Money: past, present, and future | Dinheiro: passado, presente e futuro (legendado)

Money: past, present, and future | Dinheiro: passado, presente e futuro (legendado)


[Music] good morning everyone [Applause] when does the yes I could do this talk in Spanish but I don’t think the translators would have a easy time translating the poor – no – all of you so I’m gonna stick to English so the title of this talk is money can we put a presentation on that’s it there you go so the title of this talk is money past present and future but Before we jump it on jump into the presentation itself now just let me share with you guys crypto voices which is a great podcast in which I’m a co-host along with my friends my buddy Matt machines because I think he’s only using the audience or perhaps he’s running late they were he actually blackmailed and threatening me to kick me out of the show if I didn’t put this in the presentation so there you go but so the topic of today the money monetary system not just I want to talk not about not just about Bitcoin itself but also explain and highlight some of the features or bugs of the current monetary system and how Bitcoin can play a role a fundamental role in the future of this monetary system so right now when we take a look at the system the way we live on how we live under is the dollar standard so this is the current monetary regime all paper currencies they revolve around the dollar and the dollar is the monetary unit of accounts of the whole world everything is priced in dollars and this is the standard but the irony is the dollar itself the paper dollar it isn’t redeemable in anything it is an IOU it’s a liability issued by the Federal Reserve System which cannot be converted into anything it’s not backed by gold or silver anything it’s redeemed in itself only which is a complete and utter and normally in the current financial system and if you ask the average person nowadays what is the dollar the typical answer would be this it’s the George Washington Federal Reserve not the one dollar bill this is the typical answer but as a matter of fact the word dollar is much older than these notes the word dollar if you read the documents the founding documents of the United States we can see the word dollar in the articles of confederation in the US Constitution as depicted here in this slide we can see on section line where text was already priced in dollars and also in Section ten where the where it said no state shall make anything but gold and silver coins legal tender and payments and that’s this is what they meant but back then this is 1787 there was no legal definition yet for the word dollar it didn’t define the US Constitution nor did the Bill of Rights define what a dollar was and it didn’t have it so for usual practice of Commerce because everybody knew everybody knew what a dollar meant and it meant the Spanish silver dollar a silver coin that was actually minted for the first time in the 16th century and the dollar this is the this is just a picture of the Spanish dollar this was the most widely circulated coin during colonial America so and this was actually the monetary unit back then and it wasn’t because of any decree of governing Lord because the King of England said that the citizens of the US had to use this it was just the market usual practice was adopted by the market and the name dollar actually comes from Thaler which is an abbreviation of your ham stellar which was a silver coin minted by the count of Schlick in your homes town and the kingdom of Bohemia which is now the Czech Republic back in the 16th century but it was up to the coinage act of 1792 to actually define the dollar so when we speak of the Constitution or dollar the legal dollar this is the definition as given by this act which was signed by the then President George Washington and this act not only established the mint in the United States but also regulated coins and said specifically dollars or units each to be of the value of the Spanish meal dollar as the same is now current it was already the currency of the states of the United States and to come saying 371 point 25 brains of pure silver so this is the legal definition of the law this is what a dollar actually means according to the United States Constitution and in this act it also defines the money of account to be expressed in dollars or units but there was one problem with this act and all the acts soon after this one because this was the first president for a four bimetallism or bimetallic standard because in these acts they also defined the value of gold in terms of silver so they define a fixed ratio for go to silver 15 to 1 and what this meant was the price of the two currencies should be fixed well as you know any commodity the price fluctuates are going to supply according to demand and when we fix the two – the two metals one against the other you eventually end up over valuing one against the other and it happened in many instances in the seventh in the 18th and the 70 and the 19th century to many acts where in one period of time the gold would just flow out of the country disappear for the market or the silver and just here just a brief overview of some of the legal monetary acts or history of the United States we had a legal tender act in 1862 where Lincoln’s Abraham Lincoln’s issued the famous greenbacks so paper dollars in convertible into anything and then all the other acts and which end up culminated in the 1913 Federal Reserve System now what is important to note here is that from the 1870s until 1914 when the Federal Reserve actually started operations the United States was living under a so called classical gold standard so silver coins and gold coins they were used in the market and the paper issued either silver certificates or gold certificates or even Federal Reserve notes they were redeemed in species citizens could with him and could ask for redemption but after that and then the 1933 executive order by Franklin Delano Roosevelt II executive order 6102 when gold ownership was prohibited the United States and everyone had to give up their go and surrender their go to the United States government after this this classical gold standard was no longer in place and then we had the Bretton Woods system that set the monetary order in terms of the dollar it was still anchored in gold but the pillar of the system was the Federal Reserve dollar the United States dollar so every other currency would peg or being somehow fixed to the US dollar and the US dollar would redeem dollars into the fixed ratio of $35 per troy house that was the crux of the Federal Reserve the Bretton Woods system so this means this meant the United States had an obligation to redeem dollars at this fixed ratio but of course if you have a situation a scenario where every nation is accepting your currency your IOUs as if it were gold why would would you bother with this parity you can just issue more I are using the nation’s and every other government who keep accepting your money there’s no reason to bother with this with the redemption of the gold itself but of course when you start flooding the market and this is something that then-president this was the nineteen sixties here on the left corner here then President General showers ago he denounced this system and he used to use the term the exorbitant privilege he didn’t coined this term I use it very often the exorbitant privilege of the US dollar because this meant every nation was accepting dollars dollars as good as gold but of course as dollars were being flooded into the market and nations realized this parity would no longer be able to be maintained the United States saw its monetary gold stock being depleted year after year and so this is the inception of Bretton Woods 1944 up to 1971 when Richard Nixon finally closed the gold window and in this monetary era where he still had an anchor an attachment to gold and it could be and dollars could be finally settled in redeemed in gold and this is the era we live now this is this announcement by presentation on 15th of August 1971 assured a new air of inconvertible paper currencies so there’s nothing back and there’s nothing being actually redeemed in these dollars that we currently use and this is jerome power the current Federal Reserve presidents so if George Washington were alive today and you told him this is what people think a dollar is I guess this would be his reaction and and it’s ironic because when it when we talk about fraud and there’s a lot of fraud prevention rules treatises mechanism but there’s no greater fraud than our current monetary system it’s irredeemable in nothing but the liabilities issued by the central banks themselves so this means our current monetary system the monetary regime is completely debt based I’m sure you all know this but it’s not only that base it’s even worse because it’s unpayable that no single paper currencies actually bail paid in anything they’re never finally settled and this leads to severe imbalances in international payments I’m sure you heard the phrase balance of payments differences that since the air of the the end of Bretton Woods no balance of payments differences are settled before that whenever I can’t repaid more abroad and II received from abroad flow ago the would flow out of the country and when the inverse happened when it received more from abroad gold would fall into the country so this was the kind of automatic adjusting mechanism that the gold the classical gold standard and even during the Bretton Woods system we had but since then there’s no mechanism so these imbalances the balance of payment differences they’re never settled and the imbalances they keep grow and keep building yet this is the chart it’s a flow chart with the annual net lending or net boring from the rest of the world to the United States so you can see this is since the 1970s the imbalances began to build up and this is the net lending the rest of the road landings in the US or the universe of this chart the federal government being a net borrower year after year and the end result is what we call the u.s. international investment position this is the US as a nation so this is a private and the public sector this means all the assets all the assets accumulated over the years – liabilities and this comes to a negative so more liabilities at the order in the order of magnitude of 8 trillion dollars that’s the u.s. international investment position and this is only made possible because of the current monetary order of inconvertible paper dollars that’s what happens now when we speak up the gold standard perhaps one of the greatest merits of God and something that people often talk about is how it is a an inflation protection a hedge against inflation and I’m sure this is one of the most important and I do agree with this but it’s not the only one one of the one of the other reasons for gold is because it was the final settlements asset and also as a way to manage liquidity between banks not just between commercial banks but also between nations in between central banks and since we’re off we went off the gold standard there’s no other mechanism to settle debts between countries so there’s no final debt liquidation we just keep piling more and more debt year after year but of course even though we have this is the current state of affairs a irredeemable paper dollar governments around the world they do not trust each other that much and that’s why every single development nation and here I have the devote of the Bank of England they still hold enormous amounts of gold and why because gold is nobody else’s liability it’s no it’s an asset in the truest sense of the world it has it has no default risk so it’s nobody else’s liability and it’s the final crisis hedge they know if something happens in the world if paper dollar starts being hyper inflated they know that God will be accepted so this is why God still use and still held by governments and central banks around the world so would I be advocating for a return of the gold standard no I don’t think it would work nowadays and not because of economic reasons because this is actually how most of economists they denounce gold the gold standard as a terrible monetary system because it will bring about price deflation I think this is one of the greatest part about the gold standard so this is not the problem itself the problem why it is infeasible today is just because of purely technological and logistical costs I mean if you just imagine the huge amount of cost to move go around the risks involved insurance just to give you an idea of how this works this is the British ship HMS Lawrence it’s sink of the British coast in 1917 carrying 44 tons of gold most of it was recovered years after now imagine all this go just did the cost involved to move price so today these forty tones go forty tones of God would be around 1.8 billion US dollars so just imagine the amount of cost and risk involved to move gold out of the world’s loading into the ship and then moving it sailing across the Pacific or across the Atlantic at the end having on the other side unload on the ship and moving into the world and also certifying that all the bars are genuine well we do have another system it’s much easier and much cheaper than this and it’s called Bitcoin but this is the reason for me that one of the reasons why I think bitcoin is destined to play a fundamental role in the future of money and is mainly two reasons one has a new final asset for International Settlement so a new ultimate acid it is contending to the throne goats as this reserve asset as a safe-haven asset it’s not there yet it has the potential but is not there yet four-bit going to be perceived as immutable as gold as a safe-haven asset it must be developed and tested and we are still ears perhaps decades away from this happen but it has this potential but of course it won’t happen if we hard for the hell out of it every six months now the second reason is because it’s also a platform a neutral open and all sensible platform where this international transfer national settlements can happen now this feature of the being an international unsensible Global payment or settlement system is already being a concern by many leaders around the road and here I bring two prominent figures like Heiko Maas on the Left he’s the foreign minister of Germany who in August published an op-ed in the handles blood newspaper where he had vacated for a new swift payment system free from US pressure free from US influence and just last week we had vladimir putin said that Russia doesn’t have a clear objective to move away from the dollar it’s actually the dollar that is moving away from us that that was his words last week so there is a row even in the current international still of affairs for Bitcoin to be played now we’ll talk about the future of money and when we see central bankers and economies talking about the future of money usually what they talk about is a cashless society a cashless world I mean I do feel Bitcoin as a clear geopolitical weapon force for governments to use right now but I don’t think it’s going to happen any time so but when these guys central bankers and politicians and bureaucrats when they talk about the future of money Dameon a cashless world so this means even everyone voluntarily just surrender paper money and start using completely digital forms of money or even it’s prohibited and some economists are even fostering this idea of proofs outright prohibition of paper money now when they do this what they want to introduce now is what they call a central bank digital currency cbgc and they say that the central bank digital currency would give us a global money that we could use on our smartphone and send to anyone we wanted any time in the day any amount cheap and almost instantaneous that’s what they say and what’s more they would do away with volatility they would bring stability to cryptocurrencies that’s what I say but here comes the fine print antimony anti money laundering and terrorist financing controls would nevertheless run in the background if we suspicion arose it would be possible to lift the veil of anonymity and investigate you all know what this means this is backdoor this is backdoor for crypto currencies and we all know where this leads we’ve seen it play out in the nineties with the Clipper Chip battle and more recently after the edwards and all the revelations were where the US government and the National Security Agency wanted Apple and Google and other platforms to have a backdoor in their equip shion’s so we all know where this leads so when I see when I when I think of the future of money I see mostly two scenarios we can have either free decentralized global open unsensible money like Bitcoin or we can have centralized closed politicized monitored control and backdoor money like central bank till talkers CB DC which is the Clipper Chip of cryptocurrencies so my message then to all these proponents of central bank’s digital currencies and to paraphrase the champions of the 1980s borrow against the Clipper Chip is this excuses if we don’t issue like so sync clipper and sync Central Bank digital currencies thank you very much [Applause]

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