October 26, 2022 • 38 mins
From our YouTube archive this week come two videos which lay bare many of the failings of the current financial system.
The first is inflation - that pernicious force which is busy making lives harder for most people around the world. Most, but by no means all, because those at the very top of the pyramid ultimately benefit from the inflationary system the rest of us labour under.
Believe it or not, but inflation is guilty of more than just rising prices and increasing living costs. It also drives many of the most troubling aspects of society, including war, environmental degradation, inequality and corruption, to name but a few. In the first part of today’s episode, you’ll hear how inflation furthers these evil ends and allows the wealthy and powerful to benefit, while everyone else foots the bill.
Then, in part two, you’ll hear all about a new bill in Washington DC which aims to crack down on insider trading by US politicians and other government officials. This shady practice has been going on since time immemorial, and this isn’t the first bit of legislation to try and tackle it. However, as the economic climate deteriorates and public opinion hardens against such underhand practices, perhaps this could be the moment the folks on Capitol Hill are brought into line. Here’s everything you need to know about the extent of the insider trading that’s been going on and what’s being done to curb it.
We hope you enjoy the show.
Producer for iHeartMedia: Noel Brown
Editor: Semir Mutapcic
Theme music composed by: Noel Brown
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hello everyone, and welcome to the latest episode from the
midweek edition of the coin Bureau podcast. Every week, I
pick out two of my favorite videos from coin Bureau's
YouTube channel to present to you in podcast form. The
audio you're about to hear is from those videos I've
chosen this week. Many of you have been in touch
to ask whether it's possible to listen to our videos
(00:20):
in podcast format, and so your wish is my command.
This week will be taking a look at the devastating
effects that inflation is having, not just on the global economy,
but on the environment as well. Will also be lifting
the lid on a new bill that seeks to ban
insider trading by US government officials. Both provide insights into
(00:41):
the accelerating decline of the FIAT financial system. First up,
inflation is a word that's on everyone's lips at the moment,
as virtually every country in the world is experiencing it
to a greater or lesser degree. But inflation isn't just
pushing prices up and hurting our purchasing power. It's also
fueling war, climate change, inequality, and much more. Besides, it
(01:04):
also ensures that the wealthy and powerful get to hold
on to their wealth and influence at the expense of
everyone else. Put simply, inflation is the enemy of the people,
and if left unchecked, will continue to make us poorer
and our world a more polluted, unfair, and unsafe place
to live. So in the first part of today's video,
(01:25):
we'll see how inflation perpetuates all these evils and look
at what a solution to it could be. Speaking of
the rich and powerful, It's been well known for a
long time that US politicians and other government officials have
been abusing their privileged positions to make money from insider trading.
Attempts have been made before to try and but to
(01:46):
stop to this, but still it goes on well. A
new bill titled Combating Financial Conflicts of Interest in Government
Act was recently proposed, and in the second part of
today's episode, we take a look at what's in it,
what it's hoping to achieve, and why it could end
up being bad for cryptocurrency. I hope you enjoy listening
(02:06):
to these two pieces, and I will be back talking
crypto with Mike very soon, so be sure to stay tuned,
and if you want even more content from coin Bureau,
be sure to subscribe to our YouTube channel and visit
us on social media too. War famine, economic inequality, pollution, corruption,
(02:44):
climate change, unaffordability, low paying jobs, no upward mobility. These
are just a few of the issues that the world
has been grappling with for years. But believe it or not,
all these issues have a shared cause, and that inflation,
more accurately, the ability to create money out of thin
(03:05):
air with the help of a central or commercial bank. Today,
I'm going to reveal where all this inflation is coming from,
explain exactly how this inflation is causing these issues, and
why the solution might require just a single step. Okay,
let's start with where this inflation is coming from. Imagine
(03:27):
you were given the bank account with an unlimited amount
of money. What would you do. Well, You'd probably start
by buying a nice house, going on a fancy holiday,
getting yourself a very silly car, and all the other
things that the average person would do. Once you've had
your fun, you would start doing the same for your
friends and family, buying them houses, cars, holidays, the whole shebang. Next,
(03:49):
you'd probably start donating your money to charities, investing in startups,
building cutting edge tech, and all the other kinds of
stuff rich people do. Now, I think we can all
agree that spending money on all of the above is
an effective allocation of that capital. In other words, it's
the right way that money should be spent, improving the
quality of life for yourself and others, and then trying
(04:12):
to take humanity itself to the next level. Given enough time, however,
you'll inevitably start spending your money on stupid stuff. Maybe
you'll start buying ship coins that you know will probably
go to zero, or marry a reality TV star, or
construct a secret underground layer and try and take over
the world. Why because you can, or rather because you've
(04:36):
run out of ways to allocate that capital effectively. What
I've just described is the financial system in a nutshell.
When a currency is first created, its purpose is to
improve the quality of life of the people using it.
The institution that issues the currency is often instructed to
ensure that it operates in accordance with this purpose when
(04:58):
it is established. Now, this currency issuing institution is a
central bank or a commercial bank. Whereas the central bank
has the power to print currency, commercial banks have the
power to create currency out of thin air through fractional
reserve banking a k a. Lending out more than they
have on their balance sheets. The people with exclusive access
(05:21):
to these money sources basically have their own bank accounts
with unlimited money supplies. This isn't a problem at the start,
because the private sector uses its accounts to invest in
innovation and the public sector uses its accounts to develop infrastructure.
As time goes on, however, the stupidity sets in. The
people in the private sector engage in reckless financial speculation
(05:45):
and enforce their ideologies on society. The people in the
public sector purchase political popularity through public programs and increase
the surveillance and control of their citizens. All these endeavors
require creating lots of currency, and that eventually results in inflation.
It also results in a collapse in the confidence of
(06:07):
the institutions that issue the currency, including the ones in
the private sector that have exclusive access to the institutions
that issue the currency. This is why every fiat currency
that's ever been issued has eventually failed, and it's why
any form of currency created by people is destined to fail.
And yes, it is the cause of all the issues
(06:29):
I mentioned in the introduction. Now, a topical issue to
begin with is war any student of history out there
will know that when countries go to war, their governments
take on unbelievable amounts of debt to finance that war.
This is much more significant than you think. And to
explain our paraphrase macro analyst Mike Green, when a government
(06:52):
must borrow massive amounts of money to do something that
it wants, then it's often, if not always, because it's
something it knows that its citizens do not want or
do not need. It's something that it knows its citizens
would not fund with their taxes. If it was something
the citizens wanted or needed, then the government would have
a much easier job of selling the idea to them.
(07:15):
Raising taxes to pay for things people actually want is
a lot more straightforward than doing so for something they don't.
Not surprisingly, war is very low down on the list
of things that citizens of any country want or have
ever wanted. However, it has always been and will always
be high on the list of things that the powerful
(07:36):
public and private people and institutions have wanted because they
always want more growth. Now, of course, this urge to
grow bigger and better is often a good thing. When
you throw the ability to create money into the mix, However,
it can become a very bad thing because it opens
the door to reckless spending and war. Without the ability
(07:57):
for people to create money to finance these war was,
they would happen a great deal less frequently. Now. Another
hot topic these days is climate change. If you watched
our video about the U N's upcoming individual carbon credit score,
you'll know I briefly noted that inflation is causing this
environmental breakdown. One of the comments asking exactly how was
(08:20):
in fact the inspiration behind this video, So to recap,
inflation ultimately comes from excessive money creation driven by public
and private institutions that are abusing their infinite money bank accounts.
I suppose this really depends on your definition of inflation,
but let's roll with it for the sake of simplicity.
In practical terms, inflation means that a currency is losing
(08:43):
value by the day. This is simply because the gradual
increase in the supply of that currency makes it gradually
less valuable. It's basic economics. The more of something you have,
the less it is worth relative to other things. So
riddle me this. What happens when people can see that
their currency is slowly losing value by the year, by
(09:04):
the month, or even by the day. Well, obviously they're
incentivized to get rid of that currency by buying something.
That's because they know everything else will be more expensive
in the future. Now, the effects of inflation are arguably
felt most by those with massive amounts of money. That's
because a one percent devaluation on one hundred dollars is
(09:25):
just one dollar. A one percent devaluation on one million dollars, however,
is one million dollars. That's an amount of purchasing power
anyone would notice losing. And because the only way to
preserve this purchasing power is to buy something else with
that money, that's exactly what the rich do. They use
their money to buy assets, and then they borrow money
(09:46):
against these assets to buy even more assets, which continue
to appreciate in value due to inflation. As we've learned,
this infinite money glitch inevitably results in the misallocation of capital,
specifically over consumption. Now, over consumption is what lies at
the core of climate change and all other environmental issues
(10:06):
we're experiencing, and the rich are the largest consuming class. Now,
don't get me wrong, the urge to consume can be
a good thing inasmuch as it keeps the economy going.
When you throw an inflation based infinite money glitch into
the mix, however, it quickly becomes a very bad thing
because it leads to the kind of over consumption that
destroys the environment. This ties into another big issue that's
(10:30):
been fueled by money creation, and that's all the issues
with employment. This includes low paying jobs, the inability to
move upwards within those jobs, and jobs where nothing of
value is being produced, or, to use the scientific term,
bullshit jobs. I'll start by saying that the issues in
the job market are not due to inflation alone. There
(10:52):
are a few other factors involved, including demographics, migration, and globalization.
That last factor is probably the primary cause of low wages,
since an increase in the supply of labor drives wages down.
That said, there still seems to be a very strong
correlation between currency creation and depressed wages. This can be
(11:14):
seen in this chart here. Some of you may recognize
this chart from the website wtf Happened in ninety one?
Well one is when Fiat currencies officially stopped being backed
by gold. To be clear, there was already lots of
unbacked feed currency supply in circulation prior to ninety one.
(11:35):
The thing is that it hadn't been officially sanctioned, so
to speak. Going off the gold standard effectively gave the
green light to central banks and commercial banks to create
as much money as they wanted. This allowed a handful
of corporations with close connections to both types of bank
to get their hands on easy money. They use this
(11:55):
easy money to expand their empires into other countries and
lobby poly petitions to pass regulations that would prevent any
competition from catching up. So what happens when a corporation
can borrow almost as much money as it wants? Obviously
that corporation is less incentivized to care about its actual
operations that generate actual income. This includes the employees of
(12:20):
the company. If corporations were not able to borrow almost
as much money as they wanted, then they would be
forced to pay extra close attention to what employees want.
This is because they would need to create favorable conditions
for productivity. But I suppose this incentive falls apart when
globalization comes into play. In any case, the employment issues
(12:41):
caused by inflation are even worse in the public sector.
That's because When a government can borrow as much money
as it wants to finance its operations, it doesn't need
to care much, if at all, about the productivity of
its employees. To make things worse, many governments have policies
to reduce funding for a department if it man just
to do its job within its annual budget. This inadvertently
(13:04):
creates an incentive for these departments to spend more money
so they can keep their budgets or even increase them. Now,
another significant issue being caused by money creation is economic inequality.
Economic inequality in almost every country around the world exploded
to record highs during the pandemic, and that is not
(13:24):
a coincidence. In response to the pandemic, central banks around
the world dropped interest rates on borrowing to zero. By now,
you'll know that the entities with close connections to central
banks and commercial banks were the only ones who were
able to borrow at a near zero percent rate, otherwise
known as free money. These entities use this borrowed money
(13:47):
to buy up all the assets they could get their
hands on. That's why the prices of houses, stocks, and
cryptocurrencies went vertical. As the primary holders of assets, the
rich got richer. And everyone else saw their hopes and
dreams become that bit further out of reach. The worst
part is that this dynamic didn't start with the pandemic.
(14:08):
It started as soon as the current financial system was
created in the aftermath of the Second World War, and
it was significantly accelerated by the dropping off the gold
standard that I talked about earlier. Now there's even a
phrase for this phenomenon, by borrow die. The elites start
by making it big, usually through legitimate means, and then
(14:30):
they buy up as many assets as they can. By
now you'll know that the elites will then borrow against
their assets to buy more assets until they own all
the assets. Now I've done a video on this practice,
which I will leave linked to below in the description
for you. Anyways, once they own all the assets, many
of them have nothing better to do than to force
(14:51):
the world to comply with their ideology. The best example
here is Black Rock forcing it's E s G ideology
into every institution in world, despite it being inherently unprofitable,
only possible thanks to money printing. The best part is
though they pay no tax as part of this process.
(15:11):
That's because you only pay tax on something when it's
sold in most countries. Anyhow, borrowing against an asset is
therefore tax free because that money didn't come from the sale.
It came out of thin air at a low interest
rate courtesy of the banks. Meanwhile, the inflation caused by
all this money creation has been destroying the purchasing power
(15:33):
of the average person. The unprecedented money creation we saw
in response to the pandemic put the pedal to the
metal on inflation, and we are continuing to feel the
effects of that now. As messed up as all these
issues are, there's an easy way out of them. That's
to take away the ability of central banks and commercial
banks to create unlimited amounts of money. One way to
(15:56):
do this would be to move to a sound money system,
so just one where currencies are once again backed by gold.
It doesn't necessarily have to be gold either, I reckon.
There are ways to back currencies with other commodities, and
even cryptocurrencies with gold like attributes, such as BTC. In
a sound money system, the only way you can really
(16:17):
create money is to produce something of value that someone
will give you money for. Because the supply of sound
money isn't constantly expanding, that means that the purchasing power
will be preserved over time. And not only that, but
you'll be able to preserve your purchasing power by just saving.
You won't have to invest in high risk assets that
(16:38):
are being manipulated by well capitalized speculators. Now the only
problem is, of course, that the elites that have their
wealth in these assets that they've borrowed against would be
wiped out. That's because borrowing in a sound money system
would be much more expensive. It would no longer be
possible for those with close connections to banks to borrow
money for free at close to zero percent. This includes
(17:03):
governments which have taken on unbelievable amounts of debt to
mostly do things that their citizens do not want and
do not need. Now, the rich could probably find a
way to unwind their debts, the government not so much.
They would almost certainly default, and it will result in
regime change in every country, along with a complete restructuring
(17:24):
of government operations. As an added bonus, unaccountable international organizations
that are sustained by made up money would completely dissolve,
and their explicit plans to create a centralized global government
would dissolve with them. Remember World domination is only possible
through money manufacturing. Now, the only issue a sound money
(17:46):
system could possibly create is something called a deflationary death spiral.
This is when everyone realizes that their purchasing power is
increasing over time, so they reduce their spending to a
bare minimum. This does serious damage to the economy. The
thing is that this is an issue that only ever
(18:07):
existed in theory, and if you ask me, it's one
that's been made up by the elites to scare people
away from pursuing a sound money system. In addition, there
would still be some inflation in a sound money system
since more gold, BTC, et cetera is produced every day.
It seems that the ideal solution would be to have
an algorithmic currency whose supply expands and contracts based on demand.
(18:32):
This would make it possible to preserve purchasing power while
simultaneously allowing for more currency expansion when it's required by
the economy. Unfortunately, the current currency issuers would never allow
such a currency to take hold. This includes the stable
coin issuers in cryptocurrency, and you can learn about how
(18:53):
one of them is slowly taking over the crypto industry
using the link in the description. Last week, US politicians
introduced a bill that would see government officials banned from
holding stocks, cryptocurrencies, and other assets due to all the
(19:13):
insider trading that's been occurring of late. This bill is
quite timely, given that we appear to be on the
brink of a global recession. It's also a bit hypocritical
because the politician who apparently tabled it is infamous for
insider trading allegedly. So today I'm going to give you
a bit of background about this bill, explain what it
(19:36):
says in simple terms, assess where the loopholes are, and
tell you what it could mean for the markets. If
it's past. It should really come as no surprise that
the people in power are taking advantage of inside information
to enrich themselves. This practice probably dates back to the
dawn of time, but it has become more endemic in
(19:56):
recent decades as financial markets have evolved. The issue of
insider trading has been especially acute in the United States.
This is partly because it's home to the world's largest
financial markets, and partly because the decisions made there have
a huge impact on both the domestic and international economies.
(20:18):
The scrutiny of insider trading by US politicians arguably began
back during the two thousand and eight financial crisis. As
you might have guessed, many politicians got word of what
was going on in the markets long before the average American,
and it's believed that many of them cashed out before
the crash. This eventually led to the passing of the
(20:40):
Stop Trading on Congressional Knowledge or Stock Act in as always,
kudos to whoever came up with that acronym. The Stock
Act requires US politicians and other public servants to disclose
any trades or investments over one thousand dollars within thirty
days of the trade or investment. What's hilarious is that
(21:03):
the punishment for failing to report on significant trades or
investments is a mere two hundred dollar fine. It's not
exactly a deterrent, is it. An investigation by The Insider
newspaper found that information about these fines is not public,
so nobody knows how often these fines are being issued
and whether they're being paid. To my knowledge, not a
(21:27):
single US politician has been fined for violating the Stock
Act or arrested for making millions from insider trading in
recent decades. For reference, the maximum prison sentence for insider
trading in the United States is twenty years. That is
what you and I would get for doing the same. Now,
if you're wondering why there have been lots of headlines
(21:49):
about insider trading over the last couple of years, that
is because of the pandemic. Many US politicians sold everything
when they heard about what was coming, some of them
up to two months before the pandemic was officially declared.
This insider trading was so significant that there's even a
Wikipedia page about it. Dozens of US politicians sold before
(22:12):
the news broke, brought back their stocks when they got
word of the Fed's emergency measures, and loaded up on
pharmaceutical stocks when solutions entered the picture. While another investigation
by The Insider newspaper found that seventy two US politicians
have violated the Stock Act over the last few years,
it's not known how many are guilty of actual insider trading.
(22:36):
The poster girl, or rather post a grandmother, has been
Nancy Pelosi, but she is just the tip of the iceberg.
Many US politicians have net worths that are completely out
of proportion with their standard six figure incomes. Although some
of these U s politicians come from long lines of
wealth or own lucrative businesses. For most, there's only one
(23:00):
other explanation, insider trading or bribery, maybe a bit of both. Now,
it's not just US politicians either. If you watched our
video about the Federal Reserve scandal, you'll know that Fed
officials have been caught buying and selling stocks before and
after important monetary policy announcements. You know, I can't recall
(23:22):
there being any punishments there either. Now, in what was
likely an attempt to appease American voters who were understandably upset,
multiple US politicians tabled various bills that would ban public
officials from trading or holding assets of any kind. Naturally,
none of these bills made it past the first stage
(23:43):
of deliberation. The bill I'll be discussing today is not
all that different, as it was only introduced last week.
The only difference is that this bill was reportedly expected
to pass with bipartisan support. That was until the current
ority party decided to postpone voting on the bill until
(24:04):
after the mid term elections. Regardless, though I reckon this
bill is worth examining as it's likely to eventually pass
in some shape or form. As you'll see, it also
pertains to cryptocurrency. So the bill is titled Quote Combating
Financial Conflicts of Interest in Government Act, and I will
(24:24):
leave a link to the full text in the description
if you're interested. Now, the very beginning of the bill
specifies that its purpose is quote to restrict trading and
ownership of covered investments by senior government officials. This includes
not just senior US politicians, but federal judges, the Federal Reserve,
Board of Governors, and of course the President. Next, the
(24:48):
bill goes through a handful of amendments that should be
made to the Ethics in Government Act of This Act
was passed in the aftermath of the Watergate scandal that
engulfed former US President Richard Nixon, and it's where political
disclosures of investments and trades were first proposed. The amendments
in the current bill include stuff like clarifying language around
(25:12):
how trades and investments should be reported, and the definitions
of various assets such as securities and commodities. It is
mostly tedious legal ease, but a few things here caught
my eye. The first is that the bill clearly states
that any US politician who tries to invest in any
asset using a trust by a third party after the
(25:35):
bill is passed must divest, a k A sell the
asset no later than eighteen months after the bill has passed.
This is significant because investing through third parties is probably
how most US politicians currently get away with insider trading.
The beginning of this bill therefore suggests that this loophole
(25:57):
will be closed, but as you'll see, this isn't entirely clear.
The second thing that caught my eye was that the
bill notes cryptocurrency as one of the assets that cannot
be held or traded. Oddly enough, the bill also notes
that US politicians will still be allowed to invest in
popular e t f s like the S and P
five hundred, as well as various forms of government debt.
(26:21):
This ties into the third thing that caught my eye,
and that's the US politicians can still invest in other
assets via blind trusts. For those who don't know, blind
trusts give total control of a person's assets to a
third party who's supposed to be independent. Totally not a loophole.
The fourth thing I spotted is that the family members
(26:44):
of US government officials in question are also not allowed
to hold or trade the assets in question. This is
important because the spouses and children of many US politicians
have likewise gotten rich from insider trading. Speaking which, if
you're wondering who the richest people in crypto are and
how they got there, check out the link in the description. Now,
(27:08):
the bill goes on to detail exactly what US government
officials will have to do with their assets if and
when the bill becomes law. This is where things get
a bit confusing, because the author's note that US government
officials have sixty days to buy or trade forbidden assets
after the bill becomes law. However, the very next sentence
(27:31):
reads that quote, a covered person shall divest of any
covered investment within one d eight days of the effective date.
In other words, you can buy for sixty days after
the bill becomes law, but you have to sell everything
one eighty days after the bill becomes law. Mm hmm.
If that wasn't peculiar enough, US government officials don't necessarily
(27:55):
have to sell their assets after half a year. Instead,
they can give those assets away as a gift or
make a quote charitable donation. Alternatively, they can put everything
into a blind trust, which I'm sure will be very blind. Now,
what's promising is that the bill explicitly states that any
(28:16):
violation of these new laws will be publicly revealed within
thirty days of the violation. Recall that the information about
Stock Act violations and inside trading is not currently public available.
What's not so promising, however, is there is a long
list of exceptions to these rules. Some of these exceptions
(28:37):
makes sense, but others not so much. For example, quote
investments held in trusts or other complex financial arrangements can
be granted temporary exemptions from scrutiny. The authors do note
that these exemptions will be made public within thirty days
of their enactment, just like with violations of the bill's rules.
(28:59):
They also know that these exemptions can only last from
maximum of ninety days. Now, this does make me wonder
what this bill could mean for all the US government
officials who are staking eth. I know it's sounds silly,
but as more institutions start to offer eath steaking, it's
more than likely that a few officials will not be
(29:19):
able to sell their stake deeth. I suppose that's good
news depending on who you ask. If you're wondering when
it would be possible for people to sell their stake teeth.
You can refer to our recent Ethereum update using the
link in the description. I digress. Now regarding the specific
penalties for violating the rules set forth in the bill,
the author's note that a small fine of one thousand
(29:42):
dollars will apply to each violation at the discretion of
the Supervisory Committee. Now, obviously this amounts to a slap
on the wrist for the millions upon millions being made
from insider trading. This is probably why the bill includes
a provision which requires ten percent of the value of
the violating asset to be handed over to the government.
(30:04):
This ten applies to the value of the violating asset
at the beginning of the thirty day violation period, which
means it's probably still possible to come out with a profit.
As a cherry on top, the bill allows for the
Supervisory Committee to waive or reduce these penalties in the
event of quote extraordinary circumstances. For what it's worth, waiving
(30:28):
or reducing the penalty will be made public. The bill
also leaves the door open to civil penalties where appropriate,
which is not that big of a deal since civil
cases tend to result in fines, not jail time. Some
would say that jail time is exactly what many of
these politicians need, but let's not go there now. The
(30:49):
next part of the bill pertains to the quote Accountability
and public disclosure of enforcement measures. This section starts with
a blurb about how any court willfully violating the would
be laws in the bill will find themselves face to
face with the Attorney General. Scary. Now, what's interesting is
that any reports by the Attorney General and the Compliance
(31:12):
Office about violations will be submitted to Congress on an
annual basis. This is interesting because it means that any
violations will likely be disclosed to the public long after
they have occurred, i When they are no longer relevant.
After describing all the contents of public disclosures, the authors
(31:32):
pivot to more amendments to the aforementioned Ethics in Government Act.
These include adjusting the income reporting requirements for US government
officials in a way I honestly don't quite understand. Now.
The amendment that caught my eye was about the quote
disclosure of cryptocurrency and other digital assets. Here, the author's
(31:54):
amend the Ethics in Government Act to include cryptocurrencies as
part of its scope. This is pretty significant as it
further validates cryptocurrency as an asset class. What particularly eye
catching is a paragraph wherein the authors seem to imply
that cryptocurrencies are not securities in the traditional sense. This
(32:16):
is because they specifically reference quote other forms of securities
and cryptocurrency or other digital assets. Sounds like two separate
categories to me. Another interesting set of provisions can be
found a few paragraphs later. These relate to the oft
cited Ethics Committee, which will have the final say on
(32:37):
how the rules in the bill are applied. This is
significant in the context of cryptocurrency, as the Ethics Committee
will decide which digital assets are a boten What's somewhat
concerning is that this Ethics Committee will also have the
power to write new rules and regulations related to trading
and investment by US government officials. This reminds me of
(33:02):
the powers in the Dodd Frank Act, put together by
the current Vice Chair for Supervision at the FED. More
about that guy in the description. Now, the last two
pages of the bill are about quote new and strengthened
penalties for non compliance. What are these new and strengthened penalties,
you ask, Well, it involves increasing that two hundred dollar
(33:24):
slap on the wrist to a five hundred dollar slap
on the wrist. This is again confusing because earlier in
the bill it said that the punishment will increase to
a terrifying one thousand dollars slap on the wrist. Well,
at least the part about taking ten percent of the
trade or investment is still consistent. And last, but not least,
(33:48):
a public website will be created that will contain all
the information about violations of the provisions in the bill.
This includes information about the government officials who were granted
temporary exemptions for the rules and regulations. Funnily enough, you
can already kind of check this information in real time.
There are multiple websites that track the stock trades of politicians,
(34:11):
and even a few Twitter accounts tracking the trades of
repeat offenders. Too bad, these Twitter accounts keep getting banned
for no apparent reason. So this brings me to the
big question, and that's what this bill will mean for
the markets if it becomes law. I'll start by reiterating
that this bill is not guaranteed to pass, even with
(34:32):
bipartisan support. That's simply because government officials have benefited greatly
from their blatant insider trading. Who wants to put the
brakes on their own gravy trainer. As I mentioned in
the introduction, this fact makes the timing of this bill
quite suspicious. I mean, the only reason why politicians would
ban together to support a ban on investing and trading
(34:56):
is because they know there's no more money to be
made in the short to meet um term. It's a
red flag, similar to Elon Musk selling his Twitter stock
near the top, or all the other CEOs and billionaires
bailing on their companies shortly before the market started crashing.
In retrospect, we should have taken their actions as a
sign to do the same lessons for next time, I suppose.
(35:19):
As I mentioned earlier, though, it looks like this bill
won't be voted on anytime soon, and that suggests there
could still be a few more big bear market rallies
before the midterm elections. Some politicians are actually upset about
the vote being postponed, but who knows who's in their pockets.
Call me crazy, but I think this so called stock
(35:40):
trading ban is meant to not so subtly target cryptocurrency.
That's simply because US government officials will still be allowed
to invest in traditional assets like stocks and government debt,
albeit in a more limited manner. Cryptocurrencies, on the other hand,
will be severely restricted, and the wording of the bills
jests that even n f t s will not be allowed.
(36:03):
Then again, it appears that the Ethics Committee will have
the final say on which specific coins and tokens government
officials will be allowed to hold. If you're wondering why
cryptocurrencies are being singled out, it looks like it's because
the people in power know that if politicians hold crypto,
they will be more likely to pass pro crypto regulations.
(36:25):
This is why the US Office of Government Ethics banned
policymakers from holding crypto earlier this year. Now, believe it
or not, but the anti crypto provisions in this bill
could actually backfire if it becomes law. That's because it
could put pressure on the SEC to pass a spot
bitcoin e t f as. Then US government officials would
(36:47):
be allowed to invest, at least according to my admittedly
amateur understanding of the bill. One thing is for sure, though,
and that's that government officials won't be getting away with
insider trading for too much longer. People are starting to
wake up to what's happening, and the increasing tensions between
the halves and have nots means that such politicians will
(37:09):
be voted out. It just goes to show you that
transparency and accountability are key to running a robust society.
These are two things that crypto does really well, and
with a bit of luck, crypto based community government systems
will replace the governments and all their corrupt officials. More
about the power of crypto governance using the link in
(37:32):
the description. Thank you so much for listening to the
coin Bureau podcast. If you'd like to learn more about cryptocurrency,
you can visit our YouTube channel at YouTube dot com
forward slash coin Bureau. You can also go to coin
bureau dot com for loads more information about all things crypto.
You can follow me on Twitter at at coin bureau
or one word, and I'm also active on TikTok and
(37:54):
Instagram took co
Hello everyone, and welcome to the latest episode from the
midweek edition of the coin Bureau podcast. Every week, I
pick out two of my favorite videos from coin Bureau's
YouTube channel to present to you in podcast form. The
audio you're about to hear is from those videos I've
chosen this week. Many of you have been in touch
to ask whether it's possible to listen to our videos
(00:20):
in podcast format, and so your wish is my command.
This week will be taking a look at the devastating
effects that inflation is having, not just on the global economy,
but on the environment as well. Will also be lifting
the lid on a new bill that seeks to ban
insider trading by US government officials. Both provide insights into
(00:41):
the accelerating decline of the FIAT financial system. First up,
inflation is a word that's on everyone's lips at the moment,
as virtually every country in the world is experiencing it
to a greater or lesser degree. But inflation isn't just
pushing prices up and hurting our purchasing power. It's also
fueling war, climate change, inequality, and much more. Besides, it
(01:04):
also ensures that the wealthy and powerful get to hold
on to their wealth and influence at the expense of
everyone else. Put simply, inflation is the enemy of the people,
and if left unchecked, will continue to make us poorer
and our world a more polluted, unfair, and unsafe place
to live. So in the first part of today's video,
(01:25):
we'll see how inflation perpetuates all these evils and look
at what a solution to it could be. Speaking of
the rich and powerful, It's been well known for a
long time that US politicians and other government officials have
been abusing their privileged positions to make money from insider trading.
Attempts have been made before to try and but to
(01:46):
stop to this, but still it goes on well. A
new bill titled Combating Financial Conflicts of Interest in Government
Act was recently proposed, and in the second part of
today's episode, we take a look at what's in it,
what it's hoping to achieve, and why it could end
up being bad for cryptocurrency. I hope you enjoy listening
(02:06):
to these two pieces, and I will be back talking
crypto with Mike very soon, so be sure to stay tuned,
and if you want even more content from coin Bureau,
be sure to subscribe to our YouTube channel and visit
us on social media too. War famine, economic inequality, pollution, corruption,
(02:44):
climate change, unaffordability, low paying jobs, no upward mobility. These
are just a few of the issues that the world
has been grappling with for years. But believe it or not,
all these issues have a shared cause, and that inflation,
more accurately, the ability to create money out of thin
(03:05):
air with the help of a central or commercial bank. Today,
I'm going to reveal where all this inflation is coming from,
explain exactly how this inflation is causing these issues, and
why the solution might require just a single step. Okay,
let's start with where this inflation is coming from. Imagine
(03:27):
you were given the bank account with an unlimited amount
of money. What would you do. Well, You'd probably start
by buying a nice house, going on a fancy holiday,
getting yourself a very silly car, and all the other
things that the average person would do. Once you've had
your fun, you would start doing the same for your
friends and family, buying them houses, cars, holidays, the whole shebang. Next,
(03:49):
you'd probably start donating your money to charities, investing in startups,
building cutting edge tech, and all the other kinds of
stuff rich people do. Now, I think we can all
agree that spending money on all of the above is
an effective allocation of that capital. In other words, it's
the right way that money should be spent, improving the
quality of life for yourself and others, and then trying
(04:12):
to take humanity itself to the next level. Given enough time, however,
you'll inevitably start spending your money on stupid stuff. Maybe
you'll start buying ship coins that you know will probably
go to zero, or marry a reality TV star, or
construct a secret underground layer and try and take over
the world. Why because you can, or rather because you've
(04:36):
run out of ways to allocate that capital effectively. What
I've just described is the financial system in a nutshell.
When a currency is first created, its purpose is to
improve the quality of life of the people using it.
The institution that issues the currency is often instructed to
ensure that it operates in accordance with this purpose when
(04:58):
it is established. Now, this currency issuing institution is a
central bank or a commercial bank. Whereas the central bank
has the power to print currency, commercial banks have the
power to create currency out of thin air through fractional
reserve banking a k a. Lending out more than they
have on their balance sheets. The people with exclusive access
(05:21):
to these money sources basically have their own bank accounts
with unlimited money supplies. This isn't a problem at the start,
because the private sector uses its accounts to invest in
innovation and the public sector uses its accounts to develop infrastructure.
As time goes on, however, the stupidity sets in. The
people in the private sector engage in reckless financial speculation
(05:45):
and enforce their ideologies on society. The people in the
public sector purchase political popularity through public programs and increase
the surveillance and control of their citizens. All these endeavors
require creating lots of currency, and that eventually results in inflation.
It also results in a collapse in the confidence of
(06:07):
the institutions that issue the currency, including the ones in
the private sector that have exclusive access to the institutions
that issue the currency. This is why every fiat currency
that's ever been issued has eventually failed, and it's why
any form of currency created by people is destined to fail.
And yes, it is the cause of all the issues
(06:29):
I mentioned in the introduction. Now, a topical issue to
begin with is war any student of history out there
will know that when countries go to war, their governments
take on unbelievable amounts of debt to finance that war.
This is much more significant than you think. And to
explain our paraphrase macro analyst Mike Green, when a government
(06:52):
must borrow massive amounts of money to do something that
it wants, then it's often, if not always, because it's
something it knows that its citizens do not want or
do not need. It's something that it knows its citizens
would not fund with their taxes. If it was something
the citizens wanted or needed, then the government would have
a much easier job of selling the idea to them.
(07:15):
Raising taxes to pay for things people actually want is
a lot more straightforward than doing so for something they don't.
Not surprisingly, war is very low down on the list
of things that citizens of any country want or have
ever wanted. However, it has always been and will always
be high on the list of things that the powerful
(07:36):
public and private people and institutions have wanted because they
always want more growth. Now, of course, this urge to
grow bigger and better is often a good thing. When
you throw the ability to create money into the mix, However,
it can become a very bad thing because it opens
the door to reckless spending and war. Without the ability
(07:57):
for people to create money to finance these war was,
they would happen a great deal less frequently. Now. Another
hot topic these days is climate change. If you watched
our video about the U N's upcoming individual carbon credit score,
you'll know I briefly noted that inflation is causing this
environmental breakdown. One of the comments asking exactly how was
(08:20):
in fact the inspiration behind this video, So to recap,
inflation ultimately comes from excessive money creation driven by public
and private institutions that are abusing their infinite money bank accounts.
I suppose this really depends on your definition of inflation,
but let's roll with it for the sake of simplicity.
In practical terms, inflation means that a currency is losing
(08:43):
value by the day. This is simply because the gradual
increase in the supply of that currency makes it gradually
less valuable. It's basic economics. The more of something you have,
the less it is worth relative to other things. So
riddle me this. What happens when people can see that
their currency is slowly losing value by the year, by
(09:04):
the month, or even by the day. Well, obviously they're
incentivized to get rid of that currency by buying something.
That's because they know everything else will be more expensive
in the future. Now, the effects of inflation are arguably
felt most by those with massive amounts of money. That's
because a one percent devaluation on one hundred dollars is
(09:25):
just one dollar. A one percent devaluation on one million dollars, however,
is one million dollars. That's an amount of purchasing power
anyone would notice losing. And because the only way to
preserve this purchasing power is to buy something else with
that money, that's exactly what the rich do. They use
their money to buy assets, and then they borrow money
(09:46):
against these assets to buy even more assets, which continue
to appreciate in value due to inflation. As we've learned,
this infinite money glitch inevitably results in the misallocation of capital,
specifically over consumption. Now, over consumption is what lies at
the core of climate change and all other environmental issues
(10:06):
we're experiencing, and the rich are the largest consuming class. Now,
don't get me wrong, the urge to consume can be
a good thing inasmuch as it keeps the economy going.
When you throw an inflation based infinite money glitch into
the mix, however, it quickly becomes a very bad thing
because it leads to the kind of over consumption that
destroys the environment. This ties into another big issue that's
(10:30):
been fueled by money creation, and that's all the issues
with employment. This includes low paying jobs, the inability to
move upwards within those jobs, and jobs where nothing of
value is being produced, or, to use the scientific term,
bullshit jobs. I'll start by saying that the issues in
the job market are not due to inflation alone. There
(10:52):
are a few other factors involved, including demographics, migration, and globalization.
That last factor is probably the primary cause of low wages,
since an increase in the supply of labor drives wages down.
That said, there still seems to be a very strong
correlation between currency creation and depressed wages. This can be
(11:14):
seen in this chart here. Some of you may recognize
this chart from the website wtf Happened in ninety one?
Well one is when Fiat currencies officially stopped being backed
by gold. To be clear, there was already lots of
unbacked feed currency supply in circulation prior to ninety one.
(11:35):
The thing is that it hadn't been officially sanctioned, so
to speak. Going off the gold standard effectively gave the
green light to central banks and commercial banks to create
as much money as they wanted. This allowed a handful
of corporations with close connections to both types of bank
to get their hands on easy money. They use this
(11:55):
easy money to expand their empires into other countries and
lobby poly petitions to pass regulations that would prevent any
competition from catching up. So what happens when a corporation
can borrow almost as much money as it wants? Obviously
that corporation is less incentivized to care about its actual
operations that generate actual income. This includes the employees of
(12:20):
the company. If corporations were not able to borrow almost
as much money as they wanted, then they would be
forced to pay extra close attention to what employees want.
This is because they would need to create favorable conditions
for productivity. But I suppose this incentive falls apart when
globalization comes into play. In any case, the employment issues
(12:41):
caused by inflation are even worse in the public sector.
That's because When a government can borrow as much money
as it wants to finance its operations, it doesn't need
to care much, if at all, about the productivity of
its employees. To make things worse, many governments have policies
to reduce funding for a department if it man just
to do its job within its annual budget. This inadvertently
(13:04):
creates an incentive for these departments to spend more money
so they can keep their budgets or even increase them. Now,
another significant issue being caused by money creation is economic inequality.
Economic inequality in almost every country around the world exploded
to record highs during the pandemic, and that is not
(13:24):
a coincidence. In response to the pandemic, central banks around
the world dropped interest rates on borrowing to zero. By now,
you'll know that the entities with close connections to central
banks and commercial banks were the only ones who were
able to borrow at a near zero percent rate, otherwise
known as free money. These entities use this borrowed money
(13:47):
to buy up all the assets they could get their
hands on. That's why the prices of houses, stocks, and
cryptocurrencies went vertical. As the primary holders of assets, the
rich got richer. And everyone else saw their hopes and
dreams become that bit further out of reach. The worst
part is that this dynamic didn't start with the pandemic.
(14:08):
It started as soon as the current financial system was
created in the aftermath of the Second World War, and
it was significantly accelerated by the dropping off the gold
standard that I talked about earlier. Now there's even a
phrase for this phenomenon, by borrow die. The elites start
by making it big, usually through legitimate means, and then
(14:30):
they buy up as many assets as they can. By
now you'll know that the elites will then borrow against
their assets to buy more assets until they own all
the assets. Now I've done a video on this practice,
which I will leave linked to below in the description
for you. Anyways, once they own all the assets, many
of them have nothing better to do than to force
(14:51):
the world to comply with their ideology. The best example
here is Black Rock forcing it's E s G ideology
into every institution in world, despite it being inherently unprofitable,
only possible thanks to money printing. The best part is
though they pay no tax as part of this process.
(15:11):
That's because you only pay tax on something when it's
sold in most countries. Anyhow, borrowing against an asset is
therefore tax free because that money didn't come from the sale.
It came out of thin air at a low interest
rate courtesy of the banks. Meanwhile, the inflation caused by
all this money creation has been destroying the purchasing power
(15:33):
of the average person. The unprecedented money creation we saw
in response to the pandemic put the pedal to the
metal on inflation, and we are continuing to feel the
effects of that now. As messed up as all these
issues are, there's an easy way out of them. That's
to take away the ability of central banks and commercial
banks to create unlimited amounts of money. One way to
(15:56):
do this would be to move to a sound money system,
so just one where currencies are once again backed by gold.
It doesn't necessarily have to be gold either, I reckon.
There are ways to back currencies with other commodities, and
even cryptocurrencies with gold like attributes, such as BTC. In
a sound money system, the only way you can really
(16:17):
create money is to produce something of value that someone
will give you money for. Because the supply of sound
money isn't constantly expanding, that means that the purchasing power
will be preserved over time. And not only that, but
you'll be able to preserve your purchasing power by just saving.
You won't have to invest in high risk assets that
(16:38):
are being manipulated by well capitalized speculators. Now the only
problem is, of course, that the elites that have their
wealth in these assets that they've borrowed against would be
wiped out. That's because borrowing in a sound money system
would be much more expensive. It would no longer be
possible for those with close connections to banks to borrow
money for free at close to zero percent. This includes
(17:03):
governments which have taken on unbelievable amounts of debt to
mostly do things that their citizens do not want and
do not need. Now, the rich could probably find a
way to unwind their debts, the government not so much.
They would almost certainly default, and it will result in
regime change in every country, along with a complete restructuring
(17:24):
of government operations. As an added bonus, unaccountable international organizations
that are sustained by made up money would completely dissolve,
and their explicit plans to create a centralized global government
would dissolve with them. Remember World domination is only possible
through money manufacturing. Now, the only issue a sound money
(17:46):
system could possibly create is something called a deflationary death spiral.
This is when everyone realizes that their purchasing power is
increasing over time, so they reduce their spending to a
bare minimum. This does serious damage to the economy. The
thing is that this is an issue that only ever
(18:07):
existed in theory, and if you ask me, it's one
that's been made up by the elites to scare people
away from pursuing a sound money system. In addition, there
would still be some inflation in a sound money system
since more gold, BTC, et cetera is produced every day.
It seems that the ideal solution would be to have
an algorithmic currency whose supply expands and contracts based on demand.
(18:32):
This would make it possible to preserve purchasing power while
simultaneously allowing for more currency expansion when it's required by
the economy. Unfortunately, the current currency issuers would never allow
such a currency to take hold. This includes the stable
coin issuers in cryptocurrency, and you can learn about how
(18:53):
one of them is slowly taking over the crypto industry
using the link in the description. Last week, US politicians
introduced a bill that would see government officials banned from
holding stocks, cryptocurrencies, and other assets due to all the
(19:13):
insider trading that's been occurring of late. This bill is
quite timely, given that we appear to be on the
brink of a global recession. It's also a bit hypocritical
because the politician who apparently tabled it is infamous for
insider trading allegedly. So today I'm going to give you
a bit of background about this bill, explain what it
(19:36):
says in simple terms, assess where the loopholes are, and
tell you what it could mean for the markets. If
it's past. It should really come as no surprise that
the people in power are taking advantage of inside information
to enrich themselves. This practice probably dates back to the
dawn of time, but it has become more endemic in
(19:56):
recent decades as financial markets have evolved. The issue of
insider trading has been especially acute in the United States.
This is partly because it's home to the world's largest
financial markets, and partly because the decisions made there have
a huge impact on both the domestic and international economies.
(20:18):
The scrutiny of insider trading by US politicians arguably began
back during the two thousand and eight financial crisis. As
you might have guessed, many politicians got word of what
was going on in the markets long before the average American,
and it's believed that many of them cashed out before
the crash. This eventually led to the passing of the
(20:40):
Stop Trading on Congressional Knowledge or Stock Act in as always,
kudos to whoever came up with that acronym. The Stock
Act requires US politicians and other public servants to disclose
any trades or investments over one thousand dollars within thirty
days of the trade or investment. What's hilarious is that
(21:03):
the punishment for failing to report on significant trades or
investments is a mere two hundred dollar fine. It's not
exactly a deterrent, is it. An investigation by The Insider
newspaper found that information about these fines is not public,
so nobody knows how often these fines are being issued
and whether they're being paid. To my knowledge, not a
(21:27):
single US politician has been fined for violating the Stock
Act or arrested for making millions from insider trading in
recent decades. For reference, the maximum prison sentence for insider
trading in the United States is twenty years. That is
what you and I would get for doing the same. Now,
if you're wondering why there have been lots of headlines
(21:49):
about insider trading over the last couple of years, that
is because of the pandemic. Many US politicians sold everything
when they heard about what was coming, some of them
up to two months before the pandemic was officially declared.
This insider trading was so significant that there's even a
Wikipedia page about it. Dozens of US politicians sold before
(22:12):
the news broke, brought back their stocks when they got
word of the Fed's emergency measures, and loaded up on
pharmaceutical stocks when solutions entered the picture. While another investigation
by The Insider newspaper found that seventy two US politicians
have violated the Stock Act over the last few years,
it's not known how many are guilty of actual insider trading.
(22:36):
The poster girl, or rather post a grandmother, has been
Nancy Pelosi, but she is just the tip of the iceberg.
Many US politicians have net worths that are completely out
of proportion with their standard six figure incomes. Although some
of these U s politicians come from long lines of
wealth or own lucrative businesses. For most, there's only one
(23:00):
other explanation, insider trading or bribery, maybe a bit of both. Now,
it's not just US politicians either. If you watched our
video about the Federal Reserve scandal, you'll know that Fed
officials have been caught buying and selling stocks before and
after important monetary policy announcements. You know, I can't recall
(23:22):
there being any punishments there either. Now, in what was
likely an attempt to appease American voters who were understandably upset,
multiple US politicians tabled various bills that would ban public
officials from trading or holding assets of any kind. Naturally,
none of these bills made it past the first stage
(23:43):
of deliberation. The bill I'll be discussing today is not
all that different, as it was only introduced last week.
The only difference is that this bill was reportedly expected
to pass with bipartisan support. That was until the current
ority party decided to postpone voting on the bill until
(24:04):
after the mid term elections. Regardless, though I reckon this
bill is worth examining as it's likely to eventually pass
in some shape or form. As you'll see, it also
pertains to cryptocurrency. So the bill is titled Quote Combating
Financial Conflicts of Interest in Government Act, and I will
(24:24):
leave a link to the full text in the description
if you're interested. Now, the very beginning of the bill
specifies that its purpose is quote to restrict trading and
ownership of covered investments by senior government officials. This includes
not just senior US politicians, but federal judges, the Federal Reserve,
Board of Governors, and of course the President. Next, the
(24:48):
bill goes through a handful of amendments that should be
made to the Ethics in Government Act of This Act
was passed in the aftermath of the Watergate scandal that
engulfed former US President Richard Nixon, and it's where political
disclosures of investments and trades were first proposed. The amendments
in the current bill include stuff like clarifying language around
(25:12):
how trades and investments should be reported, and the definitions
of various assets such as securities and commodities. It is
mostly tedious legal ease, but a few things here caught
my eye. The first is that the bill clearly states
that any US politician who tries to invest in any
asset using a trust by a third party after the
(25:35):
bill is passed must divest, a k A sell the
asset no later than eighteen months after the bill has passed.
This is significant because investing through third parties is probably
how most US politicians currently get away with insider trading.
The beginning of this bill therefore suggests that this loophole
(25:57):
will be closed, but as you'll see, this isn't entirely clear.
The second thing that caught my eye was that the
bill notes cryptocurrency as one of the assets that cannot
be held or traded. Oddly enough, the bill also notes
that US politicians will still be allowed to invest in
popular e t f s like the S and P
five hundred, as well as various forms of government debt.
(26:21):
This ties into the third thing that caught my eye,
and that's the US politicians can still invest in other
assets via blind trusts. For those who don't know, blind
trusts give total control of a person's assets to a
third party who's supposed to be independent. Totally not a loophole.
The fourth thing I spotted is that the family members
(26:44):
of US government officials in question are also not allowed
to hold or trade the assets in question. This is
important because the spouses and children of many US politicians
have likewise gotten rich from insider trading. Speaking which, if
you're wondering who the richest people in crypto are and
how they got there, check out the link in the description. Now,
(27:08):
the bill goes on to detail exactly what US government
officials will have to do with their assets if and
when the bill becomes law. This is where things get
a bit confusing, because the author's note that US government
officials have sixty days to buy or trade forbidden assets
after the bill becomes law. However, the very next sentence
(27:31):
reads that quote, a covered person shall divest of any
covered investment within one d eight days of the effective date.
In other words, you can buy for sixty days after
the bill becomes law, but you have to sell everything
one eighty days after the bill becomes law. Mm hmm.
If that wasn't peculiar enough, US government officials don't necessarily
(27:55):
have to sell their assets after half a year. Instead,
they can give those assets away as a gift or
make a quote charitable donation. Alternatively, they can put everything
into a blind trust, which I'm sure will be very blind. Now,
what's promising is that the bill explicitly states that any
(28:16):
violation of these new laws will be publicly revealed within
thirty days of the violation. Recall that the information about
Stock Act violations and inside trading is not currently public available.
What's not so promising, however, is there is a long
list of exceptions to these rules. Some of these exceptions
(28:37):
makes sense, but others not so much. For example, quote
investments held in trusts or other complex financial arrangements can
be granted temporary exemptions from scrutiny. The authors do note
that these exemptions will be made public within thirty days
of their enactment, just like with violations of the bill's rules.
(28:59):
They also know that these exemptions can only last from
maximum of ninety days. Now, this does make me wonder
what this bill could mean for all the US government
officials who are staking eth. I know it's sounds silly,
but as more institutions start to offer eath steaking, it's
more than likely that a few officials will not be
(29:19):
able to sell their stake deeth. I suppose that's good
news depending on who you ask. If you're wondering when
it would be possible for people to sell their stake teeth.
You can refer to our recent Ethereum update using the
link in the description. I digress. Now regarding the specific
penalties for violating the rules set forth in the bill,
the author's note that a small fine of one thousand
(29:42):
dollars will apply to each violation at the discretion of
the Supervisory Committee. Now, obviously this amounts to a slap
on the wrist for the millions upon millions being made
from insider trading. This is probably why the bill includes
a provision which requires ten percent of the value of
the violating asset to be handed over to the government.
(30:04):
This ten applies to the value of the violating asset
at the beginning of the thirty day violation period, which
means it's probably still possible to come out with a profit.
As a cherry on top, the bill allows for the
Supervisory Committee to waive or reduce these penalties in the
event of quote extraordinary circumstances. For what it's worth, waiving
(30:28):
or reducing the penalty will be made public. The bill
also leaves the door open to civil penalties where appropriate,
which is not that big of a deal since civil
cases tend to result in fines, not jail time. Some
would say that jail time is exactly what many of
these politicians need, but let's not go there now. The
(30:49):
next part of the bill pertains to the quote Accountability
and public disclosure of enforcement measures. This section starts with
a blurb about how any court willfully violating the would
be laws in the bill will find themselves face to
face with the Attorney General. Scary. Now, what's interesting is
that any reports by the Attorney General and the Compliance
(31:12):
Office about violations will be submitted to Congress on an
annual basis. This is interesting because it means that any
violations will likely be disclosed to the public long after
they have occurred, i When they are no longer relevant.
After describing all the contents of public disclosures, the authors
(31:32):
pivot to more amendments to the aforementioned Ethics in Government Act.
These include adjusting the income reporting requirements for US government
officials in a way I honestly don't quite understand. Now.
The amendment that caught my eye was about the quote
disclosure of cryptocurrency and other digital assets. Here, the author's
(31:54):
amend the Ethics in Government Act to include cryptocurrencies as
part of its scope. This is pretty significant as it
further validates cryptocurrency as an asset class. What particularly eye
catching is a paragraph wherein the authors seem to imply
that cryptocurrencies are not securities in the traditional sense. This
(32:16):
is because they specifically reference quote other forms of securities
and cryptocurrency or other digital assets. Sounds like two separate
categories to me. Another interesting set of provisions can be
found a few paragraphs later. These relate to the oft
cited Ethics Committee, which will have the final say on
(32:37):
how the rules in the bill are applied. This is
significant in the context of cryptocurrency, as the Ethics Committee
will decide which digital assets are a boten What's somewhat
concerning is that this Ethics Committee will also have the
power to write new rules and regulations related to trading
and investment by US government officials. This reminds me of
(33:02):
the powers in the Dodd Frank Act, put together by
the current Vice Chair for Supervision at the FED. More
about that guy in the description. Now, the last two
pages of the bill are about quote new and strengthened
penalties for non compliance. What are these new and strengthened penalties,
you ask, Well, it involves increasing that two hundred dollar
(33:24):
slap on the wrist to a five hundred dollar slap
on the wrist. This is again confusing because earlier in
the bill it said that the punishment will increase to
a terrifying one thousand dollars slap on the wrist. Well,
at least the part about taking ten percent of the
trade or investment is still consistent. And last, but not least,
(33:48):
a public website will be created that will contain all
the information about violations of the provisions in the bill.
This includes information about the government officials who were granted
temporary exemptions for the rules and regulations. Funnily enough, you
can already kind of check this information in real time.
There are multiple websites that track the stock trades of politicians,
(34:11):
and even a few Twitter accounts tracking the trades of
repeat offenders. Too bad, these Twitter accounts keep getting banned
for no apparent reason. So this brings me to the
big question, and that's what this bill will mean for
the markets if it becomes law. I'll start by reiterating
that this bill is not guaranteed to pass, even with
(34:32):
bipartisan support. That's simply because government officials have benefited greatly
from their blatant insider trading. Who wants to put the
brakes on their own gravy trainer. As I mentioned in
the introduction, this fact makes the timing of this bill
quite suspicious. I mean, the only reason why politicians would
ban together to support a ban on investing and trading
(34:56):
is because they know there's no more money to be
made in the short to meet um term. It's a
red flag, similar to Elon Musk selling his Twitter stock
near the top, or all the other CEOs and billionaires
bailing on their companies shortly before the market started crashing.
In retrospect, we should have taken their actions as a
sign to do the same lessons for next time, I suppose.
(35:19):
As I mentioned earlier, though, it looks like this bill
won't be voted on anytime soon, and that suggests there
could still be a few more big bear market rallies
before the midterm elections. Some politicians are actually upset about
the vote being postponed, but who knows who's in their pockets.
Call me crazy, but I think this so called stock
(35:40):
trading ban is meant to not so subtly target cryptocurrency.
That's simply because US government officials will still be allowed
to invest in traditional assets like stocks and government debt,
albeit in a more limited manner. Cryptocurrencies, on the other hand,
will be severely restricted, and the wording of the bills
jests that even n f t s will not be allowed.
(36:03):
Then again, it appears that the Ethics Committee will have
the final say on which specific coins and tokens government
officials will be allowed to hold. If you're wondering why
cryptocurrencies are being singled out, it looks like it's because
the people in power know that if politicians hold crypto,
they will be more likely to pass pro crypto regulations.
(36:25):
This is why the US Office of Government Ethics banned
policymakers from holding crypto earlier this year. Now, believe it
or not, but the anti crypto provisions in this bill
could actually backfire if it becomes law. That's because it
could put pressure on the SEC to pass a spot
bitcoin e t f as. Then US government officials would
(36:47):
be allowed to invest, at least according to my admittedly
amateur understanding of the bill. One thing is for sure, though,
and that's that government officials won't be getting away with
insider trading for too much longer. People are starting to
wake up to what's happening, and the increasing tensions between
the halves and have nots means that such politicians will
(37:09):
be voted out. It just goes to show you that
transparency and accountability are key to running a robust society.
These are two things that crypto does really well, and
with a bit of luck, crypto based community government systems
will replace the governments and all their corrupt officials. More
about the power of crypto governance using the link in
(37:32):
the description. Thank you so much for listening to the
coin Bureau podcast. If you'd like to learn more about cryptocurrency,
you can visit our YouTube channel at YouTube dot com
forward slash coin Bureau. You can also go to coin
bureau dot com for loads more information about all things crypto.
You can follow me on Twitter at at coin bureau
or one word, and I'm also active on TikTok and
(37:54):
Instagram took co
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!