The Next Big Thing

Bitcoins are accepted in stadscafé De Waag in Delft as of 2013. Wikimedia.

The business as usual period of society that we grew up in is beginning to come to a close. The change to a future we cannot see yet will be driven by winds of change.

Banks are Obsolete

The problem with money is that is just pixels these days, no gold or even paper behind most of it. But that may be its undoing. Think about it for a minute, why do we need banks? We need banks for two reasons. First for a safe place to keep your money besides under the mattress. Second, for a place to borrow it or create money with the fractional reserve system.

If you pay your bills with PayPal or Bitcoin, who needs a bank? If Apple or Google became credit card companies, they almost are, then payments become ubiquitous. The first bank domino falls.

Why do you think banks are so wealthy, its the interest stupid. A bank loans you $100,000 for a home. You pay $200,000 over the life of the loan, the bank only needed $10,000 of fractional-reserve deposits to make you the loan, $90,000 was made up by the bank at the keyboard. Bottom line, the bank makes $100,000 on $10,000 that was not even their money in the first place, a return of 1,000%.

Taking the banks out of the middle will enable the original lenders aka depositor to make a higher return. What if you or I could loan 10 times the money we have to other people and make interest on the entire amount? What if you setup a bank as a co-op allowing the members to leverage the bank’s fractional-reserve to make money loaning out their own deposits with the bank just taking a cut? Boom! that is a thought bomb.

Let me put it another way. If a bank makes 3.5% interest on a $100,000 loan, it is actually making 35% interest on the original $10,000 reserve deposit! Plus the original $10,000 is FDIC insured so it can’t be lost by the depositor. Why should a bank make money off of other people’s deposits? Shouldn’t the depositor be the one making most of the money?

The trick is lending or money creation, let’s talk. This may be the next big thing. These are probably the Apple I days for crowdfunders like GoFundMe, Kickstarter, Indiegogo and a host of others. I remember when everybody including Timex and Osborne made computers. They sprung up like weeds then the leaders emerged and most fell by the wayside. Same thing with crowdsource funding.

My point is, with the internet, we need banks a lot less than before. Next will come lending rating systems and reporting so investors can transparently see the quality of investments and expected return. Banks today are like the mid-ranged computer systems of yesterday like DEC or Unisys.

Debt Bubble

Simply put, we don’t have economic growth to cover global debt payments. Just like 2008, the debt house of cards in some sectors such as energy will fall. Today we see entire nations collapsing from low oil prices. Saudi Arabia, Russia and the United States are at war. Russia is the one I would worry about. The Saudis have money, The U.S. has a somewhat diversified economy, Russia has neither.

Banks change the rules from time to time to keep the system afloat. But they will won’t change them to lose money or will take a bailout from their minions in government.

These folks have no scruples. If there is no economy to make a buck there is always war. What happens when the next Russian fighter doing a barrel role collides with or sinks an American ship?

Energy Changeover

Its time to stop thinking of this century as peak oil, but as Energy Changeover©. Yes oil will be on its way down probably more for the next generation but they will still need energy too. Changeover will switch where we get energy and how our economy runs on it.

The kicker is, you cannot make a solar panel with a solar panel. It takes fossil fuels to make and maintain a solar or wind farm. Most people just think about assembly but forget about mining the rare earth metals, logistics and even housing and feeding the workers. Alternative energy sources generally take more BTUs to manufacture than they produce over their lifetime. Measuring all of the imbedded costs to compare apples to apples is called emergy.

The exception might be hydroelectric, but dams destroy the world’s hydration and aquatic life cycles and must be removed. We are not the only species on the planet. The rivers of the western U.S. used to be filled with salmon but almost no more. See the film DamNation.

The bottom line is that our children will go through a hybrid period of diminishing fossil fuels, greater efficiency and just less available energy in general. Imagine the task to just changeover our automative and heating infrastructures. They have taken generations to build and convert over time.

New School Control Taking Over

This is the last election that the generation born before 1960 will have a material impact. If today were 2020, Bernie Sanders would be dominating the Democratic primaries like Trump just cleaned house on the Republican side.

The rise of anti-establishment politics like as Donald Trump and Bernie Sanders are the headwinds of change. Hillary Clinton is the last old school establishment candidate left standing. The rest have folded their cards.

New thinking is in place. A way to spread new memes via the internet is up and running. The only thing holding change back is a tipping point that will reroute the flow of the river money and power. Money is not paper, it is the power that commands the efforts and will of society.

The change will run over the banks of capital investments and some establish industries to carve out a new course. The new course will be a rocky rapids for a while until we return to a quiet eddy and slow moving river.

Chuck Burr