Financial Feudalism - The New American 'Dream'
ZeroHedge.com Tue, 02/18/2020 - 23:25 Authored by Mike Krieger via Liberty Blitzkrieg blog, Watching politics unfold in the post-financial crisis era has been extraordinarily frustrating. While it’s been refreshing to observe the emergence of grassroots populism over the last few years, there’s a problematic lack of depth and clarity embedded in these burgeoning mass movements. Tens if not hundreds of millions of Americans now acknowledge that something’s deeply broken within the current paradigm, but we remain focused on identifying symptoms as opposed to understanding and rectifying the systemic nature of the problem. As depressing as Bloomberg’s blatant attempt to buy the presidency is, there’s a silver lining. It’ll force many people to admit what they’ve been trying to avoid. That the country is in fact an imperial oligarchy. Pretending it’s not only makes things worse. — Michael Krieger (@LibertyBlitz) February 17, 2020 Of course, there are numerous complexities when it comes to the administration of an imperial oligarchy, and our system didn’t emerge overnight. Perhaps the most fundamental mutation of the post WW2 era came in 1971 when the international convertibility of U.S. dollars into gold was severed. This is when the country began its long transformation from a largely industrial empire to a financial one. I’ve often highlighted how the purely fiat USD reserve currency is the most powerful weapon ever invented, and how the U.S. control of the global financial system is the true backbone of empire, but it’s equally important to understand how the predatory financial system is also used to subjugate Americans in their own country. In order to understand how this works we need to dig into the most fundamentally important four letter word in any modern economy: Debt. When most people consider the debilitating societal effects of excessive debt they tend to see it from one basic level. How the bottom half of the population essentially has no choice but to borrow in order to participate in the economy as constructed. This is because the cost of so many things has been inflated way beyond the capacity of most people to purchase them outright. Specifically, wage growth has failed to keep up with the soaring costs of fundamental things such as shelter, healthcare and higher education. For instance, home prices have been rising faster than wages in 80% of U.S. markets, which means the higher cost tends to offset historically low mortgage rates. Low interest rates don’t really help such people, it just lets them maybe, barely purchase an intentionally inflated asset to live in by taking on a huge chunk of debt. An asset that could quickly become completely unaffordable should the economy turn down as it did a decade ago. As such, you have multitudes taking on debt defensively just to keep going and avoid falling further down the socioeconomic scale. Debt doesn’t empower such people, rather, it turns them into modern day indentured servants endlessly stuck on a hamster wheel with little to no hope of getting off. This is not an accident, it’s a tried and tested tool which, when combined with incessant mass media propaganda, is an effective way of creating a submissive, confused and desperate underclass. Many people understand this by now, but what’s far less understood, yet potentially more significant, is how the wealthy use debt. The oligarchy uses debt offensively (to increase wealth and power), while the masses must use debt defensively (to survive). If more people understood precisely how the game is rigged at the highest level (financial system) we might get somewhere. — Michael Krieger (@LibertyBlitz) February 17, 2020 When you own your primary home outright and you’ve got enough savings that healthcare premiums and paying for your kids college in cash doesn’t make a dent, debt becomes something else entirely. Debt’s no longer an albatross around your neck, instead it becomes a tool to increase wealth. Debt becomes leverage. Much of the explosion in wealth inequality over the past several decades can be traced back to this systemic interclass weaponization of debt. If you’re very wealthy and connected, access to extremely cheap debt is virtually unlimited, and this access is used to make leveraged bets on all sorts of stuff, but primarily real estate and financial assets such as stocks and bonds. Hasn’t this always been the case you ask? Aren’t those with capital always extremely advantaged over those without it? Isn’t that the history of capitalism and America since the beginning? My answer would be yes and no. The main difference between prior periods of history and, let’s say the 21st century, has been the vast increase in power of the financial services sector thanks to the Federal Reserve’s willingness to encourage and enable the insatiable reckless behavior of the speculator class. It’s no secret the Fed has been intentionally boosting assets across the FIRE sector such as real estate, stocks and bonds since the crisis. Those with the capital to ride the coattails of this irresponsible and undemocratic central planning rushed out to take on debt to buy these assets, thus multiplying the return on investment. While the white-collar cubicle worker with enough extra income to diligently add to their retirement account over the past decade has done fine, bankers or hedge fund managers who took on massive leverage to amplify such bets made generational fortunes while creating nothing of value. It’s the way debt works for the financial services sector versus how it works for the average person in a world dominated by big finance and the central bankers who provide them unlimited welfare. The same thing occurs within the corporate suite, as executives across industries have used access to extremely cheap debt to buyback stock and reward themselves handsomely despite creating nothing of societal value while doing so. It’s pure financial engineering. Nobody should become generationaly wealthy this way, but it’s exactly what’s been happening. So you see, debt’s not just a means to subjugate a desperate bottom half of the population, it’s concurrently an effective tool to expand wealth and power at the top. Rickards: What Happens When A Biological Virus Turns Into A Financial Virus?
ZeroHedge.com Tue, 01/28/2020 - 18:15 Authored by James Rickards via The Daily Reckoning, The world is confronting the effects of the “coronavirus.” It likely originated in Wuhan, China, where it jumped from animals to humans at a local food market. It has since spread to other parts of China and beyond. The death toll in China has soared past 100 while the number of confirmed cases doubled overnight. Health officials around the world have confirmed more than 4,500 cases, more than triple the number from Friday - cases have also been found in France, the U.S., Canada, Australia, Japan, South Korea and elsewhere. That list includes the world’s three largest economies (the U.S., China and Japan). All but a few of the deaths recorded so far have been in Wuhan or the surrounding Hubei province, per the SCMP. For many, it recalls the SARS outbreak of 2003, which also originated in China. It ultimately killed 774 people and infected more than 8,000 in different parts of the world. Not surprisingly, global markets are on edge over fears of the “coronavirus” contagion spreading. And the U.S. stock market sold off yesterday. But let’s discuss the word “contagion,” because it applies to both human populations and financial markets — and in more ways than you may expect. There’s a reason why financial experts and risk managers use the word “contagion” to describe a financial panic. Obviously, the word contagion refers to an epidemic or pandemic. In the public health field, a disease can be transmitted from human to human through coughing, shared needles, shared food or contact involving bodily fluids. An initial carrier of a disease (“patient zero”) may have many contacts before the disease even appears. Some diseases have a latency period of weeks or longer, which means patient zero can infect hundreds before health professionals are even aware of the disease. Then those hundreds can infect thousands or even millions before they are identified as carriers. In extreme cases, such as the “Spanish flu” pandemic of 1918–20 involving the H1N1 influenza virus, the number infected can reach 500 million and the death toll can run over 100 million. A similar dynamic applies in financial panics. It can begin with one bank or broker going bankrupt as the result of a market collapse (a “financial patient zero.”) But the financial distress quickly spreads to banks that did business with the failed entity and then to stockholders and depositors of those other banks and so on until the entire world is in the grip of a financial panic as happened in 2008. Still, the comparison between medical pandemics and financial panics is more than a metaphor. Disease contagion and financial contagion both work the same way. The nonlinear mathematics and system dynamics are identical in the two cases even though the “virus” is financial distress rather than a biological virus. But what happens when these two dynamic functions interact? What happens when a biological virus turns into a financial virus? We’re seeing it happen in China. It’s the time of the Lunar New Year holiday in China, China’s most important public holiday. It’s traditionally a time of widespread celebration. Many major Chinese cities have been shut down, with no citizens allowed to leave, and their transportation systems have been closed. Retails sales are also suffering as consumers remain home instead of risking contagion with trips to the store. The disease is causing financial panic in China at a time when it can least afford it. GDP growth has hit a wall and investors have curtailed new investment. Could it unleash a global financial panic that ultimately results in a lockdown of the banking system? It’s possible, but it’s far too soon to say. This is the type of catalyst that could take a year to build. But it definitely bears watching. Almost $300 Million Stolen From Crypto-Exchanges In 2019
ZeroHedge.com Mon, 01/06/2020 - 18:25 Authored by Patrick Thompson via CoinTelegraph.com, Twelve major cryptocurrency exchange hacks occurred in 2019. Of these, 11 hacks resulted in the theft of cryptocurrency while one only involved stolen customer data. In total, $292,665,886 worth of cryptocurrency and 510,000 user logins were stolen from crypto exchanges in 2019. Cryptocurrency exchanges experienced more hacks last year than in 2018, when only nine cryptocurrency exchanges fell victim to security breaches. As time goes on, you might think that cryptocurrency exchanges would become more secure. The reality, however, is that more hacks on cryptocurrency exchange are taking place year after year. In general, crypto exchanges remain unregulated, and it’s still unclear which regulatory agency has jurisdiction over the crypto markets. Although there are no established rules regarding how cryptocurrency exchanges should safeguard customer funds, there are crypto-friendly countries and states. Canada, Malta and the American state of Wyoming have created crypto-friendly legislation that makes it easier for businesses to operate and gives them guidelines regarding security practices. Sadly, not all countries have created guidelines or laws that help crypto businesses operate and reduce the risk for consumers. The way cryptocurrency exchanges store and protect their customer’s wealth differs from exchange to exchange; unfortunately, this makes cryptocurrency exchanges a hotbed for hacks that result in the theft of cryptocurrency or customer data. Let’s take a closer look at the cryptocurrency exchange hacks of 2019 and how much cryptocurrency, fiat and customer data was stolen in each incident. 1. Cryptopia Date: Jan. 14, 2019 Headquarters: New Zealand Amount stolen: $16,002,108 Just two weeks into the year, the first hack on a cryptocurrency exchange took place. New Zealand-based Cryptopia was hacked for over $16 million worth of cryptocurrency at the time. Social media users started their own investigation, according to which, over 20 different cryptocurrencies were taken from the exchange’s hot wallet. 2. LocalBitcoins Date: Jan. 26, 2019 Headquarters: Finland Amount stolen: $27,000 A few weeks later, the popular over-the-counter Bitcoin exchange LocalBitcoins was the victim of a security breach. Attackers were able to replace the official link to the exchange’s forum with a fraudulent link that led users to a fake page that resembled the discussion board but collected the information of the users who attempted to log in. The attackers used the information they obtained to steal 7.9 Bitcoin — worth $27,000 at the time — from at least six user accounts. 3. Coinmama Date: Feb. 15, 2019 Headquarters: Israel Amount stolen: 450,000 account usernames and passwords In just the second month of the year, Israel-based cryptocurrency broker Coinmama learned that its database had been breached. As a result, an estimated 450,000 user account logins and passwords had been compromised and posted on a darknet registry. 4. DragonEx Date: March 24, 2019 Headquarters: Singapore Amount stolen: $7.09 million On March 24, Singapore-based exchange DragonEx posted in its official Telegram group that it had experienced a hacking attack, and as a result, a portion of the users’ and the platform’s crypto assets had been stolen. Days later, DragonEx released an announcement on its website, saying: “On March 24th, DragonEx suffered APT attack, which is the greatest challenge since DragonEx was first launched in the year of 2017. 7.09 million USDT assets are stolen.” 5. CoinBene Date: March 25, 2019 Headquarters: Singapore Amount stolen: $105 million Just two days after the DragonEx hack, another cryptocurrency exchange in Singapore, CoinBene, was hacked. Many CoinBene users became suspicious of a hack when the CoinBene site unexpectedly went down for maintenance. Individuals who were tracking the CoinBene hot wallet noticed that a whopping $105 million worth of crypto assets had been removed. Even though all of the evidence is on the blockchain, CoinBene continues to deny that it was ever hacked. 6. Bithumb Date: March 30, 2019 Headquarters: South Korea Amount stolen: $18.7 million March was a bad month for cryptocurrency exchanges. Just a few days after the CoinBene hack, Bithumb was hacked for an estimated $18.7 million — $12.5 million in EOS tokens and $6.2 million in XRP. Unlike other exchange hacks, Bithumb believed that the theft was an inside job committed by a former Bithumb employee who had access to its hot wallets. 7. Binance Date: May 7, 2019 Headquarters: Malta Amount stolen: $40 million On May 7, Binance — the world’s biggest cryptocurrency exchange — experienced a security breach. As a result, 7,000 BTC, equivalent to $40 million at the time, was stolen. In addition, Binance said that hackers were able to obtain user API keys, two-factor authentication codes and possibly more user information. Later, on Aug. 7, it was revealed that hackers were in possession of over 60,000 pieces of Know Your Customer data from the Binance exchange. An individual going by the name “Bnatov Platon” said he or she hacked the individuals that hacked Binance back in May and discovered that the original hackers had also gained access to 60,000 pieces of customer KYC data, including the photo IDs of 10,000 Binance users. 8. GateHub Date: June 1, 2019 Headquarters: United Kingdom Amount stolen: $10 million In June, GateHub made an announcement, saying 100 of its users’ XRP wallets had been compromised. A GateHub community member took a deep dive into the hack and discovered that by June 5, 23,200,000 XRP had been stolen from 80–90 of these wallets — the equivalent to about $10 million at the time. 9. Bitrue Date: June 26, 2019 Headquarters: Singapore Amount stolen: $4.23 million At the end of June, Bitrue was hacked, and roughly $4.23 million was stolen. Hackers learned of a vulnerability in Bitrue’s security that gave them access to about 90 user accounts. Afterward, hackers used what they learned from their 90-account takeover to successful compromise Bitrue’s hot wallet. As a result, 9.3 million XRP and 2.5 million ADA were stolen. Top of Form Bottom of Form Top of Form Bottom of Form 10. BITPoint Date: July 11, 2019 Headquarters: Japan Amount stolen: $32 million On July 11, Japan-based cryptocurrency exchange BITPoint was alerted of an irregular outflow of XRP from its hot wallet. Several hours later, BITPoint became aware that Bitcoin, XRP, Ether, Bitcoin Cash and Litcoin had been moved from the exchange’s hot wallet without authorization. In total, $32 million worth of cryptocurrency was moved out of BITPoint’s hot wallet — $23 million of which belonged to BITPoint users. 11. VinDAX Date: Nov. 5, 2019 Headquarters: Vietnam Amount stolen: $500,000 For the most part, the VinDAX hack is a mystery. VinDAX is a small cryptocurrency exchange based in Vietnam that primarily hosts token offerings for unheard of companies. Information regarding this security breach is scarce. However, The Block took a deep dive into this mysterious hack and learned from the VinDAX support staff that roughly 23 cryptocurrencies — worth $500,000 in total — had been removed from its hot wallet without authorization. 12. Upbit Date: Nov. 27, 2019 Headquarters: South Korea Amount stolen: $49,116,778.00 And finally, the last hack of the decade: Upbit. Upbit is a South Korea based cryptocurrency exchange that was hacked for 342,000 ETH — equivalent to $49,116,778 at the time — on Nov. 27. All that is really known is that hackers were able to gain access to Upbit’s hot wallet and move Ether without authorization. However, Upbit released a statement shortly afterward telling users that it would be covering all of the losses with the exchange’s assets. * * * The damage In total, $292,665,886 worth of cryptocurrency was stolen from 11 cryptocurrency exchanges and 510,000 pieces of user information were taken from the database of one exchange — a total of 12 cryptocurrency exchanges experienced security breaches. So, what does this all mean? It means that cryptocurrency exchanges have to do better in terms of industry standards and security practices. Sadly, we did not see enough legislation and security improvement in 2019, and we experienced even more cryptocurrency exchange hacks than in any previous year. But hopefully, these things will change in 2020 and the cryptocurrency markets will be safer for every party involved in the cryptocurrency ecosystem. |
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