• Ryan Himes

Jesus Take The Wheel

The markets fell roughly 2% on the week as uncertainty continues building around the Debt Ceiling and Evergrande Real Estate Group. Most analysts expect the selloff to continue through the end of the year.

Coinbase’s New Feature Allows Millions of US Citizens To Receive Their Paycheck In Crypto

Coinbase allows for workers who currently receive a paycheck through direct deposit to receive their deposit in cryptocurrency. Coinbase will exchange their deposit for crypto with zero transaction fees. Companies would still pay their workers in US dollars, however, the worker would choose what percentage of their paycheck they’d like to receive in any of the 100+ cryptocurrencies that Coinbase offers.

The feature is being deemed the “future of payroll,” as previously only select individuals could receive their paycheck in crypto, either famous athletes or people who work at a crypto exchange. This new feature reduces the amount of time, energy, and money it would’ve taken to exchange USD for crypto.

What Does It Mean In The Long Run? This provides millions of people with the opportunity to directly keep portions of their income in cryptocurrency. It cuts a lot of the red tape previously surrounding the gateway for this type of investing. Crypto should be viewed as a cash-alternative, so it’s very cool that people can receive both cash and crypto for their paycheck.

How Does Coinbase Make Money From This? Coinbase does not charge a transaction fee for the conversion, but the company has a standard spread on all trades that produces a profit. A spread is the difference between what the buyer has to pay and what the seller receives; since Coinbase processes the transaction, they take a tiny piece right in the middle of the transaction so it equally affects buyer and seller. It’s technically not an additional fee, rather neither the buyer nor the seller see the spread as it’s usually miniscule. Trading fiat currencies also has a spread, such as exchanging US dollars for Euros.

The Big Picture: This makes cryptocurrency more accessible to millions of people almost instantaneously. It’s amazing that Coinbase has the infrastructure to provide this service while making a profit.

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Government Shutdown Has Been Averted But The Debt Crisis Still Looms

Thursday afternoon Joe Biden signed a bill to avoid a government shutdown. The bill didn’t fully fund the government for the upcoming year, but it provided enough funds to allow the government to operate until December 3rd.

The next step will be raising the debt ceiling which has a tentative deadline of October 18th. Treasury Secretary Janet Yellen has stated that not raising the debt ceiling would result in catastrophe. The US will be unable to repay its debt for the first time in history, which could produce relatively small effects such as Treasury Bonds becoming more expensive to issue, or it could be cataclysmic such as the US dollar is no longer the world’s reserve currency and the world no longer views the United States as an economic superpower.

A lot of different things can happen and nobody really knows what will happen or how the world will react. We’ll probably raise the debt ceiling before it’s too late. We’ve raised the debt ceiling more than 80 times since 1960. The Republicans seem adamant about not wanting to raise the debt ceiling, but the benefit of letting the United States default on its debt isn’t visible anywhere.

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US Announces Strategic Alliance Between US, Japan, India, and Australia

The group of four countries has formed a strategic partnership that pledges the Indo-Pacific region of the world will be “undaunted by coercion”. The alliance, known as The Quad, has not yet mentioned China, but the group is making it clear that China will not rule the South-Eastern part of the globe unchallenged.

Why Is The Indo-Pacific Region Important? The Indo-Pacific region is the area between Eastern Africa, South Asia, and Australia. This part of the world holds roughly 60% of the global population: roughly 4.3 billion people (Read More Here). Also, it’s the main pathway for trade to Africa, which is the world’s fastest growing continent by population size.

Isn’t The World Overpopulating? No, the world is actually reaching its population peak over the next 7-10 years. Population growth rates are negative, which means that population growth is slowing, and that soon the total world population will peak (at roughly 9 billion people) and subsequently decline. (Read More Here)

So That Makes Africa Important? Africa is becoming a very lucrative place as by 2100 it's expected to be the world’s most populated continent. Nigeria at that time will be the world's most populated country with an estimated 1.4 billion people. And 1.4 billion people need a lot of stuff.

Who Is Going To Provide That To Them? So far, it’s been China. China makes up roughly 18% of all African imports (goods being shipped into Africa). The next highest country is India with roughly 6% of all African imports. The United States directly trails India, also importing roughly 6% of all African goods. (Read More Here)

The Big Picture: The Quad has been incredibly cautious to not mention China specifically, or call themselves a military alliance. Yet China is a serious problem for the major countries of the world. And they are growing exceptionally fast, much faster than the US. China often holds themselves back through regulatory crackdowns because they have the ability to grow so fast, meanwhile the United States is barely surviving through all of the debt it’s drowning in. If this were elementary school, China would be sprinting the mile while the US would be walking and still gassed.

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🤷 What To Watch For…

  • An Amazon-backed electric vehicle start-up filed to go public. The company, Rivian (RIVN), produces fully electric delivery vans and consumer pickup trucks. (Read More Here)

  • A new ETF filed this week aimed at investing in companies more in line with Gen-Z values. They use an algorithm that creates a “Gen Z Score” that is computed based on “how closely the company aligns with Gen-Z’s progressive values.” (Read More Here)

  • President Biden is meeting with 30 countries in the US’s first coordinated strike on cyber attacks. Cyber security has been a growing problem, and the White House is assembling an alliance to fight back. (Read More Here)