In the world we live in, finance hasn't been the same since the early 1970s. In the United States, a law was passed called the Bank Secrecy Act, signed by Richard Nixon. Or Dick, as he was known in America. That Dick signed this law. It required that banks operate as a surveillance mechanism for the government.
This was then expanded internationally to become the framework of international finance we have today. It requires every financial transaction to have both the sender and the beneficiary identified. Every participant in the transaction. Your bank, their bank, everyone in between, must know who is being paid, who is paying them, why they are paying them, and what they're paying them for.
This turned all banks into surveillance organizations. They became deputized into law enforcement. To fight the war on drugs, the war on pot, the war on traffic violations, the war on drink, the war on something. The war in Syra, the war in Yemen, whatever the current war is.
Gradually, banks became cops. The problem is banks can't be banks and cops at the same time. But they no longer have a choice. They become cops. In fact, the cops in most banks rule what happens.
Most banks today have what is called a compliance department. In some banks, it is called the Bank Secrecy Act (BSA) department. They can overrule everyone in the bank. Remember the old Soviet movies with the commander on deck of the nuclear submarine? He is not actually in charge. Next to him is that guy in a dark suit who says, "You can do it." He is the Politburo representative from the Communist Party, in charge in the submarine. The captain doesn't run the submarine. It is the political operative next to him, who decides whether they can fire the weapons or not.
" It is funny [when we look at] the way we run our banks. The person you talk to in the bank isn't in charge. There is some person in a dark suit, talking to the Department of Justice and Treasury. Asking, "Can we send money to that person?" "No, you can't.
Sorry." "Okay, we will fix it." They are in charge in the bank. In fact, if a wire transfer is sent to you and it gets "stuck," meaning it doesn't get through to you for seven months. But they don't tell you why the wire is stuck. When you call them up, asking where your transfer is, they may say, "We haven't received it." When you go to the other party and ask why they didn't send it, they say, "But I have a receipt that says I did.
" So, you take the receipt into your bank, and they say, "I don't know, I haven't seen this." Eventually, they figure out that they haven't seen it because the bank's compliance department, is keeping them in the dark.
They haven't told the customer service that there is a wire transfer, but they're not allowed to talk [about it] ... until the "security problem" has been resolved. This is how we run banks in the free world.
I don't need to tell you how they run banks in the unfree world. I can. It happens the same way. These regulations have become the basis for international settlement of transactions. If you don't play by the American banking rules, they cut you off from the American banking system.
They tried to do that to the Swiss, threatened them into breaking the banking privacy laws they had. To go after people who had bank accounts in Switzerland.
Switzerland doesn't have privacy in its banking anymore. They are now operating by these international laws. How did this happen?
How did the banks allow themselves to become captured by political operatives? To effectively become police officers, or staff police officers to tell them what they can and can't do, against their own commercial interests? Let me give you an example. Recently, we legalized recreational marijuana in Colorado, Washington, Oregon, and California. Smoke till you drop, anytime you want, for anyone who is 21 years or older.
You can walk into a shop, buy and smoke as much as you want. But none of these [shops] have bank accounts because the federal government has not yet legalized it. They will not let the banks bank the cannabis industry. In Colorado alone, this is an industry that brought in $1 billion dollars in taxes up to now. That is within two years. $1 billion. Which means they are moving ten times that in revenue. All of which could happen as commercial activity... with a bank. In any rational society, that would be the smart thing to do.
The last thing you want is businesses going around with duffel bags full of cash. Because they can't deposit it, they must try to find ways to get rid of this cash, without being robbed. Which makes the whole place very insecure and dangerous, all-in order to fight the war on drugs. We have already lost because it was always going to be lost. Even though [some] states have stopped fighting the war on drugs, the federal government is still fighting it, With the last cops [available to them] in every state: the banks.
It is insane, but that is how it works. This happens all over the place.
The same thing is happening to sex workers, gambling organizations, and gun merchants in the United States. You may not like one or all these categories, but many of these activities are perfectly legal. Banks are being prevented from participating in legal activities by policies set by the Department of Justice. Not by law. They can say, "We don't want you banking [these people], even if they are engaging in legal activities.
" Basically, they are passing secret laws that are not subject to the legislature, no vote in a democracy.
They are ruling by fiat. How did the banks get into a situation where they must deny customers, even good and secure customers? Because they became cops. It all started simply by demonizing certain segments of society, to find an evil cartel, organization, or person. "You can't give banking to evil people." Forgetting the fact that for 20,000 years, evil people could use [some form of] money. Just by using cash, the original anonymous peer-to-peer currency. Civilization did not destroy itself, right? Once that decision was made and followed through, the category of "evil people" kept getting wider and wider.
Someone came up to me at a conference in Australia a couple of weeks ago, and said, "I have been living in Europe for 15 years and I can't get a bank account for 15 years." The moment I fill in my name and place of birth in the application, I am denied." "I am Iranian.
I have no contacts with Iran." "I have no relationship with the government. I don't like the politics of the government of Iran." "I cannot get a bank account. All I want to do is deposit my paycheck and buy groceries.
" "No bank will allow me to bank with them." "I have done nothing wrong. I didn't choose where I was born." [This story] gripped me. This story is repeated millions of times in every developed society, even worse in developing countries.
Banks agreed to these rules at first; then the rules got wider and wider. Now, it is accepted wisdom. 'Of course, you should be able to [watch] everybody who makes a transaction.' Really? Why? Because bad people might use money? Are we going to base our entire society on a blanket law just because some bad people might abuse systems? Well, guess what? Bad people will abuse systems either way.
But we are punishing millions, billions of people who have done nothing wrong.
.. simply to preserve this bourgeois illusion of security. And you know what? That is unethical. In fact, it is evil. Condemning people to poverty so you can feel safe, with no basis in fact or evidence that it makes you safe. In fact, it does the opposite. People in poverty resort to violence and have no access to justice. To preserve that [feeling of safety], we are doing evil on an institutional basis, worldwide.
The banks started with this gilded cage, the cage they built around themselves. It was a deal, quid pro quo, in return for fulfilling these regulations. The banks [earn] the ability to get away with criminal activities, for which they are never punished. When they get caught money laundering, there is a minor fine. They get caught again and again.
All of them. Every single bank has done money laundering in the order of billions of dollars, not for [the benefit of] you and me.
For Pablo Escobar. Drug dealers, terrorists are funded by state intelligence agencies through banks, in U.S. dollars. We've created this crazy system where mega-crimes can be committed... if you have a banking license if you do surveillance on behalf of the government. The goal is not to eliminate crime, right? That is ridiculous. The goal is control. What do you call a system of control where the goal is to [watch] every transaction ever done in the world? Total control.
I believe we call that "totalitarianism." Rational societies don't believe in totalitarianism, but in our financial system, we have accepted it. When Edward Snowden came out with a revelation that phone calls and internet activity was being monitored... by intelligence agencies, specifically the Five Eyes, of which Germany is a participant, we also found out that the CIA and NSA were monitoring Angela Merkel's calls. People were outraged.
But the fact that every Visa, MasterCard, and bank transaction you do is shared, remains unchallenged.
With all five intelligence agencies, piggybacked by data streams to other intelligence agencies who have managed to hack in - "Eh, it's okay. We should watch everybody just in case they do something wrong.
" Think about how much power that gives to some people. The power to control what you spend, when you spend it; the power to deny you access to finance. More importantly, the power to see all your habits, your location any time you use one of your cards, your political associations, or just friends and family.
But don't worry: Facebook is making a digital currency. This quid pro quo agreement allowed banks to prevent competition. Compliance is expensive. But it's a very good cost of business because you can pass it on directly to customers. The people being hurt are little people. The big people can afford lawyers, accountants, and better banks in other places that are more flexible like Panama, Malta, and Switzerland.
The little people who want to bank in downtown Sydney, Munich, London, or New York, they are just little people. My friend, he's from Europe. He should have known better. He should have tele-transported from the womb of his mother to a better country before he was born. These little people pay the price.
We all pay the price in higher transaction costs and friction. An international wire transfer takes forever. We pay the price in a much bigger way, in terms of reduced economic and commercial activity. Friction results in higher costs for everything. This introduces enormous friction into our financial system, for unachievable political aims that give power, to the wrong people. We pay the price in money; we pay the price again in freedom and the erosion of our democratic institutions. The banks don't.
The banks have this wonderful tool. "If it costs me $10 million in order to do compliance each year, and I hire three hundred people to staff... the compliance department, that means the smallest competitor entering the banking business, needs at least $10 million to start, before they even get a banking license." We have set the barrier to entry so high that competition in banking is reduced as a result. The big banks can [appear] more efficient than the smaller banks, because $10 million in compliance cost is a smaller percentage of their revenue than all the small banks.
The small banks struggle and then they get bought by the bigger banks. Or they join forces, merge together, become medium banks, and then they get bought by the bigger banks. Or the big banks buy the bigger banks, and the bigger banks buy the even bigger banks, and then we end up with six banks. The western world is dominated by about six banks. All in just 45 years, we are down to six major banks. They have different names, but they are pretty much all owned by the same six banks.
There are few little ones still chugging along. There are a few new ones with fancy names, like N26, Digitalxmoney and Monzo. They are fighting the hard fight. They are trying to go online. But as soon as they try to compete, the big banks say, "Well, they should really follow the regulations more closely." They must either [adopt] the exact same model the big banks are following, which is unprofitable for them, or stop competing by doing innovative things, because those innovative things they want to do may make it easier for "bad people" to get banking.
As a result, they must reduce the number of customers they take in. Eventually, it happens, what has been happening to me in banking for the past twenty-five years.
I open a bank account with this wonderful young, online, hip, cool bank with a great website. It doesn't do any of that. It works great for five years. Then they get bought by a bigger bank. Within two months, it is all over. It turns to shit. So, I switch banks to another young, hip, cool bank. For five years, it works, then they get bought by a bigger bank. In two months, it is all shit again.
This keeps happening and eventually it is all shit. The cage is made of gold. They like it because it is shiny and keeps out the competitors. It is a comfy cage. The bottom line is this golden cage has been built up around the banks so they can prevent competitors from entering the space.
PayPal, for example, started off idealistic. PayPal started with the idea of building the internet of money. They wanted to use the internet to bypass regulations. Then they got sued and investigated. The banks pay for the politicians to make sure that the cartel stays in place. It is funny that we use the term "cartel" to talk about drugs and oil, but here is a $114 trillion industry that is dominated by six regionally controlling players.
We don't call that a cartel. I wonder why. It is almost as if they are the most powerful cartel of all. So powerful that they can ensure no newspaper will ever call them a cartel, because then they would lose all their funding from advertising.
No politician will call them a cartel because they would lose their jobs.
None of the regulators will call them a cartel or dare to break them up. In fact, they don't even dare to fine them or put them in jail. When they take away the homes of a million people with straight-up fraud caught on tape, where they say they know that these mortgages are fraudulent, but they are so profitable.
Nobody goes to jail. That is a cartel. That is the behaviours of a cartel. Let's say it again: banking is a cartel. Well, guess what? A cartel buster came in the door on January 3rd, 2009. With the invention of an open public blockchain called Bitcoin, that cartel is now over. They had a golden cage to keep out competitors. It was shiny and nice. But now there's something outside the cage, “That shouldn't be there.
Why is that out there?" "You can't let them do whatever they want. They will fund criminals! No, not the criminals like our friends. "The other kind of criminals. Poor criminals, not rich criminals. We [need] that market."
"They can fine poor criminals and poor terrorists, not nation-state terrorists. We [need] that market too. "They can fine poor immigrants, not rich immigrants like the wife of our president. No, just the poor immigrants." "Like the people who are in concentration camps in America. Why would we give them bank accounts?"
I was once at a banking conference. At the end, during the Q&A, a lady asked me, "Why should we give illegals bank accounts?" The question shocked me. First, due to the use of the word "illegals" to refer to human beings. Secondly, because of the audacity of that question. Are you not a commercial entity that facilitates banking? Since when did you become the police? So, I answered in the best way I could: "You shouldn't give illegals bank accounts.
Bitcoin is an anomaly. It brought about four thousand other anomalies to date, over the last ten years. All these anomalies refuse to play by the rules, because most of them don't have identifiable leaders. Here is the playbook of the banks. They go through these steps every time they face competition.
Can we buy it? If we buy it and then shut it down, it is not a risk. Or we buy it and hold it very close. Very, very close, until it stops breathing and we've killed it. Then it doesn't compete with us anymore, right? The old bank will buy this innovative bank; you watch it asphyxiate over two months, until there is no innovation left, and all the creative people quit within a week. They can see what will happen next. On the first day they come in, [their new bosses] say, "This is very good. We really appreciate your creativity. Now cut your hair, put on a suit and some better shoes. Come into the office at 9:00 in the morning. Okay? Good. Thank you." The creative people will say, "Oh, fuck this. I quit." And there goes your innovative group, out the door. That bank is over.
So, the first rule is: buy it. The second rule is: compete viciously, even in illegal ways, to shut them down. Classic cartel interference. If that doesn't work, the third rule is: sue. The fourth rule, and best one, is: convince the government to regulate them.
Regulate them harder; regulate them mercilessly. Pass a few new laws to make sure that...
What they are doing that's different is not allowed. If that doesn't work, just shut them down by using the government as your cartel enforcer. Essentially, the government becomes the Sicario for the banks. It is a very weird relationship. That is the playbook.
Then Bitcoin comes on the stage and the banks think, 'Buy them.
"Umm, we can't. They are not a company. If we start buying up bitcoin, it will just become more valuable." "Then we won't be able to buy it all. We will just make the [early adopters] richer and they will be able to fight us." "Oh, okay. Well, we can compete with them using dirty tricks! "We already call them drug dealers, terrorists, and paedophile’s, but people still keep buying this shit. "I don't know what else we could do.
Some of them even get up on stage and call us criminals now. "They're becoming really audacious. "Then let's get the government to regulate them!" "We tried that. They regulated the exchanges; gradually, the exchanges have turned into banks.
"It kind of felt like we were winning. But the more we closed the on-and off-ramps, the more some of these weirdos just stay inside the crypto economy and stop trading for fiat." "Then we really can't control them.
They are selling their labour, products, and services directly for crypto." "They are paying their employees directly in crypto, and they never exchange it for euros or dollars.
"In fact, they even turned this into a slogan: HODL. What does that mean?" the banker asks. "I think it means 'hold on for dear life.'" It doesn't!
It is just 'hold' misspelled. "So, they HODL? And make funny memes with Shiba Inu dogs, smiling and saying 'Wow, how crypto.
Awesome'?" "I don't understand any of it.
"We could try to sell the currency suddenly, to crash it. "It did crash, but some of them just held and it went up again by eight times. That didn't work." "Make the government sue them." "We already put a bunch of them in jail, the ones who tell us what their name is. "But other than that, there are other people who have it and we don't know who they are." "They don't touch the banking system. We [haven't been able to] put them in jail." "Just shut the whole thing down!" "Well, we can't. " Here's the thing: this is frustrating and fundamentally unfair.
I feel for the bankers. It was so nice inside that golden cage. They wanted to "invite" everybody into this nice regulator cartel. This has been a very profitable [model] and a rogue dis-organization is ruining the game.
That is fundamentally unfair... Look at the psychology of fairness. As human beings, we feel it very strongly. It is fundamental party of what keeps society together. One of the fascinating things I've read is, this is not just a phenomenon among human beings, but also our closest animal relatives: primates.
Our closest relatives are bonobos and chimpanzees. They exhibit a very strong sense of fairness. So do gorillas, other apes, and monkeys. You can perform a simple experiment with two chimps next to each other. Put one grape in front of each one. They both eat their grapes and are very happy. The next day, put one grape in front of one chimp and two grapes in front of the other chimp. The chimp with one grape will look over at the other chimp with two grapes, and start screaming, as if it is the other chimp's fault.
It may even take the one grape it received, which is still better than zero grapes, the same number of grapes it received yesterday, and throw it at the researcher. And continue screaming in their cage. Why? Because it is unfair. That sense of justice is important in a social animal, that fairness is part of our surroundings.
Without the feeling of fairness, without the feeling of justice, we become unmoored from society. We come isolated and depressed. It can have a serious toll on your psyche...
if you don't believe that justice exists in some fundamental way. If not in this universe (which it doesn't, of course), at least in the society of people around you. Fairness is important. When faced with a system that has two sets of rules, how do we respond? If I must follow one set of rules, but then I notice that another person in the same situation as me, must follow another set of rules, maybe an easier set of rules...
Even though I have been following these rules for a very long time, I feel a sense of injustice. 'Why do they get an easy ride? I must follow the hard rules.' In a situation where you must follow rules, and someone else has more freedom, there are two rational responses. 1. I want to be that free too. 2. Fuck that guy. They should be miserable like me. Guess which one the banks are going for? They are faced with this situation of unfairness. This Bitcoin thing isn't playing by the rules. It can't be made to play by the rules.
If you kind of force it to play by the rules, we will just invent another one that doesn't. We will probably still call it "Bitcoin" for [simplicity's sake].
Then Bitcoin once again won't be playing by the rules. It may be a slightly different Bitcoin, more stealthy, anonymous, and evasive. Maybe, in the end, the people who use cryptocurrency will be the only people with freedom. The poor criminals, of course. The rich criminals have always had freedom.
They don't need cryptocurrency to achieve that. They have Swiss bankers and lawyers. They can buy freedom. Freedom is something you can buy. For poor people, they will use cryptocurrency even if you ban the entire middle class from using it.
More and more of them are falling out of the middle class. Right into the clutches of these freedom-making technologies, which is really frustrating for bankers. [When faced with] "they don't have to play by the rules," instead of saying, "We should not play by the rules either," or at least, "You should try to relax these rules," or "We should test whether these rules are working, the way we expect them to," they are saying, "Make them stop." They will keep saying, "Make them stop," even though they have seen for a decade now... we are not stopping, and we will continue. There are billions of people who need this. There are billions of people who don't have access... to the nice gold cage, because they are on the outside and will never be on the inside.
They will never have enough documentation, provable wealth, light skin, recognition as a human being, or enough of a penis, to ever have access to banking. They fell outside of the golden cage, and they will continue to be outside. It is astonishing that in 40 years into development of the internet, 25 years of the commercial internet, banking has refused to change [much]. If anything, it is becoming more exclusive and unequal. They are kicking more and more people outside of the golden cage.
They are beginning to realize how the cage is getting smaller. Do you know those horror movies where [the characters are] running around, they go into a room, press one of the tiles, and suddenly the walls start closing in? They say, "Oh shit!" They run around some more to find the door. Those kinds of movies. I'm sure you've seen one. Indiana Jones was one, but there have been others. It is great.
It explains the human psyche so well. It triggers that claustrophobic sense.
Well, right now, bankers are feeling that. The golden cage keeps getting smaller and smaller. If they keep banking fewer and fewer people, playing with less and less of the world's wealth, concentrated in fewer hands, they become fragile. The economic system they are presiding over, the pyramid they are standing on top of, has cracks [forming] in the foundation. Every now and then, it starts shaking like [those rooms] in the Indiana Jones movies.
'I feel like I'm king of the world, but not for much longer. Those peasants down there seem very angry.' 'Is that a guillotine they're building? I don't like that at all.' 'I will go to a nice, gated community somewhere in the Alps, with a vault where I can hide my wealth, that is the world we now live in. We are transitioning to the stage where people will move behind higher walls, in smaller and smaller compounds, to escape the fate of everybody outside the golden cage.
Well, I have news for you. It is nice out here. You should try it, outside the golden cage. We have freedom. We have sovereignty. We have monetary independence. We control our own money. We choose our monetary policies.
They can be for deflationary money that retains its value; others choose inflationary systems. We are building new, cool things. Toys, smart contracts, and games. We are tokenizing everything, just for the sake of it. There are scams, weird and criminal people out here, but at least none of them are criminal bankers, who are all inside that golden cage.
They can't come and play with us. They built this cage they're now locked in. And it's getting smaller. All I have to say is, it's lovely out here. Come and join me outside the cage.
Let them regret the decision to become the law enforcement arm of corrupt governments and militaries.
They built the cage to increase their profits. Now they are trapped. We're outside, and we are free. Thank you!
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