The Real Financial Reset
While the details are complex, resetting to a “new, better normal” is a lot simpler than you might think.
Eradicating debt and re-establishing a highly functional financial system is well underway.
The core question is: For what, and for whom?
We have a few key scenarios to consider.
- A new currency war between a reflated US Treasury dollar and Bitcoin’s meteoric rise
- What has historically controlled commerce since 1885
- The real math behind finance and financial instrumentation
- What this all means going forward
THE NEW CURRENCY WAR
There are two main battle lines being drawn.
The first is a digital Treasury note.
In March of last year (2020), the U.S. Federal Reserve was fractionalized, with 13 underwriters set against the 12 regional banks.
Federal Reserve Board - Reserve Requirements
As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020…
What this means is that the Reserve is now separate from these Treasury notes.
The Reserve is “cloning” its own debt notes (the new quantitative easing) in an attempt to buy up assets in the equities market — rising stocks, etc. That isn’t going so well, for many reasons. The main reason is that capital is being used to inflate stock prices, while liquidity is quickly moving out of the market.
Just a few days ago, the first gold bond in 87 years was issued to subscribers, further circumventing the Reserve. So, it appears that gold and other precious metals will back the U.S. Treasury note in a new standard handbasket.
The 20%+ depreciation of the Treasury-backed USD is a reflationary adjustment so that spending power can be revitalized.
It is likely that this “full transition” to the Treasury-backed USD will happen on April 1st of this year (2021), which will be the 50 year anniversary of the Nixon Shock, when the FIAT/petrodollar was instituted, and gold certificates no longer backed those notes.
At this time, bank account holders will be given the option to accept these new Treasury-backed notes, by way of a basic digital permission offered by their banks.
We’ll see how this plays out.
The second battle line is Bitcoin.
Bitcoin is not only being traded as a speculative commodity, but it is being centralized in an attempt to circumvent US Treasury-backed notes (not Reserve notes, which are irrelevant in this context).
This is why major corporations like Mastercard, Amazon and BNY Mellon, along with various institutions, are buying up inventory and taking huge positions. In short, these corporations are attempting to become their own lenders.
Further evidence of this is PayPal’s assessment that it wants to “shape the future financial system and central bank digital currencies (CBDCs) are a part of its vision”, as per CEO Dan Schulman.
Not Just Bitcoin, Paypal's Vision Involves Central Bank Digital Currencies Too: What You Need To…
PayPal Holdings Inc (NASDAQ: PYPL) wants to shape the future financial system and central bank digital currencies are a…
BTC instruments are also being pegged to gold and other precious metals.
Exchanges like Gemini are paying people to rehypothecate their BTC as loan-outs to other customers. Rehypothecation is a practice whereby banks and brokers use, for their own purposes, assets that have been posted as collateral by their clients. Essentially, it is a way to redistribute debt in the form of a digital instrument (a “cryptocurrency”).
Even with pegs to stave off volatility, BTC’s price may go to the moon, but it cannot be fractionated and hold value for the “average person”. Not without centralized control, that is.
Additionally, SHA-256 (the BTC blockchain) cannot replace SWIFT as the global ledgering system, for many reasons which this author has written about.
Solving the Bitcoin Problem
Deconstructing non-deterministic math to get to the real promise of the blockchain.
Net-net: This author loves BTC as an invention, but it is not a stable investment. It also cannot possibly become a global reserve currency because it already doesn’t function as sound money or currency.
If this is the case, then what’s the alternative that “exists in the middle”?
THE REAL (e)COMMERCE FACTOR
Unbeknownst to the vast majority of the population, the entire system has been governed by maritime law, or more formally, “postal law”, for the last 136 years.
Maritime or admiralty law is a body of law that governs nautical issues and private maritime disputes. Admiralty law consists of both domestic law on maritime activities, and private international law governing the relationships between private parties operating or using ocean-going ships.
So, we have been operating in a system that essentially bypasses constitutional mandates, to include unwieldy taxation and restrictions on civic rights.
Hard to believe? Here’s the proof.
The original Treaty of Lisbon was signed in 1878 by the U.S. and all other first world governments. It was updated in 2009 to reflect the advances in international trade law.
The Universal Postal Union or UPU was founded in 1885 as an “Additional Act”, meaning it is a standalone treaty signed directly by all nations at the time with an economy worth controlling.
Therefore, the UPU has been in control of all commerce (all shipping and trade globally), and the designated proprietor of the international “court system” as well. The Postmasters for the UPU are the “authoritative assignees” of all commerce globally.
Which means that a postal construct has been used as the “law of the land” or more specifically, the “law of the land by sea”, to control global trade, across nations, and across geographies.
Here’s the kicker: The UPU had to be “ratified and approved” by the Postmaster General of the United States, and then “approved” by the sitting President of the United States.
So, a “one world government” has been in existence since 1885.
Let’s unpack what this means in fundamental finance terms.
THE REAL MATH BEHIND TRADITIONAL FINANCE
As important to a centralized trade and (e)commerce operation are the financial mechanics behind it.
Also unbeknownst to the vast majority of the population, financial maneuvering in a centrally controlled economic system actually boils down to some very straightforward math.
There are, of course, basic formulas around compound interest, or what are commonly understood to be interest rates based on inflation.
There are also more sophisticated formulas around average interest, which basically take compounding interest and bundle it into a median value such that financial instruments can “hide” the debt that assets carry.
What all of this produces are two important variable sets, the first being debt to asset ratios, and the second being cash to asset ratios.
Here are the common parameters that are used to make these calculations in more complex scenarios. These are based on time, frequency and the projections of growth per the rates of compounding interest.
What you end up with is a scenario where your cash and assets can achieve a 1:1 balance, or, a scenario in which your cash to asset ratio is upside down, which is more often the case.
In more optimal situations, smarter operations adhering to these common parameters will determine outcomes which have you “well into the black”, or with your cash reserves greatly exceeding the debt you might carry, along with the valuation of your assets.
Until, of course, market conditions change.
What this ultimately means for common people (“citizens”) is that their time, their labor and the things they acquire as “wealth” are not actually owned by them — they are “borrowed”. They essentially borrow against assets they are already entitled to, per constitutional charter.
They also do not own the government notes they use for money, nor are their taxes more commonly used for things they perceive to be benefits or subsidies.
Those have been going to the Corporation of the United States, along with other corporate government structures. These legal codes outline the definitions in understanding these implications.
28 U.S. Code § 3002 - Definitions
As used in this chapter: an amount that is owing to the United States on account of a direct loan, or loan insured or…
You might be asking yourself at this point how much has been “stolen” from us, the “common people” around the world. This author calculates the number to be somewhere in the range of $23 quadrillion.
Yes, you read that right.
And as with all things unjust, there are silver linings.
RESTRUCTURING FINANCIAL MATH
Now we have to consider that any asset we purchase or borrow against with cash or credit immediately loses its inherent value as it enters the market.
This is even more glaring in how companies today are then overvalued to increase stakeholder profits, oftentimes without having revenues, or cash to asset ratios that can substantiate their share prices.
This means that its value is either speculated on, or, that its valuation is inflated considerably to increase the margin in yield, while incurring costs to the resources used (otherwise known as externalities, or side effects).
There are ways around this, such as a framework this author has developed for calculating externalities, called natural risk amortization.
Reality is, there is no need for interest rates or interest rate adjustments, if the assets themselves are properly ledgered, and if their risk parameters are amortized.
In other words, if we know what the actual risks are in developing an asset, we don’t need to create imbalances in how we financialize the asset.
Keep in mind that the real-time amortization of risk is perhaps the most important element in assessing economic health.
Along these lines, this author has written about the blockchain’s role in amortizing risk as an “alternative” to operationalizing and capitalizing resources toward more independent means.
The Blockchain’s Role in Resource Independence
Introducing the economic construct of Universal Natural Assets.
In the simplest of terms, what this really comes down to is a way to restructure basic math such that there is little inherent risk and therefore the most inherent value to preserve during the lifecycle of the asset’s use, or if it goes dormant.
The basics of this can be seen as follows.
In short, we are simply replacing interest rates with 1s and 0s that reflect the actual value of an asset, as it is transacted or exchanged in the market, in real-time.
Another way to look at this is to consider that no unit of account (money, currency or credit) is worth anything other than the underlying asset or resource itself.
So, whatever we use for money, currency or credit must accurately represent the asset for the labor put in, its uses and its ongoing value. If those parameters are challenged, or if the asset is no longer useful, then we can retire it, or reset it and use it other ways.
What we don’t want to keep doing is to overfinancialize assets of decreasing value, or which don’t have discernible utility in a world of critical needs.
What needs? Land, food, medicine, energy, water, and information.
Which brings us back to the very real prospect of decentralizing commerce and currency in ways that are commensurate with natural value — meaning value that represents real utility addressing real needs in the real world.
Which means we are on the precipice of calling out this monetary and commerce system for what it really is, and then rolling out the alternatives.
This author has written about an approach to the alternatives, which is active throughout all of his company projects and platforms.
Quantum Tolerant Currency
Moving from fault tolerance to quantum tolerance in the design of cryptocurrencies that can sustain their value over…
WHAT THIS ALL MEANS GOING FORWARD
Understandably, this is a lot for anyone to take in, at least conceptually. But it is the truth, and the mechanics behind it are very real.
If we consider that corporate consolidation has accelerated over the last 40 years, we can begin to see the bigger picture.
It is no mystery that corporate and technological oligarchs have been vying for total control of our economic system, and now it is clear how they’ve been doing it.
Yet, as mentioned above, there are plenty of tools and solutions in tow to establish a proper reset.
- There is a financial battle (a currency war) that is exposing two centralizing paths that involve removing interest on digital money, and leveraging the encrypted interest on goods and services
- This leverage on encrypted interest drives a global (e)commerce scheme that bypasses both natural laws and constitutional law
- The math behind it all can be deconstructed and reconstructed to provide alternatives, in a very short timeframe
In sum, we are at once unwinding what appears to be an illegitimate, predatory system and replacing it with one that will serve the people.
It’s been long overdue.
Now it’s time to roll up our sleeves and continue the task of building alternatives that enable people to live and work on their own terms.