Breaking the tyranny of centralised trust

  • The end of central banks
  • The cryptocurrency revolution

Never let a crisis go to waste.

That seems to be the political rhetoric coming out of the UK this week.

In the wake of the London terrorist attacks, UK Prime Minister Theresa May spied her opportunity. With only 72 campaigning hours left before Britain heads to the polls, May declared she’s willing to ‘tear up’ human rights legislation in order to beat terrorists.

Ah, politicians. They never fail to capitalise on fear and tragedy, do they?

At a campaign event in London earlier in the week, she told the crowd that she would like to limit the freedoms of individuals who are threats to society but can’t be prosecuted in court, saying, ‘If our human rights laws stop us from doing it, we will change the laws so we can do it.’ 

In a separate interview with The Sun newspaper, May added she would like to consider extending the length of time that a suspect can be held without charges to 28 days, after it was reduced to 14 in 2011 under a previous government.

Already the UK is considered to have some of the most draconian anti-terror laws in the EU.

An Amnesty International report, ‘Dangerously Disproportionate : The ever-expanding national security state in Europe’, claims that the terror legislation allows blatant ‘mass surveillance’ under the pretence of ‘diplomatic assurances’, where people are stripped of their nationality, have their movements controlled, and can be detained without charge or suitable legal process.

May’s push to disregard a person’s basic rights really just brings the UK into line with Australia.

Back in 2004, three years after the September 11 attacks, Australia introduced legislation that crippled a potential suspect’s freedoms. The initial laws were given what’s called a sunset clause, meaning they expired after 10 years. Under the pretence of ‘protecting the people’, the government pushed through to make them effective permanently.

It’s the little things that count. Like the fact that a terrorist suspect can be held for up to 14 days without any charges being laid. The only right the person has is one phone call to contact someone to say ‘they are safe, and not to worry’.

Furthermore, federal policing agencies in Australia have the power to place control orders over private citizens, restricting their personal freedoms to certain places…and sometimes forcing them into house arrest.

Who grants these orders, you wonder? Well, that would be just one person: the Attorney-General. There are no panel of judges, either. A suspect is up against a highly-qualified legal mind on their own.

My point is, the government preys on your biggest fear: That your life is under threat.

They take this fear and turn it into legislation that, in the long term, restricts your freedoms.

Sure, today it’s about ‘catching’ terrorists. Not only is this ripe for abuse, but who’s to say that the definition of a terrorist won’t change?

Today, the legislation is one thing. But over the course of time, it can be be manipulated to allow the government to chase after anyone they please.

And with that…a look at the markets.

Markets 

Overnight, the Dow Jones Industrial Average was up 37.46 points, or 0.18%. 

The S&P 500 increased 3.81 points, or 0.16%. 

In Europe, the Euro Stoxx 50 was down 5.34 points, or 0.15%. Meanwhile, the FTSE 100 dropped 0.62%, and Germany’s DAX was down 0.14%. 

In Asian markets, Japan’s Nikkei 225 is up 14.76 points, or 0.07%. China’s CSI 300 is up 0.45%. 

In Australia, the S&P/ASX 200 is up 63.72 points, or 0.07%. 

On the commodities markets, West Texas Intermediate crude oil is US$47.40 per barrel. Brent crude is US$48.48 per barrel. 

Gold is trading for US$1,284.47 (AU$1,703.31) per troy ounce. Silver is US$17.55 (AU$23.28) per troy ounce. 

The Aussie dollar is worth 75.40 US cents. 

The end of central banks

While cleaning up my desktop the other day, I found something I wrote back in February 2015. I had a little giggle, and thought you might too. Have a look:

A week ago yesterday, the Reserve Bank of Australia did the unthinkable. It dropped the cash rate to a never before seen 2.25%.

One of the commentators over at The Age called this move a “surprise”.

However, if you’ve been paying attention, there was nothing surprising about it.

All the central power’s favourite economic numbers are down.

Wage growth has slowed to 2.6%, the slowest pace since the late 1990s. The consumer price index had the lowest increase in several years, with underlying inflation coming to 2.25%. While house prices were up, consumer spending was down — even with the crude oil price falling to its current US$56 per barrel.

So, hoping to fix these numbers, the RBA decided to cut interest rates.

There, she’ll be right mate.

Ah, weren’t we so naïve back then? Interest rates at never-before-seen levels of 2.25%. Since then, the Reserve Bank of Australia hammered the cash rate all the way down to 1.5%. Also a never-before-seen low.

Yet nothing’s changed for the better. 

Today, wage growth is at new lows of 1.9%. That’s below consumer price inflation, running at 2.1%.

All this tweaking with interest rate policy has done nothing.

The problem with central banks is that they call it ‘managing the economy’ — when in reality it’s economic manipulation.

The power central banks have over asset prices is enormous. What appears to be a simple up and down interest rate movement is far more complicated. Centralised decision-making has left us ‘trapped’ in a banking system that benefits governments but robs wealth from the people.

But what if we weren’t part of this system?

The cryptocurrency revolution

Bitcoin, the most well-known cryptocurrency, caught the mainstream off-guard.

The idea was simple. A monetary system without a ‘trusted’ third party. A digital currency that can’t be controlled, manipulated or printed; one whose value is determined by the market alone — the opposite of the fiat currency system we have today.

Australian banks and governments continue to distance themselves from any digital currency. They label them as ‘untrustworthy’ and ‘volatile’. Oddly enough, you and I would probably use those same words to describe the banks and governments.

Perhaps cryptocurrencies aren’t unstable. Perhaps, instead, they are just working out their place in fiat money world.

Bitcoin price index



chart image

Source: CoinDesk
Click to enlarge


The price rise in Bitcoin in a few short years is incredible. And that’s exactly why governments and central banks warn you that cryptocurrencies are for ‘crooks, charlatans and people who lurk in shadows’.

However, I see it differently. Money that operates between two parties alone liberates us from the oppression of fiat money. 

Cryptocurrencies have the power to free us from the tyranny of central bankers.

But whether Bitcoin replaces the monetary system isn’t the point. What matters is that it has challenged that system.

This needed to happen.

Think of it like this: Tesla Motor Inc. [NASDAQ:TSLA] first launched its Roadster in 2006. Was there a market for a pure electric vehicle? No one knew for sure. Yet there was an idea that people wanted something else…

Less than a decade later, Tesla challenged the offerings of carmakers globally. Now, every major car manufacturer has an electric model.

Tesla challenged and changed the market.

Bitcoin is the first mover in cryptocurrencies.

This manipulation-free currency has many questioning their faith in the fiat money system and the dominance of the central banks.

Cryptocurrencies will become more powerful as more people learn about and use them, and their success will put pressure on central banks to leave the monetary system to its own devices.

Sam Volkering, editor of Revolutionary Tech Investor, tells me there are over 800 cryptocurrencies available today. However, he says that while Bitcoin was the first mover in the crypto space, there are greater investing opportunities ahead outside of Bitcoin.

Yes. I do mean ‘investing’. Rather than being a fringe idea that gets your money out of the banking system, cryptocurrencies are slowly becoming legitimate investing options.

As Sam explained to his subscribers yesterday:

We remember people thinking bitcoin at US$200 was expensive. Heck, we were one of those people at the time. But that was our “traditional” finance brain speaking. Our gut told us this was transformational. It was a revolution — and that’s exactly what bitcoin is.

It’s easy to sit back and think you’ve missed the boat. The incredible price rises these cryptocurrencies have already enjoyed are hard to ignore. But the potential future gains are far greater than what we’ve already seen.

It’s gaining ground among governments. It’s got big business on board. It’s already showing what it can achieve. And its development community is pushing ahead with updates and improvements to the network.

And Sam has his eye across far more than Bitcoin. As he told me, with cryptocurrencies still in the early-stage growth phase, it’s not too late to get on-board one of the fastest-rising asset classes of the 21st century.

Stay tuned for more on that from Sam next week.

Until next week,

Regards,
Shae Russell