 Hi, everyone. Today I'm going to talk about the golden cage of financial regulation. In the world we live in, finance hasn't been the same since the early 1970s, when in the United States a law was passed called the Bank Secrecy Act. This was signed by Richard Nixon, or Dick, as we call him in America. That Dick signed this particular law. What it required was that banks operate as a surveillance mechanism for the government. This was then expanded internationally to become the framework of international finance. We have today the requires every financial transaction to have both the sender and the beneficiary, as they call it, identified by every participant in the transaction. Your bank, their bank, everyone in between, has to know who is being paid, who is paying them, why they are paying them, what they are paying them for. This turned all banks into surveillance organizations. They became deputized into law enforcement to fight the war on drugs, the war on pot, the war on traffic violations, the war on drinking, the war on something, the war on Syria, the war on Yemen, whatever the current war is. Gradually banks became cops. The problem is that banks can't be banks and cops at the same time, but they no longer have a choice. They become cops, and in fact the cops in most banks rule what happens. Most banks today have what's called the compliance department. In some banks it's actually called the BSA department, the Bank's Secrecy Act department. They can overrule everyone in the bank. Remember in the old Soviet movies where you had the submarine commander? He's on the deck of the nuclear submarine, and he's not actually in charge. Next to him is a kind of a dark suit, who's like, you can do it. He's the Politburo representative of the Communist Party, who's actually in charge in the submarine. The captain doesn't run the submarine, it's the political operative next to him who decides whether they can fire the weapons or not. They're constantly talking to the Kremlin on one phone and telling the captain what to do on the other side. Of course, that's not how we run American submarines, because freedom! No, the captain is a strong man who decides everything on his own without political interference. Away from all of the politics makes the last minute decisions life and death. So we could know who the bad guys were and who the good guys were by who exhibited freedom. It's funny now that the way we run our banks is that the bank CEO and the person you talk to in the bank isn't in charge. There is a person in a dark suit talking to the Department of Justice and the Treasury Department and saying, can we send money to that person? No, you can't. Sorry. No, no, no, it's okay. We fixed it. They can't because they're actually in charge in the bank. They're actually in charge. In fact, if you have a wire transfer sent to you, and that wire transfer gets stuck, and by stuck I mean it doesn't get through to you for seven months, let's say, as a random hypothetical example that happened to me, then what happens is they don't tell you why the wire is stuck. You call them up and you say, where's my wire transfer? And they say, we haven't received it. And then you go to the other party and you say, you didn't send it. And they're like, no, but I have a receipt. So you take the receipt and you go into your bank and they say, I don't know, I haven't seen this. And eventually they figure out that the reason they haven't seen it is because the bank's security department is keeping them in the dark. They haven't told the customer service people that there is a wire transfer because they're not allowed to talk to them until the security problem has been resolved. This is how we run banks in the free world. I don't need to tell you how they run banks in the unfree world. Actually, I can't. Exactly the same way. Exactly the same way. Because one of the interesting things is that these regulations now become the basis for international settlements of transactions. And so if you don't play by the American banking rules, they cut you off from the American banking system. They tried to do that to the Swiss and threatened them into breaking their bank secrecy laws, their privacy laws they had, and to go after people who had bank accounts in Switzerland. So Switzerland doesn't have privacy in its banking anymore because they're now operating by these international laws. And you have to think, how did this happen? How did the banks allow themselves to become captured by political operatives, to become effectively police officers, or effectively have police officers that they pay to tell them what they can and can't do? And they do it against their own commercial interests. Let me give you an example. Right now, recently in fact, we legalized marijuana in Colorado, Washington, Oregon, and California recreationally. Smoke till you drop, anytime you want. Anyone 21 or older, walk into a shop, smoke as much as you want. But none of the companies that sell it have bank accounts. Because the federal government has not yet legalized it, and they will not let the banks bank the cannabis industry. Now, this is an industry that in Colorado alone brought in $1 billion in taxes up to now. That's in two years. $1 billion in taxes, which means that they're moving ten times that in revenue. All of which could be part of the commercial activity of a bank. In fact, in any rational society, that would be the smart thing to do. Because the last thing you want is businesses going around with duffel bags full of cash, and trying to find ways, they can't deposit it, to get rid of this cash and get robbed in armed robberies. Which makes the whole place very, very insecure and dangerous. So basically, in order to fight the war on drugs that we've already lost, because it was always going to be lost. And even though the states have stopped fighting the war on drugs, the federal government is still fighting it... with the last cops they can use in every state, the banks. It's insanity, and that's how it works. And this happens all over the place. The same thing is happening to sex workers, the same thing is happening to gambling organizations, the same thing is happening to gun merchants in the United States. And you may not like one, the other, or all of these categories. But many of these activities are perfectly legal activities. So banks are being prevented from participating in perfectly legal activities by policy that is set. At some level in the Department of Justice, not by law. They can say, we don't want you banking this type of organization, even if they're engaging in legal activities. So basically they're passing secret laws, they're passing laws that are not subject to the legislature. That they don't have to have a vote, that are not subject to democracy. They're ruling by fiat. How did the banks get into a situation where they have to deny customers, even good customers, even secure customers, because they have become cops? It all started in a very simple way. It started by demonizing specific segments of society in order to find an evil cartel, an evil organization, evil someone. They said, well, you can't give banking to evil people. Forget the fact that for 20,000 years evil people could use money perfectly well, just by using cash, the original anonymous peer-to-peer currency. And civilization did not destroy itself, right? But once that decision was made and then followed through, the category of what became evil people just kept getting wider and wider and wider. I met someone who came to me at a conference in Berlin a couple of weeks ago, who said to me, I've been living in the West for 15 years, and I can't get a bank account. For 15 years I can't get a bank account. The moment I fill in the application, my name and place of birth, I am denied. I am Iranian. I was born in Iran. I have nothing to do with Iran. I have no contacts with Iran. I have no relation with the government of Iran. I don't like the politics of the government of Iran. I cannot get a bank account. All I want to do is deposit my paycheck so I can buy groceries, but no bank will allow me to bank with them. I have done nothing wrong. I didn't choose where I was born. And it gripped me because this story is repeated millions of times in every developed society and even worse in developing countries. Banks agreed to these rules at first, and then the rules got wider and wider and wider. And now it's accepted wisdom. Of course you should be able to check everybody who makes a transaction. Really? Why? Because bad people might use money. We're going to base the entire basis of a society on a blanket law that applies to everyone just because some bad people might abuse systems. Well, guess what? Bad people are going to abuse systems either way, right? But what we're doing is we're punishing millions, billions of people who have done nothing wrong simply to preserve this illusion of security, to preserve this bourgeois illusion of security. And you know what? That's unethical. In fact, it's evil. Condemning people to poverty so that you can feel safe with no basis in fact or evidence that it actually makes you safe. In fact, it does the opposite because people in poverty resort to violence and have no access to justice in order to preserve that. We do evil on an institutional basis worldwide. The banks started with this gilded cage. The cage they built around them has bars of gold because it was a deal, a quid pro quo. In return for fulfilling these regulations, the banks get the ability to get away with criminal activities for which they are never punished. When they get caught money laundering, it's a minor fine and they get caught again, and again, and again, and again. And with them, every single bank has done money laundering in the order of billions of dollars. And not really for my Iranian friends who can't get a bank account. No, for the Sinaloa drug cartel, right? For Pablo Escobar, drug dealers, terrorists. Because terrorists get funded by states and intelligence agencies through banks in dollars. And so we've created this crazy system where mega crimes can be committed as long as you have a banking license, as long as you do surveillance on behalf of the government because the ultimate goal is not to eliminate crime. That's ridiculous, right? The ultimate goal is control. So what do you call a system of control where the ultimate goal is to be able to see every transaction that is ever done in the world of finance? Total control. I believe we call that totalitarianism, right? And rational societies don't believe in totalitarianism, but in our financial system we've accepted it. When Edward Snowden came out with a revelation that phone calls and internet activity was being monitored by intelligence agencies, specifically the Five Eyes of which Germany is a participant, when we found out that the CIA and the NSA are monitoring Angela Merkel's calls, right? People were outraged. But the fact that every Visa, MasterCard, and bank transaction you do is shared with all five intelligence agencies, and on top of those data streams piggyback all the other intelligence agencies that have managed to hack into this data, ah, it's okay. We should watch everybody. Just in case they do something wrong. Think about how much power that gives to some people. The power to control what you spend when you spend it, the power to deny you access to finance and bank accounts, and more importantly, the power to see all of your habits, your location at any time you use one of your cards, and who you associate with in terms of political associations or just friends and family. But don't worry. Facebook's making a digital currency. This quid pro quo agreement allowed banks to effectively prevent competition because doing compliance is expensive, but it's a very good cost of business because you can pass it on directly to customers. The people being hurt, they're little people. The big people can afford lawyers and accountants and better banks and other places that are more flexible, let's say. Places like Panama, places like Malta, places like Switzerland. The little people who want to bank in downtown Munich or in London or in New York, well, they're just little people. Doesn't matter, my friend, he's Iranian. He should have known better. He should have known better. He should have tele-transported from the womb of his mother to a better country before he was born. See, these little people pay the price. We all pay the price in higher transaction costs than friction and the fact that an international wire transfer takes forever, but we pay the price in a much bigger way in terms of reduced economic and commercial activity because friction results in higher costs for everything. So this introduces enormous friction into our financial system in order to achieve unachievable political aims that give power to the wrong people. We pay the price in money and then we pay the price, again, in freedom, in the erosion of our democratic institutions and our freedoms. But the banks don't. The banks have this wonderful tool that says, if it costs me $10 million in order to do compliance each year and I can hire 300 people to staff the compliance department, that means that the smallest competitor who can enter the banking business needs at least $10 million to start. And that's before they even get to banking license. So we set the barrier to entry so high that the amount of competition that happens in banking is reduced. As a result, the big banks are able to be more efficient than the smaller banks because that $10 million in compliance costs is a smaller percentage of their revenue than all of the small banks. The small banks struggle and then they get bought by the bigger banks or they join forces and they merge together and then they get bought by the bigger banks and then they become medium banks and then they get bought by the bigger banks and then the big banks buy the bigger banks and the bigger banks buy the bigger banks and the bigger banks buy the bigger banks and then we have six banks. Six banks. The Western world is dominated by six banks. All in just 45 years. In 45 years, we're down to six major banks and they all have different names but they're all owned by the same six banks. Pretty much. There's a few little ones that are still struggling. There's these new ones that have fancy names like N26 and Monzo and things like that and they're fighting the hard fight. They're trying to go online. And as soon as they try to compete, the big banks go, well, they should really follow the regulations more closely. And so they either have to turn themselves into the exact same model that the big banks are following, which is unprofitable for them. They have to stop competing by doing innovation because the innovative things they want to do all make it easier for bad people to get banking. So as a result, they have to reduce the number of customers they take in and eventually what happens is what's been happening to me in banking for the past 25 years. I get a bank account with this wonderful, young, online, fantastic, hip, cool bank with a great website that doesn't do any of that bullshit. And it works great for five years and they get bought by a bigger bank. And within two months, it's all over. It turns to shit. And I switch banks to a new, young, hip, cool bank. For five years it works and then they get bought by a bigger bank and in two months it's all shit. And this keeps happening and eventually it's all shit. The cage is made of gold. And they like it because it's shiny. It keeps out the competitors. It's a comfy cage. So the bottom line is that this golden cage that has been built up around the banks gives them the ability to prevent competitors from entering the space. Every time a new competitor comes in, like PayPal for example, they start off idealistic. PayPal started with the idea of building the internet of money. They wanted to use the internet to bypass regulations. And then they got sued and investigated and investigated and sued because the banks pay for the politicians to make sure that the cartel stays in place, right? It's funny that we use the term cartel to talk about drugs and oil, et cetera. But here we have a $114 trillion industry that is dominated by six regionally controlling players. And we don't call that a cartel. I wonder why. It's almost as if they're the most powerful cartel of all, so powerful that they can make sure that no newspaper is ever going to call them a cartel. Because then they'd lose all of their funding and advertising. And no politician is going to call them a cartel because they'd lose their job. And none of the regulators are going to call them a cartel or dare to break them up. In fact, they don't even dare to find them. In fact, they don't even dare to put them in jail when they take away the homes of a million people with straight-up fraud that's been caught on tape where they're saying, we know these mortgages are fraudulent, but they're so, so profitable. And nobody goes to jail. That's a cartel. That's the behavior of a cartel. So let's say it again, banking is a cartel. Well, guess what? A cartel buster just came in the door on January 3rd, 2009, with the invention of an open public blockchain called Bitcoin. And that cartel is now over. They had a golden cage that allowed them to keep out competitors. And it was shiny and it was nice. But now there's this thing outside the cage. And they're like, that shouldn't be there. That should be in here. Why is it out there? You can't let them do whatever they want. They're gonna fund criminals. No, no, not criminals like our friends. The other kind of criminals. Poor criminals, not rich criminals. We got that market, right? They're gonna find poor criminals and poor terrorists, not nation-state terrorists, we got that one too. They're gonna find poor terrorists and perhaps even poor immigrants, right? Not rich immigrants, like the wife of our president. No, poor immigrants, like all the other people who are in concentration camps in America, right? They're gonna give them bank accounts. I was in a banking conference where at the end, a lady asked me at Q&A, why should we give illegals bank accounts? And the question shocked me, first of all, because of the use of the word illegals to refer to human beings, but secondly, because of the audacity of that question. Are you not a commercial entity that is supposed to facilitate banking? Since when did you become the moral police, right? So I answered in the best way I could, which was you shouldn't give illegals bank accounts. We will. In fact, we'll give them banks on their smartphone where they're the CEO so they can compete with you. Bitcoin is an anomaly and it brought 4,000 other anomalies to date over the last 10 years. All of these anomalies refuse to play by the rules and the reason they refuse to play by the rules is because most of them don't have identifiable leaders or companies. So the playbook of the banks and they go through these steps and every time they face competition is one, can we buy it, right? If we buy it and shut it down, it's not a risk. Or we buy it and we kind of hold it very close, very, very close. Stop breathing and then it stops breathing and then we've killed it and then it doesn't compete anymore, right? So you get the old bank and they buy this really, really innovative bank and you watch it asphyxiate over two months until there's no innovation left. All of the creative people quit within a week, right? Because they can see what's going to happen next, right? First day they come in and they say, this is very good, we really appreciate your creativity. Now, cut your hair, put on a suit, better shoes, come in at nine in the morning, okay? Good, thank you. And they'll go, oh, fuck this, I quit. And there goes your innovative group out the door and that bank is over. So buy, first rule is buy. Second rule is compete viciously in ways that are illegal in order to shut them down, right? Interference, classic cartel interference. If that doesn't work, third rule is sue. And the fourth and best one is get the government to regulate them, regulate them harder, regulate them mercilessly, pass a few new laws to make sure that what they're doing that's different from what we're doing is not allowed. And if that doesn't work, shut them down by using the government as your cartel enforcer, right? Essentially the government becomes the Sicario for the banks. It's really a weird relationship, a very weird relationship. So that's the playbook. So, Bitcoin comes on the stage and the banks go, okay, great, buy them, we can't, they're not a company. And if we start buying up all the Bitcoin, it's just gonna get more valuable. And then you won't be able to buy it all, we'll just make the people who invented it richer and then they'll be able to fight us. Oh, okay, well then compete with them with dirty tricks. Well, I mean, we call them drug dealers, we call them terrorists, we call them pedophiles, and they keep buying this shit. So I don't know what else we could do, like some of them even get up on stage and call us criminals now. They're getting really audacious. Oh, okay, well then let's get the government to regulate them. Well, we tried that and the government, they regulated the exchanges and gradually what they've done is they've been able to turn all of the exchanges into banks. So it kind of feels like winning, but then we realize that the more we close the on-ramps and off-ramps, the more some of these weirdos just stay inside the crypto economy and stop trading for fiat. And then we really can't control them because they start selling their labor and products and services directly for crypto and paying their employees directly in crypto and they never exchange it for euros and dollars. In fact, they even turn this into a slogan and they call it huddle. And the banker goes, what does that mean? I think it means hold on for dear life. It doesn't, it doesn't. It's just hold misspelled. So they huddle, I don't know. I don't know what it means. And then they make funny memes with monkeys and dogs, the Shiba Inu dogs, like smiling and saying, wow, how crypto, awesome. I don't understand any of it. So what we did was we tried to sell the currency suddenly to crash it and it crashed, but some of them just held and then it goes up again. And we've done that eight times and that didn't work. Okay, so make the government sue them. I mean, we've already put a whole bunch of them in jail. All of the ones who tell us what their name is, we put them in jail, but other than that, there's all of these other people who have it and we don't know who they are because they don't touch the banking system so we can't really put them in jail. Just shut the thing down. Well, we can't. Here's the thing. This is really frustrating and it's fundamentally unfair and I really feel for the bankers because it was so nice inside that golden cage and they really wanted to invite everybody into this nice regulatory cartel. But this rogue organization is really ruining the game, right? This has been a very profitable game, but this rogue organization that is really a disorganization is ruining the game and that's fundamentally unfair. If you look at the psychology of fairness, it's something that as human beings we feel very, very strongly. It's a very fundamental part of what keeps society together. One of the fascinating things that I've read is that this is not just a phenomenon of human beings but also our closest animal relatives, primates, right? So our closest relatives are bonobos and chimpanzees and they exhibit a very strong sense of fairness. So do gorillas, so do other kinds of apes and monkeys and other primates. So if you do the simple experiment, you have two monkeys in a cage or two chimpanzees in a cage next to each other and you put one grape in front of one and one grape in front of the other and they both eat the grape and they're very, very happy. And then the next day you put one grape in front of one and you put two grapes in front of the other. And the one that just got one grape looks over the two grapes and goes, it's screaming at the other monkey as if it's his fault. And then it will take the one grape that it just got which is still better than zero grapes which is still the same amount of grapes that it got yesterday and it will throw it at the researcher and scream in their cage. Why? Because it's unfair. Because that sense of justice is something that is really important in a social animal, right? It's really important to feel that fairness is part of our surroundings. Without the feeling of fairness, without the feeling of justice, we start feeling unmoored from society. We become isolated and depressed, right? It can have a very serious psychological toll on your psyche if you don't believe that justice exists in some fundamental way. If not in this universe, which it doesn't, of course, at least in the society of people around you. So fairness is important. So when faced with a system of two sets of rules, how do we respond as human beings? If I have to follow one set of rules, but then I suddenly notice that another person in the same situation as me has to follow another set of rules, maybe an easier set of rules, right? Even though I've been following these rules for a very long time, suddenly I feel a sense of injustice. Like why are they getting an easy ride? I had to follow the hard rules. Now, there are two rational responses to this scenario. When you are faced in a situation where you have to follow rules and someone else has more freedom, you have two possible rational answers. One is, I want to be that free too. And the other one is, fuck that guy, they should be as miserable as me. Guess which one the banks are going for? They're faced with this fundamental situation of unfairness. This Bitcoin thing isn't playing by the rules. It can't be made to play by the rules. And if you kind of somewhat make it so that it has to play by the rules, we'll just invent another one that doesn't. We'll probably just call it Bitcoin for easiness. And then Bitcoin once again, won't be playing by the rules. It'll be a slightly different Bitcoin, more stealthy, more anonymous, more evasive. Maybe in the end, the only people who can actually use cryptocurrency, the only people who end up having freedom are the criminals, the poor criminals, of course. Because the rich criminals have always had freedom. They don't need cryptocurrency to achieve that. They have Swiss bankers and lawyers. So they can buy freedom. Freedom is something you can buy. But for poor people, they're gonna end up using cryptocurrency. Even if you ban the entire middle class from using it, more and more of them are falling out of the middle class into the clutches of these freedom-making technologies, which is really frustrating for the bankers. So in the position of they don't have to play by the rules, instead of saying we shouldn't play by the rules either, or at least you should relax the rules, or at least we should try and test if these rules are working the way we expect them to work, instead they say make them stop. And then they keep saying make them stop, even though they see that for years and years, decade now, they're not stopping. And we're not stopping. We're gonna continue because there are billions of people who need this. There are billions of people who don't have access to the nice gold cage because they're on the outside. They will never be on the inside. They will never have enough documentation, enough provable wealth, enough bright white skin color, enough recognition as a human being, enough documentation as a citizen in some countries, enough of a penis, to ever have access to banking, right? Because they fell outside of the golden cage, and they will continue to be outside. In fact, the astonishing thing is that more than 40 years into the development of the internet, and certainly 25 years into the robust development of the commercial internet, banking has refused to change. And if anything is getting more exclusive, more unequal, and kicking more and more people outside of the golden cage. And now they're beginning to realize the cage is getting smaller. You know those horror movies where there's people running around some rooms and they go into a room and they press on one of the tiles and suddenly the walls start closing in? They're like, oh shit, start running to find the door? Those kinds of movies, I'm sure you've seen. Indiana Jones was one of those, but there's been others too. It's a great phenomenon. It explains the human psyche so well. You know, it triggers that claustrophobic sense. Well, right now, bankers are feeling that. Because the golden cage keeps getting smaller and smaller and smaller, right? And if they keep banking fewer and fewer people and playing with less and less of the world's wealth, concentrated in fewer hands, they become more and more fragile. The economic system they're presiding on, the pyramid they're standing on top of, has cracks in the foundation. And every now and then it starts shaking like that Indiana Jones movie. And they're like, I feel like I'm the king of the world, but not for much longer. And those peasants down there seem very damn angry. And is that a guillotine they're building? That looks like a guillotine. I don't like that at all. I'm going to get a nice gated community somewhere in the Alps with a vault underneath where I can hide all of my wealth. That's the world we now live in. We're beginning to go into this stage where we're going to have people getting behind higher and higher and higher walls and smaller and smaller and smaller compounds to escape the fate of everybody who's outside the golden cage. Well, I have news for you. It's really nice out here. You should try it. Outside the golden cage, we have freedom. We have sovereignty. We have monetary independence. We have control of our own money. We have monetary policies that we can choose. Some of us choose to use deflationary money that retains its value. Others can choose other systems. We're building new cool things. We're building toys and smart contracts. We're building games. We're tokenizing everything just for the sake of it. A lot of it is scams. There's a lot of weird and criminal people in this space out here, but at least none of them are criminal bankers. They're all inside that golden cage, and they can't come and play with us because they built a cage, they're locked in, and it's getting smaller. And all I have to say to you is it's lovely out here. Come and join me outside the cage and let them regret the decision of becoming the law enforcement arm of corrupt governments, the military enforcement arm of even bigger corrupt governments, and building this cage to increase their profit, which they are now trapped in. We're outside and we are free. Thank you.