Afternoon. This question is actually for Saifedian. It's pretty straightforward, and I think it's a key to get an answer, not necessarily today, I think it's an evolving question. Basically the question is, what technical challenges must we overcome before we experience everybody in the world, or at least the majority of the people can enjoy free money like Bitcoin, so that everybody can enjoy the benefits, not just the small people, the small kind of people that have acquired it. That's the question. I think the real challenge is not so much technical. I think Bitcoin is operational as it is, and it's been working for 12, 13 years. On the base layer, it works fine. It does about up to half a million transactions a day. Obviously that's not going to be anywhere near enough for the whole world to do all of their transactions, but what I argue in the Bitcoin standard is that we need to think of base layer transactions in Bitcoin as being more like settlement transactions between financial institutions rather than consumer payments. Consumer payments can be built on secondary layers, and we already have all the secondary layers that are existing. They can all be adapted to Bitcoin, so Visa, Mastercard, they already support about 150 fiat currencies. They can do 151, and all they need to do is just start buying some Bitcoin. I'm not going to say it's trivial, but there's no technical hurdle that is standing in the way of more Bitcoin adoption. I think the real hurdle is economical. It's an economic problem, which is that 100% of people's cash balances today, or about 99% plus percent of people's cash balances are not Bitcoin. People hold their cash balances in government currencies, but they also hold government bonds, and they also hold real estate as a cash substitute, and they hold stock indices. All of these things are substitutes for holding cash money that you want to hold for the long term. The challenge really is how do these people change their cash reserves from fiat-denominated assets into Bitcoin, and this is not like switching from Android to Apple. It's not a question of switching from one form of consumer product to another, because it's a very complicated liquidity question.  People pay you every day, and you pay other people every day, and all of that is in fiat, so you have to hold the cash balance in fiat, and you can't just switch 100% to Bitcoin because of the volatility in the value, and because of transaction costs that would be involved. You can't switch completely, and it's not something that Bitcoin is not a product of central planning. We're not going to get a government that's just going to say, all right, everybody's bonds are marked to zero, and here, take Bitcoin instead. Nobody can do that. Nobody can print Bitcoin to hand it out, and nobody can unroll other stores of value in favor of Bitcoin. So it's going to be a gradual market process, and this is exactly what we're seeing. The value of Bitcoin goes up, and the amount of Bitcoin held on cash balances continues to increase while fiat cash balances decline in real value. We're still at a point where Bitcoin is less than 1%, but I think as the price goes up, we're going to see this gradually happen, so business will first hold 5% in Bitcoin, and then as Bitcoin appreciates, they're able to hold more and more and more, and then more of their clients and more of their customers will start being willing to pay in Bitcoin, and so gradually we'll see this kind of transformation take place, and of course it's going to be significantly hastened and sped up if any of these fiat currencies fail, so people will switch much faster to Bitcoin in that case. Thank you. I also have a question about Bitcoin for Mr. Amos primarily. I let me preface by saying I'm a big fan of Bitcoin. I've been using it actively for more than 10 years, and I'm heavily invested in it, but there's one thing I worry about, which is the possibility that governments might ban it in some way. So what would happen if major governments started introducing some kind of bans against using Bitcoin, trading Bitcoin? Obviously we could still use Bitcoin. The blockchain would still exist, we could use the technology still, but if it's illegal, then obviously very few people would actually be willing to do it. So what would happen in this kind of scenario? Could Bitcoin still remain viable? Could it be a sort of underground technology, and how would it affect the price of Bitcoin? I would say the short answer is that Bitcoin is optimized for this kind of operating environment where it is not favored by governments, and it's designed in a way where it will be able to survive, something like a very powerful government crackdown. You know, you won't be able to pay for your coffee and lunch with Bitcoin in that kind of world, but it will continue to survive, it will continue to make a block every 10 minutes. So when you think of it surviving in spite of this massive crackdown, then that changes the rationale for what governments should do. So if they do crackdown on it, and it continues to survive, they're basically doing two things.  So Bitcoin's value proposition is that it has money outside the control of the state, and if the state clamps down on it and fails, then that massively increases it. But I think from the other side, I think I would have expected the last 10 years to have witnessed the serious government crackdown on Bitcoin, and when I first heard about Bitcoin, I spent many years thinking, well, you know, I wouldn't touch this because they're going to start throwing people in Guantanamo Bay for touching Bitcoin, and that was a very expensive mistake, it turns out, because they didn't come after people who use Bitcoin, they didn't throw them in Guantanamo, and Bitcoin's price just kept going up. So I think what we see is that a lot of people in government are beginning to realize the value proposition and realize that this is a very powerful technology. Instead of banning it, what you want to do is you want to own it. So I like to liken it to gunpowder or dynamite. When gunpowder is invented, all the world's armies were running on swords and sticks, and if you had a strong army and you heard about the country next door have developed dynamite, I don't think the smart thing to do would be to ban dynamite in your country or to ban gunpowder, because what ends up happening is, you know, you can ban it for your own soldiers, but you can't ban it from the people who are going to shoot at your soldiers. And so what ends up happening is that dynamite is going to come into your country, but one way or the other is going to come, either you're going to give it to your soldiers or somebody else is going to shoot it at your soldiers and then replace your soldiers with their soldiers. And I think Bitcoin is a little bit like that, and I think more and more people are beginning to see it this way, that first of all, you can't win a war against Bitcoin because it's just designed to survive no matter how much government pressure is against it. And secondly, if you fight it, all that you're doing is your, as I said earlier, advertising it, but also giving your opponents an advantage in being able to accumulate it instead of you. So it's like you're banning dynamite and you're letting your neighbors accumulate more and more dynamite. Perhaps there will be a massive government attack on Bitcoin, but I think with every passing day, it's growing and normalized as part of global financial markets, and this becomes less likely of a scenario. Well, Torsten, since we have a gold expert on the stage also, what is your estimation of your view on the function of gold and Bitcoin as an alternative for today's possible monetary crisis? Thank you very much, Thomas, for the question. I think gold is still the ultimate means of payments in this world. It's a 5,000-year tested means of payment of exchange. There's certain features that make it unique. It's scarce, it's homogeneous. It's actually perfect money, I would say. And gold, in comparison now maybe to Bitcoin, one feature that's often overlooked is gold. There's a demand for gold for a variety of reasons, namely technology or dentists, dentistry, industrial purposes, and the monetary demand. Even if no one would ask for monetary purposes, there would still be a demand for gold for other purposes. So the chances that gold will become worthless at any point in time is basically zero. With Bitcoin it's different. Bitcoin has just one demand. The demand for money, or people hope that at some point it will serve as money. Now, assume that Bitcoin 0.2 enters the market, which is as good as the current Bitcoin, except it has one feature that makes it special. Then the price of the current Bitcoin could go down to zero because the demand would collapse. I'm not saying that's going to happen, but that's the difference any investor should keep in mind. And the great advantage of the Bitcoin is the idea that you can escape from the power grip of governments. You know, that you can move somewhere where the government cannot tax you and cannot see what you're doing in terms of monetary exchanges. I think money in a modern economy must be an intermediation process by which I mean people want to hold their money not only on their personal USB stick or on their computer drive at home, but places somewhere else where it's safeguarded. So people typically demand banking services. And that I think is also the case in Bitcoin at the moment. Most people do not have the private key, but many, I speak for myself, hold their Bitcoin at a trading platform, for instance. And the reason why I do it is I feel comfortable, you know, and they can charge me for this. I'm happy to pay for it. And once you have this intermediation process in place, then the government starts breathing down your neck. And so I cannot imagine that Bitcoin can really become a widespread means of exchange under current conditions. If the government would go, if we would get rid of government interventionism, and we would have a truly free market in money, I'm not that sure that Bitcoin would outperform or outdo or have all the advantages over, for instance, having a digitalized gold or silver money standard. But to conclude, the important point is to get nearer to free market in money, to put pressure on governments, and that's a brilliant and most favorable development more than we can ask for at the moment. But at the end of the day, I'm not really sure. I mean, the Bitcoin, as far as I can see it, will retain its market. It's going to hear to stay. I think the interesting question is really how far it can still expand. But maybe for all of you who consider putting your money into certain investments, maybe diversification is a good approach. So put some money into Bitcoin, but not all of it in Bitcoin. Put some of it into gold, but not all of your money into gold. My question is for Juan. So if we accept that human bodies are capital goods, how would macroeconomic analysis use this? How would it change? What would we see? Do you think if human bodies were taken into account? Thank you, Greg, for the question. We would see all sorts of activities that, as I said, the good character of certain activities wasn't even recognized 100 years ago. We have new professions, we have new trades, we have new arts, technical activities and inventions, etc. So all of these would have to be valued because Mengehr not only criticized three definitions of capital at the microeconomic level, he actually also spoke of capital as a macroeconomic dimension or category. And he was very clear again on his 1888 work about capital not being something that we can do in the aggregate, although he accepted it for the lack of a better term, you can use a national capital or something like that. But he was very clear about it having to be an individual valuation. My point was not that the body is a capital good but the body can be a capital good for some people at certain points and it's only advancing, we're beginning to recognize this and all future capital investments and enhancements in your body and your brain, etc. may have to be recognized by your employer, etc. But it's already happening with insurance and major figures in different arts and trades. Thank you. Well Tim, you said that the militia is actually the priority of everything basically. Now what about secession? Do people or regions first build up an army to have a good secession process? I mean basically also the civil war in America, two militias fighting each other. Thank you for the question. I think the priority is to preserve peace and to avoid conflict as much as possible. And I believe that Professor Hoppe's work in this area also about successful secession movement would require a posture of non-provocation, at least especially I should say in the initial stages. So to allow the powers that be to carry on their activities just without the support of that local region. To allow them access to their facilities unimpeded, unobstructed, at least initially until one can reasonably expect to secure their territory. But the first thing, the first step of secession would be the nullification piece. Is to make sure that you don't provide any support to the quote unquote enemy. Once a declaration of having our own territory it would be essential to gather strength and to avoid any provocations that might lead to any type of harsh penalties. But it's about, at this point it's about legitimacy rather than relative power. Relative power would be able to overwhelm any type of security forces in a small polity. So again it's having that recognition and part of that recognition is to be legitimate in your own internal fortification. So build strength militarily, take care of one's own laws, protect property try not to be antagonistic to those around you. And ultimately economic integration is the greatest security. So in the event of a crisis or some type of collapse the solution is not necessarily the gun the solution is the network, the community. And that's the greatest sense of integration that would lead to better security I think. The ability to resist in the extreme is indispensable and again I think it's valid to have that capacity, that martial capacity whether it be a minimal state or the ideal of a completely private law society. I have a question for Tim as well. And you know in most European countries, in most countries, possessing weapons is very difficult, it's close to impossible and we are very far from the ideal of the Second Amendment and of the militia. And my question is how could we in Europe especially and especially in these times when there would be the necessity of fighting governments and resisting governments even on a military basis, how could we move from point A where we are now so basically citizens without any arms and exposed to government violence to point B where we could come closer to a militia or something like that. Any suggestions how we could move towards this direction? My focus would be more on the institution building rather than the arms. Initially the institutions of police in the U.S. we have police and sheriff but they don't exist in the Constitution. So the idea of placing the police or the sheriff or whatever the enforcement entity under a committee of citizen activists that are involved in the day-to-day decision making would be part of that institution building. Now focusing on the right to keep and bear arms for self-defense and things along those lines is not looked at as so legitimate and they're trying to bring that type of argument to the United States that you don't need this type of firearm for hunting or things along those lines. What I was trying to convey earlier that it's really not about the weapons themselves it's about who is in charge of executing the laws. Who is the enforcement authority in a given geographic territory and the message is it has to be about self-governance rather than about having a top-down structure. So the idea of changing legitimacy of who is executing the law and it's going to require that sea change within the mentality of the people that they are in charge of their own security and having a hand in directly contracting with whoever else is going to provide that supplementary security. So I wouldn't focus on the weapons so much but more about the institution building and then from there you start to gain more confidence in the ability to secure the right to keep and bear arms but it's more about the organizations and the institutions. My question is to Tim again. Do you think it's a good way to think about outsourcing defense? Outsourcing defense always brings risks with it. Like any kind of outsourcing brings risks. People can steal your secrets. They're not really loyal to you. They're an outside organization or something like that. And when we think about defense or self-defense it's best, the closest it is to us. If we defend ourselves on a household level and then a neighborhood level what I mean to say that it is probably best when you do it yourself but then violence is a little nasty and the wealthier you get, the higher in status, you get the further away you want to get from that possibly. People are tempted to outsource the defensive violence that needs to be done for them and that will always bring risk and there will always be this push and pull between how much violence are you actually willing to do when you want to defend yourself or maybe you can't take it and you need someone else to do it and maybe some kind of how to prepare yourself for that as well or do you think not everyone needs to be a warrior? Short answer is not everyone needs to be a warrior however but there's the eternal struggle between power and market and vigilance is the price of liberty and you cannot 100% outsource your security without expecting those others to take advantage of the position so again self-governance requires engagement and that is the mentality that needs to change it's difficult within libertarian communities to organize individualistic personalities it's like herding cats yet at the same time property is a social function Robinson Caruso alone on his island doesn't need property rights property is about enforcing or signaling proper behavior in human relationships so to give a monopoly or to outsource the decision making to someone else creates the incentive structure for them to take advantage of that position so the contract has to be severable but if they have all the arms and they have all the organization then of course they can alter the terms of the deal unilaterally and then start to enforce things that the customer might not have wanted and we're starting to see that in the realm of big tech they're starting to look more and more like states they're starting to perform more and more like states and they're starting to merge with the existing states so the capacity to enforce that severability needs to be held from the client and as I indicated those territories that might have more money than time might do less of their own militia work and outsource that to a market provider whether it be an insurance company or a mercenary firm that's what the rough combination is and when it comes to libertarian strategy strategy is an art and a science so how to implement it in your particular area is going to require some finesse and analysis yet again that overarching structure of how it would work you have to have the capacity to sever the contract unilaterally if you no longer feel that your market provider is abiding by the terms that you had agreed that's the main thing is to understand that self-governance is going to require personal engagement what that level of engagement is will be dependent upon the circumstances locally the question that I have is especially for Safideen but not exclusively you're probably familiar with the money speech of Ein Rand where she calls money being the barometer of society's virtue following that can you imagine that a bitcoin or cryptocurrencies in general can cause a rise in society's virtue? I think so, yeah I kind of make this case in the bitcoin standard and in my next book the fiat standard I think the corruption of money well in very simple terms when money is a free market good nobody forces you to accept any form of money then the only way that you can make money in that kind of system is if you provide others with value and so you live your life the greedier you are the more you want to make more money the more you want to serve others and I really think you can see this you can glean it from looking at the cultures of different places so in times of hard money you see that people in society are focused on providing value for each other and providing services for each other people have real jobs, they wake up, they have a work ethic and because that's the only way that you can eat you have to provide value for others when you corrupt that and when you make it so that first of all the producer witnesses their wealth disappear so yeah you've worked and you've provided value for others but next year it's worth 10% less because you know the government had to print money in order to finance all of the things that it wants to finance on the one hand you're discouraging or honest work because you're taxing it and reducing the reward for it and on the other hand you're providing a lot of income for people who are not doing honest productive work that is rewarded on the market so you have a lot of people in fiat societies that don't produce anything of value they sit in offices in jobs that are essentially guaranteed by government fiat whether it's in the private or the public sector and they receive their salary regardless of how well they serve and how well they do their job and you see this all over the world you see it in advanced societies where they have a powerful money printer that allows them to pay a lot of their population but you also see it in very poor societies where a big chunk of the population lives off the foreign aid that comes into the country and they don't have to work real jobs because they live off the printers of foreign countries and in fact it's a serious problem in poor countries not the smartest, not all but a lot of the smartest, most capable, most talented people instead of getting real jobs serving others, being valuable to society they just want to get a job in the local aid organization writing reports that nobody reads because that secures the money from the money printer of the foreign country that is the donor so those two things I think are massively corrosive of the work ethic of society and it makes sense money is the coordinating mechanism of the economic society money is how we perform economic calculation and when you're corrupting money so deeply you're corrupting economic value you're corrupting people's conception of economic value and you're giving people the incentive not to work at not to focus on serving each other and not to work to the benefit of society but to figure out how do I get rich how do I get my share of the money printer and the longer this goes on the more that the parasites are rewarded at the expense of productive people the more the culture of parasitism prevails spreads and increases and the less the culture of productive work spreads and the more it recedes so I think bitcoin offers us a way out of this because and of course the amazing thing about bitcoin is that it's not like we need to get the government we need to vote for the right government that will force society to accept bitcoin it's a spontaneous market phenomenon on its own that's rewarding people who save in bitcoin that's rewarding people who get back to the natural order of money who get back to the natural order of society and work and save and it's effectively devaluing government money it's not yet at that point because it's still very small but if you think about it 10, 20, 30 years ago 10, 20, 30 years from now as it increases in value it's going to eat up it's going to eat up the ability of the government to finance itself through inflation because it's going to devalue government currency further and further either it's going to force monetary discipline on governments or it's going to help in the collapse of national government currencies as they resort to more and more economic printing and people have an exit out of it so I am quite optimistic about this I think and I don't see it as if it's bitcoin being this magical cure in as much as it is this is the natural order of society always has been and this is what normal functioning money brings about and this is what fiat money in the 20th century destroyed this is what statism and democracy and high time preference caused by fiat money brought about and destroyed in the 20th century creating all these massive governments that we've heard about and all of their drive towards centralization and power so yeah I would think so, yeah also for Safeday you could also argue that people had the choice before by choosing gold to choose a hard currency and they rejected it or maybe they were you know, wind of it or somehow that failed, that opportunity failed, how would you think that in this case in bitcoin that would not happen yeah that's a great question and that's kind of one of the focuses of my next book which is not standard I think there are two reasons really why bitcoin can fix this where gold failed and the first one is you can't send gold anywhere further than your arm without having to trust somebody else to do it for you and that just means that you need extensive physical infrastructure for the clearance for the secure clearance of gold and that just means that you can't take over which is what the central bank is so if you think about it and the way that I think of it in the fiat standard I could discuss it in terms of the salability across space how much does your money lose in its value as you send it across space in the case of gold the further you want to send gold around the world the more you have to pay so if you wanted to send gold from New York to London you're going to lose something between the shipping and transportation and verification and the insurance of the sending of the gold so as a result obviously you're not going to have all transactions of gold settled individually you batch all these transactions and then central banks will settle with one another with one big shipment of gold at the end of the month or the year or something like that so because of the very high cost of moving gold tends towards centralization and centralization leaves it vulnerable for capture so governments can just come in take over the gold give you pieces of paper and then what are you going to do you have the pieces of paper all the gold was captured and even even if they don't capture the gold you know you're kind of stuck with their monopoly where they can issue more fiduciary media than gold that they have because your local central bank is your only mechanism for trading with the rest of the world to hold out and tell them okay I don't want this paper I want the gold well what you have is essentially useless as a monetary asset outside of your own town you can take it to pay for people in your own town but if you wanted to buy something from abroad you can't really send it so you're reliant on these monopoly institutions in the case of central banking with gold which at the beginning of the 20th century you had maybe 40, 50 central banks around the world that was it to perform final settlement with one another and so it was highly centralized and highly capable of being taken over by government Bitcoin I think in its current form allows us to have something in the range of tens of thousands of central banks that are able to settle with one another internationally at a tiny fraction of the cost of moving gold around so you can still send Bitcoin right now you can send a billion dollars of Bitcoin from New York to London and you pay about a one dollar transaction fee I'm sure the transaction fees are going to go up significantly over time but it's still going to be a tiny fraction of a billion dollars that you're sending in terms of value so because of this I think Bitcoin is naturally going to be far more decentralized and far harder to capture that's the first advantage the second advantage is what I'd like to call Bitcoin's number go up technology gold is already an asset worth around ten trillion dollars of gold being held everywhere and so if we were to dump all national currencies and everybody were to move toward using gold gold will appreciate significantly it will go from being about ten trillion dollars to maybe a hundred trillion dollars in terms of its market value so it goes up about ten fold in the best case scenario maybe it will go up two fold three fold something like that but in the case of Bitcoin, Bitcoin is starting a small base so the incentive to get in is much higher for people because the potential for it to increase if it does go up to it's less than a trillion today if it does go up to about a hundred trillion that's a hundred fold and if it goes up to ten trillion if it becomes equal to gold it will be ten X larger than it is today so an increase of one trillion dollars of demand for gold will cause a ten percent rise in price an increase of one trillion so the amount of demand in Bitcoin is going to cause a doubling of price roughly so because gold is tiny sorry, because Bitcoin is tiny and it has a very small capitalization it has an enormous potential for appreciation which can be more attractive for people so the barriers towards this happening for gold is that it's hard to move gold around and there's not a lot of financial incentive for the appreciation of gold to draw investors into gold in the same kind of excited to Bitcoin today maybe one additional remark to moving gold to and fro if there would be a really free market in money presumably there will be a lot of money warehouses showing up where people would deposit the physical gold and you would receive on your app a monetary certificate on your app you could bank basically and then you would presumably have some settlement locations centers let's say in Europe and in Japan and in the United States and this settlement wouldn't necessarily involve the physical movement every day, every week maybe they would settle half a year and if they would see there's no drawdown in terms of physical gold then they would settle maybe once a year that would bring costs of transactions in digitalized gold balances down so I think it would still be competitive and for instance the Perthman in Australia offers such a service for those who are interested how it works can go to your website and look it up and I mean it's very important to know that the gold standard was not abolished because it didn't work the reason was governments wanted inflation and gold stood in the way and also it is important to note still governments want to control our money and once an alternative to the fiat currencies that circulate the government will come and try to kill it that's for sure they will discourage the use of using let's say gold or silver or bitcoin they will do everything they can the only solution to this is getting rid of governments or a large majority of people finding it interesting and being in favor of a free market in money but as long as the state as it is today I cannot really imagine that the fiat currencies process will be driven out of business and what I put out I mean the governments expand further and further as we talk today and so the first step for free market in money is a change in the mindset of the people I think it's not just a technological advantage that can do the trick I have a comment myself on the golden versus bitcoin first of all I think we should be rejoicing in the appearance of honest money it's money based on truth and math after a hundred years and it really bothers me when even some of the best of us try to armchair define what is money or bitcoin may become money or may be money I have used bitcoin as money so it's human action what defines something as money and we have used seashells how can bitcoin not be money and gold has already failed us in a year or couple of years where 25% of all or more more than one fourth of all dollars in human history have been printed gold lost around 10% and gold has failed us not because there's anything wrong with gold but because it's easy to censor and it's under censorship since 1933 or even before that I would probably go even further than Professor Poliet I'd say that if we did have a free market in money if you know tomorrow all of the world is taken over by classical liberal governments that don't care what money you use and they give the world free choice to give a very significant probability for a global gold standard emerging and I think there's a good chance that it would be very bad for bitcoin because we already have 10 trillion dollars of gold out there so gold has a much bigger liquidity pool it has a much bigger first mover advantage people are familiar with it people's cultures and religions and traditions and marriage and dowry and all of that stuff is intertwined with gold and with specific measurements and I think in a totally free market gold's first mover advantage is quite significant over bitcoin but we don't live in that world we live in a world in which governments want to take over not only do they want to protect their fiat currencies they want to as Professor Poliet was saying they want to move us to one international fiat currency controlled by one board one central planning board so we're headed in that direction and bitcoin is kind of our only way patch it's our only insurance policy against this it's our only way it's the life boat really and I think the dangerous thing about a lot of the criticisms of bitcoin is that you know you're standing on a sinking boat and you're considering whether the life boats colors match your clothes it's a life boat it's the difference between life and death would it be nicer if it was pink if it was yellow if it was orange perhaps but it'll get you to safety that's what really matters keep you busy I think it's important to note what money is you know money is the universally accepted means of exchange and if you with your trading partner use bitcoin it doesn't make bitcoin money it's important to note that money is the unit of account you know for pricing purposes for making economic calculation and as I noted earlier the productive power of money is optimized if all people use the same unit of account if you use bitcoin I use gold and you use silver we are still in a state of barter economy and that is something people want to overcome we people want to have a single unit of account and I'm pretty sure if we have a free market and money if I would have a button I can press and would start a free market and money on a global scale it wouldn't take long that people go for a single unit of account the ultimate means of payment maybe it's gold then but they wouldn't be dealing with all sorts of different units of accounts of means of exchange I think that the competition out there is really for who provides global money in the future so far I'm concerned it will be the cartel of states and we fear single currency it's a quite dystopian perspective but there is this tendency towards pushing out all units of account which do not live up to the standard of being money and that's why I think it's important you know to get that clear bitcoin is not yet money it is a means of exchange that is used by some people the dollar is very close to the world currency at the moment because all kinds of people use the dollar to make financing transactions to make purchases and goods and services and I think it's important to know what money is I have one question do you think with gold certificates or with paper gold the banks are printing out gold out of thin air and what percentage of gold demand is directed to paper gold I mean not physically backed a very important question at the moment many institutional investors consider holding physical gold as an equivalent to holding gold futures for instance so if they have to take up a hedge position they typically even decide for gold futures so paper gold it's not backed by physical gold and this market is huge and this market actually determines the price of physical gold and so you are well advised if you go for gold to buy it in physical form and don't buy it as a gold certificate because if you buy a gold certificate it is backed by gold futures if you buy a gold ETF you have to see whether it's backed by 100% physical gold or not holding physical gold is important for you to be on the safe side because all the paper gold instruments have certain risks county party risks etc and in April 2020 something very interesting happened normally the paper market gold price equals the price in the physical market but because of this huge uncertainty back then the lockdown and the gold couldn't be moved logistically from one continent to the other there was a coupling between the paper money gold price and the physical gold price physical gold traded at a premium at a very high premium and this is actually a good example to show where the breaking point in this in this game is once people lose faith in the fiat currency system and all the instruments that have been built up on this paper money pyramid then at some point the link between the physical gold market and the paper gold market will break and you as an investor should be aware that there are risks you will be on the safe side if you hold physical gold in forms of bars and coins I have a question to Tim Hafner first of all thank you very much for giving us this insight on the economics of a militia based on this Japanese example my question is as followed can you imagine private law society developing on the base of a private military company especially for example in the case of a desperate government seeking help in the case of a total chaos what type of government a private law society basically developing on the base of a private military company I think private military companies number one they exist now they've existed all throughout history and they'll continue to exist could a private law society evolve from that well again we have to look not necessarily to the company but to the culture and the people need to recognize their responsibility to self-govern and not to completely farm out those security functions to any contracted solution and so the idea and I referenced the United States Constitution because I'm an American and it is a good document with regard to these particular aspects that the whole body of the people need to be organized, armed and disciplined that discipline is the most important piece because it's a culture and to refer back to the earlier question how can we create change especially Europeans that might not have a second amendment might not have a militia within their operating charters of their government if one even exists it's to start to honor and value that armed, organized and disciplined character so perhaps instead of subsidizing sports that involve chasing a ball that you subsidize sports that involve militia related activities to start to bring esteem to people that are organized and disciplined and then the arms can also follow so I wouldn't put faith in any private solution like a private military company but again it's more about culture and so many other social issues can be solved once that cultural piece is addressed you mentioned the Japanese society being a polite society, I think it was armed or was it secure what was the basis for a polite society and what about how they behave outside of Japan I would premise my statement by saying for a long time there were no good guys but Japanese culture evolved over a thousand years of warrior leadership and at certain points the legislation allowed for the warrior class to cut down a commoner for any reason now it didn't happen very much but there are instances of it and the fact that it was legal to do so again as we indicated when your life is on the line you're going to act very polite and not provide any offense just as a matter of self-preservation so not using that as the example to move forward in the future so that there's one class that warrior class was embedded in law to have certain privileges that's to be avoided in the future what we need is an armed equilibrium in which no one will be able to provide that type of offense and nobody will be able to enjoy that type of legal privilege to impose upon anyone else that being said over a thousand years you can see that cultural change so that they do become extremely polite so as to not cause any offense and I think that's something that we can look to in terms of the type of culture we want to exist in what does it have to do with what's the same people can you give me an example the atrociousness of I mean was it particularly atrocious how they behaved against the Chinese and the later wars the Korean War and all of these yeah and so the examples during World War II the Great Pacific War and their conquest that was a very I'll use the term bastardized version of what's known as the samurai code which is largely a fiction of the 20th century so they took some of those samurai values and kind of manipulated them to honor the imperial state and then send those folks overseas with that very mutated form of virtue and then impose it upon anyone that wasn't them so again that's the ugly side of samurai culture that was again bastardized incorporated into the state and then set loose so that those Japanese troops during the war went overseas and looked at everyone else as being beneath them again that's to be avoided in the vein of asking about values and this is a question for all panelists what values have you seen in foreign cultures that you went made you go maybe we should adopt that at home and please feel free to answer everybody cause they're always interested in that I'll just use one example I was in Romania and I bought some candles from a street vendor and I said keep the change and they said no no no you're gonna get your change back they wanted to give the impression that they would not accept anything more but an exchange of value for value I think that's something to be honorable and admirable and adopted elsewhere maybe it's just a footnote in an exchange you surrender something you consider less valuable and receive something you consider of more value so I mean the Romanian guy did the right thing and you too but equivalent of values that were exchanged right yeah well you gave something you consider less valuable and received something you consider more valuable it was not the equivalent of value just value for the point that I was trying to make is that there's problems with corruption and Romania has its own issues so I was actually really moved when I was in Romania to feel what it was like in that environment where they were trying to claw their way out of their communist past and so I felt like I was being charitable by saying keep the change but they wanted to the regular people wanted to let me know that they weren't about corruption and they didn't want to receive anything more than what they had asked for and I thought that was honorable I think you know perhaps one aspect of Arab culture which I think is could benefit from learning from the west is probably the culture of saving and long term provision it's not that common it is common and people will save but it's not as common as it is in the west but it's also becoming less and less common in the west unfortunately and less and less common everywhere but I think there's a lot of emphasis culturally on the good values and the good traits but there's not much emphasis in many places on the low time preference aspect of just sacrifice the present for the future I think this is something that everywhere in the world could benefit from perhaps just to add to the discussion I think cultural is low and sometimes the people that have the picture very clear are not the best advocating or doing the marketing of ideas etc so I think liberty is going to come through innovation rather and I see inventions like bitcoin precisely as a sort of mangarian institutions that we are creating as we go so innovation is going to do more for freedom in the future it doesn't look like that at the moment because the state is using technology to oppress us even more right now but in the future we're going to innovate into freedom that's going to be faster than persuading other people into freedom I have a question to Juan regarding the actual time of COVID so the body represents capital and I think it's a good time to support that hypothesis so if you have so to speak increased your capital then you have a different reaction probably to this threat now my question I have a very strange hypothesis a very dangerous one now that we live in a time of capital consumption so we have this beautiful vaccination escape so to speak so there is absolutely no debate about this capital element of the body so there is no responsibility to look after your own health so you have a high time preference solution which is the vaccine and it immediately solves all problem and my question is could you comment on a feeling that I have concerning this spiritual element of capital consumption couldn't it be that the vaccine is actually a real danger to that capital because we are in this capital consumption time so basically the body is consumed by the vaccination so that in the future it's a hypothesis of course in the future we will see very bad signs neighbor vehicle so I don't know in English side effects of it that really puts your body in danger could you comment on that certainly the incentives are in place we live in a very sad moment in human history where all this mercantilistic incentive we know there's not only big pharma we have big health, we have big food we have a destruction of not only the family but the individual at the corporal level so now it's a conspiracy theory when students of classical liberalism and austral libertarianism have known this for decades there are horrible incentives towards the short term use of the body even in the medical profession the medical doctors have probably one course, one semester on nutrition they are not focused on prevention they are not focused on long term health it's all about patches and solutions or maybe solutions it depends on the case obviously all the bad incentives or these incentives are in place for this mess we know that most people affected with certain illnesses are obese or have other comorbidities and this has been totally ignored because it places again individual responsibility at the center and of course it places the state because of these evils and mis-incentives


Calcification is when blood vessels turn into bone, obviously something that should not be happening, certainly not a natural process. As you can imagine, our hunter-gatherer ancestors did not suffer from calcification, nor did they suffer from atherosclerosis, the buildup of fatty streaks in the arteries. Calcification and atherosclerosis are two separate diseases, but tend to come hand in hand, as these fatty streaks can calcify furthering the narrowing of the arteries, eventually leading to heart disease. They are both driven by inflammation. Calcification requires several other factors to occur, but atherosclerosis is solely caused by inflammation. The biggest culprit is omega-6 fatty acid, linoleic acid. Linoleic acid occurs in vegetable oils, better known as seed oils, soybean oil, rape seed oil, canola oil, it's in margarine, so when you consume large amounts of omega-6 fatty acid, linoleic acid, the lipids, the fats in your body, literally turn into linoleic acid, which your body does not recognize and attacks it. This results in it getting stuck in the arterial wall. Heart disease patients have very high levels of linoleic acid in their arteries. This is exacerbated by sugar, high carbohydrate diets, smoking, environmental pollutants, all of these things result in more omega-6 fats getting stuck in your arteries. What we have to take away from that is inflammation and the driving factors for atherosclerosis also contribute to calcification. Calcium is dangerous, exogenous calcium that is. Exogenous means outside of not normal. So any calcium that is obtained outside of a natural context is dangerous to humans. Why is the calcium RDA, the recommended dietary allowance so high when bone is less than 10% calcium? There is no source of calcium in nature that we obtain in high amounts. Dairy is a relatively new addition to our diets only in the past few thousand years and most groups of humans didn't really subsist off of dairy. And plant foods don't contain calcium in an available form. Calcium in plant foods is bound to oxalate oxalic acid so much so that if you compared the amount of calcium in spinach to a steak you would be getting far more calcium from the steak because the steak doesn't have those oxalates, those substances that bind to calcium. One pound of meat has approximately 44 mg of calcium. That is plenty adequate for what we need. The calcium RDA being at a thousand milligrams is because we lack certain nutrients in our diet that are required to absorb calcium. So the three main issues that lead to calcification are vitamin D3 deficiency, a lack of these vitamins in general, and inflammation. Vitamin D3 deficiency causes excess calcium in the bloodstream. As you can imagine consuming exogenous calcium would exacerbate this greatly. So when your vitamin D3 is low that raises your parathyroid hormone which causes calcium to be shifted from the bones into the blood. It decreases the excretion of calcium so you can't urinate out calcium and it increases the absorption of calcium in the stomach. This basically means you have an incredibly large amount of calcium circulating in your blood likely more than any human has ever seen in hundreds of thousands of years that we've ever existed because vitamin D3 is crucial to life. We would have to be out in the sun obtaining vitamin D3 in order to procure food. Vitamin D3 actually releases calcium in the urine and it lets calcium be absorbed in the bone so it's essential for regulating all absorption and excretion of calcium. What also happens is gene expression and cell differentiation become compromised. Our genes, the tens of thousands of genes in our body dictate how every single molecule functions. These genes cannot be utilized without certain precursor nutrients. In the case of vitamin D3 it is involved in genes specific to calcium metabolism. Cell differentiation is these cell components, the proteins, the sugars, the fats actually forming into cells. If you don't have adequate vitamin D3 cells will not differentiate and form properly. If a cell wants to turn into an osteoblast if you don't have enough vitamin D3 it's not going to happen. The second issue is a lack of vitamins in general. This ties into the gene expression and the cell differentiation we just talked about. When humans grow trees if the tree dies we don't really blame the tree's genetics We say okay was it the weather conditions, was it the soil, did we not use the right fertilizer? We have to start looking at humans the same way instead of blaming genetics. The vitamins, the minerals, elements, fatty acids in our diets determines how our genes are expressed and how our cells are made. If we don't have the building blocks we're not going to be healthy, stuff like this happens and these vitamins are synergistic so you need certain vitamins to absorb vitamin D3, you need certain vitamins to absorb vitamin K, elements, minerals, fatty acids, everything comes hand in hand. Vitamins can also help deal with inflammation. There are antioxidant pathways such as the glutathione pathway that require certain vitamins so you're increasing inflammation by not having these vitamins as well. And we spoke about the inflammation earlier. In the context of calcification impairs cell function greatly which results in imbalances that we'll touch on later. Before we actually understand how our blood vessels calcify it helps to understand how various cells in our skeletal system function. You have osteoblasts that synthesize and build bone. Osteoblasts cannot function on their own they actually work in an osteon which is a bunch of osteoblasts working together to build bone. Osteoblasts break down bone and reabsorb the components of bone. Osteoids are what make up bone tissue. They compose 50% of the bone volume and 40% of the bone weight. The rest of the bone is these other various cells. Osteoids are composed of 90% collagen, the remainder is conjoined in sulfate which is a substance commonly found in cartilage like tissue and osteocalcin. Less than 10% of the bone is calcium. Why aren't we obsessed with collagen instead? Vitamin D3 regulates osteoblast function. The proliferation, the creation, the differentiation, the changing, the mineralization of osteoblasts is dependent on vitamin D3. This ties back to the gene expression stuff and the cell differentiation. If we don't have vitamin D3 osteoblasts cannot be created and functioned properly. Osteoblasts are regulated by osteoblasts. So when osteoblasts are not functioning properly, you won't have the proper amount or function of osteoclasts. This is where we see bone imbalances, it's becoming pretty clear how calcification can occur. Vitamin D3 has been shown in studies to actually form osteoclasts. Vitamin K2 is also involved in this whole gene expression cell differentiation thing as are probably dozens of other nutrients that I don't have enough time to speak about today. Vitamin K2 is different than regular vitamin K. Vitamin K1 occurs in plants and is not utilized well by the human digestive system. Vitamin K2 occurs in fermented foods as well as animal foods in several different forms. The primary forms are MK4 as well as MK7. So vitamin K2 in the form of MK4 has a high activity in blood vessels and organ systems. Vitamin K2 in the form of MK7 has a lot of activity in the skeletal structure. In some of my day of eating videos I always mention that our ancestors consumed raw, cooked and fermented animal foods. The reason they consumed fermented animal foods is because of the vitamin K2 content these indigenous people were smarter than us. They knew the importance of these nutrients in development. But vitamin K2 has been shown to inhibit osteoblast apoptosis. Apoptosis is cell death and it causes osteoclast apoptosis. This isn't necessarily specific to what we're talking about. This just shows that vitamin K2 does have a regulatory effect in this process. It's important to consider vitamin K2's role in gene expression and cell differentiation with all of these other vitamins. So what we just spoke about occurs in the bone, in the skeletal system. What's interesting is there are similar mechanisms in the vascular system but none of these cells. So vascular smooth muscle cells utilize genes specific to bones to calcify themselves. These vascular smooth muscle cells turn into calcified vascular smooth muscle cells using these genes. Something is going wrong.  The reason we're saying like cells is because these cells aren't osteoblasts and osteoclasts. These are vascular muscle tissue that lines the arterial wall functioning like those bone cells. So what ends up happening is calcium metabolism, as you can imagine, is completely messed up and cells start calcifying. This compromises the osteoclasts because osteoclasts are regulated by the surrounding cells. If these cells can't communicate with each other, there's going to be imbalance. It also causes an imbalance here. So calcification occurs and these cells start releasing these substances. Interleukin is an immune-regulating glycoprotein. Interleukin actually tells the body to produce osteoclasts. The issue is osteoprotegerin is an osteoclastogenesis inhibitory factor. So another substance is being produced that is inhibiting the creation of these osteoclasts. Osteoprotegerin is actually regulated by estrogen. So I'm led to believe there might be some sort of hormonal imbalance as a result of our modern diets and lifestyle that is causing this to be released and not letting the interleukin create more osteoclasts. Matrix-glock protein is also released, MGP. It is a calcification inhibitor, but it is inactive without vitamin K2. When MGP is inactive, it is called dephospho-uncarboxylated matrix-glock protein. So calcification goes up. You get all of this MGP, all of this inactive protein that's loaded with calcium and you get a lot of inflammatory cytokines. They're just components of cells that are floating around. Vitamin K regulates MGP as well as osteocalcin, which is the component of osteoids. So without vitamin K, we cannot have proper bone formation. This is why they are injecting infants with vitamin K right now. As a result of us not having vitamin K2 in our modern diets. Another substance that is released is Fetuin A. Interleukin stimulates the release of Fetuin A. Fetuin A is a glycoprotein that has a very high affinity of binding to calcium. People with high levels of Fetuin A in their blood have lower calcification. Statins actually lower Fetuin A. So if you have arterial calcification and you're using a statin, you're actually inhibiting your body's ability to decalcify the arteries. This is because statins inhibit acetylcoenzyme A, which is important for so many processes in the body. They don't just lower your cholesterol. So low levels of Fetuin A and high levels of inactive MGP are associated with increased cardiovascular mortality. There's a lot of stuff going wrong here, whether it's just from inflammation, a lack of vitamin D3, a lack of vitamin K2. There are so many things that we need to address to fix this issue. Recently there was a podcast with Ivor Cummins and another engineer where they were speaking about using vitamin K2 to decalcify and reverse calcification. I think that's just a component and the primary reason I made this video was because there's a much bigger picture here and people really undershoot what they have to do. Modern problem calls for modern innovation. We have to make up for years and years and years of poor health with extreme nutrient intake, what our ancestors might have gotten in optimal times of hunting or procuring animal products. So yes, we obviously do need vitamin K2 as it plays a role here. Vitamin K2 can be supplemented, it is in eggs, raw cheese, liver. We spoke about the fermented foods earlier. Vitamin K2 is very important here. Vitamin D3 is always undershot. You can supplement it, you can get some sun. A tanning bed gives you a little bit of vitamin D3. I did a video last week titled Get Some Sun Naked. If you want to know how much vitamin D3 you should be getting, definitely check out that video. I would assume most people don't get even 5-10% of the vitamin D3 they need to reverse calcification. That's why there's an asterisk here. Vitamin D3 as well as vitamin A are always greatly undershot in the amount that our bodies need for optimal health. Vitamin A can only really be obtained from liver. You could supplement cod liver oil capsules. There might be some type of plant retinol extract that might work. I haven't experimented with those things.   You need all of these vitamins in optimal amounts. As I said, I mentioned the vitamin D3 amount in that video last week. I did a video titled, liver is a superfood about two weeks ago where I talk about how much liver we should be consuming. Inflammation of course needs to be removed. One main consideration is the omega-3 to omega-6 ratio in the diet and this also ties greatly into vegetable oils. If you feed an animal pork or chicken, soy or corn, the fat in that animal literally turns into linoleic acid. If you guys are going to say you can consume grain fed meat, conventional meat, whatever you want, if I had high levels of calcification in my arteries I would not count on conventional meat. That would not be the best way to reverse calcification as your omega ratios would still be off. Of course consuming vegetable oils would be so much worse than consuming animals that were fed vegetable oils. Carbohydrates are also an issue here. High sugar, high carbohydrate diets, I mean yeah we can deal with that but when you have extreme levels of arterial calcification we need to take extreme measures to reverse it. We need to have as little inflammation as possible and the only way to really do that is to remove most of the carbohydrates from the diet. The word animal is here because if you simply increase the amount and quality of animal foods in your diet you would likely fix all of these issues. If you were consuming high quality eggs, cheese, organ meats, meat every day this issue would fix itself. You know granted you went out in nature and got some sun. Hopefully this will help you guys reverse calcification or educate other people in how to reverse their calcification. I haven't heard anyone else talk about this so if you guys have please let me know. I spent the last 48 hours staring at my computer screen trying to figure this out so if there was someone that has a deeper understanding of this than me please let me know. All I have to say is if Frankie Boy is the best you got then you guys are in trouble. As much as I'd like to believe this could potentially be groundbreaking information I really don't think I am intelligent enough to be the only person that has ever figured this out. So guys please let me know if anyone out there you know has a YouTube channel focused around health wants to collaborate and talk about this. I do have quite a few studies that I have been reviewing that connect the dots of all of these ideas. So thank you guys for joining me. Please like, subscribe, hit that bell icon and share the video if you can. If you guys would like to support me further please check out some of the other videos I mentioned. They will also complete a lot of the information I spoke about. I do have another video titled calcium is dangerous. I will link that at the end here. I've also recently launched Frankie's free range meat my goal being to provide you guys with high quality nutrient dense animal foods. So whether you need some raw cheese for some vitamin K2, some cod liver for some vitamin A or just calories in general and high quality meat to reduce the inflammation and improve the omega ratio of your diet you guys can check out frankiesfreerangemeat.com. Go to the website check out our mission we're looking to do so many things in the future from having our own chickens, raising pork the right way, providing you guys with raw dairy products just about everything. Again, thank you guys for joining me today. Enjoy the rest of the week.


Okay, very good morning. It's Thursday, 28th of October. And before I do my normal macro look around the headlines and the outlook for today across different asset classes, I'll have a quick chat about Ethereum and the reason why there's quite an interesting article in the FT this morning. And it was talking about essentially the positioning that's been happening in the options market, which would suggest then that there's anticipation of a surge in Ethereum prices on the horizon with the options market indicative then of the price more than trebling to 15,000 by March of next year and a lot of the rationale there and actually the option trade volume has come in the context of the Bitcoin ETF launches that we saw last week from the likes of ProShares and Valkyrie and so on. And there's an anticipation then that we're going to get a repeat scenario for Ethereum ETFs again all speculative in opinion. But that in itself then has seen a bit of a disconnect in prices actually more recently between Bitcoin and Ethereum, which generally move in a somewhat tandem fashion. But from a technical perspective, this is a look at the Ethereum price over a one year period. And more recently, in the last 10 days or so, it's been flirting again with the previous record highs that we were seeing back earlier this year. If we were to go to May of 2021, we obviously failed it around these areas in early September, but we're right back at that mark at the moment. So yeah, in terms of the options pricing for 15K by March, I mean, obviously that's incredibly bullish and would be indicative then of a breakout in what some say is very reminiscent of early phases of Bitcoin before extrapolating out the more recent activity of the last several years. So yeah, technically from that perspective, obviously this is quite a key area. So it'd be interesting to just keep an eye on the price of that going forward, particularly with what the options movement has been over the last several days. But otherwise away from that, let's just jump in and have a quick look at general traditional asset classes in a sense of equity, FX, commodity and fixed income. And this morning it's pretty quiet overall, to be quite honest, we did have a bit of a negative close on Wall Street. In fact, the Dow fell for the first time in basically four days. But I don't think that comes as any great cause for concern given the fact that we moved up to record high territory. Remember just the day before in the lights of the S&P and the Dow. So a little bit of kind of mild profit taking the Nasdaq didn't actually outperform only a touch but managed to keep its head above water. And as you can see here from the heat map of the S&P 500, following their earnings, both Microsoft and Google finished up around four and 5% each respectively just helping prop up that that index with the likes of Tesla also up just shy of 2%. One market that did move a little bit lower last night was oil prices. I mean, I do think this needs a bit of context. If I just zoom out here a little bit on the 60 minute bar, you can see we've just come back down to an area of technical relevance, generally a bit of an inflection point for price, which is around here. If I just color that so you can see it a bit more clearly of what I'm talking about. This area here of around the $81 mark. Again, it's kind of marked what was the previous high of the recent surge in prices and also the bottom end of this trading range that we've been in over the last two weeks or so. A bit of coming off that high though, where we pushed through 85 in the beginning of the week. The rationale here that people are looking at is Iran and European Union agreed to restart negotiations on the revival of the 2019 nuclear accord before the end of next month. As we've been here before, that kind of promotes expectations and about if that were to happen, there's a greater prospect of Iranian barrels coming back to market. However, I would put a caveat on that and say, remember where we were 10, 11 months ago? The price of oil at the time was coming off because people were thinking, well, the US have started their first rounds of talks with Iran and it was a similar understanding that then Iran could soon come back to market with oil and then here we are. We've moved absolutely nowhere with those Iranian talks after going through several rounds of negotiations with the US led. This is talking more about the EU now. Cutting a deal with Iran has proved incredibly problematic, particularly given the house severed relationships became under the Trump administration. I don't buy too much into that, that move being really generated by that headline in itself. I would say more, if you look at the bigger picture on the weekly chart, of course, we've had such a run up in price and we got very close to that through 84, that 87 mark on the weekly candles here, which was up back to significant levels of 2013-14 price action. Some profit taking there. I think it's nothing more than that to be quite frank for the time being. Then jumping over to the ECB, that's really the real main event for the calendar for today at least and here's the crib sheet. I have tweeted this out from our friends at ING, the Dutch bank. They always put out this crib sheet, which just to recap is particularly useful because it gives you generally what the expectations are for a subsequent outcome being more dovish or hawkish and therefore what the reaction could be in the currency market, i.e. the euro-dollar currency pair and then they divide then this kind of bingo card into two sections or four categories in total which being the general outlook for the economy defined by inflation or growth and then on policy by interest rates and the QE programs or the PEP on top with any commentary on the exchange rate. So the base case here as far as ING's view is that they will acknowledge higher inflation but core will fall in 2022 but there's a requirement for vigilance so two things there. One, inflation globally as we're seeing being a little bit more sticky and they need to kind of make note of that and so hence the acknowledgement of higher inflation but the expectation is as ECB officials in the Guard have been saying that in Europe at least they're talking about inflation being transitory so it's still very much holding on to that idea compared to some of the more hawkish comments we've heard from the likes of the Bank of England for example and in this word vigilance some commentary talking about you know if you've been in the market for a while and you remember Jean-Claude Trichet for example who was before Mario Draghi who was obviously before Lagarde as the ECB president that was when we used to be very much in tune with ECB code words and vigilance is kind of the key word strong vigilance things like that can elevate then and give hints and guidance towards the ECB sensitivity toward taking action potentially in moving policy tightening or loosening depending on the description of that vigilance word. If anyone's interested just google search ECB code words and Jean-Claude Trichet and I'm sure you'll find a table of the breakdown but on the growth side recovery improved but downside risks from energy prices again this kind of energy price squeeze that we've had of course of late which has been particularly evident here in the UK but also globally and whether or not then there's a downside risk on the back of that and then interest rates and QE and PEP no change again that's an important point we're not looking for any change here Lagarde to avoid giving details on tapering discussion and I'll get to that in a moment and as far as the exchange rate is concerned there's that really is not a talking point at the moment so not expecting anything explicit on that for the time being but the summary of which ING had I thought was pretty on point they said Lagarde will use all her diplomatic skills to moderate the diverging views of hawks and doves within the governing council now what are they talking about there well at this particular point in time obviously the ECB is very large and so there's a number of there's a division growing between what's the best course of action the big kind of macro or monetary policy decision being do we act now is inflation going to surge forever higher and therefore we need to get on top of it or is it transitory and that's where the two sides of the table kind of lie at this point in time so she has to basically tow a more neutral line keep both happy but signal they're flexible to move in either direction essentially which is a tricky proposition of course now the neutral message may ultimately defy what ING say is some of the markets hawkish expectations and the balance of risks for euro-dollar which by certain metrics is overvalued in the short term appears slightly tilted to the downside and so what they're trying to say there in kind of simple terms is if you think about the bigger picture at the moment for instance the Bank of England where following the UK budget yesterday following things like you know the Bank of Canada being super hawkish yesterday the way that markets have been moving is ever increasing the prospect of rate hikes becoming more imminent and although the signs haven't come so explicit from the ECB they've kind of been dragged into this global yield and rate expectation move with your general shift of higher inflation expectations in the future and so therefore hence the reason why for a pricing positioning point of view perhaps then the the balance of risk is for euro-dollar to move lower not so much on any type of dovish commentary but on the fact that it doesn't deliver to the hawkish pricing of how the market currently resides so yeah it would be interesting to see how that plays out and certainly of course I'll update you by this time tomorrow on the outcome otherwise on the central bank side don't want to spend too much time on the BOJ because quite frankly it's boring hasn't really been any move in the Japanese yen of great note to mention they stood patterned stimulus while signaling more delays in the economy's post pandemic recovery again remember it's just a couple of days now before the new prime minister Kishida faces his first national election so quite typical then with those looming political uncertainties for the central bank in any country to really make any drastic changes ahead of that risk event the BOJ kept its interest rates and asset buying plans unchanged as expected they cut though their projection for economic growth this fiscal year to reflect setbacks from the summer's covid surge and remember the issues that they confronted around the summer olympic games and then also of course these global supply chain issues which of course Japan was impacted such as like everyone else was they also downgraded their view on exports and production so citing those supply constraints otherwise as far as the UK budget was concerned obviously you've probably read enough about that but the one thing I thought that was quite interesting and this was what we were talking about yesterday from a trader's perspective particularly in the fixed income market was any of those announcements that would come out from the debt management office or otherwise known as the DMO and UK government bond markets yesterday the 10 year guilt rallied the most since march of last year so basically the onset of the pandemic which you will remember was the meaningful shift in global asset prices so yesterday's move was akin to the biggest we've seen since that moment in time of the onset of covid 19 and the lockdown that we had and the reason for that was that total planned guilt sales for 2021-22 fiscal year were down close to 60 billion relative to its april estimate taking the total to just under 200 billion the reduction came after the official estimate showed stronger than expected economic growth will boost government receipts and that lowers then spending needs and so decreases the volume of debt or borrowing in the sense of issuance of government bonds and so yeah remember this is comparison to the spring kind of statement and so back then the vaccination rollout program was was in its infancy if you like and so therefore the general economic recovery that we've had has been more robust than perhaps the more pessimistic view that people were taking before then without the seeing the the success of the early rollout of the program that we had so hence the reason rationale why Rishi Sunak made that move okay for the day ahead what have we got on the agenda well we've already had a couple of the german state cpi's north vine versphalia came out very early on the month of month 0.4 percent against previous flat that puts year on year state north vine versphalia and german cpi at 4.5 percent up from 4.4 last month we'll get the rest as we go through the morning we've got the german unemployment rate and change just ahead of 9 a.m this morning um otherwise then going into the afternoon of course the ECB as I mentioned two-part event so you get the normal statement at 1245 followed by the presser would regard the latter as the one that the market's going to be more sensitive to and watching from an intraday perspective at 130 130 is a busy time of day though because not only does she kick off her press conference but you've got the weekly jobless claims but more importantly than that you've got us q3 advanced gdp so our first look at how third quarter gdp fared in america and as you can see here the expectation is for a moderation the headline figure year on year to 2.7 percent from 6.7 in the prior quarter and as you can see here that would be one of the weakest readings that we've had of course since that dramatic kind of initial pandemic lockdown situation that we had in 2020 now a couple of things here consumer confidence fell and americans spent less remember this is q3 and we had that covid surge coming out the back end of summer and so hence the reason why there's been a moderation in expectations for growth in the US they also grew more rare wary consumers that is as higher prices on everything from gross groceries to petrol to home prices everything's gone up and so that would have been a contributing factor as well in the pullback for spending is what analysts are expecting however a sharp moderation in growth from q2 as i've described i mean that's not an unknown quantity we we already have factored that in i'd say largely and the markets as we know are forward looking and so given the fact that we've had a decent improvement in case trajectory is kind of declining for multiple weeks now in the US i would say that the impact of today's number is probably going to be fairly muted barring any very large standard deviations if you like away from the consensus figures today so overall i don't think it's really going to have too much to alter the perception of what the fed are going to do with their november taper announcement and thus then the overall impact despite what might appear on the surface to be headlines i'm sure the tabloid media will spin the saying how weak growth is the markets already looking at that gross re kind of picking up if you like going into the the back end of the year all things remain equal at the moment so yeah i don't really see it's too much of a of a massive event but obviously i'd be aware of technical setups of various charts equities obviously remain quite elevated could we snap lower on the breakdown of any key support levels but you know perhaps intraday in the short term but it wouldn't really change the picture i don't think beyond that point of the initial moves all right that is it so i'm going to leave it there let you guys get on with your day hopefully that was useful again feel free to drop me a comment if there's any questions hit that subscribe button if you're new to the channel thanks for watching and i will see you tomorrow take care


I was in my head I was like man I wish I could have gotten a little more in-game work there but you know what for the first one shorter is better quick and clean get in get out I'm healthy I feel great just some of the little things getting back into compete mode again see how the delivery carries over I'll have to go back and watch video to you know see but it felt really good it felt clean I feel healthy those are all the big takeaways I think I finished up with about 10 more just so that you know to bridge the gap to the two in and out again make that a little easier great Joyce you have the next question please unmute yeah so I'm not used to not starting so that was different in in my mind earlier and then you know we've got such an easy access to the backfield there I was able to warm up right as pretty much as I would if I were starting the game so that was really nice I didn't have butterflies once I got to the field but waking up today it definitely felt a little different so I was a little nervous but other than that once I got going once I'm on the mountain stuff that's kind of like my safe spot where I'm confident so it felt good we can go next to Christy Acker Christy go ahead hi James what what's the next step for you what did you did you throw everything today and how did they feel yeah so the next step will be just getting into a tuning game upping the pitch count I didn't get to throw any change ups today that pitch usually just kind of comes last in my mind the other pitches take a little bit of priority over that one but I'd love to just kind of run some more sequences together and just honestly get back in game mode and get to face more hitters that's really the next step is just to turn a line up over see the hitters more than once see how my stuff plays we go next to Eric Boland Eric go ahead yeah I've enjoyed throwing to Gary he made a really good impression on me because my first few bullpens he wasn't lined up to catch me but he was sitting right behind the catcher watching every pitch locked in and he made some comments to me after my bullpens and stuff about what he saw so you know for me that was a great first impression and he's making a really strong effort to get to know me and work with me so you know the more reps we get together the more in-game experience we get together the better we'll be but so far so good I'm a pretty easy guy to catch there's nothing too specific I like to just sequence my pitches together I told him a few like good sequences I like and I've used in the past and besides that I like to give the catcher the freedom to see what the hitters doing and to call their game we go to Greg Joyce yeah so let's see spring training at 14 I had TJ I think my first game back was just like a GCL game in Clearwater so less fans which it was nice to have fans today and I was facing much younger hitters I wasn't facing experience like 40-man roster big league hitters so this is a great test first game back getting to be against big leaders on a big league stadium or big league spring training stadium against a big league lineup so definitely different and I'm at a way different point in my life


Hello and welcome to this session. This is Professor Farhad and this session we would look at withholding taxes and thin capitalization as they relate to international accounting and international taxation. This topic is covered in a CPA and ACCA exam. As always, if you haven't connected with me on LinkedIn, please do so. YouTube is where you would need to subscribe. I have 1500 plus accounting, auditing, tax and finance lectures. Please like my lectures, share them, put them in the playlist. If you're watching my lectures, it means you're benefiting. Share them so other people might benefit as well. If you're looking for additional resources, more than the lectures, you can visit my website where I can download the PowerPoint slides, work multiple choice questions, quizzes, additional exercises about the lectures. I strongly encourage you to visit. Astudypal.co is an artificial intelligence driven study body that matches you with someone who's studying for the CPA or CFA. If you're looking for a study body, they're in 85 countries in 2800 cities. So let's talk about withholding taxes. What is tax withholding and how does it work? So let me give you an example on a personal level, this way you will understand. Let's assume you are a foreign citizen, not only foreign citizen, foreign citizen means you are not a resident of the US. This is what I mean by foreign citizen. And let's assume you invest in Apple computers and you happen to receive for a particular year $10,000 in dividend from Apple. They pay dividend and you receive it. Now the US government requires Apple to withhold 30% because the foreign citizen is not required to file a tax return. Now remember we're not talking about resident people in the US. Let's assume you are from France, living in France, but you invested in Apple. Now can you get this money back? For example, if you receive 10,000 minus 3,000, you'd receive 7,000. Well it all depends on the tax treaties or if you're going to get a tax credit in your country, but that's a different story. But the point is this is how tax withholding work. If Apple pays you and you are not a citizen of the US, they will withhold the taxes, 30% taxes. Now I happen to have my first job out of college. I work with a company, well now it's part of Bank of America, Merrill Lynch, and I used to work under what's called employee stock option plan where your company, if you work for example for Intel or PepsiCo, they will grant you options, stock options, and what you do is you will exercise those options, sell your options and get your money. If you were a foreign citizen and a lot of Intel executives, they were in Asia, East Asia, and what happened is if they did not have a particular form, in other words, I remember the form used to be called W, I believe W9. If they did not have a W9 form on hand, then we were required on behalf of the US government to withheld, I don't remember how much it was, was 25 or 30% unblocking over 20 years ago. So we are required to withheld a certain amount of taxes. Now if they filed the W9, it means the US they have, they know who filed and in case they get a credit in their own country. So it all depends if they filed the form then we will not withheld. So basically the form will tell the US government there's some sort of an agreement between the US and that country and that was the case. But just want to let you know that I saw this up front and personal. People were not happy when they did not have the W9 and they received 25% less than what they thought they would receive. Okay, anyhow. So withholding taxes applies the same to companies. So withholding taxes are also imposed on payment made to foreign parent companies or foreign affiliate companies. So if you are operating as a company and you want to make payment to your parent company and you are operating in a different country, you might be subject to withholding. And there are three types of three types of payment that are subject to withholding. If you pay dividend to the parent company, interest and royalties. Now withholding rate might vary across countries and in some countries varies by the type of the payment or the recipient. So there is no one set rate. For example in the US, the US withholding rate on payment is generally 30% on interest on bank deposit and on certain registered debt and instrument debt is 0%. But bank deposit, if you have a bank deposit in the US and you don't have the proper forms, they will they will withhold 30%. Again, the reason I say the proper forms because sometimes you don't have to withhold anything depending on the tax treaty between the US and where you are a citizen. But again, we'll talk about this later on. But the withholding means the money is taken up front. Okay, let's take a look at just for example the US, they withhold 30% on dividend, 30% on interest for the bank and 30% on royalties. The UK don't withhold anything on dividend. France don't withhold anything on interest payment. Germany nothing on interest payment. Notice Hong Kong, no dividend, no interest payment. I remember Hong Kong as a tax haven country. So just kind of gives gives you an idea. Again, Singapore 0, again Singapore again in your textbook but they may not be tax havens. Switzerland same thing, zero on interest, zero on royalties but they would help 35% on dividend just to give you an idea. Now, since we have those different withholding rates on different type of payment, now this gives the company, the multinational the option to finance themselves in a way to minimize their taxes or increase their cash flow. So the differences in those withholding rates on different type of payment provide an opportunity to reduce taxes by altering the method of financing a company. So when you finance a company, you finance through debt and through equity remember, hopefully you remember this, assets equal to liabilities plus equity. So you finance yourself as important. For example, let's assume a Chinese company planning to establish a facility in France, they would prefer that future cash payment received from the French subsidiaries to be a form of interest. Why? Because the French don't withhold any money on interest. Now, if the subsidiary pays the parent Chinese company in dividend, then the French government will withhold 30%. So the objective here by the Chinese company is to finance as much as possible with loan rather than equity. Why? Because when the subsidiary pays interest on that loan, when they send that money to China in form of interest payment, then they don't have to withhold 30%. For example, rather than the Chinese parent investing 10 million euros in equity to establish the French operation, what they can do, they can invest 5 million and 5 million rather than the whole thing 10 million in equity. Why? Because the debt, it's going to be, you're not going to, when they send the interest payment, they will not withhold any money. They will not withhold any money. Okay? Interest on the loan which is cash payment to the Chinese parent company would be exempt from the French withholding tax whereas any dividend paid to foreign to on the capital contribution would be taxed at 30%. So that's why they will finance it. Now, you might be saying, well, that's easy. Let's just use that. Well, that's not the case because if the company had what's called thin capitalization, thin capitalization means they have mostly in debt, mostly the company is established by providing debt rather than equity. This is called thin capitalization. When there's a thin capitalization, how do you determine it's this thin capitalization? We're going to find out what each country required but the point is thin capitalization means there's little equity in a lot of that. So when you finance the company, if we go back to this example, if we say, okay, we're going to invest 1 million and 9 million, well, definitely this is for every 1 million dollar invested or 1 million euros you're investing 9, that's thin capitalization. The equity holders are not much. So several countries have a lower rate of withholding on interest than dividend. In addition, the good thing about interest, interest is it has its disadvantage. We were talking about the advantages here. Interest payment are generally tax deductible whereas dividend are not. So financing yourself with debt has a tax advantage because one thing, the withholding tax rate is lower in certain countries and you can deduct the interest on your taxes. There's often incentive for companies to finance their operation with as much debt as possible and with little equity as possible again because you have double incentive. Now that has its also that has its disadvantage because you have to come up with the payment and now that, you know, fixed payment every month or fixed payment every quarter and companies may not have the cash flow to meet those payments. But when that's the case, when you have a lot of debt and a little bit of equity, this is known as thin capitalization. In several countries had set limits on how thinly your company can be capitalized. So if you go, you know, too crazy, then they're going to say, hold on a second, if you want to, you're not going to get the benefit of it. Just to give you an idea in France, interest paid to foreign parent will not be tax deductible for the amount of the loan that exceed 150 percent of equity capital. Simply put, the ratio of debt to equity simply put debt to equity cannot exceed 150 percent. Simply put, if you have $150 in debt, you must have 150 in equity. Now, if what happened if you have less than 150, which is this is equal to 150 percent, and under those circumstances, you can deduct all the interest on the debt. But let's assume you have $180 in debt and 100 in equity. Now that additional $30, you cannot deduct the interest on them. You cannot deduct the interest. You can only deduct the interest up to 150 percent as of debt to equity. So simply put, if the equity capital is a million, you could have loans financing the company up to $1.5 million that you can deduct. Now you could have more than $1.5 million in loans to finance the company, but anything in addition to $1.5 million, the interest paid on that addition is not tax deductible. That's what we're saying. Now, for example, in Mexico, they're a little bit more liberal. In Mexico, you could go up to $3.1 before they start to take that deduction out. So in Mexico, if you have $100 million in equity, you can provide $300 million in debt, because that's $300 million divided by $100 million is three. So you're in good shape. So notice in Mexico, they're a little bit more liberal. They allow you to be more thinly capitalized than the French company. In some countries, again, why? Because companies are aware of this. They're aware that that multinational may go through this process. Now, if you have any questions or if you want additional lectures, please visit my website, farhatlectures.com, and on the website, you could have additional resources such as the PowerPoint slides, additional exercises. In the next session, I will cover the value added taxes. Please subscribe, like the videos, share them, stay motivated, and good luck.