Expressing the difference between Virtual Currency (VC) and Fiat Currency (FC) concerning the bitcoin, states, in paragraph 19: "VCs are defined as a digital representation of value that is neither issued by a central bank or public authority nor necessarily attached to a FC, but is used by natural or legal persons as a means of exchange and can be transferred, stored or traded electronically. (7) VCs can therefore be characterised along the distinguishing features specified below. Although some of the features resemble activities or products that are already within the remit of the EU E-Money Directive, these products are not intended to be included here, as e-money is a digital representation of FC, which VCs are not." And,
in note 7: ""It is theoretically conceivable that a central bank or public authority might back a particular VC scheme. However, it can be reasonably argued that, in this case, the currency is no longer a virtual but a fiat currency." Since
commercial banks, which are not public authorities or central banks,
adopt a VC scheme (the virtual currency deposits) but this VC is
supported (backed: supported, endorsed) by the public authorities and
the central bank, therefore it can be said that their VC is an FC, a Fiat currency., A.K.A., "legal tender", or "fiat currency".
John Turmel: Scarborough-Rouge River byelection candidate Q and A
John Turmel
Metroland file photo
John Turmel of the Pauper Party is running in the Scarborough-Rouge River provincial byelection.
Scarborough Mirror
Candidates from many parties will be on the
ballot Sept. 1 for the provincial by-election in Scarborough-Rouge
River. We asked the same questions of each candidate, and are presenting
their answers here.
(1) Can you please tell us about yourself and why you want to be an MPP?
TURMEL: I want to upgrade financial services to online interest-free
Bank of Canada or Bank of Ontario checking accounts.
http://SmartestManOnEarth.Ca explains all. We had Quantitative Easing,
interest-free loans for the banks. Jeremy Corbyn and the COMER suit against the Bank of Canada seek interest-free loans “for the people,”
meaning governments, as the Bank of Canada used to do before 1974.
I want Interest-free Quantitative Easing for citizens too. Open an
online account, pay off all interest-bearing debts below and all
payments to the Bank of Canada now go against principal and someday,
you’re out of debt. Sad about all the chartered banks closing down when
we don’t need to use their networks any more.
(2) What actions would you take to improve transit service in northeast Scarborough?
TURMEL: Provide more funding using the Argentinian Bond Bucks idea to
pay government employees with small-denomination provincial bonds that
may be used for hydro, taxes, medical and licenses. They reached full
employment and paid off their external debt; we could too.
(3) What do you consider the most important issue in Scarborough-Rouge River?
TURMEL: Not enough money to do things best. Money is a mere accounting
token that’s been given destructive power by the demand for return of
interest as well as the created money created by the bank in the
principal.
(4) Many say this area is not treated with respect by the rest of the city or the province. How would you change that?
TURMEL: I’d first determine the cause of any disrespect.
This is a guest post by Prof. Dr. Luc Soete, a UNU-Merit
research fellow, on the challenges posed to labour markets by growing
automation and the need to distribute the gains from modern technical
change with tools such as basic income or helicopter money. It is based
on remarks made at a panel event marking the 50th Anniversary of the
Science Policy Research Unit at Sussex University earlier this week.
_________
The concerns about the impact of robotics and artificial intelligence
on employment and job displacement, raising the spectre of mass
unemployment, sound from a historical perspective not very convincing.
Having written with Chris Freeman in the 80s and 90s numerous
articles and books on the topic, there seems to be (again) in economic
analyses of the phenomenon, a natural tendency to overestimate both the
speed and the impact of robotics and more broadly artificial
intelligence.
Just look at the complexity involved e.g. in using robots to lift
patients in a hospital, involving numerous physical security and other
machine-human interaction problems, or using artificial intelligence in
assessing written exams.
Historically the evidence of disappearing skills as a result of new
technologies has not really been at the core of the emergence of mass
unemployment.
In short, we tend to lack the necessary imagination to anticipate the
new types of jobs that can be created by the new technologies. The
current debate reminds me in other words of the report written with
Chris Freeman (at the request of IBM) in 1985 and which formed the basis
of the book “Work for All or Mass Unemployment” published in 1994 .
In that book the technology employment issue is first and foremost
described as a distributional issue. The record on what has been
achieved over the last 20 years, since this book was published and
Internet started to diffuse globally, is disappointing to say the least
with respect to those emerging distributional challenges.
The result has actually been polarization, rising inequality, with
also a trend towards a “race to the bottom” of existing European social
welfare systems, to use Jacques Drèze’s term, focusing on full-time blue
or white collar workers following European economic integration and the
single market.
Nevertheless, there are certainly new features associated with the
current wave of digitalisation. Four features stand out and make the
distributional issues today much more difficult to handle than 20 years
ago:
First, the phenomenon of disruptive, primarily organizationally-inspired innovations, whereby incumbents are being undercut by “regulatory free riders”
is applying a heavy toll in terms of fixed, full-time employment in
favour of more volatile, temporary and unstable employment conditions;
Second, the distributional issues have become global in nature with
what could be called general purpose platforms entering the debate
rather than the old general purpose technologies concept, creating now
global network monopolists attracting global network rents based on
“home” absolute size and political advantages;
Third, the newly created consumer surplus is in many ways
economically invisible, often neither being formally valued (in its
contribution to GDP) nor taxed, with hence major difficulties for public
authorities to redistribute rents; and…
Fourth, because of the latter phenomenon, the full deflationary
effects of the diffusion of new (digital) technologies combined with
globalisation are now becoming dominant particularly in developed
countries.
It is therefore essential to reframe the technology employment debate
by focusing on the need for alternative income systems disconnected
from employment such as “basic income”.
Following Jahoda’s study of unemployment in Marienthal in the 30’s,
employment could still be considered today to represent one of the most
important factors for social integration and personal recognition.
At the same time, and given the tremendously grown opportunities for
social contact outside of the sphere of employment thanks to the
development of social media over the last twenty years, it is also
reasonable to assume that an unconditional “basic income” could well
lead to a substantial voluntary shift in labour market participation,
based on free choice and ultimately to the benefit of the individual,
even to his health and happiness, as well as to the benefit of society.
Once “basic income” is viewed as the monetized “digital manna from
heaven” resulting from technological change, the concept seems like a
simple and attractive way to redistribute gains from technical change to
all.
As a side note, it is interesting to observe, how the case for a
basic income fits well the current macro-economic monetary debate on how
to combat deflation in the developed countries.
In the extreme version, whereby money would be dropped from the sky,
so-called “helicopter money”, the advantages are primarily related to
the fact that money is directly put in the hands of people.
As pointed out by many macro-economists, this form of “democratic
helicopter money” [that is why the term “drone money” is not used!] is
also a monetary policy instrument, using similar QE techniques, but may
also be viewed as the equivalent to a tax rebate policy.
However, because it is institutionally distinct from fiscal policy,
it offers the central bank (or in the European case, the ECB) a more
effective policy tool while maintaining the institutional separation
between fiscal and monetary authorities, dispensing with the need for
any ‘coordination’ between the two, or the subordination of one to the
other.
-----------------------
This blogger comment: " I fully agree. And it must be done before the public at large discover how much money was artificially withheld from them through the mismanagement of the accounting of money creation by the banks and the Treasury combined... Banks mismanaged the liability side of money creation while the Treasury disregarded completely to record a matching asset in his books, I calculated that in Italy the monetary rent pro-capita that was hidden by the banks is in the order of 100 times the public debt, i.e. around 4 million euro for each Italian citizen."
California and federal regulators fined Wells
Fargo a combined $185 million on Thursday, alleging the bank's employees
illegally opened millions of unauthorized accounts for their customers
in order to meet aggressive sales goals.
A staggering 5,300 employees at Wells Fargo were
fired in connection with this behavior, according to the Los Angeles
City Attorney's office.
The San Francisco-based bank will pay $100
million to the Consumer Financial Protection Bureau, a federal agency
created five years ago; $35 million to the Office of the Comptroller of
the Currency, and $50 million to the City and County of Los Angeles. It
will also pay restitution to affected customers.
A Wells Fargo branch is seen in the Chicago suburb of Evanston, Illinois. REUTERS/Jim Young
It is the largest fine the CFPB has levied
against a financial institution and the largest fine in the history of
the Los Angeles City Attorney's office.
The CFPB said Wells Fargo sales staff opened
more than 2 million bank and credit card accounts that may have not been
authorized by customers. Money in customers' accounts were transferred
to these new accounts without authorization. Debit cards were issued and
activated, as well as PINs created, without telling customers.
In some cases, Wells Fargo employees even created fake email addresses to sign up customers for online banking services.
"Wells Fargo built an incentive-compensation
program that made it possible for its employees to pursue underhanded
sales practices, and it appears that the bank did not monitor the
program carefully," said CFPB Director Richard Cordray.
The behavior was widespread, the CFPB and other regulators said, involving thousands of Wells Fargo employees.
Los Angeles City Attorney Mike Feuer called Wells Fargo's behavior "outrageous" and a "major breach of trust."
"Consumers must be able to trust their banks," Feuer said.
Wells Fargo's aggressive sales tactics were
first disclosed by The Los Angeles Times in an investigation in 2013.
The story series prompted the Los Angeles City Attorney office to sue
Wells Fargo over its tactics.
In a statement, Wells Fargo said: "We regret and
take responsibility for any instances where customers may have received
a product that they did not request." Wells Fargo said they've refunded
$2.6 million in fees associated with any product that was opened
without authorization.
Despite the LA Times investigation, Wells Fargo
is still known for having aggressive sales goals for its employees.
Wells Fargo's executives highlight every quarter the bank's so-called
"cross sale ratio," which is the number of products the bank sales to
each of their individual customers. The ratio hovers around six, which
means every customer of Wells Fargo has on average six different types
of products with the bank.
Ms.
Bailey, the Citizens Bank customer in Massachusetts, had sold a condo
in Maine in 2013, a year after the death of her husband, who she says
had handled their finances. She went to a Citizens branch in Arlington, a
suburb of Boston, to deposit the money. She says bank employees
pressured her not to just park the money in a savings account.
She says she was directed to Citizens broker Andrew
Jurkunas, who steered her to a CD called the GS Momentum Builder
Multi-Asset 5 ER Index-Linked Certificate of Deposit Due 2021. It is
one of a series of CDs based on a Goldman Sachs-designed index that
tracks the performance of up to 14 exchange-traded funds and a cash-like
holding. The index aggregates the performance of different combinations
of some or all of the underlying funds, relying on a complex formula
designed to smooth volatility.
When Ms. Bailey received her first statement showing that
the value of her CD had dropped by more than $4,000, she complained to
Massachusetts state securities regulators. This January, the office
filed civil charges against the bank alleging that Mr. Jurkunas, who
wasn’t named or accused of wrongdoing, didn’t adequately disclose the
risks of the market-linked CD.
Wall Street is an industry that should have been allowed to go down in flames back in 2008.
Bailing out these career criminals and sociopaths was one of the
gravest errors in American history. An error that we as a nation
continue to suffer from to this day.
As an example, yesterday’s Wall Street Journal reported on the
industry’s latest scheme to pocket the hard earned savings of those
dwindling Americans who still have a few pennies left — structured CDs.
What follows are some key excerpts from this must read article, Wall Street Re-Engineers the CD—and Returns Suffer:
Mary
Bailey, a 79-year-old widow in Arlington, Mass., made a big deposit for
her grandchildren at her Citizens Bank branch when a financial adviser
there sold her on a newfangled $100,000 certificate of deposit. It would, he said, double her savings in six years, according to a later state enforcement action.
So she was irate when her first statement showed the CD’s value
had fallen to $95,712, thanks to upfront fees. “This was not a CD as I
know a CD,” Ms. Bailey says.
Traditional certificates of deposit offer better interest rates than normal savings accounts for
customers who agree to lock up funds for a period of time. Since the
1960s, they have been among the most popular products retail banks
offer. Now Wall Street has re-engineered the most
bread-and-butter of investments in a way that leaves many investors with
lower returns, and facing losses if they have to cash out early.
Returns on such CDs, known as market-linked or structured CDs,
depend on the performance of a basket of stocks or other assets instead
of a flat interest rate. CD holders get their original money back when
the CD matures, usually after three to 10 years, plus a return based on
the performance of certain assets or benchmarks.
Sounds good, but as always, the devil is in the details.
Most
issuers of such CDs don’t publicly disclose any performance data, so it
is difficult for would-be investors to assess how good a deal the
products are. The Wall Street Journal obtained from an investment
adviser returns data on hundreds of market-linked CDs created
by Barclays PLC, a leading player. The data show that many
underperformed conventional CDs, in part because their design puts a
limit on the upside from gains in the underlying assets.
Of the 325 Barclays CDs reviewed by the Journal, 239 had announced at least one annual return payment. More than half of those returns were lower than an investor would have earned from an average five-year conventional CD.
Of the 118 structured CDs that were issued at least three years ago,
only one-quarter posted returns better than those of an average
five-year conventional CD. And roughly one-quarter produced no returns
at all as of June 2016.
A Journal analysis of 147 market-linked CDs issued since 2010 by Bank of the West, part of French bank BNP Paribas SA, revealed a similar pattern. Sixty-two
percent produced returns lower than an investor would have received
from a five-year conventional CD, while almost a quarter have yet to pay
any return at all, the analysis found.
A Barclays spokesman said in a written statement the structured
CDs market has “seen significant evolution over the last few years to
meet the needs of clients, investors and distributors seeking to
navigate the continued challenges of a low interest rate environment.”
Banks, for their part, are looking for inexpensive sources of
funding. In addition, such CDs generate fees. Fee income, in particular,
has been hard hit, leaving banks looking for new products yielding more
than conventional savings accounts and CDs.
Market-linked CDs don’t have to be registered with the Securities and Exchange Commission, so there are no official sales data. Bankers and other experts on the product estimate sales of $5 billion to $15 billion a year. U.S.
investors held about $22.7 billion of market-linked CDs last month, up
36% from 2012, according to StructuredRetailProducts.com.
I suppose it doesn’t matter how many times the public gets scammed by
Wall Street, they keep coming back for more. In this particular case,
this is partly due to the fact that these products are created by the
TBTF banks, but then marketed at the retail level by local bank
branches.
The CDs are sold to customers of regional banks and
brokerages by bankers and brokers, who receive commissions. Brokers say
each month they receive lists of new market-linked CDs created
by Wall Street firms, including Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Barclays and others.
Typically, everyone in the sales chain—a wholesale
broker, a financial adviser and a bank teller—gets paid more for selling
a market-linked CD than a conventional CD or a mutual fund.
The adviser who actually sells the CD, for example, can get commissions
of up to 3% of the CD’s value, according to information sent to brokers
reviewed by the Journal.
“Banks have to be delighted with these structured
products,” said Steve Swidler, a finance professor at Auburn University.
“There’s virtually no risk to them, and [the banks] sit back and rake
in fees.”
The Barclays CDs reviewed by the Journal generally are linked to
underlying “baskets” of five, 10 or 20 stocks. Most pay income based on
an “adjusted” version of the basket’s actual return, calculated by
applying a cap and floor to each stock’s performance.
Now here’s how the sausage is made…
Suppose a basket of 10 stocks has a cap of 5% and a floor
of 20%. If eight of the stocks go up 20% and two go down 20%, the
average actual performance would be 12%. But because each increase is
capped at 5%, while up to 20% of each decrease is counted, the adjusted
average performance is zero—a much worse return for the customer.
For the 247 Barclays CDs analyzed by the Journal that
used this method, the adjusted overall stock performance tended to be
worse—on average, 28 percentage points lower—than the actual performance
of the underlying stocks. Investors in the CDs also forfeit the
dividends they would have received by owning the stocks outright.
One Barclays six-year CD due to mature in October is
based on 20 stocks. The shares’ average values had more than doubled as
of June. But the CD was designed to cap positive returns at 6% and
negative returns at 30%. That translated into an adjusted performance of
negative 4% for the whole basket.
As a result, four of the annual coupons the CD has paid were
zero. A fifth was 0.04%. That means a $100,000 deposit would have
generated a $40 return over five years. A conventional five-year CD, by
contrast, would have generated an average of $8,100 in interest,
according to Bankrate.com. Other structured CDs from Barclays and other issuers fared better, including some that track a stock index.
“I’ve worked in the kitchen and seen how it’s made, so
I’m not interested in consuming them,” says Keith Amburgey, who used to
design market-linked CDs at Morgan Stanleyand now runs Tampa-based financial advisory firm Rutherford Asset Planning. Morgan Stanley declined to comment.
One series of CDs from HSBC Holdings PLC is called “Industry
Titans” because the instruments are pegged to brand-name stocks. The 10
stocks underpinning a 2012 version of the CD, including Tiffany &
Co. and ConAgra Foods Inc., were
up by 46%, on average, at the end of July, according to FactSet. But a
6% cap on positive returns and a 30% floor on negative ones
reduced the CD’s adjusted performance, which determines the amount paid
to the investor, to negative 1.1%. The CD paid a zero return in July, for the fourth year in a row, according to HSBC.
In 2013, a broker at Fifth Third Securities Inc. advised an
88-year-old customer to put about $200,000 from his retirement account,
nearly 80% of the total, into market-linked CDs, according to the
customer’s lawyer, Howard Rosenfield of Farmington, Conn.
The investor had to sell the CDs early, in part to make
the minimum withdrawals required under retirement-account rules—a cash
need that was foreseeable at the time Fifth Third sold him the CDs, Mr.
Rosenfield says. His client lost more than $20,000 on the sales.
Ms. Bailey, the Citizens Bank customer in Massachusetts, had sold
a condo in Maine in 2013, a year after the death of her husband, who
she says had handled their finances. She went to a Citizens branch in
Arlington, a suburb of Boston, to deposit the money. She says bank
employees pressured her not to just park the money in a savings account.
She says she was directed to Citizens broker Andrew Jurkunas, who
steered her to a CD called the GS Momentum Builder Multi-Asset 5 ER
Index-Linked Certificate of Deposit Due 2021. It is one of a series of
CDs based on a Goldman Sachs-designed index that tracks the performance
of up to 14 exchange-traded funds and a cash-like holding. The index
aggregates the performance of different combinations of some or all of
the underlying funds, relying on a complex formula designed to smooth
volatility.
A spokeswoman for Goldman, which hasn’t been accused of any
wrongdoing in relation to the case, said the bank was “not a party in
the customer’s complaint or settlement, and had no direct relationship
with the investor” and that the product’s risks were “clearly explained”
in its documents.
Indeed, here’s how the Vampire Squid “clearly explained” the product…
Documents related to the CD, including a description of
the methodology behind the Goldman index, run to 266 pages and feature
calculus, hypothetical backtested data and flowcharts. Ms. Bailey says she didn’t read the documents.
When Ms. Bailey received her first statement showing that the
value of her CD had dropped by more than $4,000, she complained to
Massachusetts state securities regulators. This January, the office
filed civil charges against the bank alleging that Mr. Jurkunas, who
wasn’t named or accused of wrongdoing, didn’t adequately disclose the
risks of the market-linked CD.
At this point, Wall Street is essentially a purely parasitic
industry. It adds virtually nothing of value to the U.S. economy or
society, it just constantly rips off the public and redistributes wealth
to itself.
Still don’t believe me? Chew on the following excerpts from an article published yesterday at Naked Capitalism, Does Wall Street Do “God’s Work”? Or Even Anything Useful?
In the wake of the 2008 crisis, Goldman Sachs CEO Lloyd Blankfein famously told a reporter that bankers are “doing God’s work.”
This is, of course, an important part of the Wall Street mantra: it’s
standard operating procedure for bank executives to frequently and
loudly proclaim that Wall Street is vital to the nation’s economy and
performs socially valuable services by raising capital, providing
liquidity to investors, and ensuring that securities are priced
accurately so that money flows to where it will be most productive. The
mantra is essential, because it allows (non-psychopathic) bankers to
look at themselves in the mirror each day, as well as helping them fend
off serious attempts at government regulation. It also allows them to
claim that they deserve to make outrageous amounts of money. According
to the Statistical Abstract of the United States, in 2007 and 2008
employees in the finance industry earned a total of more than $500
billion annually—that’s a whopping half-trillion dollar payroll (Table 1168).
There’s just one problem: the Wall Street mantra isn’t true.
Let’s start with the notion that Wall Street helps companies
raise capital. If we look at the numbers, it’s obvious that raising
capital for companies is only a sideline for most banks, and a minor one
at that. Corporations raise capital in the so-called “primary” markets
where they sell newly-issued stocks and bonds to investors. However, the
vast majority of bankers’ time and effort is devoted to (and most bank
profits come from) dealing, trading, and advising investors in the
so-called “secondary” market where investors buy and sell existing
securities with each other. In 2009, for example, less than 10
percent of the securities industry’s profits came from underwriting new
stocks and bonds; the majority came instead from trading commissions and
trading profits (Table 1219).
This figure reflects the imbalance between the primary issuing market
(which is relatively small) and the secondary trading market (which is
enormous). In 2010, corporations issued only $131 billion in new stock (Table 1202). That same year, the World Bank reports, more than $15 trillion in stocks were traded in the U.S. secondary market– more than the nation’s GDP.
Yet secondary market trading is fundamentally a zero sum game—if I make
money by buying low and selling high, it’s money you lost by buying
high and selling low.
So, what benefit does society get from all this secondary market
trading, besides very rich and self-satisfied bankers like Blankfein?
The bankers would tell you that we get “liquidity”–the ability for
investors to sell their investments relatively quickly. The problem with
this line of argument is that Wall Street is providing far more
liquidity (at a hefty price—remember that half-trillion-dollar payroll)
than investors really need. Most of the money invested in
stocks, bonds, and other securities comes from individuals who are
saving for retirement, either by investing directly or through pension
and mutual funds. These long-term investors don’t really need much
liquidity, and they certainly don’t need a market where 185 percent of shoes are bought and sold every year.
They could get by with much less trading—and in fact, they did get by,
quite happily. In 1976, when the transactions costs associated with
buying and selling securities were much higher, fewer than 20 percent of equity shares changed hands every year.
Yet no one was complaining in 1976 about any supposed lack of
liquidity. Today we have nearly 10 times more trading, without any
apparent benefit for anyone (other than Wall Street bankers and traders)
from all that “liquidity.”
So, what does Wall Street do that benefits society? Doctors and
nurses make patients healthier. Firefighters and EMTs save lives.
Telecommunications companies and smart phone manufacturers permit people
to communicate with each other at a distance. Automobile executives and
airline pilots help people close that distance. Teachers and professors
help students learn. Wall Street bankers help—mostly just themselves.
European Commission president Jean-Claude Juncker could end up in courtAfter June's referendum, the bureaucrat blocked his Commissioners from holding talks with British officials until Article 50 is triggered.
Meddling Mr Juncker claimed he was using a "Presidential Order" to implement the ban – even though no such order exists.
Now a campaign group is set to take the Commission to court, claiming the move "discriminates against the UK and its people".
Lawyers representing the
Fair Deal for Expats group will also argue it "infringes the rights of
EU citizens who live in another EU country".
The case is expected to be heard by the EU's General Court in Luxembourg, according to the Sun.
If
the legal action is successful, the Government would be able to begin
Brexit talks with Brussels without having to invoke Article 50.
GETTY
He claimed he was using a 'Presidential Order' – which does not existDaily Express crusade for EU referendumThe
result would be humiliating for the unelected fatcat, who is blamed by
some EU officials for Britain's historic vote to quit the bloc.
He
issued several doom-mongering warnings about Brexit earlier this year,
saying Britain would be treated as a "third world country" outside the
EU.
And last week he sensationally attacked Theresa May for holding preliminary trade talks with Australia at the G20 summit.
GETTY
The case is expected to be heard by the EU's General Court (not pictured)
Speaking
at summit in China, the Mr Juncker said: "I don't like the idea that
member states of the EU are negotiating free trade agreements."
Last
night a Commission spokesman insisted it was "clear" talks between the
EU and Britain cannot start until Article 50 is invoked.
He added: "President Juncker has instructed Commissioners and EC officials also to follow that principle."
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