Weaponising Corporate Power in the Pacific

Adam: [00:00:24] Hello and welcome to Comedian versus economist, we demystify the world of money and help you get a handle on the bigger picture. My name's Adam, and we're joined, as always, by my little older brother and Real-Life economist Thomas Thomas here. Good, Adam, 

Thomas: [00:00:37] how are 

Adam: [00:00:38] you? Pretty good, thanks. How are you going? Yeah, doing all right. That's the way a big show coming up. Thank you out there for joining us once again. Welcome. If you're tuning in for the first time. Got a nice message during the week. Actually, shout out to Vanessa, who sent us a message on Instagram at CBC Podcast, said that she had us read out the review last week, which we got, which was actually meant for talk money to me and Hollywood podcast on Equity Mates Media. So she decided to take the time out to let us know that she loves our podcast and can't wait for it to be posted every week. So thank you, Vanessa. Big shout out to you! She said it would be great if we could make more episodes. Well, good news, Vanessa. We're making one right now. I genuinely appreciate you tuning in that we do love the support. Thomas Big Show Coming up, Woolworths says consumption is slowing. Are we eating out more or are we just not as hungry as we used to be? The Australian government bought some stocks with their money, so I will check in and see how the people of Australia share portfolios performing. Fingers crossed that 

Adam: [00:01:42] it's going well. 

Adam: [00:01:43] Would you let me scan your eyeball if I promised to give you some crypto world coin once they say we'll find out what that's all about. But first, Thomas in the words of Bruce Buffa. 

Adam: [00:02:03] It's the big show, the thing we've we've tolerated 

Adam: [00:02:06] all of your economic musings on things like Trump speculating on buy now, pay later and whatever the hell the Panama Papers was about. But now, Thomas, it's your time. It's inflation time, baby. What do you got? 

Adam: [00:02:18] Mm hmm. Yeah, this 

Thomas: [00:02:20] this is probably the most important data in the in the stable right now, and it didn't move markets as what was that inflation came in. So remember, inflation's the how much the price of stuff is increasing came in at 0.8 per cent in the quarter, which was in line with expectations. Annual CPI down a three percent, down from three point eight percent in the June quarter. So it's slowing a little bit driven by transport and housing, largely petrol prices, and that petrol price is going to keep kicking into December as well. So the interesting the interesting thing, though, is that the trimmed mean. So the ABS publishes this data, which tries to cut through a bit of the noise. You get some sort of choppy, choppy data in the series just by the nature of it. And the RBA is really interested in the sort of the core measure of inflation and are looking for sort of like temporary blips, but they want to look at the core measure of inflation, and that was up 0.7 percent versus market expectations of 0.5 to give us 2.1 per cent over the year. And that puts us back in the RBA's target band. So the RBA has a target band of two to three per cent. So as an inflation targeting central bank, they're going to use interest rates to keep inflation within the two to three per cent target band. And so we got back in the target band back at 2.1 per cent, and that's the first time since 2015 found ourselves back in the target band. 

Adam: [00:03:47] Mm-Hmm. Is this one of those things where like to the target because we're dealing with pretty small increments here. So two to three percent of the target band, are they kind of going right back in there now or do they really need to see it get like 2.5 per cent before they start thinking about trying to control it with interest rate? 

Thomas: [00:04:05] Yeah, I think, yeah, Thilo has said recently he wants to see it, you know, sustainable and in the target business is not just so now now we're here, we're fine. So it's like sort of there's no case to to hike interest rates until it gets above three per cent. So you think about hiking interest rates, pulls inflation down lower interest rates, pushes inflation up, doesn't work exactly like that. But that's sort of the theory. Yeah. So this is a real no case until it gets above three percent. And the other thing that that Thulo said recently or through the year and this is sort of new for the RBA is they're saying that they that it really hinges on wages and they're not really going to be interested in hiking rates until they get wages in around three to four percent. And right now, they're running at 1.7 per cent next result, out in November mid-November. But there's no wage. There's not enough wages pressures there to to trigger the RBA to hike rates. 

Adam: [00:04:59] Right. So the RBA said they were going to they were targeting 2024, didn't they, for for a rate increase? 

Thomas: [00:05:05] Yeah, that's right. 

Adam: [00:05:06] That's right. So they haven't changed that position. 

Thomas: [00:05:08] They haven't changed that position, but nobody believes them anymore. 

Adam: [00:05:13] Did anyone believe him in the first place? 

Thomas: [00:05:15] I think I did, and I think I do like I think I'm not sure some markets are now expecting a rate rate hike that's pretty, pretty consistent across the big banks amp. Shane Oliver saying pencilling a small increase in the cash rate from 0.1 per cent two point twenty five per cent in November 2020 to 

Adam: [00:05:33] hang on an increase from 0.1 2.0 to five. That's a decrease. 

Thomas: [00:05:38] Oh, sorry, 0.25. Sorry, good catch. Yeah. 0.25 sorry. 

Adam: [00:05:42] Hey. You're on it. Oh yeah, she's carrying this, obviously with the economist in the family. 

Thomas: [00:05:52] Yeah, so he's he's setting up two point twenty five in November next year, 2022, and then another point to five in December. And that's what they're expecting. So ending ending 2022 at 0.5 per cent, so a full year ahead of what the RBA is talking about. And that's pretty consistent now. And look, a lot of the CBA's expecting the same. Most of the major banks are because they see inflation sort of getting away. So there's sort of a question here. It's probably in in the for the old RBA, that's probably true. But it does seem that there has been a sort of a philosophical shift at the RBA within now. I think I think they've feeling like they've been too hard on inflation and they need to let wages pressure build to get the inflation that they want. And until they see that they kind of think there's just a sort of deflationary trend in the system with more of a structural problem. And so you need that wages growth and so on. I think there has been a shift and I'm not sure if if the if the banks are really clocking that shift and I would expect, you know, we could get inflation into the threes and the fours and into. Wages get up, then we're probably not going to see rate hikes, I think so there's a question there about how genuine the RBA has been in this in this change of philosophy. 

Adam: [00:07:08] I like it, though. I like that we're looking at a scenario where it's Thomas V the big banks. Mm hmm. Because they've obviously they've showed their hand and said, it's going to go up. You're saying, yeah, you say you're not so sure. So sure. Or maybe you're saying it's not going to happen? Yes. So this could be a big coup for you, Thomas. This could be your your defining moment, 

Thomas: [00:07:30] any moment in my career 

Adam: [00:07:32] where I believed what Phil Lowe said. Yeah. The only one of those you probably get invited to dinner at Phil's house will be you'll be hosted. The only guy who who believed me when when I said that we were going to raise 

Adam: [00:07:47] rates till 2024. I mean, it's a lie because the media has been making a lot of it. And I always want I always wonder how much, you know, things are influenced by like it becomes self-fulfilling. You know, people like, Oh, not that inflation's going up, they're going to have to raise rates, and then that just starts getting reproduced everywhere and recirculated and everyone starts kind of believing it becomes like, you know, if you have if you ever paid any attention to the crypto sphere, that's how how priced prices are seemingly driven there. So, yeah, I just wonder whether the RBA sitting, the RBA sitting there going, Well, no, we're telling you, 

Adam: [00:08:25] we're telling you, we're not going 

Adam: [00:08:26] to do it. And it was like, Yeah, we know. 

Adam: [00:08:28] We know what we think. I'm hearing a lot of noise. Yeah. 

Thomas: [00:08:32] No, you feel low literally came out a couple of weeks ago and said, I can't understand what people are pricing in rate hikes. And we were like, That's pretty clear signal unless 

Adam: [00:08:41] we hear what you're saying through, you get a hike right now. I'm genuinely not like, I'm telling you, you're literally saying, Yeah, I'm not got a wink wink. Yeah. 

Thomas: [00:08:52] I mean, the other thing that you got to remember with this 2.1 per cent, it's still a very soft outcome. So like in the US right now, they're running at 3.6 percent in the UK, they're at 2.9 percent over New Zealand, there at 4.9 per cent. And that big jump? Yeah, that was a big jump. And that force and the BNZ hiked rates to 0.5 per cent on the back of that inflation number 

Adam: [00:09:14] hiked rates to zero point five people in the eighties, people who grew up with 15 percent interest rates on their mortgage. Yeah, you can't use the word hiked. Yeah, yeah. From zero 2.5. It is funny.

Thomas: [00:09:28] There's only two ways that interest rates move. Either they hiked by 0.25 percent, which is the minimum 

Adam: [00:09:36] amount that it can be raised or they slashed by 0.5 

Thomas: [00:09:40] percent. That's the only options. There's no. 

Adam: [00:09:43] It's like if you ever lose a match at like a grand slam tennis tournament, you are either bundled 

Adam: [00:09:49] out or you crashed out of the third round. You didn't lose you a bundle it out in the third round or you crashed out. Yeah, it's very materion here, right? 

Adam: [00:10:00] So we've got inflation all over the world. I mean, so the big promise I was told I was given was that money printing quantitative easing wasn't going to cause inflation. It was, you know, it's different this time. People don't understand we weren't looking at inflation. And yet here we are. What, like a couple of years into the money printing machine and inflation's kicking off all over the place? 

Adam: [00:10:21] Yeah. Yeah, I 

Thomas: [00:10:23] mean, so the key question is is whether it is structural or whether it's temporary. And the really interesting thing about Covid is that the Covid crash wasn't as deep as people expected, not not anywhere near it, and the snap back was much quicker than people expected. And that's created all these dislocations in global supply chains like chips are an example. So people slashed chip production, microchip production, but then demand actually surged and that so now there's a shortage in microchips. Mm-Hmm. And that's sort of happening in all sorts of levels, and that's then feeding through into into the into prices. But it's it's sort of like it's just a wobble because we just kind of got wrong footed by where Covid was going. So so the question is, once we once we get find our balance again, once the global economy finds its balance and we put the wobble of the Covid wrong footing behind us, then where do we sit with inflation? And that's that's the question. And that's what sort of fill those looking through and saying, Look, yeah, when I look through that, I don't see any wages pressure. And until I see wages pressure, I'm not expecting to see sustained inflation. 

Adam: [00:11:30] Sounds a lot like classic economists. Yeah, but you know, because economists predict things and then then things don't go the way that they and then everyone's like, Oh yeah, but like, we had the things bounce back quicker than we were expecting, you know, we're 

Adam: [00:11:47] like, Yeah, well, that's you know, 

Adam: [00:11:50] why didn't you see it coming? Like, that's the No. 

Adam: [00:11:58] Yeah, I'm with you. Whatever that's worth, could I count the dinner as well? 

Adam: [00:12:06] All right, Thomas, you spotted something interesting in the Woolworths results this week. What was it? Yeah. 

Thomas: [00:12:10] So Woolworths got a trading update from those guys. They had a twenty point one per cent increase in net profits to one point five billion. It's a big number. Sales were up 3.9 percent. Online shopping was up to a record 1.9 billion and that was up 54 per cent compared with a year ago. So what do you think? How do you think markets reacted to seeing a 20 per cent increase in profits? 

Adam: [00:12:39] I'm guessing the share price 

Adam: [00:12:40] tanked as a result of profits because 

Adam: [00:12:43] that doesn't make sense, which means it's 

Adam: [00:12:45] probably what happened. 

Thomas: [00:12:46] Yeah, share prices fell three per cent. 

Adam: [00:12:49] Yeah, yeah, yeah. So those big, 

Thomas: [00:12:51] big, big numbers, but less than people then markets were expecting. Yeah. So and kind of seeing through the noise, sales were up 8.7 per cent on two years ago. So on pre-COVID numbers, so not a huge thing. And there was a downturn in sales, which Brad Banducci, the CEO of Woolworths, put down to people going out for dinner. So you're saying that with the economy reopening, people going out for dinner and that slowing grocery sales because people aren't eating at home as much? Can I have 

Adam: [00:13:21] that bigger impact, though, like people, I mean, people? Surely that's a temporary blip, like because you can only afford to have a dinner so much? Yeah, yeah. I mean, yeah, possibly like if people have been saving, I guess people have been saving for a long time in lockdown. They can't go out. So now they've got pent up money, they've got to go out for dinner like every night. Who wants Mac? 

Thomas: [00:13:40] Well, I think it's probably just returning to normal because you Banducci was saying it's slowing of some very high numbers. So they, Woolworths and the grocery retailers did see a boom in sales with with the Covid lockdowns and people just eating at home more. Hmm. Yeah. So I think that's the story. So I think I think it's I think it's interesting that we did see this. There's an interesting chart. Maybe I'll share it to Instagram that looks at goods consumption and services consumption. And basically, the idea is that good goods consumption boom, there was a pivot to online retail, which and you can see that in the Woolworths numbers as well. But good consumption didn't slow down. It actually jumped up above trend where as so, services consumption that that did go, that did that did take a hit, which is make sense because you just can't go out and get, you know, one on one haircuts on the stuff like that. Yeah, yeah. So so the question becomes the really interesting question going forward is does services rejoin goods? Canned goods consumption like is good consumption higher because there's so much money in the system and now that people are able to consume services? Does that bounce back? That's one scenario. The second scenario is that there was just a substitution between services and goods because people couldn't buy services. They just put that money into goods and that so that caused a jump in. 

Adam: [00:15:07] Goods can't get a haircut. I'm going to sit at home and eat chocolate. Yeah. 

Adam: [00:15:14] So nice thing to level out somehow. So does one go up or does the other one come down? 

Thomas: [00:15:18] Well, no, they don't. They don't need to balance out, necessarily. Look, in that first scenario, services consumption rebounds in the first scenario, goods consumption is high because there's so much money in the system. We know that household incomes are up. We know that household savings are up with prico on pre-COVID levels. And that's consistent with a boom in consumption. So in the first scenario, goods consumption remains high and services consumption joins it bounces back quickly. And if that's if that's the case, then we're looking at a pretty epic boom in services from current levels because current levels are depressed, so they'll come back to trend and then bounce back even higher. So you could see a real boom in services consumption 

Adam: [00:16:01] also or a other thing on TV. The other day, some hairdressers booked up until March. Wow. 

Adam: [00:16:06] It's ridiculous. Yeah. Wow.

Adam: [00:16:09] That's like, that's a that's a problem for people like me that don't book. 

Thomas: [00:16:12] Yeah, right? 

Adam: [00:16:13] Like, I just I just rock up and go, Hey, how's it going? 

Adam: [00:16:18] Can you cut my hand now? Yeah, yeah. But people have booked up 

Adam: [00:16:24] all over the place for a long time. 

Thomas: [00:16:26] Yeah. So maybe it is. Maybe it is. That's that's the scenario that we're going to see an epic lift in services consumption. 

Adam: [00:16:31] I'll be fascinated to see if online shopping stays high. If people have made the shift because I hate it, like I love buying things online, like Amazon, eBay, I'm all over it. And that's how it get a lot of things. But grocery shopping? Yeah, right? And from what I can tell, it's not for people I know, like people in my I guess for me, young families start with time. Poor, right? And so to me, it was like no brainer. Online grocery shopping is the way to go, but it's too unreliable. It's too unpredictable in 

Thomas: [00:17:05] terms of the quality you get 

Adam: [00:17:06] to get things. Things are not in stock, things to get substituted for other things because, you know, we didn't have this brand or this, you know, type of muesli or whatever. So we've given you cornflakes. 

Adam: [00:17:20] Oh, really, they do that, right?

Adam: [00:17:22] Yeah, they can just swap things in. So we've we've tried it maybe three times and each time we've just been kind of gone. We'll just get like the bare basics. And so we still need a trip to this. 

Thomas: [00:17:37] Yeah, I gotcha. Gotcha.

Adam: [00:17:38] So I'll be fascinated to see because I didn't it wasn't catching on in Australia. Hmm. Online grocery shopping was was growing really slowly from what from what I recall. And then the pandemic hit. And it's like, this is people didn't want to go to the shops. People couldn't go to the shops, online shopping. Just boom. I'm going to be really fascinated to see whether it continues. 

Thomas: [00:17:58] Yeah, yeah, we'll be very sad 

Adam: [00:18:00] that people are kind of used to it now. And maybe was the pandemic constructed by grocery companies? 

Adam: [00:18:09] Possible was Woolworths 

Adam: [00:18:15] and Coles behind the pandemic, it's all in my

Adam: [00:18:17] hands a simple question on super, 

Adam: [00:18:20] okay, let's take a break. There we'll go, grab a word from our sponsors and be back with more comedian versus economist right after this. Thomas The government has bought a phone company,

Adam: [00:18:48] so we already have one. 

Thomas: [00:18:50] You know, that's not exactly what's happening. So Telstra is buying a phone company Telstra is buying. Did you sell Pacific paying for us? $1.6 billion? Did you sell? Pacific is the South Pacific biggest telco business headquartered in PNG. Papua New Guinea Opera also operates in Vanuatu, Nauru, Samoa, Tonga and Fiji. Has 2.5 million phone and internet subscribers and 7500 employees, and Telstra's buying it there. Yeah, but they're doing it with the government things of that one US 1.6 billion. Telstra is chipping in a modest 270 million, so the government is stumping up the remaining one point four billion dollars or more. But doing that through debt and equity, so they're going to lend them some money and take a bit of a net. The government is going to take an equity stake in Digicel, I think is the sound that's going to work. 

Adam: [00:19:48] So the government's buying some shares, kind of. 

Thomas: [00:19:52] Yeah, yeah, a concept like that. Yeah. Well, yeah, it was more that they're funding Telstra to go and buy. Did you sell their provider? Yeah. The Export Finance Corporation's involved. 

Adam: [00:20:03] So Telstra's Telstra's private company. They used to be owned by the government. They're now a private company. So is the government is this this is unusual for the government to be lending money or giving money to a private company to buy other companies? 

Thomas: [00:20:19] I'm not sure. I'm aware. I don't know of a precedent in recent times where it's like this. So the key the key thing is that the Australian government was worried that a foreign power which in brackets is China. 

Adam: [00:20:36] Yeah, yeah. Just once I'd love it to be like New Zealand. 

Thomas: [00:20:40] Yeah, yeah, it is. Yeah, they're worried that China was going to buy Digicel Pacific and then control the phone networks around Australia in in the Pacific, which was seen as that seen as a worry. So, yeah, so that's so that's what's driving this. This is why they're stumping up the money because they don't want China to control, yeah, the foreign networks. 

Adam: [00:21:05] And yeah, right. So it's a risk mitigation thing. They're like, this is this this has got problems written all over. And if

Adam: [00:21:11] yeah, 

Thomas: [00:21:12] yeah, like given given the current tensions, it's just it's seen as a situation that they would much rather avoid. So I thought it was interesting because I thought it was about Chinese companies then controlling the network, but saying it's more than that. So the Australian Strategic Policy Institute, the head of international cyber policy, Fergus Hanson, says that the Chinese national security law obligates its private entities to assist the Chinese state espionage activities so they could could be spying. But the bigger risk was maliciously changing the information environment through default settings of news providers on mobile phones, which we know through wolf warrior diplomacy is a real thing. So Wolf Warriors, I don't know if you come across this term before there was, there was a famous movie in China about the wolf warriors who are some sort of patriotic warrior types or something in this sort of historical movie. But we've now got Wolf Warrior diplomacy, so what that causes is diplomacy. That's a bit on the aggressive side towards China's diplomatic ends. Things like tariffs and trade bans and stuff like that, but also getting in and know messing around in the diplomatic sphere as well. So that's that's what's called wolf warrior diplomacy. But part of that, they're saying is that they'll get in and change the defaults new settings so that everyone in the Pacific would then see China friendly news or news angles that would would promote China's interests, which, you know, which would probably involve trashing Australia. And then in that way, turn the Pacific populations against Australia. And that's and that's what that's what Fergus Hanson says is the real issue there. And it's why they why the government's not willing to tolerate Chinese ownership of the ji. So there wasn't actually an offer on the table from China, by the way, like it was just just a potential threat. But China has form there like it has been. It buys up infrastructure in particular countries around the world in order to have to have that influence. 

Adam: [00:23:15] Interesting. Yeah. Well, I guess I think it's the Chinese will have to just keep coming in through the back door like that. Yeah. 

Adam: [00:23:24] You know that we've bought the front door and yeah. Oh, well, I guess we'll just keep coming around the back. Yeah, that's right, yes. So it's this 

Thomas: [00:23:32] is a big deal. So it's bigger this this investment on the Australian government part is bigger than all Pacific aid combined in this one deal. So it's pretty substantial. And markets have generally reacted pretty well. Pan Pengana Capital's principal Rhett Kessler says it's a very elegant deal because it's sort of not tenable for the government the government itself doesn't own, did you? So it doesn't want to be managing a phone company like that in a foreign, you know, foreign countries like it's got an ageing 3G network and 

Adam: [00:24:04] didn't even want to manage 

Adam: [00:24:05] it, for example. Yeah, yeah, that's right. So, so yeah, so so it 

Thomas: [00:24:14] enables the government to do that. John Kehoe, the AFR says Australia is weaponizing corporate power. So Telstra's got runs on the board with running, running a network, and so we're weaponizing that capability in order to meet our strategic agenda. So yes, it's elegant in that sense. Like it, it we we address the strategic risks, but without having to run, having the government, having to run a phone company. And then on the other side, it's quite a good deal for Telstra. So Telstra's chipping in just $270 million out of the in the total deal. But for that, they're buying a business that generates 233 million of annual free cash flow. So they get their money back in like a year and a quarter or something like that.

Adam: [00:25:01] And what happens to the money that the taxpayer has given Telstra?

Thomas: [00:25:04] Well, they're paying it back here. And then and then, because there's an equity stake is what they bought, did you? 

Adam: [00:25:10] So they they statement, they stop making money and then they pay us. 

Thomas: [00:25:14] Yeah, that's right. That's right. And then, yeah, because we've got an equity stakes of this. Yeah, we can get a share of the profits. 

Adam: [00:25:20] We'll get dividends. Yeah. Is this the tip of the iceberg, though? Is the government going to just start casually investing in companies? And it's I'm not sure I'm comfortable with that if it's my money. 

Thomas: [00:25:30] Yeah, it's interesting. I mean, it's very interesting, too. 

Adam: [00:25:33] We can. We can. We put suggestions on the table with the companies would like to buy. 

Adam: [00:25:37] Yeah, these speculative. Yeah. No, I mean, I think I think there's a very clear strategic 

Thomas: [00:25:46] imperative with this one like it's it's quite clear why, why it makes sense for Australia to to buy, did you so? Yeah. And I don't think there's going to be many, many companies with that that happens. But you could you could imagine you could imagine ports in Indonesia or, you know, you know, runways and 

Adam: [00:26:04] we sang on we sold a port and down to the China. 

Thomas: [00:26:08] Yeah, I think we're in the process of taking that forward. I think we aren't doing that one. 

Adam: [00:26:14] We've learnt from the lessons of the past don't sell ports. 

Adam: [00:26:18] Instead, let's buy phone companies in other countries. 

Adam: [00:26:21] Yeah, yeah. I think I think

Thomas: [00:26:22] what's really interesting in this for me is just how quickly this this pivot is playing out. So the Port of Darwin sale that was only five or six years ago or something. And yeah, so back then it was like, yeah, fine, we'll let China run the ports. No worries. And now we're like, we're not even willing to let China run phone networks in foreign countries, let alone a port domestically. Yeah, yeah. So so. So I think this this pivot, this in in global politics has been really rapid, and I'm not sure that the markets are really sort of caught up with with what all this means. And I don't know that anyone really knows what it means, but we have moved from a reality where China was everyone's best friend and the production house of the world. To now, it's becoming recognised for the US and Australia as a strategic rival, and that has very different implications. And now I think we're still still figuring it all out.

Adam: [00:27:12] But as you say, if if we was only five years ago that they are our best friend and it was all happy families and now it's not too late, we've got to buy this fine company to protect our interests. Well, what about in five years time when you know we've kissed and made up and everyone's happy again? Now we've got this fine company. We get cheap, cheap international calls to Nauru. Suppose? 

Thomas: [00:27:33] Yeah, yeah. Check on the offshore detention centres. 

Adam: [00:27:37] Yeah, yeah. 

Thomas: [00:27:38] But commercially, the deal kind of stacks up in that. That's sort of been the the feedback from the financial press is it's not that just buying a dog that's unprofitable just for the sake of it like it. It seems like a reasonable asset, and Telstra's share price jumped two per cent on the deal. So I think markets see it pretty favourably. 

Adam: [00:27:56] Yeah. Okay, very good. 

Adam: [00:27:59] All right, Thomas, guess what? Big news? There's a new crypto coin. The new one. 

Adam: [00:28:05] I know you love your crypto 

Adam: [00:28:07] world coin is being spammed now. Share this! Share this article with you! During the week I came across it, you know in my extensive reading that I do three the a week. So there's a new coin. I'm keen to get your thoughts on on this world coin, which is a new idea to give everyone in the world some crypto. The essentially it's been. It's been started by 

Thomas: [00:28:29] Sam

Adam: [00:28:29] Altman, Sam Altman, who was behind like Y Combinator and some other kind of big big investment 

Thomas: [00:28:36] in the silicon Silicon Valley legend Austin. 

Adam: [00:28:38] Yeah, so he's got this vision where he wants to give everyone in the world some crypto and all you have to do to get your free crypto is agree to have you written. This can 

Adam: [00:28:54] buy and 

Adam: [00:28:55] or operator in your local area. 

Adam: [00:28:58] Iris scanning or what? 

Adam: [00:29:00] Yeah, what did you make of it? 

Thomas: [00:29:01] It's a part of me. Loves it. Part of me loves, loves the idea that they're just going to airdrop it to everyone that if you exist, you're entitled to some world coin is kind of that idea are like that. Like, I think one of the things about bitcoin that people gloss over is that 70 per cent of bitcoin is controlled by whales. 

Adam: [00:29:20] So like by the one percent or the few, the few billionaires that have 70 percent. Yeah. Elon Musk. 

Thomas: [00:29:26] Yeah, yeah. Yeah, exactly. So like, 

Adam: [00:29:28] we'll probably even the silent the something, the more silent ones that have probably even more than Elon Musk. 

Thomas: [00:29:32] Yeah, that's right. So like in terms of like setting up a new global currency, you know, as set it up and then give 70 percent to a bunch of billionaires seems like a really terrible way to establish a new currency. 

Adam: [00:29:45] It was fascinating. There's only 3.9 percent of the world owned crypto. Mm hmm. So it seems like it's everywhere. It seems like everyone's got some crypto. You know, everyone's talking last week about Shiba Inu going to the Moon. It just feels like everyone's got crypto in some form, even if it's just a little bit, but it's 3.9 percent of the world. Mm hmm. 

Thomas: [00:30:07] Yeah, I mean, you forget you forget this living in Australia, but like, we're in the top one. If you're an Australian, you're in the top one percent of the global wealth distribution, like there's a lot of poor people in the world. Yeah, yeah, yeah, you know, and they're not they're not out there buying crypto. So. So I like I like that element of it. 

Adam: [00:30:24] But it's but it's got no value right at the moment. So. So this world coin, it has, he's just creating it as all crypto coins that they created that have no value and have no intrinsic value to begin with, do they? I mean, that's that's true. 

Thomas: [00:30:38] Yeah. Yeah, most have known. And he rallied to end with

Adam: [00:30:44] his pocket scepticism for a moment. We're talking about world changing like 

Adam: [00:30:52] world solving world problems here. 

Adam: [00:30:55] All right, it's a positive use with crypto. Just like crypto sceptic 

Adam: [00:31:01] have had off, often not so they have no value to begin with. And then over time, as people buy into them and the cause, the the supply of those coins is limited, then people want them and demand pushes up the price of the coin. Hmm. Does that work? 

Thomas: [00:31:20] Yeah, yeah. 

Adam: [00:31:21] So he's saying we're going to have all these coins and we're going to give them out to everyone in the world. Everyone in the world is entitled to one. And the way that they're going to enable this to happen, to make sure that no one kind of just rocks up and says, Oh, I haven't got any of my world coins yet, can I have? Can I have one, please? Even I've already got one. Is there going to scan your Ren, which sounds really intrusive and really, really sort of privacy breaching? Like, I think if the vaccination rollout has taught us anything, it's that people aren't really that keen for the government or anyone to be collecting too much their personal data, especially if it involves some sort of biological component. So it sounds horrendous, but they're saying that what they're going to do is they're going to create a hash of your retina scans. Everyone's retina scan is the same as the most reliable in terms of unique. So it's really hard to forge. It's more it's more unique than a fingerprint, for example. You need your fingerprint and it's more reliable and then you face, obviously. So they're going to take a retina scan, and they've promised that they're not going to then save that image anyway. And what they're going to do is they're going to convert that effectively into a cryptographic hash, which is a long string of numbers and letters. And and that hash becomes your personal identifier and then that hash gets assigned some crypto. So they then promised and this whole promises, they then promise to delete the retina image of your eyeball. Mm-Hmm. So they actually don't need to. They don't need to even record your name anyway or anything about you because they've got your eyeballs game. Hmm. So they just need to know that that eyeball has got its world coin already. Yeah, which I think is kind of cool, but it's a very it's a very labour intensive process to scan everyone's eyeballs. 

Thomas: [00:33:20] Yeah, yeah. Well, some the eyeball scanner is called an orb because you must like dystopian fiction and this or there's entrepreneurs are given orbs to run this thing, so the orb operators must get some kind of cut or something. So they're running a pilot programme at the moment. Yes, 30 orbs run by 25 entrepreneurs in Chile, Kenya, Indonesia, Sudan and France. And they're going to increase oil production to 50000 a year.

Adam: [00:33:47] So the interesting thing like referral codes are everywhere, like if I wanted to get you, if I if I refer you to say, I don't know, self worth trading platform, I give you a referral code. You guys are things. You get free trades and I get five free trade or something like that. But with this one, you get more world coins. So if you if I refer you, if I can get you to get your retinas scanned, then I get some gold coin as well. Hmm. So like, this is like this is dystopian future Tupperware parties. This is like people are going to have a little party at their house 

Adam: [00:34:25] with an old scanner and inviting 

Adam: [00:34:29] your friends around just like, Hey, that is kind of rare. Have you drinks, coffee or whatever? 

Adam: [00:34:34] Oh, what sounds always get? Oh what we all get I scam. It'll be fun. 

Adam: [00:34:45] Yeah, that's going to be fascinating to see whether the power of the referral will get people to scan the eyeball for the promise of some crypto. Hmm. Which may or may not be worth anything? Mm hmm. But he's talking about he's talking about potentially solving universal basic income. Yeah. Do you see a way that that can kind of eventuate? 

Thomas: [00:35:08] Yeah. Altman's been I've been talking about UBI for a while, and he floated an idea that a glow like last year that a global UBI, it's a universal basic income. So free money, people, everyone is getting free money basically could be funded by profits generated by a powerful artificial general intelligence, or AGI. So I don't know if you know, if done much reading about AGI, but it's potentially world ending if it if it goes wrong. So it's like super intelligent artificial intelligence. Mm hmm. You know, there's a lot of years worth. We're digging up, we should we should do a show on it because there's a lot of scenarios where a guy goes rogue pretty quickly. If it's just designed poorly and destroys the world, yeah, 

Adam: [00:35:50] Terminator two taught us that. 

Thomas: [00:35:51] Yeah. So that that vision that he outlined there of a UBI funded by AGI profits that that freed a lot of people out. But he's still he's still backing it, and he still thinks that could be an idea and then could, well, coin could be a way to distribute that. But Rubio is a bit different from just giving people a one off payment. So the idea with the UVI is that every month or whatever you get their money you need for your basic needs and then that's a recurring income stream is not not a one off payment. So I don't yeah, but it's saying it is an experiment he sound like. Yeah. One thing I believe is that you do an experiment, you do a first thing and then you learn and you discover all sorts of things about what works and what we can improve. There will be many answers to how this could be. Something could something like this could become a closer to a UBI. So seising is a first step towards a UBI. Let's get everyone a bunch of free money and then see what happens. You see how it works? Yeah. So that's that's an interesting idea. I mean, I like I like that intention to it like trying to solve that problem. Like, I think one of the things that I struggle with the whole crypto universe is how much it's driven by speculation and how much it's like get on board and watch what your currency go to the Moon. And yet it's going to save the planet at some point. But in the meantime, I'm just going to make a bunch of cash and buy a Lambo. Like for me, I find it very hard to believe that the solution to the global economic crisis is a speculative frenzy, like a kind of hard to imagine that that ends well. So I kind of like that this is like ghost of that directly goes like, Well, let's distribute it equally from the get go and to everyone. And it's super ambitious. They are talking about getting it to one billion people by the end of 2022. It's only 14 months away. So that's a that's a massive rollout. But yeah, so I do like that in that. I like that element of it a lot. 

Adam: [00:37:47] Yeah, it's not like but this guys, it's nice. It sounds good that he's saying, I want to give everyone free money, but he's just giving everyone a worthless coin at this point until it finally becomes money. So I guess there's lots to see here and lots to go before this eventuates into something meaningful. But still, it's an interesting idea. So look, let's leave it there. End of the show for this week. Thank you very much for tuning in. We really appreciate your support. Don't forget, you can send us an email at cve@equitymates.com Or on the website equitymates.com/cve, Instagram and Facebook at CVE podcast. And don't forget lots of other good shows from Equity Mates Media Get Started Investing feed Equity Mates Investing podcast. You're in good company. Talk money to me and starting very soon. Crypto Curious. I'm very much looking forward to that if you're enjoying the crypto chat here. You will certainly enjoy that show. So let's look forward to thank you once again for tuning in. We do appreciate it, and we'll talk to you again next week. See you, then!