Episode Transcript
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Have you ever wondered what direction the canadian currency system is going in? Or really the global currency system? Well, we get a lot of comments from people about that and asking us questions. And today with my friend Henry Wong, we're going to dive into some of those aspects a little bit today and just sharing at least some perspective and some opinion on the direction that at least the canadian currency seems to be going. And how does the sound money or the idea of sound money overlap with that? And where can we seek some solace in the utilization, of course, of the amazing infinite banking concept to help us with these winds of change? So, Henry, thanks for being with me again today. This is a bit of a follow up from a recent recording that we did, so maybe it would be helpful if we kind of did some summary of that last conversation as it moves us into this sort of direction, talking about specifically fiat currency and its current form and potentially its future form as we move forward in time.
[00:01:43] Speaker B: Yeah, Richard, thanks for having me. And just as a quick recap, I thought it would be good to lead into this discussion that we're going to have today recapping what we talked about last time, where the focus of the conversation was on fiat currency. And for some of you who may be for the first time hearing what fiat currency is, fiat currency is really currency backed by the government. And I still want to clarify the term currency, which is a form of payment accepted by the majority. And so today, what we typically handling on a general day to day basis is currency in the form of canadian dollars. And when I need to buy goods and services, it's going to be denominated in canadian dollars or canadian currency for me to utilize, to pay. I can't pay in general alternative means, it's not as widely accepted by the majority. And so that's where we last left off, talking about fiat currency, how the process of banking is being utilized, or how we teach Canadians to utilize the process of banking using a properly designed whole life policy to participate, doing the things that they were already doing, whether it is related to purchasing investments, whether it's related to purchasing cars or larger other purchases, but nonetheless, it is some form of taking on or adopting that process and deploying the capital to do the things that we are going to do. And so today, where we're going to talk about now, is leading towards another side of the territory. And for those of you, I'm just going to share my screen really quickly. You would have seen the screen share that I only had one side revealed. And today we're going to talk about the side on the right, which I'm going to show and introduce as cryptocurrency.
[00:03:39] Speaker A: Now, what's interesting here, just highlighting the idea of fiat currency, and I had a comment about this before we hit the record button today, Henry, and my entire human existence has been under the banner of a fiat currency, and I suspect yours has been the same.
Yes, really, as North America wide, we're in a position where what we are accustomed to doing on a day to day basis when it comes to transactions, buying groceries, buying, putting fuel in our vehicle, whatever it is that we're doing, paying for our utility bills, we are utilizing the currency of the nation. And that currency is, again, it's backed by, in this instance, at least in Canada, by the bank of Canada in the United States, it's backed by, effectively, the Federal Reserve system. It's the trust in that system. There's nothing else really backing it other than the idea of trust. And so we don't have it backed by anything tangible or physical, like in the past when it used to be backed by gold, where you would be able to exchange a certain volume of dollars for an equivalent amount in weight of gold ounces or bars or whatever it is. That's really the difference that we're talking about is what is the scenario that backs the currency now, that hasn't really been, I would say, problematic in my lifetime existence, other than the impact of currency devaluation and the reference point of essentially inflation eroding the purchasing power of our dollars. And I know over my own human lifespan, I've certainly seen that to be the case. So we're not going to have a big in depth conversation about that today, but just giving people the framework that what does it really mean to be operating under a fiat currency system? Well, the reality is what you've been doing every day, we're just in it. And because we're in it, we don't often think about the fact that we're in it, some maybe more than others, but I think today's conversation is starting to open up a little bit about how, I guess, alternatives to some degree of the current currency model are being considered and becoming more aware and more popular, I think, to some degree in the wider marketplace and then more geographically speaking here in Canada, there's some things that we're going to talk about.
[00:06:04] Speaker B: Yeah. And for sure, and we encounter these questions quite regularly because part of it I'll just kind of express my opinion, is when people come to us, they're kind of looking at as the process of banking as a safe haven.
We're talking about learning the skills of the functions and steps or sequence of requirements for the process of banking, which we talked about deposit lending, withdrawals and lending in general. So we're adopting those processes. And just picking up from your point, Richard, back in 1971, which is before I was born, I don't have as much white hair as other listeners or anything like that. I have come in to when Canada was already operating primarily on the fiat model and to kind of go back to 1971 when President Nixon removed the gold standard for the US dollars.
If we kind of look at it from a very step by step sequence before, the paper that we had was backed by the government and also backed by a fixed metal that has, through history stood a level of confidence that it meant a representation of wealth and money. It meant a representation or belief of money, which was gold. And the instance they have broke that connection. Everything that is operated with fiat now is just based on the confidence of government. Now, confidence of government, especially in, let's say Canada, has from 1971 until now, has the confidence of the government increased or decreased? I think a lot of people have very different opinions on what their level of confidence in the government is. In my opinion, when the government has multiple trillions of debt, 1.6 trillions of debt, and operating on a regular operating deficit where revenues is lower than expenses or expenses are higher than revenues, so they're operating at a loss on a regular basis. It does bring to question, how confident are you in our government in running the nation and where are they going to get their shortfall? Well, they have legal rules written to how they would tax Canadians and their confidence would be, well, if we ever. I mean, could be. I'm not saying it is. Could be that if they ever needed to pay back debts or meet their deficits to have a break even, they will or could raise taxes on their citizens and take more of your money. So the long winded way of saying, right now we're in an interesting pivotal moment to talk about this conversation of money, because it is a very common question that we're dealing with when it comes to helping Canadians adopt the process of banking.
[00:09:07] Speaker A: Yeah, and we're going to point to a few different resources as we go throughout the day.
I think if we bring up your slide again, Henry, and we talk a little bit about the alternate, I guess, method or system that has been developed in the last kind of decade or two, we have this idea of cryptocurrency. Again, it's a hot topic out in the marketplace, and our conversation isn't to defend or say that cryptocurrency is good or bad. We're just talking about the fact that it is an alternative technology by which they are looking to base either monetary value or the exchange, the ability to facilitate the exchange of capital and transact currency. So when we think about cryptocurrency, we're really talking about the fundamental technology behind the blockchain style technology that's allowing digital transactions to take place at some measure of speed, different than the current online banking technology aspect that allowing us to transact today at some measure of speed. And even. We'll probably get to this in a moment. But there's a little bit of a video clip, I think, with a statement from Elon Musk in a podcast episode that we're probably going to play to reference that a.
So what's interesting is talking about how these cryptocurrencies and the technology of them is becoming at least well known. Whether it's well utilized or well adopted, I would say, is not the case, but it's certainly very prevalent and known in the world today.
[00:10:58] Speaker B: Yeah, most certainly. And I want to use this time as a chance to first distinguish some definition clarity, because when people hear cryptocurrency, they may already jump to certain terminologies, that you may already see one of them on my screen already, or cryptocurrency could be another thing. And the first part, in terms of segmentation that I wanted to highlight, is that when it comes to cryptocurrency, I would probably categorize it as two broad stroke categories where there's a centralized form of it and then there's a decentralized form of it. And actually, if we were to expand the definition of money, we could also even potentially go back to there was the fiat currency version, which is the centralized version of it, and then there is the decentralized physical version of it, which some people may understand as precious metals, whether it be gold, silver, platinum, copper, whatever that is, however, the limitation to that specifically was that it was not a well accepted form of currency, so it was not really used on a wide basis of accepting payments. So the centralization and decentralization format existed in both environments, in the fiat environment. And also now I'm just kind of sharing in terms of the crypto environment. And so the one that most people have caught a lot of attention towards is, let's say, bitcoin. And people who don't understand bitcoin on the decentralized space will think of it as, they think of it as an investment, a future of money, future of technology, future of whatever it is.
And the clip that I would share, I think helps put a lot of perspective from Elon Musk, which I'll share a little bit in a bit, but it's kind of an exchange of information.
Similarly, another form of cryptocurrency that people are hearing is a term called the central bank digital currency. And this is probably a good time for us to describe a little bit more about central bank digital currency. However, the main part that we're still going to talk about is diving into the process of banking and the environment of that information or that money that is being operating or acting on that place. But I think it's important to kind of break down the concept of the money that we're talking about. And the one that I want to address more specifically first is around the centralization of the central bank digital currency. And so if I kind of go into, and I think we'll be able to show some resources to the bank of Canada. They have a very long list of articles and white paper of them researching a central bank digital currency. They have a long list of information of how they are planning to implement the central bank digital currency. So there is no speculation, there is no conspiracy. There is active efforts and resources diverted towards implementing some form of a central bank digital currency. I think what a lot of people now get much more aware about is the concerns, and there are fear in the amount of or lack of control and what that could entail to do. And I think just personally sharing that is something I would be very concerned about, too. And that's where it's important to get educated and understand exactly what's going on.
[00:14:40] Speaker A: Further, to the point that you identified the current system of centralized versus, as you said, decentralized. If we look at paper money, I mean, here I've got a canadian $20 bill right here, and it's not even paper. It's actually a form of plastic nowadays.
And of course, they have to make these things in such a way where they can't be counterfeit. And so there's foils and holograms and all kinds of stuff going on. But this here is not backed by anything other than effectively the system of trust in the fiat world that we live in today. Whereas if I were to open up my safe and I've got a bunch of silver canadian maple leaf coins, well, I can't really go and transact those out in the marketplace right now. I'd have to find a reasonably similar minded individual who had something I wanted to purchase that was willing to accept that because it's not considered legal tender in the country any longer. Similarly, you had gold or gold bars or whatever. Like, if I wanted to go buy a truck, well, maybe I can convince someone to sell me their truck for a gold bar. But realistically, I think the gold bar is worth more than the truck. So I'm probably going to keep the gold bar. And I would rather use this mysterious paper plastic money to go in exchange for that private seller to get that truck and then maintain the thing that I think is actually going to be more valuable in the long term, which is the gold bar. So it wouldn't make sense for me, in my opinion, to do that. But again, I would have to certainly find someone who was even willing to in the first place. So the lack of, I guess, transparency or public awareness in the utilization of other things to make the exchange happen, and that's the foundation of what? Paper money or digital money in the form that we use today, most of which is digital. I rarely use paper money for anything these days. But that digital aspect that we transact with debit and credit cards, et cetera, on it, is so convenient because it's accepted by every institution. So that measure of convenience, it's important to understand as a consumer, we are in this system because we seek a measure of convenience. That ability to transact at speed is so critically important, and it's fundamental to almost everything that we do on a daily basis, so much so that we don't even think about it. And so we have to take that into context as we move into recognizing the potential direction of how currency might shift in our nation and certainly in others as well. I mean, the United States, as you identified earlier, Henry, in a previous, before we hit the record button, they have their own central bank digital currency system that's being created. I think you said it's called Fed plus. Fed now. Yeah. So no different than Canada is doing research. The Federal Reserve system in the United States is also in the process of implementing or testing out a similar model.
[00:17:48] Speaker B: Yeah, and I think before I share the clip of what I wanted to share with Elon Musk, about 114 countries, now representing 95% of the global GDP, are already exploring a central bank digital currency. And in May 2020, only 35 were considering it. So there has been a huge leap from 35 to 114 now that are on that phase of moving towards a central bank digital currency. And the obvious question is, why would the bank of Canada be so interested in digitizing dollars, like how the US Federal Reserve or like how other countries are doing it? Has the implementation been effective for countries? No. I mean, let's say Zimbabwe tried, other countries have tried, and it has very vastly failed because the citizens heavily rebelled against the lack of control that they had when it came to needing their money. Now, China is a very big country, as we know, that has implemented a central bank digital currency, or some form of a digital currency amongst their regions and their cities. And so this is not a new term or a new thing that has been happening. A lot of countries have gradually started to adopt it, and the resistance or acceptance is up for debate. So why would they focus on digital? If we, as you mentioned, Richard, our dollars that we're looking at, it is already digital, and it's already on our bank accounts. We just log in, we send an e transfer, or we go to the bank, send a wire transfer, that money instantaneously will get somehow show up on the other person's account that you've properly provided the destination information to. But what's the difference between true digital currency and the system we have today? Because our current monetary system relies more on digital. And this is the part that I want to make sure is clear in terms of terminology. It relies more on digital claims of currency. And this is why, when we use banks, we are transferring from one account to another. We're actually sending digital ious and digital claims to money, but not necessarily the actual money itself. And that's why banks also need to use their own third party banks to verify transactions to make sure that the money we are sending exists in the first place. So let's say when you deposit a check, that check doesn't immediately mean you get immediate access to that money, because they're going to put that claim into your bank account. But that check still needs to clear. And what that means is someone, whoever you're getting the check from, that money actually needs to transfer. And so there is that verification process. So check is a really good, slower process of things to explain what the current monetary system is that lag and that delay. When you deposit a check, it takes time for it to clear. It's because they're going through a series of steps of people doing manual verification, system verifications, and no money from one account can transfer to the other, and that amount doesn't bounce. So that's really where the value will come in. And banks are starting to jump on to cryptocurrency, and they're creating their own network, which is a blockchain to house the network. So last podcast we talked about a network that the banks have built to charge tolls or transfer money. Blockchain is no different. Every cryptocurrency will build their own form of blockchain. Now, how that blockchain is governed is also a very important element to take into consideration. But banks are starting to sound like the crypto aspect of it, and they have their own private network. So what they want to have is that centralized control of the network so they can control how the flow of money is actually going to work and.
[00:21:55] Speaker A: Be used, become your own banker and take back control over your financial life. Hey, is this even possible? You may be asking, can I even do this? Well, you better believe it. In fact, it's easy to get going. So easy that we put together a free report. Seven simple steps to becoming your own banker. Download it right now. Go to Sevensteps ca. That's seven steps ca. Now let's get back to the episode.
I would say that this know, before we go too much further, this would be probably an appropriate time to maybe just play that video clip and give people a little bit of context. And so this is a great clip that Henry found.
Again, it's an interview, I believe, on the Lex Friedman podcast with Elon Musk. It's probably about a year, you know, giving his perspective, know the guy who started many, many years ago, and his familiarity with the money system from the digital aspect, the digital backbone of it in that format. And he gives an interesting, I think, relevance point to the current monetary system.
[00:23:06] Speaker B: Yeah, so I'm just going to share it right now.
[00:23:09] Speaker C: Cryptocurrency thing is an interesting approach to reducing the error in the database that is called money.
I think I have a pretty deep understanding of what money actually is on a practical day to day basis because of know we really got in deep there.
And right now, the money system actually for practical purposes, is really a bunch of heterogeneous mainframes running old cobalt.
[00:23:44] Speaker B: So I just want to add in heterogeneous means, different systems running on COBOL programming, and for people who don't actually know what COBOL programming is, an extremely strict formatting rules. A set of code that requires a lot of extra syntax to format it, to execute the instructions. Modern programming languages today are a lot more modular and simply easier to construct. There's a lot of just extra code syntax that has to be written down to get to the final execution of what they want to do. So imagine if a set of new updates happen for how money is to be to execute a set of instructions. For that money, you would have to write a whole set of new code. And if something didn't execute properly, then you have to try to debug going through layers and lines of code.
It would be very hard to find, let's say, if you're missing one period or something like that, that could throw the whole thing off and you don't even know where it's being thrown off. So I just thought I would intervene with.
[00:24:52] Speaker A: I would add too, that cobalt was designed in 1959. So we're talking about a 60 year old technology, effectively that's widely in use. That's kind of the backbone to the digital money system that we operate in today.
Okay, you mean literally?
[00:25:13] Speaker C: Literally.
[00:25:14] Speaker A: That is literally what's happening in batch mode.
[00:25:17] Speaker C: Okay, in batch mode, yeah, pretty. The poor bastards who have to maintain that code.
[00:25:23] Speaker B: Okay, sorry, I just want to add in. So there's like a straightforward, real time autonomous happening mode, and then there's batch mode where they're going to accumulate all of the processes into a particular point. Just imagine, for those of you who don't know, actually a lot of banks will set up batch processing for wire transfers. So if you send a wire transfer before, let's just say 01:00. Okay. So I am very familiar with these back end processes because I get very frustrated with them in my old life, past life, being cfos and sending monies to bank and making sure they needed to land in a particular time frame.
Some banks will, let's say, set by 01:00. If you have initiated the wire, their department will actually collect all the wires at that particular time and then be reviewing them so that they actually make sense to where it wants to go. There's no fraud, there's no anything like that. Before they send it, I need, if I miss the 01:00, then my wire wouldn't land until the next day, and that would be extremely frustrating. So just thought batch modes mean it's just a whole bunch of all of the transactions that have come from, let's say, richard, or for me or for Joe and for Jason, all sending our wires, and they will get centralized into a bank department, to the wire department, and they will review it all at once. So this batch mode is kind of like that. Everything is just being reviewed in a batch to be. Then once it's all been cleared, it'll get sent out at that time.
[00:27:00] Speaker C: That's pain.
[00:27:01] Speaker A: Not even Fortrans. Cobalt.
[00:27:03] Speaker C: Yeah, it's cobalt.
And banks are still buying mainframes in 2021 and running ancient cobalt code.
And the Federal Reserve is probably even older than what the banks have, and they have an old cobalt mainframe.
The government effectively has editing privileges on the money database, and they use those editing privileges to make more money whenever they want. And this increases the error in the database that is money. So I think money should really be viewed through the lens of information.
[00:27:45] Speaker B: It's just to go back on the comment of information theory. So, on Elon Musk's opinion, I'm just inserting the word opinion for him. I'm sure he has a lot more experience than I do on this part. But information theory is just a quantification of when you are loading the system with too much information. Just think of your hard drive. If you have too much data into one location, you've got to start unpacking, relocating data. So that's then there's a component of storage, and then even the communication of the bits and bytes of data that needs to go from one and the other. Well, in the old system, which is what we currently operate on, when I write a wire transfer into a bank, I go into a branch, I write a wire transfer. They're going to receive those instructions, they're going to enter it into the computer, and then they're going to then send that data, plus the order that I put in to the wire department, that's the communication of the information. So you can see that that takes a bit of time. And if I don't get it in before 01:00, my money is not going to arrive tomorrow, I'll be extremely frustrated. So that's the communication aspect of it. So I just wanted to talk about why he's raising the point of information theory.
[00:29:00] Speaker C: Kind of like an Internet connection. Like, what's the bandwidth, total bitrate, what is the latency, jitter, packet drop?
[00:29:10] Speaker B: And for those of you who are young enough to remember, I used to start Internet with a dial up that used to take a long time to first get connected to the server. And then I used to be one of the most popular kids when I got cable. And I was able to connect instantaneously to the Internet. Well, before the Internet, information used to travel, let's say, through pigeons who used to have wrapped on their leg, and they would fly over to different towns for information to go there, or they would hire people who have used to ride horses. I'm kind of stereotyping and generalizing, but I think you kind of understand what that transportation of information means.
[00:29:50] Speaker A: You're also still popular today. Just so you know.
[00:29:56] Speaker C: Network communication should think of money like that. Basically.
I think that's probably the right way to think of it, and then say, what system, from an information theory standpoint, allows an economy to function the best.
And crypto is an attempt to reduce the error in money that is contributed by governments diluting the money supply as basically a pernicious form of taxation.
[00:30:35] Speaker B: So I think you can see, at least from Elon's opinion, or my interpretation of it, is that there is a very good basis and a ground to have a digitized form of money because of the outdated technology of that cobalt, programming the construct of all the frameworks, the delay in how money needs to flow to the intended destination and the storage of it. There's definitely a very good proposition for why it needs to be evolved. And he talks about now how the governments dilute the money. And as we kind of talked about back in 1971, when they severed the gold standard ties, the money used to tie to a fixed supply by gold for every dollar that they had, they had to have that same worth of ounce available in their storage vaults. Otherwise they can't issue new money. Now they're able to issue new money without any, in my opinion, real repercussions or consequences. And so that's how if there's 100 of those bills available now, they can just miraculously turn on and have 1000 of those bills available. That is a dilution in the quality of that money.
[00:31:58] Speaker A: So both policy in terms of, with inflation and actual technological cobalt cryptocurrency takes us into the 21st century in terms of the actual systems that allow you to do the transaction, to store wealth, all those kinds of things.
[00:32:14] Speaker C: Like I said, just think of money as information. People often will think of money as having power in and of itself.
It does not. Money is information, and it does not have power in and of itself.
Applying the physics tools of thinking about things in the limit is helpful. If you are stranded on a tropical island and you have a trillion dollars, it's useless because there's no resource allocation. Money is a database for resource allocation, but there's no resource to allocate except yourself. So money is useless if you're stranded on desert island with no food.
All the bitcoin in the world will not stop you from starving.
[00:33:08] Speaker A: Yeah.
[00:33:13] Speaker C: Just think of money as a database for resource allocation across so very.
[00:33:22] Speaker A: Good points that he makes here. So, tying back to the technological aspect and what you identified, Henry, is like, okay, well, we're dealing with 60 year old technology. We're in a modern technological world. I think most people I know, for me hearing that, I'm particularly surprised. I was like, oh, well, we do digital banking. I mean, things have been getting better. We have apps and everything, but that's all front facing. What we're talking about is what's backstage, what's on the backbone of running this kind of money system, monetary system that we're working within today, again, for my entire human existence and how new technology is now allowing, let's call it, a better mousetrap for the ability to create more speed and more justification of the transactional aspects of data moving between one party or another, whether that party is an individual to another individual, or a bank to a bank, or a business to a business, or a business to a bank, or so on and so forth. So we're talking about the advantage or the perceived advantage of creating a better mousetrap for the transactional, layered movement of money. And so cryptocurrency, as a broad stroke, technologically wise, will allow for that to happen. So if you just looked at, from a high level perspective, the advantage of why nations are looking at moving to that model, there's a logical based reason to doing that. And another logical based reason for it is something I mentioned earlier in Canada. We got rid of the penny. Now, that was happened a number of years ago. It's probably been like six or seven years since the penny's gone. My children don't even have pennies. I've never really seen a penny. And it's kind of weird because, know, there's the old idea, well, a penny saved and a penny earned, and the idea of the lucky penny, my kids won't even understand what that means. The expression of a lucky, they won't even understand. It's strange. And if you think about why they phased that out, well, they phased it out because it cost more than a penny to create.
So the cost to produce the thing that you would use as money was more than what it was worth. And as that begins to transpire more and more with other currency level denominations, then that gets harder again. And I bring up the $20 Canada bill again, because it's got its fancy, whatever lended holograms and whatever inside of the money. Well, I remember when these first came out, and I thought to myself, well, these are really strange, but the reality is there's counterfeit reasons why the issuing the money printer, the bank of Canada, has to modify the currency in such a way to avoid every once in a while, they have to make an update so that it's less likely that this can be counterfeit, even though the pure idea of this on its own is presently a counterfeit to some degree, when we talk about the fiat currency. So the irony of that is not lost on me, by the way. So we won't speak more of that. That's my opinion. I mean, this is basically a piece of counterfeit anyway, that's produced by our own nation, but whatever.
But just from a fundamental basis, there's a cost associated with producing this bill. And as those costs rise, which is, again, coincidentally, as the value of the currency itself decreases and or aggregate costs rise, the combination of those two things makes it increasingly more difficult for them to produce this piece of technology right here so that it can't be counterfeit, which means they try to phase out the denomination.
So, moving to an idea of a digital world in a modern society, where there's less and less reliance on something like this because of its cost to produce, there is some fundamental logic to that from a national perspective. I'm just saying, even though there's a lot of stupidity going on here, we can understand that it cost them something to produce this stupid bill.
[00:37:34] Speaker B: I wouldn't call it stupid. There's just some new rationing and thinking that has to happen on the production of that bill, and as the cost of it is increasing to create it, the value of it. And if I were just to use Elon's perspective to say it should be on information theory, the information on that bill costs a lot more now to produce. And the communication of that $20 bill now is much more expensive for what it actually is trying to communicate or store or have in terms of its purpose. So it makes sense to digitize that information in some form, because transferring bits and bytes costs a lot less than creating that physical manifestation of that $20 bill or $100 bill or $50 bill that you want to call it if.
[00:38:31] Speaker A: We aren't sufficiently down the rabbit hole. Before we started our conversation, Henry, we're definitely getting closer. There but again, there's rational logic to what's happening, what we're saying. That doesn't make it good, bad or otherwise, just like certain financial products aren't good, bad or other, they just simply are. So looking at some of these fundamental aspects, and the logic behind why there might be a sensible reason at some level to move to some kind of a transitioned currency method that is still widely accepted in the nation, I think there's some logic there. But the risks now come in.
How is that going to be implemented? And what are the, I guess, measurements of control that might be influenced in the process of doing so?
[00:39:21] Speaker B: For sure. And part of this, my past life being a CPA, working in corporations, we were heavily, or I was heavily involved in transforming systems from old systems to new systems, whatever program you want to do. So even for listeners going through, maybe you were using Windows and you were transforming systems into the Mac operating system. I'm not trying to throw names out there, but just something for people to relate to. There's always been hiccups that happen, and if and when that happens at the monetary level will for sure happen too.
So the question is, how do you position yourself to ensure that you are the least bit affected in circumstances that you are not in control of?
[00:40:18] Speaker A: It's not like, how can we minimize your hiccups? Basically, yeah.
[00:40:22] Speaker B: So just as an opinion piece, we're not here to give any advice or investment advice, because we don't know the actual answers. Unless I was actually sitting on the insider's table of all of this happening, I still wouldn't be able to share it. But nonetheless, it's just kind of giving some perspective of some relatable experience that you can probably get and tie into. It's just like when you moved from one location of a home to a different province, you will run into similar hiccups. You have to restore new banking processes, you have to restore new places of where you buy your groceries. You have to online yourself in a different way. No different when there's a change in system. Richard, you have something you wanted to share?
[00:41:05] Speaker A: Well, it just reminds me of that email I told you about that I got from one of the big five banks recently. And I'm currently going to be in the process of looking for new banking for a couple of my corporations and even myself personally.
You just referenced the hiccups I'm going to have to deal with in the pain of disconnect from the current what I'm used to, my logins, all the bill payments set up, all that automated aspects of my life that simplifies my life. I have to invest time, effort, and a fair amount of energy to disconnect from that current big five bank establishment and transfer to some new establishment. Now, I haven't determined what that's going to be yet, but at the time of this recording, I'm currently looking at making that change despite the challenge and frustration and energy that's going to take for me to go and make that unplug from here, to go plug into someone else's chassis so that I can use all of their tools. And with that in mind, I might as well share it now because it's applicable to what we're talking about.
I'm going to read an email that I received from this big five bank institution recently. Now, this bank offers a tool that's available to be able to move money from a corporation that you own and control to another one at an expediated way, with less restrictions of the amount of money on a given day.
And I could have delegate access to allow an admin assistant to be able to download reports and things of that nature. So, very simple and basic things. It's a thing that they offer for anybody. I've been trying for over a year to get this thing because I can't find a human being at that institution that actually works there who can get this thing to me. And it would probably cost like $80 or $100 a month or whatever it is for the usage of this service, and they still won't sell it to me.
I'm a little frustrated. I'm not going to mention the institution, but here's a recent email that I received from them on March 1 of 2023.
Good morning, Richard. I've gone back and forth with the team a few times now. You indicated originally attempting to set this up, and it fell by the wayside. Well, that is true. The original agent you spoke to a long time ago indicated there was a business need for the ongoing purchase of bitcoin, which is not actually true, but that's what their notes indicate.
Activities surrounding virtual currencies are mostly restricted. There is a possibility to receive a national exception if the exposure is minimal. Sounds very scary. Can you clarify the purchase of bitcoin or other cryptocurrencies and how that involves your business? So I can tell you that when I read that, my first thought wasn't maybe I shouldn't be doing that. My first thought was, why on earth is this institution telling me what I can't do? I was instantly aggravated and I suspect our listeners, if they receive similar communication from their main primary banking institution, would also be likely perturbed. And so I provided a response that the end result is, like any bank account, you need to move currency from one institution to another to transact. There was limitations and challenges in moving money from my own account or my corporate account to a wallet account.
As a very busy professional, this takes time, and I've been far too busy to continue this activity with my other responsibilities, which is true.
This institution. I have two corporations, multiple accounts. I have personal accounts. I have what they call a vip account. I have multiple mortgages with this institution, all with this one institution.
I said, I have all these products. I'm a vip client. Please tell me why on earth I would have difficulty or be restricted from getting a simple tool you offer to move money more efficiently and with less restriction between accounts I control and oversee. This has been a truly frustrating process. Why on earth am I only hearing about this issue now? Remember, it's been a year that I've been trying to do this for. It's absolutely ludicrous and in my opinion, as a long term customer of the bank, completely insulting. If it was not for the time and effort required to go and set up accounts elsewhere, I would instantly move my accounts from your institution.
Just have someone tell me flat out, will you let me use this tool, this service, or not? Tell me now so I can move on and find another bank that will accept my business and give me the tools to do what I need as a customer. And then I thank the gentleman for his help and that he's been a very helpful individual.
And then I encourage them to have management contact me so I can discuss my experience and frustration in detail. So that was, again, a month and a half ago, almost two months ago, and I still haven't received a response, surprisingly, from my email.
[00:46:12] Speaker B: Your fees are going to good work, Richard.
[00:46:16] Speaker A: Indeed they are. So, in other words, for our listeners, the frustration that you may be experiencing with your day to day operations with the current banking institutions you use. I can tell you rest assured, I also experience said frustrations, potentially more so than some others. And so my proclivity to look at alternate methods of controlling the banking function as it relates to my needs are very reasonable in my own particular circumstances.
[00:46:52] Speaker B: In a shorter way, in what you went through, Richard. Share the same sentiment and frustration and my own ways of similar avenues of looking through all of that. And if we kind of go down to just going back to where we came with this conversation, that technology has really come into the hands of individuals and have really empowered everyone that we don't have to always rely as much on people unless necessary. Like the banking system that currently exists with the banking act that regulates how money needs to be transferred, with Fintrack monitoring it, with all of those other required rules that we have to abide to and follow. And if you can imagine now if there is an outdated set of technology that exists and people are still trying to do about the ways that they're doing, but they're getting and running into restrictions just as you are, Richard. They're wanting to find a more efficient way of doing that. And I would for surely say that for sure amongst whoever is running the banking systems, recognize that threat, that people need a solution. And instead of building a wonderfully more effective solution to what the citizens actually want, they're creating their own form of a central bank, digital currency. And there's a lot of concern personally, on what that actually means and how that lays out. Since it becomes programmable, they can choose to do the things that they may want you to do within specific limitations and restrictions, because the information of what they're deploying and retracting is going to be completely centralized in their control, which is where a lot of people are looking to move outside of that. And with the advent of technology, they are able to start doing things in that way. The main challenge of that is which digital currency is generally accepted right now? No, nothing. Some have a little bit more of a higher adoption rate, but we don't actually all have the real way or what the real medium of exchange would be. And so there's certain people who will have sentiments of specific precious metals, and some people will have specific sentiments on, I don't know, seeds or whatever it is, whatever it is, as a value. As Elon even mentioned, if you are on an island, what is valuable in the circumstances that you're in? You can hoard all the bitcoin or gold that you want, but it means absolutely nothing based on the context of the environment that you're in. So that's why we can't really give you investment advice. We will run into the situation or question regularly, what are your thoughts on cbdcs? What do I do? How does this work with IBC or anything like that? Well, we still need to practice the process of banking, and our opinion is that practicing the process of banking, you might as well learn the skills of what is involved in the process of banking. The first step, at least, is why don't you move outside of the unprotected landscape of the chartered banks, as an example, into a legally binding arrangement with the insurance company that they are legally responsible to you to fulfill with a contractual guarantee with every growing cash values that increase as part of the contract requirement. So when people also ask us, how does the money grow? We tell you it's part of the contract, it just grows. It's not set by a central bank, it's not set by the bank, it's part of the contract.
[00:50:38] Speaker A: And coincidentally, we have a great book that explains exactly how that grows called cashfall is the leader, and it was released in December of 2022. And so you can grab a copy of that book, you can go to cashfalls.com and download a free copy of it right now, and it'll explain to you exactly how that contractual feature allows cash to accumulate. Now further to this statement here, Henry, again, as you shift from process of banking method that you do today to the process banking method that we're teaching you to have a higher level of control over, then you can now part, even though you're still in the same currency system. If what you want to do is begin to separate yourself from currency dependency of some nature, well then you need to do some research on what is the thing that you believe you most believe will give you that highest level of independency. And for some people, maybe it's a form of cryptocurrency, maybe it's bitcoin, maybe it's XYZ, whatever, crypto, maybe that's what it is. Maybe it is gold and silver, maybe it is seeds or your ability and your knowledge to grow and create your own food source. Okay? So whatever it is, maybe it's real estate, assets, whatever the thing is that you determine is the best fit for you, then get clear on that and then choose to double down on it, if that's what you think. But you're going to need the current currency to go and acquire that other stuff. So rather than taking it from your day to day bank account, instead take it from a policy loan and use the life company's money to go and create and acquire that hedge that you're looking for, so that your money is always working for you in more than one location. So there's no harm in doing that. Again, if you've done your own research and we're not here to point you in the direction of one thing, that's not the purpose of this. It's to recognize that that thing that you're looking to create has no additional balance or weighting on the fact that you're controlling the banking function. Control the banking function first and then go do the other thing anyway, is what we're getting at.
[00:52:56] Speaker B: Exactly. And the research is not something we can. I don't want as listeners, I wouldn't want you to depend on me for my research. My research is my research. Your research is your research. It is part of, in a sense, a responsibility that you have to have and just to kind of visually tie back to what Richard was sharing right now, most of you will go through the banking process this way and go buy the investments, we'll go buy the cars, we'll go buy the vacation, whatever that is.
What we're essentially trying to change as a very simple method is instead of going there for getting the cars, you are just coming over here where you've taken your funds and moved it into a properly designed insurance policy, whole life insurance policy, which, by the way, again, we don't know how all of this rollout is going to happen, but if we were to look at the position on the board where you are today, you must transact using the legal tender. Try walking down the grocery store and give them a sliver of copper or a round of gold or whatever it is. They'd be like, what are you smoking? It doesn't work that way. You still need to practice the process of using the current legal tender that exists. And so you are going to move. Let's say you follow this process and you start on ramping your fiat currency onto this insurance contract, and now you still go about buying your cars, you go about buying your groceries, you go about doing your investments, you go do whatever those investments are. Maybe the same financial products in the fiat currency system. It may be different investments. Maybe it's that real estate or that land or whatever that it is.
Even if you are looking to change into the dimension and slip into the blockchain cryptocurrency world, then still move it over in here. Because me putting money into Ethereum or bitcoin, I'm also still restricted on what I can actually buy with it. I can't go to a grocery store and say, here's my bitcoin. No, we don't accept that. So why would I go into doing that? So this is just using the current best way that we believe to practice the process of banking is using a properly designed whole life policy to execute the matters of choices you want to make with your money. And we're not here to give that opinion on what that is supposed to.
[00:55:32] Speaker A: You know, I think this is appropriate, so I'm going to bring up a book here for anyone watching online. It's called how privatized banking really works, integrating austrian economics with the infinite banking concept. This was written by Carlos Lera and Robert Murphy. Again, Robert Murphy being a well known austrian economist. And I'm going to go to the last section here on page 286. This is where they're talking about the, the, the infinite banking concept.
Alternate or something that can help towards the sound money solution.
It says here, as we will see, the widespread practice of IBC, the, the, the infinite banking concept, accelerate the achievement of the sound money solution. In a very real sense, a household's decision to practice IBC would increase the likelihood that future generations can grow up in a world enjoying monetary and banking.
You know, there's a very interesting statement here, and there's another one I want to flip to, where they highlight some information from an austrian economist, Jose DeSoto, and he's very well known austrian economist. The institution of life insurance has gradually and spontaneously taking shape in the market over the last 200 years. It is based on a series of technical, actuarial, financial and jurisdictional principles of business behavior which have enabled it to perform its mission perfectly and survive economic crisis and recessions which other institutions, especially banking, have been unable to overcome. Therefore, the high quote, unquote, financial death rate of banks, which systematically suspend payments and fail without the support of a central bank, has historically contrasted with the health and technical solvency of life insurance companies.
It indicates that in the last 200 years, a negligible number of insurance companies have disappeared due to financial difficulties.
And there's one more bullet here that I think, again just amplifies the rationale behind why, as a banking mechanism, the insurance company is sensible.
The following technical principles are traditional. In the life insurance sector, assets are valued at historical cost and premiums are calculated based on a very prudent technical interest rates, which never include a component for inflation expectations. Thus, life insurance companies tend to underestimate their assets, overestimate their liabilities, and reach a high level of static and dynamic solvency, which makes them immune to the deepest stages of the recessions that occur with economic cycles. In fact, when the value of financial assets and capital goods plunges in the most serious stages of recession in every cycle, life insurance companies are not usually affected, given the reduced book value they record for their investments with respect to the amount of their liabilities, insurers calculate their mathematical reserves at interest rates much lower than those actually charged in the market. Hence, they tend to overestimate the present value of their commitments. On the liability side, moreover, policyholders take advantage of the profits insurance companies bring in as long as the profits are distributed after realization in accordance with profit sharing clauses.
There's a lot in there. But ultimately it's saying that the robustness in the design of actuarial implementation on how the insurance company puts everything to work has been, moreover, historically proven for 200 years. And when you incorporate the contractual elements that we've described on this podcast that are available to the participating owner, the whole life insurance owner of that mutual pool of financial value, you are creating a methodology of control over a well established, highly profitable, consistently ran financial institution.
[00:59:41] Speaker B: And I'll just add, the insurance company that we use has existed for a very long time, and it's a mutual insurance company. That means the contract that you get with this insurance company is a private contract between you and the insurance company following contract law. And if you imagine the amount of contracts that actually exist amongst the insurance companies, not even just this one, just in general, insurance contracts, again, follow a particular set of laws, contract law. And what people don't realize is that contract law has very good protection mechanisms. And if there was any form of, I'll just call it potentially intervention of some way, good luck enforcing individual private contracts being applied on individual Canadians for that circumstances. So we hear questions about people saying, oh, what if the insurance company collapses? Or whatever happens? First, there's already a layer of an insurance company that protects all of that assurance. And then there's the fact that if there's unnecessary intervention, good luck with knowing that. It's good to know that an insurance company with a vast amount of resources will be fighting back against unfair stipulations on their own. Policy owners like, you're not the individual one fighting for this. You have a band of a well.
[01:01:23] Speaker A: Resourced insurance company supporting you, and not just supporting you. They're obligated by contract to do what's in your best interest, which is fight for your benefits, which means that they would lobby for any change that would impede the policy owner, because that's who their owners are, the policy owner.
[01:01:47] Speaker B: And when it comes to life insurance, there's an actual value it provides in society when it actually is needing to be provided. Otherwise, the government would be giving it. But they can't operate the same way or give the same value of what an insurance company can offer. Which is why there's also legitimate reasons why insurance contracts will exist. I mean, ultimately, there's concerns on, let's say, how a central bank digital currency can be programmed and controlled to the nth degree of an extent of your imagination and fear. I will completely resonate with the acceptance of that. However, if you are thinking that whatever decision you're making today is the final solution to the nth degree of that time, that's wrong. We all evolve. Time changes, everything evolves. But the best position on the board is to take control of the banking function as it exists right now inside a properly designed life policy. Because you need insurance. Everyone needs insurance. There is a very valid need for it. It's just the fact that we can help engineer the contract in a way to help practice the process of banking.
[01:03:04] Speaker A: And optimize lifelong cash flow and its utilization for every future generation of your family, should you choose it.
[01:03:12] Speaker B: And there was just one more thing I kind of wanted to highlight, which really, I want to bring it not as a form of fear, but more as a form of education. Because when people go through fear, they're going to accept information that may be very conflicting, too. And it's really important to learn how to decipher information. But one thing I just want to highlight is if we go back to what people believe as money, let's just use gold as the example for people who don't know. Back in 1933, gold was actually banned. Private, private gold ownership was actually banned in the US by Franklin D. Roosevelt.
So what that meant at that time was that there was motivation to constipate gold. Now, I wasn't alive at that time, so I don't actually know exactly how it worked or how it played out, but I'd be wondering if there was actual real enforcement of people knocking on doors and really coming after people of their goal. But nonetheless, there was a policy installed, just like all the other policies that governments have installed of that gold being issued to be confiscated. And they made it illegal to own that gold, and it became the property of the government.
So how is that going to play for everyone else? And as Richard, thanks for pulling that up. That was that executive order that is right there that you can see.
So there's really no real safe haven, but how do you best position yourself? It is to do good research, understand the circumstances of history, I will say the right history, not the ones who wrote the history, and dive into how do you best arm yourself and protect yourself in these circumstances? When I work with clients who had to deal with CRA, auditing them unfairly and unjustly, in my opinion, then they had to research and arm themselves with information to properly defend themselves. And they win because of their premise of how they were being audited. So all of that comes down into, just as you see here, criminal penalties for violation of executive orders. I mean, there was tons of penalties issued for citizens breaking lockdowns and not following those lockdowns. So maybe when we look at the history books 80 years later, we're going to see that times back then, we'd be like, whoa, what in the world has happened? How is the position on the board? How do we have to accommodate knowing that that was a type of card that was used in getting the control.
[01:06:02] Speaker A: That they were looking to get, which is interesting. This is literally 90 years ago, April 5, 1993, they gave them less than 30 days in this executive order to turn in their gold, and people turned in on their friends that had gold or were hoarding, by their definition of hoarding. What's interesting is these criminal fines and penalties of $10,000. Got to think, what's $10,000 in 1933?
The inflationarily adjusted equivalent of that has got to be like 300 grand or something. Like, it's a huge reference point. If you were to have that same fine today, it would be an astronomical amount of currency that you would be fined or facing, again, imprisonment. So to say that things like this haven't happened in the past, that's not true. They certainly have. And we had gold seizures in Canada as well. Somewhere. I think in my Rolodex of information, I probably have a similar document that reflects that. But it's not to say that that's going to happen, and we don't want to, again, produce that fear. We're talking about history being a teacher. For us to leverage, history has a way of repeating itself. The more that we recognize things that have happened in the past, the more we can see how to position ourselves for the best possible outcome. And there's no executive order for seizing the issuance of insurance contracts from the citizenry. Right? So, again, just as a reference point, we're talking about giving people the most amount of options that you can have while you continue to do whatever your research is to figure out what other things you can do to continually add insulation to your circumstance in the event that the currency system of today doesn't go the direction that you are hoping it does. All right.
And who knows? Maybe we won't ever have a problem. Maybe everything will just be sunshine and rainbows. But at least you can walk confidently into the future by making sure that you're taking every piece of control at the you and me level. That you can.
[01:08:21] Speaker B: Yeah. And just going back to the research is important. Relying on someone else to do the research for you is not a good basis of doing that. But I think it's important as you learn to do the research, learn to access the right information. Just as here, I wanted to share something that if you align to where we are today, I think it would be very interesting to see as Canadians, where we stand in the spectrum of, let's say, if gold was money. If gold was money, and we are transacting with that currency, fiat currency. I just wanted to show you the history again, easily accessible website, publicly available from economic data of Canada's gold reserves. And I just want to first look at the last. This is a line chart here, the last ten years, we can see the tons of gold that used to be held in Canada. Now, Canada is a very well mineral resourced company, but this is what's actually declared and held and stored. So back in about 2015, when a certain government, the federal government, came into power, suddenly all of the gold reserves. Now, this actually shocked me when I looked at this, that Canada has had zero reserves of gold since that government has come into power. Now, if we look at the max, this is the max data that available, the max chart of it. It used to be back in 2000s, like, let's say 45, and it has gradually sharply come down, it has steady pace and then it sharply went to zero. So if we look at gold as the standard form of money right now, we can actually say that Canada's fiat currency doesn't have. If it was to be backed by gold, Canada actually doesn't have any money available.
We're all transacting on legal tender, backed on the confidence of government. As we kind of talked about, fiat currency is currency backed by the confidence of government.
Now, where does Canada stand relative to the world? You see us stands with a lot of tonnage of gold. And if I scroll all the way down, this is also very surprising. I look at Canada, Canada has zero, and I scroll all the way to the next country, which is Kenya. And Kenya has more gold than Canada.
[01:10:56] Speaker A: What I think is even funnier isn't that Kenya does, but that Fiji does. Like, Fiji is an island of a very small population that you could probably know between Edmonton and Calgary. On a map, they got more gold than the entire nation in Canada. Now, there's probably some gold still in the ground. I mean, there's gold mines and everything in Canada, but the fact that what's warehoused and available is zero, according to the tradingeconomics.com website should be eye opening for a lot of people. And so with that in mind, we want to leave you with some measure of an action step that you can do to start your education journey on this a little bit more. And so I'm going to defer that to the infinitebanking.org website, which is Nelson Nash's website, the website for the Nelson Nash Institute, and the Lara Murphy report.
Carlos Lara and Bob Murphy did an example of something, how to weather the coming financial storms. And this is dating back a few years, I think probably 2017, they released this video. You can go to the menu, and if you click on the resources part of the menu and you'll go right down to how to weather the financial coming storms. They talk about extra's pyramid of collapsing values in here and what they recommend from an economics perspective, an austrian economics perspective, how they think people should be looking towards preparation for economic calamity. And this is their recommendation. So I would suggest that maybe this might be a good starting block for your learning journey if you haven't already started down the learning journey. And not to say that we're again taking everything here, take everything with a grain of salt and just begin to think about what's happened in the past as currency systems shift and change. And there's some relevance here, and you're going to get an epic economic perspective on how you might consider putting protection. And coincidentally, one of the things that they do talk about, of course, is the implementation of the infinite banking concept as part of that three pronged strategy that they relay. So that would be, I think, a good action step for people to take in and of course enhance your reading. Get a copy of Nelson's book, becoming your own banker. Get a copy of our book cashballs leader. Go to cashballs.com and grab a know soon. In the near future, perhaps by the time this releases, we will have Henry's new book available. Keep taxes away from your wealth. Again, check the description in the podcast or in the YouTube description for a link to go ahead and access that. And Henry, this was fantastic. I think we really showcased a little bit more about the problem and the current world that we're in and the way that the technology may be moving, some of the reasons why that technology may go that direction. I think we really hammered home on the rationale there. And again, what you can do to some degree to give yourself the most protection in place, at least as it sits today, relative to your banking needs, is still the same as it is in the current system. So current system or new system, you still have to do banking and you might as well use the right tools to help you amplify your ability to do that on an ongoing basis.
[01:14:17] Speaker B: Great. It was a lot of fun Richard and I hope the listeners really get the value that is coming in it. We aren't here to give any investment advice, but to provide and inspire with the knowledge to look into it and really dive into what's best for their personal circumstances.
[01:14:37] Speaker A: Awesome. So go ahead, click on the video link down below to continue your journey of learning. Thanks again for participating in this amazing discussion. Henry, thank you for your assistance and for all that you do and have an amazing rest of your day everybody. We'll catch you on the next video.
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