Are The Banks Trying To Doom Themselves?

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You cannot make this stuff up.

I felt for a long time that the banks are done. Some seem to take exception to this believing the banks will adapt and adjust. I find that very unlikely.

In fact, the banks, in spite of the new threat from global, decentralized cryptocurrencies, keep engaging in the same behavior.

What is that they say about a leopard and its spots?

The people of Chile are the latest to enter the fray of countries that are being screwed over, outright, by the banking system. It seems as this is a weekly occurrence. Between the banks and United States government pushing sanctions everywhere, we are seeing a lot of people being pushed away from the traditional banking system.

And right into the waiting arms of cryptocurrency.

Reports are now coming out of Chile that the situation there is taking a turn for the worse. What was bad has become horrific. People are now taking to social media stating they cannot get their money out of banks.

https://bitcoinexchangeguide.com/chile-declares-state-of-emergency-people-unable-to-access-their-money-bitcoin-enters-the-fray/

This is a common situation when things turn bad in a country. The individuals who place their money in the care of banks are the last to get access to it. Banks often hold onto it to ensure their solvency. Then there are the situations where the governments step in and give everyone a "haircut" (the only question is how much of one).

Even in stronger economies, we are seeing similar circumstances. People are having their accounts closed because of claims they owe money. Sadly, in many countries, these accusations are proven false but, by then, it is too late.

The cryptocurrency movement is expanding. Hong Kong is already seeing Bitcoin usage spike. We can now expect the same in Chile. With Argentina, Iran, Turkey, and Venezuela also in dire situations for various reasons, it makes sense that crypto adoption is increasing in those countries.

Our fiat world is starting to disintegrate. The governments of the world are abusing their citizens. While most are not overt about it, they are waging financial war in an effort to maintain control. Behind it all are the central banks who believe they have the ability (along with the right) to keep pillaging.

This is not going to turn out well.

Even developed countries are seeing the blood pressure of their citizens starting to boil. Civil wars are going to be commonplace over the next few years. There simply are too many powder kegs around the world for there not to be mass violence.

In a strange way, this all favors cryptocurrency. As the lower tier countries, in financial terms, start to suffer the ill-consequences of their government's actions, they will embrace the alternate system that is being established. They will be the early adopters. The Western, advanced countries, will end up being the last to get involved. It is rare to see widespread change when people are "comfortable".

All the while, the banks keep operating like it is business as usual. Their antics are not changing. Across the board, they are over leveraged meaning they will tank when the markets collapse. The American banks are bad but they look like shinning stars compared to Europe. Those banks are really under capitalized.

Once again, this is not going to end well.

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Monopolies are slow to change. In a world where technology is advancing at a rapid pace, this makes it difficult to catch up if one falls behind. This is exactly what is happening to the banks. While they are trying to invest at a speed that makes sense to them, it is not enough.

As a comparison, the traditional banks are spending roughly 30% of their IT budgets on innovations. FinTech companies, on the other hand, are spending 70%. Just going up against these newer entrants, the banks are falling behind.

Of course, the comparison to cryptocurrency is not even worth looking at since, it is at the stage where everything is innovation. Another few years will reap a payoff that will most likely obliterate a larger portion of the banking business.

There is a very simple premise that shows what is taking place. It has to do with what takes place when the Internet enters an industry.

Think of all the industries that were disrupted by the Internet. Consider the top 4 or 5 over the last 25 years. What happened?

There are two results which are undeniable.

When the Internet enters an industry it A) destroys most of the incumbants and B) creates abundance.

Whether we want to look at communication, music, video, shopping, news, or information, the results are the same. Those companies that were the leaders tend to get knocked off (or at least down a few pegs) while other companies take over. At the same time, there is an abundance of whatever that industry offers.

Just look at that list. Let us use shopping as an example. Amazon is the obvious online leader there. It is worthwhile, however, to think about how Amazon got its start.

Amazon started, way back when, as an online bookstore. The fact that it was online gave it a huge advantage over the competition. Few realize what it is thinking the online economics are that much better than the physical world. While that is true today, it was not the case in the early days when logistics were still a nightmare.

What gave Amazon an enormous advantage was the number of titles. A Barnes and Noble can handle roughly 50K titles while Amazon could carry millions. The "shelf space" for Amazon was virtual meaning it was simple to add more titles.

It took a while but the fallout from Amazon is operating in full swing. The retail world took a bit longer than most. Consider the fact that many record companies were wiped out in a couple of years. Newspapers and magazines started failing almost immediately once the Internet became a mainstream feature of the developed world.

Now the Internet is in the world of banking. The money game is no longer a monopoly. How will these entities respond? Quite frankly, in spite of their efforts, they are being as obtuse as the record labels. Instead of suing their customers, they are engaging in the usual protectionist practices they always did.

It is only going to fail.

Each day, more people are receiving cryptocurrency in their wallets. Whatever the amount is, it is growing. The disadvantage of cryptocurrency is the lack of time. Most wallets have not had the time to grow large. This is going to change are more activity starts to take place on blockchain.

I am highly confident in the demise of the banks because the writing is on the wall. They can do nothing to protect themselves since they are doing what they always did. I am not even sure they fully acknowledge how big the problem is. My sense is they will wake up when there are 500M people with cryptocurrency wallets.

By that time, it will be too late.

Pay attention to the second tier countries. This is where all the activity is going to take place. Monitor what is taking place Italy, Greece, Portugal, and most of the South American countries. This is where turmoil could foster a rapid acceptance of cryptocurrency.

The nations that are already in massive turmoil are starting the process.

All the while, the banks operate according to the status quo. I guess this is expected when you had a monopoly to do as you saw fit for well over 100 years.

Permit me to issue and control the money of a nation, and I care not who makes its laws!

This quote is attributed to Mayer Rothschild.

Well guess what, with cryptocurrency the banking families do not control the money.

This creates an enormous problem for them.

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