Bitcoin’s history and origination is an important factor for more than just true believers and maximalists. Created in the aftermath of the 2008 financial crisis, and with evidence that it was intended, by its founder, known only as Satoshi Nakamoto, as remedy for the failed system that had nearly collapsed the world economic system at that time.
In a recent CoinDesk post, Nathan Thompson wrote: Bitcoin’s genesis block is historic, not just because it contained the first 50 bitcoins, but because it had a message coded in the hash code: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
The bank bailouts and various financial system failures were integral, then, in the creation and purpose of bitcoin, and one could even say, coins and systems that followed, starting with Ethereum in 2015.
After a few weeks of tweets revolving around the Twitter buyout brouhaha, Elon Musk, in a reply, added, in a more introspective tone than has been seen of late, some of his thoughts on the subject;
The axiomatic error was that housing prices only go up. I don’t support predatory lending, but many of those lenders were severely wounded or didn’t survive.
They dug their own graves – a lesson we should all take to heart, including me.
Interesting timing and a nice shift from the obsession with prices
The recent “crash” and panicked voices over the drop of the bitcoin price below $30k is the unspoken background addressed in this exchange, it appears.
Decrying the erroneous belief that “prices only go up” held by the public at large during the doomed run up to the 2008-2009 crisis could be seen as a hint that, perhaps, prices of assets like Bitcoin, and Tesla shares, for that matter, can not “only go up” and anyone who seeks such a preposterous nirvana is digging their own graves, having failed to learn from all the times in history that fools took the path of peak greed and self-delusion.
Worse, and worth being singled out specifically, are those that profited from the delusion of others in “predatory lending” practices, which Elon Musk “doesn’t support”.
Ultimately for this tweet thread, it was Elon Musk’s Twitter buddy @BillyM2k that nailed it with a series of tweets explicitly spelling out the divergence between the founders and believers in the original, positive, intent of bitcoin and the massive bubble of speculators and scammers that has, in his view unfortunately, grown up around it.
Pointing out that DogeCoin, as an example, was created to highlight the stupidity of speculation and excess greed that came with the avalanche of meme-coins and “shitcoins” etc, that flooded the market and, to a great degree, obscured the original, positive force that bitcoin and decentralized finance was invented to be.
Maybe, some of the various challenges and stumbles that Elon Musk is experiencing lately, seemingly for the first time, after a string of incredible triumphs, culminating with the Person of the Year designation and the buyout launch that is now in limbo, will inspire him to be more reflective and use his powerful position as a “Twitter-sage” to draw more attention to the need for a voice of “reason”, rather than as a cheerleader for the bonfires of vanity and speculation.
Building solar panels over water sources is one way to both provide power and reduce evaporation in drought-troubled regions. Robin Raj, Citizen Group & Solar Aquagrid
To most people, a solar farm or a geothermal plant is an important source of clean energy. Scientists and engineers see that plus far more potential.
They envision offshore wind turbines capturing and storing carbon beneath the sea, and geothermal plants producing essential metals for powering electric vehicles. Electric vehicle batteries, too, can be transformed to power homes, saving their owners money and also reducing transportation emissions.
With scientists worldwide sounding the alarm about the increasing dangers and costs of climate change, let’s explore some cutting-edge ideas that could transform how today’s technologies reduce the effects of global warming, from five recent articles in The Conversation.
1. Solar canals: Power + water protection
What if solar panels did double duty, protecting water supplies while producing more power?
California is developing the United States’ first solar canals, with solar panels built atop some of the state’s water distribution canals. These canals run for thousands of miles through arid environments, where the dry air boosts evaporation in a state frequently troubled by water shortages.
“In a 2021 study, we showed that covering all 4,000 miles of California’s canals with solar panels would save more than 65 billion gallons of water annually by reducing evaporation. That’s enough to irrigate 50,000 acres of farmland or meet the residential water needs of more than 2 million people,” writes engineering professor Roger Bales of the University of California, Merced. They would also expand renewable energy without taking up farmable land.
Putting solar panels over shaded water can also improve their power output. The cooler water lowers the temperature of the panels by about 10 degrees Fahrenheit (5.5 Celsius), boosting their efficiency, Bales writes.
2. Geothermal power could boost battery supplies
For renewable energy to slash global greenhouse gas emissions, buildings and vehicles have to be able to use it. Batteries are essential, but the industry has a supply chain problem.
Most batteries used in electric vehicles and utility-scale energy storage are lithium-ion batteries, and most lithium used in the U.S. comes from Argentina, Chile, China and Russia. China is the leader in lithium processing.
Geologist and engineers are working on an innovative method that could boost the U.S. lithium supply at home by extracting lithium from geothermal brines in California’s Salton Sea region.
Brines are the liquid leftover in a geothermal plant after heat and steam are used to produce power. That liquid contains lithium and other metals such as manganese, zinc and boron. Normally, it is pumped back underground, but the metals can also be filtered out. https://www.youtube.com/embed/oYtyEVPGEU8?wmode=transparent&start=0 How lithium is extracted during geothermal energy production. Courtesy of Controlled Thermal Resources.
“If test projects now underway prove that battery-grade lithium can be extracted from these brines cost effectively, 11 existing geothermal plants along the Salton Sea alone could have the potential to produce enough lithium metal to provide about 10 times the current U.S. demand,” write geologist Michael McKibben of the University of California, Riverside, and energy policy scholar Bryant Jones of Boise State University.
President Joe Biden invoked the Defense Production Act on March 31, 2022, to provide incentives for U.S. companies to mine and process more critical minerals for batteries.
3. Green hydrogen and other storage ideas
Scientists are working on other ways to boost batteries’ mineral supply chain, too, including recycling lithium and cobalt from old batteries. They’re also developing designs with other materials, explained Kerry Rippy, a researcher with the National Renewable Energy Lab.
Concentrated solar power, for example, stores energy from the sun by heating molten salt and using it to produce steam to drive electric generators, similar to how a coal power plant would generate electricity. It’s expensive, though, and the salts currently used aren’t stable at higher temperature, Rippy writes. The Department of Energy is funding a similar project that is experimenting with heated sand. https://www.youtube.com/embed/fkX-H24Chfw?wmode=transparent&start=0 Hydrogen’s challenges, including its fossil fuel history.
Renewable fuels, such as green hydrogen and ammonia, provide a different type of storage. Since they store energy as liquid, they can be transported and used for shipping or rocket fuel.
Hydrogen gets a lot of attention, but not all hydrogen is green. Most hydrogen used today is actually produced with natural gas – a fossil fuel. Green hydrogen, in contrast, could be produced using renewable energy to power electrolysis, which splits water molecules into hydrogen and oxygen, but again, it’s expensive.
“The key challenge is optimizing the process to make it efficient and economical,” Rippy writes. “The potential payoff is enormous: inexhaustible, completely renewable energy.”
4. Using your EV to power your home
Batteries could also soon turn your electric vehicle into a giant, mobile battery capable of powering your home.
Only a few vehicles are currently designed for vehicle-to-home charging, or V2H, but that’s changing, writes energy economist Seth Blumsack of Penn State University. Ford, for example, says its new F-150 Lightning pickup truck will be able to power an average house for three days on a single charge.
How bidirectional charging allows EVs to power homes.
For example, he writes, “some homeowners might hope to use their vehicle for what utility planners call ‘peak shaving’ – drawing household power from their EV during the day instead of relying on the grid, thus reducing their electricity purchases during peak demand hours.”
5. Capturing carbon from air and locking it away
Another emerging technology is more controversial.
Humans have put so much carbon dioxide into the atmosphere over the past two centuries that just stopping fossil fuel use won’t be enough to quickly stabilize the climate. Most scenarios, including in recent Intergovernmental Panel on Climate Change reports, show the world will have to remove carbon dioxide from the atmosphere, as well.
The technology to capture carbon dioxide from the air exists – it’s called direct air capture – but it’s expensive.
Engineers and geophysicists like David Goldberg of Columbia University are exploring ways to cut those costs by combining direct air capture technology with renewable energy production and carbon storage, like offshore wind turbines built above undersea rock formations where captured carbon could be locked away.
The world’s largest direct air capture plant, launched in 2021 in Iceland, uses geothermal energy to power its equipment. The captured carbon dioxide is mixed with water and pumped into volcanic basalt formations underground. Chemical reactions with the basalt turn it into a hard carbonate.
Goldberg, who helped developed the mineralization process used in Iceland, sees similar potential for future U.S. offshore wind farms. Wind turbines often produce more energy than their customers need at any given time, making excess energy available.
“Built together, these technologies could reduce the energy costs of carbon capture and minimize the need for onshore pipelines, reducing impacts on the environment,” Goldberg writes.
Editor’s note: This story is a roundup of articles from The Conversation’s archives.
Takeovers are usually friendly affairs. Corporate executives engage in top-secret talks, with one company or group of investors making a bid for another business. After some negotiating, the companies engaged in the merger or acquisition announce a deal has been struck.
But other takeovers are more hostile in nature. Not every company wants to be taken over. This is the case with Elon Musk’s US$43 billion bid to buy Twitter.
Companies have various measures in their arsenal to ward off such unwanted advances. One of the most effective anti-takeover measures is the shareholder rights plan, also more aptly known as a “poison pill.” It is designed to block an investor from accumulating a majority stake in a company.
There are many variants of poison pills, but they generally increase the number of shares, which then dilutes the bidder’s stake and causes them a significant financial loss.
Let’s say a company has 1,000 shares outstanding valued at $10 each, which means the company has a market value of $10,000. An activist investor purchases 100 shares at the cost of $1,000 and accumulates a significant 10% stake in the company. But if the company has a poison pill that is triggered once any hostile bidder owns 10% of its stock, all other shareholders would suddenly have the opportunity to buy additional shares at a discounted price – say, half the market price. This has the effect of quickly diluting the activist investor’s original stake and also making it worth a lot less than it was before.
Twitter adopted a similar measure. If any shareholder accumulates a 15% stake in the company in a purchase not approved by the board of directors, other shareholders would get the right to buy additional shares at a discount, diluting the 9.2% stake Musk recently purchased.
Poison pills are useful in part because they can be adopted quickly, but they usually have expiration dates. The poison pill adopted by Twitter, for example, expires in one year.
No one has ever triggered – or swallowed – a poison pill that was designed to fend off an unsolicited takeover offer, showing how effective such measures are at fending off takeover attempts.
These types of anti-takeover measures are generally frowned upon as a poor corporate governance practice that can hurt a company’s value and performance. They can be seen as impediments to the ability of shareholders and outsiders to monitor management, and more about protecting the board and management than attracting more generous offers from potential buyers.
A poison pill isn’t foolproof, however. A bidder facing a poison pill could try to argue that the board is not acting in the best interests of shareholders and appeal directly to them through either a tender offer – buying shares directly from other shareholders at a premium in a public bid – or a proxy contest, which involves convincing enough fellow shareholders to join a vote to oust some or all of the existing board.
As desirable vacation destinations go, war-torn Ukraine must surely rate low. But in the first month of Russia’s invasion, Airbnb bookings in Ukraine boomed, as people around the world used the accommodation platform to channel more than US$15 million in donations to the country.
As with other forms of direct donation, using Airbnb to channel aid to Ukraine has been problematic. The company was relatively quick to waive the 20% commission it usually charges on transactions. But stopping scammers from setting up fake accounts to collect money from well-meaning donors has proven more difficult.
It’s a story that illustrates both the potential and limitations of the so-called sharing economy.
Idealistic visionaries once imagined the internet would connect individual buyers and sellers, peer to peer (or P2P), without the need for intermediaries and their commissions. But this promise of market democratisation and inclusivity has largely failed to materialise.
Instead, the platforms that have arisen – eBay, Uber, Airbnb and so forth – are very much like traditional capitalist enterprises, putting the squeeze on rivals, exploiting labour, and making their founders and executives among the wealthiest people on the planet.
Platform capitalism
The founders of these companies didn’t necessarily begin with such ambitions. Airbnb’s founders, for example, started their website in 2007 to provide an alternative to mainstream hotels and motels, enabling anyone to offer a spare room or residence for short-term stays in the expensive San Francisco market.
Now Airbnb’s market capitalisation rivals that of the world’s biggest hotel chain, Marriott. In 2021, Airbnb reported US$1.6 billion in earnings before interest, tax, depreciation and amortisation, compared with Marriott’s US$2 billion.
Co-founder and chief executive Brian Chesky’s personal fortune is an estimated US$14 billion, placing him 157th on Forbes’ world billionaires list.
The fortunes made by the dominant sharing platform have not all come from technological innovation.
There’s little that is democratic about these platforms. The owners have the last say in the equation, dictating which actions and exchanges are allowed or cancelled.
Creating a true sharing economy
Our research on the sharing economy shows that digital platforms can be a powerful tool for individuals to collaborate in developing solutions to their needs. But for the promise of the sharing economy to be realised, platforms must be far more open, democratic and publicly accountable than they are now.
As the non-profit P2P foundation argues, peer-to-peer networks create the potential to transition to a commons-oriented economy, focused on creating value for the world, not enriching shareholders.
For that to happen, all users must have input into decisions about why a platform exists and how it is used.
Examples of what is possible already exist. Perhaps the best known is Wikipedia – a hugely valuable service that runs on volunteer labour and donations. It’s not perfect but it’s hard to imagine it working as a for-profit enterprise.
There are many attempts to create collectively owned, more democratic sharing platforms. In New York, for example, drivers have organised to create ride-sharing alternatives to Uber and Lyft based on cooperative principles. Such endeavours are known as platform cooperativism.
But these ventures routinely struggle to raise the money needed to develop their platforms. Members also vary largely in their knowledge of business practices, particularly the skills needed to manage democratic decision making.
To help these platforms thrive, we need public policies that assist them to raise funds. We also need programs that deliver financial and business education to platform members.
Beyond these practical difficulties, users also need to have a stake in how these platforms run for them be a fully transformative version of the sharing economy.
We’ve drifted a long way from the early hopes for the sharing economy. But it’s not too late to change course and work to co-create more equitable, human-focused models of exchange.
To most people, a solar farm or a geothermal plant is simply a power producer. Scientists and engineers see far more potential.
They envision offshore wind turbines capturing and storing carbon beneath the sea, and geothermal plants producing essential metals for powering electric vehicles. Electric vehicle batteries, too, can be transformed to power homes, saving their owners money.
photo credit / pexels
With scientists worldwide sounding the alarm about the increasing dangers and costs of climate change, let’s explore some cutting-edge ideas that could transform how today’s technologies reduce the effects of global warming, from five recent articles in The Conversation.
1. Solar canals: Power + water protection
What if solar panels did double duty, protecting water supplies while producing more power?
California is developing the United States’ first solar canals, with solar panels built atop some of the state’s water distribution canals. These canals run for thousands of miles through arid environments, where the dry air boosts evaporation in a state frequently troubled by water shortages.
“In a 2021 study, we showed that covering all 4,000 miles of California’s canals with solar panels would save more than 65 billion gallons of water annually by reducing evaporation. That’s enough to irrigate 50,000 acres of farmland or meet the residential water needs of more than 2 million people,” writes engineering professor Roger Bales of the University of California, Merced. They would also expand renewable energy without taking up farmable land.
Putting solar panels over shaded water can also improve their power output. The cooler water lowers the temperature of the panels by about 10 degrees Fahrenheit (5.5 Celsius), boosting their efficiency, Bales writes.
2. Geothermal power could boost battery supplies
For renewable energy to slash global greenhouse gas emissions, buildings and vehicles have to be able to use it. Batteries are essential, but the industry has a supply chain problem.
Most batteries used in electric vehicles and utility-scale energy storage are lithium-ion batteries, and most lithium used in the U.S. comes from Argentina, Chile, China and Russia. China is the leader in lithium processing.
Geologist and engineers are working on an innovative method that could boost the U.S. lithium supply at home by extracting lithium from geothermal brines in California’s Salton Sea region.
Brines are the liquid leftover in a geothermal plant after heat and steam are used to produce power. That liquid contains lithium and other metals such as manganese, zinc and boron. Normally, it is pumped back underground, but the metals can also be filtered out. https://www.youtube.com/embed/oYtyEVPGEU8?wmode=transparent&start=0 How lithium is extracted during geothermal energy production. Courtesy of Controlled Thermal Resources.
“If test projects now underway prove that battery-grade lithium can be extracted from these brines cost effectively, 11 existing geothermal plants along the Salton Sea alone could have the potential to produce enough lithium metal to provide about 10 times the current U.S. demand,” write geologist Michael McKibben of the University of California, Riverside, and energy policy scholar Bryant Jones of Boise State University.
President Joe Biden invoked the Defense Production Act on March 31, 2022, to provide incentives for U.S. companies to mine and process more critical minerals for batteries.
3. Green hydrogen and other storage ideas
Scientists are working on other ways to boost batteries’ mineral supply chain, too, including recycling lithium and cobalt from old batteries. They’re also developing designs with other materials, explained Kerry Rippy, a researcher with the National Renewable Energy Lab.
Concentrated solar power, for example, stores energy from the sun by heating molten salt and using it to produce steam to drive electric generators, similar to how a coal power plant would generate electricity. It’s expensive, though, and the salts currently used aren’t stable at higher temperature, Rippy writes. The Department of Energy is funding a similar project that is experimenting with heated sand. https://www.youtube.com/embed/fkX-H24Chfw?wmode=transparent&start=0 Hydrogen’s challenges, including its fossil fuel history.
Renewable fuels, such as green hydrogen and ammonia, provide a different type of storage. Since they store energy as liquid, they can be transported and used for shipping or rocket fuel.
Hydrogen gets a lot of attention, but not all hydrogen is green. Most hydrogen used today is actually produced with natural gas – a fossil fuel. Green hydrogen, in contrast, could be produced using renewable energy to power electrolysis, which splits water molecules into hydrogen and oxygen, but again, it’s expensive.
“The key challenge is optimizing the process to make it efficient and economical,” Rippy writes. “The potential payoff is enormous: inexhaustible, completely renewable energy.”
4. Using your EV to power your home
Batteries could also soon turn your electric vehicle into a giant, mobile battery capable of powering your home.
Only a few vehicles are currently designed for vehicle-to-home charging, or V2H, but that’s changing, writes energy economist Seth Blumsack of Penn State University. Ford, for example, says its new F-150 Lightning pickup truck will be able to power an average house for three days on a single charge. https://www.youtube.com/embed/w4XLBOnzE6Q?wmode=transparent&start=0 How bidirectional charging allows EVs to power homes.
For example, he writes, “some homeowners might hope to use their vehicle for what utility planners call ‘peak shaving’ – drawing household power from their EV during the day instead of relying on the grid, thus reducing their electricity purchases during peak demand hours.”
5. Capturing carbon from air and locking it away
Another emerging technology is more controversial.
Humans have put so much carbon dioxide into the atmosphere over the past two centuries that just stopping fossil fuel use won’t be enough to quickly stabilize the climate. Most scenarios, including in recent Intergovernmental Panel on Climate Change reports, show the world will have to remove carbon dioxide from the atmosphere, as well.
The technology to capture carbon dioxide from the air exists – it’s called direct air capture – but it’s expensive.
Engineers and geophysicists like David Goldberg of Columbia University are exploring ways to cut those costs by combining direct air capture technology with renewable energy production and carbon storage, like offshore wind turbines built above undersea rock formations where captured carbon could be locked away.
The world’s largest direct air capture plant, launched in 2021 in Iceland, uses geothermal energy to power its equipment. The captured carbon dioxide is mixed with water and pumped into volcanic basalt formations underground. Chemical reactions with the basalt turn it into a hard carbonate.
Goldberg, who helped developed the mineralization process used in Iceland, sees similar potential for future U.S. offshore wind farms. Wind turbines often produce more energy than their customers need at any given time, making excess energy available.
“Built together, these technologies could reduce the energy costs of carbon capture and minimize the need for onshore pipelines, reducing impacts on the environment,” Goldberg writes.
Editor’s note: This story is a roundup of articles from The Conversation’s archives.
“We want to thank Jeff Bezos for going to space, because while he was up there, we were organizing a union,” said Christian Smalls, president of the Amazon Labor Union.
Amazon warehouse workers in Staten Island, New York won their election Friday to form the retail giant’s first-ever union in the United States, a landmark victory for the labor movement in the face of aggressive union-busting efforts from one of the world’s most powerful companies.
According to an initial tally released by the National Labor Relations Board (NLRB),there were 2,654 votes in favor of recognizing a union and 2,131 against. The number of disputed ballots, 67, is not nearly enough to change the outcome.
The historic unionization drive was spearheaded by the Amazon Labor Union (ALU), a worker-led group not affiliated with any established union. Christian Smalls, the president of ALU, was fired by Amazon in 2020 after he led a protest against the company’s poor workplace safety standards in the early stages of the coronavirus pandemic.
“When Covid-19 came into play, Amazon failed us,” Smalls said during a press conference after the union victory was announced. “We want to thank Jeff Bezos for going to space, because while he was up there, we were organizing a union.”
BREAKING: David beats Goliath! In a historic victory, Amazon workers in Staten Island win the first U.S. Amazon union.@AmazonLabor and workers at the JFK8 warehouse overcame extreme union-busting to make history.
Long-time labor journalist Steven Greenhouse wrote Friday that “the unionization victory at the Amazon warehouse in Staten Island is by far the biggest, beating-the-odds, David-versus-Goliath unionization win I’ve seen.”
“America’s wealthiest, most powerful, most seemingly indispensable company has lost to a pop-up coalition of workers,” Greenhouse added. “A generation, the younger generation, is stirring.”
Amazon, which spent $4.3 million on anti-union consultants in 2021 alone, worked hard to crush the unionization effort, forcing employees to attend hundreds of captive-audience meetings and threatening workers with pay cuts and other potential consequences.
But the company’s union-busting campaign wasn’t enough to overcome the upstart revolt led by ALU, which was founded just months ago.
Derrick Palmer, a co-founder of ALU and an employee at the Staten Island warehouse, said he expects Friday’s victory to be one of many.
“This will be the first union,” said Palmer, “but moving forward, that will motivate other workers to get on board with us.”
Widespread celebration followed the official announcement of the union’s election win, with progressive lawmakers and activists hailing the victory as a potential watershed moment for the U.S. labor movement, which has struggled for decades in the face of corporate America’s relentless assault. Union membership in the U.S. declined by 241,000 workers in 2021, according to Labor Department figures.
“The organizing victory at Amazon on Staten Island is a signal that American workers will no longer accept exploitation,” Sen. Bernie Sanders (I-Vt.) tweeted Friday. “They’re tired of working longer hours for lower wages. They want an economy that works for all, not just Jeff Bezos.”
The union has much work ahead of it. As HuffPost labor reporter Dave Jamieson noted, the union must now negotiate “a first collective bargaining agreement with one of the most powerful companies in the world.”
“It can take years for a union to secure a first contract, and some never manage to,” Jamieson wrote. “Amazon would have a strong incentive not to offer the union a decent deal, for fear it would only encourage more unionization elsewhere.”
Originally published on Common Dreams by JAKE JOHNSON and republished under Creative Commons (CC BY-NC-ND 3.0)
The remarks, though later walked back by the White House, are the most explicit yet from the U.S. president that he sees no future for Putin as Russia’s head of state.
Originally published by JON QUEALLY March 26, 2022 in CommonDreams.ORG
Bucking those who warn that a push for regime change in Moscow could prolong the war in Ukraine and intensify the suffering of its people, U.S. President Joe Biden appeared to openly call for the overthrow of Russian Vladimir Putin on Saturday during a speech in Warsaw, Poland.
“Whenever the United States tried regime change, it didn’t turn out very well.”
While applauding the international unity that has mobilized to condemn and push back against the Russian invasion of Ukraine, a war now entering its second month, Biden suggested it has now become intolerable for Putin to remain.
Near the very end of his speech, Biden declared, “For God’s sake, this man cannot remain in power.”
“Whenever the United States tried regime change, it didn’t turn out very well.”
The remarks were the most explicit yet from the U.S. president that he sees no future for Putin as Russia’s head of state, but the comment also raised immediate alarm bells among those who recognized that such rhetoric could make it harder to a negotiated peace settlement to take hold or for the diplomatic strategy known as the “Golden Bridge” which would allow for a dignified exit from hostilities.
In a Democracy Now! interview that aired Friday, former Greek finance minister Yanis Varoufakis explained why Putin must be given a viable exit strategy—not because he isn’t a contemptible war criminal, which Varoufakis readily admitted—but because it would be the fastest way to end the invasion and mass slaughter of innocent Ukrainian civilians.
“What is exactly the aim?” asks Varoufakis during the exchange. “Is it regime change in Russia? Well, whenever the United States tried regime change, it didn’t turn out very well, and has never been tried with a nuclear power. This is like playing with fire, or nuclear fire, I should say. If it’s not regime change, what exactly is it?”
"Putin must be given a golden bridge from which to escape his conundrum. He must be given something he can sell to his own people as 'mission accomplished," says @YanisVaroufakis.
"We should be moving toward a rational solution that will leave everybody slightly dissatisfied." pic.twitter.com/SH0ma4aXBf
In his assessment, Varoufakis said that if Biden and his NATO allies are “not leaving any room for a compromise” with Putin, then they are “effectively jeopardizing the interests of Ukrainians, because a quagmire in—an Afghanistan-like quagmire in the Ukraine is not exactly in the interests of any Ukrainian I know of.”
“The President’s point was that Putin cannot be allowed to exercise power over his neighbors or the region. He was not discussing Putin’s power in Russia, or regime change,” said the official.
Following the walk back, Varoufakis responded on Sunday morning by saying the need for such a clarification is itself a worrying sign.
“A U.S. president who, during an atrocious war, does not mean what he says on matters of war and peace, and must be corrected by his hyperventilating staff,” said Varoufakis, “is a clear and present danger to all.”
Update: This piece was updated to include news comments from Varoufakis.
This article was first published on Common Dreams and republished under Creative Commons license (CC BY-NC-ND 3.0)
A 7.3 magnitude earthquake hit Japan near the north-east coast of Fukushima Wednesday March 16. According to Reuters one fatality has been reported along with 69 injuries. Authorities have issued a tsunami warning with residents in costal areas told to evacuate.
More than 2 million homes lost power, as reported by NPR, The Japanese Meteorological Agency said the quake hit at 11:36 P.M. at a depth of 36 miles below the sea.
One person is reported dead and dozens of people are believed to have suffered injuries.
In some areas it was reportedly too forceful for people to stand, and buildings rattled in the Tokyo, according to AFP.
The quake jolted the region just a week shy of the anniversary of the devastating 9.0 earthquake and tsunami that happened back in March 2011.
Bitcoin and Crypto’s reached a major turning point: why is cryptocurrency worth anything?
In a recent interview clip Jack Dorsey quietly states his opinion on the difference between people who “get” blockchain and crypto, and those that will forever be married to the past:
This is the simply stated portion that says it all:
“People who have questions in the world, people who have curiosity (and are) recognizing that the current systems, wether they be corporate financial systems or the government financial systems just aren’t working for them…”
Although the context of his statement is regarding bitcoin as the native currency for the internet, and in particular how people are responding to the fact that financial systems “just aren’t working for them” it is, nevertheless, a perfect statement of how the world is changing.
It has already changed into two distinct groups: those that are clinging to the status quo, since it has worked very well for them, and those that want to find a new and better way, because, in most cases, the current system did not work for them.
It’s important to realize that this statement is not coming from a disgruntled outsider, but from the hugely successful founder of Square, now called Block.
The fact that a large group of highly successful business leaders, such as Jack Dorsey and Elon Musk, although benefiting massively from the current financial systems, are at the same time embracing a new way of thought and action for the future, is at the crux of the issues addressed in this post.
Buffet vs Musk & Dorsey and the zero sum mindset of Malthusian Capitalism
There is a war waging between those that are open to, and welcoming of, bitcoin, crypto, blockchain, DeFi and other new financial innovations and those that reject all of it and would like nothing more than to see it stopped, by any means necessary.
The derision, insults and disdain lobbed at bitcoin, crypto and anyone that believes in them, by the “old guard” epitomized by Warren Buffet and Charlie Munger are now well known and documented:
A few quotes:
“Probably rat poison squared.” — Warren Buffett in Fox Business interview at 2018 meeting
“I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization” – Charlie Munger vice chairman at Berkshire Hathaway
“I certainly didn’t invest in crypto. I’m proud of the fact I’ve avoided it. It’s like a venereal disease or something. I just regard it as beneath contempt.” – Charlie Munger vice chairman at Berkshire Hathaway
Interestingly, if you look deeper at the interviews and quotes, you’d see that, in spite of the headline grabbing hyperbole, it’s the price speculation that is at the heart of the criticism.
The comments that crypto and bitcoin “don’t produce anything” are ridiculous on their face, as if the fiat dollar “produces” products, services or anything else.
Oh, wait, the dollar does “produce” inflation (loss in value), and has done so very dependably over the last 100+ years.
Take a stat so well known that it is almost a cliché, any way you put it: a 2013 U.S. dollar (the year the federal reserve was created, not coincidentally) would be worth more than 16x what a dollar is worth today. One has to ask where that value is now?
Bitcoin, however, has over time only gained value. A lot. If bitcoin is rat poison, maybe the fiat system and the federal reverse are the rat?
100 year old billionaires are, aparently, not inclined to speak from enlightened self-interest. Or, to be kind, perhaps they are blinded by the success they enjoyed in a system that favors anyone at the top of the pyramid, one built on value theft?
One very big caveat, however, is clearly that the “everything bubble” is bursting, price speculation always ends in price crashes, and the massive gains in the value of various cryptocurrencies are a symptom of a larger systemic emergency, rather than a quality inherent to crypto itself. There’s that.
The gap between this kind of thinking vs. that of the forward looking cryptocurrency proponents, and what they consider to be positive innovations, is vast. In a time where divisive thought is nearly ubiquitous this is not news.
However, the fact that the legions of those that “get it” are as large as they are, and that they are constantly growing, has clearly taken the debate past the point of no return.
To get the full view of this divide it’s important to look also at just how the nearly 100 year old duo of Buffet & Munger got to be the “legends” that they are.
All the best known names they are associated with, from the initial Berkshire Hathaway purchase in 1962 to more recent investments in companies such as CocaCola, GEICO Insurance, RJ Reynolds Tobacco, Sees Candy, Clayton Homes and so on, paint a clear picture of extreme hierarchal and exploitative capitalism that is solely based on making themselves and shareholders rich, and doing it on the backs of consumers.
In an example of the thinking of those that do not worship the duo, in The Nation, David Dayen wrote: “America isn’t supposed to allow moats, much less reward them. Our economic system, we claim, is founded on free and fair competition. We have laws over a century old designed to break up concentrated industries, encouraging innovation and risk-taking. In other words, Buffett’s investment strategy should not legally be available, to him or anyone else.”
Exactly this kind of double standard, corrupt to the core, is built on systemic greed founded on a Malthusian “zero-sum mindset”. This is what has led millions to conclude that the system just isn’t working for them.
Being championed ad nausea for this lifetime of “achievement” is part and parcel of the status quo that many, from many in the 99% to the “nouveau 1%”, such as Elon Musk, Jack Dorsey, Vitalik Buterin and many others, are actively seeking alternatives to.
That distinction, being rich and powerful and yet not satisfied with the legacy of corruption and greed, is at the heart of the new wave of thought that has made bitcoin, crypto and DeFi a force to be reckoned with.
Moreover, seeing the state of the world that centuries of this kind of thinking has engendered, it’s natural for the young and more enlightened to want to search for other ways for things to work, ways that perhaps champion something other than monopolistic greed and exploitation.
In a recent Interview Elon Musk addressed precisely this issue – how many in the current system are focused on prospering at the expense of others and maintaining a zero-sum mindset. In the clip he outlines how important it is to understand the failure of that approach.
The idea that crypto will disappear is wishful thinking by those that cling to the systems of the past
A clip of Harrison Ford speaking at the Global Climate Action Summit was banned on some platforms as incendiary. Why? Because he passionately accuses those that are financially linked to fossil fuels of working to spread disinformation and misinformation, in order to perpetuate their massive incomes, even while the planet is on the brink of climate disaster.
Blocking this opinion, from a rich and famous film star, no less, is typical in the way that the established system works to suppress the idea that you should do anything about the fact that “it’s just not working” for you.
This is the same divide, mentioned above, that is nearly all pervasive today, but will never stop innovation in thinking about financial systems. It will not stop DeFi or DAOs or crypto or bitcoin.
It will not stop sustainable energy from becoming an ever bigger part of the world’s energy infrastructure. The point of going back has long since passed.
How money works according to Musk
Jack Dorsey has an understated and somehow “quiet” way of expressing revolutionary ideas. Elon Musk, on the other hand, is well known for controversial and flamboyant statements, and especially tweets.
But to get a taste of just how radical his thinking really is, particularly to those that disagree, you have to dig deeper into lengthy interviews, such as those with Lex Fridman, where he reveals his thinking more specifically on money, crypto and the governments role in the system of money.
Coming from the wealthiest person on earth, some may find it odd, yet his thoughts on crypto vs fiat money are well documented. It’s just this kind of stance, taken by so many in the “new” establishment at the top of the current financial pyramid, who also see the necessity for change toward new ideas and systems that can so away with the worst of the status quo, well represented above by Buffet & Munger and other “crypto haters”.
Government is a corporation in the limit
In yet another interview excerpt, Musk goes even deeper into his belief that – in his exact words: “if you don’t like corporations should really hate governments”
While this particular statement arose out of a spat with Senator Elizabeth Warren regarding taxes, the overall concept of challenging the status quo and the, clearly failed, systems perpetuated, remains in play.
Web3, and how Web2 and legacy financial structures are linked
Although fraught with infighting – the typical bitcoin vs. Ethereum vs. Doge vs. Shiba Inu internal debates and criticisms are not on the magnitude of the division between those that generally support and benefit from, for example, status quo financial structure and fossil fuel business, vs those that favor Blockchain and Sustainable energy.
Further, the spirit of the clash between Web2 and Web3 rests not on the tech or the systems themselves, which it can be argued are the same, but on the beliefs and intent of each camp.
The surveillance capitalism business models of web2, epitomized by Facebook and Google are diametrically opposed to the spirit and stated goals of web3, just as bitcoin was created out of a time that, not coincidentally, corresponded to the 2008 crash and crisis born of the greed and corruption of the legacy economic establishment.
There are two distinct camps that have emerged.
Those, such as Tesla and Elon Musk, that reject the traditional holy grail of shareholder value and instead embrace, for example, a more enlightened mission “to accelerate the transition to sustainable energy”. This aligns with any individual choosing the support crypto as a “Hodler” or at least believer, vs. those that support the legacy systems of finance, the fossil fuel industrial complex and Web2’s exploitative business model.
This divide is the ultimate test of our time and it will only grow in stature and importance.
The correspondence between forward looking innovation in all human thought, communication and action is already too big to stop and cannot be wished away.
There will undoubtedly be setbacks to these new directions, and there will be attacks using more than insults, such as those quoted above, but the time for the unstoppable force to be quelled is long since past. Coke and a smile? No thanks.
Above: Photo Collage – Rolling Stone / Lynxotic / Various
The U.S. senator from Vermont called for “serious sanctions on Putin and his oligarchs” in response to the Kremlin’s latest moves.
Sen. Bernie Sanders on Tuesday called for the U.S. and its allies to impose heavy sanctions on Russian President Vladimir Putin and other oligarchs in the country as he condemned Moscow’s escalating military aggression toward Ukraine.
“Vladimir Putin’s latest invasion of Ukraine The U.S. senator from Vermont called for “serious sanctions on Putin and his oligarchs” in response to the Kremlin’s latest moves.is an indefensible violation of international law, regardless of whatever false pretext he offers,” Sanders (I-Vt.) said in a statement. “There has always been a diplomatic solution to this situation. Tragically, Putin appears intent on rejecting it.”
In addition to backing sanctions, Sanders said preparations must be made to accommodate refugees displaced by the conflict and called for investments in a global clean energy transition to fight the climate crisis and disempower “authoritarian petrostates” worldwide.
Sanders’ remarks came after U.S. President Joe Biden—in concert with officials in the United Kingdom and the European Union—moved to impose new economic sanctions on Russia following the Kremlin’s deployment of troops into two breakaway territories in eastern Ukraine, which Putin on Monday formally recognized as independent.
To prevent Putin’s effort to expand his country’s presence in the Donbas region from descending into a broader military conflict, peace advocates in the U.S. and abroad continue to urge the Biden administration to double-down on diplomatic efforts, as Common Dreamsreported earlier Tuesday.
“The United States,” said Sanders, “must now work with our allies and the international community to impose serious sanctions on Putin and his oligarchs, including denying them access to the billions of dollars that they have stashed in European and American banks.”
“The U.S. and our partners must also prepare for a worse scenario by helping Ukraine’s neighbors care for refugees fleeing this conflict,” Sanders continued, alluding to the possibility that Russian lawmakers’ approval of the use of military force outside the country could lead to a full-fledged war.
In the wake of recent developments in Ukraine, oil prices surged to nearly $100 per barrel on Tuesday, the highest in more than seven years, and European gas futures spiked by as much as 13.8%.
While the U.S. fossil fuel industry is expected to benefit from Germany halting approval of the Nord Stream 2 pipeline due to Russia’s recent actions, people in Europe—already struggling with skyrocketing energy bills—are bracing for even higher costs in the case that Moscow restricts gas exports.
“In the longer term,” said Sanders, “we must invest in a global green energy transition away from fossil fuels, not only to combat climate change, but to deny authoritarian petrostates the revenues they require to survive.”
Originally published on Common Dreams by KENNY STANCIL and republished under a Creative Commons (CC BY-NC-ND 3.0)
One option is as part of a crowd, through a decentralized autonomous organization. In this relatively new kind of group, also called a DAO, decisions and choices are governed by holders of one kind of cryptocurrency token, such as ethereum or bitcoin. DAOs also use “smart contracts” that make decisions through online votes by all participants who wish to weigh in and other forms of automation.
DAOs are essentially clubs that harness both crowdfunding and cryptocurrency to operate in arenas from art to sports. They are also cropping up in philanthropy.
One good example is the Big Green DAO. Launched in late 2021, it’s tied to a decade-old food justice charity that had revenue in excess of US$9 million in 2019.
First, DAOs have little if any formal infrastructure. Some states simply require one individual to be designated as the agent of record. Wyoming passed a law in 2021 – the first of its kind in the United States – that legally recognizes DAOs as legal entities. It still requires the DAO to be organized as a Wyoming-based limited liability company, with an individual identified as the registered agent.
In theory, at least, when combined with the quick nature of how DAO decisions are made, this means that nonprofits can achieve more and respond more quickly to changing circumstances, while spending less on administrative staff and other kinds of overhead.
For tax purposes, donating cryptocurrency is like giving away stocks, bonds or other property, rather than donating money. This means, typically, that cryptocurrency donations actually provide donors with a larger tax benefit versus cash donations. If a donor were to instead liquidate their cryptocurrency prior to making a gift, they would first have to pay capital gains taxes, and they would have less money to give away.
Nonprofits are subject to regulatory enforcement and need to be chartered in a particular state. So far, it’s unclear how regulators, such as the Internal Revenue Service or state charity offices, will be able to monitor or audit these groups.
It’s also unclear whether the very nature of DAOs is compatible with charitable donations.
In most, if not all, instances of for-profit DAOs – or even DAOs organized for a specific one-time purpose, such as attempting to purchase an original copy of the U.S. Constitution – cash or appreciated property that is contributed to the organization is exchanged for governance tokens. The tokens essentially represent a fractional form of collective ownership.
This could be problematic. When donors make charitable contributions, they relinquish the money or asset they just gave to the charity. A basic condition for having a donation be eligible for favorable tax treatment by the authorities is that the donor gets nothing of value in return.
The authorities may eventually determine that the distribution of virtual tokens to donors, even if those tokens aren’t used for anything outside the scope of the nonprofit, violates this precondition.
Wild rides
The clearest risk with those gifts is probably their volatility.
Overall, the cryptocurrency’s total market value sank to $1.6 trillion on Feb. 3, 2022, down from $2.85 trillion three months earlier.
Charities either need to convert these donations into U.S. dollars right away, as they do with donated stocks, or gamble regarding their future value.
Despite all the operational, financial and legal obstacles nonprofit DAOs face, I’m excited about the opportunities with these crowd-managed charities funded by cryptocurrency donations because of their potential for a high degree of transparency paired with low overhead.
In wake of what she calls “failed” Cop26 in Glasgow, a fitting gesture of truth
In the video above the real story of NetZero by 2050 is told, without window dressing and in total honesty. Frustration with government responses to global warming are on the rise, as well they should be. The video is a light hearted and yet deadly serious take on the situation and how it is going to affect all of us who live on this planet.
Though delivered in the trademark style of TheJuiceMedia the facts that are contained in the colorful and grimly entertaining clip are 100% accurate. And that is why it is so important to watch, like and retweet.
It has always been the case, sadly, that no Government will take action against the carbon emitting and producing infrastructure that they are beholden to, until that action is demanded by million upon millions of world citizens, in other words the people that are being affected most by the negative effects of climate change that are already surrounding us.
The underlying plea of both activists like Greta and TheJuiceMedia is that we all have to step up and get loud – now, as the plan for NetZero 2050 is more of the same blah blah blah that Governments have been spewing for more than 30 years.
Above: Photo Collage / Lynxotic / Greta Thunberg / Instagram
Political failures and frustration rising
It all started in September 2021 when Greta went to the Youth for Climate Summit in Rome. Her now legendary “blah blah blah” speech spawned 1000’s Memes and remixes and began a new barrage of media savvy Guerrilla marketing for the planet…
Fortunately for the rest of us, Greta is back, Big Time. I seems as if she’s decided to vent in a Creative and, at times, incredibly hilarious way.
Next, footage of the 18 year old activist went viral, as she was shouting in a crowd, “shove your climate crisis up your arse” The climate activist joked that she would adopt a “net zero” approach to her cursing.
She posted a response to her five million followers on Twitter: “I am pleased to announce that I’ve decided to go net-zero on swear words and bad language.
In the event that I should say something inappropriate I pledge to compensate that by saying something nice” A follower asked Thunberg:
“would you commit to reaching net-zero bad language by 2050?”
She replied: “No, by 2052 with a 39.78% reduction by 2034”
A seasoned spokes-person with a challenge ahead
Greta was brilliantly skewering companies, individuals and those who claim they are being environmentally friendly, simply because they pay for carbon credits to offset the carbon they are emitting.
More recent quotes include: “It is not a secret that COP26 is a failure,” she told the thousands of people at the protest. “This is no longer a climate conference. This is now a global greenwashing festival.” It’s as if her frustration has reached a boiling point, along with many of us, and in her words; “Hope always comes from the people”
Digital rights advocates on Tuesday welcomed Facebook’s announcement that it plans to jettison its facial recognition system, which critics contend is dangerous and often inaccurate technology abused by governments and corporations to violate people’s privacy and other rights.
“Corporate use of face surveillance is very dangerous to people’s privacy.”
Adam Schwartz, a senior staff attorney at the Electronic Frontier Foundation (EFF) who last month called facial recognition technology “a special menace to privacy, racial justice, free expression, and information security,” commended the new Facebook policy.
“Facebook getting out of the face recognition business is a pivotal moment in the growing national discomfort with this technology,” he said. “Corporate use of face surveillance is very dangerous to people’s privacy.”
The social networking giant first introduced facial recognition software in late 2010 as a feature to help users identify and “tag” friends without the need to comb through photos. The company subsequently amassed one of the world’s largest digital photo archives, which was largely compiled through the system. Facebook says over one billion of those photos will be deleted, although the company will keep DeepFace, the advanced algorithm that powers the facial recognition system.
Facebook has announced they will be deleting over a billion face recognition templates as they shut down their entire face recognition system. This is great news for Facebook users, and for the global movement pushing back on this technology. https://t.co/0ErdCBhkCT
In a blog post, Jerome Presenti, the vice president of artificial intelligence at Meta—the new name of Facebook’s parent company following a rebranding last week that was widely condemned as a ploy to distract from recent damning whistleblower revelations—described the policy change as “one of the largest shifts in facial recognition usage in the technology’s history.”
“The many specific instances where facial recognition can be helpful need to be weighed against growing concerns about the use of this technology as a whole,” he wrote.
Facial recognition technology, which has advanced in accuracy and power in recent years, has increasingly been the focus of debate because of how it can be misused by governments, law enforcement, and companies. In China, authorities use the capabilities to track and control the Uighurs, a largely Muslim minority. In the United States, law enforcement has turned to the software to aid policing, leading to fears of overreach and mistaken arrests.
Concerns over actual and potential misuse of facial recognition systems have prompted bans on the technology in over a dozen U.S. locales, beginning with San Francisco in 2019 and subsequently proliferating from Portland, Maine to Portland, Oregon.
Caitlin Seeley George, campaign director at Fight for the Future, was among the online privacy campaigners who welcomed Facebook’s move. In a statement, she said that “facial recognition is one of the most dangerous and politically toxic technologies ever created. Even Facebook knows that.”
"Facial recognition is one of the most dangerous and politically toxic technologies ever created. Even Facebook knows that," @caitlinseeley of @fightfortheftr told ABC News, "and even as algorithms improve, facial recognition will only be more dangerous." https://t.co/XBZGfyE6mp
— Evan Greer is on Mastodon and Bluesky (@evan_greer) November 2, 2021
Seeley George continued:
From misidentifying Black and Brown people (which has already led to wrongful arrests) to making it impossible to move through our lives without being constantly surveilled, we cannot trust governments, law enforcement, or private companies with this kind of invasive surveillance.
“Even as algorithms improve, facial recognition will only be more dangerous,” she argued. “This technology will enable authoritarian governments to target and crack down on religious minorities and political dissent; it will automate the funneling of people into prisons without making us safer; it will create new tools for stalking, abuse, and identity theft.”
Seeley George says the “only logical action” for lawmakers and companies to take is banning facial recognition.
So Facebook is deleting one billion facial recognition scans, but it's keeping DeepFace, the model that is trained on all those faces. Note that "the company has also not ruled out incorporating facial recognition into future products." Very meta. 👀 https://t.co/8ntPg5Hyf9
Amid applause for the company’s announcement, some critics took exception to Facebook’s retention of DeepFace, as well as its consideration of “potential future applications” for facial recognition technology.
Originally published on Common Dreams by BRETT WILKINS and republished under a Creative Commons license (CC BY-NC-ND 3.0)
The metaverse is a network of always-on virtual environments in which many people can interact with one another and digital objects while operating virtual representations – or avatars – of themselves. Think of a combination of immersive virtual reality, a massively multiplayer online role-playing game and the web.
The metaverse is a concept from science fiction that many people in the technology industry envision as the successor to today’s internet. It’s only a vision at this point, but technology companies like Facebook are aiming to make it the setting for many online activities, including work, play, studying and shopping.
Metaverse is a portmanteau of meta, meaning transcendent, and verse, from universe. Sci-fi novelist Neal Stephenson coined the term in his 1992 novel “Snow Crash” to describe the virtual world in which the protagonist, Hiro Protagonist, socializes, shops and vanquishes real-world enemies through his avatar. The concept predates “Snow Crash” and was popularized as “cyberspace” in William Gibson’s groundbreaking 1984 novel “Neuromancer.”
There are three key aspects of the metaverse: presence, interoperability and standardization.
Presence is the feeling of actually being in a virtual space, with virtual others. Decades of research has shown that this sense of embodiment improves the quality of online interactions. This sense of presence is achieved through virtual reality technologies such as head-mounted displays.
Interoperability means being able to seamlessly travel between virtual spaces with the same virtual assets, such as avatars and digital items. ReadyPlayerMe allows people to create an avatar that they can use in hundreds of different virtual worlds, including in Zoom meetings through apps like Animaze. Meanwhile, blockchain technologies such as cryptocurrenciesand nonfungible tokens facilitate the transfer of digital goods across virtual borders.
Standardization is what enables interoperability of platforms and services across the metaverse. As with all mass-media technologies – from the printing press to texting – common technological standards are essential for widespread adoption. International organizations such as the Open Metaverse Interoperability Group define these standards.
Why the metaverse matters
If the metaverse does become the successor to the internet, who builds it, and how, is extremely important to the future of the economy and society as a whole. Facebook is aiming to play a leading role in shaping the metaverse, in part by investing heavily in virtual reality. Facebook CEO Mark Zuckerberg explained in an interview his view that the metaverse spans non-immersive platforms like today’s social media as well as immersive 3D media technologies such as virtual reality, and that it will be for work as well as play.Hollywood has embraced the metaverse in movies like ‘Ready Player One.’
The metaverse might one day resemble the flashy fictional Oasis of Ernest Cline’s “Ready Player One,” but until then you can turn to games like Fortnite and Roblox, virtual reality social media platforms like VRChat and AltspaceVR, and virtual work environments like Immersed for a taste of the immersive and connected metaverse experience. As these siloed spaces converge and become increasingly interoperable, watch for a truly singular metaverse to emerge.
Bond jump should have been seen coming, yet the reaction is nevertheless a big rush to the exits
In what some are calling a Taper Tantrum, the markets dropped with a sense of purpose today, with little bounce after the close in the futures market. With Fed rate hikes now a certainty, inflation concerns real, and bond yields spiking today, there were plenty of things to point to as catalysts.
This could be, and this is extremely likely regardless of what endless permanent-bull commentators would have you believe, the start of a tough two months, with late September and October being known as a very dangerous time in markets, especially whey they exhibit pre-crash signs and warnings.
Insane valuations that have preceded past September / October disasters are back
It’s unbelievable that the fall of 2008, when the financial crisis came to a head with the Lehman Brothers collapse, was 13 years ago, and the prior peak in November 2007 was a full 14 years.
I guess we can observe that we now have the iPhone 13, with the iPhone “1” which was just called “iPhone” at the time, has been marking the time with yearly iterations, not always named in sequence:
iPhone: June 29, 2007
iPhone 3G: July 11, 2008
iPhone 3GS: June 19, 2009
iPhone 4: June 24, 2010
iPhone 4S: October 14, 2011
iPhone 5: September 21, 2012
iPhone 5S & 5C: September 20, 2013
iPhone 6 & 6 Plus: September 19, 2014
iPhone 6S & 6S Plus: September 19, 2015
iPhone 7 & 7 Plus: September 16, 2016
iPhone 8 & 8 Plus: September 22, 2017
iPhone XS, XS Max: September 21, 2018
iPhone 11, Pro, Pro Max: September 20, 2019
iPhone 12, Mini, Pro, Pro Max: October 23, 2020
iPhone 13, Mini, Pro, Pro Max, September 24, 2021
And during all these years, for the most part the artificially inflated Fed “bubble of everything” has continued.
Here is a disturbing chart, courtesy of Elliott wave International at Elliottwave.com:
This behavior, seen across nearly all markets since extreme measures were taken to respond when the March 2020 pandemic crash occurred, has been building to a crescendo. And today was a tiny pin-prick that could augur ill for October.
What this has led to, naturally, is an overvaluation beyond anything seen in modern times, perhaps 500 years. The previous all-time-peak for overvalued stocks (S&P) was in March 2000. August 2021 is far beyond that peak and likely will stand as the most overvalued moment for decades.
Unless, that is, somehow the insane valuations are pushed even higher. Which is unlikely, but not impossible, given the state of delusional euphoria that pervades the financial markets.
Many 2021 characteristics, such as the Crypto, NFT frenzy will be seen in a similar light to the tech stocks in 2000 or Real estate in 2007
There’s a sense that it is normal for bored apes NFTs to experience a multimillion dollar bidding wars, or for crypto alt coins with dog mascots to explode 10,000% or more during this, possibly final phase, of what has been called the “everything bubble”.
And why not? If you bought and held almost anything in March 2009 or again at the bottom of the crash on March 16, 2020, then you have seen nearly continuous gains that you’d be eager to risk on, well, anything.
And if you were 10 years old in the year 2000, you’d not have known about NASDAQ drops that take around 13 years to regain what was lost after a 1 year bear market, so why worry?
Perhaps the Fed and the markets seemingly infinite ability to expand and inflate will go on for years. Or the next bear, possibly the one that already kicked off today, and will accelerate into October, is one to take seriously.
Ask almost any billionaire how they got so obscenely rich and , invariably, you will get the response: “I just did what the law allows” or some convoluted version of that idea. Tax laws, property and financial regulations and structures, corporate stock options, Roth IRA tricks, all the tried and true methods outlined in a slate of recent articles from ProPublica and others are rightfully given credit for the insanely massive windfalls.
Not that these arrogant, self-centered sociopaths don’t jump at the chance to take credit for their “miraculous” good fortune, or even write books and “let” others write books about all the “genius” ideas and methods they used to conquer the universe.
Jeff Bezos is the most ridiculous example of this, literally dozens of books exist only to extol the virtues and genius of this a-hole that basically used one simple trick: selling dollar bills for .75 cents and using the stock market to “monetize” a trillion in intentional losses and turn them into “wealth”, to amass his absurd mountain of “worth”, yet if you read these books the central concept of his fraud doesn’t even get a mention.
Of course, 25 years later, the FTC and Lina Khan are finally beginning to wake up to the simple fact that, not only is the entire scam something that “ought-a-be-illegal”, but literally is illegal and always was, yet this comes across, so far, as a somewhat pathetic attempt to put a band-aid on the world after a nuclear holocaust has already devastated the planet.
When we say “tax the rich,” we mean nesting-doll yacht rich. For-profit prison rich. Betsy DeVos, student-loan-shark rich.
AOC used her beauty and a cheeky dress to highlight the issue of income inequality
Above: Photo / Wikipedia
AOC at the Met Gala styled herself in a “Tax the Rich” gown. The look on her was beautiful. The subject matter being broached couldn’t be uglier. Tax the rich a not a bad idea, but the system is so screwed up, and so far from any semblance of “fair”, that a few little pin pricks on trillions in undeserved holdings is basically meaningless.
How can it be said that the system is that far gone? It’s in the numbers and the proportions of “wealth”. The extremes of unequal wealth distribution have risen to levels so incredible, that it’s as if they are turning into an economic ouroboros dragon that will expand and swallow itself until it has devoured all life.
The increases, during the pandemic, for example, in the “net-worth” (which is in itself an obscene concept for measuring humans) of the worlds richest animals was like the replication of the virus the rest of us were fighting to avoid, most with too few resources to have any hope of being rescued by medical intervention, if we got infected.
This idea and proof of a system vastly out of balance can be seen everywhere you look…
In a recent, excellent, NYT article on Afghanistan multiple examples were cited illustrating who really “won” that endless war, and points out that it wasn’t the just Taliban. It was locals entrepreneurs and politicians who, early on, saw the opportunity for what it really was, a way to build personal fortunes supplying the US military with support and comfort during the endless, directionless morass.
Several examples were of people who began the war as local american sympathizers and ended up with fortunes hundreds of millions of USD and more, virtually none of which trickled into the local populations which, ostensibly, the war was meant to give a chance for “democratic freedom”. And capitalism.
Here’s a couple of paragraphs from the NYT article in full :
”Consider the case of Hikmatullah Shadman, who was just a teenager when American Special Forces rolled into Kandahar on the heels of Sept. 11. They hired him as an interpreter, paying him up to $1,500 a month — 20 times the salary of a local police officer, according to a profile of him in The New Yorker. By his late 20s, he owned a trucking company that supplied U.S. military bases, earning him more than $160 million.”
“If a small fry like Shadman could get so rich off the war on terror, imagine how much Gul Agha Sherzai, a big-time warlord-turned-governor, has raked in since he helped the C.I.A. run the Taliban out of town. His large extended family supplied everything from gravel to furniture to the military base in Kandahar. His brother controlled the airport. Nobody knows how much he is worth, but it is clearly hundreds of millions — enough for him to talk about a $40,000 shopping spree in Germany as if he were spending pocket change”
New York Times
Redistribution will likely only happen after the entire system collapses of its own stupidity
Hubris and pride before the fall is the reason that, when you read this, you’ll think perhaps this writer has lost his marbles. But the system is unsustainable in its current unequal, and increasingly unjust, form.
Sources: March 18, 2020 data: Forbes, “Forbes Publishes 34th Annual List Of Global Billionaires,” accessed March 18, 2020. August 17, 2021 data: Forbes, “The World’s Real-Time Billionaires, Today’s Winners and Losers,” accessed August 17, 2021.
Just one more ballooning of the one tenth of one percent and the system will be so out of balance, that only a total and complete realignment of reality will allow any kind of improvement in the distribution of resources.
In fact, the opposite outcome is far more likely, where to increase in the imbalance will continue ‘till there are no options, but for the current system to be drowned in its own orgy of self-congratulations.
The solutions that are out there, many even championed ironically and paradoxically by the very billionaires that sit on top of this mountain of inequality, could work. But a “penny tax” or some kind of gratuitous show of “generosity” by those that have wealth that, if the system were designed with any form of equal distribution, they would not, and could not, have, is less than nothing.
Similar to the climate conundrum, things will have to get worse, it appears, to engage and enrage people, and wake enough people up, to set a fire under enough people, to build to a tipping point toward real change. Fortunately, if you accept that inverted and convoluted logic, that day is very near.
Above: Photo by Michael Krahn on Unsplash with elements added by Lynxotic
Coming after a frenzied run-up the hand wringing is no surprise
On the big El Salvador day for Bitcoin to go live, for the first time as legal tender, naturally there were glitches. And the predictions for crypto in general and Bitcoin in particular to surge on the news were, backwards.
The longstanding stock market adage “buy on rumor, sell on news” once more proved itself as what is now being called a “crypto flash crash” knocked around $400 billion off the market cap of the previous 24 hour period, or almost 12%, as per CoinMarketCap at the time of this writing.
The president of El Salvador announced that his government used the dip to buy an additional 150 Bitcoin, above the 400 he had announced on the previous day, bringing the total to 550.
From CoinMarketCap:The global crypto market cap is $2.07T, a 11.91% decrease over the last day
The total crypto market volume over the last 24 hours is $227.12B, which makes a 66.15%increase.
The total volume in DeFi is currently $30.41B, 13.39% of the total crypto market 24-hour volume.
The volume of all stable coins is now $179.83B, which is 79.18% of the total crypto market 24-hour volume.
Bitcoin’s price is currently $46,893.62.
Bitcoin’s dominance is currently 42.55%, an increase of 1.17% over the day.
By 3:30 PM ET on Tuesday Bitcoin bounced back, the “discount” ended, for now, and recovered to around $47,000 after dipping to $42,870. The recent highroad been $52,732, with the all time high from April still intact above $63,000.
I many ways it seems as if Bitcoin and Cryptocurrencies appeared suddenly in 2021 out of the head of Zeus. Protean and fully formed, with billions and trillions in market caps, and all your sisters, brothers, cousins and even the Uber driver climbing aboard.
And the FOMO blog posts, where every hour an innocent reader is assaulted by a story, perhaps true, perhaps exaggerated and certainly foolhardy in retrospect, of an innocent putting their life savings into Dogecoin and suddenly having, theoretically, huge gains at their disposal.
Meanwhile, craggy faced, ancient stock market mavens would interject famous last words that now appear to be wise. However, all that notwithstanding, this week’s crash is nothing new or unexpected.
In reality, as can be seen from the graphic below, provided by Visual Capitalist, there have been so may crashes / corrections and doomsday prognostications since 2012 in Bitcoin that it seems like a miracle the there’s any thing such as Crypto at all.
There’s a reason it’s not dead and it’s in the DNA
The resiliency, far from a shock to those that have been around more than a fortnight, is kinda the point. When Satoshi Nakamoto built the system architecture of Bitcoin and since then inspired the over 8000 new crypto entities that have been developed, it was, just like the internet itself that was build to survive WWIII, supposed to be as indestructible as possible.
Like physical gold, which is considered have been adopted as a store of value partly due to its indestructibility and immutability (alchemy notwithstanding) the volatility and sometimes violent-seeming life story of Bitcoin is a necessary adjust to its role in finance, commerce and even individual monetary survival.
Not for the faint of heart, perhaps
While the mainstream and those forces opposed to the adoption or survival of Bitcoin and Crypto are out in force pointing to the “unsuitability” of Bitcoin and other cryptocurrencies for any “legitimate” use as a trade or savings vehicle, the progress so far, in spite of the obvious fact that volatility has always been baked in to the situation, is an obvious refutation of that viewpoint.
Will the current drop in dollar values relative to Bitcoin end it’s popularity and strip it of the respect it has thusfrar earned among many? In a word, no. In essence what is happening is, as many have foretold, what happens often and repeatedly, the excess attention and dollars that were pumped into crypto by you brother, sister, cousin and Uber driver are now getting blown out, since those were more speculation and psychosis than any kind of vote for viability or permanency.
And, why not? Where was to concern, shock and hesitation by the masses when the prices seemed to only rise for weeks and even months across so many products and coins it was impossible to keep count? Why was to feeding frenzy and the mania-like piling on not ignored as an anomaly?
The herd does as the herd will do. Diamond hands and Paper hands will ebb and flow as long as the rivers flow to the sea and humans herd like buffalo. And, in all likelihood, dollars and euros and yen will be long forgotten when the last bitcoin is transferred to the final wallet in the sky.
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Lynxotic does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
El Salvador has officially legalized bitcoin as legal tender (alongside the U.S. dollar which is the country’s current national currency) starting today; September 7, 2021.
The day before the big day, President Nayib Bukele announced El Salvador had purchased 200 Bitcoins and later in the day confirmed that “we now hold 400 bitcoins”. Given the current market prices, the country’s recent bitcoin purchases amount to roughly $20.8 million.
In June this year, El Salvador’s Congress voted 62 out of 84 votes to establish the crypto coin as legal tender. This will make the small country is Central America the first in the world to recognize bitcoin as an official form of currency.
In a subsequent tweet Bukele’s translated tweet said
Like all innovation, the process of #Bitcoin in El Salvador it has a learning curve. Every road to the future is like this and not everything will be achieved in a day, or in a month.
But we must break the paradigms of the past. El Salvador has the right to advance towards the first world.
-President of El Salvador – Nayib Bukele
Bitcoin climbed nearly 2% to more than $52,680 as of Sept 6, and according to a market analyst with Reuters the cryptocurrency is on track to reach $56,000.
Salvadorians will now have the ability to use the digital coin in exchange for goods and services, and as an accepted form of tax payments by the government. Bitcoin is actually the second legal tender in El Salvador, with the US Dollar also having that status since 2001.
Upon its adoption, users who register with the country’s government supported Bitcoin wallet called Chivo will be awarded with $30 worth of currency pre-loaded (must have a Salvadorian national ID number).
The overall impetus for legalizing bitcoin officially is, according to experts, that savings that will be possible for citizens to receive remittances – transfers, until now in US dollars, without intermediaries and the large fees they charge for international transfers.
Remittances account for more than 20% of GDP for El Salvador – mainly in the form of dollars sent by the approximately 1.5 million ex-patriots living abroad and wiring payments to families in El Salvador.
Western Union, for example, handles these transactions and charges a hefty fee. And those fees would represent a percentage (for small remittances up to 10%) of $5.9 Billion per year that flows into the small country from abroad, mostly from the United Stated, according to World Bank data.
Although there has been a lot of political rhetoric and expressions of opinion against the move, such an obvious adversary as the international wire transfer interests, like Western Union, and the large income from fees that may begin to dry up starting today, could easily explain at least a portion of the well represented opposition opinion.
That being said, the now famous price swings of Bitcoin do represent a real risk for people hoping to transfer directly into the country. Another risk is losing the coin due to lack of experience handling a digital currency, by people who are more likely to know the feel of paper dollars than digital screens, cryptocurrency exchanges and virtual wallets.
For observers, both crypto adherents and detractors, this is a very important opportunity to see what kinds of practical obstacles will arise and what benefits are realized by the El Salvadoran people.
It is also a kind of warning to those in governments, including in the U.S., that hope to stop Bitcoin’s seemingly inexorable rise, and to prevent what they perceive as threats to the public, and perhaps, to the U.S. dollar’s previously unchallenged hegemony.
The news that 400 Bitcoins were purchased by El Salvador was, naturally seen as a positive by the Bitcoin trading community, and there has been speculation of further pricing strength likely continuing going forward.
On the utopian dream side, various experiments have recently been announced related to Bitcoin and crypto. For example, in El Salvador there are emerging plans to make Bitcoin mining a state run operation with power being supplied by geothermal energy drawn from the country’s volcanos. How’s that for cheap, renewable resources?
A town in the U.S., fittingly called Cool Valley, MO has a mayor who recently announced that the city government is considering making payments to all residents of 1000 in Bitcoin. In this case, the idea behind the plan is to give citizens a crypto nest-egg, and the holders would be barred from selling, with the hope that, in the event the currency continues its exponential climb, the residents would benefit from holding it as an appreciating capital asset.
Which leads to the observation that, over the last few years, a fog of confusion appears to hang above the media regarding coverage of cryptocurrencies.
Price speculation is off the charts and there’s a kind of mania afoot. But the biggest confusion seems to come from one simple truth, that the U.S. dollar has gone only in one direction for more than 100 years, since the Federal Reserve was established in December 1913, down.
Against any measure of buying power for goods and services the dollar is continuously worth less, far less, on a yearly basis.
Although many headlines scream “Crypto and Bitcoin are Worthless” the same could be said of the U.S. dollar, in relative terms, against a basket of goods and services which is the traditional measure of “inflation” and against other assets, for example, now that Bitcoin provides a second measuring tool, dollars are worth less over time against bitcoin.
With prominent people and companies around the world and in the U.S. already supporting the idea of Bitcoin and Cryptocurrencies with their dollars and by choosing to hold crypto, it will be very interesting to see what transpires as these “currency wars” mutate and expand around the globe.
Data stolen include names, dob, SSN, and much more!
The investigation of the ongoing T-Mobile data breach has revealed some staggering information regarding the number of customers affected. As per a new article from Engadget, T-Mobile has confirmed roughly 47.8 million current and former customers have been affected by the cyberattack.
The company issued a press statement regarding the data breach and below are some of the immediate steps they are taking:
As a result of this finding, we are taking immediate steps to help protect all of the individuals who may be at risk from this cyberattack. Communications will be issued shortly to customers outlining that T-Mobile is:
Immediately offering 2 years of free identity protection services with McAfee’s ID Theft Protection Service.
Recommending all T-Mobile postpaid customers proactively change their PIN by going online into their T-Mobile account or calling our Customer Care team by dialing 611 on your phone. This precaution is despite the fact that we have no knowledge that any postpaid account PINs were compromised.
Offering an extra step to protect your mobile account with our Account Takeover Protection capabilities for postpaid customers, which makes it harder for customer accounts to be fraudulently ported out and stolen.
Publishing a unique web page later on Wednesday for one stop information and solutions to help customers take steps to further protect themselves.
As a T-Mobile customer myself, this is quite worrisome. The data stolen includes personal information like names (first and last), date of birth, social security numbers and driver license numbers. It is unclear at the moment if the stolen files have information that would contain financial account numbers or passwords.
Senate Finance Committee Chairman Ron Wyden said on Thursday he is revisiting proposed legislation that would crack down on the giant tax-free retirement accounts amassed by the ultrawealthy after a ProPublica story exposed that billionaires were shielding fortunes inside them.
“I feel very strongly that the IRA was designed to provide retirement security to working people and their families, and not be yet another tax dodge that allows mega millionaires and billionaires to avoid paying taxes,” Wyden said in an interview.
ProPublica reported Thursday that the Roth IRA, a retirement vehicle originally intended to spur middle-class savings, was being hijacked by the ultrawealthy and used to create giant onshore tax shelters. Tax records obtained by ProPublica revealed that Peter Thiel, a co-founder of PayPal and an investor in Facebook, had a Roth IRA worth $5 billion as of 2019. Under the rules for the accounts, if he waits till he turns 59 and a half, he can withdraw money from the account tax-free.
The story is part of ProPublica’s ongoing series on how the country’s richest citizens sidestep the nation’s income tax system. ProPublica has obtained a trove of IRS tax return data on thousands of the wealthiest people in the U.S., covering more than 15 years. The records have allowed ProPublica to begin, this month, an unprecedented exploration of the tax-avoidance strategies available to the ultrawealthy, allowing them to avoid taxes in ways most Americans can’t.
Wyden said ProPublica’s stories have shifted the debate about taxes at the grassroots level, underscoring a “double standard” that would have a nurse in Medford, Oregon, dutifully paying taxes “with every single paycheck” while the wealthiest Americans “just defer, defer, defer paying their taxes almost until perpetuity.”
Wyden said, “Now, the American people are with us on the proposition that everybody ought to pay their fair share, and in that sense, the debate about taxes has really changed a lot.”
The focus on recouping lost tax revenue comes at a critical time, Wyden and others say, as lawmakers look for ways to fund President Joe Biden’s infrastructure plan and other domestic spending.
Wyden had worried for years that Roth IRAs were being abused by the ultrawealthy. In 2016, he put forth a proposal that would have reined in the amount of money that could be stowed inside them.
“If I had my way back in 2016, my bill would have passed, there would have been a crackdown on these massive Roth IRA accounts built on assets from sweetheart deals,” Wyden said.
The proposal was known as the Retirement Improvements and Savings Enhancements Act. It would have required owners of Roth accounts worth more than $5 million to take out money over time, capping the accounts’ growth. It also would have slammed shut a back door that allowed the wealthy to move fortunes into Roths from less favorable retirement accounts. This maneuver, known as a conversion, allows a taxpayer to transform a traditional IRA into a Roth after paying a one-time tax.
Ted Weschler, a deputy of Warren Buffett at Berkshire Hathaway, told ProPublica he supported reforms to rein in giant Roth IRAs like his. Weschler’s account hit the $264.4 million mark in 2018 after he converted a whopping $130 million and paid a one-time tax years earlier, according to tax records obtained by ProPublica.
In a statement to ProPublica earlier this week, Weschler didn’t address any specific reform plan but said: “Although I have been an enormous beneficiary of the IRA mechanism, I personally do not feel the tax shield afforded me by my IRA is necessarily good tax policy. To this end, I am openly supportive of modifying the benefit afforded to retirement accounts once they exceed a certain threshold.”
Wyden’s proposal also targeted the stuffing of undervalued assets into Roths, which congressional investigators had flagged as the foundation of many large accounts. Under the Wyden draft bill, purchasing an asset for less than fair market value would strip the tax benefits from the entire IRA.
ProPublica’s investigation showed that Thiel purchased founder’s shares of the company that would become PayPal at $0.001 per share in 1999. At that price, he was able to buy 1.7 million shares and still fall below the $2,000 maximum contribution limit Congress had set at the time for Roth IRAs. PayPal later disclosed in an SEC filing that those shares, and others issued that year, were sold at “below fair value.”
A spokesperson for Thiel accepted detailed questions on Thiel’s behalf last week, then never responded to phone calls or emails.
The RISE Act was never introduced because, Wyden said, Republicans controlled the Senate at the time and made clear they opposed the effort. The proposal was also heartily opposed by promoters of nontraditional retirement investments. One of them wrote, at the time: “Everything about the RISE Act Proposal is opposed to capitalism and economic freedom.”
Following ProPublica’s story on Roths, Sen. Elizabeth Warren, D-Mass., said the way to address the gargantuan accounts would be a wealth tax, which would impose an annual levy on households with a net worth over $50 million.
Warren tweeted a link to the story and wrote: “Yes, our tax system is rigged with loopholes and tax shelters for billionaires like Peter Thiel. And stories like this will keep popping up until we pass a simple #WealthTax on assets over $50 million to make these guys pay their fair share.”
Yes, our tax system is rigged with loopholes and tax shelters for billionaires like Peter Thiel. And stories like this will keep popping up until we pass a simple #WealthTax on assets over $50 million to make these guys pay their fair share. https://t.co/6aP6l8tG3A
Daniel Hemel, a tax law professor at the University of Chicago who has been researching large Roths, said that Congress should simply prohibit IRAs from purchasing assets that are not bought and sold on the public market.
“There’s no reason people should be able to be gambling their retirement assets on pre-IPO stocks,” Hemel said.
He added that lawmakers should go beyond reforms targeting the accounts directly and address a potential estate tax dodge related to Roths.
If the holder of a large Roth dies, the retirement account is considered part of the taxable estate, and a significant tax is due. But, Hemel said, there’s nothing to stop an American who has amassed a giant Roth from renouncing their citizenship and moving abroad to a country with no estate taxes. It’s rare, but not unheard of, for the ultrawealthy to renounce their U.S. citizenship to avoid taxes.
Under federal law, U.S. citizens who renounce their citizenship are taxed that day on assets that have risen in value but are not yet sold. But there’s an exception for certain kinds of assets, Hemel said, including Roth retirement accounts.
Thiel acquired citizenship in New Zealand in 2011. Unlike the United States, New Zealand has no estate tax. It’s not clear whether estate taxes figured into Thiel’s decision.
A spokesperson for Thiel did not immediately respond to questions on Friday about whether estate taxes factored into Thiel’s decision to become a New Zealand citizen.
In his application for citizenship, Thiel wrote to a government minister: “I have long admired the people, culture, business environment and government of New Zealand, as well as the encouragement which is given to investment, business and trade in New Zealand.”
Patching the hole in the expatriation law, Hemel said, “should be a top policy priority because we’re talking about, with Thiel alone, billions of dollars of taxes.”
by Justin Elliott, Patricia Callahan and James Bandler for ProPublica via Creative Commons.
The number of multimillion-dollar individual retirement accounts has soared in the past decade, as more wealthy Americans use the tax-advantaged vehicles to shield fortunes from income taxes, according to new data released by Congress today.
The data reveals for the first time the staggering amount of money socked away in tax-free mega Roth accounts: more than $15 billion held by just 156 Americans.
The new data also shows that the number of Americans with traditional and Roth IRAs worth over $5 million tripled, to more than 28,000, between 2011 and 2019.
The data was requested by Senate Finance Chairman Ron Wyden, D-Ore., and House Ways and Means Chairman Richard Neal, D-Mass., following ProPublica’s story last month exploring the rise of mega Roth IRAs. The story, based on confidential IRS data obtained by ProPublica, revealed that tech mogul Peter Thiel has the largest known Roth IRA, worth $5 billion as of 2019.
In a Senate Finance hearing on retirement on Wednesday, Wyden said such massive accounts underscore the country’s inequalities. “Individuals at the very top — at the very, very top — are able to game the rules to get ahead and basically abuse taxpayer-subsidized accounts with pricey accountants and lawyers,” Wyden said. “This increases the already existing retirement inequality between retirement haves and have-nots to an extreme level.”
Roth IRAs were established in 1997 to incentivize middle-class Americans to save for retirement. Congress imposed strict limits, including a cap on how much can be contributed to the accounts each year, which today stands at $6,000 for most Americans. The average Roth account was worth $39,108 at the end of 2018.
But a select set of the ultrawealthy have managed to get around limits set by Congress and transformed the vehicle into a powerful onshore tax shelter. One way they’ve done that is by buying nonpublic shares of companies with extremely low valuations. That allows them to tuck a huge volume of shares into a retirement account. Congressional investigators have previously found that the IRS has struggled to enforce rules around these investments, including whether the valuations are legitimate.
Once money is deposited into a Roth account, any proceeds from investment gains are tax free. So, for example, a Roth owner who sells a successful tech investment for a $1 million profit gets to keep all of the money, saving a potential $200,000 in federal taxes. The savings can then be reinvested, tax free, as long as the Roth holder waits till he or she is at least 59 and a half before withdrawing the money. Owners of traditional IRAs, by contrast, enjoy tax-free growth but must pay income tax on withdrawals. The Roth is considered the more powerful tax-avoidance tool for the wealthy.
The latest numbers come from analysts at Congress’ nonpartisan Joint Committee on Taxation. They update a widely cited study from the Government Accountability Office that released figures on large IRAs in 2011.
The new figures show that, as of 2019, nearly 3,000 taxpayers held Roth IRAs worth at least $5 million. (The total of more than 28,000 people holding IRAs of that size includes both traditional and Roth IRAs.) The aggregate value of those Roth IRAs was more than $40 billion.
Both Wyden and Neal said in statements that the new figures show the need for reform. Neal said that “IRAs are intended to help Americans achieve long-term financial security, not to enable those who already have extraordinary wealth to avoid paying their fair share in taxes and deepen existing inequalities in our nation.” Neal said earlier this month, in the wake of the ProPublica article, that the Ways and Means Committee would draft a bill to “stop IRAs from being exploited.”
For his part, Wyden said, “As the Finance Committee continues to develop proposals to make the tax code more fair, closing these loopholes will be a top priority.” Wyden first proposed an overhaul of IRA rules to prevent the accounts from being used as large tax shelters several years ago. One reform that is being discussed would prohibit investors from putting assets that are not available to ordinary Americans, such as shares of startup companies, into retirement accounts.
Wyden and Neal’s push for reforms comes as Congress is considering bipartisan retirement legislation. The bills are being pitched as helping ordinary Americans save for retirement, including by proposing to automatically enroll workers in employer-sponsored retirement plans. But they also include perks for the retirement and financial industries, such as relaxing rules in ways that are seen as a boon for insurers. And buried deep inside the two complex bills are provisions that could make it harder for the IRS to crack down on the ultrawealthy who dodge tax rules.
by Justin Elliott, James Bandler and Patricia Callahan for ProPublica and published via Creative Commons License
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