Spending vs Saving
This spending vs saving narrative is one of the major differences between Keynesian and Austrian economics. Keynesian logic is that people in a nation shouldn’t be “savers”. They should be out spending money – driving the economy. It’s your duty to spend and not save. Austrians think that savings is an important component of any healthy economy. Of course these concepts are at cross-purposes. Let’s dig in!!
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December 18, 2022 Weekly Close (USD)
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I can be reached by email at email@example.com and on twitter at @McIntoshFinTech. My mastodon handle is @firstname.lastname@example.org. Looking forward to hearing from you!
Protofunk by Kevin MacLeod
The following music was used for this media project:
Music: Carol Of The Bells [Metal Version] by Alexander Nakarada
Hey, SatStackers. It’s December the 19th, and this is Episode 87 of Generational Wealth of Cryptocurrency. I’m your host, MacIntosh. Today’s episode is about Consumption vs. Savings.
Of course, no one on this podcast is a financial advisor, and any information presented on this podcast is for informational purposes only. Now that we have the legal stuff out of the way, let’s jump on in.
All right, it’s Sunday night. The market has closed for the week. It’s turned over, and we’ll talk about that in just a minute. But the Earl Grey is hot. I just finished a little bit of wonton soup that I made earlier. One of the things that I’m trying these days is doing a little bit of cooking as kind of a hobby, as a way to do something that doesn’t cost a whole lot of money, because frankly, I work too much and need something to do to keep myself from working even more. So this week, I tried my hand at making wonton. It turned out pretty good, happens to be my favorite type of soup. And this time, I purchased the wontons frozen, and of course, assembled everything else. Next time, I will probably actually make the wontons by hand and make a batch of them and freeze them up. All in all, it was quite tasty. I had one child who thought I had a little too much ginger in it, but that’s okay. We’ll adjust that a little bit. Next time, I thought the ginger was quite nice, but everybody has different tastes. So sorry about that. A little side note there. But I finished my bowl of wonton soup, still sipping on the Earl Grey, and off we go.
Markets did close a couple hours ago, and let’s chat. It’s got a BTC price at closing of $16,765.64, so $16,765. Ethereum closed at $1,185, and ADA closed at $26.65. All three down, of course, from the week before. All three kind of in this same range that we’ve been trading in. We did have some numbers come out this week in terms of interest rate. The Federal Reserve chairman, Jerome Powell, announced they would be raising rates 0.5%, which is what was expected, which puts the central bank lending rates somewhere in the neighborhood of 5%. I don’t know exactly offhand, maybe 4.5%. The rates are 4.25 to 4.5%. So I don’t actually understand why there’s different rates, I guess, for different situations. I don’t know, but that’s the ballpark rate that they’re lending out money to the other banks, and then you can call it trickle down or whatever. The rates that we pay as consumers for car loans, house loans, whatever, are based off of that. It looks to me like we’re going to end up around 5% before this is done. I suspect in January the rate will either be 0.25 or 0.5%, which would put it very close to 5%, and then in February we’ll either have a very small rate increase or maybe even, quote, a pause. I am of the opinion, of course, 2023, we will continue to go sideways.
I posted a thing on Twitter, speaking of the crypto market specifically earlier tonight. It’s what’s called a three-day. So every bar on the chart represents three days of information. So what that does, it basically enables you to easily put an entire year on the screen at one time. What is that? A little over 100 bars, 100 and, I don’t know, 15, 20, whatever, very easily fits on one screen. And it’s very obvious when you go back that we have been in a downward trend since we topped at 69,000. And we need to respect that as if you’re trading, we need to respect that if we’re buying, and it’s something to keep in mind.
So you can go on my Twitter account, McIntoshFintech on Twitter, and you can see that chart if you would like, but it is a sharp downward line. And you can see the way that I drew it, it’s approached it twice, if I remember correctly, but it’s actually not touched it. And until it crosses that line, essentially, we’re in a downtrend. Now it may bump up like over the last few weeks, it goes up, it goes down, but in general, it’s continuing to work its way down. And what I said on the Twitter that I posted was, where did that go? Man, I posted a lot tonight. I was catching up on my Twitter feed. I had not been on all day, so I posted quite a few things or retweeted. Some of them we’ll talk about tonight.
Anyways, it’s approached that line. I look at it as from the top. The line actually is not exact. It looks like if you want to draw it to where it’s touching the top, and then down near the bottom, it would start in May of this year. But regardless, we have a clear downward trend from that 69,000 top, and it’s approached the line a couple of times. It just approached it over the last few days, and it is starting to look like actually it’s going to be rejected again, not surprisingly. I don’t think that we’re done.
And until we cross that line, until it crosses that line, starts on an upward trend, retest that trend, retest that line is best case. So it would actually cross it, go up, fall back, hit the line. This is a classic trading pattern. And then start back up. We’re not out of the bear market. So it’s a very easy metric way to look at this if you’re just kind of interested in knowing where we’re at. I think we might be close. I don’t think we’re there yet. I also think we will have some form of capitulation event where, and we’ve seen some good drops. I look at two right there on the chart actually over one bar over a three or six day period, but we’ve had dramatic drops.
But I think there’s too much out there. We’ve talked about the Bitcoin miners. They’re running out of capital. They’ve done everything that they can, and energy prices are not going up. They bought a lot of miners. Many of them bought a lot of miners when they were very expensive. Right now you can buy almost a top of the line unit for brand new for $3,000. And at the top of the market, it was like 15, 18,000 maybe if I remember correctly, because I actually looked at it and said, I can’t do that. Now I’m actually thinking about buying one or two of these units to start mining with them because they’re quote so cheap, at least relative to the price of Bitcoin and the basically four year lifespan that these units would have. So I think we will have one or two more miners capitulate. I think that if there are certain, if there are companies who have large holdings of Bitcoin who capitulate, that could start all this off. We’ll see. I just don’t think we’re there yet.
I come on here every week and I know you all get tired of, you want me to come on here and be like rah rah rah, but we’re just not there yet. This is the bear market. Welcome to it in case you didn’t know. And this is the time for building and this is the time for learning. And this is the time for stashing away your money. I hope that you’re DCA into Bitcoin. And we’ve talked about these other assets, Ethereum, ADA, so on. But now’s the time to be buying those assets at these bargain basement prices. If we do have a capitulation event, buy as much as you can when that happens. If we don’t, we go sideways, so to speak, between say $15,000 and $20,000 for the rest of, for all of next year, then so be it.
And that may be what happens. And that’s okay. All right. So there you go. Yay.
Buy your Bitcoin. DCA. I’m happy with where the market is right now. I’ll tell you during the last bear market, I was not happy. I was miserable at this point. And maybe you are too. And if you are, understand this is part of the process. You have to get through this. And maybe next bear market, and there will be one, maybe you’ll embrace it and use it as a chance to do these things that we were talking about. Build, learn, buy more Bitcoin. Right? All right.
This week’s topic, of course, we’re continuing our discussion of Austrian economics versus Keynesian economics. This week’s actual topic is consumption versus savings. What does that mean? So as we’ve discussed with the Keynesian worldview, it’s all about GDP. GDP, GDP, GDP. This is the most important statistic. And a big part of that statistic is spending. So when we have this discussion, you have to understand that. So spending of consumers, people like you and me, that’s super important to them. So you have to keep that in mind as we’re having this discussion. Austrians, on the other hand, believe that savings are fundamental to the economic growth of a country. In other words, they believe that by having high savings, high savings by stashing away money or assets or whatever, in order to use those later for various things, that is what will help make a country prosper. It’s a very fundamental difference between those two.
Now, the reasoning, I’m going to explain the reasoning for the Austrians. It’s going to take about five minutes and then I’m going to spend the rest of this time talking about the Keynesian economics view of it. And I’m trying very hard. Of course, I’ve told you all a number of times, I have an Austrian mindset. That’s my bias. But I am trying to be open to this. I’m going to explain it. I’m going to explain how, what I think that they’re, where they’re coming from.
And then I’m going to kind of pick that apart and say, this is why I believe that it’s incorrect. You can choose to do whatever that you want with that information. So Austrians believe that savings is fundamental to growth. The reasoning is that money is saved by people. It becomes available to businesses for investments. So maybe they make a loan to a small business to help get them started. This investment gets spent on new technology and on other improvements, or maybe they’re expanding their square footage of their factory or whatever, and that drives up the productivity of the business. The increase in productivity then contributes to an overall increase in the economy and ultimately growth. To me, that’s really straightforward.
Now, does everything that people save get spent on businesses? Of course not. Many people save and they’re going to pass that money on to their kids or whatever. But over time, people do tend to invest in businesses as their assets and their money matures and diversifies, I guess. Maybe it’s a local pizza parlor where they’re expanding the square footage to include the building next to it. Maybe it is something like, well, these days, certainly, it could be something as simple as investing in stocks like an early Amazon, for example. There are a number of ways that people can save and invest. The end result of that is almost always productivity increases in the nation’s total in the nation’s total economic output. The problem is it’s not immediate. If I’m saving, let’s say, I don’t know, let’s say I’m making a pretty good living. Maybe I’m making $60,000 or $80,000. Maybe I’m saving $1,000 a month. That would probably be pretty difficult these days, but let’s say that we can do it.
The problem is that money is not immediately visible in the economic output of the country, is it? No, of course not. It gets stored up, it gets saved, it gets put into stocks, it gets put into bonds even, real estate, whatever. But down the road, maybe that real estate, for example, becomes a rental property. That’s actually contributing to the GDP of the country. Because the rental, if I buy an $80,000 house and I’m making $200 a month net in rent after expenses, that’s what that means, is what that means, then that is going to contribute to the GDP of the country in the long term, if that makes sense. So it’s just a much slower process than the Keynesian view where consumption is king.
If it’s the holiday season right now, as I record this, of course, it’s in the middle of December. We’re approaching Christmas. Hanukkah is tomorrow. Happy Hanukkah to the Jewish listeners. And so you’ve got this holiday season. You’ve got people buying things, going to the stores. Typically, these last few months of the year, certainly the last quarter, is the strongest in retail. Those are immediate. I go out and buy something and yes, that’s going to increase the GDP. I’m spending it. So on the one hand, I do understand that thought process in terms of the Keynesian view.
I want to read, I got this off of a web page. I’m not sure I even have a link to it, so I’m not sure I can give proper attribution to it. But I’m going to read this. This was definitely written by a Keynesian person. And I’m going to read this. I will stop from time to time and I will say things that I think versus what this person is saying. I think this provides a very good view of the Keynesian viewpoint on spending. John Maynard Keynes, who published his influential work, The General Theory of Employment Interest and Money, now there’s a best-selling title for you, but yeah, lots of economic books have fun titles like that. In 1936, noted savings can ultimately be detrimental to the economy because of the paradox of thrift. So they actually believe that savings can be detrimental. Now, they go on to explain at some point that some savings is good for the economy. This theory argues that if everyone individually cuts spending to increase savings, which is absolutely what I would encourage you to do, aggregate savings will eventually fall because one person’s spending is someone else’s income.
So this is me. I think this is a very simplistic viewpoint, but that’s the thinking. Because increased savings, by definition, decreases current consumption. It stifles demand. A simple example can illustrate this paradox. Let’s assume I want a new computer, so I start saving an extra $100 each month that I would otherwise spend going out to eat. By choosing not to spend that $100, I deny the waitstaff at my favorite restaurant some work hours and tips, i.e. some portion of their income. As a result, these workers also have to reduce their consumption because they are earning less. If society, as opposed to an individual, as in our example, follows the savings pattern, this snowball or Keynesian multiplier effect could ultimately lead to decreased consumer spending and lower income for everyone.
Consequently, Keynes argues output would decrease and therefore limit economic growth recovery until, of course, I bought my new computer with the money that I would save. Okay. So that’s the first example. I’m going to jump in here for just a second. Now, they even allude to this. It’s like until they spend that money, which you’re saving the money, in this case, to buy a new computer, which is going to stimulate the economy for that manufacturer, for the manufacturer to buy a new computer, the economy for that manufacturer, for the manufacturer of the components for those supply chains, so on and so forth. Is it delayed, so to speak? Yes. It’s not as immediate as spending that money at the local diner. But that doesn’t mean it’s not as effective. It’s just different. So I personally, well, let’s go on. People don’t save forever. They don’t. Even if the money or assets are passed down, descendants, the people who they get passed it down to, almost invariably spend that money or maybe they sell the asset, maybe some real estate or whatever. Think about the number of people, even with something as simple as land, who own land that’s been in their family for quote, you know, generations, even 100 years. It’s extremely rare. And even though it does occur, basically that land is just out of circulation in that case. That real estate is out of circulation for that time frame.
Does that do as much for the economy as if it were, you know, passed, if it were sold every few years? Well, technically, no, it does not. But it’s not going away. And if you want to follow the Keynesian logic, to the logical end, you would just continuously, everything would be up for sale at all times. Nobody would have any savings. I’m going to sell my house every chance I get, because I’m generating GDP for the economy. See how ridiculous that is?
All right, going back to the article, in the Great Recession, the increase in the number of adult children, 25 to 29 years of age, living with their parents, is also a good example of the paradox of thrift. According to the Census Bureau’s Family and Living Arrangements data set, the percentage of 25 to 29-year-olds living with their parents increased from 14% in 2005 to 19% in 2011. This arrangement allows them to save money on rent, mortgages, utilities, cable, and furniture. However, because the addition of just one new household contributes an estimated $109 million to the rate of rent, mortgages, utilities, cable, and furniture, the rise in the number of 20-somethings living with their parents could have deprived the economy of up to $25 billion per year during this period. Even if this is accurate, it’s a very small share of the $15.3 trillion in economy. In the short run then, some could argue that this choice, and I want to emphasize that word choice, by young adults to save, slows not only the housing market, but also the retail, construction, and manufacturing industries. So this is complete baloney. I’m not denying the numbers. I’m sure that during, quote, the Great Recession – I keep calling it the Depression – I’m sure that during the Great Recession that the number of adult children essentially went back home and lived with their parents. But they weren’t doing it because they wanted to. Most of them were not doing it to save money. They were doing it because they were broke and desperate and had nowhere else to go, plain and simple.
So what this person is proposing is that these people should have been out buying homes and so forth, renting apartments. They couldn’t because we were in a recession, because we were in the lead-up to a recession. So this is the kind of logic that they used to use to create this worldview that spending is good, that everybody should just spend, spend, spend, spend everything you’ve got and then some. Go out and get some credit. Go down to that car lot and buy a car and put it on credit. And you know what? Right now, you can get a car for 3% if you’ve got good credit, which most people don’t. But let’s say you’ve got good credit. Let’s say you’ve got 800 on your credit score. You could go down to a car lot, get credit for 3%. It’s less than what the Federal Reserve is charging all the other banks. That sounds like a great deal. Spend, spend, spend on a depreciating asset in that case. Your car, and here in America, that’s pretty needed, but your car is a depreciating asset. Do not forget that.
By the way, of course, that was all my opinion. I think that’s fairly obvious. But these two short examples illustrate that savings can have unintended consequences because one person’s consumption is another person’s income. That is not true. It is true in some sense. If I don’t go to, if everybody does not go to everybody does not go to the restaurant and spend money, the waitstaff will be laid off, the restaurant will close. That is true. But that is a very, very, very, very simplistic view of an economy. The economy is much more complex than that.
In fact, the Austrians would argue the economy cannot be managed by some government planning it. The economy is going to, it’s just going to do, it’s going to do what it’s going to do. There’s going to be recessions. There’s going to be downturns in the economy, and those are needed things. They shake out, quote, the bad players. They shake out the weak, if you want to put it that way. During recessions, decreases in consumption could inhibit economic recovery. Sorry, got to jump back in here. Well, duh.
I think I’ve mentioned, I’m pretty sure I mentioned about a month or so ago, the company that I work for twice, twice this year has laid off people. They’ve laid off 15, 20% of the company. I think it’s around 15%. Half the team that I work on has actually been cut. Do you think if those people lost their job and they couldn’t find a job that they’re out spending money at a restaurant? I hope not. I hope they’re buying food at the grocery store, as expensive as that is, and staying at home and cooking it themselves, because that will save them money. I hope they’re doing everything they can to cut expenses. So yes, during a recession, during a downturn, the economy, the GDP is going to go down, and we’re not going to get out of it by everybody going out and spending a bunch of money. That’s baloney. It doesn’t make sense.
If you think about it, in my mind, maybe I’m wrong, but if you think about it for more than a few seconds, and then they have to backpedal. All right. Carrying on, and you’ll see what I mean in just a second. Carrying on with the article. However, in the long run, the accumulated money from the individual savers is available for capital investment. Bingo. That’s the exact viewpoint of the Austrians. I’m sorry, Mr. Keynesian, that you had to say that. A situation where businesses borrow to purchase capital, machinery, technology, expansion, et cetera. Thus, an increase in the savings rate increases capital investment. Such increases in capital stock ultimately lead to higher levels of business productivity and growth. Because economists are largely concerned with long run growth and economic theory, notes the positive aspects of increased savings, the paradox of thrift remains a controversial concept. I’m going to backpedal on everything I just said, Mr. Article writer, and agree that actually savings is a good thing.
Yes, GDP is important. Ultimately, GDP is a measurement of a country’s long-term growth, but making consumption and buying the god of the economy is not the way to create stable economies and stable growth over the long run.
So, that actually will cover our section for this week. Trying to keep these a little shorter, not really being very successful, but I did okay. Oh, and then I’m including, and I posted this on Twitter as well. Of course, one of the things that they’re adamant about, the Keynesians are, we shouldn’t be saving, essentially. I found a chart, and this is federal economic data. This is straight out of a federal database. I do not know exactly. I believe it’s from this website, it’s the St. Louis Federal Reserve website, and there’s a link to it. I’ll put a link to it in the show notes. Personal savings rate. This is basically what the Keynesians are talking about. This is the rate that people save. This particular data set goes back to 1959. I wished it went back further. I don’t know if they have it any further or it’s just cut off, but this one goes from 1959 until now, and it’s amazing because basically from 1959 all the way up to 1982-ish, the savings rate was around 10%. It basically did not dip below that. It was a little above it sometimes, including actually during the 70s, 1971 right there, 1973, and then a big spike up to, see if I can get it, there it is, 1975, 17.3% in May for some reason. And then it starts going down, and it went down all the way to 2005 where it was at 2.6%. I’m sure the Keynesians were celebrating, and then we had a recession, that Great Depression, Great Recession that we were just talking about, and it started climbing again.
Because people remember, subconsciously at least, in 2020 all of a sudden it shot up to over 30%, and then it dropped back down in 2021. No, that was actually still in 2020. Late 2020, down to 13%, so still higher, and then it shot back up in 2021 to 26%, and it has absolutely taken a nosedive since. It’s at 2.7% right here, even though they haven’t declared it a recession, in the middle of this recession. In my mind, we are in a recession. We’ve been in one for a year. The people in Europe certainly think we’re in a recession. I believe even though our unemployment rate has stayed fairly low that we are in the middle of recession.
I’ll talk about that another time, but we’ve seen our savings rate drop because people don’t have money to save, because their jobs are getting eliminated, downsized. They’re taking second jobs, or they lose their job. They can’t find a job that’s as good, so on and so forth. The extra money’s gone, and you’ve got a lot of people here in the United States who are barely hanging on, and I’m afraid in 2023 it’s only going to get worse.
Even if the economy starts to improve, the longer this goes on, the worse it will be. So our savings rate is dropped to the floor, and yet I do not see this Keynesian miracle. People are not saving. Where’s the economy going? It’s not going anywhere. Our interest rates are still going up. Companies are still cutting jobs, etc.
All right. All right, let’s move on. Talk about our supporters for just a second. It’s been a fairly slow week, to be honest. On a side note, right where I’m sitting as I record, I can see the new computer. I did pull it out of the closet over the last week, dusted it off, booted it up. It’s running Windows 10, and so I had to install Ubuntu on it before I can do anything with it, and to do that with the setup that I’ve got, I had to get a little boot disk. I had to get a USB stick. I did not have one. What are they called? Like a thumb drive. That is on its way. We’ll be here in the next couple of days, and I’ll be able to start setting that up. In the meantime, I honestly don’t know what’s going on with Sotoshi Stream. If you try to send Sats and they’re not getting through, please let me know by direct message on Twitter or something. I would really appreciate that. It makes it very hard to figure out if people are not getting through, or they just don’t like what I’m saying. I don’t know.
Inflation and deflation. One of our newer users, rdg3, sent in 250 Sats for that episode, and he said, promo episode had me hooked in. Great episode. He could have been talking about this episode or the other one that I’m promoting through Fountain, which is the one, the three parts of a blockchain. Security, speed, the trilemma of a blockchain. Security, speed. I can’t think of the third one right now, but anyways, it could have been either one of those. Anyways, rdg3, I do appreciate that. It’s awesome. Glad you’re liking it.
Our friend Kyrin at Meremortals podcast, which of course you guys should go take a listen to. I haven’t had a chance to listen this week, but I’m glad you’re liking it. I haven’t had a chance to listen this week, by the way. I’ve kind of gotten behind on my podcast, so I will catch up with them hopefully early this week. Sent in 1,324 Sats and said this. I don’t actually know specifically what he was talking about. I know I got a little wound up last week, but anyways, getting wound up is good. McIntosh shows that you have some passion, and I do. Sometimes it comes across maybe more than others, but I appreciate that. I just got to make sure it’s a righteous anger that is channeled in a positive way rather than becoming mopey nihilistic and self-defeating. I appreciate that. I agree, and it’s easy, frankly, when you’re kind of Don Quixote out here tilting with windmills. Sometimes it seems like to be that way, but we will carry on the fight.
To be honest, I had a discussion. We have some friends that we’ve known for a long time. We were talking the other day, and I don’t even know how. I try and actually stay out of these discussions, to be honest, because I find they’re generally not productive. We got to talking about banks and surveillance, essentially, and I started talking. Maybe it didn’t necessarily end well, but what it did do is it made me think since then really hard about how could I best present it. It’s one thing. You can go listen now to 87 episodes if you’ve got the time and understand, at least to an extent, what I think about Bitcoin and crypto in general.
On the other hand, it’s a lot more difficult, at least for me, to put that into two minutes. In early January, I’ve already got the episodes lined out for the rest of the year, as you all know, and then plus one on January the 2nd, but then in early January, I’m going to do an episode on why I believe that Bitcoin, specifically, is a solid, sound investment in today’s world and what it can do, I hope, to change the world, because that’s ultimately what I believe. First of all, I believe it’s a solid investment, and second, I think it has a chance of making a change in the world that we have not seen before. I think it’s a solid investment, and I think it seen easily since the Industrial Revolution, maybe even more than that, because if it’s put into the hands of everyone, it’s a way to set people free. Now, I’m going to hopefully elucidate that better in a few weeks when we talk about this, but I’m partially doing this so that I can carry on a conversation with this particular person. They’re fairly knowledgeable. They’re also set in their ways, as many people are, and they can’t see what’s going on, in my opinion, and I love these people. I’m not trying to put them down at all, but that’s where they’re at, and I think everybody knows people, the majority of people that you know are like that, so maybe you can go along with me on that journey as to how we approach people like that.
I saw something on Twitter. Somebody was like, they were really trying to boil down the Bitcoin message into just a few sentences, and I thought that was pretty neat. A mission statement almost, and maybe that’s really what I’m going after, but I think Bitcoin is a lot. It’s basically impossible to put it in a mission statement because it’s so all-encompassing. It’s amazing. All of the things that are going on in Bitcoin, and people are just like, well, Bitcoin’s bad because it consumes energy.
I’m like, wait, you don’t understand because over here, we’re using Bitcoin to reduce methane emissions in a landfill. There’s nothing else that can do that economically, and while we do it, we can generate sound money. Over here, we’re using it to burn, to use the natural gas that we had been burning off and mining oil, which by the way, we need to continue to do because otherwise we have crazy issues with energy. And over here, we’re using it to provide economic incentive for a base load for an energy system, a new energy system to reach out to people who’ve never even had energy before, but you think it spends too much electricity because that’s what you hear maybe on Twitter or some little blurb on God knows what.
I don’t know that we can get it down to a mission statement per se. Maybe we can. I would love to, but I’m going to think really hard about this stuff over the next few weeks. What’s coming up basically after the Austrian economic crisis and economic stuff, because it’s really important to me. It’s important that it is a way to empower people. All right, I will stop. Sorry. I’m giving all this stuff away. So there you go.
Moving on to news. So as you know, I’m using Twitter to replay my news at this point. It just makes it easier. So let me click to my Twitter account, McIntoshFintech. Of course I’m on mastodon at macintosh at podcast index dot social as well. And away we go. All right. Some of this, I’m just going to flat out skip. You should obviously, you should obviously follow me on Twitter. Um, but if you don’t, that’s okay.
All right. I, um, I posted on the 13th, a retweet about a place in Africa. They have got some really good things. You should follow gridless compute on Twitter if you can. Uh, they are working with villages in Africa to bring them electricity through hydroelectric power. And there are a lot of places like this remote. They don’t have any form of electricity or it’s very expensive because maybe they’re running generators or, or whatever, but they have a river or they have some large stream or whatever that’s providing a large amount of potential hydroelectric power. They bring in the capital to set up the hydro and they mine Bitcoin there and also provide power at a very cheap rate because once that’s set up, it is cheap to the local village. And what that does then allows them to, to grow really neat stuff. So, uh, take a look at that. This was a frontier town is what they’re calling it.
On December 13th, 12 years ago, Satoshi Nakamoto posted for the last time. This is the key difference. Really. There’s no other crypto that this is happened. He’s the founder. He’s the guy who started, he or she, sorry, we do not know, or the group started all this and left. They left and walked away and they have a wallet of a million Satoshi’s Bitcoin that they mined to help things get started. And that wallet is sitting there and has never been touched.
Tokyo electric power grid is going to use excess power for Bitcoin mining. Now, when it comes to crypto, when it comes to Bitcoin, I don’t think personally that the Japanese have been very active. Now I may be mistaken, but I don’t recall over the, over the years, a large number of Japanese crypto stories. Well, this is a big one, Tokyo electric. They will be using their excess power for mining Bitcoin.
So energy discussions themselves, people don’t understand how complex energy is. We think just cause you flip on a light with a switch, that’s how energy works. It’s just, it’s there when you need it. It’s not there. It’s gone. That’s not the case, whether it’s coal, whether it’s nuclear, whether it’s natural gas or hydro or solar or whatever, the power just doesn’t go away because you’re not using it. It’s still there and it has to be used or essentially wasted. So if I build a hydroelectric dam, for example, like compute gridless compute did in central Africa, and it’s generating a megawatt of power and only two-tenths of that is being used. The rest of it just goes to waste. That’s what they’re using to mine their Bitcoin with that, the rest of that power. They built a system that provides more than is needed because the river’s there. In this case, it’s available and can be used for that. And it doesn’t hurt to do that. So they’re doing it. They put the capital into it. Now they’ve got a place to mine their Bitcoin. Plus they can sell essentially the excess to the village. And as the village grows and prospers, they’re going to be using more power. Well, they’ll cut back on their mining and they’ll go build somewhere else.
On the 14th, I retweeted about the SEC is charging eight social media influencers and a hundred million dollar stock manipulation scheme promoted on Discord and Twitter. Just as a point, because this kind of stuff happens outside of crypto. We think that crypto is like the only thing that this kind of stuff ever happens. It’s not true. We, people think that for example, you know, the illicit use of Bitcoin or some other token is like that only happens in crypto. No, actually far more cash is used for illicit means. If you want to call it that, then what happens in crypto? In fact, a very small percentage of crypto transactions are related to this stuff because the reality is it’s actually very difficult to truly be private on a crypto network. So they found out they get caught. So influencers, they get busted because they were doing pump and dump or, or whatever. I don’t even know. I didn’t even look into it because I didn’t even know what was going on. I didn’t even look into it or whatever. I don’t even know. I didn’t even look into it because the point is this stuff is happening elsewhere. Oh, and by the way, well, I’ll save that for next month. That’s all right.
Something that you do need to be aware of on the 14th of December, we had a new bill come out called Asset Anti-Money Laundering Act. And this is being promoted by Senator Elizabeth Warren. It’s requiring devs to register identity and obtain a license, censor and surveil users that ban privacy tools. Now, I do not think that this bill will pass. I truly hope it does not because this will be a huge step towards creating some dystopian nightmare with a complete lack of privacy. Again, I’ll be talking about that early next month because that’s part of why I believe in Bitcoin. Now, I do not think again that that will actually pass, but anyways, I got another tweet on here, another retweet with more information about those eight social media influencers. You can take a look at that. Oh, by the way, this chain analysis done in 2021, I actually said the other day it was 1.5%. I was off by digit, by decimal point, I should say. It’s 0.15. So for 0.15% of the transactions, they want to surveil everyone. And that’s what really gets my goat.
All right. Will Clemente posted this. I thought this was funny. I retweeted this. The UN estimates that $800 billion to $2 trillion, that’s pretty good spread by the way, but anyways, is laundered globally every year. So in other words, it’s done something, I don’t know, it was part of some criminal activity, so they’re cleaning it, they’re laundering it. That’s why they call it that. We must outlaw this fiat currency, fiat being the dollar. It’s used for terrorists, rogue nations, money laundering, and evading sanctions. It’s also backed by nothing. Oh boy.
Anyways, Kevin O’Leary has come out very strongly saying that there’s nothing wrong with what was going on at FTX and blah, blah, blah. Kevin O’Leary was also paid $15 million by FTX. And that’s something I think that’s very important in this discussion, because he says he lost everything, but in fact, he lost part of what they gave him. He lost $9 million. They paid him $15 million. You do the math and then wonder why he’s talking. I have no…what’s the word I’m looking for? I won’t listen to anything else he says at this point. There’s nothing for him to say. He’s proven what he’s like.
US interest rates are now at the highest level since 2007. That came out on the 14th on Wednesday, which of course was when they raised the interest rates to that 4.5% level.
All right. I have decided not to get too involved in this one. I’ve probably mentioned it a little bit, but Binance is kind of…a lot of people are talking about Binance. Maybe they’re insolvent. Maybe it’s the next Celsius, whatever. The leader of Binance did come out this week and said that users are more likely to lose crypto by holding it in a cold wallet, in other words, offline, rather than putting it in a centralized exchange. Yeah. Okay. I’ll take my chances actually, but that was interesting.
By the way, same day that came out. Oh, the same day that this bill came out, the anti-Monday laundering, whatever. The Dansk Bank, and I don’t know where that is other than I think it’s in Europe. D-A-N-S-K-E. Oh, Estonia. It’s Estonian branch. I do think they’re in Europe, but anyways, the Dansk Bank to pay $2 billion to settle money laundering charges. They have agreed to plead guilty to money laundering charges at its Estonian branch. Hmm. I don’t know. I don’t know. But you know, Bitcoin is used by terrorists. I don’t know. I don’t know what they’re going to come up with next. It probably is, but so is dollar bills. So don’t treat me like a terrorist, please.
I’m sorry if that offends you, but here in the United States, as I continually remind people, I’m just going to put it on my shirt, we have a right to privacy. We have a right to free speech. Anyways. And in fact, I tweeted it this week. I retweeted somebody’s. George Washington said, if the freedom of speech is taken away, then the dumb and silent, then dumb and silent, we may be led like sheep to the slaughter.
Now, I did think this was very interesting. Just a few hours ago, Nigeria, this tweet came out from Bitcoin magazine. Nigeria is going to pass a bill. Now, sometimes when this stuff comes out, it’s maybe a little premature and it doesn’t really happen. But I’m going to say this, preface it with that. And then I’ll explain why I think this is very interesting, actually. Nigeria to pass bill legalizing Bitcoin and crypto. So again, Bitcoin is leading that. Nigeria has had a lot of money problems. Nigeria’s currency is not doing well at all. And they are promoting, I’ve mentioned this currency, Naira, N-A-I-R-A or something like that. I’ve mentioned it a number of times. They’re promoting their own digital currency as a way to combat this. And really what they’re doing is they want to make it digital so that they can make it easier to print more of them. But apparently they’ve, if this is true, they’re somewhat capitulating to that. Because the people in Nigeria, a lot of people in Nigeria are turning to Bitcoin because their local currency is a joke.
All right. I did post something, a few hours ago from the Bitcoin conference that apparently is some kind of, it’s a TikTok video of somebody who went into a bank, tried to withdraw $5,000, which the reality is these days, that’s not very much for a lot of people. It’s $5,000. I wished I had $5,000 sitting here on the desk, okay? I don’t want to diminish that, but I don’t know. I don’t know. I don’t know. But the bank wouldn’t give it to him. They said, we don’t have it. That’s insanity to me. But okay.
Argentina. Congratulations, Argentina. They just won the World Cup. I’ve been watching the World Cup actually. It’s great this year, this time. It’s really the first time I’ve watched it from start to finish, but congratulations. They were not the team I was rooting for. I was actually rooting for Morocco because I love the underdog. And they got booted in the round before this one. But anyways, they also won in something else. Their inflation has now hit 90%. So they are not doing well.
Glenn Greenwald, very much a liberal, not somebody that I often agree with, to be honest, posted this definitive evidence showing a fully integrated relationship between the FBI and Twitter’s top censors. If you’re not bothered by the U.S. security state’s infiltration of big tech and its ability to censor at will, then you are by definition a hopeless authoritarian.
I have not waded into this whole Twitter thing. This is not what this podcast is about. I have been watching it with some interest. I am on Twitter because that’s where everybody is. There certainly was a lot of censorship going on. There is appearing to be more censorship going on, maybe of a different kind. I do not know. I am also preparing to open up a third social media platform because, you know, two of these isn’t enough. But there is a decentralized one. But there is a decentralized one that I will be talking about very soon that, in my mind, actually might provide a long-term alternative to a lot of this.
Mastodon is better, in my opinion, in regards to this stuff, but it is not perfect. And I am on it because of the Podcast 2.0 people. I do cross-post a fair amount. I have not been so good at it lately, but it is not decentralized in some ways, and I will explain that when I talk about this later.
Time is running out. Banks in Lebanon froze money. We have talked about this for a while. People are robbing the banks just to get their own savings. It is still going on. This was an article from December the 17th.
And by the way, since 2000, according to this guy, Alexander Ellefson, which again, this is Twitter, I do not know where he got this from in this case. So treat this with a modest amount of doubt. But given the actual news article, I just posted $2 billion, and that was on MSN, by the way, the Dansk Bank, $2 billion for that one thing. Anyways, since 2000, the year 2000, banks paid, let us see, hundreds, thousands, millions, billions, $340,816,534,000 in fines, mortgage abuse, toxic security abuse, investor protection violations, sanction violations, banking violations, price fixing, false claims, market manipulation, tax evasion, and fraud. I am not saying you should not use a bank. I cannot answer that for you. But I will point out that banks are not perfect.
One last thing, just came out on Cointelegraph, 352 scam tokens were created every day this year. So scam tokens are, they’re just built for rug pulls, this kind of thing. Been happening a lot, more than ever. And I have a solution. It’s a simple solution, only by Bitcoin, proven for the last 13 years, and it’s not a scam.
Follow me on Twitter, McIntoshFintech. That’s it. No crazy news other than that. Bitcoin sits at 16707, still wanting to go down.
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