Brent is a game theory expert, and is the most technologically inclined member of the group. In fact he's writing this in the 3rd person while creating the website right now. Brent was able to find a picture of the only hike he's ever done in his life to convey how worldly and outdoorsy he is. Karim will often leave him messages about his weight, and he will tell the mos inappropriate side story-tangents of any of the podcast participants.
Welcome to the Crypto Basic Podcast! We'd been gone for a little while (blame our editor and his "exams", yeah right) but we're back and this week we're talking about the big ol' Fed, which announced that it will start buying individual corporate bonds. What does that mean for the economy and the banking system? What the hell are SMFCCs and SPVs? And are they sexually transmitted diseases, or do they just sound like that? Tune into today's episode for the answer to this truly profound and engaging question, and many many more.Fed says it is going to start buying individual corporate bondsThe Federal Reserve said Monday it will start buying individual corporate bonds.In order to “support market function and eases credit conditions.” they added functions to its Secondary Market corporate Credit Facility (SMCCF)SMCCF? - It is a Special Purpose Vehicle launched by the Fed in MarchSPV? - A subsidiary created by a parent company to isolate riskBasically creates separate company with isolated balance sheetSPV operations limited to acquiring and financing specific assetsSPV may be created solely to securitize debt so that investors can be assured of repayment.Can help companies securitize assets,create joint ventures,isolate corporate assets, or perform other financial transactions.Fed is trying to ensure banks continue to lend to corporationsThe SMCCF then buys corporate bonds and Bond ETFs,To encourage lending by ensuring demand for the bondsBut it was only started with bond ETFs…. So lets talk about these functionsSo whereas before it was “passively” buying ETFs at fair market value is (metrics and restrictions)Now it has $750b to buy individual corporate bonds directly (with a maturity of within 5yrs)This is on top of ETFs in the marketThe loans will be tailored to small- and medium-sized companies and can range from $250,000 to $300 million.Dow went from down 700 to a +157pt spike after announcementFed has yet to launch its Primary Market Corporate Credit Facility.
Welcome to the CryptoBasic Podcast! This time around we don't go over a lot of things - we just focus on the basics, the important info, the headlines. Kung Fu, private militias, corporate coups, you know, the good stuff. If this sounds weird to you, tune in to find out what the heck has been going on with Bitmain and how the crypto space can sometimes offer stories and incidents that are truly hollywood-worthy. What is Bitmain exactly?Bitmain produces ASIC miners for the Bitcoin Blockchain. The Antminer. Basically the gold standard in mining gear.They also run Antpool, which is a big mining firm that has a lot of hashpower - but they aren't the biggest.Remember when we covered this in a flagship? Lets go back over.This was back in October 2019.Jihan Wu sent an e-mail to the entire Bitmain team that said that Ketuan Zhan was dismissed from the company.Wu was then given the roles of executive director and legal representative.Then is, Zhan still had 36% of the company in shares, and it wasn't clear what was happing with them.Zhan then filed a lawsuit in the Cayman islands to try and stop this from happening.They also filed to go public in the US with the SEC right before all of this.Zhan wins a victory in April.So the Bejing District Bureau if Justice actually went ahead and blocked Bitmain's attempt at replacing the legal representative with their current CFO. Even though Jihan Wu was the representative, Bitmain wanted to switch.This has been in courts since Jan 2.He was then granted the right to return to his post as legal representative.When he tried to attend the beaureau to collect his registration, he was surrounded by those loyal to Wu, and his license was grabbed from his hands.Then shit got physical, details are sparse.There's now TWO official seals somehow. Zhan wasn't in possession of the real one because it was physically taken from him. I guess in Chinese law the physical seal is pretty important. So there are now two serial numbers and there's dispute as to which one is accurate.Getting more interestingSo most of the staff was working from home because of the PandemicOn June 4 Zhan actually sent all employees a notification via wechat that he was back in the office starting the day before, and that they needed to return to the office to work.There's literally a video out there of Zhan marchingg on the Bitmain offices with armed guardsSo he used his private guard force to enter the office and has apparently seized control.He was handing out $10,000 worth of Yuan for anyone that showed up to the office to work with him.He made a public decree to finish the IPO and have a market cap of over $50M in 5 years.It looks like Zhan has taken control of the company's Wechat account, and has been posting saying that the "new" seal is the official seal.Karim's video suggestion
Today the gang's all here, gathered around the fireplace, eating metaphorical marshmallows as papa Karim, our resident economist, busts out the spit facts. We're going over the current economic state of the US, monetary strategies, how they affect economies and trade between them, and much, much more. So, grab a stick, poke a marshmallow and relax while Karim gets them FACTS into your brain.The U.S. Treasury Will Borrow A Record $3 Trillion This Quarter As Stimulus Spending SoarsOver last two months Congress has authorized more than $3 Trillion in emergency stimulusIn order to come up with that cash the Treasury will have to issue record breaking amount of debtLast quarter, the Treasury borrowed about $500 billion, and it plans to borrow another $677 billion in the third quarter.relatively cheap to borrow with record low interest rates (10 year note yielding about 0.6%)The Treasury’s numbers only account for legislation that has been passed to date. Another stimulus package is in the worksUS Debt big picture$25 Trillion threshold crossed, $7 trillion in the last 5 yearsAccording to data from the US Treasury growth is$1.2 million per minute$1.7+ billion per dayNational Debt ClockEvery 15 secs our tax revenue is falling by like 100kDebt per citizen $75,600Per Tax payer though that’s $200,000Currency Creation (M2 Money supply) +$100,000 every few secondsWho owns that debt?Majority of US debt owned by Americans (investors, fed, banks).30% owned by foreign entitiesChina and Japan more than 1 Trillion eachDebt to GDP2019 -publicly held federal debt was almost 80% percent, $17 trillionAccording to CBO estimates then, debt was already rising faster than the economy and was projected to reach 98% by 2030now at 107% and projected to 108% by 2021, our record was 106% year after WWIIAnother chart shows Gross debt to GDP after WWII at around 118%Checked again this morning on Nat debt clock, looks like we broke this barrier as of 5/21 119.08%Saw this back of envelope simplifications 35m to 1 reductionUS as householdIncome - 100k p/yrDebt - $714kUnfunded liabilities (medicare,SS,VA) - $4.2mInternational perspective06-18FWIW Trump said if he gets re-elected he’ll wipe the debt =) he said that last time too and it was +5Trillion going into this (last time we cleared the debt was Andrew Jackson 1835)Interesting quote though to keep this in perspective -“If the Fed didn’t take these and other emergency measures, “the system already would have blown up,The markets would have crashed 10 times over.” - Tim Duy University of Oregon (Economist, US Treasury)Modern Monetary Theory, Is there a limit?MTT points out a government that controls its own currency can't default on debtBut defecit + interest rates increase outstanding debt, is there a limit?Sustainability does not require the government deficit to be zero, or surplusesit requires that the debt increase at the same rate, or more slowly than, GDP growthParts of MMT rely on the President and Congress to fight, at some point, the inflation created by money printingby either tax increases or reducing government spending.But this ignores the political realities that easy for fed to print, but hard for politicians to tax more or cut spendingMMT also "ignores distributional effects of paying for borrowing"Essentially MMT tends to consider debt payment as occruing between two players within the economyAs we mentioned before, irl USA has 30% of debt owned by foreign entitiesInterest payments to those investors reduce the income flowing to U.S. residents, making Americans less well off.This would be justifiable if today’s spending raised income and living standards in the futureSo this is not just a problem of scale, but of allocationHere is the catch 22If we keep creating money, there is going to be inflation unless we raise interest rates (which makes borrowing /spending more expensive)“too much money chasing too few goods”If we raise interest rates, we exacerbate the debt problemDevaluing the currency?strong currency is not necessarily in a nation's best interests.Weak Domestic currencymakes exports more competitive, while making imports more expensiveHaving more exports spurs economic growth,pricey imports can stimulate local consumptionwealth effect also takes hold here as widely held assets prices rise, making ppl feal wealthyDangersDevaluation hurts citizens purchasing power overseasCan lower productivity by making capital equipment and machinery more expensive to importStrategic devaluation doesn't always work though, and here we can get currency warsStrategic reasons to devalue currencyTo boost eports (as explained)To shirnk trade defecitsIf your country was importing too much and exporting too little this can be used to achieve a better balancewhile Many countries run persistent imbalances, Economic theory says this isnt sustainableThe important one here, to reduce Sovereign Debt BurdensIf debt payments are fixed, a weaker currency makes these payments effectively less expensive over time.Say you had to pay $1m each month in interest on outstanding debt… if that same $1m becomes less valuable its easier to pay it offIf we devalue currency by half we effectively owe only 500k value wise“The United States can pay any debt it has because we can always print money to do that,” former Federal Reserve chairman Alan Greenspan said on NBC in 2011. “So there is zero probability of default.”But most goverments are doing very similar things, central banking is the world standard. so as grim as this looks for the US, and arguably the dollar, the fact that it looks so much worse in other fiats creates flight to the dollarCentral Bank Foreign Currency Reserves are 61% Dollars, next best is Euro at 21%Also remember that our discussion on devaluing local currencies applies to tons of countries that do business with the US, like China and Japan (the largest debt holders)Not UnfathomableAccording to Juan Zarate's "Treasur Wars", Russia approached China in 2008 with a plan for a coordinated sale of government-sponsored debt to exacerbate America's financial crisis. China thankfully declined.Still Over a trillion USD countries and companies need to make interest payment on dollar-baseed debt
Welcome to another episode of the Crypto Basic Podcast, where today we’ll be talking about -surprise surprise- the COVID-19 pandemic. It’s not a random commentary episode though, no general rambling, but a discussion on what we think might be a possible solution for the coronavirus crisis: Contact Tracing. Decentralized, blockchain based, anonymous and, as far as the data predicts, VERY effective. Tune in now to learn the ins and outs of it, and how it would revolutionize pandemic management.Relevant Website that has the covid playable simulatorsSource Code for DP-3T LabsA website we've referenced on the show before - This is a great website and it takes you step by step through the process of epidemiology. Why is the virus acting like it does, what ways could it act if things were different?You can play with the simulations to see how even one little thing about the virus changes, and it brings everything into or out of balance.After going on and on down the line, they come to this conclusion - the lockdown doesn't do anything but flatten, and then inevitably reset the curve. Testing doesn't solve the problem, and neither does herd immunity.Enter contact tracing.So what is google building with contact tracing? Well Google isn't exactly building it, but they are funding it.This is being created by a company called DP-3T. Which is a cute short name for Decentralized Privacy-Preserving Proximity Tracing.It is being worked on by cytologists, but it isn't using blockchain.Phones will broadcast via bluetooth what looks like a wallet key every few minutes.If you're close to another phone, your phones will exchange strings.Both phones store those strings for 14 days.If someone gets covid, they're marked as being in a hospital / doctor. The doctor can put in a one time passcode that confirms that the phone holder has been diagnosed with covid.Positive strings get stored in a database, and phones check the database every 5 minutes for any strings that they've heard recently.It's compatible with anyone's app that uses the source code, and the code is public.I see an interesting future, where if this were implemented properly with a public database and zero knowledge proofs, it would solve the problem and keep liberties in tact. The Nuance of the argument.Why it's hard to know where to stand.Fuck Plandemic
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