Speaker 1: Hello everyone, and welcome to the latest episode from the
Speaker 1: midweek edition of the coin Bureau podcast. Every week, I
Speaker 1: pick out two of my favorite videos from coin Bureau's
Speaker 1: YouTube channel to present to you in podcast form. The
Speaker 1: audio you're about to hear is from those videos I've
Speaker 1: chosen this week, and I hope you enjoy listening. So
Speaker 1: today you'll hear our videos on the housing bubbles that
Speaker 1: are threatening to burst in a number of countries, and
Speaker 1: the intriguing tale of what happened when a meme I
Speaker 1: posted on Instagram about central bank digital currencies got fact checked.
Speaker 1: As inflation continues to wreak havoc across global asset markets
Speaker 1: and central banks hike interest rates in response, housing markets
Speaker 1: in a number of countries are now coming under strain.
Speaker 1: The pandemic and its attendant lockdowns supercharged home prices in
Speaker 1: many countries, but this conceals the fact that they had
Speaker 1: been climbing for a long time before COVID nineteen appeared.
Speaker 1: The pull of a place of one's own is a
Speaker 1: strong one in many places, but global macro e can
Speaker 1: comics are making it increasingly difficult for people to turn
Speaker 1: their dreams into reality. As interest rates rise, so to
Speaker 1: do the costs of mortgages while increases in the cost
Speaker 1: of living I mean people have less and less to
Speaker 1: save for a deposit. In places like the USA, Canada,
Speaker 1: and the UK, housing prices are now expected to fall
Speaker 1: in the coming months, and this could have dire consequences
Speaker 1: for the economies of these countries. Find out why in
Speaker 1: the first part of today's episode Next up. Not long ago,
Speaker 1: I posted a meme on Instagram which was critical of
Speaker 1: central bank digital currencies or CBDCs. In a nutshell, it
Speaker 1: highlighted all the negative consequences of CBDCs while also pointing
Speaker 1: out that many, perhaps most people would only focus on
Speaker 1: their perceived convenience. Well. To my surprise, the post was
Speaker 1: fact checked by Instagram, so I decided to analyze the
Speaker 1: contents of the meme and show why they are factually correct,
Speaker 1: look into why it was fact checked, and examine what
Speaker 1: the fact checkers said. It was an interesting look into
Speaker 1: both c b d c s and the whole concept
Speaker 1: of fact checking too, So have a listen and enjoy.
Speaker 1: Thanks for listening to today's episode, and there'll be more
Speaker 1: coming your way soon. And if you want even more
Speaker 1: content from Coin Bureau, be sure to subscribe to our
Speaker 1: YouTube channel and visit us on social media too. The
Speaker 1: long anticipated housing market crash may be upon US. Prices
Speaker 1: and sales in some of the world's hottest property markets
Speaker 1: are beginning to fall. Mortgage rates are at multi year highs,
Speaker 1: and market analysts are wondering whether this has any power
Speaker 1: arallels with two thousand and eight. So where are we
Speaker 1: going and what should you be looking out for? Well,
Speaker 1: that's exactly what I'll be covering today, So don't go anywhere.
Speaker 1: Given that it's the largest property market in the world,
Speaker 1: let's start off with the good old U S of A.
Speaker 1: It's pretty clear that America's pandemic price boom is long over.
Speaker 1: For example, according to the SNP Case Shiller Index for
Speaker 1: the twenty largest U S cities, prices fell one pree
Speaker 1: on a month on month basis in August. This was
Speaker 1: below expectations, and it was the largest fall since March
Speaker 1: of two thousand and nine. Not only that, but home
Speaker 1: sales are also on the decline. New home sales decreased
Speaker 1: ten point nine to a seasonally adjusted annual rate of
Speaker 1: six hundred and three thousand units in September. This is
Speaker 1: down from six hundred and seventy seven thousand in August.
Speaker 1: There are many factors that have been driving this slowdown,
Speaker 1: but perhaps one of the biggest appears to be the
Speaker 1: high cost of buying a home, not in terms of
Speaker 1: actual home prices themselves, but in terms of the cost
Speaker 1: of getting a mortgage on those homes. That's because the
Speaker 1: rate on a thirty year mortgage, at over seven percent,
Speaker 1: is the highest it's been in twenty years. What's even
Speaker 1: crazier than this, however, is the fact that the monthly
Speaker 1: mortgage on a median priced home with a twenty percent
Speaker 1: down payment went from thirteen hundred dollars a year ago
Speaker 1: to over twenty three dollars. Now, that's an eight percent
Speaker 1: increase in payments to give you an idea of how
Speaker 1: unaffordable this is. On an annual basis, this equates to
Speaker 1: about forty of the median pre tax household income according
Speaker 1: to this i n G report. To put that into context,
Speaker 1: this was about twenty six percent in the fourth quarter
Speaker 1: of ten and thirty seven percent at the peak of
Speaker 1: the two thousand and six housing market boom. This has
Speaker 1: forced some buyers to consider adjustable rate mortgages as well
Speaker 1: as loans that have lower rates for the first two
Speaker 1: to three years, called one to buy downs. Needless to say,
Speaker 1: the exorbitant cost of taking out these mortgages means that
Speaker 1: the demand for them appears to be cratering. Demand is
Speaker 1: half what it used to be a year ago, and
Speaker 1: it is at its lowest level since These higher mortgage
Speaker 1: rates are of course due to the monetary policies of Jerome,
Speaker 1: Powel and Co. As the Federal Reserve aggressively increases interest rates.
Speaker 1: It's been one of the fastest periods of rate hiking
Speaker 1: in recent history. As you can see in this chart
Speaker 1: over here. In each of its last three meetings, the
Speaker 1: Fed has increased its funds rate by seventy five basis points.
Speaker 1: It's not as if Jerome and Co. Are really that
Speaker 1: concerned about a correction either. In a press conference back
Speaker 1: in September, Jerome stated, quote, we probably in the housing
Speaker 1: market have to go through a correction, and quote the
Speaker 1: deceleration in housing prices that we're seeing should help bring
Speaker 1: prices more closely in line with rents and other housing
Speaker 1: market fundamentals. And that's a good thing. Now. Whether you
Speaker 1: agree with him or not, the fact of the matter
Speaker 1: is that the Fed is not slowing those hikes anytime soon,
Speaker 1: and the overwhelming consensus is that we will see another
Speaker 1: seventy five bibs At the meeting tomorrow. The FEDS fundrate
Speaker 1: is expected to peek at between four point five and
Speaker 1: four point seven five. The last time rates were at
Speaker 1: this level was between October and December of two thousand
Speaker 1: and seven, the start of the Great Financial Crisis. It's
Speaker 1: not only the fact that taking out a loan is
Speaker 1: a lot more expensive. However, first time buyers may also
Speaker 1: struggle to source the funds required for a down payment
Speaker 1: on many properties. Surging inflation is destroying purchasing power and
Speaker 1: making it a lot harder for many to save. Now.
Speaker 1: That is all on the demand side, but we also
Speaker 1: have some troubling statistics over on the supply side. For example,
Speaker 1: the National Association of home Builders's sentiment index has fallen
Speaker 1: for ten straight months. The slowdown in sales at a
Speaker 1: time of widespread construction means that the inventory of new
Speaker 1: homes is near all time highs. In this chart over here,
Speaker 1: you can see the months housing supply i e. The
Speaker 1: months required to clear the housing infantry. This is at
Speaker 1: the highest level it's been since. So how low could
Speaker 1: house prices fall in the US. Well, let's see what
Speaker 1: analysts on Wall Street are saying. At the lower end
Speaker 1: of the estimates, we have Morgan Stanley who are now
Speaker 1: expecting house prices to fall by about seven percent next year.
Speaker 1: While that may indeed be less than the twenty seven
Speaker 1: percent we saw in the peak to trough of the
Speaker 1: two thousand and eight housing crash, it is still a
Speaker 1: sizeable fall and would be one of the largest ones
Speaker 1: since the Great Depression. According to Morgan Stanley's analysts quote,
Speaker 1: if we assume a seven percent mortgage rate, affordability looks
Speaker 1: materially worse than today, and the pace of its deceleration
Speaker 1: has already more than doubled compared to almost any time
Speaker 1: in history. They do note, however, that even with this
Speaker 1: price decline of seven percent, house prices would still be
Speaker 1: about thirty two percent higher than they were back in
Speaker 1: March of Morgan Stanley has a bull and a bear
Speaker 1: case as well. This all depends on how interest rates
Speaker 1: progress over the next few months. For example, in their
Speaker 1: bull case, they assume that interest rates start coming back
Speaker 1: down next year. If this were to happen, they assume
Speaker 1: a price increase of five. However, if the US falls
Speaker 1: into recession next year, then we're looking at potential falls
Speaker 1: of ten percent or more. According to the analysts quote,
Speaker 1: affordability is already challenged, exposing would be homeowners to an
Speaker 1: increasing rent environment that erodes their ability to save for
Speaker 1: a down payment. If that were to be combined with
Speaker 1: increasing unemployment, we could imagine a scenario in which existing
Speaker 1: home sales continue to outpace the Great Financial Crisis to
Speaker 1: the down side. In other words, a worrying state of affairs.
Speaker 1: Moving on, though, another bank that had a change in
Speaker 1: their view of the US housing market was Goldman Sachs.
Speaker 1: Let's not forget that as recently as last month they
Speaker 1: were predicting a modest one point eight percent rise in prices. Well,
Speaker 1: they're current and estimates are for a fall of five
Speaker 1: to ten quote. We view the risks to these estimates
Speaker 1: as tilted to the downside because of a sharp deterioration
Speaker 1: in our descriptive home price outlook scores and evidence of
Speaker 1: strong mean reversion in regional data. Meanwhile, on the ratings
Speaker 1: agency side, Moody's Analytics is predicting a drop off between
Speaker 1: five and ten percent, although they don't seem to think
Speaker 1: that we will see a two thousand and eight style
Speaker 1: housing crash. Their chief economist Marks Andy stated that plain
Speaker 1: vanilla lending, good mortgage underwriting, and low vacancy will be
Speaker 1: enough to stave off the crash. However, as I noted earlier,
Speaker 1: housing supply is at a high level, and even Zandy
Speaker 1: admits that these factors aren't sufficient to stave off an
Speaker 1: inevitable correction. Moody's analytics actually draws up a quarterly index
Speaker 1: that looks at local fundamentals such as income levels, etcetera,
Speaker 1: that helps determine whether house prices are over or undervalued
Speaker 1: in the regions being examined. You can see what this
Speaker 1: regional index looks like over here in this Fortune article.
Speaker 1: This shows the over and undervalued regions for Q two.
Speaker 1: If we were to compare this to the index for
Speaker 1: Q one, you can see the deterioration. I can't wait
Speaker 1: to see what it looks like for Q three. Any
Speaker 1: who in those housing markets that Moody's views as quote
Speaker 1: significantly overvalued housing prices should see declines of ten to
Speaker 1: fifteen percent. However, if we do indeed hit a recession,
Speaker 1: then these could even fall by twenty to twenty five.
Speaker 1: That will hurt like heck anyway. Getting the perspective of
Speaker 1: another ratings agency, Fitch Ratings, seems to think that we
Speaker 1: could see prices fall by between ten and fifteen percent. Quote.
Speaker 1: The likelihood of a severe downturn in US housing has increased. However,
Speaker 1: our rating case scenario provides for a more moderate pullback
Speaker 1: that includes a mid single digit decline in housing activity
Speaker 1: in twenty three and further pressure in four now. One
Speaker 1: final analyst with a prediction for housing prices next year
Speaker 1: is Paul Shepherdson, the chief economist of Pantheon macro Economics.
Speaker 1: He expects housing prices in the US to fall by
Speaker 1: as much as twenty in twenty three. He said, quote,
Speaker 1: we expect home sales to keep falling until early next year.
Speaker 1: By that point, sales will have fallen to the incompressible
Speaker 1: minimum level, where the only people moving home are those
Speaker 1: with no choice due to job or family circumstances. Shepherdson
Speaker 1: also thinks that the supply of homes available for sale
Speaker 1: will shrink next year and that prices will have to
Speaker 1: fall much more to restore equilibrium. So those are the
Speaker 1: estimates for the US housing market, not exactly two thousand
Speaker 1: and eight level armageddon, but disconcerting nonetheless. But that is
Speaker 1: only the US. Are there any other housing markets that
Speaker 1: are at risk of two thousand and eight type collapses? Well,
Speaker 1: there is one, and it's just north of the US border.
Speaker 1: That's right. Canada's housing market appears to be one of
Speaker 1: the biggest property bubbles in the world. In fact, according
Speaker 1: to ubs is recent Global Real Estate Bubble Index, Toronto
Speaker 1: is the city that scores the highest on the list.
Speaker 1: Vancouver isn't too far behind at number six. You can
Speaker 1: also see how this has progressed for the cities over
Speaker 1: the years. Ever since, it's been an upward march from
Speaker 1: overvalued to bubble risk territory. It's not as if this
Speaker 1: is a new phenomenon either. There have long been many
Speaker 1: analysts ringing the alarm bells about the risks facing the
Speaker 1: Canadian housing market, and there are several factors which have
Speaker 1: been driving demand in these cities. They include high immigration levels,
Speaker 1: falling mortgage rates, and high investment demand. Now, the most
Speaker 1: recent housing frenzy actually began back in and only accelerated
Speaker 1: during the pandemic. Much like central banks in other countries
Speaker 1: around the world. The Bank of Canada dropped its benchmark
Speaker 1: interest rate to near zero. This made it a lot
Speaker 1: cheaper for people to take out mortgages and gave those
Speaker 1: first time buyers who had been waiting an opportunity to
Speaker 1: get on the housing ladder. During the pandemic, property prices
Speaker 1: in Vancouver and Toronto accelerated to their highest levels in
Speaker 1: five years, at fourteen percent and seventeen percent, respectively. This
Speaker 1: drove housing affordability in these key metros to levels that
Speaker 1: were last seen during the nine eighties real estate bubble.
Speaker 1: In this RBC research note, for example, you can see
Speaker 1: ownership costs as a percentage of household income. Houses are
Speaker 1: much less affordable in Canada than they are in the US,
Speaker 1: and if you speak to any Canadian you'll know how
Speaker 1: much of an issue housing affordability is. But beyond affordability concerns,
Speaker 1: there's also the risk posed by bad debts. Something that
Speaker 1: is a lot more prevalent in Canada than in the
Speaker 1: US is the use of variable or adjustable rate mortgages
Speaker 1: or arms. These are essentially mortgages that lock in a
Speaker 1: lower rate of interest for an initial fixed period, but
Speaker 1: will then adjust up to a market rate after a
Speaker 1: certain number of years. In Canada, about a third of
Speaker 1: all mortgages are variable rate. That's about three times the
Speaker 1: amount in the US, where the share of ARM activity
Speaker 1: is about eleven. Those borrowers that took out arms to
Speaker 1: buy a home in Canada between May and July two
Speaker 1: could sue and see their monthly mortgage payments start to skyrocket.
Speaker 1: That's because the Bank of Canada has been following the
Speaker 1: FED in its aggressive rate hiking policy. What may have
Speaker 1: seemed like a good mortgage deal when rates were near
Speaker 1: zero percent could become exorbitantly expensive when they adjust up.
Speaker 1: This has already started happening, and according to Royce Mendez,
Speaker 1: managing director and head of macro strategy at djadon Quote,
Speaker 1: banks are already sending out lessers to clients whose variable
Speaker 1: rate mortgages owe more interest than their fixed monthly payment obligation.
Speaker 1: And that's just the tip of the iceberg. As these
Speaker 1: homeowners face higher mortgage payments, some of them may be
Speaker 1: forced to make the ultimate decision and sell their homes.
Speaker 1: This could only precipitate a broader price crash as people
Speaker 1: see the value of the equity in their homes plummet.
Speaker 1: It's a de leveraging cycle of lower prices, more sales
Speaker 1: and lower prices. Again, so those are homeowners, But you
Speaker 1: also have to consider the investors who are snapping up
Speaker 1: this housing in the hope of making generous yields on
Speaker 1: their properties. Well, as interest rates are going up, the
Speaker 1: cost of servicing their debts mortgages is going up to
Speaker 1: This means that they have to rely on rising rental
Speaker 1: rates to make up for the lost yield. While rental
Speaker 1: rates are still red hot, they could easily turn down
Speaker 1: in much the same way as they're now doing in
Speaker 1: the US. Now, if you were to combine all of
Speaker 1: these factors, you can see why housing prices are on
Speaker 1: the decline. Here you can see the steep drop in
Speaker 1: the price of an average home in the g T
Speaker 1: A Greater Toronto area. Overall prices in Toronto are down
Speaker 1: seventeen percent as sales plunge. Now, this is something that
Speaker 1: one of the Coin Bureau team members actually witnessed firsthand
Speaker 1: when he visited his family in Canada a few weeks ago.
Speaker 1: The number of for sales signs in his neighborhood was alarming. Now,
Speaker 1: this is of course anecdotal, evidence, but I would be
Speaker 1: interested to hear the experience of some of my other
Speaker 1: Canadian viewers, so let me know in the comments down below.
Speaker 1: The point is that Canada, and especially Toronto and Vancouver
Speaker 1: are due for a pretty nasty and long overdue correction. Okay,
Speaker 1: on to our next hot housing market, and this one
Speaker 1: is a little closer to home for me, the good
Speaker 1: old United Kingdom. The UK housing market is also starting
Speaker 1: to face downward pressure. House prices fell by zero point
Speaker 1: one in August and by the same amount in September.
Speaker 1: This left the annual growth at nine which is the
Speaker 1: weakest it's been since January. What these figures suggest is
Speaker 1: that the housing market was already cooling long before the
Speaker 1: disastrous budget from Liz Trust and Code. For those not
Speaker 1: fully clued up, the shortest serving prime minister in our
Speaker 1: history and her chancellor released a budget that would have
Speaker 1: made Iron rand All misty eyed. The only problem was
Speaker 1: that they didn't think about how they could pay for
Speaker 1: it all, and it's sent the market into turmoil. I've
Speaker 1: done a separate video on this disastrous episode, which I
Speaker 1: will leave linked to below not for the faint hearted.
Speaker 1: If you watch that video, you'll know that one of
Speaker 1: the side effects of that budget was that UK government
Speaker 1: bond yields went soaring. These are the interest rates that
Speaker 1: mortgage providers used to price their fixed rate offerings. Therefore,
Speaker 1: in the wake of that chaotic budget, these mortgage products
Speaker 1: were left in turmoil. Buyers were scrambling to see whether
Speaker 1: they could secure mortgages before their prices reset. In the
Speaker 1: midst of the chaos, banks and building societies withdrew around
Speaker 1: sevre mortgage products in the space of a week. Now,
Speaker 1: while the mayhem appears to have calmed down since the
Speaker 1: budget was pulled and a new PM installed, the mortgage
Speaker 1: rates themselves have been slow to adjust back down. For example,
Speaker 1: although interest rate swaps have fallen between one point three
Speaker 1: and one point four, average rates on two and five
Speaker 1: year fixed rate mortgages have only fallen zero point one six.
Speaker 1: You can see what that looks like over here. Quite simply,
Speaker 1: lenders are not passing on the lower interest rates to
Speaker 1: those taking out the mortgages. These higher mortgage rates are
Speaker 1: causing a great deal of uncertainty for homeowners and prospective
Speaker 1: buyers in the UK. This is especially the case for
Speaker 1: those who took out fixed rate mortgages Now this may
Speaker 1: sound counterintuitive, but in the UK fixed rate is more
Speaker 1: akin to adjustable rate in the United States, i e.
Speaker 1: There is a fixed term that is for a limited
Speaker 1: period of time, usually two to five years, after which
Speaker 1: they will adjust up. Think of it as in the
Speaker 1: same way our public schools are in fact fee paying
Speaker 1: and therefore nothing of the sort. Makes you wonder how
Speaker 1: we ever ruled over a third of the globe, doesn't it? Anyway?
Speaker 1: For those who took out these loans in the period
Speaker 1: when mortgage rates were low, the costs of servicing them
Speaker 1: are suddenly looking much higher. Over here you can see
Speaker 1: what that looks like. In London, for example, mortgage payments
Speaker 1: make up over fifty percent of first time buyers take
Speaker 1: home pay. Now, this is something that I myself and
Speaker 1: worrying about with my mortgage in the UK, as it's
Speaker 1: coming up for refinancing in the next couple of years.
Speaker 1: That's because I know that interest rates are only going
Speaker 1: in one direction up. The Bank of England is also
Speaker 1: widely expected to raise interest rates by seventy five basis
Speaker 1: points this Thursday. That's the largest hike by the BOE
Speaker 1: since nine Beyond that, interest rate futures currently predict that
Speaker 1: the b o E rate is likely to tap out
Speaker 1: at almost five percent next year. That's all the more
Speaker 1: pain for borrowers already on the edge. If we were
Speaker 1: to add this to the pressures of inflation and writing
Speaker 1: energy costs. This is all a bit too much to
Speaker 1: bear for the average UK homeowner. Some may decide to
Speaker 1: sell and this will of course have a negative impact
Speaker 1: on prices. As a result, analysts are predicting steep falls
Speaker 1: in UK house prices next year. For example, Credit Suee
Speaker 1: analysts are predicting a fall of between ten and fifteen percent. Meanwhile,
Speaker 1: Andrew Wishart, senior property economist at Capital Economics, also predicts
Speaker 1: similar falls in prices. Quote the rise in market interest
Speaker 1: rates that has already happened will push up mortgage rates
Speaker 1: to at least six percent and reduce the size of
Speaker 1: loans that lenders can offer and Quote, the resulting drop
Speaker 1: in buying power makes a significant drop in house prices inevitable. Ouch. Okay,
Speaker 1: time for a few of my closing thoughts. It's clear
Speaker 1: that the global housing market is heading for some turbulence.
Speaker 1: E's the era of pandemic fuel cheap credit is coming
Speaker 1: to an end, and that means a reckoning for those
Speaker 1: trying to secure a mortgage. All eyes are on the
Speaker 1: US housing market as a number of the hottest metros
Speaker 1: start to cool. Housing supply is on the rise and
Speaker 1: prices are on the decline. While a two thousand and
Speaker 1: eight style housing crash is unlikely, analysts are predicting pretty
Speaker 1: nasty falls which are likely to put a massive dent
Speaker 1: in consumer confidence. Perhaps this is what Jerome Powell always
Speaker 1: intended when he wanted to quote bring housing prices back
Speaker 1: in line with fundamentals. But it's a bitter pill to
Speaker 1: swallow for all those who have a great deal of
Speaker 1: their wealth tied up in their homes. However, such worries
Speaker 1: are perhaps even more acute for Canadian homeowners, as concerns
Speaker 1: about a massive correction ripple through the air waves. While
Speaker 1: this has been a long time coming, it appears as
Speaker 1: if the dominoes are beginning to fall. This could be
Speaker 1: Canada's version of the two thousand and eight housing collapse
Speaker 1: in the US, at least according to the pundits. If
Speaker 1: that is the case, it could do significant damage to
Speaker 1: the country's GDP, given that so much of household wealth
Speaker 1: is again tied up in housing. That said, it could
Speaker 1: prove a silver lining for those Canadians who have given
Speaker 1: up on the dream of owning a home. Indeed, many
Speaker 1: younger people in the country are secretly hoping for a correction,
Speaker 1: anything for them to be able to eventually afford a
Speaker 1: place to call their own. When it comes to my
Speaker 1: native UK, things aren't looking two pretty there either. While
Speaker 1: the housing market in Britain is slightly more resilient than
Speaker 1: those in North America, it's the overall economic picture that
Speaker 1: has me most worried. Inflation is over ten per and
Speaker 1: the recent snaffoo with the budget has thrown the country's
Speaker 1: finances into disarray. The cost of living is only likely
Speaker 1: to get higher for those homeowners who may have to
Speaker 1: refinance their mortgages at higher rates. So let's hope that
Speaker 1: our new PM can help steer the ship. Two Calma sees.
Speaker 1: Last week, a meme I posted to Instagram about Central
Speaker 1: Bank digital currencies or CBDCs was fact checked. This came
Speaker 1: as a shock because everything the meme says about CBDCs
Speaker 1: is factually correct. It also came as a shock because
Speaker 1: it suggests that governments are slowly starting to clamp down
Speaker 1: on narratives that go against their upcoming CBDCs. If this
Speaker 1: is true, then it is flat out terrifying. That's why
Speaker 1: today I'm going to analyze the CBDC meme I posted,
Speaker 1: explain why it's accurate, summarize what the fact checkers said,
Speaker 1: and assess whether this is an anomaly or the beginning
Speaker 1: of a bigger trend. Let's start by taking a closer
Speaker 1: look at that CBDC meme. As you can see, it
Speaker 1: features a gray NPC all excited that the government is
Speaker 1: rolling out a CBDC. This is because the only thing
Speaker 1: the NPC can see is the convenience of a CBDC.
Speaker 1: The NPC doesn't see all the dystopian attributes that CBDC
Speaker 1: will have. Now As a fun fact, the NPC meme
Speaker 1: has its origins in psychological research, which found that many
Speaker 1: people have no inner monologue. In other words, there's a
Speaker 1: substantial percentage of people who do not reflect on their past,
Speaker 1: present and future emotions, decide, et cetera. NPC stands for
Speaker 1: nonplayer character, and any gamers in the crowd will know
Speaker 1: that this term refers to any video game character that
Speaker 1: isn't controlled by a real person. In other words, NPCs
Speaker 1: are robots that just go along with the programming. The
Speaker 1: more you know now, you'll notice there is a social
Speaker 1: media handle on the bottom left of the CBDC meme.
Speaker 1: It reads the Freethought Project, which appears to be an
Speaker 1: alternative media website. I reckon it's safe to assume that
Speaker 1: this is the creator of this meme, and it would
Speaker 1: actually explain a lot. That's because when I searched for
Speaker 1: the Freethought Project on Google, one of the first results
Speaker 1: was from PolitiFact, an American fact checking website. PolitiFact notes
Speaker 1: that the Free Thought Project has published two articles that
Speaker 1: it takes issue with, one of which is mostly false
Speaker 1: and another which is entirely false. This is significant because
Speaker 1: it's possible that the mention of the Freethought Project in
Speaker 1: the meme was why it was fact checked by Instagram.
Speaker 1: In case you didn't know, Instagram's algorithm can read text
Speaker 1: in images, it might have seen that content by the
Speaker 1: Free Thought Project had been fact checked before to the
Speaker 1: alternative media sites credit. It did issue a correction on
Speaker 1: the article which was mostly false after getting called out.
Speaker 1: The other one that was deemed entirely false hasn't been corrected,
Speaker 1: and that's because it deals with a very contentious political
Speaker 1: issue that I won't even try to discuss lest I
Speaker 1: be fact checked. Two. I also can't help but find
Speaker 1: it funny that Politi fact seems to take issue with
Speaker 1: the fact that the Freethought Project's purpose is to quote
Speaker 1: foster the creation and expansion of liberty minded solutions to
Speaker 1: modern day tyrannical oppression. I suppose that tells you all
Speaker 1: you need to know about these fact checkers. Note that
Speaker 1: I'll break down the fact check on this CBDC meme
Speaker 1: near the end of the video, but trust me when
Speaker 1: I say you'll want to stick around until then. Now,
Speaker 1: while it's possible that the CBDC meme was fact checked
Speaker 1: because of its creator, it's equally, if not more, likely
Speaker 1: that it was fact checked because of its contents. As
Speaker 1: you can see, there are twelve statements made about CBDCs
Speaker 1: in the meme. Before I unpack those, you should know
Speaker 1: that there are two types of CBDCs, wholesale CBDCs and
Speaker 1: retail CBDCs. Now, if you've watched any of our videos
Speaker 1: about CBDCs, you'll know that wholesale CBDCs will be used
Speaker 1: by select individuals and institutions, while retail CBDCs will be
Speaker 1: used by regular folks like you and me. What this
Speaker 1: means is that there will be two different digital currency systems,
Speaker 1: one system for the elites, the corporations, and the governments,
Speaker 1: and another system for everyone else. The statements about CBDCs
Speaker 1: made in this meme, as well as others like it,
Speaker 1: pertain to a retail CBDC, not a whole sales CBDC.
Speaker 1: So the first statement is quote banks have full control
Speaker 1: of every penny you own. Assuming other forms of fiat
Speaker 1: currency like cash are phased out, then this is one correct.
Speaker 1: Central banks will have total control over what you can buy,
Speaker 1: when you can buy it, and even how much money
Speaker 1: you can save. You might be wondering how this is
Speaker 1: different from the current financial system. After all, we've seen
Speaker 1: banks freeze bank accounts before. A recent example is Canadian
Speaker 1: banks freezing the accounts of protesters back in February, something
Speaker 1: that was truly unprecedented for a developed country. The difference
Speaker 1: is that the existing financial system is still relatively decentralized.
Speaker 1: For example, there are multiple banks and payment processes. If
Speaker 1: one of them starts to limit what you can buy
Speaker 1: and when, then you can take your business elsewhere in
Speaker 1: a Canada type scenario, you can still use. More importantly,
Speaker 1: there are many non bank entities, or so called shadow banks.
Speaker 1: A great example is cryptocurrency platforms that offer visa debit cards.
Speaker 1: These platforms don't always require extensive k y C, and
Speaker 1: they can't be forced to comply with, say, in order
Speaker 1: to freeze the bank accounts of protesters. In a CBDC system, however,
Speaker 1: there won't be any competing banks, and there certainly won't
Speaker 1: be any shadow banks. Instead, you will have an account
Speaker 1: directly with the central bank. The commercial banks and payment
Speaker 1: processes will only exist until the government has rolled out
Speaker 1: its own infrastructure. Now, in theory, the central Bank is
Speaker 1: independent of the government, but in practice it's not. I
Speaker 1: would argue that the introduction of a CBDC would actually
Speaker 1: cause the two to merge, as many are already predicting.
Speaker 1: This means that it's really the government that will have
Speaker 1: total control over what you can buy and when. If
Speaker 1: that wasn't bad enough, The Bank for International Settlements or
Speaker 1: b i S the Bank for Central Banks, recently published
Speaker 1: a report detailing what it believes the future of the
Speaker 1: financial system will look like. The t L d R
Speaker 1: is that they see all assets being token ized on
Speaker 1: a government and central bank blockchain. What this means is
Speaker 1: that you will un ironically own nothing and be happy.
Speaker 1: This is because you think you will own your assets,
Speaker 1: when in reality, the government will have the ability to
Speaker 1: turn your ownership off at the click of a button.
Speaker 1: So be sure to keep physical documents proving your ownership
Speaker 1: and your identity. Now, the second statement is quote vulnerability
Speaker 1: to state and foreign actors. And this is a fact
Speaker 1: about CBDC s that is often overlooked. It's also a
Speaker 1: concern that's been mentioned in many CBDC reports, namely the
Speaker 1: Federal Reserves report about a digital dollar from earlier this year.
Speaker 1: You see, if every person in a country has their
Speaker 1: bank account at the central bank, then this creates a
Speaker 1: single point from which the entire financial system of a
Speaker 1: country could be exploited or manipulated. History suggests that it's
Speaker 1: not a question of if this will happen, but when
Speaker 1: it will happen. This ties into the third statement, which
Speaker 1: is quote social credit scores. Now, this is not actually
Speaker 1: something I've seen discussed in any CBDC reports, at least
Speaker 1: not yet. That probably has to do with the fact
Speaker 1: that people associate the concept of social credit scores with
Speaker 1: the Chinese Communist Party. Attempting to roll out such a
Speaker 1: system would likely result in a revolution in most other countries.
Speaker 1: That's why these other countries are taking a slightly different approach,
Speaker 1: and that's to introduce a carbon credit system for their citizens.
Speaker 1: Sounds environmentally friendly, doesn't it. An individual carbon credit system
Speaker 1: is something I discussed at length in another the video,
Speaker 1: which I'll leave in the description. The short of it
Speaker 1: is that governments will create an elaborate incentive structure for
Speaker 1: their citizens to emit less carbon a CBDC and centralized
Speaker 1: digital I D will be required for this system. Now,
Speaker 1: the fourth statement is quote every transaction is documented, which
Speaker 1: is literally in every CBDC report. Obviously, the central banks
Speaker 1: and governments are going to want to know about every
Speaker 1: transaction that's ever happened. Something tells me that data protection
Speaker 1: laws like g d p R won't apply with CBDCs.
Speaker 1: The fifth statement is quote access to your money can
Speaker 1: be turned off at any moment. This is essentially the
Speaker 1: same statement as banks have full control of every penny
Speaker 1: you own. And the sixth statement, which is quote frozen funds.
Speaker 1: If you're skeptical, that CBDCs will have these restrictions. Consider
Speaker 1: the following quotes from the b I S Quote Quantity
Speaker 1: base safeguards would restrict the use of CBDC through imposing
Speaker 1: hard limits on the transfers and or holdings of CBDC.
Speaker 1: Quote limits could also be applied varyingly for different CBDC
Speaker 1: account holders. And finally, quote such limits could be imposed
Speaker 1: on a permanent basis or on a transitional basis. Now,
Speaker 1: this actually reminds me of something that's important to point out.
Speaker 1: Believe it or not, but the money you have in
Speaker 1: your bank account technically doesn't belong to you. It belongs
Speaker 1: to the bank. It just sits in its vault store
Speaker 1: on its electronic ledgers under your name. The same is
Speaker 1: true of any other asset you hold with a third party,
Speaker 1: including any coins or tokens you have on a cryptocurrency exchange.
Speaker 1: News flash, financial freedom doesn't mean having lots of assets
Speaker 1: in custody. It means owning your assets and deciding how
Speaker 1: and when they are spent. The value of financial freedom
Speaker 1: will become evident once central bank digital currencies are rolled out,
Speaker 1: and this will lead to serious crypto adoption. Anyways, the
Speaker 1: seventh statement is the one the NPC in the meme
Speaker 1: is focused on, and that's the convenience of CBDCs. Funnily enough,
Speaker 1: central banks, governments, and international organizations have held up the
Speaker 1: convenience of CBDCs as the fundamental justification for their rollout.
Speaker 1: They say that CBDCs will be faster, safer, and cheaper
Speaker 1: than traditional banking. The irony is that they simultaneously admit
Speaker 1: that existing financial technologies are evolving to become even faster,
Speaker 1: safer and cheaper, including cryptocurrency. This just proves that CBDCs
Speaker 1: are about control and nothing more. Now, this relates to
Speaker 1: the eighth statement, and that's centralization. This one is admittedly
Speaker 1: debatable because some countries want inactial banks and payment processes
Speaker 1: to run notes on their CBDC networks, whereas others want
Speaker 1: the central banks and the governments to be the only
Speaker 1: CBDC notes regardless of the setup, though it's almost guaranteed
Speaker 1: that the government will have a back door. This is
Speaker 1: very bad because centralization is inherently unstable. This is because
Speaker 1: any issue with or compromise of the core infrastructure means
Speaker 1: that the entire financial system is pardon my French, now,
Speaker 1: what's scary is that the financial system has been trending
Speaker 1: towards increasing centralization for quite some time. This was revealed
Speaker 1: in a twenty nineteen report by black Rock, which stated
Speaker 1: that all the financial regulations we've seen since two thousand
Speaker 1: and eight were implemented to further centralize the financial system.
Speaker 1: The reason why the financial system is centralizing is because
Speaker 1: its current iteration is collapsing. Central banks and governments are
Speaker 1: desperately trying to keep the Ponzi from falling apart. Being
Speaker 1: able to dictate every transaction in the economy with a
Speaker 1: CBDC is the only solution as they see it. The
Speaker 1: ninth statement is similarly scary, and that's quote all your
Speaker 1: movements and actions are traceable. This is also something I
Speaker 1: haven't seen in CBDC reports, and to be honest, I
Speaker 1: think it borders on conspiracy. Then again, there is precedent
Speaker 1: for it because of all the data collection by commercial
Speaker 1: banking apps. As per reporting by the Telegraph and others,
Speaker 1: many banks are now tracking their customers through their mobile apps.
Speaker 1: This is supposedly being done to catch scammers and criminals,
Speaker 1: but I suspect it has as much or more to
Speaker 1: do with gathering data that can be sold to advertisers
Speaker 1: for additional profits. As such, it's not far fetched to
Speaker 1: think that the mobile app you'd use to access your
Speaker 1: CBDC account would track your movements and location for similar reasons.
Speaker 1: It's possible that it would even be required, as some
Speaker 1: central banks have discussed to limit CBDC payments to merchants
Speaker 1: within specific locations. The tenth statement is quote zero anonymity,
Speaker 1: and this one is probably the most accurate and up
Speaker 1: to date. That's because Federal Reserve Chairman Jerome Powell recently
Speaker 1: specified that a digital dollar will be quote identity verified,
Speaker 1: so it would not be anonymous. Similar statements can be
Speaker 1: found in most CBDC reports now. The eleventh statement is
Speaker 1: quote cyber security attacks, which is almost the same as
Speaker 1: vulnerability to state and foreign actors. It goes without saying
Speaker 1: that no central bank wants a cyber attack on its CBDC,
Speaker 1: but this is something that all of them are again
Speaker 1: extremely concerned about, and understandably so. In the case of
Speaker 1: the United States, the Federal Reserve wants to make sure
Speaker 1: that its digital dollar is resistant to cyber attacks from
Speaker 1: quantum computers. Without getting two technical quantum computers will eventually
Speaker 1: be able to crack any encryption that exists today, and
Speaker 1: it's possible that they can already now. Although many are
Speaker 1: worried about a cyber attack on a cryptocurrency, the fact
Speaker 1: of the matter is that the existing financial system is
Speaker 1: a much bigger and much more lucrative target. This is why,
Speaker 1: according to PwC, the FED is working with m I
Speaker 1: T to make its digital dollar resistant to quantum computers.
Speaker 1: As I've mentioned before, Algorand recently achieved quantum resistance and
Speaker 1: its founder, Sylvia McAuley is based at m I T.
Speaker 1: Not saying that Algorand is going to be the blockchain
Speaker 1: that powers a digital dollar, but it's max USDC supply
Speaker 1: of eighteen point four trillion suggests that the crypto project
Speaker 1: is trying to prepare for such a role. More about
Speaker 1: Algorand in the description. I digress now. The final statement
Speaker 1: in the CBDC mean is quote zero privacy, which sounds
Speaker 1: the same as zero anonymity at first glance, but it's
Speaker 1: actually not, at least not according to the Central banks.
Speaker 1: It might sound strange, but CBDCs will in fact offer
Speaker 1: privacy despite not offering any anonymity. Confused, well, consider that
Speaker 1: the definition of privacy used by central banks means that
Speaker 1: your information is not shared with any private entities, only
Speaker 1: public entities such as the central bank and the government.
Speaker 1: CBDCs will therefore be private according to that horrendous definition
Speaker 1: of privacy. I can't wait until the fact checkers start
Speaker 1: claiming missing context on that one, any who, in addition
Speaker 1: to being private, CBDC transactions will apparently not contain any
Speaker 1: personal information about senders and recipients by default. Instead, security
Speaker 1: officials at central banks and governments will selectively reveal this
Speaker 1: information on any transactions deemed to be suspicious. Given that
Speaker 1: you will probably have no way of knowing when you're
Speaker 1: being probed by some three letter agency, it's more than
Speaker 1: likely that this power will be abused, assuming such a
Speaker 1: restriction is even implemented at all to begin with. And finally,
Speaker 1: we have the apparent inner monologue of the NPC, which reads, quote, hey, cool,
Speaker 1: the government is trying to make my life easier with
Speaker 1: the digital currency. I quickly want to comment on this
Speaker 1: because convenience is probably not how governments and central banks
Speaker 1: will sell their CBDCs. This is because their own statistics
Speaker 1: suggest that between four and twelve percent of citizens in
Speaker 1: g twenty countries would voluntarily adopt a CBDC. This means
Speaker 1: that they must go down another route that's been actively discussed,
Speaker 1: and that's to make CBDCs mandatory for the payment of
Speaker 1: taxes and other forms of subtle theft. They will also
Speaker 1: use CBDCs to distribute social benefits, pensions, and any emergency
Speaker 1: stimulus in response to future financial shocks. This will force
Speaker 1: most citizens to adopt CBDCs, which they won't like. Hence
Speaker 1: why the governments and central banks want to get rid
Speaker 1: of physical cash. As per the ECB's own admission, more
Speaker 1: about the ECBs Digital euro aspirations using the link in
Speaker 1: the description. This brings me to the moment you've all
Speaker 1: been waiting for, and that's what the hell the fact
Speaker 1: check on the CBDC meme said. Well, I'll start by
Speaker 1: saying that the fact check was removed shortly before I
Speaker 1: put together this video. This is possibly because my tweet
Speaker 1: about it went viral, but it's more likely it was
Speaker 1: an error. That's because the description of the fact check
Speaker 1: reads quote. Social media posts claim an executive order from
Speaker 1: Joe Biden eliminates cash and enables the government to monitor transactions.
Speaker 1: This is misleading While the US President did call for
Speaker 1: additional research on a central bank digital currency, the order
Speaker 1: does nothing to limit cash use. The authors add that quote,
Speaker 1: experts say any such system would be legally required to
Speaker 1: include privacy protections and involve the independent Federal Reserve Banks
Speaker 1: and Congress. By now you'll know what privacy means to
Speaker 1: these people, and that the FED probably won't stay independent
Speaker 1: with a CBDC. You'll also know that the CBDC meme
Speaker 1: doesn't say anything about Joe Biden or eliminating cash, even
Speaker 1: though that's something the central banks actually want. Even so,
Speaker 1: I must admit that many of the examples of this
Speaker 1: misleading information given by the fact checkers are as accurate
Speaker 1: as the CBDC meme. What irks me is the fact
Speaker 1: checkers claim that the US government is far away from
Speaker 1: launching a digital dollar, when billions of de facto digital
Speaker 1: dollars are already in circulation today. Circles USDC is the
Speaker 1: elephant in the room here because the company is basically
Speaker 1: looking to become a part of the FED. More about
Speaker 1: that in the description now. As expected, the fact checkers
Speaker 1: agree that quote it is probably better for privacy and
Speaker 1: civil and human rights purposes for some pieces of information
Speaker 1: to be collected by intermediaries rather than the central bank.
Speaker 1: Whatever you do, don't forget that warped definition of privacy
Speaker 1: in relation to a CBDC. The fact checkers even go
Speaker 1: as far as insinuating that a CBDC on a public
Speaker 1: and transparent blockchain is analogous to China's digital yue, which
Speaker 1: is just insane. They also reaffirmed that the United States
Speaker 1: CBDC network would be run by a collection of entities
Speaker 1: in the private and public sector. The fact checkers finish
Speaker 1: off the article implying that the rollout of a digital
Speaker 1: dollar is justified because one d other countries are testing
Speaker 1: CBDCs according to the International Monetary Fund or i m F.
Speaker 1: This reminds me of what my mother used to say,
Speaker 1: if everyone is jumping off a bridge, should you do
Speaker 1: it too? In all seriousness, it's clear that this particular
Speaker 1: fact check is related to the upcoming midterm elections in
Speaker 1: the United States. Historical search trends for fact check reveal
Speaker 1: that fact checks spike every time there is an election.
Speaker 1: This makes sense given most of these fact checking websites
Speaker 1: are politically oriented. That said, you might have heard about
Speaker 1: the recently leaked documents which revealed that the Department of
Speaker 1: Homeland Security, or DHS, has been asking social media companies
Speaker 1: to suppress and take down any content that quote undermines
Speaker 1: trust in financial systems. This CBDC meme certainly falls into
Speaker 1: that category, and it begs the question of just how
Speaker 1: much the DHS and others will start to censor social
Speaker 1: media once CBDCs start being rolled out around the world.
Speaker 1: Something tells me that this won't be the last time
Speaker 1: that this crypto guy gets fact checked. Thank you so
Speaker 1: much for listening to the coin Bureau podcast. If you'd
Speaker 1: like to learn more about cryptocurrency, you can visit our
Speaker 1: YouTube channel at YouTube dot com forward slash coin Bureau.
Speaker 1: You can also go to coin bureau dot com for
Speaker 1: loads more information about all things crypto. You can follow
Speaker 1: me on Twitter at at coin bureau or one word,
Speaker 1: and I'm also active on TikTok and Instagram too,