‘The reason I’m bringing this up is that for every hundred dollars of loans a bank makes, they don’t hold much more than five or six dollars of equity capital, the risk-absorbing equity to protect against the loan loss. In other words, they’re 20. If they’re 5x equity, and on a hundred dollars of loans, they’re 20x leveraged, which means the other 95 comes from deposits or subordinated debt. Okay, this is just the reality of banking. Therein lies the problem of the global banking system and why I love Bitcoin better than any other digital asset that would solve the fiat Ponzi.’ – Greg Foss.
Greg Foss, one of the co-founders of Looking Glass, an education platform that helps investors navigate their financial future with bitcoin, is one of the top advocates for the world’s largest cryptocurrency. Foss’s unwavering conviction about bitcoin copy trading comes from his decades of experience in the traditional finance industry, especially the banking sector. This is ironic, but as someone who has seen the rot from the inside, there is no one better experienced than Foss to warn others about the impending collapse of the global banking system. Despite increasing financial education, many people still put a lot of trust in the traditional banking industry, but that trust is completely misplaced because the whole industry is a house of cards that can topple at any point.
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In a recent interview, Foss explains in detail just how bad the situation is, not just with the banking sector in the United States and Canada but the global banking sector as a whole. Thankfully, there is a solution that saves us all from the overly leveraged banking sector and provides a chance to multiply your wealth enormously. This is, of course, none other than bitcoin, the world’s largest cryptocurrency and the best performing asset of the past decade by over 1,000% for crypto trading. We will now take you to the Greg Foss interview:
‘One of the big differences between the United States and Canada is the banking system, and everyone has this idea: ‘Oh, the Canadian banks are so safe. You know, all those U.S. banks are not safe because they do crazy stuff’. But Canadian banks are very safe.
One of the reasons I bring this up is that it’s not true. Banking as a whole is a very risky business. The amount of leverage in banks is basically the same around the world in that. In order to compete in banking, you have to have a similar capital structure, and that capital structure is built on the fact that for every hundred dollars of loans a bank makes, they don’t hold much more than five or six dollars of equity capital. The risk-absorbing equity is to protect against the risk-absorbing equity, which is another way of saying imagine how many loans lose more than 5% of their value in the event of a bankruptcy. I’ll tell you it’s a lot more than five cents on the dollar. The typical recovery rates are anywhere from 0 to 40 cents on the dollar, which means you lose at least 60 cents. So the key is not to have too many loan losses, but the reality is that banks are cyclical.
I happened to join in 1988, and it’s a story I often tell. I came back to Canada and I worked for Royal Bank of Canada, Canada’s largest financial institution still, and that was the same case in 1988. I was working directly for the CFO, and the CFO was a good French Canadian guy named Emil. One of my first projects was to evaluate the Latin American debt portfolio of the Royal Bank of Canada. In 1988, the world was suffering from a debt crisis. It was driven by the idea that an appreciating US dollar, much like we’re experiencing today, crushed emerging market economies. These emerging market economies had all taken out loans denominated in U.S. dollars, so their economies were tanking, their tax revenues were going down, and the interest expense was rising because it was in U.S. dollars. It was a recipe for disaster. The average Latin American loan was trading at 25 cents on the dollar at the time.
One of my first projects was to evaluate the portfolio for the CFO and determine what Brady Plan option we were to take as a restructured debt option from U.S. Treasury Secretary Nicholas Brady, who had designed these restructurings for the global banking system. It wasn’t just Royal Bank of Canada, it was the entire global banking system that was in the same situation.
Essentially, here’s the story: I did a quick back of the envelope calculation and in under 10 minutes I determined the Royal Bank of Canada was bankrupt. You know, here’s Canada thinking we have a really strong banking system relative to the 10 000 banks we had in the US. We only have 6 nationwide banks.
Well, we were all having the same problem. The entire banking system was insolvent or on its way to bankruptcy. The CFO doesn’t want anyone to know.’
The Fiat Ponzi scheme is probably the greatest Ponzi scheme of all time. Take the US dollar, for instance. Due to rising inflation and an expanding money supply, the purchasing power of the world’s leading fiat currency has fallen by nearly 100% over the last century. This means Americans are paying more to get the same goods, and more families are being sent below the poverty line.
But not all Americans are suffering the consequences of the Ponzi scheme. It primarily benefits the top one percent. They benefit from the Fiat Ponzi every time they get a new bank bailout loan or corporate bond loan, which they invest in assets, essentially abandoning the ship they helped to sink. While the fiat world is built to wreck the poor and make the rich richer, the blockchain industry gives the masses a decent fighting chance.
Let’s get back to Greg Foss’s interview as he speaks further about the collapse of the banking industry and how bitcoin comes to the rescue:
‘That was really the first time I started to question this whole fiat system. Because the reality is that Canadians first don’t know that the banks are that exposed to risk, but what they always feel is that our bank would be back. And this is largely true.
The failure of the Royal Bank would be backed by the government of Canada. right too large to fail And while that’s true, how does the bank of Canada backstop the Royal Bank of Canada by printing money? Okay, that’s the only way that they would be able to backstop a failure of the Canadian banking system. So therein lies the problem of the global banking system and why I love Bitcoin better than any other digital asset that would solve the fiat Ponzi okay.
The first thing for your listeners to understand is that you have digital assets. Yes, I like to refer to bitcoin and then the other digital assets as coins. Some people call them shit coins. That’s fine. I only know that bitcoin is the only digital asset that solves the Fiat Ponzi. For that reason, it’s the one I focus on, because I believe the Fiat Ponzi to be the biggest impediment to our children’s future. The banks have been bailed out on a regular basis.
I lived in 1988. 10 years later, I worked at Long-Term Capital Management in 1998. Where you had a Nobel laureate economist who leveraged a hedge fund 100 to one, not 20 to one, and sold insurance to Wall Street, and then Wall Street had to bail out the insurance company because they realized the insurance they were buying was worthless. They had to bail out the insurance company that’s 1998 long-term capital management.
Then I was working at a hedge fund in the 2008 great financial crisis again, kicking the can down the road, socializing losses on Wall Street driven by subpar prime mortgage lending. All of this is to say that the banking system and capitalism are Ponzi. I love capitalism, but there is no such thing as capitalism in banks. They socialize the losses every time they blow their brains out. The Fed and central banks came in to rescue them. It’s no way to run a capitalist system. You need creative destruction in capitalism, but what’s happened with the banking system in the successive banking crises and continued bailouts?
The TARP program in 2008 was just under a trillion dollars. That’s the troubled asset relief program. That’s a trillion dollars. 10 years later, the globe just printed 10 trillion dollars to rescue the COVID crisis again.
So what is bitcoin? It is a scarce 21 million yen supply. It is not controlled by anybody, so it is not central bank planning. It is not centralized. There’s no CEO. If you’re not happy with bitcoin, you can’t write a letter to anybody. It’s controlled by a network of computers around the world that defend the protocol and security of this network. So people say bitcoin’s got no intrinsic value. I think it’s got a ton of intrinsic value as an insurance product, but if you don’t buy that argument, understand it’s got network value much like the internet. Just get a bitcoin wallet for yourself, for your children, or for both of you and experience the beauty of being able to send monetary value anywhere in the world that will settle instantaneously as a lightning transaction or within 10 minutes as an on-chain bitcoin transaction.
If you don’t understand how beautiful it is to be able to send money anywhere in the world, go ahead and try and send a wire transfer through the Canadian bank system and try and settle it in a place like New Zealand. I’ve done it. I can promise you that it is a painful process that you can get accomplished in 10 minutes on the bitcoin blockchain.’
We are at a pivotal moment in the history of the global economy. We are at a tipping point and every step you take now will determine what your finances will look like in the future. Will you stick with a collapsing fiat world or switch to a new system that offers much more assurance and convenience without any sort of manipulation from the rich and powerful? What are your thoughts on the Greg Foss interview?
[This article is a transcription of a video made by Savvy Finance]
[Original video: https://youtu.be/cUEzMtrr5kk]