountains, and they go everywhere to try and get this passport right here.

With this ID, people will give you anything. They don’t even question it. And They just look at it. They’ll give you whatever you want, there and then. Because as far as they’re concerned, it’s a real passport. If you make it good enough, no one’s going to question nothing. So that’s the most important part, is the photo ID. So that bit’s done now. So now we just need to make the rest of the utility bills and the bank statement. And that’s it. We’re going to make a complete bill with numbers on the back. Everything it’s meant to have, it’s gonna have. So when people look at it, they turn it over, it’s going to have all the numbers there.

Everything’s in place. Even the direct debit card slip is perfect to how it should be. There is no difference whatsoever. It’s absolutely perfect. People would say it’s hard work, but it’s not. It’s an easy thing to do. Whereas most people walk past the shop, and they don’t see anything, we’re walking past the shop and thinking, oh, let’s have a little look in there and just see what we can do. SIMMER: She’s green. TONY SALES: Look how young that girl is. What, she’s 20. What’s she going to know? There’s so much coming to play. Do you do finance? My wife said you do, yeah? FEMALE SPEAKER: It takes about 15, 20 minutes to do on the system.

I just need some form of identification, preferably like a debit card. TONY SALES: Yeah, now these people are not trained in any type of financial background at all. You can go to them and say, I’d like to open a store card today in your store, please. And they’ll say, OK, thank you. Could you fill this form out, sir? The House of Fraser store card. Do you do a House of Fraser store card? You do, yeah? And do I have to have any ID with me? FEMALE SPEAKER: We do need a form of ID, like a credit card. TONY SALES : All right, I’ve got that, yeah. Yeah, that’s fine. That’s fine, yeah? All right. Thank you very much! SIMMER: They want you to take it more than they think you want to take it.

So just let them sell it to you. TONY SALES : Hello. I was just making some inquiries, really. I see you do up to three years’ interestfree credit. FEMALE SPEAKER: Yes. TONY SALES : I’m looking to get my wife a 10 year anniversary present. Yeah, that looks all right. FEMALE SPEAKER: That’s a nicelooking watch, isn’t it? TONY SALES : Yeah. FEMALE SPEAKER: Marital status? You’re married, yeah? 10 years, was it? TONY SALES : 10 years, yeah. FEMALE SPEAKER: Same as me, this year. TONY SALES : Oh yeah? Well you don’t look old enough to be married 10 years. FEMALE SPEAKER: 10 years, July. TONY SALES : Wow.

FEMALE SPEAKER: Do you have any proof of residence at all with you? Driving license or utility bill? TONY SALES : I’ve got a utility bill. Yeah. I’ve left one bit in the car. Here you go. Thanks. They haven’t got a clue what they’re looking at, what ID they’re looking at, how to check to see if the ID is real or not. They don’t have a clue. And that person could issue you up to 5,000 pound credit on the spot, there and then. MALE SPEAKER: Right, you have six autographs in total, sir. Signature there. Signature and dates on that one. And there’s three copies of it, basically. One for me, one for , and one for us.

TONY SALES : OK, sir. I’ll go and get the card. I’ve got to do a couple little bits just down there, yeah. MALE SPEAKER: We’ll have the watch ready, we’ll have all this done, all the paperwork sorted. TONY SALES : Thank you, sir. Thank you very much. See you later, bye bye. On one day, it could be that there might be 20 of us out. And that girl does 20 applications in one day. That poor girl is going to get in trouble. SIMMER: Before I met Tony, I used to do robberies. I was robbing doorstep collection people. I was getting in so much trouble. Prison, police stations, . It just got progressively worse.

It was wearing a bit thin. I could see a long prison sentence coming out of something like that. I just met Hott. And he just showed me a different way where I wasn’t getting into trouble so much. He just brought me in like it was just an old family sort of thing. It was just an easy way of life. I didn’t worry about nothing. I didn’t have to worry about money. Nice clothes, whatever I wanted. Growing up, I never used to have nothing like that. When I stopped robbing and started doing the fraud, it was taking the face away from the crime, if you like. Wasn’t hurting nobody indirectly. It’s luck of the draw.

Because what you do is you’re picking people. You don’t know the people you’re picking. You might have a million people, and all you’re doing is just picking the best name that suits yourself. It’s already happened to my mother. She was the victim of identification fraud, as well. Not saying that come from none of us, because it never come from none of us. But she was. My family didn’t want me to go the way I did. But you take your own path in life, don’t you? TONY SALES: Like in a football team, the striker scores the goal. Fraud works in exactly the same way where at the end, sometimes you build everything up, and you just need the last part of the jigsaw puzzle to put it together.

9 times out of 10, that’ll be someone like Kelly. Men are men. They will look at a gorgeous young girl, and they go weak at the knees. I can go in and corrupt the girls behind the counter. But there’s a lot more men working stores, and it’s easier for her to go in, flash her boobs, wink- make the guy feel that he’s special. So she’ll come out with 10 times more than what I can come out with. KELLY: Listen, I’ll go out some little Geary. He must be about eighteen. And I’ll mug him right off. I will use my, what’s the word, femininity. TONY SALES: Femininity. KELLY: How do you say it? TONY SALES: Femininity.

KELLY: Femininity. I will use that. Oh, please. At the end of the day, love, I’ve never, ever robbed anybody. If I could get 50 grand off some silly bank, because I’ve got a bit of paperwork, whatever, I’m happy to do that. I won’t get out of my bed for 5,000. Would I? TONY SALES: No, you wouldn’t. You love money too much, man. KELLY: I wouldn’t get out of my bed for it. TONY SALES: You know, in that game sometimes people, when they get a bit nervous, they turn to drink or drugs to just sort of calm their nerves a little bit. I think sometimes, a lot of what happens with these people is that they’ve earned so much money in the past, and they’ve had such a good life, that things start to spiral out of control.

Before you know it, the party lifestyle is trying to happen every day. Dave? DAVE: Goddamn! Tony, come here. TONY SALES: Hey, how you doing, mate? You all right? Yeah, mate, I’m all right. You all right? This is Dave. DAVE COURTNEY: I do apologize about him. I was right from the start. I blame the parent. I’ve known him a long time. When I first met him, I had a fringe. This is one of the local heroes of our little block. Right? He was always, and I mean this most sincerely, a little bit smarter than your average bear, BooBoo, right? He was a little bit above his years. TONY SALES: Thank you. DAVE COURTNEY: No, I don’t mean it nice.

I looked at you as a threat. I hated him. I hated him. talking to him [INAUDIBLE] a fancy smile. Come on, you mastermind. Now, I don’t have to be the best fraudster. ‘Cause I know him. And he don’t have to be the best fighter, because he can ring me. Each to his own. Horses for courses, right peg in the right hole. I’m a completely different era. And the only way to be against the law, or criminal, in them days, you all had the same haircut, you all had the flat nose, and you was a gangster, you understand what I mean? Now, as the world has evolved, everyone’s got a little bit more sharper. You couldn’t rob a bank.

It wouldn’t be worth it. Because everyone’s paying with a check. And when I used to do it, some old woman used to give you 200 grand, and we’d run off down the road. And if you was unlucky, a cop would chase you with a whistle. It was fucking mental. Their criminal mind is so sharp. They’ll crucifying and slaughtering these failsafe things that they’re doing within hours. How could I get away with fraud? Look at me. Stop it. Criminals spend their money very, very fast, because they do not understand the concept of saving. And when you run out of money, you just then go out and nick some more. So you don’t have to do the saving.

You know what I mean? Although you might not want to be squanderous and slaphappy with your money, you can’t help it. Because it’s easy come, easy go. And I hate to say that, but it is like that. Very much so in Tony’s case, with the fraud thing. He never, ever believed that that was ever going to stop. Otherwise he wouldn’t have wasted the money he did on what he did. He must have thought this would go on forever. TONY SALES: DAVE COURTNEY: Come then. Next! Yeah, but I can’t make a passport. I couldn’t walk out of a fucking in . Unless I went like that, give me the fucking, give me the fucking .

Know what I mean? How’s that for a fraud? Boom. I’m rubbing my cock on her ankle. I’m rubbing my cock on her ankle. The illusion that anyone that’s on the wrong side of the law is more exciting is an illusion, but it definitely is an aphrodisiac. These little creatures, here, that look like they walked off the front of a magazine wouldn’t be sitting in my back garden, letting me molest her ankle if I was a milkman. They make me feel like I’m 25, about 6’8″, and Jamaican. Step this way. Look. After you. Listen, God didn’t give you a bum like that to walk behind me. Fucking hell. I’m loving the way your legs bend, blondie.

I’m liking that little bend you do. FLORA: I can tell the difference between gangsters and them sort of straight guys, just even down to the way they talk a lot of the time, and the words they use. DAVE COURTNEY: Oh, your fucking legs! FLORA: I just have that side to me that finds it attractive or feels excited by them. It’s not like I were used to that. Like when I was a teenager, when I was a kid, I was completely innocent. I didn’t think, oh, I want to hang around gangsters. It was just something that happened, really. I prefer the fraud side of crime, more than anything else, like violence and drugs.

It is more clever. It’s finding loopholes in today’s society. Because on both sides you’ve got people that are making a lot of money. And if everyday people can use their brain enough to find a way to look after their kids lovely, their girlfriend lovely, make a nice house, sometimes I do think, well, good on to you. You’ve put enough brain power into it, you’ve made things happen out of nothing. And it might be bad to say, but I guess I don’t mind that too much. I know that I’ve had friends that have had their identity stolen and their banks cleared. So they will probably hate me for that. And I know that’s really bad.

But fraud is more commendable? DAVE COURTNEY: It’s our duty as a criminal, as soon as you’re doing something that the rest of the world don’t like, which is crime, you should at least do it with as much dignity, honor, respect, class, quality, professionalism, as possible. Because what you’re doing is scummy, so at least do it with honor. That’ll be a nice one. Alright, thanks a lot, ladies and gentlemen, thank you very much. The Courtney Show is over. TONY SALES: I did tell you that. You don’t listen to me. I told you the other day. MINDY: You didn’t tell me. TONY SALES: I’m not arguing with you.

MINDY: You were out last Saturday. TONY SALES: What are you, my mum? MINDY: No, I’m your fucking wife that’s sitting here looking after your children. That’s what. TONY SALES: Yeah, please, babe, can you do that for me, yeah? Mindy? I think she’s gone now. TONY SALES: There’s my son, there. There’s my little boy. This is where I live now. I’ve obviously moved on from the big houses and the big cars and stuff. Now I’m trying to change my life around and go legit. It’s a lot harder than when you’re just taking stuff for free. The thought of going and getting it for financial gain doesn’t bother me in the slightest.

Money, Power and Wall Street

>> Tonight on FRONTLINE Episode One of a special fourhour investigation. >> You created the mess we’re in and now you’re saying sorry? >> Inside the financial crisis >> Wall Street got bailed out and Main Street didn’t. >> How did we get here? >> Other banks were taking these ideas and applying them in ways that they’d never expected. >> Once the seed was planted there wasn’t any stopping it. >> We never imagined they were just taking the risk and it came right back like a boomerang it turned into a Frankenstein monster. >> Money, Power and Wall Street: Episode One. Tonight on FRONTLINE. >> Every day, tens of thousands of workers make their way to Wall Street.

They work for banks, brokerages, hedge funds, insurance companies and mortgage lenders. It is the largest single sector of the American economy, an industry that is almost double the size of America’s manufacturing sector, a business with enormous power and global reach. It is the industry that led America and the world into its worst economic crisis since the Great Depression. The banks say they exist to create wealth, holding in trust our collective worth, promising to invest the trillions of dollars that stream in from businesses, pension funds and savings accounts that belong to all of us. One morning in the fall of 2011, bankers arriving in Lower Manhattan were caught by surprise.

>> This is what democracy looks like! We got sold out, banks got bailed out! >> On the sidewalk! You must go on the sidewalk! >> The recession had destroyed $11 trillion of Americans’ net worth. A recovery seemed far off. Occupy Wall Street wanted bankers held responsible. >> Most Americans think, and with good reason, that Wall Street got bailed out and Main Street didn’t. We have very high unemployment. We lost 8.5 million jobs in the recession. People’s houses aren’t worth what they paid for them. A lot of them don’t have jobs. Their kids are graduating from college and are moving back in. >> This is what democracy looks like! >> It is pretty clear, actually, that there was massive illegality going on.

And if somebody with subpoena power was intent on prosecuting that, I don’t think there’s really much doubt that they would be quite successful in criminal prosecutions. >> We are the 99 percent! We are the 99 percent! >> In a matter of weeks, Occupy demonstrations spread to scores of cities across America and the world, calling for radical changes in the banking system. Bankers responded by saying that the answer is to move on and get back to business. >> Some of our companies made a series of bad mistakes, and— and— and— and we all paid for them, including— and— and— and it lead to the economic crisis.

>> But what makes people upset is that — I mean, what— you know, a lot of the people. that are on the streets demonstrating, Occupy Wall Street — is that the economy hasn’t. recovered but banks have.. >> If you want a strong economy, you have to have financial services companies that. are safe and sound and able to lend and able to finance their— their customers.. Now, if you want to have a recession, then go ahead and— and— and hammer the banks,. and you know, make sure that they’re— that they fail because then you’ll have another. recession.. >> Do you understand why they’re angry?. Do you have any comment?. Mr. Blankfein, can we ask you a question, sir?. Can you give the American people an accounting of how you spent their money?. And do you understand why it is they’re are angry at bankers?. Do you have any regrets about the way you spent the taxpayers’ money?.

>> Since the meltdown of 2008, there have been dozens of hearings. >> —and we regret that people have lost money. And whatever we did, whatever the standards of the time were, it didn’t work out well. >> I would like to ask your opinion of the role that overthe-counter derivatives played— >> Many questions have been asked— >> —in contributing to the financial crisis. >> —but there have been few satisfying answers. >> What goes on at Wall Street and exactly what caused the crisis and how did we get where we are— it’s difficult to understand even for professionals. >> I’m not sure I understand that point.

Maybe you could elaborate. >> Well, I think that it’s— in many ways, is very simple. I think our regulators and the industry have to focus on complexity. >> But at the end of the day, people usually have a pretty good ability to tell when something’s wrong. >> Somehow, we just missed, you know, that home prices don’t go up forever. >> What is a synthetic CDO? >> A CDO is a pool of assets— >> I think finance may have gotten too complicated for anyone to understand— >> —that are pooled together and then can be sliced. In a synthetic, you pool reference securities that are indexed to specific more pools of mortgage.

>> —and that the managers of these large financial institutions in some ways have been given an impossible task, that they won’t be able to comprehend what it is their institutions are doing. And that is really, really scary. >> You created the mess we’re in, and now you’re saying, “Sorry. Trust us.” You created CDOs. You created credit default swaps that never existed a few years ago. Who was the brilliant person who came and said, “Let’s do credit default swaps?” Find him! Fire him! >> It’s hard to pinpoint the origins of America’s financial crisis, but one weekend at this resort in Boca Raton, Florida, is a good place to start.

Assembled here in June 1994 were a group of young bankers from JP Morgan. At the time, it all seemed innocent enough. >> Boca Raton was a gathering of people that were part of the Global Derivative Group at JP Morgan, in part as a celebration, in part as an opportunity to relax, but perhaps much more importantly, as an opportunity to get creative, innovative people together in a room to discuss a whole variety of different topics. ..And since they were young, mostly in their 20s, and since there was plenty of money floating around and they were full of high spirits, they did what any young bunch of kids would do and they got drunk.

They had parties. They threw each other in pools. You know, this is the normal stuff that happens at conferences. >> Yes, I went into the pool fully clothed, as did— as did my boss. Some people drank, some people didn’t. And I’m happy to say that, like, most people stayed reasonably sober. >> They played hard. But they also worked hard. They were striving to address an ageold problem in banking, how to reduce risk. The first journalist to tell the full story was Gillian Tett. >> They began to look for ways to enable financial institutions to pass risk between them. One way to do that was to sell loans.

Another way, though, was to separate out the risk of a loan going bad from the loan itself. And out of that came this drive to develop credit default swaps. >> Credit default swaps, a kind of derivative that insures a loan against default. Traditionally, derivatives were a way to bet on the future value of something. For hundreds of years, farmers have traded derivatives to protect themselves against fluctuating crop prices. It is this type of derivative that has been traded on the Commodities Exchange in Chicago, along with the futures of fuels, currencies and precious metals. In Boca Raton, the JP Morgan team realized that they could use credit derivatives to trade their loan risks.

>> Bankers borrowed one set of ideas that had been developed in the commodities market and applied it to loans for the first time. This idea was essentially created under the banner of making the financial system safer. >> The first big credit default swap was engineered by Blythe Masters and involved Exxon. >> Exxon was the client at the bank, and we had credit exposure associated with that relationship. >> The Exxon Valdez spewed almost 11 million gallons of oil into Prince William Sound. >> In the wake of the Exxon Valdez oil spill and a rash of lawsuits, Exxon took out a multibillion dollar letter of credit with JP Morgan.

>> A letter of credit creates credit risk. If Exxon were to fail on their obligations, then JP Morgan would have to step in and make good on those obligations on their behalf. There was a large amount of exposure, and there was a significant amount of risk associated with that. >> And that risk is a big drain on a bank. >> Every time a bank makes a loan, under banking regulations, they’re required to set aside certain reserves of capital for the loan. So JP Morgan, when they made the loan to Exxon, would have had to set aside some capital. >> JP Morgan has to hold a certain capital relative to the size of that loan in the event the loan is not paid off at 100 percent as you expect.

Well, of course, if you don’t have to do that and you’re a bank, you— you’d prefer not to do that. >> Because then you can finance more freely? You can take on more debt? >> Right. >> So Masters started looking at who could take on their loan risk and free up JP Morgan’s capital. She found a taker in London, the European Bank for Reconstruction and Development, the EBRD. >> EBRD would receive compensation from JP Morgan for taking on or assuming credit risk, and felt that that was a good risk/reward proposition. And so risk was essentially dispersed. And why did JP Morgan do that? Because we wanted to free up our capacity to do more business.

>> This was a major financial innovation. Credit derivatives made it possible for a bank to skirt capital requirements. >> And that’s what actually happened, is the amount of capital that banks had to hold got less. And so banks became able to create more and more credit. They could make more loans. >> The Exxon deal was just the beginning, demonstrating that risk could be offloaded and capital freed up. JP Morgan had struck gold. In 1998, they decided to ramp up their credit derivatives operation. That year, another young banker joined the team, Terri Duhon. >> Part of my job was to come in as a trader and to build a credit derivative trading book, including all the risk management around the more exotic products.

That was what I was brought in to do. >> Previously JP Morgan had written credit swaps on single companies like Exxon. Duhon was asked to write swaps on bundles of debt. >> The idea was, “Let’s put together a portfolio of credit risk, a portfolio of names.” >> Her first trade was a credit default swap on 306 corporate names on JP Morgan’s books. >> And that list of 306 entities, they were very highly rated. They had very low credit risk. >> And the credit default swap was ensuring JP Morgan against default by those 306 entities— >> That’s correct. >> —many of them Fortune 500 companies or other— >> It would have been— it would have been your— some of your most well known household names.

And so we were giving investors an opportunity to, in effect, invest in our loan portfolio. >> JP Morgan did a lot of work, did a lot of due diligence to assemble this portfolio of loans. And you can get it in one easy bitesized piece. >> And the bank facilitated this by slicing up the portfolio into different risk levels, or tranches. Investors could choose how much risk they were willing to take. >> Different investors wanted different levels of risk. There were some investors that wanted to earn a big return on really risky stuff, and there were some investors that wanted to earn a little return on stuff that wasn’t risky at all.

>> From there, the bank looked to expand their business even further. >> So along comes this idea. What if we could create a market where people were able to buy and sell freely, independently of the companies themselves, the risk associated with lending to those companies? >> And so they began selling derivatives that were simply bets on any and all portfolios, whether the bank owned them or not. These products came to be known as synthetic collateralized debt obligations, synthetic CDOs. >> There were investors who were able to invest in some entities that they had not had access to before. >> By buying a credit default swap.

>> By investing in a credit default swap because it was a name that they hadn’t previously had access to. So there was a lot of— a lot of very positive reinforcement of the market. And it just grew. It grew very naturally. Once the seed was planted, there wasn’t any stopping it. >> It was the beginning of an unfettered brave new world of banking. >> This was pretty new stuff. >> This was— This was incredibly new stuff. It was amazing. It was clearly a product that was in need. We had identified a need. >> Most of the members of the global derivatives group at JP Morgan were in their 20s, including Masters and Duhon.

But with the creation of the credit default swap market, they had made banking history. >> What in the long run this all meant was that credit, which is a vital part of the lifeblood of any economy, the global economy, became a more readily available asset. And the thinking was that that would be an unambiguously positive thing. Credit helps drive growth, helps companies deploy capital, helps employment, et cetera. It wasn’t any longer just an idea in a room in Florida, it was the creation of an entire marketplace. >> Risk could now be easily traded. It fueled a worldwide credit boom. Soon other banks got excited about the money to be made writing credit derivatives.

Paul LeBlanc was a derivative salesman at Morgan Stanley who remembers the pressure to get more deals done. >> The volume of transactions was just exploding. I mean, I used to know all the statistics because they used to talk about it every meeting, how this is a growing market and you have to get your customers involved. They can make money. We can make money. It was a massively important sector for us to focus on, derivatives. >> And importantly, it was a private market, unregulated, and out of view. >> —the Dow up just about two and three quarters of— >> See, unlike an exchangetraded market where all the banks can see all the positions, there’s no public market for these derivatives.

You can’t look in the newspaper and get a price for them. These are all private offexchange markets. And nobody else in the market knows what’s going on. >> And because this market was opaque, the spreads — the difference between what banks could charge for derivatives and what it cost to provide them — could be huge. >> How much were these things making for the bankers that were selling them? >> The spreads on derivatives are several times larger than on comparable cash securities, just as a general rule. And that’s why the banks trade them. >> Cash securities being those that are— >> Equities, bonds— >> Well, paint some picture of that and the kind of money that people were making.

>> The best reference that you could give is that if you look at, say, the spread that a bank might earn doing an IPO for FaceBook, they’re going to maybe make 1 percent to bring out that IPO, a very hot IPO. If you were doing the same size deal in a derivative security, you might make 10 times the fee. >> And the basic business that they created was immensely profitable. But there’s a problem with all of this. Most people in finance assume risk can be eliminated, but all you can do is to move it around from one party to another party. >> There was growing concern in Washington. >> We are moving towards greater risk.

We must do something to address the regulation of hedge funds and especially derivatives in this country, $33 trillion, a substantial amount of it held by the 25 largest banks in this country, a substantial amount being traded in proprietary accounts of those banks. That kind of risk overhanging the financial institutions of this country one day, with a thud, will wake everyone up. >> Proposals circulated to rein in the banks and to regulate derivatives. >> What are you trying to protect? >> We’re trying to protect the money of the American public, which is at risk in these markets. >> The head of the Commodity Futures Trading Commission, Brooksley Born, led the charge.

>> Certainly, we are the regulator which has been given the authority to oversee the major derivatives markets— >> Brooksley Born was absolutely right because what she said is if you don’t have transparency and regulation of derivatives, the risk is going to build up and they’re going to lead to a financial crisis that’s going to cause massive taxpayer bailouts. >> The banks lobbied hard for no derivative regulation. >> The banks didn’t want anyone to know how much risk they were taking on. They didn’t want to have to quantify it on their balance sheet. They wanted to be able to push it off and hide it.

And that was why they lobbied so hard to make sure that swaps and derivatives would be treated differently from other kinds of financial products. >> Others wanted them to be regulated like insurance. >> One of the most heavily regulated products in the country are insurance products, for all the obvious reasons. If you’re going to— if you’re going to write insurance, you have to have enough money to pay off that insurance. >> But if you write a credit default swap, you don’t have to have that same amount of money on hand. >> Or anything else, including, importantly, no disclosure. >> So you’re saying it’s a kind of underthe-table insurance agreement that avoids regulation.

>> It’s an insurance product designed not to be regulated as an insurance product and designed to avoid regulation at all. And one thing we do know is that when a product of any type is designed with minimal regulation, capital and activity moves into that area and it expands dramatically. >> Regulation of derivatives transactions that are privately negotiated by professionals is unnecessary. >> The chairman of the Fed, Alan Greenspan, sided with the banks. >> Alan Greenspan was coming from a very libertarian tradition. Keep your hands off everything. The markets will sort themselves out. And if there’s a problem, then we’ll clean up afterwards.

And now that— that really was the way the Federal Reserve operated under— under his leadership for almost 20 years. >> On Capitol Hill, supporters of bank deregulation made urgent, stark pleas. >> The future of America’s dominance as the financial center of the world is at stake. >> Before them was legislation to lift restrictions on how banks could do business. >> If we didn’t pass this bill, we could find London or Frankfurt or Shanghai becoming the financial capital of the world. >> This bill is going to make America more competitive on the world market, and that’s important. >> And legislation to prevent oversight of credit derivatives.

>> —highpaying jobs not just on Wall Street in New York City, but it affects every business in America and it benefits every consumer in America. And we do it by repealing GlassSteagall. >> It’s the most important example of our efforts here in Washington to maximize the possibilities of the new information age global economy. >> In the end, banks would get larger and derivatives would remain in the shadows. >> The derivatives market went into darkness, almost no transparency and no regulation. And what you see is this explosion in the growth of derivatives in the United States and throughout the world.

>> The banks had won the day. Credit default swaps would now be introduced to new markets. >> The next application of this same technology was to portfolios of consumer credit risk, and in particular. mortgagerelated credit risk. >> And the higher the risk, the better. >> What everyone is trying to create is something that has a high rating and a high yield. That’s the holy grail, that’s the goal, is to mix together assets in some way so that you come out with a AAA, and a big return. >> And so Wall Street discovered the rewards of funding the American dream. Just as they had bundled corporate loans, bankers now bundled mortgages.

>> You would buy these big pools of mortgages, and these credit default swaps enabled you to bundle all this stuff together, bring it inhouse, in order to get it ready to put through the sausagemaking machine and create these securities. >> Bankers spread their investing dollars across the country, but especially in states seeing historic levels of population growth, places like Florida, Nevada, California, and here, in Georgia. >> Well, Atlanta was one of the hottest markets in the country, the Atlanta region. >> Roy Barnes is the former governor of Georgia. >> Georgia was the fourth fastest growing state at the turn of this last century, and the fastest growing state east of the Mississippi.

So it was a hot market to start with. >> Elected in 1998, Barnes is renowned for having taken on Wall Street over subprime lending, a market the Street had traditionally avoided. >> And in the ‘80s, there was no place for subprime. Nobody wanted it. The banks wouldn’t buy it because there was a higher risk. >> What really changed the appetite for subprime mortgages was you could securitize them. And you could sell it on Wall Street. They do it in tranches, and then they wrap it up so they could be packaged together and have an overall higher yield. >> Nearly half of all new singlefamily home construction is in the South, now more than 50,000 a month.

>> And of course, Moody’s says AAA. So it was just a feeding frenzy. I mean, it was just an absolute feeding frenzy for subprime mortgages. >> With the economy strong, home buyers are willing and able to spend double what they did just two decades ago. >> And you could just about drive by a bank, and they’d throw a loan paper in your car as you passed by. It became very loose. Became very loose. >> But what big banks on Wall Street did not or would not see was what was happening on the ground around the U.S., a wave of lending abuses. >> The Wild West experience in home mortgages was well under way.

>> Forty one year old Hessiemay Hector, mother of three, agreed to a second mortgage at 27.5 percent. >> We were creating mortgages that we had never seen before. And they were being created faster and faster. >> The interest rate on these loans was as high as 42 percent. >> We saw borrowers given loans that were greater than the value of their home. Home buyers were getting loans that had no income. >> When you have a high interest rate, then you have high points. Then you have prepayment penalties, when you have balloon payments, when you have adjustable-rate mortgages and when you layer those bad practices on top of a high interest rate, it becomes predatory.

>> Housing advocates around the country took on predatory lenders.. But one of the fiercest fights was here in Georgia, over what was called the Georgia. Fair Lending Act.. >> It’s up right now on the House floor, a governor’s bill to crack down on—. >> The mortgage lenders and the banks struck back.. >> None of these people have a clue of what’s going on!. Nobody here understands the business, and they didn’t let us speak!. >> You would have thought I had recommended that we repeal the plan of Salvation.. Why were they so opposed to it?. Money.. Money. >> This bill will cripple the mortgage business!. It’s going to cripple real estate sales!. It’s going to absolutely devastate the home market in Georgia, I can guarantee you!. >> There were threats that the residents in Georgia wouldn’t be able to get mortgages.

Anymore because investors would not buy the mortgages in Georgia. And if that were true, no bank would create a mortgage in Georgia. >> Georgia now has the toughest predatory lending law in the nation— >> Despite the efforts of the mortgage lobby, the bill passed. Fearing similar bills in other states, the lobby helped to unseat Barnes, and rescind the law. >> Right after the Governor Barnes’s defeat in November, one of the top legislative priorities for the new governor and the new legislature was to gut the Georgia Fair Lending Act. I think it was about two weeks into the new legislative session, and it was gutted.

>> No letup in the housing boom, which is good for the economy. Homes were selling last month at a record clip, the main reason, low mortgage rates— >> The big banks continued to package and sell more mortgage portfolios. And more and more of these CDOs contained highrisk subprime debt. To keep the rating agencies on board, more credit default swaps were sold. >> Let’s say I have a pool of mortgages. I have a thousand mortgages from California, and I want to package these up. But I decide, “Well, some of these mortgages may be subprime, and I want to buy a little bit of credit default insurance.” >> And by doing that, you improve the profile>> In theory, yes.

>> —of your CDO>> That’s right. >> —so that you can sell it better. >> And I can go get a rating for it, too. I could go to Moody’s and say, “Look, I have laid off 2 percent of the risk on this portfolio. Shouldn’t I get a better rating than if I just sold the pool as it was?” >> So you take a lot of crap>> That’s right. >> —a lot of mortgages that are>> Hideous crap. >> —people are not going to pay— right. OK. But you insure it, and the credit agency says, “Hey, that’s a good idea.” >> Yes. Yes. >> New home sales jumped 13 percent over a year ago, while existing home sales rose 4.5 percent, setting a new record— >> The team at JP Morgan was also dabbling in mortgage debt, but they weren’t sure it made good sense.

>> We traded mortgages. We had some mortgages on our books. We certainly understood the mortgagebacked security market. But we had a lot of trouble getting comfortable with that risk. The big hangup for us was data. We had years and years of historical data about how corporates performed during business cycles. But we didn’t have that much data about how retail mortgages performed during different business cycles. >> We knew how much money people said they were making. We saw that UBS and Merrill Lynch had securitized products earnings that were growing faster than ours. And we asked ourselves the question, “What are we doing wrong? What are we missing? Have we not figured out how to lay off some of this risk?” And honestly, we couldn’t figure it out.

What we never imagined was that those other firms weren’t doing anything at all. They were just taking the risk and sitting with it. >> Sales of new single family homes shot up— >> The first wave of JP Morgan bankers who had developed these original ideas in the 1990s, when they saw what was starting to happen — essentially, other banks were taking these ideas and applying them in ways that they had never expected — some of them began to get very worried. >> We were just about to say done on a transaction. We had a global phone call, and we were discussing the risk that we were about to do, and we had discussed it over and over and over.

And finally, someone on that phone call said, “I’m nervous.” >> Twice as many home buyers are getting adjustable mortgages— >> —a huge increase in new home sales— >> We almost had stopped thinking and stopped reassessing the risk as we went along. And suddenly, we found ourselves with a product that was vastly different from where we started. And every little tweak along the way, we had all said, “Oh, that’s OK. That’s OK. That’s OK,” until suddenly, we all looked up and said, “Hang on, it’s not OK.” >> The world is still living with a lot of big unresolved problems— >> Other banks were not so cautious.

>> —storm clouds on the horizon— >> They aggressively sold subprime CDOs to customers all over the world. London became a second beachhead for their trading and sales operations. >> The stock market’s on the rise and economic statistics— >> The City of London actually did yeomen’s service in creating some of the nastier structures. They did this offshore. These were not SECregistered deals. These were all private placements. So they were going through the legal loopholes. >> A group of staterun banks in Germany known as Landesbanks were among the biggest customers. Desiree Fixler, who worked at JP Morgan, says she was amazed by these banks’ appetite for subprime mortgages.

>> You knew that a core group of banks in Germany would buy anything. We strongly believed they were very naive. We were amazed that they would buy this. It was— I mean, every single person, every sales person, was envious of that particular sales person that was able to cover the Landesbanks and IKB because you were in one of the hottest seats globally. You were going to generate tremendous profit margin. They were big buyers. >> IKB was very convinced that they were one of the strongest banks in that area. They were running around, telling people how good they are in investing. >> Multinational Deutsche Bank did several deals with IKB.

>> Did you think, at the time, that your products were helping IKB, that these were good things for them to buy? >> Yeah, absolutely. Otherwise, we wouldn’t have manufactured these products and sold it to them. >> So you were bullish on subprime mortgages in the U.S. >> We were bullish on the mortgage market in general, and subprime, which was an element of it, we were not overly aggressive, but we were a part of that market. Absolutely. >> Americans are buying real estate in record numbers. That demand has given— >> By the end 2005, the total outstanding value of credit default swaps around the world was measured in trillions of dollars and was doubling every year.

>> Existing home sales rose 4.5 percent, setting a new record. >> Did top management at JP Morgan understand credit derivatives? >> Yes, they did. Absolutely, they did. >> Did they at other banks? >> No, not all other banks. Certainly not. >> Did the regulators understand them? >> I don’t think the regulators understood. I don’t think the credit ratings agencies, the bankers or the regulators fully understood all of the kinds of credit instruments that we’re talking about. >> In other words, some big banks simply didn’t know what they had in terms of risk. >> Certainly, they didn’t— they didn’t know some of the forms of risk that they had.

That’s exactly right. >> Sales were higher than most regions, up more than 40 percent in the West and Northeast— >> Housing prices continued to soar. >> The average price of a new home grew slightly— >> Banks packaged more and more CDOs. Theoretically, there was no limit. An investor didn’t need to own any actual mortgages. Socalled synthetic CDOs allowed investors to bet many times over on someone else’s portfolio of debt. >> It allowed participants— either buying or selling, so on either side of the market — to take their positions without being constrained by the size of the underlying market.

>> In synthetic CDOs, all you had to do was make a side bet based on what would happen to this group of mortgages and have that be the basis of the CDO. The fact that someone had done it one time wouldn’t stop you from doing it again and again and again. >> So how is that different than betting on the outcome of the Super Bowl? >> Or a horse race or a craps table. There’s no different at all. It’s just a pure bet by somebody who has no economic interest in what they’re betting on. >> We’re pretty confident that the housing market’s not going to down at all. It’s just going to go up. >> Within a decade, you have the most phenomenal machine anybody’s ever seen.

>> New homes are selling at the second highest rate on record— >> We are in a housing boom. It’s strong right now. >> Profits soared 93 percent. >> —expected to dole out $36 million in bonuses this year. >> Everyone was highfiving. It seemed to be brilliant. The combination of free markets, innovation and globalization appeared to have delivered this incredibly heady cocktail of tremendous growth. >> Top executives will earn as much as $20 million to $50 million— >> Between 2003 and 2006, Dick Kovacevich, CEO of Wells Fargo, remembers attending meetings with bankers and regulators. >> Oftentimes, what would happen at these meetings is— regulators would be there, like Chairman Bernanke, and there might be, I don’t know, 30, 40 bankers.

And they would often go around the room and say, “Well, what are you guys seeing out there?” You know, “What’s working? Are you concerned about housing,” you know, trying to get input. And when they came to me, I would say, “This is toxic waste. We’re building a bubble. We’re not going to like the outcome. >> What did your fellow bankers say to you when you told them that you thought this stuff was toxic? >> Well, the ones that were in it said I was wrong and everything’s fine. “We don’t see any losses occurring in this.” >> But we saw risk all over the place. >> There’s a great set of adages on Wall Street about where risk will flow.

And if you ask people, they’re basically split between two camps. One says that risk will flow to the smartest person, the person who best understands it. And the other says that risk will flow to the dumbest person, the person who least understands it. And at least based on my experience and my understanding of what has been happening in the derivatives market, it’s the latter. >> I was amazed at the interest on the part of investors to invest in a product that was highly complex and very risky on top of it. >> So let me get this straight. You were— you were first to the party. You developed this tranching of stuff— >> That’s right.

>> —and writing credit default swaps on it. But now everybody else has jumped into the game. >> Everybody wants to do it. >> But your team decided to stop. Why did so many others keep going, marching towards the cliff? >> The— I mean, there— I— look, very simply, there are certainly some— some investors, some banks, some borrowers who are a bit greedier than they should be. >> Goldman Sachs Lloyd Blankfein will take home $53 million. >> No one wanted the party to end. >> —pocket an estimated $40 million— >> Most banks believed housing prices would never go down, let alone crash. >> To imagine losses of that severity required very significant assumptions about the path of the economy which were just not in people’s mind.

So it required things like assuming that house prices in the United States fell by 25 percent. People weren’t thinking that way. And as long as house prices never fell, then these risks would never come home to roost. And that ultimately was obviously very flawed logic. >> As interest rates rose early this year, home sales slowed. And after years of record appreciation— >> —businesses and individuals do, as well, and the cost of borrowing is going up. >> The unraveling began in late 2006. >> Big trouble for millions of American home owners— >> When housing prices started to drop, only a very few bankers could see the bubble they were trapped in.

>> The housing market has turned some mortgages into time bombs. >> By 2007, 2008, all the smart money knew the game had ended, and all the banks tried to effectively repackage what they were stuck with as quickly as possible and get it off their books. But there was second parallel movement which was going on, which was all about, “How can we take advantage of it?” >> The DowJones average seemed in freefall, ending the day down— >> One of the Wall Street banks that took advantage of a declining market was Goldman Sachs. According to a congressional investigation, the bank created a series of CDOs containing toxic subprime and then sold them to customers— >> We at Goldman Sachs distinguish ourselves by our ability to get things done on behalf of our clients— >> —while Goldman Sachs, using credit default swaps, bet against them.

>> They bet against their own clients, so when the clients lost money, Goldman was making money. Goldman has a little slogan that the clients come first. No, they didn’t. Not in these transactions. Goldman came first, second and third. They were really, I think, the only major bank which made money when the housing bubble burst. >> In a settlement with the SEC, Goldman admitted that some of their marketing materials did not disclose important information, but Goldman claimed that their investors were highly sophisticated institutions. >> Thirtyfour subprime mortgage companies have gone bus— >> One customer was that German Landesbank, IKB.

>> Analysts say anyone associated with the subprime market is going to pay the price. >> Even when there was a downturn in the markets, they were still buying. I mean, the market is telling them. It’s on the screen. There are headlines everywhere, “Danger.” But they still wanted to go ahead. >> Did you feel there was an obligation on your part to tell them that, “Look, wake up, the markets are going down. Maybe you should stop buying this crap?” >> Those discussions— the word “crap” wasn’t used, but I mean, those discussions definitely happened. But they felt that this was just a temporary glitch in an overall bull market.

“It will recover. It has to recover.” >> In July 2007, the German bank, IKB, stuffed with subprime, was the first bank to fail. >> —hundreds of thousands of home owners are defaulting on their loans— >> It was only a matter of time before the crisis came back to Wall Street. >> —and that could hurt the value of homes nationwide by— >> We knew that the housing bubble had burst. But we’d been reassured that the problem had been contained. But by the beginning of 2008, it was becoming clear that this was a much, much bigger problem than anybody anticipated. >> There was a broad misperception of the risk in housing prices.

The widespread view that we could have a regional decline in housing prices, but never a national decline in housing prices, proved to be horribly wrong. >> Last week was a difficult time in the mortgage business. There was talk about problems in funds— >> This was the most actively traded stock by far— >> In New York, banks were trying to unload what they could. But there was confusion. At CitiGroup, they were running in circles. >> One of the incredible things about CitiGroup, we now know, was although it was tossing these risks off its balance sheet, those risks came right back, almost like a boomerang.

Without knowing it, they had set up one business to offload risk, and then completely reversed that business, taking those risks back onto its balance sheet. >> It was quite clear to me that a number of really quite large financial institutions had not had the kind of management information systems which allowed them even to know what all their risks were. >> That was astounding to you. >> It was astounding to me. >> The sort of origination of these subprime loans, the creation of the CDOs— that business is gone. >> And the reason why is all those credit default swaps— >> It would all come down to those credit default swaps.

Would they pay off as they were designed to do? >> We have known for generations that banks are susceptible to runs. Banks can’t function if everybody comes and wants their money at the same moment. >> —Merrill Lynch, devastated by losses— >> The failure of Lehman Brothers and the fire sale of Merrill lynch— >> —starting to take a closer look at AIG. The world’s largest insurance company— >> This time, it would be a run on an insurance company. AIG was on the hook for $440 billion worth of credit default swaps. >> —credit default swaps— >> Remember, an insurance contract is only as good as the credit quality of the insurer.

They have to pay you. And if they can’t pay you for whatever reason, then this whole process of risk transfer breaks down. >> We need to stabilize this industry. It can spread throughout the economy. It could be a very, very dangerous— >> September 18th of 2008, when I have a conference of my CEOs, and CEOs traditionally don’t read their Blackberries during meetings. But I kept looking around and noticing that a number of them were. And so I turned to one. We recessed. And I said, “You looked like the world was ended.” And he said, “I think it has.” >> —the enormity of the situation, like a financial nuclear holocaust.

Some $400odd billion of credit default swaps— >> —another government bailout, AIG securing an $85 billion— >> AIG could not conceivably have paid off all of those credit derivatives because it had misunderstood the risks and did not have what we’d call a balanced book or nearly enough capital to back their losses. >> Didn’t everybody know that AIG was holding a lot of CDSs? >> No. There was no disclosure. That’s the whole point They haven’t reported this to anyone else. The other dealers have no idea what’s going on. The other banks don’t know. Nobody knows. The banks turned this market into their own private game.

>> It was, in fact, a financial shell game where we were manipulating banking results by moving the risk out through one door, but bringing it back into the banking system by another door. The risk was not leaving the banking system, and everybody in the world was connected to these chains of risk. And if any part of that chain breaks down because they can’t honor the contract, the entire system implodes. >> The idea dreamed up by a group of young JP Morgan bankers at a weekend retreat many years ago was supposed to reduce risk. >> Their original idea had been taken and it turned into a Frankenstein monster, which they never dreamt would become so big and spin out of control to that degree.

>> It was a very scary time. We were in totally new territory. And the notion that Lehman Brothers could be filing for bankruptcy and AIG could be at risk of the same fate was absolutely unprecedented. And the implications— thinking through the implications of that for the health not just of the U.S. economy but the world were— I mean, it wasn’t— it wasn’t really conceivable to do that. I couldn’t get my mind around it. I know others couldn’t. >> We never saw it coming. We never saw that coming. And I was disappointed, hugely disappointed. I mean, I was part of a market that I believed was doing the right thing.

And maybe I was idealistic, maybe I was young, maybe I— I didn’t fully appreciate where we were going, but there was a whole system going on all the way from the borrower of the mortgage, all the way through to the investor. There’s a whole system of people who maybe were turning a blind eye, maybe were, you know, just— I don’t know. It’s— it’s frustrating to see, certainly. >> It shouldn’t have happened. Most of our financial crisis in the past is due to some macroeconomic event— an oil disruption, war. This was caused by a few institutions, about 20, who, in my opinion, lost all credibility relative to managing their risk.

And the sad thing is it should never have happened. The management should have stopped it before it got big. And people are suffering for something that should never have happened. >> Today, the fallout is felt mostly in places that had seen the highest growth, like Georgia. Ground zero of the subprime crisis— local neighborhoods, city streets. >> Cities throughout the United States are seeing a rise in vacant and abandoned properties. And that’s where the neighbors feel it. As neighbors, we’re concerned not so much with the complexities of the subprime mortgage market and derivatives. These things we will hardly ever understand.

What we feel on the street is the fact that the house next to us is vacant, abandoned, partially burned. And we wonder how long it’s going to be there, how long we pay the price for that abandonment. A neighborhood cannot survive long when it has a growing inventory of vacant, abandoned properties. >> Sometimes, no one even knows who owns the properties. >> It’s hard to know who owns it because it’s been sliced and diced so many ways by investors that it could be somebody in Ireland who owns it. You have these securitized pools, where investors own pieces of it. The investors are around the world, literally, and so it’s just in noperson’s land.

It’s a vacant property, mostly vandalized, and it just sits here and we can’t do anything with it. And the reality is that that plays out across this neighborhood hundreds of times. >> That house has a loan that is somewhere lost in a huge financial vehicle put together by some young Turks on Wall Street. It’s lost in that billiondollar package because there’s nobody assigned to look after it. And there are whole subdivisions like this, by the way, that are just lost in this great morass. And so it affects Main Street because Wall Street was too greedy. The greed of Wall Street broke Main Street.

The Dark Side of Microfinance

Madhuka Kumari took out a loan from a microfinance company. She pretty quickly became unable to make the $30 monthly payments on those loans. And when she fell behind, she started getting visits from loan officers, and they became increasingly aggressive, demanding their money back. Ultimately, it led Kumari to attempt to commit suicide. She poured kerosene over her head and set herself alight. Microfinance was the development world’s attempt to help do away with poverty by giving small loans to people in the developing world. In much of the developing world, people don’t have access to capital.

They call them unbanked because they can’t get bank accounts. So, it started with this kind of noble aspiration. It began as a charitable endeavor and it has since morphed into something quite different. In many societies, it’s doubly hard for women to get access to financial services. And microfinance was seen as a panacea in terms of targeting women in particular. What we found was a network of predatory microfinance institutions operating around the world who were promising to lift people out of poverty and include women in the financial services system. When in reality, what they were actually doing was forcing women to sell property to repay small loans, putting them in prison in some instances, and in Sri Lanka, more than 200 suicides have been linked to microfinance loans.

Despite these problems, it is still being funded by public money and publicly funded development banks. So, public money that’s supposed to be helping the poor is, in some cases, being given to people who exploit them. Modern microfinance traces its roots back to the economist, Muhammad Yunus, who in the 1970s, really pioneered this form of lending in Bangladesh after a devastating drought there. With no means of support and no place to go, they’re in government camps. And his innovation was to lend these people small sums of money with low interest rates. And they would build their businesses on that investment.

And he found that, actually, it was very successful, and these people repaid their loans. And a global movement was born out of that. I never had any intention or any plan or any thought that I will ever lend money to become a banker of a sort. I was looking for opportunity to do some tiny little thing which will be helpful to another person. And one thing hit me very hard is the victimization of people by the loan sharks. Giving tiny loans, as little as $1, $2 loan, and grab everything the other person has. And the poor people are desperate to find some money for survival and so on. So they had to borrow money.

Seeing this repeatedly in the village, I was wondering whether I can protect them from the loan shark. All people are entrepreneurs. All they need is money. Money is the oxygen for entrepreneurship. Within a couple years, you know, he won the Nobel Peace Prize. The UN declared it the Year of microcredit because it was the hot idea in the development world. Poverty is in the system. So, we sort out the system, correct those system, nobody will remain poor. It’s a very simple logic. I believe that Dr. Yunus is a person that understands that love is a verb. That love is an action. This is an important trend in an era of economic instability and entrenched poverty.

The Clinton Global Initiative, the Gates Foundation, Matt Damon, Bono, I mean, it really captured the imagination of people because it had everything that you wanted. It had profit. You can make some profit while doing good. So that’s kind of the neoliberal dream. And it also depended upon, you know, people being selfreliant. And everyone wants to think that, you know, that a little entrepreneurial spirit can help people. What was particularly seductive about microfinance was that the microfinance institutions that were receiving government funding would one day transition to profitability and have a sustainable business model.

But by making these institutions profitseeking, there’s an inherent conflict there between doing social good and making money. Banco Compartamos really was the big bang of commercial microfinance. It had been founded by a group of religious people, and it was a charity. But they wanted to scale up, and they thought the best way to do that was to become commercial. They had an IPO in 2007 as a small lender which had come to dominate the microfinance world in Mexico. All of a sudden, it had a valuation worth $2 billion. Some of the NGOs that had invested in it, like ACCION, which is based in the U.S., took a million dollar public money from USAID, the U.S. development agency, invested in Compartamos, and after the IPO, boom, they had $350 million worth of value in it.

It made a lot of people very rich. But it also, in the financial world was like ringing the dinner bell. Because people saw how much money could be made, and so, it changed everything. I think the big hope was that by bringing in the commercializing and bringing in, you know, more capital, you could do more good. But when big money comes in, it often demands big returns. And what we’ve found is the world kind of turned its attention away from it. And as that’s happened, the financial world has continued to do it. And people’s tax dollars are underwriting a huge amount of it. In 2020 alone, there was more than $50 billion worth of committed funds from development banks, commercial lenders, nongovernmental organizations, and sociallyminded impact investment firms.

That was a record. Sri Lanka is a country where the consumer protections are very sparse. And there is a burgeoning microfinance industry there. Lending everlarger amounts of money to poor, mostly financially illiterate people who are getting stuck in a vicious cycle of debt. LOLC started out as a leasing company in Sri Lanka with the backing of the World Bank in the 1980s. It has since morphed into one of the world’s biggest microfinance lenders, backed by hundreds of millions of dollars of financial assistance from pretty much every development bank that you can think of. For the next generation, a new dawn has arrived, full of promise.

Today, LOLC is Sri Lanka’s most profitable listed company. And its owner is one of the country’s richest men. And the lion’s share of that money has come from microfinance: from lending to poor people. There’s very little regulatory oversight of these microfinance institutions. And so, what you find is that they are operating really on their own terms. We found multiple instances of LOLC microfinance companies using pressure tactics to force women to repay money that were leading these women into real despair and torment. Cambodia became the first foreign market that LOLC expanded into. It bought a stake in a microfinance lender there, called Prasac, which was coowned by a bunch of development banks.

Cambodia has become a poster child for what can go wrong with microfinance. It’s one of the world’s poorest countries, and now, one of its most overindebted. In Cambodia, loan sizes have ballooned over the past decade. And now, more than one in five adult Cambodians has a microfinance loan. Not in my wildest dream did I thought our work would be used by someone to make themselves loan sharks. So that’s a very sad part of the story. You are driven by selfinterest, and this is translated as maximization of profit. So basically, you became moneymaking robots. And you can destroy all the poor people’s lives.

You don’t care less because you make money. When you make the point to many people in the development banking world that there is little evidence to show that microfinance has achieved its aims of lifting the poor out of poverty, they often say that it’s much better than the alternative, which is that these poor people would have to resort to loan sharks. While that’s difficult to dispute, It really doesn’t justify the hundreds of billions that has been put into this industry with very scant evidence of it having any longterm impact. The U.S. government, the British government, the World Bank, Proparco, the French bank, they give to different banks.

And when you ask them, “Well, why did you give to this lender who has a history of forcing people to sell their land and of throwing people into debtors’ prison?” And they’ll say, “Oh, we didn’t know that.” That someone else was supposed to vet it. And ultimately, they can just pass the buck of responsibility onto someone else. No one wants to say what is an acceptable amount of interest and what is an acceptable amount of profit level for a lender that says it’s a sociallyminded institution. So, people all just kind of look the other way. And I think people don’t wanna reckon that because there’s a lot of people making a lot of money off of it.

Why Web3 Is a Big Opportunity for Brands

But more than ever, you can take blockchain, you can take tokens at NFTs and begin to apply them as incentive programs, as membership programs that allow you to do things that you may not have been able to do in the past. Today. I’m very excited to be joined by Jeff Carvalho. If you don’t know who Jeff is, he’s a cultural anthropologist and Web3 strategist. He’s the CoFounder of Highsnobiety, an agency powered by a publisher that helps brands improve reach with cultural pioneers. He also cofounded Burrata, a consultancy that helps brands show up in the metaverse. Jeff, welcome to the show. Thanks so much, Michael, happy to be here.

Well, I’m super excited to have you here today. We’re gonna explore the big opportunity for brands and businesses in the world of Web3. Before we get started, I would love to hear your back story. How the heck did you get involved with Web3? You start wherever you wanna start. Yeah, so for me it definitely started well before Web3’s moment that it’s had over the last few years. I’ve been obsessed with media and certainly platforms since before the internet. I’m a gen Xer, so for me, the internet showed up in my life around ’93, but before that I was into Zen culture and in the mix tape culture, and it was a way of sharing information amongst people.

And certainly amongst folks that were interested. in very niche things, things that were happening. in the underground.. What was great about Web1,. those first years of the internet. and certainly what came with Web2,. which is that social media and eCommerce moment. was that it really started to allow for people. to connect together, especially folks that were likeminded. around how they thought about product. or how they thought about music. or how they thought about fashion and art.. So I’ve basically bounced between what I would like to say,. new technology and new platforms.. So for me, was the Web1 when the worldwide web popped off. and using Mozilla and Netscape, I was launching webpages. and then really early streaming around 1997, ’98,. I started an online radio station. that was called Trans Cast and we were broadcasting.

Music live over the internet. Really? Really trying to prove that you could use this pipe to send media basically, prior to that, it was basically built on radio waves or satellite. And now, with cable being essentially in everybody’s home by 1999, the cable modem came into play, which offered very high speed connectivity. And if you remember prior to that, we all remember that funky sound that our modem produced in the phone line. Yeah, I mean, it was great not to have to lock up a phone line in that sense. Yeah, I was really active with Bulletin Board Systems back in the 90s, I don’t know if you remember and stuff like that.

Of course. So just keep going. Yeah, so, I think social media really changed everything. And social media to me is not just the platforms that I think we think about, which Facebook, Twitter, and Instagram, and all of the forefathers prior to that, like Friendster and MySpace. And what was the product that Google had? Google had- Google Plus. Google Plus as well, and very much understood blogs as being part of that social experiment that was popping off. So Highsnobiety actually was founded on blogspot.com, you can actually still go to Highsnobiety.blogspot.com and see some of the most early posts that we did and then of course the transition over to our own .com.

But quite frankly, if it wasn’t for blogging as a platform and certainly Web2 as an idea of a social experiment where there was a twoway conversation, to be honest, I don’t think Highsnobiety nor blogs like Gizmodo were in Gadget, who were also very early users of blogging platforms as a news tool, we wouldn’t be here for the power of that tool. It really allowed for framework to do storytelling and news sharing, but also made us realize very early on that the community of individuals and people that were into this subculture of what we were calling street fashion at that time, which encompasses fashion, sneakers, art, and anything around your life, it allowed us to talk to likeminded individuals.

And what it did is it turned a very small niche of fans and consumers into a larger pool. Now, for the first time, if you were into a Nike Dunk, you could find somebody else in the world that was into it. And by the way, that’s not just for the categories that we covered for Highsnobiety, it’s essentially for any sort of fandom or any sort of movement that was happening, the power of Web2 allowed for us to all come together and have that conversation. And that’s really how I got to Highsnob, so I went from being in the music industry, to starting that online radio station in the early 90s, to actually being part of the first wave of podcasting, which happened around 2004, 2005, which eventually led to myself joining Highsnobiety as a cofounder in 2007.

Let’s talk a little bit about Highsnobiety and like what it was, it sounds like it was a blog, but was it more than a blog? And tell us a little bit more about that journey and how that ultimately led you into the Web3 ecosystem, if you will. Sure, I mean, Highsnobiety really started off with a very, almost no mandate, what it was is David Fischer who founded Highsnobiety and myself, again, having this likeminded view of goods and products and services, beginning to collect the very best things that we found, not only on the internet, but also in the real world and putting together onto this webpage that we called Highsnobiety.

Which was very much a blog and every day you could catch up. on anywhere between 10 and 20 different stories. that were covering 10 or 20 different products at that time.. What made it really interesting is that the majority. of what we covered was aspirational, meaning that the goods. were not necessarily available on the internet.. We may cover say a special sneaker release. that was happening at Tokyo, but quite frankly,. if you were not in Tokyo, there was no way to get that.. So in many ways, Highsnobiety was this passion blog,. this aspirational blog.. And I remember very early on when in finding. in collecting stories to write about,. we actually would go out there and physically buy. international magazines, especially magazines. that were coming out of Japan to see. what was happening on the ground,.

Because you couldn’t find that stuff online, at least not yet. So I remember having a subscription at the Japanese grocery store in Boston to every men’s fashion and every men’s sneaker magazine coming out of Tokyo. And once a month we would hustle, we would take it, we’d find a new pair of sneakers that was being released in Japan and we’d scan that page and put it online and it was very wild west at that point, but of course, eventually the brands began to understand what we were trying to do with blogging. Certainly not just in the categories that we cover, I think technology as well, Samsung’s, Apples, the Nokia’s, they very much catered to the tech blogs themselves.

But we were at the front lines of trying to fill in. a consumer set with product that was not easy,. number one, to find and not easy to purchase.. And I think all of that changed, I would say by 2010,. 2011, when eCommerce really started to make a wave.. And more importantly, when luxury goods as well. started to be purchasable online,. it became safe for people to play in that space.. And so Highsnobiety went from this passion blog. to becoming a media brand, being an outlet.. We were breaking exclusive stories.. And the journey to Web3 came out. of a lot of what was happening during COVID for us,. where we were home spending a lot of time,. certainly writing more than ever on Highsnobiety. about aspirational goods and understanding. that there was likely another way to transact. that wouldn’t just happen with physical goods,.

But there was a way to lock up physical goods with digital assets. And as early as 2018, I was turned onto this by a company I was advising for called Portion, you can find them at Portion.io. They were a marketplace that now we can call an NFT marketplace. And at that time they were essentially selling original comic book art, graphic novel art, and you would get this NT token, but also the piece of physical art that arrived to your house. And that token was both a reminder and authenticator to what you had. And it got me really thinking early on as to number one, the rise of the gaming culture, which continues today.

For me, it was a really big wake up for me when Amazon bought Twitch if you remember that, and the economy of digital goods was really starting to come to the forefront, at least in my mind. And it just happened that NFTs became quite popular by around December of 2019, January of 2020. And immediately it clicked for me, we were going to enter a time where, we’ve already entered a time where there is a web native consumer out there, a consumer that was born postinternet boom, ’93, ’94, and a good majority of those consumers, they’re young adults, young kids at this point, their notion of the difference between what was happening in the real world and what was happening in the digital world was really becoming a fine line.

And I take my son for example,. he plays the trifecta of majors, Minecraft,. Roblox and Fortnite and he’s constantly doing chores. to earn digital currency within these platforms. so that he can buy digital goods to outfit his players.. And while not every single person in the world. necessarily wants to game,. I do believe that there’s a tremendous number of consumers. out there that believe that digital authenticity. and digital goods are gonna come to the forefront. and become more than ever part of your life.. So give us a quick update on Burrata. and what you’re doing there.. Yeah, so everything I’ve talked about. in terms of digital goods and locking up authenticity,. what we do with Burrata is act as a partner to brands. in more than ever Csuite who number one,. are trying to understand what’s happening.

In the world of Web3. And when I say world of Web3, I’m definitely encompassing everything from NFTs to blockchain, to tokens. And we like to talk about it as us bringing culture on chain. That’s a term that Sam Ewen over at CoinDesk coined himself. And the idea of bringing culture on chain is starting to take what we have learned about consumerism, about our consumers and the fans of the world of Highsnobiety in the world that we write about and beginning to apply Web3 technology to their world that makes sense. I think the hardest part about Web3 is that people are a little bit fearful of it if they don’t understand how they can use it, how it works out.

And our job with Burrata is to help brands. educate their consumers as well, to ensure when they onboard. them into the world, that they know. what they’re getting into, the consumer.. ‘Cause I think most of the time today,. there’s almost an assumption made that the average person,. just understands what a crypto wallet is. or what cryptocurrency is.. And I think that’s not a smart approach for brands today.. Brands certainly need to educate their consumers. as to what the tech is and more than ever,. how that tech is going to benefit those individuals.. Well, that’s a great transition into my next question,. because so many businesses and brands listening right now. are like, okay, pretty skeptical, perhaps about Web3,. because of the very thing you talked about,. about how most of their consumers don’t have any clue.

What the heck an NFT is or what the heck the metaverse is or what the heck crypto is. So what do you wanna say to the skeptics that are listening right now as to why they might wanna reconsider or take a closer look at the world of Web3? Sure, the majority of examples of what we have in Web3 today outside of cryptocurrency, such as Bitcoin, Ethereum and others, are NFTs. And the way that NFTs are presented to the wider consumer is that there are pieces of art that are scarce and finite in object, meaning that they’re locked up in the blockchain, there’s only a certain number that are made. So wrapping your head around the fact that the blockchain can lock up scarcity or ownership I think, is quite difficult for people to get.

So as a fundamental starting point, the blockchain people know, or may not know is simply a ledger that captures this transaction and it allows for provenance to exist. Today, the majority of that provenance is through NFT art. And we’re certainly about to enter a crypto winter where prices of NFTs are falling. What I love to tell brands is yes, that is one component of what you can do with blockchain is put out NFTs as art. And certainly there have been those that capitalize from it, but more than ever, you can take blockchain, you can take tokens at NFTs and begin to apply them as incentive programs, as membership programs that allow you to do things that you may not have been able to do in the past.

So without comparing a crypto wallet or an NFT wallet to cookies, which we know have been sunsetted as being the way of tracking people, once you have an NFT inside of a wallet, you have a pretty good understanding of what else is inside of that consumer’s wallet. So with that in mind, as we begin to mature with blockchain and certainly wallets being used by consumers, a brand like Concepts, which is a brand that I advise for, they’re a sneaker retailer, a premier sneaker retailer with locations in New York and Boston, Dubai and I think in Shanghai as well in China, they’re looking at the blockchain and NFTs as a way of building a membership program.

So they released what they called the Proof of CNCPTS membership card. It was a free mint, meaning that you did not have to pay any cryptocurrency for it. You did have to pay for the gas fee, which is basically a transaction fee that the blockchain charges everyone to work on. But now with this Proof of CNCPTS membership card, Concepts understands who’s holding their NFT, they can look in that wallet and actually see what other projects they’re holding. But more importantly, now they can use that NFT as a way to in the old world password protect today, we would token gate, meaning that we can build access points, VIP points for a consumer to come in, confirm that they’re holding this membership card and give them access to a whole new world.

In the case of Concepts, one simple example was that during NFT week in New York, those that were holding the Concepts pass actually got access to a shopping event in store in New York where you could buy sneakers early and they actually held back some stock to make some exclusives available. So that’s an example of an NFT or a token that may not necessarily be tied to a piece of art, but is tied to a brand in an access point. And the best part about it is as they begin to drop product and they’re using that NFT as the membership card in, a consumer who may not be interested in a product that’s being released today, can likely sell that membership card to somebody else who can then take part in it and the full cycle continues.

And by the way, the best part about it is that every time that Proof of CNCPTS membership card or NFT is sold, 10% of that goes back to charities that Concepts support such as the Dana Farber Cancer Institute in New York. So it’s for the first time a tool or a process that allows for the consumer to get closer to Concepts, meaning that there are now members, they’re holding these cards, they themselves can transact their membership card, and the whole time they’re driving dollars into a charity wallet that helps support the causes they want. That’s that whole circle, that that full cycle is not something that could exist outside of blockchain today without a variety of other databases involved, but with a smart contract, and more importantly, with the blockchain, all of this can be done and done very quickly.

Love that, let’s talk a little bit about the fact that there’s only X many digital crypto wallets, if you will, in the world right now. And in order for bigger brands to really ultimately reach all of their customers, there’s gonna need to be some sort of a event or activity that happens that incentivizes, if you will, the consumers of the world to actually get to the point where they can push a button and all of a sudden the whole world easily has access to these crypto wallets. Because you and I both know that if we were to randomly go to any mall in America, my guess is 1% of the people walking through that mall even hold any crypto.

So what do you think needs to be the next moment, if you will, that will allow the masses if you will, to come on board so that bigger brands can take advantage of more people participating? Michael, I think you nailed it, we certainly need more users, we need more adoption and we need more wallets. And how that comes, I firmly believe it is going to come through marketing and I think it’s gonna come through brands getting on board. And I think in some cases, celebrity can also help. I can imagine if Kanye West does an NFT release, trust me, we’re gonna onboard a tremendous number of wallets, but the truth is Michael, that we do need another 100 million, if not a billion more wallets online, and it’s gonna be commonplace the same way that using maybe a smartphone today or how we transact over text.

If you look at African countries, banking is essentially done over mobile phones today, it’s no longer necessarily tied to a bank account inside of a physical location. That’s been a tremendous economic change for African nations that are adopting it, ’cause now there’s this peer to peer way of transacting. We’re gonna need something similar to that. And it may not necessarily be dollars and cents, say the way that a PayPal or a Cash App work, which I firmly believe both of those guys have a massive advantage and position in being able to help with crypto adoption companies like zumo.money, I advise for them in the UK, they’re a regulated neobank that can actually work with euros, pounds, and Bitcoin, as an example, we just need more, we need more real world examples of it.

And we haven’t had that yet. What we’ve seen a lot of is projects launching, brands showing up and using them as campaign and marketing moments, which are fantastic. It allows for brands to put their foot in the water a little bit test it without getting too rinsed as they say, but more than ever, those kind of baby steps are gonna help brands understand where and how they can use the Web3 tool set. But I agree with you, Michael, we need a lot more wallets online. You know, it’s funny because I’ve been in the social marketing space since 2009, and I thought I was a little late back then, but obviously I wasn’t in hindsight, one of the things I remember, and you may remember this as well is a lot of Superbowl ads back then would have Facebook logos and Twitter logos specifically on the actual ads.

Like you’d see the advertisement and at the end, it would show a Twitter symbol and their Twitter ID or find us on Facebook. And I’m wondering whether or not, and in this year when we’re recording this in 2022, we did see a lot of advertisements for crypto related things. I wonder if in 2023, we’re gonna see advertisements that somehow push that a little bit more because you think about the Superbowl as the largest audience, typically watching a single television show in the world. That’s where I would imagine we’re gonna potentially see some breakouts or if we see like somebody like Mr. Beast, do something to activate his crazy, ridiculous following, I don’t know.

I wonder whether it’s gonna be traditional media or whether it’s gonna be new online media that’s gonna move this in the next direction. But I do agree with you, I think it needs to be a little easier. Right now everybody’s got to figure out where to buy their crypto and then they got to figure out how to decide, I mean, it’s not there yet. I mean, how long do you think it’s gonna take? I’m guessing it’s gonna take at least another three years in. Really, so we’re early, then. We’re very early, it’s getting easier to buy crypto, in the United States, you’re really pegged to whatever state you’re in, based on what you can do.

For instance, New York has quite strong consumer laws. in terms of what you can buy and not buy crypto,. sorry, what platforms you can and cannot purchase crypto on,. whereas say in Florida, it’s a little bit more wide open,. I can use a tremendous number of tools.. But you nailed it, the hardest part is finding the gateway. that’s gonna be super easy for somebody to understand. that they’re moving this currency into another form. and that’s also a habit thing, that’s also a mindset thing.. And this may come off as provocative and controversial,. but this is where I think the US Fed has a great opportunity. to support crypto and begin to set up legislation,. excuse me, regulation that allows for the consumer. to be protected because the truth is, is it’s unsecured,. it’s a little bit unregulated,. that’s a great thing in many ways, but I don’t believe.

That the average person or average consumer, the same way that you don’t necessarily wanna remember your bank credentials necessarily wants to remember a 12 or 24 word pass phrase into their crypto wallet. So it’s all got to get easier and we got to stop, we have to definitely stop communicating in terminology that loses people. I mean, you say smart contract to my mom and she’s like she doesn’t care. Smart contract, blockchain, daps, Eventually we’re gonna move away from these terms and it’s all just gonna be part of the digital layer that we live in. Well, for those gray hairs that are listening like you and I who’ve been around before there was the internet and saw how fast things changed when the internet originally started growing.

And then all of a sudden when blogging got really big and fast and how that was a great disinintermediary for like early movers, really got huge advantages there and the same thing with YouTube, same thing with TikTok, now the same thing with so many other things that are going on. So the good news is those of you that are listening that work for a business or a brand, this is the time right now to begin exploring how these things work. ‘Cause it’s not a question of if this is going to go mainstream, I believe it’s inevitable that it’s going to go mainstream. There’s far too much money that has been invested in these technological platforms and when we take a look at what Facebook has done, Meta, just recently, they announced that they’re gonna be rolling out NFTs for both Facebook and Instagram.

So, why would they change the name from Facebook to Meta if they didn’t believe this was the future and invest billions in it. And you’ve got all these other companies, Microsoft just announced, which happens to own Roblox, that they’re not allowing NFTs in their platform, why would they do that, Jeff, if they didn’t see it as a threat? So moral of the story is, this is coming. This is the opportunity for everyone right now to figure this out, because there will be big advantages to the early movers. And if you’ve been listening to this podcast, we talked to a lot of other people that have been here early and this is your opportunity because even though it’s small, it’s a powerful community already.

So what I wanna do, you can riff on that a little bit,. but I also wanna know what should we do next. if we wanna get into this space?. But feel free to say whatever you wanna say.. Yeah, I think you listen Meta or Facebook. changing their name, a variety of different reasons. why that happened, but that sets the groundwork in my mind.. I personally was very excited to hear that Facebook. was entering the space and while they’ll do it. their own way, and we’re unsure if it will be decentralized,. it’s a big mantra that plays. into the hearts of crypto and NFT.. Max this idea that it’s transparency,. if it is Meta, that will bring, 100 million wallets online,. then so be it because again, we need those entry points. and just like anything, the hope here. is that once they get into Meta,. they’ll see everything else that’s happening around them,.

But we certainly need to start somewhere. And you’re right, we are very early and for those that were here for Web1 and Web2, we know what the ebbs and flows are of pure excitement and then concern and speculation. We certainly are in the middle of a bit of a crash right now, or at least a downward trend or a flat line, but that’s okay because we’ve seen it before and now it just allows for people to really focus in on the tech, the utility. And more importantly, it gives brands and marketers, the opportunity to slow down a little bit. There’s been quite some pressure over the last year and a half or two years to get involved, do something, step in.

And that may not necessarily be the best way to do it, in many cases I think right now is a time to sit back, look at what’s happening in landscape. More than ever there’s a tremendous number of very strong vendors and players out there that can help your brand come online. You don’t have to do this alone anymore. And yeah, please join us for the ride. So let’s talk about Movember and Adidas and what they did just so people have a little bit of inspiration and also WAGMI United. Sure, I’ll start with, Adidas, Adidas was one of the first big brands to embrace NFT culture. A lot of people have aligned the world of street fashion, again, this world of fashion clothing, art sneakers, as the the first adopters of what’s happening in crypto from a cultural lens we’ve seen that.

And Adidas came in by teaming up with Bored Apes.. They released a collection by holding that special. Bored Ape, you were actually allowed to redeem. a variety of different goods.. One thing that Michael, you and I have talked about-. You said they had to hold a special Bored Ape,. do you mean they had to hold the Adidas. into the metaverse NFT, is that what you’re referring to?. Yeah, sorry, I should have been clear on that.. Yes, you needed to hold that specific NFT and-. Yeah, go ahead.. No, tell us a little bit more about what that enabled. and what that opened up.. So by keeping that in your wallet,. you may have heard of a term SnapShop,. but once you know where your NFT is,. because the blockchain of course is a ledger,. it allows you to go in and say, okay, you’re a holder,. you have access, go ahead and purchase,.

Excuse me, go ahead and go to this special webpage where you can redeem it. Now that’s just one example of what Adidas has done, they’ve actually done a lot more these days, which I think is even more interesting, which leads the idea of collaboration. And when we talk about WAGMI United, WAGMI United is indeed a football or soccer club that is run essentially by a Dow called WAGMI United And by purchasing a WAGMI United NFT, you’re allowed to partake in the voting and decision making for that club at a specific level. Now what’s super cool about WAGMI United, and going back to Adidas is, there are projects out in the world that may have a floor price that are a little higher than what I’m willing to pay today.

And one of those that comes to mind is the Squiggles project. And what got me excited about WAGMI United was the way that they were thinking about collaboratively working with other brands. So the actual Jersey that the WAGMI United NFT avatar, as well as the players will wear has an Adidas logo. So they’re basically collaborating on the wearable tshirt that’s on the NFT. And then Squiggles actually is the main mark that’s on the front of that Jersey. And that really is the first time I’ve seen real fun collaboration between a project, sorry, a new project that has an IRL component, as well as traditional brands who have now stepped into the world of NFTs.

And we’re starting to see that collaborative effort through wearables, and we’re gonna see a lot more of it. So, Michael, when you mentioned earlier, how do brands get involved? It may not necessarily be that you go ahead and build your own metaverse, it may actually make a lot of sense to you to go out there and talk to other projects that are in the works and see how you can get involved as an entry point. And I think certainly wearable garments, the idea that you’ll put fashion or clothing onto your avatar in this of course comes from the gaming world is 100% coming to the world of NFTs. Well, and let’s talk about Nike as well.

They acquire an NFT brand called RTFKT, but it’s spelled RT-F-K-T. So you would never really know that that’s pronounced RTFKT, but do you know the story behind this? And you have context and you give a little bit of wisdom on what they did here and why they did this. Sure, RTFKT is a Parisian digital agency, sorry, digital agency run out of France, I believe they’re in Paris. And what they did better than anyone during the beginnings of the wave that we’re in, was developed digital sneakers and they were fantastic. These guys are really strong as well in the AR world and whatever they touch and develop just feels right.

In fact- Now wait, so when you say digital sneakers, you should explain because did they have an actual function or was it just a piece of art that was rotated? I mean like how people understand this. Yeah, so it was essentially a piece of art that rotated, but they also physically made some sneakers by the way. Oh, okay. So they went ahead and produced it. So, I think from the Nike side, Nike understood that this shop may well be the best sneaker designers that they have seen outside of their own people and they went ahead and actually acquired the company. Now, what RTFKT is being used for, it’s not very publicly, known, Nike tends to be very quiet about what happens internally, but what we can see so far is that number one, they’re helping them understand how to touch the digital product landscape.

So we’ve seen the RTFKT Monolith box, and for those that are not familiar, just type in RTFKT, I think I spelled it right there, look at monolith. And it was this box that at a certain date revealed itself to have a pair of sneakers inside. And the best part about that sneaker was that you could change the color of it, and as you change the color of it, you’re actually and Michael, I love for you to explain it. You’re essentially dropping a serum onto your shoe, or you’re dropping a second NFT that allows you to change the color and actually change the attributes of that shoe and that adds scarcity to it.

So they’re very good at it, but we are seeing much more of from artifact, I think is actually in the supply chain as well. They’re very good designers and they’re changing the way Nike thinks about building product and I think it’s actually gonna shorten the timeline between development and actual release of goods. This is where it gets really interesting, the fact that you can own an NFT, let’s say it’s a Moonbird, or it’s like some other big, like a Bored Ape, and you can take another NFT and you can essentially say that that NFT only works with this main NFT over here. And that NFT gets burned, which is essentially spent, used up and it births something brand new.

So this is where these collaborations with other brands can get really fascinating, because you can create something completely new. And it seems like the biggest brands in the world of fashion, or in least in sneaker fashion obviously are already into this space ’cause Nike acquired RTFKT in 2021 and I don’t know when Adidas did what they did, but this is a sign- Before that, before that for sure. Yeah, and these big brands see something happening here. So, what are the steps Jeff, like for people listening right now, if they wanna get involved and they know these are early days, like what are some of the things they need to be thinking about? So if you have not downloaded a crypto wallet or an NFT wallet, just go ahead and do that.

And in my opinion, the two easiest ones today would be MetaMask which is likely the most used NFT wallet and then the Coinbase Wallet product. So go into the Apple Store or the Android, Google Play Store rather than just type in MetaMask or Coinbase Wallet, download that wallet, get your credential and you’re ready to go basically. And when you download that wallet, you’re gonna get your personalized address. It’s a long string of numbers, it’s ugly, but it’s your address and go out there and take part in a Freeman, maybe buy some crypto and put some crypto in that wallet and just start transacting.

‘Cause I think once you do those transactions, the first step is understanding how those transactions work. And then once you have them in, quite frankly, I think Twitter Spaces and Clubhouse being some great points or places to go to hear a lot of what’s happening today. Certainly Michael, a year and a half ago, Clubhouse was the center of the universe for NFTs and you and I together with everyone else, we’re learning on the fly, through conversations with developers and people that were trying things, being involved really does mean being involved within the world of NFTs and crypto, you got to get out there and get your hands dirty.

And what I will say too, is most companies out there, if you do not have a Web3 pilot program or a team in place working on it, I promise you, there are likely at least four or five people in your organization who are interested in this. And that’s always a great place to start. Internally, talk to your people and you will find early adopters who quite frankly can help you on the front lines as well. What’s your thoughts about there’s so many NFT projects out there in communities that are super active. What’s your thoughts about seeking out an existing community and kind of partnering with them? Because so many of these projects are, for lack of better words, cash poor, they’re not really, maybe they made their money off the initial mint and they’re struggling to figure out ways to bring more value to their community.

But if you can find the right community and partner with them, realizing that most of these projects have thousands, not tens of thousands of customers. Bored Ape only has like thousands, like not 10,000, so there’s never gonna be more than a couple thousand people inside of these communities. So, but I would imagine if you partner with the right community, these super loyal people could evangelize and create some cool partnerships. What are your thoughts on doing that as maybe a first order of things before you go out and try to launch your own project? Yeah, absolutely agree and let’s talk about that a little bit.

So, 100% if there’s a community that you’re interested in. that has your eye, you should go and chat with them.. You should go reach out to them.. The easiest way tends to be through either the website,. through Twitter direct messages,. or just go right into their discord. and get your hands dirty in there.. Now, what I will say is that the average companies. will respond to you, Michael say, well, wait a second,. Bored Apes only has 1,000 holders,. that’s not really scalable business.. Well, it’s more than 1,000,. but it’s less than 10,000 for sure, yeah.. That’s right, that’s right.. Regardless 10,000 is still a short order number. for a large company, what you are seeing and by the way,. I think that those early adopters in my opinion,. should have quite some value for being early. and putting their dollars or putting their crypto.

Into those projects.. But using the Bored Ape example,. I think what’s quite interesting is that you start to see. on a collaborative side or an acquisition side,. the idea that you start to almost build rings.. So if the center is the original Bored Ape OG,. you start to see these rings built around it. with new collections that are part. of that original collection that allow you. to increase your audience size.. So in the case of Bored Apes, I think we started. with the Serums and then the Mutant Apes came after that,. now they hold CryptoPunks of course, and other projects.. So the way that I believe we’re gonna see scale on projects. is either secondary tertiary collections, second series,. third series NFT drops, which not everyone should do,. because it does put a little pressure on the OG drop. and more than ever, we keep talking.

About it Michael, collaboration, handshakes happening between projects so that both projects and communities can benefit with reciprocity on what’s possible and what they can do. So in the future, I can imagine I’m a Cool Cat holder and I happen to be holding an Azuki or an avatar. Maybe there’s an handshake and we can all be friends and take part in that, that to me is also the future of building these communities and making them larger. Yeah, it’s fascinating ’cause I’m actually looking right now, there are 6,500 holders of the Bored Ape Yacht Club and 13,000 Mutant Ape Club. I happen to be one of those 13,000.

But if you think about the Bored Ape Yacht Club’s brand, it’s way bigger than just that. I mean like millions of people know who the Bored Ape Yacht Club is because a lot of people have bought and sold these over the years since they’ve been out and it’s only been just about a year and a half, believe it or not, which is kind of crazy. But I guess one of my other questions for you really is, for the brands that are listening right now and are thinking, all right, well it’s a small community right now in the world of NFTs, but there’s this much larger community of my existing customers. How do I get them actively onboarded into this space? Do you have any tips on that? Yeah, again, it’s just that education and maybe release something, maybe release a free token.

A couple examples of traditional retail that have done that Boohoo the brand did an NFT mint, I think if the first one was a free mint for their consumers and it really, Michael, in my opinion, it’s getting an NFT into your consumer’s wallet, that’s what you got to do. You’ve got to get on the inside of that wallet so that you can essentially have a point of access. And I firmly believe that we’re not gonna use password protected websites in the future, we’re gonna be using token gated websites where I may have an NFT that is my identity for, I don’t know, amazon.com and another one could be for Best Buy and maybe another one is for Starbucks.

And while today, those things are a little bit disconnected. and scattered, I’ve got a Starbucks app,. maybe I have a Target app or a Walmart app. and then even the Apple Wallet and the Android Wallets,. which are holding a variety of other cards,. eventually I think it’s all gonna come on chain.. And it may not necessarily be the same chain,. when I say chain, I mean blockchain,. but to the consumer, it’s not gonna matter.. I think the easiest way to begin is to find something. that connects you to your user and see if you can’t begin. to develop a digital version of that in some manner.. Knowing full well that in the future,. if you are an apparel retailer or even apparel brand,. there’s just no doubt in my mind that in the future,. if I go to a J.Crew webpage. and I’m buying a white J.Crew tshirt,. it’s gonna come at small, medium and large today.

And in the future, it’s gonna come in small, medium, large, and then NFT, and then NFT will have thousands of different metaverses that I’ll be able to use that tshirt in. And you know, I’m a gen Xer, Michael, you and I are kind of in the same place, the idea that this is a reality really didn’t happen before the gaming community came around. Certainly I wasn’t thinking about these things 20 years ago. Well, I just literally spent the weekend combining in San Diego ComicCon, which is one of the biggest- Oh, cool. Cultural festivals, if you will, for the world of nerds and comics and gamers and Marvel and Disney, and there was literally no presence for any crypto related anything.

It’s crazy. There was one little booth where they had the word crypto inside of it and it turned out, it wasn’t even a crypto thing, it was just some brand that happened to have this thing. So the good news is you are not too late. And just give a couple of words of where you see this going, like put on your future cap, look out three years from now, where do you see this all heading? In incentive and community decision making, brands will Today brands pull their users when they want a specific colorway. I actually listen to Mick Jagger of the Rolling Stones, talk about how they put a vote out to their audiences to decide what ballads they’re gonna play at their shows.

That stuff is great, it could be done using Web2 processes, but in the future, these kind of small decisions will be made through consensus. So think about a way that your consumer can get closer to you in the decision making, they don’t need to necessarily be within your Csuite yet, they don’t have to be making very large decisions, but small decisions that let them feel like you’re listening to them become important. And I think for traditional fashion brands, I think that’s an area that begins to become interesting, but yes, we’re getting closer to community tools through Web3, that allow you to touch your strongest fans in ways that you may not necessarily be able to do on Instagram today.

And there’s going to be purpose for them joining you because you’re going to allow them to have a voice in the decisions you make. Again, not necessarily big gigantic decisions that impact your full business, but decisions that impact the consumer. And I think that’s certainly where I see three to five years from now. And Michael, we’re all gonna have these NFT wallets and it’s gonna be a passport. It’s gonna be a passport to going to a concert. Today I open a Ticketmaster app, it scans me when I go to a concert, that’s all gonna become even more seamless, I think with Web3 and Token Gating. I totally agree with you.

And I envision a day where instead of entering an email address or a phone number, you’re just gonna connect your wallet or you’re gonna put in your .eth address. And then people will automatically, the brands will automatically drop you something when you walk in the store, ’cause they’ll know it. Jeff, I’m really excited about where this is all going. Can you do me a favor and tell everybody where they can discover more about you and if there’s a social platform you want them to connect with you on where they find you. Sure, I’m probably easiest to find on Twitter and Instagram, just Jeff Carvalho, my full name.

Top 5 WEB3 Coins You MUST HAVE In Your Portfolio!

Web 3.0 is a term used to describe the next generation of the internet. The top 5 cryptos on the web 3 are Chainlink, Ocean Protocol, Filecoin, and Helium. Each of the above crypto coins supports the Web 3.0 ecosystem in different ways. Today we will be explaining these altcoins. Do you know all these 5 coins? If so, let us know in the comments which one is your favorite. If you are not yet aware of these 5 best coins in WEB3, then make sure to watch this video till the end. Web3 has become one of the biggest buzzwords in tech. Initially coined by Ethereum cofounder Gavin Wood, it refers to the next generation of the internet, which aspires to take back control from centralized entities and ensure our personal information remains private.

Blockchain technology and artificial intelligence are at the core of many cuttingedge concepts being explored, ostensibly without intermediaries. Chainlink: Chainlink is a decentralized network of nodes that provide data and information from offblockchain sources to on-blockchain smart contracts via oracles. This process, along with extra secure hardware, eliminates the reliability issues if using only a single centralized source. This “blockchain middleware” meant that Chainlink oracles could provide essential information such as price feeds, event results, and links to traditional payment systems without sacrificing decentralization or security.

Chainlink’s use is demonstrated by its long list of partners, such as Polkadot and Synthetix from the crypto world and SWIFT and Google from the traditional business world. The use of Chainlink by SWIFT creates a seamless interaction between the traditional and crypto worlds while minimizing the potential points of failure. For instance, a realworld money transfer can be sent into the blockchain from SWIFT via Chainlink. Then proof the payment was received could be sent back via Chainlink to SWIFT. Chainlink is a decentralized oracle network consisting of purchasers and providers of data. Purchasers request data, and providers securely return data.

Purchasers select the data they want, and providers bid to provide it. Once providers are chosen, it is their job to bring the correct answers to the chain. Providers must commit a stake of LINK tokens when they bid, which can be taken away if they misbehave. Chainlink uses an oracle reputation system to aggregate and weight the data provided. If everything goes smoothly, providers get paid, and everyone is happy. OCEAN Protocol: Ocean is an opensource protocol that aims to allow businesses and individuals to exchange and monetize data and databased services. Built on top of the Ethereum blockchain, the Ocean protocol uses ‘datatokens’ to gate access to data sets.

The tokens are then redeemed by users who need access to the information. The ocean is seeking to make the data sets on its platform available to startups and researchers without the data having to leave the hands of those who store it. Ocean’s software is built to facilitate this data exchange, linking users who need data or do not have resources to store it, with those who have resources to spare. Ocean enables marketplaces to implement its protocol to connect parties and facilitate transactions. For example, Ocean Market, created by the Ocean team, is where datatokens are publicly available for trade.

Computeto-Data is Ocean’s feature that allows data sharing while preserving user privacy. Using this, datatokens enable consumers to leverage certain portions of a dataset to run specific computing jobs, thus supporting the development of research or artificial intelligence while keeping certain user information private. Polkadot: Polkadot was developed by the Web3 Foundation, led by the cofounder of Ethereum, Gavin Wood. This project was born out of the need to have a platform that could run several chains in a decentralized and parallel way, being able to adapt to the innovations of the network.

Polkadot is a network designed to join the dots with all other networks. It’s commonly referred to as a multichain network because it can join networks together, unlike networks like Bitcoin, which operates independently. Its ultimate aim is to act as a framework for all blockchains that optin, like how HTML allows sites, browsers, and servers to interact. The idea is to take care of messy and costly cryptocurrency mining processes, including validation of transactions and security protocols, and enable developers to focus on creating dapp and smart contract functionality. Blockchains can connect with Polkadot and work in parallel as socalled “parachains” to access the network’s proofof-stake validation of transactions and security.

In the network’s socalled “relay chain,” transaction addresses are checked, and data is standardized so that every system can understand it. This is where all the chains pool security. While functionality is taken care of, blockchains connected to Polkadot can use their own PoS mechanism, decide when and how to update their code, and run the dapps or tokens they choose. It’s essentially a pick and chosen layer that allows networks to preserve their own security and incorporate new protocols. Developers who are building innovative, decentralized systems currently have to engineer these systems from the ground up.

This also means that time, talent and resources are diverted into building competing networks rather than creating a standard everyone builds off. That’s Polkadot’s aim, to make way for developers to build value on top of all blockchains, rather than just one. Filecoin: The Filecoin network is a decentralized data storage network. It has been developed by Protocol Labs, an opensource R&D lab. Filecoin allows its users to sell their excess storage space on an open platform. It acts as an incentive and security layer for IPFS. Filecoin enables the IPFS storage system to act as an algorithmic market.

Using this market, users can interact with storage providers. Users pay using Filecoin’s native token, FIL, in exchange for storing and distributing data on the network. In short, IPFS is the backbone, and the Filecoin network is the surface market layer. The Filecoin network works on a proofof-work model. Unlike Bitcoin, Filecoin’s POW is related to the storage of data. The work done proves that a miner has stored data for a specific time period. Filecoin uses two types of proofof-work proofs to prove the work done: proof-of-replication and proofof-spacetime. Proofof-replication allows the network to confirm data replication to a unique location.

Whereas, Proofof-spacetime enables the network to verify that the data is stored for a specific duration of time. Combining the two, Filecoin manages largescale storage networks with multiple independent parties. Therefore, removing the possibility of forgery of data storage records increases mining rewards. Filecoin’s competitors like Storj and Siacoin lack this functionality. The minor proofs used to create a network are based on three methods put, get, and manage. Put and get methods are used for storing and accessing data in the storage on the client’s request. Filecoin has two marketplaces.

One is for storage, and the other one is for retrieval. The managing method is used for managing the marketplace by matching buy and sell orders on the platform. Storage miners receive put requests and are responsible for the storage of data. To keep the data safe, miners must pledge collateral proportional to the data stored. Retrieval miners receive requests and are responsible for fetching the client’s data. Both the miners receive rewards for the network’s native coin, FIL. Helium: Helium is a blockchainbased network that connects IoT devices. Helium technology enables communication between the devices while the system sends data across the network nodes.

The nodes that compose the network are known as Hotspots in the Helium system. The Hotspots provide public network coverage and rely on LoRaWAN. LoRaWAN is a media access control layer protocol with a cloud component to which platforms like Helium can connect. Helium aims to create a reliable, decentralized, and global network for IoT devices that rely on the community of HNT holders. The network consists of nodes, Hotspots that are run by node operators who are HNT holders. By hosting Hotspots and managing nodes, users are incentivized to participate in the network’s functionality. WiFi already has support for IoT devices.

However, supporting as many different devices as possible brings up privacy concerns. Helium solves this issue using a decentralized architecture and consensus mechanism that gives the network 200 times greater coverage compared with WiFi connection with the IoT. The consensus mechanism that the network runs on is known as Proof of Coverage and is also responsible for distributing rewards to HNT holders and node operators. Users need to purchase a mining device from the Helium website to set up Hotspots. Miners produce radio frequencies by connecting to the network, while the Proof of Coverage mechanism validates Hotspot locations.

New cryptocurrencies are emerging all the time.. Given how there are multiple decentralized storage providers wrestling market share away. from AWS.. With a plethora of metaverse platforms offering their own virtual worlds, it seems inevitable. there will be consolidation in the years to come.. It is crucial to do your own research and find projects you believe in.. Well, guys, that’s all we have for you today.. Which category shall we make a top 5 on next?. Is there a particular coin that you would have liked to see in this video?. Let us know in the comments and we’ll make a video about it!. If you guys liked this video, then be sure to give this video a big thumbs up!. Also, if you don’t want to miss out on any new future videos, then be sure to click on. the subscribe button and turn on the notification under this video so that you’re notified the.

THE FUTURE IS HERE! Web3 explained

/ Best Web3 crypto’s to invest in!

If you are a crypto investor or planning to invest in it, then this is a must for you all to watch. You might have heard about Web3, but do you guys have any idea about it and how should you invest in it? Even a single wrong decision in cryptocurrency can lead you to get ruined. So, why take any risk? Watch out for our whole video and get every detail about web3 only on CRYPTO GEMS and start investing in it right now. Also, subscribe to our channel to watch more videos like this, and hit the bell icon to get the notification of our latest videos. Let’s begin. There will be a developing interaction between these three technologies as a result of the fact that Web 3.0 is designed to function via decentralized protocols, which are the building blocks upon which bitcoin technology and blockchain technology are based.

So What exactly is Web 3.0? The third generation of the internet which is known as Web 3.0, will have applications and websites that process information in a manner that is much more humanlike. The success of Web 3.0 will be dependent on the implementation of technologies such as big data, machine learning, and distributed ledgers. In light of this, we have a list that provides the ten best cryptocurrencies related to Web 3.0 that should be purchased in 2022. Before you put any money into some of the most prominent cryptocurrencies on Web 3.0, here are some things you should think about. Number 1.

Helium Helium is a decentralized network for the Internet of Things devices that use the proofof-coverage method. This network is powered by blockchain technology. Lowpower devices can communicate with one another and transmit data over a network that is composed of nodes called hotspots, each of which covers a certain portion of the network. Users can build the decentralized wireless infrastructure of any scale with Helium, which allows for the use of Helium on any scale. The mining operations are also carried out in the hotspots. Users of the Helium network who purchase or develop a hotspot will simultaneously mine HNT, the Helium network’s native coin, and manage the nodes that make up the network.

As of July 19, the price of HNT is at $9.76, and its market value is about $1.2 billion at this time. Number 2. Chainlink Chainlink is a decentralized network that was built on Ethereum and that makes it easier to create smart contracts that are based on data taken from the real world. As a result of its ability to interact with any blockchain, it has rapidly become a popular platform for the provision of oracle services. Recently, there has been a rise in demand for the native coin of Chainlink, which is denoted by the symbol LINK. At one time, LINK overtook Shiba Inu as the cryptocurrency that is most commonly traded and held by the greatest holders of ether.

As of the 19th of July, the current price of Chainlink is $7.29, and the company has a market valuation of around $3.4 billion. Number 3. Filecoin Users of the decentralized peerto-peer storage network known as Filecoin have the opportunity to earn the platform’s currency by leasing out space on the hard drives of their own computers. The ability of Filecoin to hide nonfungible coins behind digital assets like works of art or music is one of the most useful features of this cryptocurrency. Anyone, whether a person or a data center, has the potential to function as a storage provider inside the Filecoin network.

You just need a connection to the internet and sufficient space on your disk. The more storage space you provide to the Filecoin network, the greater your potential earnings from transaction fees and tokens. As of the 19th of July, the token’s market value was around $1.47 billion, and its price was $6.14 at the time of writing. Number 4. Flux Flux is designed to assist developers in the process of creating Web 3.0 applications and simultaneously deploying such services on many networks. Additionally, it may be put to use in the formation of decentralized initiatives. Users can access data both onchain and off-chain because of Flux’s oracle architecture, which is built on top of entirely decentralized infrastructure.

As of the 19th of July, the price of flux is now $0.4748, and its total market capitalization is at $118.37 million. Number 5. Theta Theta is a decentralized blockchain network that was developed with the express purpose of supporting video streaming. Theta is a peerto-peer network that seeks to make it easier for consumers to get video content. The network will have corporate validator nodes from firms such as Sony, Google, and Samsung, among others. As of the 19th of July, the price of theta is now at $1.33, while its market value is at $1.33 billion. 6. The Graph The Graph is an indexing system that may be used to organize the data that is stored on the blockchain.

This data can then be further filtered and searched by users of the network. Both a lowlevel protocol for indexing blocks in a blockchain and a high-level cryptographic ledger built on top of that protocol are components of this system. As of July 19, the price of one graph token is now $0.1142, and the total market capitalization of the cryptocurrency is about $788.9 million. 7. BitTorrentNew BitTorrent is the most popular peerto-peer file-sharing network, with more than 2 billion users and 200 million wallets. BitTorrent client software is available for a variety of platforms, including Windows, Android, Mac, and more.

It promotes itself as “the world’s greatest dispersed network” and offers safe viewing and downloading of torrent content for various goods. According to CoinMarketCap, users can upgrade to premium memberships by paying a charge. Premium memberships provide users with benefits such as the ability to browse the website without being shown advertisements. As of the 19th of July, the current price of a BitTorrentnew token is 0.0000009276 dollars, and its market capitalization is around 867 million dollars. 8. Siacoin Sia is a digital platform that works on the peerto-peer model that allows users to pay other users to rent out their cloud storage space.

The information about the users is broken up into thirty discrete chunks and encrypted before being sent to a new site for each section. Skynet, the company that developed Sia, is currently working on several projects based on Sia. These projects include cloudbased video streaming, content distribution, and file sharing. As of July 19, the cost of one Siacoin is now $0.004401, and the cryptocurrency has a market capitalization of around $226.48 million. 9. The Most Fundamental Attention Symbol BAT is the cryptocurrency that underpins a blockchainbased digital advertising ecosystem that serves content to users of the Brave browser.

BAT is used by advertisers to pay for advertising campaigns, and a portion of the BAT that advertisers pay is then given to users as a reward for watching advertisements. Even while the BAT environment respects the privacy of users, marketers are still able to focus their messages to increase the efficacy of their campaigns. As of the 19th of July, the price of a basic attention token is now $0.4308, and its market capitalization is close to $645.16 million. 10. Polkadot Polkadot makes it possible to transfer any asset or data across different blockchains. The use of tokens is not required to use its services.

Users of Polkadot can interoperate inside the native Polkadot network with several blockchains, which are referred to as parachains. Polkadot is distinguished from other competing networks, such as Ethereum, by its parachains’ ability to connect, even though each parachain is distinct and operates autonomously. This capacity is essential for Web 3.0. As of the 19th of July, the price of Polkadot is now $7.86, and its market capitalization is about $7.77 billion. Because of the arrival of Web 3.0, the proliferation of cryptocurrencies built specifically for Web 3.0 is unavoidable. Greater usefulness, openness, and decentralization are the three core tenets around which Web 3.0 is founded.

As the number of people who support these ideas continues to grow, there is a greater possibility that purchasing Web 3.0 tokens might turn out to be a profitable investment. However, investing in bitcoin remains a very risky endeavor due to its speculative nature. Before you invest, it is important to complete your research, and you should never invest money that you cannot afford to lose. So, here we are done with this video. Let us know in the comment box what you all think about this video. Also, like it and share it with your friends. Subscribe to our channel and hit the bell icon to get the notification of our latest videos.

How To Become A Web3 Developer In 2022?

Are you a developer interested in Web3? In this video I am going to give you a complete roadmap to become a Web3 developer in 2022 I will tell you what you need to learn to build smart contracts and decentralized applications. So that in the end you can find a high paid job in crypto. And at the end of the video I will tell you about my course to become a Web3 developer. If you are new here, I am Julien, and on EatTheBlocks I help web2 developer to upgrade to web3 
 There is one big mistake that I see over and over. I see many total beginners without any coding experience diving straight into web3 development. You will really struggle if you do this.

Blockchain is built on top of web technologies, So you need to know web development before you start to study Blockchain. More specifically, you need to learn the basics of HTML, CSS, Javascript, and NodeJS. You will also need to know a frontend framework, and I recommend React. So if you are a beginner, or you are already a coder but you don’t know web development, give yourself a few month to learn this. And when you feel comfortable building simple web applications, come back to Blockchain. 
 Blockchain development can mean 2 things: * Blockchain core development * Or Blockchain app development Blockchain core development means when you create the software that runs the Blockchain network, like the Bitcoin client, or the Geth client on Ethereum.

Blockchain app development means when you build an application on top of the Blockchain. That’s what we call a Decentralized Application or Dapp. For Blockchain core development, because Blockchain clients needs to be very performant, we have to use lowlevel programming languages like c/c++, golang, Rust, etc These programming languages tend to be significantly harder than highlevel languages like Javascript or Python. And that’s why Blockchain core development is not for beginners. Now, the good news is that most Blockchain developers don’t do core development. Most Blockchain developers do Blockchain app development, which means they build applications on top of the Blockchain.

It’s exactly like with web development, where most developers do not create web browsers, instead they create web applications. And for the rest of this video I will focus on Blockchain app development Now, there is another word you need to know and it’s web3 development. Web3 development in most cases means Blockchain app development. Ok so you know about the terminology, let’s move on with Decentralized applications, the kind of app that you will build as a web3 developer. 
 A decentralized Application, or Dapp, also called a Blockchain application is an app that you build on top of a Blockchain. Once you deploy it, nobody can stop it, nobody can censor it, even big corporations or governments. It’s really amazing.

It also has some disadvantages. For example, it’s more slow, and it’s. more expensive that a normal web application. But the technology is still new, and it’s. going to improve a lot. There are already thousands of Dapps available. today, mainly on Ethereum, but also on other Blockchains.. Most of these Dapps falls into 2 categories: DeFi and NFTs. DeFi, which means Decentralized Finance, is finance reinvented on the Blockchain.. For example, with Uniswap, you can buy and sell tokens in a decentralized way, no KYC. necessary. With Compound you can borrow and lend tokens. And for NFTs, which means non fungible tokens, is a way to create unique digital assets on. the Blockchains. This has been used a lot for digital art,. but it has many other applications, like for example representing unique financial assets,.

Like membership to a group, or a certificate. If you want to see an example of NFT app, you can checkout OpenSea, a marketplace for NFTs where people can buy and sell NFTs is a decentralized way. And if you want to see even more Dapps, you can checkout a website called DappRadar. You will notice one thing when you checkout Decentralized Applications for the first time. They really look and feel like a web application. And that’s because, for a large part, it’s what they are. But not only. Let’s see what is the architecture of a Dapp. At the bottom you have the Blockchain, like Ethereum. This is not strictly part of the Dapp, but it’s the infrastructure on which the Dapp is built.

Then you have the smart contract. That’s a small program that lives on the Blockchain. It’s the most critical part of the Dapp. It’s where you put your most important data. Everything about ownership, everything that should be decentralized has to be put in the smart contract. On top of it you have a web or a mobile frontend. The frontend is to let users easily interact with the smart contract. Users will be able to read and modify the data of the smart contract, by using the frontend. Reading data is more simple. But modifying data is more complex. For this, users have to send a signed data package called a transaction. And for this they need to use a wallet.

A wallet is a software that is hosted on the client side.. It has the private key of the user, which is the equivalent of a password for the web3. world. The private key is associated to the user. address, which is like a username for web3, it identifies users.. With this private key, users will be able to create transactions to modify the data. on the Blockchain. You can see a transaction like a POST HTTP. request in the web2 world. One very important detail is that the wallet. is separated from the frontend of a Dapp. A Dapp interacts with a wallet, but it never. has access to the private key inside the wallet. Otherwise, it would be a huge security hole. Another important detail is that even though a decentralized application is decentralized,. the frontend not decentralized. The frontend is served from a backend, which.

Can be controlled by governements and big companies.. But, anybody can create another frontend to interact with the smart contract of the Dapp.. A Dapp is 90pct a standard web application, with html, css, Javascript, and optionally. a frontend framework like React. I told you before that you have to know the. basics of web dev before diving into Blockchain development.. Well, now you start to understand why. Ok, so now you understand what is a Dapp,. and what is its architecture, now, let’s move on. 
 There are so many Blockchains.. On Coinmarketcap, there are more than 18000 cryptocurrencies listed.. If you want to be a web3 developer, which Blockchain do you have to learn?. I am going to save you a lot of time. There is only ONE Blockchain that really matters,. and it’s Ethereum. I know that this is very sensitive topic and.

In crypto everybody has his or her own favorite crypto. But that’s not the point here. I am not an Ethereum maximalist. I am just being very practical. I am talking from the point of view of a developer who wants to get a job in crypto. Most of the job market is for Ethereum, period. So that’s the the ultimate argument why you should be focused on Ethereum. But, why is that? Well, Ethereum was one of the first socalled “second generation Blockchain”, capable of running applications on top of it. It has the first mover advantage. Thanks to to this, Ethereum was able to attract a huge community of users, developers and investors, and now you have this huge network effect. Exactly like when Facebook reached a critical size, it was very difficult for other projects to catch up.

And Ethereum has reached this size. Now, having said all of this, in crypto, beside Ethereum, there are many other Blockchains. For example, we have Polygon, Binance Smart Chain, Avalanche, etc.. But here is the important part. Most of these Blockchains are based on the technology of Ethereum. By doing this, they can leverage the pool of developers who already know Ethereum, as well as the pool of users who already uses the tools of Ethereum like Metamask. And finally, you will hear people telling you that Ethereum is not scalable, contrary to many other Blockchains, and you shouldn’t use Ethereum.

A lot of these Ethereum competitors sacrifice decentralization for scalability, and that’s why they cannot really be considered true Blockchains. Ethereum is one of the very few Blockchain that is developing a scalable, secure AND decentralized Blockchain. That’s the future update of Ethereum, called Ethereum 2.0, and yes it’s taking a lot of time to come out, but it’s because they are doing the real thing, and it’s difficult, but they are on the right track. So now you know that you have to focus on Ethereum. But, what do you have to know about Ethereum exactly? 
 There is a good news and a bad news.

The bad news is that Ethereum is really complex. The good news is that you don’t have to know everything about Ethereum. Remember, we are talking of how to become a Blockchain app developer, not a a Blockchain core developer. You need to separate Ethereum, the protocol, from Ethereum the implementation. As a Blockchain app developer, you need to know the protocol, but you don’t need to know the implementations like Geth, or OpenEthereum. Another important thing to know is that at the moment Ethereum 2.0 is not fully released yet. And as far as Blockchain app developers are concerned, building apps on Ethereum 1 will be very similar to building apps on Ethereum 2.0 Alright, so now let’s dive a bit more into the details.

The Ethereum protocol is based on the Blockchain technology. You need to start by this. And to learn how Blockchain work, I recommend the book of Andreas Antanapoulos called Mastering Bitcoin. I know that I just said to learn Ethereum, but this book Mastering Bitcoin is the best explanation of the Blockchain technology that I have ever read, so I strongly recommend it. Next, let’s continue with what is specific to Ethereum. On Ethereum, we have Addresses, that act like identifiers. You need to understand how addresses are generated, and which data is associated to each address, like the Ether balance.

There are 2 kind of addresses, EOA, and smart contract addresses, it’s important to know the difference. Then you need to know what is the data structure of the Ethereum Blockchain. It’s a little bit complex than Bitcoin. Then you need to understand what is a smart contract. Smart contracts are small program that runs on the Ethereum Blockchain. And it’s what makes the Ethereum Blockchain so powerful. Another related concept is the EVM. The EVM stands for the Ethereum Virtual Machine, and it’s the part of Ethereum that runs smart contracts. You need to understand how the EVM executes smart contracts.

And after that you need to understand the API of Ethereum. The Ethereum API has many endpoints, but there are 2 that are importants One that allow you to read data from the Blockchain. And another one that allow you to modify data. I encourage to check the documentation of these endpoints to understand what are the parameters required. Related to these 2 endpoints is the concept of a transaction. A transaction is a signed data package to modify the state of the Ethereum Blockchain. It’s used to execute smart contracts and also to transfer Ether between addresses. You need to know what are the different fields of a transaction. Once you know this, it’s time to move to decentralized applications 
 When you build a Blockchain app, the most important part is the smart contract.

Smart contracts are small programs that live in the Blockchain. Usually, they have quite small, a few 100 of line of codes to a few thousands, rarely more. These programs are very different from normal programs 1. Once they are deployed, you cannot change their code. We say that their code is immutable
 2. However, the data is not immutable, you can change it.
 Contrary to a normal program, it cost money to change the data of a smart contract And the more complex our code, the more money it cost. So we try to see to simplify our code to lower execution cost. That’s called gas optimization. 3. It also takes time to change the data of a contract, because you need for a transaction to be mined, which Takes about 15s on Ethereum
 4. With a smart contract you can move money natively.
 This is why smart contracts are so powerful.

With a normal program, you will have to integrate a payment service like Paypal or Stripe, but. you need to have a permission to do this, and you are constrained by their API. With. a smart contract you can write any logic you want for moving the money, you do what you. want. 5. In terms of security, it’s almost impossible. to hack the core Blockchain protocol. That means if a transaction is sent to move. money from an address to another one, it’s impossible to hack this and change the recipient. address. However, it is possible to introduce a bug. in the code of the smart contract, and have hackers take advantage of this. There are a couple of programming languages for smart contracts, but the most popular. is called Solidity. So you will need to learn the Solidity programming. language to create smart contracts. Even though the syntax of Solidity looks very.

Similar to Javascript, Solidity is very different from Javascript.. For example, in Solidity you have to declare the types of your variables, which is not. the case in Javascript. You also have to do some memory management. in Solidity, whereas in Javascript it’s all managed for you by the language.. Solidity is also much more limited compared to Javascript.. That’s why we avoid to do complicated things in Solidity.. A great way to experiment with Solidity is to use Remix, an online IDE for Solidity.. With Remix, you have nothing to install. You just load the website, and you can start. writing and running Solidity smart contracts right away. Remix is good to get started,. but in a reallife project, we usually use something a bit more robust like. Once you know how to use Remix, the next step is to learn how to use a smart contract framework,.

For more advanced projects. There are 2 popular smart contract frameworks. They are called Truffle and Hardhat. Which one to pick? Truffle is a bit easier to get started with, and has more integrations and plugins. But Hardhat has become more and more popular, especially for more senior developers, and a majority of Blockchain projects use Hardhat these days. I would recommend to learn the basics of both, and once you are have more experience you can decide to settle with one or the other. Both of them are written NodeJS, and you can install very easily with npm. When you develop smart contracts, you also need to use a local Blockchain, completely isolated from the real production networks.

Hardhat has its builtin local Blockchain called Hardhat network, and for Truffle there is another tool, built by the Truffle team, called Ganache. These local Blockchains all comes with accounts preloaded with fake Ether, to allow you to do your test very easily. So you will need to learn to use these 2 local Blockchains on Hardhat and Ganache. There are quite simple, it’s just a CLI tool that you start in your terminal, and that’s it. Another tool And the next step is to learn how to test your smart contracts. This is very important because once we deploy a smart contract we cannot update its code, so we need to make sure that everything works well. The way to test smart contract on Hardhat and Ganache is quite similar. You write test files that look similar to what you would do in NodeJS with Ganache and Mocha.

There are also some very useful testing libraries like OpenZeppelin/Testhelpers.. Once you know this, the next step is to learn token standards, like ERC20 or ERC721.. These tokens are financial assets represented by smart contracts on the Blockchain, and. they are really at the core of many Blockchain applications.. ERC20 is for fungible tokens, which means assets that can exchanged against any other,. like a dollar bill for example. ERC721 is for non fungible tokens,. It’s important to know not only these token standards but also how to implement these. standards in a smart contract. And for this, instead of writing your own. implementation, it’s better to use OpenZeppelin, a Solidity library with battletested implementations. for ERC20 and ERC721 tokens. So that’s it for the basics of smart contracts.

And Solidity, and next item on your todo list is to learn how to deploy smart contracts on public networks. 
 Beside the local development networks, there are also what we call public testnets, which are public Blockchain networks that are more realistic testing grounds compared to a local Blockchain like Ganache. These public testnets are completely separated from mainnet, the real, production network of Ethereum, so you can use them safely for development. To do your tests on these public testnets, you will need to obtain some testnets Ether, and you can do this with a tool called a Faucet. Each public testnet has its own Faucet, it’s quite simple to use.

When you use public testnets or mainnet, you will also need a tool called Etherscan. Etherscan is what we call a blockchain explorer. With Etherscan, you can verify that a transaction was mined on the Ethereum Blockchain. You can use Etherscan both for mainnet and public testnets. Another service you will probably use is Infura. When you want to connect to a public testnet or mainnet, you need to run your own Ethereum node. But it’s not easy. You need a very powerful machine, and some expertise on how to run an Ethereum node. But instead of doing this, it’s much easier to use an API service for Blockchain.

There are quite a few like like Infura, Quicknode, Alchemy or Moralis. This these services, all you have to do is create a free account, and they will give you access to a web API to interact with Ethereum Ok so, once you learn how to deploy your smart contracts, the next item on your todo list is to build a frontend. 
 If you just have a smart contract on the blockchain, the only way to interact with it is with the command line. That’s why we also need to build a frontend to let our users interact with our smart contract. The combination of the smart contract + the frontend is what we call a Dapp or a decentralized application. The frontend can be a mobile app or a web app, but in most cases, it’s a web app. The frontend of a Dapp is 90pct similar to a web application, with html, css, Javascript, and optionally a frontend framework like React.

But on top of this there will be 2 challenges specific to the Blockchain * The integration with the Blockchain, and the integration with the wallet For the integration with the Blockchain, you have 2 libraries at your disposal: Web3.js and Ether.js. These days, Ether.js is getting more popular, but I still recommend to also know Web3.js, to make yourself more marketable on the job market. For the integration with the wallet, it’s up to you to decide which wallet you want to support. You should at least support Metamask, which is the most popular wallet for Ethereum, and other Ethereumbased Blockchains. Metamask is a chrome extension.

It injects itself in your Javascript code when the web browser loads the frontend of your Dapp. You can do the integration with Metamask by using your own Javascript code, and that’s what I would do as a beginner, to learn. Or you can use like Web3react, or walletConnect, and that’s I recommend in production. And with these libraries you can also support other wallets easily. And after you learn all of this, congrats, you will know how to build Dapps on Ethereum. But if you want to be even more competitive on the job market in crypto, you need to specialize and that’s what we will see next. There are a couple of ways you can specialize as a web3 developer.

First, you can become a smart contact security specialist. This what pays the highest salaries. For senior positions, it can go up to 300k / year, and even in some rare cases I have seen some insane salaries of up to 1M. Yes, 1M. Completely insane. To be really good at smart contract security, you need to know Solidity really well, including assembly, a lowlevel language within Solidity. You will need to know in details the Ethereum Virtual Machine, also called EVM. You will to know about gas optimization. And of course you will need to know all the typical security vulnerabilities in a smart contract, and how to fix them.

Another way you can specialize is is in DeFi. DeFi, or decentralized finance is one of the. main use case for Web3 applications. And if you want to have a list of important. DeFi projects you can checkout a website called DeFipulse dot com.. I recommend picking a few protocols and doing a deep dive in how they work.. Be aware that many DeFi projects are copy paste of others, so don’t waste your time. learning too many. Focus just on some high profile DeFi projects. that had been here since the beginning, like Uniswap or Compound.. And DeFi, the other big application for Web3 apps is NFTs.. To become an NFT expert, you need to study how to make an NFT collection, how to handle. the metadata, and how to do mint new NFTs. You can also checkout generative art, which. is a technique to generate art with code. And you can also study how to build an NFT.

Marketplace like OpenSea. And a last way you can specialize as a Web3 developer is to specialize in the frontend. You will need to focus on the different UI/UX challenges that are specific to Web3 applications, especially when it comes to integrations with wallets. And once you do all of this, you will be ready to find a fulltime in crypto, get a nice salary, and work on something interesting. So you can learn all of this for free. There are resources for free on Youtube, on my channel, on stackoverflow, on Twitter etc But if you value your time, and you are willing to invest in your education, you can take my courses and make it way faster and easier to become a web3 developer and get a fulltime job in crypto.