Business & Investment

A brave new world of surveillance and control — CBDC Crypto

Are you going to the Olympics?Don’t leave home without Chinese RMB

You’ve probably heard of the central bank’s digital currency, the CBDC. The two are often confused, but they are not cryptocurrencies. True cryptocurrencies are recorded on the blockchain, have a decentralized issuing network, and are loosely regulated (if any).

The CBDC is issued by the Central Bank and is highly centralized in issuance and governance. The CBDC does not require a blockchain ledger. The central bank can maintain its own encrypted, authorized digital ledger of the counterparty that can hold and use the CBDC. (This does not have to be a small group. It can include the entire population of a large country or trading partners around the world. This allows the issuing central bank to determine who can and cannot use it. Means.)

Most importantly, the CBDC is a new payment method, but not a new currency. Digital currencies will remain in dollars, euros, yen, or yuan, depending on the central bank. What’s new is that these currencies will be available for direct money transfers and through payment channels such as Venmo, Apple Pay and Square. Individuals may also have digital accounts directly in the Federal Reserve. The entire credit card and banking system.

Currently, the leader in the use of the CBDC is the People’s Bank of China.

According to this paper, China may use the 2022 Beijing Winter Olympics as a new digital original showcase. The RMB-based CBDC is already in prototype form, but the Winter Olympics will significantly increase usage due to the involvement of tens of thousands of foreign visitors bringing RMB balances and payment apps back to their home countries. To do. Will be used in future transactions.

This viral effect will reinforce its original role as an international reserve currency.

Dark side of CBDC

Of course, this all ignores the dark side of the CBDC. The goal of the CBDC is to get rid of banknotes. When money is 100% digitized, central banks and the Ministry of Finance impose negative interest rates, confiscate account balances due to political misbehavior, and withhold taxes directly on bank balances. It will be easier to impose.

To make matters worse, a fully digital payment system operated by a central bank is an ideal monitoring mechanism as the currency issuer knows every purchase you make and your physical location. This is the ultimate totalitarian surveillance.

Payment information is executed via a Chinese computer controlled by the Chinese Communist Party, so China can even monitor foreign trade in its own country. The world of CBDC is really Brave and new world Of monitoring and control. The only way to fight back is to use non-digital, untraceable, physical wealth stores such as gold, silver, land and art.

Or is deli the next big investment trend?

New Jersey deli is worth US $ 100 million

When I first saw this story For a New Jersey deli worth US $ 100 million, I couldn’t believe it. Deli thought he had to have a big franchise agreement with McDonald’s or the subway to expand to 1,000 locations under the original name brand. This type of transaction can justify a very high reputation for the operation of a single store. But no, there were no franchise agreements or other license agreements that could explain the price. A deli with annual sales of approximately US $ 35,000. As one analyst said,’Pastrami must be amazing.. “

The owner of the deli set up a company called Hometown International, and it turned out that the company’s stock was traded over the counter. Recently, investors have raised their share price from US $ 9.25 to US $ 14 per share, giving deli companies a market capitalization of US $ 113 million. This story isn’t really about deli or pastrami. It’s about the market bubble and ridiculous valuation that can occur when a retail investor bids on a stock in the hope that a larger idiot will pay more when withdrawing cash.

Does this kind of bubble in one stock apply to a broader market index?

In such situations, market capitalization is completely decoupled from underlying value, projected returns, or other tools used in securities analysis. It’s just a bubble with inevitable losses for the last buyer. However, the bubble can last longer than many believe. Because there is a constant flood of new buyers who do not want to be the last buyers to run for the exit.

The bigger question is whether this kind of bubble in one stock applies to a wider market index. The Dow Jones Industrial Average, S & P 500, and Nasdaq Composite Index are all at or near record highs. This does not automatically mean that the stock index is in the bubble territory. However, many objective indicators such as the ratio of market capitalization to GDP and the price-earnings ratio of Schiller CAPE show that fact.

Extrinsic shock is needed to bring the market back to Earth

To say that the market is overvalued is not the same as saying that the market is ready for a crash. Returning the market to Earth requires extrinsic shocks such as rising interest rates, geopolitical crises, and unexpected bankruptcies of large corporations. Nevertheless, we know that such events occur with some frequency.

Shorting the market is probably not a good idea, as the market can be even higher. It’s a good idea to reduce your equity exposure, diversify with cash and gold, and take your time. When a crash occurs, it far exceeds all in-stock people, including deli.

nice to meet you,

Jim Rickers signature

Jim Rickers,
Strategist, Daily Reckoning Australia

PS: This content was originally published by Strategic Intelligence AustraliaA financial advisory newsletter designed to protect your wealth and help you potentially benefit from invisible world events. Learn more about.

A brave new world of surveillance and control — CBDC Crypto A brave new world of surveillance and control — CBDC Crypto

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