Finance Optimum

Central Bank Digital Currency (CBDC).

This is significant. Very significant. Like the video. Comment 665 or 667. Avoid everything else in between...
What I have here is the future.
A Report by the Federal Reserve Bank of Philadelphia, released just four months ago.
The topic? Central Bank Digital Currency.
The implications for society? Colossal.
The Abstract of the paper outlines what we are going to discuss in this video.
"The introduction of a central bank digital currency (CBDC) allows the central bank to engage in large-scale intermediation by competing with private financial intermediaries for deposits."
What does this mean in practical terms?
Well, what is a Central Bank Digital Currency?
Well, it is essentially a current account at the Central Bank.
When they say "competing with private financial intermediaries for deposits", it means the Central Banks are going to streamroll the Commercial Banks.
"...the central bank arises as a deposit monopolist, attracting all deposits away from the commercial banking sector."
This is again emphasised in the introduction of the paper:
"Besides its potential role in eliminating physical cash, a CBDC will allow the central bank to engage in large-scale intermediation by competing with private financial intermediaries for deposits (and, likely engaging in some form of lending of those deposits).
In other words, a CBDC amounts to giving consumers the possibility of holding a bank account with the central bank directly."
As we discussed in the previous video, academic economists are being used as a propaganda tool to push the narrative of the Central Banks and their wider Agenda.
When people hear the word "banker", they often think about the excesses of Wall Street and firms like Goldman Sachs, they don't split it up into Investment Banking, Commercial Banking and Central Banking.
They think about the movies they watched and how it was the investment bankers who caused the Great Recession in 2008.
Complex jargon like Mortgage Backed Securities and Collateralised Debt Obligations.
Although there were some Investment Bankers worthy of jail time in that particular crisis, in reality it was the Fed, the Central Bankers, who facilitated the 2008 recession.
It is the Central Bankers who are creating these boom/bust cycles, and they are already more powerful than ever before.
So how will this play out?
Well, as I mentioned in the video in March - From Chaos, Comes Order - a video I unfortunately believe will age very well, CBDCs will result in more control, and will facilitate negative interest rates and easier tax collection.
Richard Werner agrees.
But, we are missing a key piece...
Incentive drives human behaviour.
If you are trying to promote a change of this magnitude, you need an incentive.
But you also need a catalyst - you need people to be desperate and psychologically worn down.
I'm not sure what that catalyst could be, of course.
But what is the incentive?
Well, probably some form of Universal Basic Income - but this short term carrot comes with a long term stick.
We are witnessing the erosion of free speech, and now financial privacy will be tied into that structure...

SOURCES:
Richard Werner: Today’s Source of Money Creation
https://www.youtube.com/watch?v=IzE038REw2k
Richard Werner - ECB wants to become the only bank in town
https://www.youtube.com/watch?v=OdYmdKUiQNw

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There are three main theories of banking.
But what are they?
And, more importantly, which one is correct?
1 - FINANCIAL INTERMEDIATION THEORY
First of all, we have the Financial Intermediation Theory.
This is currently the dominant theory of banking, and states that banks are just financial intermediaries (i.e. they gather deposits and lend these out).
OK, pretty basic, makes sense.
It can, and does, however have significant implications.
For example, the Financial Intermediation Theory has had a significant influence on economic policy in the post-war era, specifically the attitude that developing countries could be helped by international banks who could provide missing domestic savings through their lending in order to fund economic growth.
This has resulted in a massive increase in foreign borrowing and indebtedness by developing countries since the second world war. As planned of course.
2 - FRACTIONAL RESERVE THEORY
Next up we have the Fractional Reserve Theory.
This was the dominant theory from around the 1920s to the 1960s.
It also argues that banks are financial intermediaries, but collectively the banking system creates money via the process of 'multiple deposit expansion'.
OK, what does this mean?
Well, it is based on the following idea:
With a reserve of, say 10%, every bank would lend 90% of any deposit, which would increase deposits with other banks, resulting in a multiple creation of deposits in the banking system.
So the Fractional Reserve Theory states that banks create money collectively, but not individually.
According to the American economist Joseph Stiglitz,
"Deposits increase by a factor of 1/reserve requirement."
OK, well at least we know that theory is wrong...
3 - CREDIT CREATION THEORY
Finally, we get to Credit Creation Theory.
This was dominant until around the 1920s, and it is at odds with the other two theories by representing banks not as financial intermediaries - neither in aggregate nor individually.
Instead, each bank is said to create credit and therefore create money out of nothing whenever it loans money or purchases assets.
This means that banks do not need to first gather deposits or reserves to lend money.
According to the Scottish Economist Henry Dunning Macleod:
"Bankers, no doubt, do collect sums from a vast number of persons, but the peculiar essence of their business is, not to lend that money to other persons, but on the basis of this bullion to create a vast superstructure of Credit; to multiply their promises to pay many times: these Credits being payable on demand and performing all the functions of an equal amount of cash.
...the business of banking is not to lend money, but to create Credit"
So the Credit Creation theory differs from the Fractional Reserve Theory, as one bank is able to create deposits.
Now you would expect many empirical tests of these theories, to see which one is correct? Right?
Well, no.
From the mid-19th century until 2014, there were no scientific empirical tests on this issue.
The first empirical test was published in 2014 by Richard Werner.
Only the credit creation theory was consistent with the observed accounting records.
Surprisingly, the Credit Creation Theory does not feature in most contemporary economics, finance or banking textbooks.
Think about this:
Since roughly the 1920s, there has been a movement from the accurate credit creation theory to the misleading, inconsistent and incorrect fractional reserve theory to today's dominant, yet completely implausible and blatantly wrong financial intermediation theory.
And this is why Economics is NOT a science.
Fields such as Physics and mathematics have high standards for rational truth for obvious reasons, a mathematical proof is a mathematical proof, a theory that matches with experiment repeatedly is a theory that matches with experiment repeatedly.
i.e. these fields strip away human emotion and present cold, rational truth.
The Field of Economics on the other hand has been corrupted, providing the propaganda for the Banking Cartel.
The interesting thing...is that the Banking Cartel, and when I say banks I am referring commercial banks here, are under attack from another Cartel.
A Cartel set to become more powerful than ever before...
The Central Banking Cartel...
https://www.youtube.com/watch?v=C4sOWJDDZsI

SOURCES:

Can banks individually create money out of nothing? — The theories and the empirical evidence
https://www.sciencedirect.com/science/article/pii/S1057521914001070

A lost century in economics: Three theories of banking and the conclusive evidence
https://www.sciencedirect.com/science/article/pii/S1057521915001477

Audience Questions for Richard Werner, Larry Kotlikoff, William White and William Dunkelberg
https://www.youtube.com/watch?v=_RWXrQqENvg

CREDIT:
Werner, R.A., A lost century in economics: Three theories of banking and the conclusive evidence, International Review of Financial Analysi

Warren Buffett has previously described Bitcoin as "rat poison squared".
What is the Truth about Bitcoin?
PART 1/4 - NSA Connection:
First off, the SHA-256 algorithm, which stands for Secure Hash Algorithm 256, is a member of the SHA-2 cryptographic hash functions designed by the NSA and first published in 2001.
The Bitcoin Network utilises the SHA-256 algorithm for mining and the creation of new addresses.
Who is 'Satoshi Nakamoto?'; what does Satoshi Nakamoto mean?
Out of respect for their anonymity, it would be rude to speculate in a video about who Satoshi Nakamoto is likely to be. The reality is, it's not important.
As for the name Satoshi Nakamoto, I would speculate that it is a homage to Tatsuaki Okamoto and Satoshi Obana - two cryptographers from Japan. There is another reason for the name, but that..is confidential.
In 1996, the NSA's Cryptology Division of their Office of Information Security Research and Technology published a paper titled: "How to make a mint: The cryptography of anonymous electronic cash", first publishing it in an MIT mailing list and later, in 1997, in the American University Law Review. One of the researchers they referenced was Tatsuaki Okamoto...

PART 2/4 - 'Crypto Market':
Most of the crypto market is a scam.
By the way, this was predicted very early on in the Bitcoin Talk forums...
Now, on the one hand, lack of regulation is more meritocratic (as you don't have to be an accredited investor just to get access).
On the other hand, it means that crypto is a Wild West environment, with many cowboys in the Desert. Be careful.
In addition to this, leverage trading exchanges, which are no different to casinos, prey on naive retail traders who:
A) Think they can outsmart professional traders with actual risk management skills and
B) Think they can outsmart the exchanges themselves who have an informational advantage as well as an incentive to chase stop losses and liquidate positions...

PART 3/4 - CBDCs:
As we have previously discussed, Bitcoin provides a natural transition to Central Bank Digital Currencies (CBDCs) and what I would describe as Finance 2.0, but what are the benefits of CBDCs for the state?
More control, easier tax collection, more flexibility in monetary policy (i.e. negative interest rates) and generally a more efficient monetary system (i.e. cash infrastructure).
This leads us to the kicker: which is the war on cash. The cashless society was a fantasy just a few years ago, however now it doesn't seem so far fetched. No comment...

PART 4/4 - Bitcoin:
What about Bitcoin? Well, Bitcoin has incredibly strong network effects; it is the most powerful computer network in the World.
In my opinion, what makes Bitcoin unique is the fact that it has a finite total supply (21 million) and a predictable supply schedule via the halving events every 4 years, which cut in half the rate at which new Bitcoin is released into circulation.
Clearly, with these properties, it seems likely that Bitcoin could act as a meaningful hedge against inflation.
Overall, a speculative thesis would be the following:
Satoshi Nakamoto is one of the most important entities of the 21st Century, and will accelerate the next transition of the human race.
Trusted third parties are security holes.
Bitcoin is the catalyst for Finance 2.0, whereby value transfer is conducted in a more meritocratic and decentralised fashion.
In 1964, Russian astrophysicist Nikolai Kardashev designed the Kardashev Scale.
At the time, he was looking for signs of extraterrestrial life within cosmic signals.
The Scale has three categories, which are based on the amount of usable energy a civilisation has at its disposal, and the degree of space colonisation.
As a technology that, through its decentralisation, links entities globally and makes value transfer between humans more efficient, Bitcoin could prove a key piece of our progression as a civilisation.

What are your thoughts?
Is it true...or false?

SOURCES:
Chamath Palihapitiya, Founder and CEO Social Capital, on Money as an Instrument of Change:
https://www.youtube.com/watch?v=PMotykw0SIk

Luke Nosek speaks to Nevin Freeman about Reserve and the original vision of PayPal - Davos 2019:
https://www.youtube.com/watch?v=hOeOzhOxeMU

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The roaring '20s was a period of economic growth, jazz and carefree living for many.
A decade of change, when many Americans owned cars, radios, and telephones for the first time.
Prosperity was on the rise in cities and towns, and social change flavoured the air.
The attitude was, as is currently the case, Stocks only go up.
Of course, all good things come to an end...

What happened in the Great Depression?
The Fed is supposed to keep inflation and monetary policy stable.
However, in the 1920s, they created huge quantities of money and cheap credit, which drove rapid expansion and a bubble.
This bubble popped in October 1929, and the Fed then adopted tight monetary policy throughout the 1930s, creating a crash.

What really happened in the Great Depression?
Some go as far to say that the Great Depression was a Government confiscation of wealth. Here's why...
In 1900, the Gold Standard Act was passed.
This Act fixed the price of gold at $20.67/oz., where it remained until the Great Depression.
In 1933, a month after taking office, FDR signed Executive Order 6102, dubbed the Great Gold Confiscation.
FDR's Executive Order forced all Americans to turn in all their gold coins, bullion and certificates to the Federal Reserve, redeeming them at $20.67/oz in exchange for paper currency.
Historians have speculated that the real reason for the gold confiscation was a bailout of the Federal Reserve Bank.
Even FDR commented during one of his early "Fireside Chats" that gold obligations far exceeded the gold held by the US Treasury and Federal Reserve.
“Behind government currency we have, in addition to the promise to pay, a reserve of gold and a small reserve of silver, neither of them anything like the total amount of the currency.” – FDR, 07 May 1933.
After the public had turned in the majority of the gold, FDR artificially increased the price of gold to $35/oz., which, amazingly, instantly bolstered the Federal Reserve holdings.
Starting in 1934, the Federal Reserve even updated the clause printed on currency bills "redeemable for gold" with "redeemable in lawful money."
This innocuous act foreshadowed the abandonment of the direct exchange of the dollar to gold.
It's also worth noting that it was the Fed's tight monetary policy which converted a recession into a Great Depression.

Others say that it is just the boom/bust cycle:
A boom to make the sheeple produce, create, establish - then a bust to steal it from them at pennies on the dollar.
Rinse...and Repeat.
An intentional failure in order to create a crisis and pass laws to empower the government, which funnels wealth and property into the hands of the elite.
I personally think this is a ridiculous line of reasoning, to say that the Fed intentionally caused the Great Depression. I mean come on, as if an independent agency set up by a cabal of private bankers on a private island when most of the Congress was away for Christmas would collude in this way...
Of course they aren't that power hungry!

It's often worthwhile to look at the official story to at least rule out one possibility as to what actually happened.
“we’ll know our disinformation program is complete when everything the American public believes is false.”-Bill Casey CIA Director

THOSE WHO DO NOT KNOW HISTORY, ARE DOOMED TO REPEAT IT...

SOURCES:

1929 The Great Depression Part 1
https://www.youtube.com/watch?v=bCEJ65H_1XE

Milton Friedman - The Great Depression Myth
https://www.youtube.com/watch?v=dgyQsIGLt_w

Fireside Chat 02 - On Progress During the First Two Months (May 7, 1933)
https://www.youtube.com/watch?v=mNxMD2kaF2A

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During this video, we will be discussing banks.
Specifically, commercial banks.
Commercial banks are what we think about when somebody says "bank"
A commercial bank is a deposit-taking institution that can lend out money.
People go to the bank for a car loan, a mortgage, but wait:
Where does the money come from?
Well, out of thin air.
The bank literally types digits into the computer.
Contrary to blue-pilled belief, the bank does not use other people's deposited money to loan you money.
It creates money out of thin air - credit creation.
97% of the money supply is created by banks.
Only 3% of the money supply is physical cash, and that number is certain to decrease as cash is dangerous now remember...
Therefore, banks are the control centre of the entire economy, since they create money and decide who gets money for what purpose.
Do the banks create money for productive purposes, boosting GDP and job creation, reducing inequality?
Nope, for the last few decades, banks have created money for unproductive purposes, for asset transactions that play no role in GDP (i.e. real estate, stocks, lending to private equity funds and hedge funds).
Therefore, asset bubbles form.
It is inevitable, as long as banks create new money for asset transactions, people will continue to chase the lucrative capital gains on offer in these asset classes.
This has a crucial impact on many people's lives.
Think about this: Private Equity giant Blackstone buys up real estate, financed by this credit creation at the banks.
Blackstone has a real estate portfolio of $325 billion, including over 300,000 residential units worldwide.
Many people struggling with their rent would be angered to find that Blackstone has financed these mammoth deals via credit creation at the banks.
Credit creation which could be used for productive purposes, but instead is used to move Schwarzman yet further up the Forbes List.
A List which ranks and celebrates humans based on net worth, regardless of their contribution to the technological advancement of the human race, and omits those with true power and obscene wealth.
So if banks are creating credit for asset transactions, then you will have asset bubbles, banking crises and soaring wealth inequality.
The Banks have NO obligation from regulators to create credit for productive purposes.
Create credit for business development, technological innovation, etc?
Nah, let's lend to Blackstone so they can increase their carry.
This is why there is some valid criticism for the Baby Boomer generation - they have traded the technological progression of the human race for an increase in their already significant carry.
If and when banks slow down credit creation for asset transactions, some speculators (i.e. those who've borrowed money to invest in financial instruments) go bankrupt.
Then, banks suddenly have nonperforming loans, so they become more risk averse, reduce lending as asset prices fall.
This leads to more bankruptcies, and this vicious cycle then leads to a BANKING CRISIS.

SOURCES:

PROF. RICHARD WERNER on Banks Money Creation
https://www.youtube.com/watch?v=10AIaRNGIZs

Richard Werner: Today’s Source of Money Creation
https://www.youtube.com/watch?v=IzE038REw2k

Watch CNBC's full interview with venture capitalist Chamath Palihapitiya
https://www.youtube.com/watch?v=w3G47PjwaT4

Yann Tiersen - La Valse d'Amélie (performed by Ray Xavier)
https://www.youtube.com/watch?v=hvi6jahmDKk

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Let's start with Robinhood.
Robinhood made around $100 million from selling its customer order flow in the first quarter of this year.
This means that Robinhood is selling retail order flow to hedge funds, who can then use high frequency trading algorithms to front run the trades.
Citadel, a hedge fund which manages a cool $32 billion, paid Robinhood almost $50 million in Q1 2020 just for its order flow.
Billionaire investor Chamath Palihapitiya described the practice as "shady AF".
This is why Ken Griffin can buy $238 million condos. Citadel know who is leveraged, they know where all the stops are and they trade against everybody. And of course the SEC is bought and paid for.
After making good money owning stocks in the roaring bull market of the 1920s, Joseph Kennedy Sr. found himself needing to get his shoes polished.
While sitting in the chair, Kennedy Sr. was shocked to have the shoeshine boy gift him with several tips on which stocks he should own.
Kennedy Sr. quickly went back to his office and started unloading his stock portfolio.
In fact, he didn't just get out of the market - he aggressively shorted it - and got filthy rich during the epic crash that followed.
Fast forward to today, and we have the Buy High Sell Low Kings, CNBC's Fast Money, talking about the Rise of the Day Trader.
We have a record number of Wall Street professionals saying the S&P is overvalued.
We have Jerome trying his best to keep the market propped up.
We have Hertz pumping nearly 1000% after filing for bankruptcy.
We are clearly at the death throes of the market cycle.
Let me tell you the fascinating story of Ke Xu, a Chinese quant.
Xu studied maths at Cambridge, by the way one of the most competitive courses in the world, and graduated third in a class of 250.
He then worked at Goldman, got bored and in 2012 joined the relatively secretive quant hedge fund G-Research.
He spent his days writing code in G-Research's "secure zone", which could be entered only through a special pod with a biometric finger scanner and a weight sensor designed to detect unauthorised equipment entering or leaving the area.
Xu's first bonus at G Research, awarded only a few months after joining, shattered any illusions that he had joined the hedge fund elite.
So Xu stepped his game up - he came up with 20 trading strategies - "signals" in quantspeak - and tested each in numerous simulations.
Seven proved profitable enough to adopted by fund and put to work in real markets.
At the start of 2014, Xu was feeling confident about his second-year bonus.
Instead, he was awarded a bonus of £400K and, although this was a huge amount for a young man from provincial China, it was far less than he was expecting - so he began planning his exit.
It was around this time that Xu began covertly accessing his colleagues' signals.
After all, he would have a better chance of getting a good job elsewhere if he had ready-to-use signals to offer potential employers.
He landed two offers in Asia, but told his managers at G-Research nothing about his plans.
One evening, Xu cleared out his desk and placed a resignation letter on his manager's desk, and boarded a flight to Hong Kong.
This abruptness of Xu's departure raised immediate suspicions.
The next morning security personnel at G-Research reviewed video footage of his activities the night before, leading the company's attorneys to get an emergency court order.
To cut a long story short, G-Research then got the prestigious law firm Allen & Overy on the case, got a travel ban against Xu, who was reported to police in London, then arrested in Hong Kong in August 2014, extradited to the UK in December 2014, then sentenced in July 2015 to four years in prison.
But that's not all: G-Research then used an ancient quirk of the British legal system called a private prosecution to find out who's seen the 55 stolen signals.
In January 2017, jurors founds Xu guilty of two of the five charged in the private prosecution, and the judge sentenced him to an additional 18 months.

So the top hedge funds secure their IP like a military facility, have an informational advantage, have the world's best lawyers at their beck and call, have the Fed on their side if things go tits up, and normies think they can match this and be day traders?.

In conclusion, DON'T DAY TRADE!

SOURCES:

LAHWF Interview with Ricky Gutierrez
https://www.youtube.com/watch?v=PbbsNsdwjLM

Bloomberg - Robinhood's High Frequency Trading Revenue Secret
https://www.youtube.com/watch?v=OgYd5Hm7Eb0

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Chamath Palihapitiya recently stated that Jeff Bezos is the best investor of our generation, better than Warren Buffett.
The Oracle of Omaha has a reputation as the gentle GOAT of investing, but is there more to this than meets the eye?
The story begins in 1942, when Warren Buffet bought his first shares at the age of just 11.
This is same year that his father Howard Buffett ran for the U.S. House of Representatives in the Nebraska district.
He won, and became a member of Congress in 1943.
Before this, Howard worked at a small stock brokerage firm.
He was reelected twice. However, in 1952, he decided against seeking another term and returned to his investment business in Omaha, Buffett-Falk & Co., where he worked until shortly before his death in 1964.
But what about Warren Buffett?
In 1951, after graduating from Columbia, where he was taught by Benjamin Graham, Buffett worked for three years at his father's firm as an investment salesman.
In 1954, Buffett accepted a job at Benjamin Graham's partnership, working as a securities analyst.
His starting salary was $12,000 a year - the equivalent of $114,000 today.
However, just two years later, Graham retired and Buffett started his own investment partnership.
He went to his father's acquaintances to raise Capital for his first fund.
These were prominent families in Nebraska with big businesses and political connections.
For example, across the street was the family whose son became the CEO of Coca Cola - that family gave him $10,000.
In 2012, the STOCK Act or The Stop Trading on Congressional Knowledge Act was signed into law.
The law prohibits the use of non-public information for private profit, including insider trading by members of Congress and other government employees.
Remember, Buffett's father used to be in Congress.
The only people who were, before 2012, allowed to trade on insider information without having criminal charges brought against them were congressmen.
Remember, Buffett's father was a stock market broker prior to being elected and going to Congress, hence he had a comprehensive knowledge of the stock market and clearly had an interest in it.
Imagine you are Warren Buffett, and you can:
1). Get insider information to trade on it
2). Get a six-figure position after College.
3). After a few years, set up your own fund, getting money from wealthy family friends
4). Pay no dividends to investors and only put a hundred bucks of your own money into the fund
5). Let the mathematics of compounding work its magic as you bring in more institutional money
6). Become so connected Politically and connected on Wall Street that you can get special deals, which have practically no risk as you know bailouts are coming. For example, in the 2008 crisis, Berkshire owned stock valued at more than $13 billion in the top recipients of the TARP funds, and Berkshire had at least twice as much dependence on bailed-out banks as any other large investor.
7). Have billions of dollars on hand, remember you ain't paying any dividends to investors, ready for the inevitable economic recession to hit so that you can sweep up cheap assets.
8). Be holier-than-thou (i.e. calling derivatives "financial weapons of mass destruction" when, during the height of the 2008 crisis, Berkshire sold more than $2.5 billion worth of credit default swaps; OR what about Buffett's reputation as the saviour in the Great Recession when Berkshire is the majority owner of Moody's, who played a key role in inflating the crisis in 2008 - via their questionable debt and derivative ratings which inflated the mortgage and subprime market.
What about Buffett's status as the GOAT of Investing?
Billionaire Chamath Palihapitiya has even stated that Jeff Bezos is the best investor of our generation, not Warren Buffett.
Buffett has missed out on an entire raft of tech and Berkshire has underperformed the S&P 500 in recent years.

Also, he has been critical of Bitcoin, describing it as "rat poison squared"
Ultimately, Buffett is worth $73 billion, he doesn't need to have an in-depth understanding of new age tech.
Also, Buffett has a huge stake in Finance 1.0, why would he give props to Finance 2.0?
It's worth noting that Howard Buffett strongly supported the gold standard because he believed it would limit the ability of government to inflate the money supply and spend beyond its means.
His son Warren, however, hates gold. See the Cantillon Effect as to why:
https://www.youtube.com/watch?v=rv5xl1AEeQs

Some have even argued that Buffett's success can be summarised by the following:
First Deals = Insider Information
Last Deals = Cantillon Effect

What are your thoughts?
Is it true... or false?

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Chamath Palihapitiya described the Venture Capital Industry as a "Ponzi Scheme" in the following interview;
Chamath Palihapitiya on rebuilding Social Capital & Silicon Valley ponzi scheme:
https://www.youtube.com/watch?v=RwRZtZQoLtQ

Chamath speaks on how Venture Capitalists (VCs) have been "lucky" in the following video;
Palihapitiya on Speaking Out in Silicon Valley:
https://www.youtube.com/watch?v=mf9mNWrAb1c

For more on Social Capital's Performance, check out the following video;
Chamath Palihapitiya Social Capital 2019 Annual Letter:
https://www.youtube.com/watch?v=PPJN68wt4pk

When people hear the phrase Venture Capital, some ask:
1). Wait a minute, what is venture capital?
2). Others who are more versed in finance, or fih-nance, ask: wait a minute, what is really going on here?

Let's tackle the first question.
Venture Capital basically means you take the capital of your LPs (your limited partners, i.e. extremely rich families, sovereign wealth funds, corporate pension funds, endowments, etc) and invest it into early-stage businesses in exchange for equity (i.e. an ownership stake) in those businesses.
You charge your limited partners a fee for managing their money.
This fee model is generally '2 and 20' - so you get 2% of the assets under management (the AUM) annually and 20% of the profits (otherwise known as the carry) on your investments.
We'll go over fees in more detail later in the video as this is a very important piece to understand.
We also need to understand some jargon:
Specifically, the funding rounds:
We have the Seed round; followed by
The Series A round; followed by
The Series B round; followed by
The Series C round; and
Some companies can go on to Series D and even Series E rounds of funding.
These funding rounds are merely stepping stones in the process of turning a successful startup into a commercially viable firm, potentially leading to an IPO.
An IPO can be like hitting the jackpot for early VCs: this is when they often join the ranks of the super rich.

Now, let's tackle the second question.
The endgame of the VC Industry is Fees.
Specifically, it is management fees that are a guaranteed cash cow.
When saying the VC firm raises a new fund, this means that they are locking in another batch of LPs money for 10 years, this is the typical length of a fund.
To clarify, the 2% fee is cash compensation, paid annually, regardless of the investment activity or performance of the VC firm.
This fixed 2% fee structure obviously creates the incentive to accumulate and manage more assets. The larger the fund, the larger the fee stream. Raising bigger subsequent funds allows VCs to lock in larger, and cumulative, fixed cash compensation.
Let's look at an example:
For a one billion dollar fund, over a typical 10 year time-frame, what are the management fees collected?
Well, 2% annually, i.e. $20MM annually - OR $200MM over the full duration of the fund.
Sure, some of that covers operating expenses, but a lot of it ends up with the Partners at the head of the firm; in all but the smallest funds, the partners make high six, and more often seven, figures in fixed cash compensation.
As we touched on earlier, the carry (the 20% of profits if it goes well) can make these partners extremely rich at IPO - however, the dirty secret in Venture Capital is that the guaranteed fees are the guaranteed cash cow.
According to Bureau of Labor Statistics, the median wage of US workers is just under $50K per year.
This means that an average partner at a reasonably sized VC firm is earning roughly 20X the average annual salary of an average American worker on just the management fee from raising a single fund, without investing a single dollar.
A study by Harvard and Yale researchers found that VCs’ abilities to pick investments and nurture start-ups “play little role if any” in long-term outperformance.
The authors analysed decades of portfolio investment and performance data to assess the mechanisms of venture capital success.
They found that investing in the right companies at the right time gives VC firms access to better deals, which often leads to long-term outperformance.
And picking those original winners appears to be a matter of luck...
What are your thoughts, is is true...or false?

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Zucc smoked meats, ate it later
Sold your data 'round the equator

10: JUST GRILLIN'
Mark Zuckerberg | Live Grilling In My Backyard
https://www.youtube.com/watch?v=VxFQDjS_BVo

9: JOKER
Mark Zuckerberg's Awkward Privacy Joke at Facebook's F8 Conference
https://www.youtube.com/watch?v=p-6WnQLHgow

8: CHINA
5 awkward moments at the Facebook hearing
https://www.youtube.com/watch?v=IuPABtlr-rM

7: TOAST
Mark Zuckerberg's awkward afternoon with Morgan Freeman
https://www.youtube.com/watch?v=ZGLPxEv_EWo

6: BODYGUARD JOG
Mark Zuckerberg jogging in Berlin
https://www.youtube.com/watch?v=kfJKIDDo7d8

5: HUMAN
Mark Zuckerberg is not human
https://www.youtube.com/watch?v=2qGVVxaosDM

4: SEINFELD
Seinfeld asks Zuckerberg what’s the first thing Zuck does in the morning?
https://www.youtube.com/watch?v=ZFZWae4bmIw

3: LIZARD?
Mark Zuckerberg Says He Is Not a Lizard Person | Inverse
https://www.youtube.com/watch?v=jiudBq7z8wk

2: SENATOR...
Senator Asks How Facebook Remains Free, Mark Zuckerberg Smirks: ‘We Run Ads’ | NBC News
https://www.youtube.com/watch?v=n2H8wx1aBiQ

1: THE HOODIE FIASCO
D8 Interview Video: Facebook CEO Mark Zuckerberg
https://www.youtube.com/watch?v=G4XGbZ7IrC8

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The Federal Reserve has made many headlines over the years, let's count down the Fed's best moments!

10) COINCIDENCE
Alan Grayson (HD): "Which Foreigners Got the Fed's $500,000,000,000?" Bernanke: "I Don't Know."
https://www.youtube.com/watch?v=_jjXCm3W4hA

9) YOUNG BUCK
Former Fed Chairman Alan Greenspan: President Donald Trump's Fed-bashing is 'ill-advised'
https://www.youtube.com/watch?v=BsL0qDM2hmg

8) LOSSES
Alan Grayson (High Quality Version): Is Anyone Minding the Store at the Federal Reserve?
https://www.youtube.com/watch?v=cJqM2tFOxLQ

7) "WHO GOT THE MONEY?"
Rep. Alan Grayson: "Has the Federal Reserve Ever Tried to Manipulate the Stock Market?"
https://www.youtube.com/watch?v=mXmNpdYpfnk

6) RECIPIENTS
Alan Grayson (High Quality Version): Is Anyone Minding the Store at the Federal Reserve?
https://www.youtube.com/watch?v=cJqM2tFOxLQ

5) "SOMEWHERE"
Alan Grayson (HD): "Which Foreigners Got the Fed's $500,000,000,000?" Bernanke: "I Don't Know."
https://www.youtube.com/watch?v=_jjXCm3W4hA

4) "NO SIR"
Rep. Alan Grayson: "Has the Federal Reserve Ever Tried to Manipulate the Stock Market?"
https://www.youtube.com/watch?v=mXmNpdYpfnk

3) INFINITE
Neel Kashkari unlimited Fed printing
https://www.youtube.com/watch?v=DUrlNHTxuJM

2) JURISDICTION
Alan Grayson (High Quality Version): Is Anyone Minding the Store at the Federal Reserve?
https://www.youtube.com/watch?v=cJqM2tFOxLQ

1) INDEPENDENT AGENCY
Alan Greenspan Admitting the FED is above the law congress and president
https://www.youtube.com/watch?v=kcvuBETuwn0

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Cyborg Soldier 2050: Human/Machine Fusion and the Implications for the Future of the DOD

Today we are going to take a look through this fascinating report titled
Cyborg Soldier 2050: Human/Machine Fusion and the Implications for the Future of the DOD.
Of course, DOD refers to the United States Department of Defense.
The primary objective of the report was to forecast and evaluate the military implications of machines that are physically integrated with the human body to augment and enhance human performance over the next 30 years.
The report is the culmination of a year-long assessment by the DOD Biotechnologies for Health and Human Performance Council, a study group established to continually assess research and development in biotechnology.

Section 1/6 - Technology Predictions for 2050:
The report highlights four case studies of technology that could be feasible by 2050.
i) Case Study No. 1: Ocular Enhancement for Imaging, Sight, and Situational Awareness
ii) Case Study No. 2: Restoration and Programmed Muscular Control through an Optogenetic Bodysuit Sensor Web
iii) Case Study No. 3: Auditory Enhancement for Communication and Protection
iv) Case Study No. 4: Direct Neural Enhancement of the Human Brain

Section 2/6 - Perceptions and Politics:
In order to learn more about the public perception of this technology, Cary Funk, Director of Science and Society Research at the Pew Research Center was invited to join the study group.
Dr. Funk specializes in measuring views on public trust in science and in 2016 conducted a survey within the United States that focused on understanding attitudes about human enhancement technologies.
It showed that the majority of Americans greeted the possibility of these breakthroughs with wariness and worry rather than enthusiasm and hope...

It is anticipated that state and non-state adversaries will seek to use U.S. deployment of enhanced warfighters to undermine U.S. interests and stigmatize the DOD as unethical. Also, mass media has led to the demonisation of cyborgs (i.e. Frankenstein and the Terminator), so the study group recommended that efforts should be undertaken to reverse the negative cultural narratives of enhancement technologies and leverage media as a means of engaging of public.
If technology is to become a more intimate partner in the physical enhancement of the human species, then DOD personnel must help alter distorted cultural narratives.
Although not intrinsically a DOD mission, defense leadership should understand that if they intend to field these technologies, social perceptions will need to be understood and OVERCOME.

Section 3/6 - Legal and Privacy Issues:
As the pace of technological development accelerates and human/machine enhancements become a reality in the years leading up to 2050, it is almost certain that legal frameworks will continue to be outpaced and face new challenges.

There is also the privacy aspect of the legal argument in which cyborg technology inherently collects data from those around the enhanced individual. Although an individual volunteers for enhancement and agrees to any corresponding collection of his or her personal data, bystanders are unlikely to have granted the same permission.

Section 4/6 - Safety and Security:
The introduction of human/machine enhancements into military and civilian populations will create new vulnerabilities that will need to be mitigated by security architectures. Unless one specifically engineers the cyborg to resist the collection or interception of data, it will be default facilitate surveillance.
From a national security perspective, adversaries may piggyback surveillance and tracking technologies within implanted cyborg mechanisms.

Section 5/6 - Military and Civilian Integration:
Classifying military personnel as enhanced or non-enhanced would add another level of categorisation to military status, fitness for duty, and rank that will have to be considered. Enhancement will effectively change the capabilities and professional status of active duty soldiers.

Section 6/6 - Ethical Considerations:
A service member who received an investigational enhancement as part of a study must be fully informed of any known risks and benefits. The individual must agree to participate without undue influence.

In conclusion, the study makes it clear that there will be significant benefits afforded by this technology. However, as it develops, it is vital that the scientific and engineering communities move cautiously to maximise potential with a focus on the safety of U.S. society...

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Don't ever change man...
Music Source: Coldplay (CLASSIC) - Fix You (piano cover by Ray Xavier)
https://www.youtube.com/watch?v=OpNdS5cQBOo

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Time is a flat circle...
Music Source: Ray Xavier; Coldplay (CLASSIC) - "Trouble" (piano cover)
https://www.youtube.com/watch?v=-0535VyCfWU

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Money is never taught in school. Why?
Periodic Tables, Times Tables, Shakespearean Fables,
All staples in our education system.
But wait a minute: have we been fooled?
How come Financial Education doesn't come up when we're schooled?

"I don't want a nation of thinkers. I want a nation of workers."
Those are the words of John D. Rockefeller, widely regarded as the richest American of all time (yes, even richer than Jeff Bezos).

Clearly, Rockefeller would far rather have a bunch of mindless workers to employ and manipulate than having intelligent entrepreneurs to compete against him.
This mentality acted as the foundation for the current education system in America and indeed the globe: a system designed to condition students from a young age to sit down, shut up, do as they're told and perform repetitive tasks for 8 hours per day.

Intelligent citizens are difficult to control.
The more intelligent you are, the more likely you will know what the real issues are and that you are being Fed (pardon the pardon) a bunch of crap by a bunch of, shall we say degenerate, psychopaths.

As Albert Einstein said: "Never confuse education with intelligence."
Being highly educated often times means being highly "educat-able"
This is not to say that all education is brainwashing, but people who excel in school do so because they are highly trainable and therefore more susceptible to influence.
Add to this the cognitive blinders that come from being labelled as "smart" (i.e. believing that you are too intelligent to be fooled), and it's little wonder that academia has turned into an ideological robotic production line.

The aim of the education system is not to produce a well-rounded populace, but to reduce as many individuals as possible to the same safe level of awareness, to suppress originality, to discourage critical thinking and imagination.

Then, there is the 'dumbing down' of an entire generation.
At one time, cultural movements such as hip hop were actually used to push positive messages to the youth, including the importance of financial independence and ownership, now...not so much.

As well as this, we have a whole generation addicted to the dopamine loops of social media, many of which are effectively state-run spying apps.
Is this really appropriate for the progress of our civilisation - particularly in the 21 Century?

In 1902, the General Education Board was created after John D. Rockefeller donated an initial $1 million and he would later give over $180 million to fund the GEB.
The GEB provided major funding for schools across America and was very influential in shaping the current education system.

I close with a quote from Frederick Gates, Rockefeller's business advisor and a prominent member of the GEB:
"In our dream, we have limitless resources and the people yield themselves with perfect docility to our molding hand...
We shall not try to make these people or any of their children into philosophers or men of learning or of science. We are not to raise up among them authors, orators, poets, or men of letter. We shall not search for embryo great artists, painters, musicians nor lawyers, doctors, preachers, politicians, statesmen, of whom we have an ample supply…The task we set before ourselves is very simple as well as a very beautiful one, to train these people as we find them to a perfectly ideal life just where they are."

SOURCE VIDEOS:

Chamath Palihapitiya, Founder and CEO Social Capital, on Money as an Instrument of Change
https://www.youtube.com/watch?v=PMotykw0SIk

Jay Z's Engineer, Young Guru (Part 2) - Pensado's Place #129
https://www.youtube.com/watch?v=aVcUa-VwWUw

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Imagine a man who is completely pragmatic.
He is smarter and more cunning than most men.
He may respect the talents of a few, but overall he has little concern over the condition of mankind.
He has observed that kings and politicians are always fighting over something and has concluded that wars are inevitable.
He is also well aware that wars can be profitable, not only by lending or creating the money to finance them, but from government favouritism in the granting of commercial subsidies or monopolies.
He is not capable of primitive feelings such as patriotism - so he is free to participate in the funding of any side in any conflict, limited only by factors of self interest.
If such a man were to survey the world around him, it is not difficult to imagine that his career would be guided by the following Blueprint.

Law 1:
War is the ultimate test of any government. If it can successfully meet the challenge of war, it will survive. If it cannot, it will perish. All else is secondary; the sanctity of its laws, the prosperity of its citizens, and even the solvency of its treasury.

Law 2:
All that is necessary to insure that a government will maintain or expand its debt is to involve it in war or the threat of war.
The greater the threat and the more destructive the war, the greater the need...for debt.

Law 3:
In order to involve a country in war (or the threat of war), it will be necessary for it to have enemies with credible military might.
If such enemies already exist, all the better.
If they exist but lack military strength, it will be necessary to provide them with the money required to build their war machine.
If an enemy does not exist at all...then it will be necessary to create one by financing the rise of a hostile regime.

Law 4:
The ultimate obstacle is a government which declines to finance its wars through debt.
Although this seldom happens, when it does, it will be necessary to encourage internal political opposition or a revolution to replace that government with one that is more compliant to your will.
The assassination of heads of state could play an important role in this process.

Law 5:
No nation can be allowed to remain militarily stronger than its adversaries, for that could lead to peace and a reduction of debt.
To accomplish this so called "balance of power", it may be necessary to finance both sides of the conflict.
Unless one of the combatants is hostile to our interests and, therefore, must be destroyed, neither side should be allowed a decisive victory or defeat.
While you must always proclaim the virtues of peace, the unspoken objective is perpetual war.

By following this Blueprint, you can have it all, and then some.
That was an interest pun by the way...

However, this does not mean you should finance every war-like group that comes along...
In 1830, the Dutch were facing an uprising from their subjects in Belgium.
Both the ruling government and the revolutionaries were dependent on the Rothschilds for financing their conflict.
The Dutch rulers were reliable customers for loans and, just as importantly, were reliable in their payment of interest on these loans.
It would be foolish to provide more than token assistance to the rebels who, if they came to power, likely would have refused to honour the debts of the former puppet regime.
Salomon Rothschild explained:
"These gentlemen should not count on us unless they decide to follow a line of prudence and moderation...Our goodwill does not yet extend to the point of putting clubs into the hands that would beat us, that is, lending money to make war and ruin the credit that we sustain with all our efforts and all our means."

Wars, both great and small, have always been a plaque to Europe, but it was not until they were easy to finance through Central Banking and fiat money that they became virtually perpetual.
The Bank of England was founded in 1694 for the specific purpose of financing a war.
In the 126 years between 1689 and 1815, England was at war 63 of them.
That is one out of every two years in combat. The others were spent preparing for combat.
Whether ending in victory or defeat, the outcome merely preserved or restored the European "balance of power."

And the most permanent result of any of these wars was expanded government debt...for all parties.

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Created 1 month, 2 weeks ago.

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Category Business & Finance