Sunday, August 18, 2019

Budget Issues Return To Spotlight As Next Debt Ceiling Circus Looms


by Chris Marcus, Miles Franklin:

Judging by the fact that you’re reading this, at some point you have probably been concerned about the financial condition of United States government.

The publicly stated debt is now over $20 trillion, while Boston University economist Laurence Kotlikoff pegs the cost of unfunded liabilities at over $222 trillion! Not exactly ideal in an $18 trillion economy. And if there’s an accountant out there who can explain how it’s even feasibly possible that the debt could ever be repaid without default, I have yet to find him.

The political climate is more divisive than ever, with attempts to even come to agreement on how much to raise spending resulting in government shutdowns. And now the treasury is once again reaching the debt ceiling limit.

Which in many ways has already been turned into a complete circus, as every time the limit is reached, it’s just raised. Which kind of defeats the purpose, doesn’t it?

Of course it’s always fascinating to see the mainstream perspective on the matter.

The upcoming battle over the debt ceiling could have a big impact on the market, CNBC’s Jim Cramer said on Tuesday.

“We really hate any debt ceiling issue which makes it so that the government would even seem for a second that it would default,” the “Mad Money” host said in an interview with MSNBC’s Chuck Todd.

Makes it so that the government would even seem for a second that it would default?!!! Are we both referring to the same government?! That’s like saying that Bernie Madoff’s Ponzi scheme was not really in default until it finally collapsed.

As Peter Schiff so appropriately pointed out during the 2011 debt ceiling debacle, the fact that you refuse to pay your creditors unless you’re allowed to go deeper into debt is the exact definition of a Ponzi scheme. Ironically on his way to jail, even Madoff said, “the whole government is a Ponzi scheme.”

Schiff was also wise to point out how the government is not in default because it does not raise the limit. It could reach the limit, and actually spend within its means without going further into debt. It’s only the refusal to actually continue borrowing additional money that turns the implicit default into an explicit one.

In other words, what it really comes down to is a refusal to balance the budget.

Failing to raise the borrowing limit ultimately could cause the U.S. to default on debt payments. That would send a ripple effect through the economy, causing government bond yields to surge. It would also result in soaring borrowing costs when government debt loses its sterling credit rating.

Speaking as someone whose first job out of undergrad was a two year stint with rating agency Moody’s back in 2001–2003, I can say firsthand that I would be careful about putting too much stock into anything you hear from the rating agencies.

Moody’s still rates U.S. Government debt with its highest Aaa rating. Which is essentially stating that it’s simply not possible to have a better credit profile. Despite that outside of hyperinflating the currency (which would really be a form of default in its own right) there’s no mathematically possible way that the treasury doesn’t eventually default.

To Cramer’s point that an overt default could send a ripple through the economy and cause yields to surge, that’s very likely true. Yet whether it happens this March or 15 years into the future, if the limit just keeps getting raised, one way or another, it’s clear what’s coming.

Sometimes it’s easy to lose track as the years pass by. But keep in mind that the historic S&P downgrade of U.S. debt back in 2011 is now seven years ago! And the only thing that has happened since then is that the limit has been raised each time it has come up.

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Volatility: Has Wall Street Found One More Index It Can Rig?


by Pam Martens and Russ Martens, Wall St On Parade:

On Monday, an anonymous whistleblower sent a letter via his lawyer to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) charging that traders were manipulating the stock market volatility index known as the VIX. The whistleblower said that a flaw exists in the VIX that “allows trading firms with sophisticated algorithms to move the VIX up or down by simply posting quotes on S&P options and without needing to physically engage in any trading or deploying any capital.”

The Chicago Board Options Exchange (CBOE) where VIX options and futures trade, quickly denied the claims.

This whistleblower claims come at a time when billions of dollars are blowing up around the globe because traders placed wrong-way bets that the VIX would maintain the low volatility levels it has enjoyed over multiple years as a result of low volatility in the stock market. As the stock market plunged more than a thousand points on two days last week and saw big intraday reversals on other days, traders nursed big losses as the VIX spiked.

The CBOE explains the VIX as follows: “The VIX Index is based on real-time prices of options on the S&P 500 Index (SPX) and is designed to reflect investors’ consensus view of future (30-day) expected stock market volatility. The VIX Index is often referred to as the market’s ‘fear gauge’.”

For a detailed academic paper by the creators of this concept, Menachem Brenner and Dan Galai, see here.

The new whistleblower’s claims come in an era when Wall Street firms have been charged with rigging other major indices and markets in brazen collusion schemes.

In December 2012, UBS paid $1.5 billion to settle charges with U.S., U.K. and Swiss authorities for its role in participating in the rigging of the interest rate benchmark known as Libor. UBS received a non-prosecution agreement with the U.S. Department of Justice which covered all of its subsidiaries except UBS Securities Japan. That unit pleaded guilty to one count of wire fraud. Six months earlier, Barclays Bank PLC agreed to a $160 million settlement with the U.S. Department of Justice over illegal activities related to Libor and Euribor, another interest rate benchmark.

On December 4, 2013 a group of Wall Street trading firms were charged by the European Commission and paid a collective $2.32 billion for rigging interest rate indexes.  Wall Street titans JPMorgan and Citigroup admitted to participating in the Yen Libor financial derivatives cartel to the European Commission and paid fines of  €79.8m and €70m, respectively. Deutsche Bank and RBS admitted to taking part in both Libor and Euribor cartels and agreed to fines of €725m and €391m, respectively. Societe Generale agreed to pay €446m related to Euribor. RP Martin, a broker, paid €247,000.

At the times the charges and fines were levied, Joaquín Almunia, the European Commission Vice President in charge of competition policy, said this:

“What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other. Today’s decision sends a clear message that the Commission is determined to fight and sanction these cartels in the financial sector. Healthy competition and transparency are crucial for financial markets to work properly, at the service of the real economy rather than the interests of a few.”

The indexes the banks were attempting to rig were described by the European Commission as follows:

“Interest rate derivatives (e.g. forward rate agreements, swaps, futures, options) are financial products which are used by banks or companies for managing the risk of interest rate fluctuations. These products are traded worldwide and play a key role in the global economy. They derive their value from the level of a benchmark interest rate, such as the London interbank offered rate (Libor) — which is used for various currencies including the Japanese yen — or the Euro Interbank Offered Rate (Euribor), for the Euro. These benchmarks reflect an average of the quotes submitted daily by a number of banks who are members of a panel…They are meant to reflect the cost of interbank lending in a given currency and serve as a basis for various financial derivatives. Investment banks compete with each other in the trading of these derivatives. The levels of these benchmark rates may affect either the cash flows that a bank receives from a counterparty, or the cash flow it needs to pay to the counterparty under interest rate derivatives contracts.”

On May 20, 2015 we reported on criminal felony counts against five Wall Street banks:

“The U.S. Department of Justice held a press conference in Washington, D.C. this morning at 10 a.m. to announce that two of the largest banks in the United States, Citicorp, a unit of Citigroup, and JPMorgan Chase & Co., would plead guilty to felony charges in connection with the rigging of foreign currency trading. Two foreign banks, Barclays PLC and the Royal Bank of Scotland (RBS), also pleaded guilty to felony charges in the same matter. A fifth bank, UBS, pled guilty to rigging the interest rate benchmark known as Libor.

“Today’s felony charges fall just short of the 19th anniversary of the U.S. Justice Department charging almost every major firm on Wall Street, including JPMorgan, the predecessors of Citigroup, and UBS with fixing prices on the Nasdaq stock market. No criminal charges were brought. That now looks like a serious mistake…

“Barclays was found to have violated its June 2012 non-prosecution agreement involving Libor and required to pay an additional $60 million criminal penalty. UBS was also found to have violated its December 2012 non-prosecution agreement and was required to plead guilty to a one-count felony charge of wire fraud in that matter and required to pay a criminal penalty of $203 million.

“All five banks were put on a 3-year probation which will be overseen by a Federal Court and ordered to cease all criminal activity.

“Other regulators imposed additional fines, bringing the total today to $5.4 billion.”

Clearly, the rigging of indexes and markets by Wall Street banks is not being deterred by criminal charges, by big fines, or by reputational damage. As a Barclays trader was quoted in the foreign currency trading charges, the new Wall Street motto is: “if you aint cheating, you aint trying.”

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Spain faces economic crisis: Wall Street warns of Spanish TIMEBOMB as US investors spooked


by Chloe Kerr, The Daily Express:

CATALONIA is still a risk to the Spanish economy and risks sparking an economic crisis, US banking giant Goldman Sachs has warned as the US stock market recovers from a rollercoaster week.

Goldman Sachs said “the political events related to Catalonia continue to be an important risk” for Spain’s recovery in a report analysing the Spanish banking system.

The report said: “We continue to see the political events related to Catalonia as an important risk for the recovery of Spain.”

Despite the worrying claims, the bank believes the overall “threat” for the economy in the short term has been reduced.

The capital cost projections for the whole of Spanish banking are currently above their levels prior to the ‘illegal’ referendum held on October 1.Last month Spain’s credit rating was bumped back up to A by Fitch, the first time it has had an A rating since the eurozone debt crisis.

Last week Prime Minister Mariano Rajoy upped Spain’s growth forecast for 2018 to “at least 2.5 percent” just months after it was downgraded over the secession crisis in Catalonia.

Speaking at conference in Madrid, he said: ”This year, 2018, we will have a growth forecast of at least 2.5 percent, with the creation of 400,000 jobs.”

In October, at the height of an attempt by Catalan leaders to get independence from Spain that caused huge economic uncertainty, the Spanish government downgraded its 2018 growth forecast to 2.3 per cent.

But last month official data showed the Spanish economy had grown more than three per cent in 2017 in a record year for tourism and booming exports, containing the impact of the Catalan crisis.

Spain suffered an almost five year recession until the second half of 2013 when the economy began a long, slow turn around boosted by strong exports and rising domestic demand.

Economy Minister Luis de Guindos said the economy could also grow by around 3 percent this year, after flash data showed 3.1 percent expansion in 2017 year on year.

On Tuesday Irish airline Ryanair said that it has dropped its prices by 30% on flights to Catalonia over the last few months in response to the ongoing political crisis between the Catalan and Spanish governments.

According to the airline boss, Michael O’Leary, the reason was to maintain the level of passenger traffic.

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Sovereign Wealth Funds Investing In Gold For “Long Term Returns” – PwC

from Goldcore:

– Sovereign wealth funds investing in gold for long term returns – PwC
– Gold has outperformed equities and bonds over the long term – PwC Research
– Gold is up 6.7% and 6.8% per annum over 10 and 20 year periods; Stocks and bonds returned less than 5.2% respectively over same period (see PwC table)
– From 1971 to 2016 (45 years), “gold real returns were approximately 10% while inflation increased 4%”
– Gold also valuable due to lack of correlation and hedge against inflation, currency devaluation and uncertainty

– Sovereign wealth funds investing 23% of assets under management to alternative investments including gold
– Gold being diversified into by HNW, family offices, institutions, pensions, sovereign wealth funds and central banks

In new research, entitled ‘The rising attractiveness of alternative asset classes for Sovereign Wealth Funds‘ PwC explain how gold is viewed as an important diversifier by sovereign wealth funds, as both an important hedge and for long term returns.

PwC now class gold as a ‘re-emerging asset class’ on the basis of its long-term out performance of stocks and bonds, low correlation with traditional assets, resilience and high liquidity.

Gold along with private equity, real estate and infrastructure now accounts for 23% of a total $7.4 trillion of assets under management by sovereign wealth funds.

The report notes that from a peak of 40% in 2013, sovereign wealth funds’ investment into fixed income instruments such as government bonds declined to 30% by 2016. Due to record low bond yields, the funds decided to turn their attention to alternative assets to enhance returns.

The report notes the impressiveness of both gold’s long-term performance and low correlation to other assets in the long-term, compared to other alternatives.  In the short-term the benefit of gold’s liquidity is noted:

“[It] has one of the highest rates of daily volumes exchanged and can provide protection against short and medium term market corrections.”

The 23% allocation is expected to increase going forward, despite slight increases in rates recently and because of the likelihood of continuing very low interest rates.

This report comes at a time when we are seeing a growing interest by both large institutions and family offices in gold investment.

Like sovereign wealth funds, they are encouraged by gold’s long-term returns, high liquidity and resilience against economic shocks.

Long term outperformance to traditional asset classes

As we have seen in recent years gold, like all assets, has periods when it underperforms. This has been in the short-term in the last 3 to 5 years, but in the long-term – such as a 10, 20 or 40 year period, it is an entirely different story.

Indeed, gold’s recent underperformance, makes its long term outperformance all the more impressive.

The report shows that in the last ten years, gold delivered returns of 6.7% per annum, outperforming equities and bonds which returned just 4.9% and 4.5% respectively. This return was slightly greater over a 20-year period when gold returned 6.8% per annum, compared to equities and bonds which returned just 5.2% and 5.2%.

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Total Household Debt Hit Record $13 Trillion in 2017


by Peter Schiff, SchiffGold:

Passage of a GOP budget that added $300 billion in new spending has focused plenty of attention on surging federal government debt over the last week or so. But Uncle Sam isn’t the only one running up those credit cards. Everyday Americans are also piling on the debt.

Total household debt soared to a record $13 trillion dollars in 2017, according to the latest data released by the Federal Reserve Bank of New York’s Center for Microeconomic Data.

Total household debt increased by $193 billion to $13.15 trillion in the fourth quarter of 2017. The report marked the fifth consecutive year of positive annual household debt growth. American indebtedness has eclipsed levels seen on the eve of the Great Recession.

Household debt rose in every category in Q4 2017.

Americans are burning up those credit cards. Revolving debt grew by $26 billion in the fourth quarter alone, a 3.2% increase. Americans have run up an $834 billion credit card tab. Meanwhile, flows into serious delinquency have increased steadily since the third quarter of 2016.

Mortgage debt grew by $139 billion, a 1.6% increase. Housing loans make up the largest portion of American household debt. As the debt grows, the creditworthiness of borrowers is dropping. The median credit score for those taking out new mortgages decreased slightly in Q4 2017.

Auto loan balances continued a steady rise that started in 2011. Currently, Americans owe $1.22 trillion on vehicle loans. Last year saw the highest annual auto loan origination volume ever observed in the New York Fed data. As of Dec. 31, 2017, 4.1% of auto loan balances were 90 or more days delinquent.

Student loan debt stands at a staggering $1.38 trillion. Outstanding student loan balances increased by 1.5% in Q4 2014 and delinquency levels remain high. About 11% of aggregate student loan debt was 90+ days delinquent or in default in the last quarter of 2017. As we reported last year, student loan debt is one of the biggest factors driving a growing trend of millennials struggling to transition into adulthood.

Growing debt level should come as no surprise. The Federal Reserve has held interest rates unnaturally low for nearly a decade. This has pumped up what US Global Investors CEO Frank Holmes called “the mother of all bubbles.”

The skyrocketing levels of debt also tell us something about the “economic recovery” since the 2008 financial crisis. It is essentially a fake recovery built on debt. This is not just an American phenomenon. As we reported last month, global debt is growing three times faster than global wealth.

Net wealth = Assets – Debt

So, you really can’t talk about wealth without talking about debt. While it may appear the economy is growing and Americans are getting wealthier because they have more stuff, it’s an illusion. Debt is holding everything up and that is not a firm foundation.

Increasing debt levels will likely temper future spending and could put a significant drag on the economy. This will become especially acute if the Federal Reserve continues pushing interest rates up. Rising rates will increase payments on outstanding debt. That could be the pin that pops the debt bubble.

Last summer, Holmes warned that the debt bubble will eventually burst. There are certainly signs the pop could be imminent. He recommended investors should buy gold and called the yellow metal’s long-term investment case “bright.” He said if and when the mother of all bubbles pops, it could potentially spell trouble for the investor who hasn’t adequately prepared with some allocation in a safe haven.

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The World Embraces Debt At Exactly The Wrong Time

by John Rubino, Dollar Collapse:

Self-destruction usually happens in stages. At first there’s a binge in which the thrill outweighs the sense of transgression. This is usually followed by remorse, acknowledgement of risks, and an attempt to reform.

But straight-and-narrow is exhausting, and because of this is frequently just temporary, eventually giving way to a kind of capitulation in which the addict drops even the pretense of self-control.

2018 is apparently the year in which the world enters this final stage of its addiction to debt. Wherever you look, leverage is soaring as governments, corporations and individuals just give up and embrace the idea that borrowing is no longer a necessary evil, but simply necessary. Some recent examples:

China January new loans surge to record 2.9 trillion yuan, blow past forecasts

(Reuters) – China’s banks extended a record 2.9 trillion yuan ($458.3 billion) in new yuan loans in January, blowing past expectations and nearly five times the previous month as policymakers aim to sustain solid economic growth while reining in debt risks.

Net new loans surpassed the previous record of 2.51 trillion yuan in January 2016, which is likely to support growth not only in China but may underpin liquidity globally as major Western central banks begin to withdraw stimulus.

Corporate loans surged to 1.78 trillion yuan from 243.2 billion yuan in December, while household loans rose to 901.6 billion yuan in January from 329.4 billion yuan in December, according to Reuters calculations based on the central bank data.

Outstanding yuan loans grew 13.2 percent in January from a year earlier, also faster than an expected 12.5 percent rise and compared with an increase of 12.7 percent in December.


Total US household debt soars to record above $13 trillion

(CNBC) – Total household debt rose by $193 billion to an all-time high of $13.15 trillion at year-end 2017 from the previous quarter, according to the Federal Reserve Bank of New York’s Center for Microeconomic Data report released Tuesday.

Mortgage debt balances rose the most in the December quarter rising by $139 billion to $8.88 trillion from the previous quarter. Credit card debt had the second largest increase of $26 billion to a total of $834 billion.


Trump’s budget balloons deficits, cuts social safety net

(Chicago Tribune) – President Donald Trump unveiled a $4.4 trillion budget plan Monday that envisions steep cuts to America’s social safety net but mounting spending on the military, formally retreating from last year’s promises to balance the federal budget.

The president’s spending outline for the first time acknowledges that the Republican tax overhaul passed last year would add billions to the deficit and not “pay for itself” as Trump and his Republican allies asserted.

Trump’s plan sees a 2019 deficit of $984 billion, though White House Budget Director Mick Mulvaney admits $1.2 trillion is more plausible after last week’s congressional budget pact and $90 billion worth of disaster aid is tacked on. That would be more than double the 2019 deficit the administration promised last year.

So far, the financial markets are responding pretty much according to script:

US bonds sell off on inflation scare

(CNBC) – U.S. government debt yields hit session highs Wednesday after the government reported inflation in January rose more than expected.

The yield on the benchmark 10-year Treasury note jumped to 2.882 percent as of 10:03 a.m. ET. It hit a four-year high of 2.902 percent on Monday. The yield on the 30-year bond was last seen higher at 3.146 percent. Bond yields move inversely to their prices.

Schwab’s Kathy Jones argued that the latest reading could mean that the yield on the benchmark 10-year note could test 3 percent in the next few months.

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Danielle Park – How Much Longer?


by Kerry Lutz, Financial Survival Network:

Danielle Park observes that the market finally had a pullback. Was it just a 3 day event or is this just the beginning? Paper profits aren’t real money until you sell or liquidate. It’s always better to sell before the crash, but why are so few unable to execute? It’s all tied into the human psyche. Dopamine is so good, we want the good times to keep rolling along. But they don’t and you need to be prepared. Otherwise, you’ll be left taking out usurious payday loans and that’s a losing strategy.

Click HERE to listen

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EU Chief: We Need Open Borders to Stop Populism

by Dan Lyman, Newswars:

Donald Tusk, President of the European Council, delivered remarks in Vienna in which he warned against the “destructive emotions” of those who oppose the on-going migrant invasion and denounced the rise of populism in Europe.

Following a meeting with Austrian Chancellor Sebastian Kurz, whose coalition government has been implementing a series of new policies to tighten border controls and begin purging the country of undesirable illegal immigrants, Tusk issued loosely-veiled threats clearly aimed at Austrian leadership and their ideological allies in other European governments, such as Hungary and Poland, where Tusk recently served as prime minister.

“When it comes to managing illegal migration, Chancellor Kurz and I have discussed it many times already, and we have similar views,” Tusk said. “Migration will remain a challenge for many years to come, which is why we want to find a solution that makes sure that the EU – together with national states – can manage future migration flows efficiently and without creating new divisions in Europe.”

“It is possible, but naturally all sides need to compromise. Above all, we must put an end to the destructive emotions surrounding the issue of relocation, as they continue to fuel populism and divide Europe. If this issue is not resolved by ministers within the next months, we will need to find a solution at the June European Council.”

It seems that June could prove a pivotal month for the direction of Europe, and may usher in an escalation in punitive measures taken by globalists and supranational bodies against nations who refuse to bow to the demands of Tusk, Soros, and the rest of their ilk in the internationalist cabal.

Last week, Hungarian Prime Minister Viktor Orban summarized an ultimatum issued by Belgian Prime Minister Charles Michel in which Michel intimated that “force” may be used against Central European countries that refuse to accept ‘refugee resettlement quotas.’

“The presidency of Fidesz has discussed yesterday the announcement of the Belgian prime minister, that they will – if necessary with force – obligate Central European countries, including Hungary, to accept migrants,” Orban said. “According to their plan, this will happen in June at the summit of the prime ministers in Brussels.”

PM Orban recently paid his first visit to Vienna since the 31-year-old Kurz was sworn in as Chancellor, and both leaders vowed to strengthen the bonds between their nations and work together to stem the invasion of predominantly Islamic migrants from Africa and the Middle East.

“We must stop illegal migration in order to ensure safety across the bloc,” Kurz said at a joint press conference with Orban. “I am glad that there has been a change in thinking in many European countries in recent years.”

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Terrified of Bitcoin, banks forced to innovate for the first time in 40+ years

by Simon Black, Sovereign Man:

Yesterday morning, several banks in Australia started rolling out a new payment system they’re calling NPP, or “New Payments Platform.”

Until now, sending a domestic funds transfer in Australia from one bank to another could take several days. It was slow and cumbersome.

With NPP, payments are nearly instantaneous.

And rather than funds transfers being restricted to the banks’ normal business hours, payments via NPP can be scheduled and sent 24/7.

You can also send money via NPP to mobile phones and email addresses. So it’s a pretty robust system.

Across the world in the United States, the domestic banking system has been working on something similar.

Domestic bank transfers in the Land of the Free typically transact through an electronic network known as ACH… another slow and cumbersome platform that often takes 2-5 days to transfer funds.

It’s pretty ridiculous that it takes more than a few minutes to transfer money. It’s 2018! It’s not like these guys have to load satchels full of cash onto horse-drawn wagons and cart them across the country.

(And even if they did, I suspect the money would reach its destination faster than with ACH…)

Starting late last year, though, US banks very slowly began to roll out something called the Real-time Payment system (RTP), which is similar to what Australian banks launched yesterday.

[That said, the banks themselves acknowledge that it could take several years to fully adopt RTP and integrate the new service with their existing online banking platforms.]

And beyond the US and Australia, there are other examples of banking systems around the world joining the 21st century and making major leaps forward in their payment system technologies.

It seems pretty clear they’re all playing catch-up with cryptocurrency.

The rapid rise of Bitcoin and other cryptocurrencies proved to the banking system that it’s possible to conduct real-time [or near-real-time] transactions, and not have to wait 2-5 days for a payment to clear.

Combined with other new technologies like Peer-to-Peer lending platforms, fundraising websites, etc., consumers are now able to perform nearly every financial transaction imaginable– deposits, loans, transfers, etc.– WITHOUT using a bank.

And it’s only getting better for consumers… which means it’s only getting worse for banks.

All of these threats from competing technologies have finally compelled the banks to innovate– literally for the FIRST TIME IN DECADES.

I’m serious.

When the CEO of the company launching RTP in the US announced the platform, he admitted that the “RTP system will be the first new payments system in the U.S. in more than 40 years.”

That’s utterly pathetic. The Internet has been around for 25 years. Even PayPal is nearly 20 years old.

Yet despite the enormous advances in technology over the past several decades, the last major innovation in bank payments was back when Saturday Night Fever was the #1 movie in America.

Banks have been sitting on their laurels for decades, enjoying their monopoly over our savings without the slightest incentive to improve.

Cryptocurrency has proven to be a major punch in the gut. The entire banking system keeled over in astonishment over Bitcoin’s rise, and they’ve been forced to come up with an answer.

And to be fair, the banks have reclaimed the advantage for now.

NPP, RTP, and all the other new protocols are faster and more efficient than most cryptocurrencies.

Bitcoin, for example, can only handle around 3-7 transactions per second. Ethereum Classic maxes at around 15 transactions per second. Litecoin isn’t much better.

By comparison, there were 25 BILLION funds transfers in 2016 using the ACH network in the US.

Based on the typical holiday schedule and the banks’ 8-hour working days, that’s an average “throughput” of roughly 3500 transactions per second.

So, now that banks have finally figured out how to conduct thousands of transactions per second in real-time, they clearly have superiority.

But that superiority is unlikely to last.

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Russian banks ready to switch off SWIFT – official


from RT News:

Russian financial institutions and firms are ready to work without SWIFT’s interbank cash transfer services, according to Deputy Prime Minister Arkady Dvorkovich.

“Certainly, it is unpleasant, as it will prove a stumbling block for companies and banks, and will slow down work. It will be inevitable to deploy some aged technologies for information transfer and calculations. However, the companies are technically and psychologically ready for the shutdown as this threat was repeatedly voiced,” Dvorkovich said, as quoted by TASS.

He added that the measure may have a negative impact on corporations working in the US and Europe.

In general, disconnecting Russia from SWIFT would be a crazy step on the part of our Western partners. It is obvious that for the companies which work in Europe and the US it would be harmful. And this applies not only to the shutdown of the service,” he said.

The potential disconnection of Russia from SWIFT has been under discussion since 2014, when the EU and the US introduced the first round of international penalties against Moscow over alleged involvement in the Ukraine crisis and the reunification with Crimea.

At the time, the European Parliament called for strong actions against Russia, including expelling the country from money transfer services. However, the Society for Worldwide Interbank Financial Telecommunication regarded the recommendations as violating rights and damaging for businesses.

In 2017, Russia’s Central Bank Governor Elvira Nabiullina told President Vladimir Putin that the banking sector had been provided with all the necessary conditions for operating lenders and payment systems in case of disconnection from SWIFT. According to the regulator, 90 percent of ATMs in Russia were ready to accept the Mir payment system, a domestic version of Visa and MasterCard.

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