Where to turn when your bank lets you down

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Port Phillip Publishing  
Selva Freigedo
Melbourne, Australia
Monday, 11 February 2019
 
 
 
Where to Turn When Your Bank Lets
You Down
 
 
 
That unsettling feeling
The era of exploring Earth isn’t over yet
Should we ‘abolish billionaires’?

By Selva Freigedo in Albert Park


You’ve just enjoyed your dinner at a restaurant.


You are ready to go, so you ask for the bill.


But, when you tap your bank card…it doesn’t work.


‘That’s odd’, you think. You know there is money in the account.


You try to log onto your bank account to check it…but the system keeps giving you an error message.


So, you decide to go to an ATM to get cash…but the ATM isn’t working either. You try another one, and the same happens.


Banks are closed. What do you do?


Panic starts to set in. Where is your money? And, why can’t you access it?


It’s an unsettling feeling. You have worked hard for your money, and entrusted it to your bank. But now, you can’t access it.


Something similar happened to Wells Fargo customers — an American bank — recently. They couldn’t access their accounts last Thursday, and they were still having problems on Friday.


You may think that having trouble accessing your money is something that doesn’t happen often. But it happened to my family in Argentina during the 2001 credit freeze. It happened to the population in Cyprus in 2012–13.


And, it’s something that could very well happen here in Australia too.


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In a recent report by the OECD, one of the key recommendations for Australia was to ‘prepare contingency plans for a possible significant correction in the housing market including a loss-absorbing regime (including bail-in provisions) in the case of financial-institution insolvency.’


A bail-in is when creditors and deposit holders take a loss to rescue the banks.


‘Luckily’ for Wells Fargo customers, the problem only lasted for two days. My family couldn’t access their savings for years.


While Wells Fargo customers were understandably fuming, it gave crypto supporters more ammunition for their argument for a decentralised network.  As Fast Company reported:


‘With Wells Fargo customers unable to access their accounts Thursday after a “power shutdown” at a bank facility, cryptocurrency advocates on social media quickly argued that their coins’ decentralized networks can better withstand such problems.’


JP Morgan recently released a report. According to the bank, they only see cryptos useful when there is a ‘dystopian’ scenario. As Business Insider reported:


‘"We have long been sceptical of cryptocurrencies' value in most environments other than dystopia, characterised by a loss of faith in all major reserve assets (dollar, euro, yen, gold) and in the payments system," JPMorgan analysts wrote in a note dated January 24.


‘"Their boom-bust cycle is similar to the path of gold in the early 1970s, the Nikkei in the 1980s and technology stocks in the 1990s," the analysts wrote.


‘However, the fact that cryptocurrencies still have a relatively limited correlation to traditional assets could be a positive for investors seeking to diversify. Despite that, Bitcoin's co-movement with some markets like US equities and EM Bonds (local currency) has risen slightly since early 2018, but remains quite low, according to JPMorgan.’


But, we disagree.


Aren’t we already living in a dystopian economy?


Our paper money has no relationship to the real economy…it’s tied to nothing.  Debt has ballooned, interest rates have been unusually low for a very long time. The unemployment rate is low, yet salaries aren’t increasing. And asset prices are increasing at unsustainable rates.


And, after the 2008 crisis, there is a lot of distrust in the system. In fact, bitcoin was born from that distrust. 


Yes, cryptos may be thriving in ‘dystopian situations’ like in Venezuela. In fact, it is thriving in South America as more Venezuelan refugees settle in surrounding countries.


But as distrust on this economy increases, we could see more people using cryptos.


In fact, cryptos keep slowly sifting into the economy.


The latest one is Argentina. Argentina’s public transport card SUBE — similar to Opal in Sydney or Myki in Melbourne — is now allowing users to top it up with bitcoin from your wallet.


And bitcoin transactions are increasing, at least according to data from Blockchain.com.


As you can see below even with lower prices, daily transactions for bitcoin are reaching the peak levels of 2017.





Source: blockchain.com



[Click to open in a new window]


Why? Inverse explains:


‘While the price crash at the start of 2018 was coupled by a decline in usage, the number of transactions per day has gradually risen to return to its previous high levels.


‘While the previous rise in transactions may have been driven by investor speculation, Harvey says that this is “unlikely” the source of this 2019 surge “given the price has been heading downwards.” […]


‘Another source for the rise could be that bitcoin is more useful now. When its value jumped at the end of 2017, the one megabyte limit on block size meant that users had to wait to confirm their transactions. The average time to confirm soared as high as 2,575 minutes, or nearly 48 hours, in January 2018. Today that figure is around 15 minutes, despite the jump in transactions.’


Dystopian situation or not, we still think cryptos could have a space in your portfolio. Obviously, it is a risky tool, so don’t put in more money than you can afford to lose.


But, as distrust keeps growing, we don’t see cryptos going anywhere.


Best,


Selva Freigedo,
Editor, Markets & Money


PS: This revolution is just starting. If you are keen to get into the crypto space but are not sure how, editor Sam Volkering has developed a step by step guide. Check out all the details here.


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The Era of Exploring Earth Isn’t Over Yet…
By Ryan Dinse in Melbourne, Australia


[Editor’s Note: The below article was originally published in Tech Insider on Thursday, 7 January 2019.]


Alas, January’s over and we’re well into the year now!


You’ve exchanged your ‘Happy New Years’, and if you felt like it this week, your ‘Happy Lunar New Year’s’, too.


But you probably haven’t exchanged your ‘Happy International Year of the Periodic Table’ yet.


I’ll bet you probably didn’t even know that the United Nations (UN) has crowned this year as such?


It’s on account of it being the 150-year anniversary this March that the periodic table was created.


And even if you did know, you probably didn’t celebrate it. But we all really should. It was an important decision.


The story goes that one day a Russian scientist named Dmitri Mendeleev decided to take all of the known elements and arrange them into a pretty table.


It was great for science teachers, and awful for science students who could never remember all the abbreviations (cough)…


But useful for all, nonetheless.


It changed the way we look at what the universe is made up of, forever.


After all, physics and chemistry rely on the elements in this table to make sense of the world.


And you might not know this, but even to this day, the table is still being developed and new elements discovered.


It’s an exciting thought: that we still haven’t finished exploring Earth, its elements or everything that can be created from its elements.


And if scientists are successful in their aims in the coming years, the implications could be huge.


Though some of these new elements might be very, very strange…


The problem with so-called ‘superheavies’


If we’re going to discover or create new elements, they’re likely to be at the heavier end of the scale.


If you remember your high school chemistry, the periodic table starts off with hydrogen, the lightest element with just one proton around its nucleus, and then we start adding protons and start getting heavier as we move to helium and so on and so forth…


Now, as an element gets heavier and heavier, something odd happens: the lifespan tends to reduce.


The element sputters to life and then just as quickly dies out, sometimes within seconds. This makes it very difficult for scientists to analyse the element’s properties.


It’s like looking up to see the bright feathers of a bird of paradise, only for it to disappear behind the trees again quicker than a flash.


The work is a technical nightmare. I won’t pretend to be a chemist or physicist here and attempt to figure it all out. All I know is that creating new elements isn’t a simple task.


But folks are giving it a go.


Russia’s Superheavy Element Factory (which sort of sounds like a scary nightclub for bikies) plans to search for the next heaviest elements — 119 and 120 in the coming months.


But some scientists believe that all this hard work isn’t even worth it — that we haven’t done enough research into our existing elements.


‘We’re reaching the area of diminishing returns in the synthesis of new elements, at least with our current level of technology,’ says Jacklyn Gates, an expert in heavy-element chemistry at the Lawrence Berkeley National Laboratory in California.


So, in response, some scientists are trying to look at the existing superheavies instead. But they’re still working on pushing them into a more ‘stable’ mode.


That way, the elements can last a bit longer for a more in-depth analysis. We’re talking days rather than mere milliseconds.


All of this, of course, is dependent on the emergence of new technologies. And it’s a key interest for several big science labs.


So, what’s the point in any of this?


Why we should care about the discovery of new elements


The aim of the periodic table, according to the United Nations Educational, Scientific and Cultural Organization’s (UNESCO) Director General Audrey Azoulay, is to ‘understand the essence of all things.’


It’s poetic stuff!


And even for those averse to hard science, it’s obvious that such work is integral to our intellectual development as a society.


That’s why the United Nations decided to celebrate the international year of the periodic table.


It’s an attempt to raise awareness in advancing chemistry. To show it’s a worthwhile cause.


The organisation has said that the study of new materials can help in a number of causes from sustainable development in energy to education, agriculture and health initiatives.


Nations will be competing on who can discover the next big chemistry frontier.


Yes, the era of exploring Earth isn’t over yet…


What’s next in this space?


The discovery of new elements could have profound implications on our global economy. But right now, we don’t know what that will look like.


Creating such technologies is costly, no doubt. But the possibilities of such discoveries are endless.


An example of this is the creation of graphene back in 2004.


This new ‘wonder material’ had actually been theorised about since 1947. But it was just 15 years ago when someone managed to create it.


Despite the waves of excitement around graphene since the 2004 discovery, there are still very few commercial applications yet.


There’s been hundreds of millions (maybe billions of dollars) thrown at graphene companies in the last decade, but we’ve not moved past the research and development phase yet.


The wheels of science move painfully slow from an investor’s point of view!


But like any big idea, I’m sure it will reach a tipping point. And when that happens, the results could be exponential.


This is not an easy space for investors. But it is a big opportunity.


Good investing,


Ryan Dinse,
Editor, Exponential Stock Investor


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Should We ‘Abolish Billionaires’?
By Bill Bonner in Paris, France


‘A physician cannot heal the sick if he is ignorant of the causes of certain conditions of the body, nor can a statesman help his fellow citizens if he cannot follow how, why or by what process each event had developed.’


Polybius


Whenever you see the ‘we should do this’ or ‘we should do that’ in the public media, it is always followed by something that is idiotic or immoral.


Usually both.


Yesterday was no exception.


Abolish billionaires


‘It’s high time we abolish billionaires’ says a serious front-page story in The New York Times. The ‘rich’ are becoming the new villains...the ‘them’ that will rally mobs...and voters...to action:


‘...it is an illustration of the political precariousness of billionaires that the idea has since become something like mainline thought on the progressive left…’


And so begins another era; the beginning always comes at the end.


And now, the end of the week, we’re ready for it...the next phase of our economic history.


In the present case, we are arriving at the end of a long period of claptrap and chicanery.


For more than 30 years, stock and bond markets have leapt at the sound of the Fed’s EZ money trumpet. And now, the money hounds are exhausted and deaf.


And — with barely 250 basis points available to it — the Fed is almost out of breath anyway.


But, unless history comes to a complete stop, this end must also mark a beginning. And that, despite what may have seemed like pointless and aggravating detours, has been our destination this week.


What comes next


Dear Readers were annoyed that we suggested there is no easy ‘us versus them’ analysis. They may choose to believe that Mr Trump is the anti-Christ...or that Ms Ocasio-Cortez is a she-devil.


These explanations are simple enough to understand and remember; they make voting easy, and help us enjoy a delicious indignation as well as smug superiority. But neither will help us understand what comes next.


Because the coming crisis will explode the delusions of both ‘us’ and ‘them’...both Republicans and Democrats...rich and poor.


It is, for example, a gross fantasy to think you can get rich by spending money you don’t have on fatuous stuff you don’t really need.


It’s also a fantasy to think that you can create money ‘out of nowhere’ and that you can use it to ‘stimulate’ an economy so it produces more real wealth.


And who could believe that the 12 academics at the Federal Open Market Committee could do a better job of choosing interest rates — in a $20 trillion economy — than free markets? If they can, why not let them set the price of oil and diapers, too?


Yet, in all the discussion of why billionaires are so bad...and how the rich got so unconscionably rich...why the Democrats are such jackasses and why the Republicans are so swinish...nobody in either party dares to mention the major cause nor to suggest the obvious remedy: Unplug the machine that made them that way.


Instead, they propose more fantasies, including unfunded tax cuts, higher taxes on the rich, and unlimited deficits. The first and third merely push the burden into the future.


The second will raise pitifully little money...and maybe even suppress the overall tax take. And none attacks the real problem.


But the hallucination that will come into focus soonest and most clearly — and mark both the end of the long boom and the beginning of the long bust — is the idea that somehow business, credit, and stock market cycles have disappeared.


Cycles turn


Inevitably, the cycles will turn (we think they already have) and the whole compound fantasy of wealth gains without the pain of saving, learning, working, and self-discipline will blow up.


That much, we think, is almost certain. Then, the partisan questions arise. Who’s to blame? The billionaires? The Fed? And who will save the situation? The Democrats? The Republicans? DJT? AOC? And that’s where the ‘us’ versus ‘them’ analysis becomes more dangerous.


Getting to the end of the 30-plus-year boom required a bipartisan collusion. Both groups had to agree. And both did. Both signed off on the fake money system...both agreed to huge deficits...and both fed the debt monster that now haunts the whole economy.


And now, beginning a new era...is a new cycle...and a new bamboozle. The two parties — us and them — will fight furiously over the details of when, how, and what is done to whom.


But both will agree — the show must go on; the money must continue to flow. The ‘system’ must be protected — at all costs.


Honest wealth (and indirectly power and status) comes from Main Street — people providing goods and services to each other in voluntary, win-win deals. (We include some honest ‘public sector’ activities such as schools, firefighters, and police. If the feds didn’t provide these services, they would still exist. They would simply be cheaper and more efficient.)


‘Public spending’ — either direct or indirect (through regulation) — must come from Main Street. That is, it must come from ‘us.’ And it must go to someone else. Whom? ‘Them.’


Who are these nasty jackals? Are the Iranians draining your retirement savings? Are the Chinese undermining the dollar? Are Russians stealing your job?


Nope?


And here we find the ‘us’ and the ‘them’ that really matters. All of life is a struggle for wealth, power, and status. There are only two ways to get it: You earn it...or you take it. And the only fight worth having is a fight to protect yourself from those who try to take it from you.


Main Street earns it. Washington and Wall Street (aided and abetted by the fake money system) take it.


And guess what? The takers are Red. And they are Blue.


Regards,


Bill Bonner


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From the Archives...


You Will Want to Own Gold after Reading This

By Selva Freigedo | February 8, 2019


Can Your Portfolio Handle a 40% Drop?

By Selva Freigedo | February 7, 2019


Will Big Lenders Get Twice Lucky?

By Selva Freigedo | February 6, 2019


Who Will Win the Game Between the US and China?

By Selva Freigedo | February 5, 2019


It Shouldn’t Be Like This…

By Selva Freigedo | February 4, 2019


 
 
 

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Paradox of Prosperity

Are global markets on the verge of collapse? Or could the next two years be the start of the greatest bull run we’ve ever seen? This is the paradox the world is currently facing.


On the one side, you have investors like Sam Volkering, who believe that ‘the next two years could be one of the most profitable investment years of your life’. But on the other, you have market veterans like Vern Gowdie, who believe that we should be prepared for a decade-long bear market. ‘Be afraid. Be very afraid…’ says Vern.


Whether you are a bull or a bear…your perspective has probably been considered at the paradox conference. To get full access TODAY, click here...


Crisis & Opportunity

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Secret Crypto Network


If you want the chance to make your fortune from the crypto boom…READ THIS BOOK NOW! Crypto expert Sam Volkering was right there to witness the birth of bitcoin — buying and selling the world’s biggest crypto when it was just $12 a coin. He’s even appeared on US TV to share his crypto expertise. Now he’s piled all his digital currency knowledge into his book, Crypto Revolution: Bitcoin, Cryptocurrency and the Future of Money. And for the first time ever, we are offering a limited edition print copy of Crypto Revolution for just $7.95 today (we’ll even cover the postage and handling). Take up this deal today and you’ll also receive instant access to a bonus crypto wealth starter pack. This starter pack not only includes a cache of exclusive ‘crypto investor reports’, but it even includes a digital copy of Crypto Revolution, so you can soak in all of Sam’s valuable crypto insights while you wait for your print copy in the mail. [more]


Cycles, Trends and Forecasts


What if there was an ‘Almanac’ for the financial markets? One so accurate, you could set your watch by it? Never again would you have to worry about what will happen next year. Never again would an economic event surprise you. Never again would you be caught out in a down move on the stock market...in fact you’d be able to profit from them. Discover ‘The Grand Cycle Equation’ [more]


Harry Dent's Boom & Bust Letter


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Find out more about Harry Dent’s new book, Zero Hour, here.


The Gowdie Letter


You may sense that there is an air of change in the markets. Now the question is not ‘is this nine-year bull market over’? That is looking increasingly likely. The question is: ‘How big will the next downturn be?’ What you may NOT realise is, it could be order of magnitudes bigger than the dotcom and GFC crashes. You could see decades of gains blown away in a very short space of time.



If you cannot afford to see your wealth shrink possibly two-thirds in value, you need to prepare NOW. What you’ve seen so far has investors spooked. But we haven’t witnessed an all-out panic, yet. You shouldn’t wait for that to happen. By then it could be too late. The five wealth protection steps outlined in Vern Gowdie’s crash survival guide will be of no use to you when this potential avalanche is fully underway. You need to implement these measures NOW [more]


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