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IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
IRTA Conference - Barter 3.0 Intro
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IRTA Conference - Barter 3.0 Intro

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Transcript

  • 1. Barter 3.021st Century Credit Clearing & Beyond Chris Cook IRTA Convention Ocho Rios 14 September 2012
  • 2. “21st Century problems cannot be solved with 20th Century solutions”.
  • 3. Market 1.0 – decentralised & disconnected
  • 4. Market 1.0 – physical market presence
  • 5. Market 2.0 - centralised & connected
  • 6. Market 2.0 - presence via intermediaries
  • 7. Market 3.0 - decentralised & connected
  • 8. Market 3.0 - network presence
  • 9. Market 2.0 reached Twin Peaks
  • 10. Peak Credit - financial demand on people
  • 11. Peak Resources - demand on finite resources
  • 12. Peak Credit – intermediary Banks createcredit pyramids on their bases of Capital Credit Capital
  • 13. Banks outsourced credit risk
  • 14. Freeing Capital to support more credit creation
  • 15. Totally – securitisation and sale of debt to shadow bank investors
  • 16. Temporarily – Credit Derivatives(CDS - a time-limited guarantee)
  • 17. Partially – using credit insurance from insurers such as AIG
  • 18. Radioactive cocktails of all three, like CDOs, structured finance and so on
  • 19. The Result was a bigger Credit Pyramid than Banks alone could sustain… Credit Investor Capital Bank Capital
  • 20. …and an opaque shadow banking system of Investors holding sliced and diced risk Credit Investor Capital Bank Capital
  • 21. This pyramid of Credit funded the Mother of all Bubbles in US property prices….
  • 22. …and servicing this credit finally exceededthe financial capacity of the US population
  • 23. Maybe the end of cheap oil spiked the bubble?
  • 24. Peak Credit – was the point when the Property Bubble began to deflate
  • 25. But by now no-one knew where the Risk was Credit Investor Capital Bank Capital
  • 26. Banks started to think, “if this is what our balance sheet looks like…..”
  • 27. “…what does everyone else’s look like?”
  • 28. The problem is not shortage of money - liquidity
  • 29. It is shortage of Capital - solvency
  • 30. Solvency of Banks is one aspect Credit Capital
  • 31. The other aspect is the solvency of populations
  • 32. And a secular decline of purchasing power
  • 33. Loans which cannot be paid, will not be paid
  • 34. Non-performing loans drain money out of the system...
  • 35. ...threatening a deflationary spiral...
  • 36. ....which requires periodic transfusions
  • 37. ...to avoid Depression
  • 38. Quantitative Easing – increases quantity of money and prevents deflation
  • 39. This dilutes the value of money, and causes inflation of financial asset prices
  • 40. Money will only inflate retail prices if lent or spent into circulation
  • 41. But at the Zero Bound of 0% dollar interest rates strange things happen
  • 42. Investors buy anything but dollars whether it carries a return or not
  • 43. Investors buy Structured Products from Banks and Units in Exchange Traded Funds
  • 44. The motive is Fear: investors aim to avoid loss, not to make speculative transaction profit
  • 45. Financial demand – not consumption – has caused correlated commodity bubbles
  • 46. Markets have suffered a cardiac arrest
  • 47. So Investors have actually created the very inflation they seek to avoid
  • 48. Financing - short term investment in creation of new assets......
  • 49. ....and trade credit necessary for the circulation of goods and services
  • 50. Funding – long term investment in productive assets
  • 51. “21st Century problems cannot be solved with 20th Century solutions”.
  • 52. In fact, the answers lie prior to the 18 th Century.........
  • 53. …..and in a Flight to Simplicity

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