Finance & Fury Podcast

Welcome to Finance and Fury, Last Friday – new monetary reset might be going digital Today – Dive into Cyrpto/BTC potential traps of the future – The potential regulation and eventual centralisation of Cryptocurrency at the nation-state level – i.e. domestically in any country Something always has puzzled me – Who invented BTC – I know the anonym's name and we all know the story – In 2008 - Bitcoin was proposed by unknown author or authors - pseudonym of Satoshi Nakamoto At the heart of blockchain is the distributed ledger - or a distributed network is a shared database So rather than one central entity holding the information, it’s spread through a network of millions of sites or nodes – in the early days decentralization offered many benefits over traditional, centralized systems: increased security and transparency As it uses a trustless, fungible and tamper-resistant distributed ledger called a blockchain Ironic it is called a decentralised currency, when you need power and the internet to access – an

Welcome to Finance and Fury, The Furious Friday Edition Today – want to explain why to watch out for proposed solutions to economic or societal issues Last ep – talked about the battleground between the Bankers and Governments back in the early 30s – Was a wild political time - Communist parties, Nazi party – mass protests, rioting, damaging buildings and assaulting people Since then – nothing much has changed – except where civil unrest is occurring and the degree - Today Sub-Saharan Africa – South Africa, Zimbabwe protests – over fuel costs, power and water, food costs and shortages South America – Chilean, Ecuadorian, Bolivia, Venezuela – over costs of living, like healthcare, education, The Middle East/Northern Africa - Algeria, Egypt, Iran, Libya – Food costs and shortages In the UK and Australia and America - Climate activist demonstrations today are acting out their perceived disenfranchisement – in the 30s it was real (living through the great depression) – while one is manufactured (world ending in

Welcome to Finance and Fury, The Say What Wednesday Edition This week Question from Mark – two-part episode (over this week and next) Hi Louis I have 2 questions, can you explain how negative yielding bonds work, they are saying a third of the global bond market is in negative yielding debt and it is going parabolic. How do people make money from negative yielding debt? It doesn't make sense. Also, can you explain the repo markets that are going on at the moment? Apparently the banks are loaning money from the Feds at 10% so they have enough liquidity to survive the night # Bank run?   How can a bond have a negative yield? Negative-yielding bonds are bonds that cause bondholders to lose money when they mature. This happens when holders of such bonds will end up with less money than what they used to purchase them Negative Yield works through the mechanics of bonds – when the prices go up to where the yield is close to zero – and they are based in a nominal real value $100 – in 10 years’ time inflation eats a

Welcome to Finance and Fury Today – want to explore the chances of the ASX booming next year Have been talking about complexity theory for the past few Monday episodes – Focusing on collapses – but what if positive feedback loops kick in further – in the form of potential QE from the RBA Want to cover this as a few developments have happened recently – pointing towards this possibility in 2020 Speculation from Banks – the RBA balance sheets show this   First – the process of QE – covered what it is in the past and why it doesn’t help the population – just raise prices Why? there is a concept of what is called the Cantillon effect - Cantillon effects – Under the assumption that all resources are fully utilised in equilibrium, a credit expansion implies that producers of capital goods in the ‘new’ processes of production bid away resources from ‘older’ processes. This is where the Cantillon Effect begins to work. The injection of additional money increases the purchasing power in the part of the econom

Welcome to Finance and Fury, The Furious Friday Edition Last ep – lead up to the market crash of 1929 - and how thanks to central bank leveraging once removed – the market crashed Today – want to run through the internal political wars that were created – similar landscape to today Corporatism versus fascism – Private central banks versus the merging of the Government with Markets Has similarities to the modern era – with The New Silk Road and the Green New Deal   Start - The Living Hell that was the Great Depression Throughout the Great depression - unemployment skyrocketed to 25%, industrial capacity collapsed by 70%, and agricultural prices collapsed far below the cost of production accelerating foreclosures and suicide. Life savings were lost as 4000 banks failed. This despair was replicated across USA, Canada, Europe and Britain - the population was pushed to its limits making western countries highly susceptible to fascism and socialism/ communism ideals England saw the rise of Sir Oswald Mosley’

Welcome to Finance and Fury, The Say What Wednesday edition.  Today's question comes from David Hi Louis, I must commend you on your contribution to the finance community. If you have thought me one thing, it’s that the more you learn the more you realise how little you know. So, one thing that does perplex me is the Australian made product of the offset account. Whilst I understand how they work and the power they have when used correctly, I can’t figure out why the banks have them. I mean it’s the modus operandi of the banks to extract money from lenders via the mechanism of interest. Call me a cynic but I feel the banks must have an ulterior motive to this play. I would love to know your thoughts. - David    That is a great question – made me think as well and do some further digging – today - Offset accounts and Why banks allow them? First – the basic = Offset accounts are a type of deposit account that is directly linked to a loan – like a mortgage Money deposited into offset accounts effectively reduc

Welcome to Finance and Fury,  For the past few Monday episodes been talking about complexity theory and markets – check out Last two eps – went through phase transition, feedback loops and how markets become fragile and some signs this is happening Most recent episode: https://financeandfury.com.au/how-do-you-know-that-the-share-markets-are-likely-to-be-in-for-a-collapse/ Previous episode: https://financeandfury.com.au/how-to-analyse-share-markets-by-treating-them-as-a-complex-system/ When applying complexity theory to current state of financial markets – exhibit characteristic of the point of criticality Lack of resilience (fragility – glass v plastic vase), flipping feedback loops = critical tipping points where markets are unstable In any system - the interaction between chaos and order builds resilience - The criticality of the balance between order and deterministic chaos is an optimal evolutionary solution for systems – too many feedback loops create a loss of resilience Making it dangerous – li

Welcome to Finance and Fury, The Furious Friday Edition. Today – continue talking about wars – the banker's wars – this time on us and financial markets– Gone through how bankers fund wars, central banks carry out monetary policy that leads to Hot wars Start a miniseries - How To Crush A Bankers' Dictatorship – likely be three eps over next Fridays – lots to unpack - Look at central banks – London, German and US connection - A Lesson From 1918, 1929, 1933 – look at how to break the trend -   To start this – the question of why often comes up – why would bankers influence politics, crash economies, control the economy and start wars  Well, hear why from the horse’s mouth – Lord Montagu Norman, Governor of The Bank Of England, addressing the United States Bankers’ Association, NYC 1924- Quote: “Capital must protect itself in every possible way, both by combination and legislation. Debts must be collected, mortgages foreclosed as rapidly as possible. When, through the process of law, the common people lose th

Welcome to Finance and Fury, The Say What Wednesday edition.  Today's question comes from Gab. Hi Louis, thank you (as always) for the great content. I've got another question that I've struggled with recently, and I'm hoping you can shed some light on the topic. I've setup a family trust for our investments, but, as you know, they have a limited shelf life of 80 years. What happens when a family trust comes to the end of its life? What happens with the assets and are there CGT or stamp duty liabilities? Is there a way to minimize costs and maintain the trust structure? Thanks, Gab Hi Gab, no worries at all! Glad to hear you are enjoying it. Great question – Preface – not a tax expert – important to get legal advice -  but this is what I know Family Trusts have an 80-year lifespan – when a trust is set up the time it is active can be set for before this, but the max is 80 years and is generally the default to maximise the benefits Known as The 'vesting' date – i.e. the point in time which a trust has to be

Welcome to Finance and Fury Last week - The lead up of markets in relation to complexity theory – phase transitions and feedback loops in markets https://financeandfury.com.au/how-to-analyse-share-markets-by-treating-them-as-a-complex-system/ Today – look at the question - How do we know that we are in for a collapse – or better - what are the early warning signs in of a change in feedback loops triggering a phase transition a complex system There are signals – complexity can pick up on but equilibrium can’t – Uber listing on the market with $1.5bn loss – signal Today's episode is a conceptual framework expanding on the previous episode – particularly focus on market fragility and what signals point to it increasing The last episode talked about how after a while the same positive feedback loop can create an increased instability in financial markets – this can occur between public and private investors – but after enough of the same feedback – exposes markets to the risk of a systemic risk escalation. But

Economic Warfare through currency, trade, and sanctions – tools that can be used to crush a nation without firing a shot – but have historically been a pre-curser to war – also – the war on all of us financially – conducted by Central banks/Fed   James Rickards – got through his 4 books this year and he has an interesting theory on financial wars turning into real wars - Stages – where financial crisis lead to – transition from economic wars to hot wars Build up – Trade imbalances – starts when people living beyond their means begin taking on debt. Wages become distorted, production costs escalate and industries move offshore – results in trade deficits and unsustainable national debts Financial Crisis occurs – Debt levels reach tipping point and the financial system suddenly destabilises – economy crumbles and borrowing stops, bankruptcies rise and unemployment increases – leaves the country in a bad state Initial outbreak – Currency wars – political leaders/bankers cheat the rules of the game – economi

Welcome to Finance and Fury, The Say What Wednesday Edition.  Where each week we answer a question from you. Hi Louis, I have a questions about portfolio construction and asset allocation. I am 36 years old and am trying to understand what is the most appropriate asset allocation to have. There is so much material out by I am looking to build a portfolio that is skewed towards reliable income paying stocks through dividends even in down times and hence have favoured the larger Aussies LICs and ETFs. I am 100% in equities with 80% Aussies Shares (LICs and ETFs) and 20% international (ETFs US and Non US) however trying to understand what does a good portfolio and asset class look like and what are the things I should be further considering. I am looking to maybe add Gold (direct through direct ownership and Gold ETFs) and Bonds as I keep hearing these are good to have for assist in downtime but the income on these are very poor but then also thinking should I be having more international exposure / alternative

Welcome to Finance and Fury - Listen to last Monday episode on Share as a complex system – today diving in to discuss the application of a complex system and a financial collapse – or pre collapse – talk about phase transitions – build up and slowdown – pre-collapse Last ep - Complex is non-linear - more in the relationship of inputs and outputs than direct relationships of cause and effect Also Adaptive – so markets are evolving, dynamical as people will change their behaviour Shares have three characteristics of complex dynamical systems highly unpredictable - due to their non-linear relationships / interactions contagion effects – panic or bubbles are things that spread very quickly – through being interconnected modularity – while the whole system is well connected parts of the system are more connected within than between, which may help its resilience, or the ability for the system to return to equilibrium after turbulence broad inter-connectedness of global markets - only increased with globaliza

Welcome to Finance and Fury, The Furious Friday Edition.  Today is an interesting episode - Central Banks and Wars – Often wouldn’t think of these two together – What is the purpose of a central bank? Financial stability, a lender of last resort, to smooth out the cycle of boom and bust? Not their original purpose – Why did nations first start central banks? To finance the material needs of the nation-state in times of war Central banks ramped up the funding capacity of wars – the long-term costs could be covered Britain had shown that its central bank chartered in the 1690s was necessary to finance a crown bent on war France too, under the revolutionaries and Napoleon, had set up their institution to ease the way for aggressive war credits. Central banks came into force early – Older nations like Germany - 1872, France – 1800, England – 1690 – ramped up after 1900s many more coming online USA – Federal reserve 1913 in USA, Swiss – Swiss National Bank 1906, Russian – 1922 – The Gosbank   First – In

Welcome to Finance and Fury, The Say What Wednesday Edition. Where each week we tackle questions from you – This week's question is from Gab Hi Louis, I have a question I've been pondering lately, around small-cap ETFs or LICs. It seems like the whole reason for investing in small caps (the fact that you can get high capital growth) is negated by the construct of such instruments. As an example, let's say we have 40 small caps in one of these funds, statistically, only a handful of them will succeed, but the moment they grow, they would automatically be removed from the fund (at a profit, of course). This means you don't get the opportunity to see 100x or 1000x benefit from a future Amazon or Facebook, because they got sold at 10x, while the poor performing ones still bring down the overall performance of the fund. What do you think? Is this a reason to avoid small-cap ETFs or LICs? Thanks, Gab Great questions and points! First - What is small-cap? - The index, the S&P/ASX Small Ordinaries Accumulation In

Welcome to Finance and Fury Series on Share markets as complex systems – a different way of thinking about them – This episode, discuss some basics of shares and introduce complexity theory – Nonlinear, Emergence, Spontaneous order, Adaption, Feedback loops Shares - What are they? Ownership in a company – private or public company – shares are the legal title to your ownership in a company As an owner of a company – you entitled to profits – that is what dividends are – decided by boards of public companies You also get price gains or losses based around how much people want the shares – Linked to performance but also irrational exuberance – future expectations Share market – is the collective representation of all the companies listed on an exchange ASX – Publicly available companies to purchase -   Share Markets are Complex Systems  I Used to break shares down to supply and demand – the equilibrium models – does work as an educational example (what and how) Failure in explanation of why –

Pre WW2 – Money and the incentive for war History is written by the victor – the focus is often the war itself – but not what happens behind the scene - How has war shaped the economy? – Last week went through tax changes to economy This week – want to talk about the behind scene to war – financial interests and those who carry them out Governments wage wars – the citizen fight them It is Governments which wage war with each other – Nation states, or NATO – Used to be directly – Nation v Nation– Now also indirectly – pre-cold war – nations went to war with one another – now, nations fund other countries to do it on their behalf But who else is funding the wars? Used to be the Monarchs (Governments) directly – not much in the way of banks/interconnected financial system in medieval periods – borrowed from other lords and money was gold/resources With the expansion of credit and fractal banking methods from Napoleonic period – bankers started gaining the ability to carry the monarchs (nations) through war

Welcome to Finance and Fury, The Say What Wednesday Edition This week question comes from Matt - Not so sure if this is your area of expertise or have come across this at all, although I have a question regarding insurance and identification of gender. People know that gender affects the price of insurance premiums paid and can save a significant amount if one were to identify as a female for insurance to pay less, would this be legal or do insurance companies have a way around this. Cheers – from Matt, Thanks for getting in touch. That is an awesome question! Actually, laughed out loud when this came through – very interesting point – Especially if someone does identify as another gender Today’s episode - Talk about disclosure requirements and pricing between male and females – Different genders pay different amounts for the types of covers   Disclosure requirements - Under current insurance legislation – non-disclosure Insurance companies only offer the options of male or female for the application

Welcome to Finance and Fury Today’s episode is a thought experiment – Investing in the potential future for the economy, Gov expansion and increased money supply – inevitably with The replacement of the Dollar – who knows when - over the next few years, decade, or never But it is an option – know that because the IMF is looking at it – and politicians are promoting these policies Permanent QE – will start to become a way to keep markets dropping – soak out additional supply Lowering rates and moving towards cashless economy to avoid BOJ situation Fiscal expansion – Government spending – and redistribution in the form of Helicopter money Abandon the dollar – IMF SDR – new reserve digital currency To start looking at investments – look at the desired effects On the Economy - What this will all do if the policy works as intended Boost Nominal GDP – sign of economic growth and to increase confidence, spending/consumption even further - Aim is to increase consumption – increased spending, increasing the in

Welcome to Finance and Fury, The Furious Friday Edition. War is a racket – Something that always catches my attention is when politicians get on What is one thing they seem to get on about? Police enforcement, regulations on industries On a more global scale - Going to war – see it in the USA right now, after 9/11, more often than not in history Pushed by media for Views, companies who stand to make a profit Pushed by Politicians – higher budgets and to keep their donors (Raytheon, Halliburton, etc. happy) Just finished getting through War is a Racket – book from 1935 – Very quick read/listen – got me thinking   Today – and probably a few more episodes – War and the Economics of it - How it all works The Futility of War – why it is important – as I hope to illustrate – fought on behalf of the few at the expense of the many One of the oldest and most profitable rackets in history - Racket – not what it seems to the majority of people – conducted for the benefit for the very few, at the expense of millio