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NOW YOU REALLY NEED SOME CRYPTO

The Fed has been told to “just keep printing money” according to an interview with CBS’s 60 Minute. President of the Federal Reserve Bank of Minneapolis Neel Kashkari referred to there being “an infinite amount of cash at the Federal Reserve.”

He went on to say “That’s literally what Congress has told us to do. That’s the authority that they’ve given us: to print money and provide liquidity into the financial system.”

Remember that this very thing is why Bitcoin was created in the first place

If you have been following our blog you will know that the present literal swamping of the world with newly printed money will lead to the most horrific inflation, with too few goods being chased by too much money. The present panic buying in the UK is merely a harbinger of what is to come. Presciently, I said a short while ago that we would soon lose the rule of law and substitute the law of the machine gun.

Now is the time to hold crypto. Your fiat money – GBP, USD, Euro etc etc will soon be worthless as the Mark was in 1922/3 Weimar Germany.

There, the  cost-of-living index was 41 in June 1922 and 685 in December, a nearly 17-fold increase – and it continued to rise.

It was only solved in November 1923 when a new currency was established WITH EVERYONE ONLY RECEIVING 5 RENTENMARK.

So be prepared for the future – buy some crypto!

To help with this, any SCOT bought through https://exchange.scotcoinproject.com/

Will receive double the number of SCOT actually bought.

IS THE TRUTH THAT OUR ECONOMY IS SIMPLY TOO BIG TO FAIL?

Robert McDowell is a long time supporter both personally and through Summerhall of Scotcoin. He is currently chairman of that renowned venue in Edinburgh, and a long time top level financier and economist. He has written a couple of pieces for us, this first one on the macro position we find ourselves in and the true scale of the credit crunch that is here now. The second piece is specifically on cryptos and will appear in a few days time.

Georgiova (IMF managing director) was recently quoted as saying “what we want is to guarantee that people are not going to die just because of lack of money“. How absurd can it get? Obviously not a Keynesian but a Monetarist supply sider.

It reminds me of the long since passed Airey Neave (who was Thatcher’s puppet-master until the IRA car-bombed his Jaguar in the House of Commons). He was an admirable person in many ways except he ordered HMT never to report to Cabinet the difference between public spending before & after tax rake-backs, a foolish neo-con rule insanely followed ever since. He was, decades earlier in WW2, nearly caught having escaped from  Colditz (an officer class PoW castle) in Germany, heading for Switzerland. He was spotted in a railway station eating a chocolate bar (a Swiss Red Cross supplied one) when chocolate was something ordinary Germans could only dream of enjoying in 1941.

Chocolate then, money now. Lack of money? Lack of air or water? Maybe the IMF think money should be a natural resource (‘public good’) whenever there’s plenty of it? But what the crisis teaches us is that it is not quantity but velocity or circulation of money that gives it value. I shouldn’t wonder too if countless people die prematurely  sometimes because they actually have too much money. But, today, asset values like cash are in free-fall and we cannot see any reasons yet for recovery!

Countries can largely shut down to ensure social isolation & social distancing, but it will become harder over time to guarantee basic necessities & essential services.  The problem is that while clampdowns, prohibitions and the like, can be announced & enforced,  the conditions for lifting restrictions & announcing a return to normal are deceptive & uncertain without a firm date (or time limit). Getting Brexit done clung fiercely to dates by when a make or break deal must be struck. No such iconoclasm is in evidence r.e. Covid-19 & the present anxiety/panic is deeply entrenched. It is so deep that there could be permanent changes in the patterns that have pertained of modern human social behaviour. There will be hard-to-calculate economic (& well-being) consequences.

It is funny how prepared everyone appears to be to be seen to tackle this pandemic with a cavalier disregard for the costs of unintended or unwanted consequences. The economic dislocation that currently appears unbounded appears unending, with arbitrary dates being bandied about. Suddenly, for example, the whole private sector is bleating for government support. These pleas come from those who normally condemn state interference or “tax & spend” almost unreservedly.

All places where crowds might congregate including pubs & cafes plus all live arts & sport are shutting or mothballing or reducing to a skeleton operation. Supermarkets or big shopping stores are not yet shutting, but they are subject to stockpiling, and panic-buying. Many are involuntarily closing. All non-essential travel for months will stop in an effort to try to postpone the spiking of the covid-19 virus. 

It’s like thinking that prolonging a recession gets everyone cut back to essentially good & necessary fundamentals and behaviour – a puritanism in fact. It can backfire just like austerity. Those who railed against government austerity policy ain’t seen nothing like the austerity now coming fast down every one of our main streets.

A pandemic – like any defined thing of business – is assumed to be like a game where we are game-players. But games have agreed rules. Players all start with an equality – two factors almost totally missing in real world or real life events yet are demanded in a general crisis. Government must defend all equally, all businesses & all people. Fairness & equality ought to rule, though of course everything has unintended consequences. No good deed goes unpunished.

The pandemic is often likened to a lottery (even if only one of many such lotteries, many of which are much bigger) i.e. everyone has a remotely even chance of getting caught by it. My father often seriously joked there is good luck, bad luck, & luck out! (to be spoken in an Ulster brogue).

Funny how all presume equality of rights (first principle of citizenry) & everything connected thereto. Many of these same people extol inequality & dramatic change as creative destruction or simply good entrepreneurial spirit. But not any longer because they feel it is all someone else’s fault anyway or like the weather, if not the climate, inevitable. Human hypocrisy is now philosophical rationalism. It is limitless in its self-justifying sense of personal & or group entitlement.

The pandemic may be a lottery, but it has classes insofar as inequalities about who gets the worst & highest percentage risk of dying. I’m in the high risk category (retirement age & vulnerable upper respiratory tract). You too probably -no more pub visits!

Summerhall is closing down in events (e.g. 6 weddings in April-June) performances & catering (our main revenue). We will therefore have to reduce staffing to a skeleton crew at immense cost & may even find August festivals cancelled . That is a third of annual revenue! Various government compensations are mooted & insurance claims, but the fact is probably we will probably be unable to access any of these.

Jobs are being temporarily or permanently lost across all sectors given there are so many knock-on effects – a negative vortex. Leading bleaters craving government financial aid (didn’t work for FLYBE) are airlines, airports, and hotel groups.  Credit demand on banks is increasing with depleting security for loans, probably with many new margin calls & higher risk rates. Cash & Gold are suddenly King as they frequently are!

Transport & tourism in particular, but general retail too, have all been massively hit. Worldwide, 50 million jobs in tourism/travel industry alone are expected to go i.e. 23%.  Global unemployment was 205 millions (c.3 billions with jobs). We now foresee, even if  temporarily in the short term (6 months- or more?), at least tripling of joblessness to over 15% of the global aggregate, & possibly another 10-20% may follow if the crisis persists for a year or more. No one knows.

The virus is triggering a major recession globally. Some felt a recession was imminent anyway, waiting only for the excuse to start, but this? Well, we know a normal recession squeezes everyone’s finances & wipes out (nominally in theory) at least 75% of banks’ reserves!  Consumer culture is debt-fuelled, so the slowing of the velocity of money makes assets fall in value as well.

While good manufacturers can stockpile & hope to catch up in the eventual recovery rebound, trade lost to services tends to stay lost!   A lot of financial firms are bound to go under for their inability to handle withdrawals & foreclosures.

There is a palpable Keynesian response (or at least a strong whiff of it) among governments in their budgetary jet streams. Whatever is blowing in & across central bankers’ rate-setting counters & balance sheet re-jigging has the same smell to it. Hence, the naff IMF statement we started with – much like politicians saying ‘we’ll do whatever it takes’ is necessary implying also “whatever the consequences” while having no idea what these might be.

UK budget deficit borrowing is mooted to hit 25% ofGDP i.e. a war-economy footing. Half of the government budget will be debt financed. That’s probably only sensible. But, off balance sheet or off-budget financial relief may, as in the 2007-9 GFC, prove even more effective.

An amusing aspect is the conspiracy theory that banks & the non bank finncial sector are capriciously unfettered in how they create new money out of loans. Now these same conspiracists must face the opposite – in other words asset value crashes. Generally markets have fallen in price by about a third so far but not yet touched bottom.

Worldwide stock market value was about $70 trillions in total. That’s now had a c.30% fall.   Property ownership is reputedly about 60% of world assets or about $217 trillions (Savills Research 2016, of which $162tn is residential). In all likelihood, there is a 20% or higher fall there as well. The $217tn figure includes $145tn not available to be traded or not secured for debt. Hence, the active market amount is c.$70tn.

Commercial property – c. $53tn including land (according to Savills 50% of the world total is in USA, 28% Europe, 5% Latin America, ME & Africa, leaving only 17% in E, S, & SE Asia, which seems a bit implausible despite what we know of market pricing) What can such figures mean? If all ‘assets’ are c. 4 x world GDP & have fallen in price by 1 x world GDP so far this year, that is by about $1,000 per person in the world – man woman and child. Of course the loss of wealth is mostly concentrated in the world’s richest 25%.

That means about $60 trillions of wealth seems to have disappeared.  Another $6 trillions of households’ & personal incomes may follow & at least half as much again in lower company profits & actual losses.   The UK appears now exposed. Sterling fell this week sharply against both the USD & Euro (considered a safe haven for capital flight alongside CHF (Swiss Franc)). In March up to today, CHF/GBP went from 0.78 to 0.86  i.e. CHF up 10%. GBP/Euro went from 1.206 to 1.097 i.e. GBP down 9.9%. Those are big movements! They will have profound long term effects, not least fewer assets to support future development. Indeed, banks may need to ignore all the existing rules and conventions about loans

Officially the UK continues to enjoy a positive inflow of private foreign capital sufficient to finance the trade deficit without resource to extra government Gilts issues. But, underlying this since 2016 has been somewhere between £1 & £2 trillions of foreign disinvestment & UK capital flight. This is officially recorded in the UK’s net external balance (over £500 billion negative) i.e. about 20 years’ worth of net inflows recorded elsewhere by ONS in the balance of payments accounts.

There is something irreconcilable in these two data sets as there is also in the UK’s self-belief that financial services generate sizeable annual trade surpluses, when the UK’s top ten trading partners in financial services record surpluses against the UK.  In truth it may not really matter. Why? Because in the UK, especially London & The City & their surrounding regions are simply far “too big to fail”! It remains to be seen whether we can take comfort in that statement.

Robert will be sharing his views on blockchain and crypto in the next article. We very much hope he will become a regular contributor to our project.

Two actors

Two actors

Two actors, a boxer, a cyber-security technician, a business administrator, a mechanical engineer and a builder all go into a gym hall.

Now you may think this is the start of a joke, but believe me this is not only no joke but one of the best things that has happened to me in quite a while.

Some weeks ago, my friend Frank of Bad Pony Media phoned me the other day and said could I take his place at an event. As it happened I could, and waited until the day before to find out what it was.

I was to turn up at St.Roch’s Secondary School in Royston at 9am in order to help some of their school leavers understand and improve their abilities to undertake interviews.

Now for those of you who don’t know, Royston in Glasgow is described as follows at understandingglasgow.com:

“ Male and female life expectancy is considerably lower than the Glasgow average. The percentage of children living in the neighbourhood is considerably higher than the Glasgow average, while there is a lower than average proportion of older people – defined as aged 65 years and over. A high percentage of the population are living in income and employment deprivation and the proportion of children living in poverty is particularly high. Nearly a third of the population are claiming out-of-work benefits.”

So it’s pretty much right up there with the “worst” areas of Glasgow. My immediate reaction was that this would be a group of underachievers with little or no ambition, and definitely no plans.

The young people we were “interviewing” were mostly sixteen to 17, with a few late 15, early 16. The first young man walked up to the table, and I rose to greet him, hand outstretched. ( This was before the Coronavirus) He looked me straight in the eye, shook my hand firmly, smiled and said “Good morning,” If I had been awarding points out of 100 for his interview, I’d have given him 50 immediately and pretty much employed him on the spot. As it happens, all the young people we were helping all behaved in exactly the same way. I’m sure they had already been told that this was the correct way to start an interview, but all 72 of them apparently acted in the same way, so at the very least they were prepared to listen and act on advice. I won’t bore you with what happened over the course of the morning, but myself and the other people roped in to help were all mightily impressed with the confidence, thought out plans and general passion for the interviewees chosen paths.

The two actors in particular were mind blowing in their confidence and poise, and one was so good that already from a standing start two years ago he was in the final casting for a minor part in a full length film about to be shot in Glasgow. The boxer just oozed certainty and had that confident walk that people who have pride in themselves and their ability can carry off to perfection without being arrogant or haughty. The mechanical engineer described his love of taking things apart, understanding them, then putting them back together. The builder didn’t just want to be a brickie – he wanted to understand all aspects from reading architectural drawings to putting the last slate in place. With me were an accountant and a business administrator and I couldn’t help but think we might all be working for this particular young man one day. The business administrator on the panel waxed lyrical about the 16 year old who wanted to be a business administrator – he already knew nearly as much as she did and clearly had a tidy mind and thought processes.

These young people gave me hope for Scotland. We oldies are always moaning about the “youth of today” and wondering what’s to become not only of us but of the country we are all proud of, yet fearful for.

Let me tell you we have nothing to worry about. If Royston can produce young people such as I met on that day then our future is truly in good hands.

Using Crypto in disaster areas

Using Crypto in disaster areas

CoinTelegraph had a very interesting article on this very thing – see here:

https://cointelegraph.com/news/unicef-fund-manager-cryptocurrency-could-revolutionize-humanitarian-aid

You probably won’t remember but this is something I spoke about and highlighted some considerable time ago as being a perfect use for crypto in disaster situations. UNICEF has now embraced the idea. In the interview their Program Funding Manager Sunita Grote has given, other unique and extremely important facts are mentioned, notably – and I quote:

  • It lets us tap into a new resource base for UNICEF and expand our network to receive contributions 
  • Blockchain can improve efficiency and transparency by tracking the flow of resources and transactions in a more transparent way. Blockchain makes us more accountable and has the potential to reduce the amount of resources we need to do our work. We’re a $7 billion global organization that conducts a lot of transactions between various parts of our organization, so we are looking to see how blockchain can help us manage and track these in a more efficient way. 
  • We are exploring how blockchain can disrupt and improve systems that deliver programs for children. Blockchain may allow us to make payments in a new way and improve how cash transfers are made. 

The other point she made was that they were not going to just take in crypto and resell it. She specifically rules this out, and also simply handing the crypto to governments in affected areas. The digital currencies, she says, are specifically going to be used as currency within affected areas.

That is an enormous step forward and a real life use of crypto that transcends anything it has been used for before.

Scotcoin - Coronavirus Redux

Coronavirus Redux

There is no doubt the Coronavirus is having a severe effect both on world trade but also in travel patterns across the globe.

It is clear that China is actually suffering a severe drop in output (check the electricity figures if you don’t believe me) and it may well be that this drop will translate into drops in manufacturing in the rest of the world. JLR is very nearly out of parts. The Baltic Dry Index (remember – 90% of world trade travels by ship) has fallen over 80% since September 2019, which means that the re-supply cannot just be switched back on. It will take time to build up again.

If you remember 2008 and its aftermath (and who doesn’t) you will know that Central Banks and Governments essentially increased massively the world’s money supply. That prevented a severe recession (with all that would have implied for social cohesion) but it is also part of why assets have increased so much in value in the last 10 years or so. Arguably, that is not a good thing.

I cannot see that the authorities response, financially, is going to be any different this time round. The drops that have been experienced mirror quite closely what happened in 2008.

In short, the real economic danger of Coronavirus is not temporary supply chain disruption, which in itself is likely to substantially slow global economic growth in the first half of 2020. The concern should be that this crisis triggers a panic in consumer and business confidence and in doing so sets off a wider reassessment of asset valuations. The thought of people’s house valuations plunging as they did in 2008 because the earnings of their occupiers have been decimated by layoffs doesn’t even bear thinking about – nor do the potential food riots. You can forget governing by consensus – it would be governing by machine gun. Already jittery investors are scarpering from the riskiest corners of debt markets amid worries the coronavirus could trigger an avalanche of downgrades and defaults.

And that’s why Crypto currencies are becoming more and more important, despite what the market prices are telling us. The inflation that should have been unleashed by the floods of money created 2008 onwards simply hasn’t happened because the classic demand push/pull of economics hasn’t been able to take hold. The credit that drained out of the system simply could not be replaced fast enough. If the governmental printing presses become red hot again, then inflation simply won’t be curtailed (And yes, I know that isn’t how money is created but it’s the usual image people relate to). But think on. Central Banks around the world are already dropping interest rates and increasing liquidity. Don’t think for one minute the Fed will stand aside just because it’s an election year, their traditional stance. There is already talk of WORLD economic activity dropping from 2.9% growth last year to a contraction of a similar amount in 2020. That would be disruptive in the extreme.

So think seriously about having some Crypto tucked away. For a start it won’t inflate away to nothing, so that pint of milk which was 50p and becomes £2.50 will still be 25 Scotcoin or .00006 Bitcoin.

BREAKING NEWS: The Fed just cut interest rates (You read it here first)

Scotcoin - ARE we going cashless

ARE we going cashless?

There has been much talk of the UK going cashless, particularly because of the relentless drive of contactless. ATMs are reducing in number, especially as the banks in the UK now rake in £100 million a year in fees from the consumer. That machine that charges £1.99 to take out £20 is now a profit centre not a cost centre.

There is great gnashing of teeth about how certain sectors of society rely on cash and “don’t” do internet, and the closing of branches means some areas are slowly but surely being strangled in terms of that good old economic axiom, the Velocity of Money.

However, amidst all the “woke” trumpeting, a fact has been completely ignored.

Over the last 5 years, the amount of cash in circulation has risen by 24% to top £70 billion. Some of that is accounted for by inflation (perhaps 7% or so) but the rest is pure increase.

How and why?

People are making fewer trips to ATMs (not least because that £1.99 charge is a real disincentive) but are taking out larger sums. They are storing around the same amounts in the wallets in their pockets, but are very definitely sticking more under the mattress. This is confirmed by the lack of use of for example £2 coins, but the relentless rise in the number of £50 notes.

In Sweden a similar crisis of cash happened a couple of years ago when both IKEA and their equivalent of the NHS stopped taking cash – card only please. There was such an outcry that the government of the day enacted certain measures to ensure that cash would not disappear and would always be useable. We may have to do the same thing here (indeed, all countries may need to), but we have a very much larger cash circulation both absolutely and per head of population than Sweden, and indeed than most countries.

People have come to the realisation that cash is a good store of value. As of now, the interest you can earn on money in an account is so pathetic that you might just as well keep it in cash. The banks aren’t helping themselves here – Halifax recently dropped an account yielding 1.5% to 0.1% – and wondered why most of the deposits disappeared.

Crypto is helping people realise that stores of value are increasingly important. I’ve argued before that cryptocurrency should be viewed as another asset class and store of value. Yes flows of money are important, but the “sitting still” of money is equally so.

So let’s hear it for cash – “The Cash is dead, Long live the Cash”

The corona virus outbreak shows just how fragile our world is

The corona virus outbreak shows just how fragile our world is

Quite apart from the disruption that has been caused, China has printed $170BILLION of extra cash to pump into the economy. There’s no guarantee that’s enough, and in fact it’s unlikely to be. In 2008, the US Treasury printed $600 billion, and that wasn’t enough to prevent widespread bankruptcies and zombie companies. The IMF only has about $3-4 triilion available to it and the dollar derivatives and swaps are now around $18 trillion, so a real disruption (people asking for their USD back) would have a catastrophic effect on the world economy. Far from reducing reliance on dollars, the crash enhanced and strengthened its hegemony.

So – at the risk of stating the obvious – there needs to be something else that can be used if dollars start to become unavailable. I’m not for a moment suggesting that cryptos – with a current value UNDER $300 MILLION – will replace it, but if your bank started not honouring your bank card, you just might like to have some cryptos available to buy that pint of milk.

Twenty years from now

Twenty years from now you will be more disappointed by the things that you didn’t do

I’ve had a number of interesting meetings with random people over the last couple of weeks. They were all related to different business aspects, but the one thing that came across quite clearly was the growing realisation that blockchain – and by extension, cryptocurrency – was going to be THE future.

At least two of the people I was talking to had had virtually no knowledge of blockchain until very recently, and one of them only started to look at it when I arranged to meet him a couple of days ago. If anything he was the most evangelical about it.

One of the most important aspects is how people are perceiving digital currency. I have already argued that it is now another asset class alongside stocks and shares, art, fine wine, bonds, gold, commodities and so on, and this idea is already taking hold. I had a very interesting conversation with a Polish lady who had never even heard of blockchain, but knew of Bitcoin. As soon as I explained about the asset class ( ok maybe you should only have 1% of your wealth in it) she rushed off to talk to her business manager, and splurged on a basket of cryptos. I’m not sure she has all the right ones, but hey, that’s her business. As an aside she’s already made money on them.

It remains true that if you had that 1% just in Bitcoin 5 years ago, your total portfolio would have out-performed nearly all others. Far be it from me to say it but if you had included Scotcoin in that same portfolio, you would have outperformed ALL others.

The countries, ecosystems and companies that embrace the possibilities of blockchain and crypto now are those that will inherit the future.

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbour. Catch the trade winds in your sails. Explore. Dream. Discover.”

It is a misconception that Mark Twain said that (along with lots of other things he said)

Mark Twain did NOT say that.

The quote belongs to H. Jackson Brown’s mother. See page 13 in Brown’s 1991 book: P.S. I Love You: When Mom Wrote, She Always Saved the Best for Last.

But Twain DID say “Denial is not just a river in Egypt”

Have a great future.

StrathclydeGlasgow University FinTech Pub Quiz

Strathclyde/Glasgow University FinTech Pub Quiz

Students from both the University of Strathclyde and University of Glasgow’s respective FinTech societies have come together in organising a unique FinTech oriented pub quiz. The event will be held on February 12th in Glasgow, open to all Glasgow and Strathclyde students. The quiz aims to take the form of any conventional pub quiz, but with an interesting twists: its structure takes the form of rounds of questions asking participants a range of different questions, including FinTech related topics.

The students involved in organising the event hope that the quiz will garner more student interest than more orthodox events, and by extension spread the knowledge of FinTech to a wider audience. In addition, the students believe that because FinTech is occupying a more central and prevalent role in more than just the financial industry, it is essential to understand and have some knowledge of its existence.

The event is sponsored by Scotcoin, who will provide different quantities of SCOT for the top three teams.

More information will be made available via the societies social media, contact details below:

University of Strathclyde: [email protected]

University of Glasgow: [email protected]

Ethereum users

Ethereum users

There has been a tweet doing the rounds by a chap called Adam Cochran @adamScochran which starts off:

“You may have heard a crazy claim that “no one really builds on Ethereum” and that “all the products being built on Ethereum are paid for by the Ethereum Foundation or ConSensys”

It goes on to list them:

Ubisoft,Amazon,American Express,Uber,BBVA USA,Oracle,Tencent Global,MetLife,Ford, Intesa Sao Paolo,Bank of Montreal,Ontario Teachers Pension Fund. Goldman Sachs

And another 346 corporations large and small who have paid for their own Ethereum blockchain set up.

Without a shadow of a doubt, Ethereum tokens and their smart contracts are leading the world in terms of usage, and we at Scotcoin will be joining them soon.

See amazing series of tweets here: