DeFi's Potential To Right Side The World Economy

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Chris:
Hi there, guys. This is Chris Coney speaking, and welcome to this week's edition of the Weiss Crypto Sunday Special.
My guest today is Dr. Martin Weiss. And the microeconomic topic we'll be discussing today is why the traditional markets are in big trouble, and how you can profit from the big opportunities in the transformation that is underway, no matter which way it goes.
So, first of all, Martin, welcome to your first Sunday Special.
Dr. Martin Weiss:
Thank you for having me here. I really like the work you've done. I really love the interviews you’ve done with Marija Matic, and the rest of the team.
Chris:
Absolutely. They're just a wealth of knowledge, those guys so I'm always delighted to talk to them. So let's begin with the first part of that statement I just made. We're in the process right now of building a DeFi program, so this is the ideal time to talk about this.
On a macro level, how have the traditional, global markets gotten themselves into trouble? And then we can go into the transformation that's underway.
Martin:Martin:
There are several dimensions to it. It's all one big phenomenon, but let's look at the key dimension first.
In order to save the traditional financial system during the great financial crisis of 2008 and the great recession that followed, and the big post pandemic and pandemic crisis of 2020, they have had to effectively eviscerate the income of not just millions, but billions of savers and investors around the world. And they have had to basically exploit all the small and even big borrowers around the world.
Because, in order to save the financial institutions, they had to shove down interest rates to zero or practically zero. And they had to give the opportunity to borrowers to earn a lot more, especially on things like credit cards. So, the end result in the United States is the average one-year yield that you can get on a bank CD is less than two tenths of a percent. Last I checked, it was 0.18%.
That means if you invest $10,000, all you're going to get for that at the end of the year is a meager $18. Not even enough to cover an Uber to get you back home from the bank.
Chris:
It's a good point.
Martin:
On the flip side, if you're a credit card user and you don't pay up immediately and you actually build up a debt on your credit card, you're going to have to pay a minimum of 24%. And if you let it compound, you're going to have to pay over 30%, maybe even as much as 40% per annum.
Chris:
It's the same in the U.K., 25% to 30%.
Martin:
Exactly. So that is a disaster — not just for a few people, but for billions of people around the world. And anyone who is trying to either start a business or earn a little bit of income to cover their expenses, but their nest egg is in big trouble. If the majority of the people are in big trouble financially because of that, you better believe that the financial system as a whole is in big trouble.
Chris:
Right. Where's that money going then? If the 25% of the credit cards isn't going to savers, who's getting it? Because we know the savers aren't getting it.
Martin:
Banks are getting it, and a lot of it is being used to cover the risk of defaults on those credit cards, of non-payments, or chargebacks or other things that happen.
But the worst of this is that after driving interest rates to zero, and after printing trillions and trillions of dollars all over the world on top of that, the financial system is no safer today.
Chris:
Well, isn't that because it's essentially the same system?
Martin:
It's the same system. And instead of fixing the problem, they're just sweeping the dirt under the rug and making it worse and worse for the long term. Now, in the near term, the markets are up, the economies are recovering, everything is fine. For politicians, that's enough; but for economists who study the long-term durability of any financial system, it's very bad news.
And now, we're starting to pay the price in the form of the inflation. When the CPI was bad two months ago, the White House came out and said it was just temporary. When the CPI was even worse in the most recent announcement — in fact, the worst it's ever been in eight years, now 13 years — they said the same thing, "Oh, it's just temporary."
But guess what? Back in 1970s, when we were watching inflation snowball into double digits in the U.S., they also said the same thing.
Chris:
Do they believe they're in denial, or they're hiding the truth? What's going on there?
Martin:
It's a combination. Some people who say it believe it. Some people who say it don't believe it, but they're just saying it because that's what they have to do in order to keep their job, or in order to maintain the-
Chris:
Keep people calm.