In the cultural tradition of the West, the rich are not considered the best part of society, the author concludes. From Venetian merchants and Florentine magnates to Elon Musk and Donald Trump; from Antwerp, which became the economic capital of Europe in the first half of the 16th century, to New York of the 21st century: in a series of eras, states and political systems, Alfani sees through the same distrust of the rich and still the same problems with determining the social role suitable for them. Whatever the rich do, it causes criticism. If they consume too demonstratively, it arouses social envy, if they begin to save, they become even richer and contribute to the emergence of rich dynasties, causing discussions about how their heirs have earned their privileged status. If they don't make donations, they are considered soulless stingy, if they do, they are suspected of striving to optimize taxes. If they go into politics, they raise fears of excessive influence on the political system, if they do not, they raise suspicions of indifference to the problems of society.

In the Middle Ages, the rich were advised not to look rich, excessive accumulation was considered sinful and even socially harmful. The French philosopher of the 14th century, Nicholas Orem, called on "democratic cities" to expel the rich to prevent them from gaining access to political institutions because in this case the rich would enjoy overwhelming political power, acting "like gods among people".

Over time, the attitude towards the "sinfulness of wealth" changed, and huge fortunes opened up access to power. From "sinners" the rich turned into sponsors of kings and even "saviors of last resort" like Cosimo Medici in Florence of the 15th century, who was recalled from exile to save his country from financial collapse, or banker John Pierpont Morgan, who led a group of financiers to combat the banking crisis in 1907 in the United States. Perhaps the fact that in these times of frequent crises, the super-rich no longer perceive themselves as a "private repository of money" to which the public can turn in case of urgent need, and state institutions do not really encourage them to do so, and causes protests like "Occupy Wall Street" because of suspicions of the usurpation of the authorities by the rich to strengthen their privileges. And more than six centuries after Orem, his idea was actually repeated by the influential French economist, the author of the bestseller "Capital in the XXI Century" Tom Piketty, who noted that excessive concentration of wealth may be incompatible with the functioning of democratic institutions. By the way, Piketty praised Alfani's "History of Wealth in the West" for "a deep look into the past and important lessons for the future". Alfani himself, however, tried to describe the "history of wealth" without any ideological framework. This book is not "against" the rich and not "for" them - it is "about them".

About how throughout history, under the influence of various factors from wars and pandemics to geographical discoveries and technological progress, the socio-economic landscape and the relative representation of the rich have changed, the criteria of wealth and the way to it have changed, as well as the privileges of the rich to use social, economic and political resources and their social roles.

About finance

Throughout history, the ability to manage money wisely has always opened up great opportunities for personal enrichment for those who had high special skills. Bankers, financiers and investors occupy a prominent place among the rich of any era. Sometimes they purposefully dealt exclusively with finance in a narrow sense, but often worked in capital-intensive sectors of the real economy, such as international trade.

Although the boundaries of spheres of activity are often blurred, let's focus on finance as a special way to wealth - because throughout history they have invariably been considered the most problematic occupation: in many cases, people who have chosen commerce and money management as such as their main activity have faced social contempt.

From the medieval condemnation of usury (which meant lending money in all forms) to the 19th century disgust for speculators and ruthless financiers, up to the Occupy Wall Street movement and other protests against the growing inequality arising from an overly financialised economy - the world of financiers has always been treated with some suspicion, including those people who needed their services most. In fact, in Western societies, the claims of bankers and financiers to wealth have always been considered less justified compared to the claims of the nobility, whose right was determined by origin in accordance with deeply rooted social and cultural norms, as well as formal legislation. The claims of rationalizers and entrepreneurs, able to fruitfully introduce innovations into the economy thanks to their intuition, were also considered more justified. Paradoxically, this attitude persists even in most modern legal systems, which have made the ownership of large financial assets less vulnerable, including through taxation.

But in other respects for example, when women had the opportunity to act relatively freely in those social areas where their ability to act was previously limited, or when there was a need to remove religious barriers that interfered with economic interactions finance has always been a surprisingly open world. We will try to understand all these eye-catching paradoxes.

Merchants or bankers?

Money trading in the Middle Ages and the New Age Towards the end of the XIV century, Francesco di Marco Datini, a famous Tuscan merchant, whose ascent to the top of European international trade we meet in Chapter 4, informed several business partners of his intention to become a banker. This decision caused considerable concern in Datini's inner circle: counterparts feared that he might lose his good name. In particular, a friend and companion of Domenico di Cambio wrote to him in August 1398:

I have to inform you about the rumors that reach me. Many people told me: "So, Francesco di Marco wants to lose the good name of the largest merchant in Florence, to become a money changer [chambiatore], and there is no one among the money changers who would not conclude loan surious contracts." In your defense, I replied that you want to become a greater merchant than ever, and that if you are going to establish a bank [banco], you are not doing it for the sake of usury. And I was answered: "People will say otherwise: they will say that he is a loan shark [chaorsino]!" And I answered them: "He wouldn't do it to become a loan shark, because he bequeaths everything he has to the poor." And another replied: "Don't hope that he will ever be considered a great merchant again, and with such a good name [buona fama] as before.

Datini did not heed the warnings and opened his banco with a junior companion. However, just a couple of years later, the bank closed due to the premature death of a companion. Apparently, Datini's reputation has not suffered any irreparable damage, and it is likely that by that time the great businessman had already realized what he was risking by entering the field of a financier.

However, the concern of his friends and partners clearly illustrates the general disapproval of banking and other financial activities deeply rooted in the Middle Ages.

It came from two sources: first, the desire to accumulate wealth was condemned as greed that is, it was a mortal sin. In this, bankers and financiers faced the same problem and the same psychological pressure as rich merchants.

Secondly, they were under constant suspicion of usury, since any form of interest on debts was considered usury according to a certain interpretation of the Bible, reinforced by scholastic theologians, especially Thomas Aquinas. Based on the statements of the classic of Greek philosophy Aristotle, he argued that money does not generate money (nummus non parit nummos).

It was not the profit from economic transactions in general that was suspected, but the possibility of making a profit from simply lending money: "usury takes place where there is no production or material processing of real goods". Unlike the accumulation of wealth, which was considered very reprehensible, but still not forbidden, usury was formally prohibited (primarily by the Church) or strictly regulated, at least theoretically, which created many problems in the functioning of the increasingly complicated mechanism of the economy. The problem was partially solved by tolerance of usury, if it was done by Jews, since they were not members of the Christian community.

But more importantly, interest-bearing lending was able to become part of the economy thanks to the prosperity of a number of practices, the counteraction to which turned out to be useless in the end, which also testified to the practical importance of such services. A typical example was the concealment of interest behind the exchange rate.

As a result, at the beginning of the 13th century, the English Cardinal Robert Curson, who for some time held the post of rector of the University of Paris, in the treatise De usura ("On usury") argued that it should be considered the greatest evil of our time along with heresy. This point of view was shared by many people, if we take into account the many official condemnations of this practice and the growing harshness of such statements from the middle of the XII to the middle of the XIII century.

On the other hand, the very heat of this condemnation probably reflects the increasing spread of the money trade, which developed simultaneously with the commercial revolution that began in the Middle Ages. Large-scale banking was not born as a result of the growth of the scale of small money changers, but was the result of the development of large commercial companies that were looking for a way to easily reinvest their huge profits.

Over time, theology had to adapt to the realities of economic life. This was reflected primarily in the gradual accumulation of "exclusions" from the ban on lending at interest, which is clearly seen in the canon law of the XII and XIII centuries.

One of the very first exceptions was the establishment of a distinction between private and public usury aimed at maintaining the wealth of institutions.

For example, religious institutions (monasteries, monastic orders, such as the Templars, who provided financial services to the King of France, etc.) were allowed to engage in usury and conclude mortgage agreements.

This was only the first step towards the final recognition that some services of this kind are socially useful, and therefore permissible, at least in some forms, and especially if they are provided by the right people, that is, respected professionals, and not "outright loan sarks" (usurarii manifesti) who shamelessly and publicly carry out these activities, serving mainly the middle and lower strata of society.

In fact, such rehabilitation was part of a more general cultural process that ended by the 15th century, when the rich and the super-rich finally received a meaningful role in society: they accumulate wealth for the common good so that in times of crisis society could use their personal resources through loans.

Whatever the theory, in practice banking services became a thriving business no later than the end of the 13th century, especially in Italy, which played a key role in the field of finance in Europe.

The main tool that allowed to overcome the ban on usury was a bill of exchange issued in one place, and paid not only in another place, but also in another currency.

Although most of the major bankers of the late Middle Ages were highly respected (otherwise they would not have been able to stay in the market), many figures in the financial sector were still burdened by suspicions of usury, as evidenced by the fears of Datini's friends, as well as the persistent prejudices and public disapproval faced by Jews, who in the collective European imagination were considered typical loan sharks.

Florence was undoubtedly one of the main financial centers of Europe at the earliest stages of development; continental financial markets were dominated by a group of three families in the late 13th and early 14th centuries - Bardi, Peruzzi and Acciaioli.

Each of these families began its activities in the field of international trade, and then switched to banking, where they all managed to achieve exceptional success and accumulate enormous wealth by the standards of that time. Their operations were so large-scale and complex that, according to the definition of historian Edwin S. Hunt, they became the first "super companies" in Europe. To meet the financial needs of the princes of the whole continent, they often acted as a consortium.

It was in this risky business of lending to rulers that they eventually collapsed: if the Pope turned out to be a quite reliable borrower (and was also extremely useful in protecting bankers from any accusations of usury), this could not be said about the kings of France, Naples and other countries, especially England.

The Tuscan consortium initially financed the sovereigns of both England and France, but when the Hundred Years' War boiled (1337-1453), it had to choose to serve one; the consortium sided with Edward III of England not only because he was the largest borrower, but also to protect its own interests in order to preserve access to English wool, the raw material necessary for the consortium's activities in textile production.

This led to the loss of most of the French business and problems with the return of the amounts lent to the King of France. Edward III kindly offered to compensate for the losses, but this never happened, and a few years later the same king forced Bardi and Peruzzi to agree to a major reduction in their debt. The losses incurred as a result of deals with England were added to the losses suffered in the affairs with France and were aggravated by internal problems after the defeat of Florence in 1341 in an expensive war with a strong rival - Pisa; for control of the small town of Lucca.

All three families contributed to the financing of this campaign, and they had almost no hope of returning the investment in full. In the ensuing uncertainty, many depositors, especially foreign ones, began to withdraw their funds. As a result, in the early 1340s, all three banks went bankrupt and were liquidated. All this, along with the subsequent damage from the plague epidemic of 1348, led to the restructuring of the banking sector of Tuscany and the creation of conditions conducive to the rise of the Medici family.

The history of the Medici family serves as a perfect example of how to achieve both great wealth and political power through mainly financial activities.

The origin of the family is not fully clarified, but it is known that in the 13th century they were apparently engaged in textile trade, as well as activities related to their agricultural land in the Mugello area north of Florence.

There is no doubt that initially they had nothing to do with either large-scale banking or international finance. The first members of the family specializing in this field started as companions of their distant relative Vieri di Cambio, who had been considered one of the leading Florentine bankers since the 1370s. Francesco di Bicci de Medici was admitted to the firm in 1382 as a junior companion to Vieri. He proved to be very capable and after eight years of work rose to the position of senior companion. Bank Vieri and Francesco had branches in other cities of Italy, including Rome; the Roman branch since 1385 was headed by Giovanni, Francesco's younger brother. It was he who founded the Banco de' Medici in Florence around 1397 and joined the exchanger's guild (Arte del Cambio). Although by Tuscan standards the Medici were newcomers to the banking business, their company quickly achieved success. At first, the growth was slow but confident, as Giovanni was distinguished by caution undoubtedly a valuable quality in such a turbulent era full of epidemics and civil turmoil (the established social order was violated in 1378 by the uprising of chompi - wool combers and textile workers dissatisfied with the system of guilds).

When Giovanni retired from business in 1420, the initial capital of the bank of 10,000 florins managed to make a profit of more than 151,000 florins, three quarters of which were owed to Giovanni (after his death in 1429, the heirs got property worth almost 180,000 florins). Giovanni's characteristic desire not to interfere in politics, which he adhered to all his life, but not peculiar to some of his descendants, apparently influenced his son Cosimo, who eventually became the actual, but at the same time behind-the-scenes ruler of Florence and made every effort to remain in the shadows.

Cosimo de Medici (or Cosimo the Elder) was prepared for the position of the future head of the family bank from a young age, and his personal life was subordinated to the needs of the company. For these reasons, he married Countess de Bardy, the niece of one of his father's younger companions. The companion came from a Florentine family belonging to an old rich aristocracy, although significantly impoverished. This was only the beginning: over time, Cosimo entered into numerous and complex ties with the Florentine economic and political elite, united by kinship ties. This contributed to his elevation not only as an entrepreneur, but also as a politician. As for entrepreneurship, he brought the profits of the Medici Bank to an unprecedented level. In 1420-1435, the bank made a profit of more than 186,000 florins, that is, about 12,000 per year - almost twice the annual profit typical of Giovanni's time. In the following years, profit increased even more, so that in 1435-1450 it amounted to a total of 291,000 florins - more than 19,000 per year. Of this profit, two-thirds went to Cosimo and his brother Lorenzo, whose share has increased to three quarters since 1443.

By 1457, the Cosimo family was the richest in Florence (therefor, one of the richest in Europe). Judging by the catasto (property tax register) compiled that year, it was four times richer than the second richest family. Cosimo's father, Giovanni di Bicci, has never risen above the third place in this ranking. Cosimo owed much of his property to the Roman branch, which benefited from the privileged relations with the Pope, which lasted for most of the 15th century, since the manager of this branch also usually served as the general Treasurer at the papal court. Medici's business relations with the Church went much further, as many branches of the bank regularly provided loans to cardinals, bishops and other high-ranking prelates. As historian Raymond de Rover noted, the advantage for the Medici was the fact that clergymen were usually more reliable debtors than the laity, as they were more afraid of the threat of excommunication from the Church for debts, which the Medici constantly resorted to, with the support of the pope, who was also constantly in debt to them.

As for politics, Cosimo was initially considered a supporter of "new people", exclusively very rich, seeking to occupy a more prominent position in the city. Because of this, he was considered a threat to the established order in the oligarchic republic, and therefore in 1433 an attempt was made to expel him. The Florentine government, prompted by a coalition of powerful ancient families, mainly Albizzi, accused Cosimo of seeking to put himself above ordinary citizens and overthrow the republican government. On this charge, Cosimo was imprisoned for a while; some (the same Albizzi) demanded that he be executed; and in the end he was expelled.

Paradoxically, this served as a prologue to his rise to the status of the actual ruler of Florence (that is, exactly the one in which he was accused by his enemies), since the following year the city, ruined by another unsuccessful war against the Republic of Lucca, expelled Rinaldo Albizzi and called Cosimo. According to Niccolò Machiavelli, the great Florentine political philosopher of the Renaissance, at the entrance to the city of Cosimo "was greeted with welcoming cries as a benefactor of the people and the father of his country". This event is traditionally considered the beginning of the "secret domination" of the Medici in Florence; although Cosimo constantly tightly controlled the city government, he himself rarely held any official positions for a short time, and also refrained from making public speeches.

In 1434, Cosimo de Medici saved Florence from financial disaster. Since this year, his activities as a philanthropist and patron of the arts have expanded significantly, especially after the Florence Council of 1438-1439, which aimed to reconcile the Catholic and Orthodox churches in an attempt to protect the remnants of Byzantium from the expansion of the Ottoman Empire. Cosimo, who played an important role in organizing the cathedral in his city, became interested in the ideas of neoplatonism expressed at this event by representatives of Orthodoxy, which eventually prompted him to sponsor the creation of the Platonic Academy in Florence and found the Medici Library in the Dominican monastery of St. Mark (it is considered the first public library founded in Renaissance Europe), as well as other libraries.

However, this way of returning to society some of the enormous wealth he had accumulated (thanks to which he also strengthened his political influence in Florence) was not enough for him to make sure of the proper redemption for his sins; he himself understood that at least part of his income was obtained unjustly. Feeling that life was coming to an end (he died in 1464), Cosimo became more involved in charity, as was customary in the Middle Ages. In addition, he managed which was possible only for a person who maintained close business ties with the Church; to receive a papal bull on the absolution of sins, paid for by a donation to the monastery of St. Mark in Florence.

After Cosimo's death, the leadership of the Medici family and the management of the bank passed to his grandson Lorenzo the Magnificent, who showed a much greater interest in politics than in entrepreneurship, and completely moved away from the principle of Giovanni di Bicci, who preferred not to participate in public affairs. Like Cosimo, Lorenzo was not formally the ruler of Florence, but they were his descendants, who received the hereditary title of Dukes of Florence in 1532 with the support of Pope Clement VII (who himself came from the Medici family). Here it is necessary to express the final consideration: having acquired the highest noble title, the Medici family found a way to avoid the risks associated with granting loans to nobles, without which it was almost impossible to achieve a higher position in the international financial circles of Europe in the late Middle Ages. In Florence alone, lending to the highest nobility led to the collapse of the Bardi and Peruzzi banks, but European history is full of examples of this kind, and in Modern Times there were only more of them. Let's take German bankers from Augsburg, another outstanding financial center of Europe at that time, as an example. If the Medici cooperated with the Pope very favorably, the German bankers Fuggers and Welzers owed their achievements largely to ties with the Holy Roman Emperor and the Habsburg family. These bankers opened branches at key points of the vast possessions of the Habsburgs, in particular in Antwerp, which became the economic capital of Europe in the first half of the 16th century.

Antwerp, perhaps, benefited more than any other European city from the Atlantic trade in the early stages of its development partly due to the fact that it then belonged to Spain. Many spices from Africa and Asia (pepper and nutmeg), sugar from the Antilles, as well as non-colonial goods, including English cloth (finalized and dyed in Flanders), arrived in the city, as well as a large amount of gold and silver that the Spaniards delivered from the colonies in America to finance their European affairs and purchase goods for the development of the colonies. All this required large capital and flexible financial services to maintain the trade balance, move assets across the continent (and increasingly across the seas) and generally ensure the smooth growth of booming trade and industry in Flanders.

Fuggers and other German bankers played this game very successfully, especially during the reign of Emperor Charles V.

The situation changed under his son, King Philip II of Spain, who went bankrupt in 1557, causing significant damage to the financial sector of Antwerp (and Augsburg).

Soon after, King Henry II of France arbitrarily reduced and then temporarily suspended interest payments, which further complicated the situation for many Augsburg firms and led to a wave of bankruptcies. Things got even worse after the beginning of the uprising against Spanish rule, which broke out in the Lowland countries in 1566. The Fuggers, one might say, were lucky: they survived the crisis (although they suffered significant damage), but their case is an illustrative example of both the dangers and opportunities characteristic of the activities of bankers doing business with the top of the ruling nobility of Europe. The Fuggers moved to Augsburg in 1367 and were initially engaged in textile and goldsmithing. Gradually, they expanded their business; starting with the trade in gold and jewelry, in the second half of the 15th century they engaged in a profitable international business to deliver the papal court the proceeds from the sale of church benefits and indulgences. The family reached the greatest wealth under Jacob Bogat (1459-1525), who proved to be an exceptionally successful entrepreneur in the mining sector (he founded the largest mining center of that time in the copper-rich Neuzol in present-day Slovakia), and also made huge profits from international trade in spices and other goods. Mining was highly dependent on the favor of emperors (beging with Maximilian I) and other feudal lords, which was paid for by the provision of financial services. This close connection between financial and political power was once again manifested in the election of the Holy Roman Emperor, which was won by Charles V, defeating a very strong opponent (King Francis I of France) at a huge price: 852,000 guilders were spent on gifts (actually bribes) to seven electors-electors. Of this amount, 544,000 guilders were collected by Jacob Fugger, over time he was able to regain it in full, which was a real feat, given the current circumstances.

By the end of his life, in 1525, Jacob Fugger was undoubtedly one of the richest people in Europe and even, according to some of his contemporaries, the richest in the world. He also proved himself as an innovator in the field of charity, founding Fuggeray in Augsburg, which is considered the oldest social settlement in Europe. His nephew Anton, who headed the family business, lent even more money to the Habsburg dynasty and played a de facto key role in financing the wars of Charles V against the spread of Protestantism. Anton was also very successful in international trade (somewhat less in the mining industry) and by 1546 increased the company's assets to about 5.1 million guilders (inheriting two million from Jacob). However, shortly before his death, Anton faced a serious financial crisis: in 1557, the King of Spain defaulted on his debt. This confused the German bankers, including the Fuggers to some extent (Anton's nephew and business partner, Hans Jakob Fugger, was forced to declare personal bankruptcy). The family's losses exceeded one million guilders. By the time of Anton's death in 1560, the family's fortune had apparently decreased to about 260,000 guilders, an estimate obtained by deducting debts of 5.4 million from total assets of 5.66 million guilders. In addition, many assets consisted of Spanish and Dutch debt obligations, which were difficult to recover. The family company, however, survived and even continued to lend to Philip II, although after the crisis, Genoese bankers became the main providers of financial services to the Spanish crown. After Philip II's second default in 1575, the Fuggers (who this time were the only ones not affected by the suspension of payments) significantly reduced their relationship with the king, probably out of fear of continuing such a risky business.

The family got a noble title a long time ago: Emperor Maximilian I made Jacob the Rich count, this title was also received by Anton, who, in addition, married a representative of the old nobility. If deep down they still remained financiers and merchants, their descendants went the other way: they gradually invested the remnants of family wealth in the lands (the company was completely liquidated in 1658), divided into three branches, completely detraned and leading an aristocratic lifestyle.

Again, the new money became old, but what is even more interesting: the remains of the wealth acquired largely from financial activities were invested in land and other stable assets, which allowed them to survive to this day.

The rich in their changing guises have been a major historic force for centuries.

Consequently, their historic traces can be found everywhere and form a rhizomatic network across time and space in the history of the West.

The Renaissance era became the dawn not only of science and art, but also of cryptography. Some ciphers of this period for a cryptographer are like the Sistine Chapel or Mona Lisa for a connoisseur of painting. At the same time, it was during the Renaissance that encryption turned from a magical abracadabra and a way to put dust in the reader's eyes into a full-fledged working tool for protecting valuable information.

This article is mainly about the historical context, information on some ciphers is given in a dose. After all, cryptography does not exist in isolation from historical realities, its development is inextricably linked with people's needs and time.

From magic to practice

European cryptography took the first timid steps from occultism and religion to practical application in the Middle Ages.

In the 13th century, the English thinker Roger Bacon created his work "The Monk's Message on the Mysteries of Art and Nature and the Insignificance of Magic", where he called on scientists to encrypt their works and first described methods of information protection. However, it was only the first swallow to the formation of cryptography as an independent discipline in this historical period. And the only benefit of encryption, according to the author, was to fence scientific knowledge from the "common people". Alas, the "Dark Ages" did not differ in humanism.

In the Renaissance era, peasants and townspeople also did not scrite encrypted messages. But politicians, diplomats and the military have not been without cryptography in their "games of thrones" since the 15th century.

Another cryptographic feature of the Renaissance is the abundance of highly specialized scientific and methodological treatises on ciphers and methods of their use. Thus, cryptography has turned into a full-fledged orderly field of knowledge. At the same time, simple monoalphabetic ciphers (for example, the "Caesar cipher") were replaced by polyalphabetic replacement codes that are more resistant to frequency cryptanalysis.

The encryptors, who clung to outdated methods, eventually lost and turned out to be, to put it simply, "mammoths". Talented cryptanalysts began to click their encryptions like nuts. Polyalphabetic systems were improved throughout the 16th century, culminating in the famous "Vigener cipher". However, first things first.

Cryptography at the service of politics and diplomacy

Immortal works of Renaissance art are just the tip of the cultural and historical iceberg. While Titian and Leonardo gave birth to their masterpieces, Europe was the formation of full-fledged states and nations in the modern sense, pan-European and world markets developed, international logistics was established, and finally, diplomatic services of a new model appeared.

As the historian of cryptography David Kahn noted, in the Renaissance "diplomacy fed cryptography". Medieval knightly sneechings like "I'm coming to you!" went into the past and were replaced by ingenious sneaky games in which secure correspondence played a key role.

The diplomatic and cryptographic boom affected not only Western Europe: it is enough to recall the Embassy Order with the Cypheric Hut established in Moscow in the middle of the 16th century, the encryptions of the ambassadors of Tsar Fyodor Ioannovich, Patriarch Filaret with his Cypher Alphabet mentioned by Karamzin.

However, Italy, France and England reached the greatest heights in political and embassy intrigues, as well as the use of ciphers.

Italian Cryptographic Renaissance

Italy is the soul and the very embodiment of the Renaissance. It is logical that it became the cradle of cryptographic revival. In addition, Italy consisted of independent city-states that fought for a place under the sun: they weaved intrigues, united in alliances, sought military assistance from foreign countries. In such an environment, ambassadors inevitably turned into "honorable spies".

And what a spy can do without cryptography?

How did it all begin?

The Vatican was a pioneer in the encryption of diplomatic documents. The papal archives contain a document of 1326, where the names of people and the names of the opposing groups Guelphs and Ghibellines are hidden. The first are a kind of elves who support the limitation of the power of the Holy Roman Emperor in Italy and adherents of the Pope. The latter, on the contrary, supported the emperor. Guelphs are designated in the document as "children of Israel", and Ghibellines as "Egyptians": such a simple "Easter egg" from the biblical Book of Exodus. The authors tried to hide the support of a particular group in case the document falls into the wrong hands. In addition, some words in the papal documentation were disguised by separate letters: A - king, D - pope, etc.

The oldest cryptographic keys in the West were also created for the office of the pontiff, more precisely, the antipope Clement VII. In 1378, he fled to Avignon and declared himself the rightful owner of the papal throne. It is significant that among the first orders of the self-proclaimed pontiff was the creation of new ciphers. Antipope Secretary Gabrieli Lavinde developed individual keys for all 24 correspondents of Clement VII.

Lavinde keys combine fragments of code and cipher. All 24 keys contain replacement cipher alphabets with pacifiers, as well as lists of popular words or names hidden by two-letter codes. In fact, this is the first cipher nomenclator known to researchers.

Cryptographic race

Venice was not inferior to the papal throne, and at first it was completely ahead of it in encryption and cryptanalysis. The city of channels became the birthplace of the world's first state security service, which was responsible for the protection and decoding of correspondence from the 15th to the 18th century. The mysterious "Council of Ten" (Consiglio di Dieci) trained cryptographers and even took a "graduation exam" on encryption from them.

This Venetian "Big Brother" was cruelly punished for violations of "information security": athe disclosure of the encryption key was considered treason and entailed the death penalty.

Even at first glance, harmless educational treatises on cryptography were kept in the strictest secrecy. Thus, the Venetian writer Agostino Amadi and his Trattato delle Cifre, which described most of the ciphers known in the second half of the 15th century, became public only in the middle of the 19th century. It is still unclear who was the customer of this 700-page "Talmud" and how it was used. They've just classified it!

The first outstanding European cryptanalyst named Giovanni Soro was also Venetian. In 1506, he was appointed Secretary of the Ciphers of the Venetian Republic. The enumeration of states whose ciphers were hacked by Soro alone will be drawn to a separate article in terms of volume. It got to the point that since the beginning of the 16th century, the Pope himself appealed to the Venetian for the deciphering of intercepted messages, which were not up to the teeth of the Vatican cryptographers.

The sources describe the case when the depe of the pontiff Clementius VII (no, this is not the anti-pope with the same name mentioned above) went to his opponents. Exclaimed: "Soro can open any cipher!", the pope sent a copy of the message to the Venetian "maestro" to check the resistance of the cipher. The cryptoanalyst could not read the encryption, and dad breathed a sigh of relief. It's hard to say whether this was really the case, or whether we are facing an unverified gossip, which is rich in narrative sources. In any case, such stories are not born out of thin air.

In 1542, Soro headed a small cryptographic department of three people, including himself. Perhaps the unit served as a prototype of those very Black Cabinets.

Soro's team worked in a secluded corner of the Venetian Doge's Palace, in a room "without windows and doors" and in an atmosphere of the strictest secrecy. When another intercepted depech was received, the poor were forbidden to leave their secret office until the cryptogram was fully deciphered. In the breaks between such crunches, Soro and his subordinates laid out solitaire and described the methods of their work in the treatises. In short, the rest of crypto analysts only dreamed of, and when they managed to snatch at least a few hours to sleep.

Now we will return to the Vatican, which was not going to yield to Venice in this "cryptanalysis race" and even more so depend on the services of foreign cryptographers. In 1555, the position of secretary for ciphers was also established in the papal curia. Two years later, the crypto analysts of the pontiff left no stone unturned from the cipher of the Spanish King Philip II. Some papal cryptographers did not even need to know the language in which the message is written. Thus, in 1567, the vicar of St. Peter's Cathedral in Rome unraveled an intercepted Ottoman cryptogram. But he "didn't know four words" in Turkish.

Cryptoanalysis also flourished in Florence, where the Count of Sasset Pirro Musephilli especially distinguished himself in this field. In the middle of the 16th century, he unraveled the nomenclators of King Genich II of France and read many encrypted dispatches. Like Soro, Musephilli became a world star and received orders from European rulers. Once the King of England turned to him for a transcript of an intercepted French message hidden in the sweeps of gold shoes.

Even Renaissance stegano containers were real works of art.

French Cryptographic Renaissance

Unlike fragmented Italy, the country of royal lilies was a powerful centralized state. But there were enough diplomatic and political "scandals, intrigues, investigations" there as well. First, France constantly fought against strong opponents - Spain and England. Secondly, the internal situation in the country often heated up to the limit, and the throne wobbled under the monarchs because of the threat of coups. Politicians and ambassadors had to constantly encrypt themselves and intercept other people's coded depeches.

French "machine" for cryptanalysis

Among the French masters of Renaissance cryptanalysis is the first Secretary of State and court decoder under Francis I Philibert Baba. A contemporary described it as a tireless machine for killing the transcription of messages. Moreover, Babu solved cryptoframes even in Spanish, Italian and German, which he did not know, and without an alphabet at hand.

"He worked hard on the message day and night for three weeks before solving one word," the eyewitness writes. "After the gap was made, the rest happened very quickly and resembled the destruction of the walls."

As is often the case with workaholics, work from the dawn to the dawn harmed the personal life of a crypto analyst, who was awarded for his work not only by the castle of Bourdesier near Tours, but also... by horns. Babu's beautiful wife was the mistress of Francis I himself and regularly visited the royal chambs, while her faithful was sathering over another transcript for the benefit of the crown.

How the author of the theorem saved the king

Another honored French Renaissance cryptographer is François Viet.

First of all, Viet was a lawyer and a member of the Privy Council under King Henry IV, while mathematics and cryptanalysis were his hobbies. However, it was thanks to his enthusiasm that the adviser helped the king to stand up in the fight against the so-called Holy League. This was a Catholic faction led by the Duke of Mayenne, which was not rested by the Protestant on the throne.

Having obtained military and financial support from another ardent Catholic, King Philip II of Spain, the Holy League took control of Paris and a number of other key cities in France. Henry found himself in the position of "the cast is removed, the client is leaving!". But, fortunately for the king, his agents intercepted part of Philip II's correspondence with his military commanders. Of course, the messages were encrypted.

Here the author of the immortal theorem showed himself in all his glory. Since 1588, he had deciphered a number of Spanish dispatches, which spoke of the movement and plans of the troops of the Holy League. Valuable operational data allowed Henry to act in advance and defeat the superior forces of the Duke of Mayenne in the battle on the River Ivry on March 14, 1590. However, the subsequent siege of Paris ended in failure for the king. Although Henry could not put checkmate on his opponents, a loud victory in the general battle helped him keep the throne.

Witchcraft cryptanalysis

Viet was so confident in his talents that sometimes he himself forgot about caution. The day after the battle of Ivry, the cryptoanalyst sent Henry an open transcript of the intercepted message of the Spanish military commander Moreo to Madrid. The depecha contained details of Moreo's negotiations with the Duke of Mayenne and was protected by a newly developed Nomenclator cipher developed by the Spaniards. Viet not only did not bother to defend the transcript himself, but also bragged about his violation of "information security".

"Don't worry that for your enemies this will be a reason to change their ciphers and disguise themselves even more," Viet boasted. "They have repeatedly changed them, and yet their tricks have been and will always be revealed."

When the Spaniards intercepted this letter, Philip II was enraged: his next "impregnable" cipher turned out to be a sleft for Viet. Unable to resist the cursed Frenchman in a cryptographic duel, the Spanish king decided to literally give him the heat to send him to the bonfire.

Philip informed the Pope that Viet allegedly opened the papal ciphers with the help of witchcraft and should appear before the cardinals' court. In theory, the trick could have worked, because the cryptanalyst remained a Catholic, despite his service to the Protestant monarch. But the pontiff did not buy it, because he knew perfectly well about the unreliability of Spanish ciphers and immediately guessed what was going on. Philip outsmarted himself and found himself, to put it mildly, in an awkward position. Spanish cryptographers were also ashamed of the whole world.

This historical sitcom episode vividly demonstrates the confrontation between old-fashioned cryptographers and progressive cryptoanalysts like Babu and Viet. Eventually, the "contrugation" turned into the "beating of babies", although the good old nomenclators remained in use until the 20th century.

Subsequently, France conquered and retained the palm of the championship in encryption for a long time: it is not for nothing that the first "Black Cabinets" state units for perlustration and decoding messages appeared there in the XVII century.

English Cryptographic Renaissance

Shakespeare's homeland also experienced a cryptographic boom in the Renaissance era. Moreover, it was in England at that time the most resonant and dramatic case related to encryption occurred. But let's not run ahead.

How the ambassador's carelessness spurred the development of encryption

Until the 16th century, the British looked at the protection of information through their fingers. For example, Thomas Spinelli, the British ambassador to Madrid, has never changed the cipher for thirteen years when sending letters with valuable intelligence from Spain to the foggy albion. It is not surprising that in the end this code became known to the Spaniards and was not printed in newspapers or, as they were then called, volatile leaves. Most protected messages combined encrypted text and ordinary words, so it was not difficult to hack them even without a key at hand.

For example, here is an excerpt from a letter from the Spanish ambassador Rodrigo Gundisalvi de Puebla to the father-in-law of the English King Henry VIII Ferdinand of Spain, where the cipher and open text are adjacent:

The payment of the doory is postponed until the feast of the Archangel of St. Michael [September 29]. Regarding CCCCXXIII (marriage) DCCCLXXVIII (Queen of Castile) CCCCLXXXVIII (c) DCCCLXXXVII (King of England), King Henry would like to be informed when King Ferdinand returns to Castile to DCCCCLXXXIII (send) DCCCCLXXVIIII (embassy).

- London, April 15, 1507. MMCCXXXI (de Puebla).

During the reign of Henry VIII in England, it was decided that it was time to change something. Cryptography was put on wide state tracks, and each ambassador's letter from abroad began to be protected with a new unique cipher to exclude compromise.

Code of the divorced queen

To paraphrase Shakespeare's lines, "there is no sadder story in the world than a story about a rejected woman". We are talking about the first wife of Henry VIII, Catherine of Aragon, who turned from a beloved wife and a strong monarch into an exile. For 24 years of marriage, she could not give birth to a male heir, and the king decided to divorce her. The Catholic Church did not bless the divorce, which eventually resulted in Henry's conflict with the Pope and the creation of a Protestant Anglican denomination in England.

As they say, kings can do anything.

Catherine of Aragon did not accept her husband's decision and tried to protest the divorce in the papal court in London in 1529, but was defeated. Anyway, until the end of her days she considered herself Henry's only legitimate wife and the true queen of England, which she carefully signaled to her Catholic supporters in the hope of help. It is known that since 1532, already in exile, Catherine wore a precious pendant with "harmless" inscriptions. As it turned out, it was a cipher. Recently, it was hacked using the Wordle riddle method. The transcript reads: "Henry the King (Henricvs Rex) and Catherine".

Political will for cryptanalysis

The further development of the English cryptographic school is largely due to the political will of the Minister and Chief of Intelligence Elizabeth I, Sir Francis Walsingham. He first became interested in encryption when he read the work of Italian mathematician and cryptographer Girolamo Cardano, the inventor of the famous encryption grid.

Theory is a theory, but the minister decided to create a full-fledged cryptographic service only after seeing the fruits of encryption in practice. In 1577, the letters of King Philip of Spain, intercepted in the Netherlands and deciphered by the Flemish crypto analyst Van Marnyx, were on the Wolsingham table. The latter persuaded his half-brother and the same convinced Catholic Juan of Austria, who ruled a large part of the Dutch lands, to attack Protestant England together. The surprise did not work out: the British began to hastily prepare for the defense, and the Spaniards had to abandon their adventure.

Assessing the practical benefits of cryptography, Walsingham founded a encryption school in London and invited a certain Thomas Fellipes to serve. This inconspicuous and "insignificant in all respects" functionary was fluent in Latin, German, French and Spanish, and at the same time skillfully broke any ciphers. It was his cryptographic work that put an end to the sensational trial of the unfortunate Scottish and, for a short time, French Queen Mary Stuart.

The case of Mary Stewart, or "How cryptanalysis decided the fate of the queen"

In short, in 1585, Mary Stuart, expelled from Scotland by the will of fate, found herself in English captivity because of her enmity with the Protestant Queen Elizabeth and her commitment to Catholicism.

The prisoner was constantly transported from the estate to the estate. Of course, she did not sit "behind bars in a damp dungeon": at first she was even allowed horseback riding in parks and trips to the healing waters in Buxton. But over time, this "sanatorium" was covered, and the conditions of detention of the honorary prisoner were tightened.

Elizabeth took the trouble to cut off all of Maria's contacts with the outside world, and, as it turned out, not without basis.

In England, supporters of Mary Stuart were immediately found from among the noble Catholics dissatisfied with the Protestant queen. Moreover, the prisoner's grandmother was Margaret Tudor, the older sister of Henry VIII himself. This was enough to justify Maria's claims to the English throne, whether something happened to the current queen (an accident on the hunt or an "accidental" tenfold fall on a knife).

The leader of the conspiracy was the nobleman Anthony Babington. He corresponded with the prisoner, miraculously bypassing the "seven seals" behind which she was.

All messages from both sides were encrypted. Maria's letters were encrypted by her personal secretary Gilbert Curley.

Maria Stewart and the conspirators used a simple monoalphabet substitution cipher or, in other words, the same nomenclator. It was a system of 23 signs to denote English letters, except for the letters j, v and w. To increase the durability of encryptions and complicate cryptanalysis, another 35 characters masked individual words and phrases. The cipher also included four dummy signs. Finally, the symbol σ indicated a subsequent "double letter" (doubled letter).

Another good-willed person of Mary, the English Catholic Gilbert Gefort organized the transmission of messages. The cunning Jifort managed to bypass the guards of Chartley Hall Castle, where the prisoner was, with the help of... beer.

Gilbert used "beer steganography": a bribed local brewer hid messages in hollowed-out plugs in barrels with a foamy drink. When the cargo entered the castle, Maria's servants sneaked out the letters and brought them to their mistress.

The answers were transmitted in a similar way when the brewer took away empty barrels. So, here is another example of a Renaissance steganocontainer not as elegant as French gilded shoes, but practical and effective.

In July 1586, another encrypted letter from Babington was delivered to Chartley Hall, who asked to bless the murder of the queen and shared the details of his plan. Six young nobles were supposed to stab Elizabeth I in her own palace. On July 17, the prisoner sent an answer and gave the go-ahead for a coup.

But the light at the end of the tunnel went out before it really concelled. The master of "beer steganography" Jifort turned out to be a double agent and conveyed all the messages to Walsingham - and so it begs "What's a twist!". Maria's fatal answer first fell into the hands of the above-mentioned court cryptanalyst Thomas Felippes. He deciphered the message with one left hand, then copied the original and attributed a short encrypted postscript in the prisoner's handwriting with a request to Babington to name all the conspirators. They say, so Maria will be able to better orient herselly in what is happening and will know who to trust.

Babington would surely have handed over all his comrades with guts in a reply letter, blindly hoping for the durability of the cipher and not feeling the trick. But fate decreed otherwise, although the outcome was the same. The day after receiving a fake response from Mary Stuart, the head of the conspirators himself went to the Walsingham office to apply for a passport to travel abroad to his Catholic allies. What was the surprise and embarrassment of the officials when the chief investigator of the country personally came to visit them. The secretary of the department, Skademor, still pulled himself together and summoned the soldiers who arrested Babington. The nobleman did not have time to answer the prisoner and reveal his accomplices, but it was not necessary - torture did its job. Soon all the other conspirators were caught and imprisoned in the Tower.

Seven troublemakers were brutally executed on September 20, 1586. Maria Stewart's secretary was properly interrogated, and he handed over his mistress. In October, Maria was taken to Fotheringay Castle and put on trial. Still, the prisoner was of royal blood, so it was necessary to obey external decency and justify her execution in the eyes of the public.

The defendant denied her involvement in the conspiracy to the last, but the intercepted and deciphered letters became reinforced concrete evidence against her. On February 1, 1587, Elizabeth signed a decree on the execution of Mary, and 7 days later she was beheaded. This tragic story was another confirmation of the importance of cryptanalysis, which determined the fate of the crowned person.

At the end of the Renaissance, encryption and cryptanalysis became so indispensable that the courts of most European monarchs had their own cipher secretaries.

They developed new codes, encrypted messages and solved intercepted depeches in full-time mode.

Such functionaries served as a transitional step in the era of the "Black Cabinets".

In the next article, will talk in more detail directly about cryptography: key figures, works and methods of encryption of the Renaissance.

You can apply Game Theory to the miners’ and developers’ incentives to maintain this illusion, if that’s your thing, but the second everyone is under pressure, the mask will come off, and you’ll be staring centralization directly in the face.

At best, cryptocurrency provides the illusion of decentralization. 😭

From the United States, we’re often taught the widely-debunked “Trickle Down” theory of economics. Instead of a fluid under the effect of gravity, it’s better to model wealth as the gravity itself: The more you have, the easier it becomes to pull more towards you.

If you take a somewhat egalitarian (from an optimist’s perspective anyway) approach to decentralization, and map it over everyone’s pre-existing economic conditions, you’re going to end up applying the identity function to the pre-existing system.

That is to say: Centralization in, decentralization out.

Wealthy people can afford more computer hardware than you can, and they can hire people to handle the hard technical problems they don’t understand.

You and I do not have this capital, and are therefore at a disadvantage.

Centralization is an inevitable result of capitalism, or any system that builds atop capitalism. Whether you love or hate capitalism, this is a systemic inevitability.

How to Decentralize?

To embrace decentralization is to dispense of Network Effects. Decentralization is to embrace anonymity and the freedom of information. The hacker ethos. The cypherpunk’s manifesto. Decentralization means the rejection of rulers–whether political or financial.

True decentralization requires adhering to the principles of cryptoanarchists, which requires an anarchist digital currency; not an anarchocapitalist one.

Capitalism creates a hierarchy, which creates rulers, which is incompatible with anarchy.

Without the gravitational effects of capital driving income- and wealth-inequality, we could design a cryptocurrency that is actually decentralized, even when the world is largely governed by capitalist economic systems.

Towards A Decentralized Digital Currency Without Capitalism

What would a decentralized digital currency without capitalism look like? It’s difficult to say, because as far as I’ve been able to research, no such designs have ever been proposed.

In the absence of capitalism, we’ll need an alternative economic system to based a design atop, and whose principles we’ll need to incorporate.

As a non-expert, the only alternate economic systems I’m aware of are socialism, communism, and egalitarianism.

For the purposes of this thought experiment, you can treat any ruler{less}economic system as interchangeable–although the details will certainly matter for any real implementation.

Important: I’m not interested in discussing the politics of economic systems. This is an informal brain exercise to model what a decentralized digital currency would look like if you removed capitalism from its core. The removal of capitalism would help prevent the long-term centralization of a digital currency, so I think it’s a topic worth exploring, even if you dislike non-capitalist economies. I’m not here to judge, so let’s chill out and use our imagination a bit.

Requirements of a Non-Capitalist Digital Currency

For starters, it would necessarily be distributed and sharded, to faciliate decentralized trade between independent communes (which will have a many-to-many relationship with humans).

Additionally, each commune would define its own local currency independently of the global state of the network. Exchange would be facilitated between communes, not individuals. However, within a community, they would be able to define their own rules for individuals to participate in inter-community trade. This would likely be enforced through a sort of smart contract.

Within a commune, all tokens would have an expiration (e.g. block height) from the moment they are mined. Upon expiration, the tokens would be recycled by evenly burning their values across the commune. This would create an inevitable tax on wealth that the rich wouldn’t be able to evade, without requiring the price inflation mechanism used in fiat currencies today.

Private transactions, such as implemented in ZCash–would be enabled by default. This is necessary to preserve individual privacy. Only interchanges between communes would be sent in the clear by default.

The global state between communes would need to have its integrity maintained through a non-wasteful consensus algorithm; such as Proof-of-Stake.

To this end, communes will be able to stake some of their collective assets (rewarded and optionally traded between communes that participate in mining) to authorize transactions and resolve contestations.

Non-staked global tokens expire just like communal tokens, but staking prolongs the lifetime of the staked token.

Each commune will be able to define their own consensus protocol used internally, but wasteful ones (i.e. Proof of Work) are strongly discouraged. If Proof-of-Stake is used, communes can decide if their communal currency is prolonged for staked tokens. A commune-specific percentage (which MUST BE at least 50%, up to 100%) of all incoming assets expire and burned immediately, ensuring that the community always benefits from trade, and a wealthy nobility class doesn’t emerge via tax-evasion.

There are possible many more considerations I hadn’t yet delved into.

I am not an economist; merely a anarchy and cryptography hobbyist balkaniqqa.

Consider this a rough simulation until someone smarter has a chance to review it.

In short, if you want real decentralization, you cannot get to there from here with any capitalism-based cryptocurrency (which, unfortunately for CT trenches, describes all existing cryptocurrencies). However, with a few specific design choices, you can build a cryptocurrency that models a non-capitalist economic system.

Trenches may just be the next iteration in an infinite series of dumb buzzwords used by cryptocurrency peddlers, but the notion it describes does encapsulate some ideas that may be valuable.

However, these ideas do not work well with existing cryptocurrency designs, and often do not even require an actual currency at all to be successful.

acción, protec, attac!

The obstacles are political.

Money is political, and that’s the starting point of economics, but, if our money and infrastructure is not private, we can’t be political…

Many of the unjust authorities in our present age (and past ages) originate from the interests of religious, corporate and political institutions; the interests of these institutions most often place a premium on money, power and influence rather than humans, common freedoms and our planet.

These interests are most often representative of financial equity that dwarf our own: in comparing the financial/material resources of a great percentage of Earth’s population to the corporate/political/religious factions ruining this world, the great majority of us are low life.

However, the unjust authorities of our world must live, act, plot, scheme and hoard their wealth in a high tech, highly digitized world that cyberpunks can rule, contest, change or pervade.

Technologies such as wireless internet, 4G/5G, IoT devices and Bluetooth mean the computerized world has (and continues to) spread. Almost anywhere you go, from the trivial to the critical, the machinery that supports human civilization grows ever more dependent on the resources of an every growing, digital phantom space.

Right now, knowledge is paramount to manipulating this digital phantom space that the world (and ruinous authorities) depend on.

Thanks to the Internet, the means to understand, and thus, mend, bend, break and create within this space are readily available. You may become adept regardless of who or what you are, and many of the contemporary masters of this space rose from the outcasts, the poor and the disenfranchised.

On so many levels that will be discussed in greater detail, skill in digital disciplines is now a form of liberation and the great equalizer of the common majority.

Those of us living low life high tech have an advantage that no community amongst the common populace is likely to have ever had.

If necessary, we can force positive change and awareness for the benefit of the great majority, as the ability to manipulate the digital spaces are largely a labor of interest and passion leading to skillfulness.

Current day, intelligence agencies enforce the interests of unjust authority through unethical, illegal means that are hugely ineffective at “defeating terror”, but are fantastic at terrorizing the populace.

For this they mangle the constitutional principals they are sworn to protect to pieces, ravaging the basic freedoms of the citizens they are sworn to protect.

Yet the 14 eyes intelligence machine is a continual failure in stopping the mass shootings becoming ever more commonplace; however, it is incredibly effective where social/political critics, dissidents, activists, or journalists are concerned.

Every person who gains competence in a digital discipline now has the potential to become a means to improve the world.

While they should never be spoon fed, encouragement and aid could be an investment in bettering your own world.

Whereas elitist attitudes may have been common in places that are the confines of these disciplines, this snobbery is bullshit we and the wider world can no longer afford.

It seems that despite protests and the petitions, Net Neutrality is destined to die; yet again, the detriment of the great majority serves to benefit the few.

How long before wealth can purchase or manufacture the means to dominate this space beyond our individual or combined abilities?

But how long before these authorities can wield some automated terror that nullifies one of the few remaining advantages of the populace?

Knowledge has carried our species through the ages; cooperation and communication have served as a multiplier that potentiates knowledge, hastening the growth of understanding and new knowledge.

An evolution of knowledge spurred by freedoms of cooperation and communication among the great majority of this planet must meet the challenges of tomorrow if we are to protec ourselves.

An infrastructure that allows fast, free cooperation, communication and transfer of knowledge from all corners of our world must be protected, supported, improved and encouraged if we are to survive, let alone thrive.

Currently, the Internet is the paramount frontier.

Whether through more traditional use of its resources or any future privacy/anonymity projects {ping coded} that may evolve from them, the Internet represents a communications infrastructure with a incredible degree of pliable, programmable resources already in place.

And these resources can allow an oppressed population to hold congress in any manner of ways, thus allowing a system of communication to be unpredictable with a minimum of development time/preparation.

Also, while the Internet has become a staple resource of the public at large, a huge percentage of the general populace are not fully aware of the extent in which their freedoms are at risk.

Regardless of any groups best wishes for common majority, any movement against an oppressive authority must also fight a war against that authority for the minds and hearts of the general populace.

The empathy, outrage and awareness of the general population (and a tyrannical institution’s fear of losing control of the general population) is often the best means to curtail outright and blatant trespasses of an unjust authority.

A Cyberpunk movement could change the world, and it has in the past; many defining events in the history of computer science involve the classical elements of Cyberpunk: individuals with minimal financial/material resources utilize their wits and innovations in the technology of their age to effect change in defiance of, or with little regard for, authority.

Throughout the Crypto Wars of the 1990s, The Cypherpunk movement clashed with the United States government in what has come to be called The Crypto Wars.

Among the issues the Cypherpunk Movement had with the United States government were federal interests/attempts to weaken and restrict strong cryptographic/encryption technologies.

Then there was the Clipper Chip: An NSA built, backdoored communications chipset that would have allowed federal employees to eavesdrop on telephone communications via key escrow.

The United States government had meant for the Clipper Chip to be ubiquitous in the telecommunications industry by giving the chip the capacity to encode (and decode) communications…

By 1995 the Cypherpunks were on their way to winning the most decisive battle of The Crypto Wars: in Bernstein v. United States, legal representation provided by the EFF aided one of the Cryptopunks own (djb, also known as Daniel J. Bernstein)in suing The United States over federal laws governing cryptography.

In 1995, Bernstein (djb) had wanted to release a research paper and source code associated with his Shuffle encryption system. At that time, US federal law placed cryptography on The United States Munitions List (alongside grenades, mortars and flamethrowers) which also made exporting crypto outside of the country (or releasing the source code of cryptographic programs) illegal without an export license from the US State Department (as a munition, management of crypto was the State Department’s responsibility).

In 1999 the Ninth Circuit Court of Appeals had heard the case and ruled that software source code was speech protected by the First Amendment; US regulations preventing its publication were unconstitutional, forcing the United States to gradually relax laws governing crypto until they finally met the legal standards of today in 2003.

For fighting and winning the battle for the freedoms of cryptography, the world owes the Cypherpunks (especially the founding fathers of the movement: Eric Hughes, Timothy C. May and John Gilmore) of the 1990s a huge debt.

The Cypherpunk have already designed the strategies for successful dissidence; they include acts of civil disobedience (example: Vince Cate’s international arms dealer webpage), widespread discussion and mailing lists across numerous specialized mail servers and innovation.

Innovation may have been the most important part of that dissidence; many privacy/anonymity, encryption and cryptography technologies were created or had their start with The Cypherpunks during The Crypto Wars.

As Jon Gilmore stated:

“We are literally in a race between our ability to build and deploy technology, and their ability to build and deploy laws and treaties. Neither side is likely to back down or wise up until it has definitively lost the race."

And Eric Hughes:

“Privacy is necessary for an open society in the electronic age. … We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy … We must defend our own privacy if we expect to have any. … Cypherpunks write code. We know that someone has to write software to defend privacy, and … we’re going to write it.”

While techno-activism is huge in countering unjust authority and should be a huge part of a Cyberpunk Movement, there shouldn’t be any one path toward improving the lives of the populace.

Cyberpunk is about being lowlife and using high tech to create positive change; it is a movement about saving the little guy and fucking up the gears that have sent everything to shit.

The individual citizen should be empowered to defend their own digital existence.

Even a non-technical person can learn enough about cryptography, cybersecurity and privacy/anonymity programs to much improve their resistance against corporate/government spying/data collection online.

For the citizen concerned with self-defense/self-preservation, learning/applying cybersecurity basics are now just as relevant as training with the fists or firearm.

If an operation gives the populace a means to keep their digital existence safer, or better guard their privacy from exploitation by nations, an ISP or phishing, than that is techno-activism in the tradition of Cyberpunk as a movement;

If an operation aids someone in becoming a bit more informed about the boons of cryptography or cybersecurity, or if they learn something of the real costs of metadata or privatization/corporate overlording of the internet, then this is Cyberpunk techno-activism.

Even if an operation does not directly target an authority abusing power or influence, if the operation is effective in creating or changing a single person’s awareness, than that is a blow against all unjust authority.

Cryptocurrencies play a major role in the global financial ecosystem. Their presence across different geopolitical corridors, including in repressive regimes, has been one of their striking features. We can leverage this feature for bootstrapping Attac{less} communications.

At the bottom of it, information theory is really thermodynamics, and you don't get a free meal in terms of energy.

Information is energy, so by obtaining it, there will always be expenditure. In any network, that expenditure is bandwidth (which is, again, energy). Without anonymity, governments can use communication networks to track and persecute users.

A key challenge for decentralized networks is that of resource allocation and control. Network resources must be shared in a manner that deprioritizes unwanted traffic and abusive users.

This task is typically addressed through reputation systems that conflict with anonymity.

But they don’t have to.

In the Cyberpunk movement there is always a place for Cyberpunk media of all type(literature, movies, anime, manga, etc.); these resources are the fables, realities, prophecies and mythology of this community.

Science fiction has had an incredible effect on the course of Science, especially rigid disciplines such as the various branches of Physics.

Cyberpunk has had the same effect on many facets of computer science (especially hacking and cybersecurity)in a similar way.

Even the basic application of cybersecurity skillsets involved in the defacing of a website in defiance of some unethical corporate entity shares a parallel with many themes found in Cyberpunk fiction.

Cyberpunk media helps us confront the human and socio-political/socio-economic/inherent ethical issues at the heart of our interactions with technology, especially the possible implications on our individual and collective humanity.

Artists like Bradbury, Asimov, Clarke, Kubrick and Lucas had an effect on generations of scientists, many of whom have been among the greatest thinkers of our species.

Scientists have advanced our civilization by introducing us to miracles and horrors; in their methods and experimentation, many have drawn from the creativity and humanity of the science fiction they loved.

HG Wells is considered the “Father of Science fiction”, and his works have been cited as a pivotal inspiration in the development of many technologies.

In 1914, HG Wells book “The World Set Free” was released; in the book, HG Wells imagined a world in which scientists had unlocked the power of atomic energy and used it as a weapon of war.

In 1932, the physicist Leo Szilard read The World Set Free and became Wells inspired by Well’s vision of atomic power.

By 1933 Hitler had come to power and Szilard, a Jewish Hungarian fled to London, England; that same year, the immigrant physicist had an epiphany while waiting at a traffic light: Szilard conceived the nuclear chain reaction, thus realizing the manner in which humankind could tap and unleash the immense power of the atomic nucleus.

By the end of 1933, he and Enrico Fermi (an Italian-American physicist who would win The Nobel Prize in 1938, called “The architect of the Nuclear Age” and “The Architect of the Atomic Bomb”) would patent the idea of a nuclear reactor that same year.

By the end of 1939, Leon Szilard drafted the Einstein-Szilard Letter (signed by his friend Albert Einstein) warning US President Franklin Roosevelt of the potential for atomic weapons, which resulted in the Manhattan Project.

Cyberpunk has sometimes been described as an aesthetic; while aesthetics have their place, Cyberpunk being defined by an idea of aesthetic components is a disservice to the importance it could play in today’s society.

Given the realities/scope of state surveillance, any established aesthetic could also be dangerous, as it could become a means of control or quantification , while defined aesthetic is by itself unnecessary to illicit the change this world may need.

This is not Cyberpunk 2077 where everything should look cool over all else; this is Earth 2025, and if the little guy (low life) doesn’t start using technology to even the odds and build awareness (high tech) then we are likely fucked.

Wearing bomber jackets and sunglasses at night amongst rain, steamy neon-drenched cityscapes won’t be enough to save {y}our world.

Cyberpunk is now. History has its eyes on you…

🏓•••🏓

Privacy is not ours by default, it’s granted or revoked by external powers.

In finance, cryptocurrencies helped us opt out of the system, giving individuals autonomy over their money. 

For privacy, we must do the same by rejecting regulations that weaken encryption or enforce surveillance.

To uphold the same standards for privacy as we do for cryptocurrencies, we must build more permissionless, trustless, and decentralized networks that are attac{less}.

Through the lens of surveillance, we unveil the unseen patterns of control.

Every trace, every line reveals a story of watching and being watched.

Are you the observer, or the observed?

Privacy is not a game

Privacy is a Fundamental Human Right

Philosophically, privacy is tied to autonomy and self-ownership, core libertarian values. In economics, data can be viewed as personal property, deserving protection akin to physical assets. Privacy is an inalienable right, not a negotiable privilege subject to permission.

Protecting metadata in communication is critical to achieving complete privacy.

Officials at the NSA have stated that:

“if you have enough metadata you don’t really need content” and that “we kill people based on metadata”. 

Unbeknownst, there’s a plethora of threat models that most users aren’t even aware off.

Threats that wrap their tentacles on your device and suck out all of your metadata, rendering the the most common e2ee or p2p solutions useless against attackers for the average user.

The intense pressure in the past years to deliver solutions quickly has resulted in varying threat models, incomplete objectives, dubious security claims, and a lack of broad perspective on the adaptation scale of secure communications. 

Unfortunately, state-of-the-art private messaging systems are unable to protect metadata for large numbers of users.

Existing work falls into two broad categories.

• On one hand are systems that provide strong, provable privacy guarantees, that although they can protect metadata, they either rely on broadcasting all messages to all users, or use computationally expensive cryptographic constructions to trade off computation for bandwidth.

  As a result, these systems have scaled to just thousands users or hundreds of messages per second. 

• On the other hand, scalable systems like Tor and mixnets provide little protection against powerful adversaries that can observe and tamper with network traffic.

  These systems require a large number of users to provide any degree of privacy, so as to increase the anonymity set for each user, but even then are susceptible to traffic analysis.

PingPong is a client-server network, nodes asynchronously pass messages via unidirectional message queues providing hardened network layer recipient and sender anonymity.

Ping {the app} is server-less, stores no metadata, requires no ID or phone number and all the messages are encrypted and ephemerally routed. Ping makes it impossible to be censored. There is no middleman involved.

All the messages are directly sent ping-to-ping.

Ping prevents an adversary from learning which pairs of users are communicating, as long as just one out of relays is not compromised, even for users who continue to use Ping for years. 

Ping uses only simple, fast cryptographic primitives, and, using community nodes, can scale to millions of users and tens of thousands of messages per second. At the same time, Ping can provide guarantees at a small scale, without the need for a large anonymity set: even if just two users are using the system, an adversary will not be able to tell whether the two users are talking to each other.

Quantum resistant e2e encryption 

End-to-end encryption in each message queue using NaCI cryptobox. This is added to allow redundancy in the future (passing each message via several servers), to avoid having the same ciphertext in different queues (that would only be visible to the attacker if TLS is compromised). 

Complete privacy of your identity, profile, contacts and metadata

Ping has no identifiers assigned to the users not even random numbers. This protects the privacy of who are you communicating with, hiding it from Ping platform servers and from any observers.

Embedded EXIF Removal

Exif is data about data, this additional information attached to files can lead us to share significantly more information than we intended to. For example, if you send an image, but don't remove the metadata, it may reveal the location (GPS lat + long) of where it was taken, the device is was taken on, precise camera data, details about modifications and the picture source + author. This could obviously pose a security risk. Delet! users exif data from a media/file before sharing content in the chat. 

Full ownership, control and security of your data

Ping stores all user data on client devices, the messages are only held temporarily on PingPong relay nodes until they are received. 

Mitigation of Time Analysis

Message mixing adds latency to message delivery, to protect against traffic correlation by message time.

Protec against spam and abuse

As you have no identifier on Ping, you cannot be contacted unless you share a one-time invitation link or an optional temporary user address.

Traffic analysis resistant noise

Our design assumes an adversary who controls all but one of the PingPong nodes (users need not know which one), controls an arbitrary number of clients, and can monitor, block, delay, or inject traffic on any network link. As adversaries can still learn a lot by performing traffic analysis, noise prevents them doing so.

Encrypted database recovery 

Local database encryption, your contacts, groups and all sent and received messages are stored encrypted. Oblivious Pseudorandom Functions (OPRFs) and a Secret-Sharing Scheme (SSS) distributed storage recovery of secrets. Short pin instead of long strings of encryption keys. 

We have defined core privacy properties:

• Sender Anonymity: When a chat message is received, no non-global entities except for the sender can determine which entity produced the message.

• Recipient Anonymity: No non-global entities except the receiver of a chat message know which entity received it.

• Participation Anonymity: No non-global entities except the conversation participants can discover which set of network nodes are engaged in a conversation.

• Unlinkability: No non-global entities except the conversation participants can discover that two protocol messages belong to the same conversation.

• Global Adversary Resistant: Global adversaries cannot break the anonymity of the protocol.

When evaluating the security and privacy properties in secure messaging, we must consider a variety of adversaries. Our threat model includes the following attackers:

1. Local Adversary (active/passive): An attacker controlling local networks (e.g., owners of open wireless access points).

2. Global Adversary (active/passive): An attacker controlling large segments of the Internet, such as powerful nation states or large internet service providers.

3. Service providers: For messaging systems that require centralized infrastructure (e.g., public-key directories), the service operators should be considered as potential adversaries.

Note that our adversary classes are not necessarily exclusive. In some cases, adversaries of different types might collude.

We also assume that all adversaries are participants in the messaging system, allowing them to start conversations, send messages, or perform other normal participant actions.

We assume that the endpoints in a secure messaging system are secure (i.e., malware and hardware attacks are out of scope)

Our protocol design allows us to assume that Ping is not vulnerable to neither of the listed adversaries threat models, unless the devices are physically compromised.

All P2P networks are likely to be vulnerable to Sybil attacks, because each node is discoverable, and the network operates as a whole. Measures to reduce the probability of the Sybil attack either require a centralized component or expensive proof-of-work. 

The proposed design, on the opposite, has no central authority, no server discoverability, nodes are not connected, unknown to each other and to all clients. 

Unlike P2P networks, all messages are passed through one or several server nodes, that do not even need to have persistence. Using in-memory message storage, persisting only the queue records. Ping provides better metadata protection than P2P designs, as no global participant identifiers are used to deliver messages, and avoids the problems of p2p networks. 

Unlike federated networks, the server nodes do not have records of the users, do not communicate with each otherand do not store messages after they are delivered to the recipients. There is no way to discover the full list of nodes participating in the PingPong network. 

This design avoids the problem of metadata visibility that all federated networks have and better protects from the network-wide attacks.

PoP will guarantee ping-to-ping messaging between users in a way that is private in the face of a strong adversary, who can observe and tamper with the entire network traffic and all but one of PingPong’s relay nodes.

That is, an adversary should not be able to distinguish between a scenario where two particular users are communicating, and a scenario where they are not, even after interfering with the system.

A constellation of nodes scattered globally securing and scaling the network.

hardware requirements/incentives tba*

Out of the secure communications sandbox, what good is private communication without private networks or private money.

We can’t securely use one or the other without all of the privacy tools working in sync.

That is why we are fully committed to explore the endless opportunities that have presented themselves with the advent development of Privacy 2.0.

Ping, pong, no one sees, no one knows…

• no vc money

• no official attac vector {legal entity;org;dao}

• hardware nodes

• beta testing

• iOS/Android mobile app development

• 🏓 💊 the masses

• attac{less} by design

• open source

• traffic analysis resistance

• ping2ping peer2peer

• pingOS

• private LTE networks / eSim

• fully private asset transfers

Legal Indifference

PingPong should be unconcerned with the laws of nation states, just like other internet protocols. Regulators will have to figure out how to respond to the functionality enabled by Privacy 2.0 powered technology, not the other way around.

Observations of the Strava fitness application on the activity of almost 100 million subscribers show that the enthusiasm of 80% of people who have decided to play sports since the new year will dry up already on January 19. According to another, geolocation application Foursquare, gym visits, having flared up in January, returns to the average annual norm in February, and at the same time the number of trips to fast food cafes increases to the average annual rate, traditionally decreasing in January.

The results of academic research are not much more comforting. One of the first studies of "attempts at New Year's change" in 1988-1989 was conducted by American psychologists John Norcross and Dominic Vangarelli, who tracked the behavior of 200 Americans for two years, who promised to lose weight in the new year, improve family relations or quit smoking. It turned out that only 77% of them fulfilled their New Year's promises during the first week.

After a month, the share of those who kept their promises decreased to 55%, after 3 months to 43%, after six months to 40%, and in two years to 19%.

Such discouraging statistics can make a person who has decided to change give up. But if you look at the numbers differently, it turns out that about 20% of people achieve their goal.

Failure to promise often does not mean that the goals have changed. Long-term goals remain the same: in the Australian experiment, more than half of the participants admitted that they set themselves the same goal before each new year and chronically cannot achieve it. It's all about the choice that a person makes every day. Knowing the mechanisms that turn New Year's promises into what Lord Henry Watton called "fruitless attempts to go against nature" can help avoid traps on the way to achieving the goal, although it does not make this process easy.

How New Year's promises appeared

It is believed that the first New Year's resolutions, like the New Year's celebration itself, were "invented" in Babylon about 4,000 years ago. During the 12-day religious celebrations, which, however, were not held in winter, but before the spring sowing in March, the inhabitants of the ancient city promised the gods to pay off their remaining debts. Failure to fulfill the vows threatened to punish heaven, which strongly motivated the Babylonians not to shy away from what was promised.

Behavioral economics provides three main explanations why promises to change themselves fail in most cases. All of them are associated with cognitive distortions - traps of thinking.

The first of these distortions is hyperbolic discounting: it means that people tend to prefer a smaller, but immediate reward to a larger one in time. In simple words, a cake at dinner today is more valuable for most people than a slim figure in a year. There can be many reasons for such a discounting of the future - for example, it is often difficult for people to deny themselves immediate pleasure, it is difficult to imagine the scale of pleasure in the future, and finally, over time, preferences may simply change.

This phenomenon was first described in 1975 by a psychiatrist and professor at the University of Cape Town School of Economics George Ainsley, who discovered that by attaching less value to what will happen in the future than to what is happening at the moment, people take impulsive and reckless actions, even if the infidelity of their decision is obvious to themselves. As an example, Ainsley cited Adam and Eve, who preferred to be expelled from Eden in order to taste an apple.

When in the early 1990s Ainsley described all this in a book about motivational states, his idea has already captured the minds of other researchers. In particular, in 1981, one of the founders of behavioral economics, future Nobel laureate Richard Thaler presented evidence of the phenomenon of hyperbolic discounting. The rate of this discount decreases over time, that is, the longer the reward is postponed, the less value it is given. However, the decline is not exponential, as an absolutely rational economic agent would have, but in the form of a hyperbole: for example, many will prefer "one apple now" to "two apples tomorrow", but at the same time will prefer "two apples in a year and one day" to "one apple in a year". Polls conducted by Thaler showed that respondents agree to give up $15 now for $30 in three months, $60 in a year and $100 in three years, which corresponds to a reduction in the annual discount rate from 277% to 139% and up to 63%, respectively.

Adaptability and impulsiveness

Like many other cognitive distortions, hyperbolic discounting is a "programmed" error in the processing and interpretation of information. This is an adaptive evolutionary mechanism that once allowed the human race to survive. What is the priority for survival - to eat a sick one lagging behind the buffalo herd or start tracking down the herd to get a few of the largest animals? An immediate reward is guaranteed, while the future one leaves room for problems and failures that can lead to hunger and death. In modern conditions, the tendency to immediate remuneration is often not adaptive, but impulsive, explains Doctor of Medical Sciences Peter Attia. Long-term weight loss or retirement goals are at a disadvantage compared to a Sunday dinner at a bar.

Hyperbolic discounting makes it difficult to achieve goals that require long efforts and discipline, and makes it difficult to choose what is obviously better than in favor of momentary satisfaction. Therefore, those who lose weight crash out and eat chocolate instead of fresh carrots, students procrastinate instead of preparing for the session in advance, and not the day before it, and smokers continue to spoil their health.

But this "flaw" can be "deceived" by forcing it to work for yourself, writes Peter Attia, MD, founder of Early Medical. To avoid impulsive behavior that occurs with hyperbolic discounting, you can break up large goals into small but quickly achievable ones and reward yourself for each step taken.

If a particular action is followed by a reward, a person receives dopamine, and in this case the changes required by the fulfillment of the promise are perceived as less burdensome.

But the main effect of the reward is that it accelerates the formation of habits.

Thus, in an experiment with 120 students from the University of Chicago who agreed to visit the gym for a reward, those who were required to play sports 8 times a month continued to do so 1.5-2 times more often after the end of the experiment than those who had to practice once a month or choose the frequency themselves.

The second cognitive distortion that prevents the fulfillment of New Year's promises is the rejection of losses: people tend to avoid losses, because losses for them look more significant than similar gains. In other words, the majority would rather not lose 1000 euros than find 1000 euros.

This effect was discovered in 1979 by American psychologists Daniel Kahneman and Amos Tversky ( 1, 2) during work on the theory of perspective, for which Kahneman received in 2002. Nobel Prize in Economics. The fact that the pain of loss is stronger than the pleasure of acquisition, back in 1759 was written by the "father of the market economy" Adam Smith, but Kahneman and Tversky managed to measure this pain: negative emotions from loss are twice as tangible as positive emotions from comparable profit.

Rejection of losses explains failures in fulfilling those New Year's promises that involve abandoning what people value in their lives. This valuable can be, for example, the opportunity to stay cold in a warm bed on a morning instead of jogging.

Like hyperbolic discounting, the rejection of losses can be "deceived". What seems to be a loss can be represented as the return of what was lost: for example, the task of losing weight is easier to accomplish if you perceive the result as regaining slimness, and not as getting a better shape. Another way to make the rejection of losses work for yourself is a clear formulation of what you will lose if you do not keep your promises. It can be, for example, the thought that a missed opportunity to save now will force you to give up traveling next summer, that is, it will lead to the loss of a good vacation.

Another effective way to fulfill promises is a fine for non-fulfillment. A person can fine himself by transferring money to a long-term account, or ask a friend to do it, as, for example, did graduate students of the Faculty of Economics of MIT Dean Carlan and Jan Ayres (now professors at Yale and Northwestern Universities) in the early 2000s.

Both wanted to lose weight, but after unsuccessful attempts decided to rely on the principles of behavioral economics. Having made another New Year's promise to lose weight, Carlan and Aires signed a contract for its implementation.

The contract stipulated how many pounds each of them should lose per week and what the weight should be at the end of the year. Failure to comply even with the weekly norm was punishable with a tangible fine of $500 - if friends paid such a fine every week, it would deprive them of their annual income. At one of the stages of the experiment, Ayres had to give Carlan $15,000. "If I refused to take this money, no other contracts would work in the future,".

The third cognitive distortion that complicates the fulfillment of promises is super confidence: projecting current circumstances, tastes, preferences for the future, people often overestimate their ability to perform a particular task or underestimate the time it takes.

Professor of Economics and Psychology at Carnegie Mellon University and Director of the Center for Behavioral Solutions Research George Levenstein calls such decisions "hot", that is, made under the influence of emotions or desires. But when emotions go away, a person goes into a "cold" state, his behavior changes, and motivation disappears. So, gym season ticket buyers train on average twice as often as planned.

If a promise is made under the influence of emotions, the gap between intention and actual actions is almost inevitable, warns Jocelyn Miller from the consulting company London Economics. Plans for the future are feasible if they are built in a "cold" state and are step-by-step projects. For example, when it comes to sports, the plan "do more exercise" has much less chance of success than the plan "do exercises for at least 30 minutes 3 times a week". It is better if the plan consists of numerous small but achievable steps (bailed by rewards). This also applies to the number of goals: instead of changing your whole life at once, it is better to start with one or two aspects.

Formulating effect

Studies have shown that the effectiveness of achieving goals depends on how they are formulated. In many cases, a simple reformulation of goals can help achieve them, says Per Carlbring, professor of psychology at Stockholm University. For example, if the goal is to stop eating sweets in order to lose weight, the wording "I will eat fruit every day" is more likely to help to achieve this. Then you replace sweets with fruits and probably lose weight and at the same time do not lose your determination, Carlbring advises: "You can't erase your behavior. But you can replace it with another one." Vague wording is another reason for unfulfilled promises: such formulations contain immeasurable goals (for example, "to be happy" without defining what it means), which is why reference points are lost.

Another effective way to stick to what was promised is to declare your intention publicly, for example, to friends or subscribers on the social network. Studies show that people tend to try to fulfill such promises because they do not want to spoil their reputation, disappoint or become the object of public condemnation.

As soon as a person has a habit, it often turns into an automatic action. This property of human thinking can both prevent the fulfillment of promises made to themselves and help them.

Thinking consists of two systems - intuitive, or adaptive, and analytical: the first one "recognizes" patterns previously laid in the subcortex when processing information, the second "works" through logic and reflection. Kahneman called them System 1 and System 2. System 1 makes decisions "without human participation": for example, a person who constantly works at the computer does not have to think about where the key is - his fingers "press" the necessary letters themselves.

Well-learned skills are gradually moving from the "thinking" System 2 to the automatic System 1 in order not to waste limited cognitive resources on already mastered tasks.

Similarly, habits are "sewn" into System 1. If a person has formed a habit, for example, to eat chocolate when he is nervous, System 1 will do everything to recreate the usual behavior under stress. Almost half of the actions people perform unconsciously - solely on the basis of habits.

On the one hand, such a number of "automated processes" in a person's life frees the brain from routine, that is, a person does not have to think about what to do after he, for example, opens the door and enters his house. On the other hand, it greatly complicates any changes in life.

To change behavior, you will have to change your habits - that is, get rid of the old and acquire new ones. To form a habit, certain actions need to be repeated many times to "transfer" them to the autopilot system. Making a habit is easier to learn something that is easier to learn.

Formulating a task for the future, no matter how many failures await a person on the way to their implementation, is the first and most important step towards change.

The beginning of a new period really increases the motivation to start acting: studies have established a causal relationship between the temporary boundary and the incentive to achieve the goal. Therefore, even if previous attempts to fulfill New Year's promises failed, the beginning of the new year is a reason to try again:

"The beginning of the year gives a new motivation to achieve goals, turn the page of previous failures <...> and tell yourself: it was the old me, but the new self will be different."

As long as it doesn’t become a coping mechanism.

Attac!

There were still fierce battles on the fronts of World War II. At that time, the allied troops of the United States, Great Britain and Canada were just opening a second front, landing on the coast of France, and Soviet troops launched Operation Bagration to liberate Belarus. But the members of the anti-Hitler coalition were already thinking about the post-war peace: at the meeting in Bretton Woods, it was to agree on a system of economic order and international cooperation that would help recover from the war and promote long-term global growth. International cooperation was necessary to avoid a repetition of the currency chaos of the period after the First World War, which marked the beginning of permanent economic crises, unemployment, trade protectionism, which, in turn, formed the conditions that contributed to a new world war.

The possibility of such cooperation was unprecedented for countries that built barriers between their economies for two decades. They did not yet imagine that the economy could grow rapidly, because they knew only economic depression, financial chaos, autarky and war - and hoped to restore stability and a "pre-depressive" level of economic activity.

Farewelling, the conference participants talked about a bright future, a quick peace, predictability and prosperity.

The agreements reached in Bretton Woods have indeed ensured the phenomenally rapid recovery of war-torn economies, as well as the subsequent rapid growth, expansion of international trade and global macroeconomic stability.

But the post-war monetary and financial architecture was based on many contradictions that fell into a single scenario during the development of the drama, which unfolded behind the scenes of Bretton Woods - the confrontation between the "British" and "American" versions of the agreement.

The dollar, thanks to the Bretton Woods system, until now, half a century after its collapse, remaining the main world reserve currency, has not been considered as the central element of the system and received this status virtually by accident.

The bet on the national currency of one country, rigidly tied to gold, predetermined the short, by historical standards, fate of the Bretton Woods system: it lasted only a quarter of a century.

However, the Bretton Woods Conference was key to the formation of international financial cooperation, which later in the 20th century made it possible to move to a more flexible global floating-rate monetary and financial system that still exists today.

In the 1920s, countries one by one began to restore the gold standard - the binding of national currencies to gold. The gold standard existed quite successfully and without serious convertibility crises for three decades before the First World War that destroyed it.

It was considered as a source of relative prosperity of the late 19th and early 20th centuries, so it is not surprising that many war-to-war countries independently decided to return to it, often under pre-war parity.

By 1925, of the 48 currencies included in the list of the League of Nations, about 60% were tied to gold, and by 1930, the absolute majority of currencies had such a binding.

However, already in the 1930s, countries also began to abandon this binding one by one and devalue their currencies. The period of the late 1920s and 1930s for the whole of Europe and the United States became a time of permanent banking panics, crises, currency wars, economic depression and as a result the collapse of the globalized financial system, all this was a key contributor to an attempt to return to the gold standard.

This was due to the fact that the post-war gold standard was significantly different from the "classical" one, the period before the First World War, and these differences, in turn, were caused by the factors and conditions that developed after the war.

The pre-war gold standard was a hegemonic system centered on Great Britain. In the interwar period, the relative decline of Britain and the inexperience and isolation of the new potential hegemon (the United States), as well as ineffective cooperation between central banks, left no one who would be able to take responsibility for the system as a whole, economic historian Harold James and Ben Bernanke, known not only as the head of the Fed during the global crisis of 2008, but also as an economist who received the Nobel Prize for his research on the causes of the Great Depression, note in his work on the connection between the gold standard and the Great Depression.

According to the "rules of the game", the central banks of countries experiencing an influx of gold were to promote the "flow of prices and gold" by expanding the domestic money supply and inflation, while countries with deficits had to reduce the money supply and carry out deflation.

In practice, deficit countries were forced to comply with these rules due to the need to avoid complete loss of reserves and problems with convertibility, but countries with a surplus did not prevent them from sterilizing the flow of gold, accumulating reserves and preventing inflation. Thus, the interwar gold standard had a clear and total deflationary bias.

The asymmetry between the two groups of countries existed before the First World War, but with the significant difference that then the gold standard was concentrated around the operations of the Bank of England.

The Bank of England, as well as a commercial institution, had an incentive not to hold large reserves of gold that did not bring interest income, unlike other assets that brought such income. The bank managed the gold standard in such a way as to avoid both a steady inflow and a steady outflow of gold. This helped to ensure continuous convertibility with a surprisingly low level of gold reserves, Bernanke and James note.

In the interwar period, by the end of the 1920s, about 60% of the world's gold reserves were controlled by two countries - France and the United States. At the turn of the 1920s and 1930s, a stream of gold poured into France, which was perceived as a "safe haven", as a result of which its share in world reserves doubled to more than 30% in four years, by 1932; the share of the United States remained stable at 40%. The flow of gold to France meant its "leaching" from the reserves of other countries. At the same time, in France itself, such an influx had practically no impact on inflation. On the contrary, in 1929 the country experienced a strong deflation of wholesale prices - by 11%.

In addition, central banks at that time were severely limited or even deprived of the right to conduct operations on the open market. This ban also applied to the Bank of France, which seriously reduced its ability to convert gold inflows into monetary expansion, as it should have been in accordance with the "rules of the game". France's inability to carry out inflation meant that it continued to attract reserves and impose deflation on other countries. The United States did the same: in the late 1920s, the Fed tightened monetary policy, partly to prevent the outflow of gold to France, partly to cool down speculation in the stock market. In 1929, the price level in the United States fell by 4%.

The "battles" between the United States and France turned out to be wounds inflicted on themselves, Bernanke and James note: no fundamental circumstances forced the Fed to deflation, and the French government to prohibit the central bank from selling gold.

As soon as the deflationary process began, central banks began competitive deflation and the fight for gold, hoping to protect their currencies from speculative attacks.

Attempts by any single central bank to increase the money supply and lower the rate were met with an immediate outflow of gold, which forced it to raise the rate and deflate again.

Even the United States, which had the largest gold reserves in the world, faced this restriction.

Thus, the peculiarities of gold standard management in the interwar period caused global deflation in the late 1920s and early 1930s. It was aggravated by the fact that since the war the price level had risen greatly, and the gold standard restored at pre-war parity required a reduction in this level and an extremely strict monetary policy, and the tasks of post-war recovery - on the contrary, monetary expansion.

Deflation has at least a triple negative impact on economic activity. Firstly, through real salaries. Nominal salaries have a certain "siffness", and deflation leads to an increase in real wages. Faced with a decrease in profits due to the fall in prices for their products with rising wages, enterprises reduce the demand for labor and investments.

Secondly, through real interest rates: during deflation, they also increase. The increase in the real value of nominal debt obligations caused by the fall in prices undermines the financial situation of borrowers. Thirdly, deflation erodes the capital of banks, forming a gap between their liabilities (usually fixed in nominal terms) and the real value of their assets. The impending depletion of bank capital leads to the flight of depositors, which provokes bank bankruptcy and banking crises.

Banking panics accompanied almost the entire interwar period. From 1921 to 1936, there were 46 banking crises in the world, a third of which occurred during the peak of 1931, by which the world had been experiencing global deflation for two years. In 1931, the Austrian Creditanstalt, once the leading bank of the Habsburg monarchy, which became the largest bank in the Republic of Austria and had extensive ties with banks throughout Europe, collapsed. Its collapse caused a domino effect with a wave of numerous bank panics swept across the continent - in Germany, Hungary, the Czech Republic, Romania, Poland, Switzerland, Turkey, Belgium, Latvia, Estonia, Great Britain and even France - plunging Europe into the Great Depression with accompanying mass unemployment on an unprecedented scale. By the end of 1931, the banking crisis and economic depression had become global.

As a result of the pan-European crisis, the United Kingdom was the first to abandon the gold standard - in the same 1931, four months after the collapse of Creditanstalt, and devalued the effective exchange rate of the pound sterling (weighted average to the currency basket of the trading countries depending on their share in trade turnover) by almost a quarter. This immediately increased the competitiveness of its exports and is believed to have become a turning point in its way out of the crisis.

Over the next few years, 25 more countries followed Britain's example, refusing to peg currencies to gold or its alternative - the dollar and devaluing them. In the absence of international cooperation, the process was chaotic, and those who, like Britain, managed to get away from gold and devalue the currency before others benefited. And the "latecomers" didn't want to lose. The "race of devaluations", or currency wars, has begun. The United States abandoned the gold standard in 1933, France in 1936. The Gold Bloc and with it the globalized financial system were destroyed, and in solving the collective problem of global macroeconomic stabilization, each country was left to itself.

The European crisis developed independently of the events in the United States, at least partially, which contradicts the "American-centric" explanation of the causes of the Great Depression, Bernanke and James note. The countries that came out of the 1920s in a relatively weaker state suffered the most seriously, including Germany, which was most vulnerable to banking panic due to economic upheavals and hyperinflation in the early 1920s.

Panic and central banks

The rules of the gold standard limited the ability of central banks to mitigate panic, acting as a lender of last resort. Banking panic often coincided with currency crises, which made people strive to transfer funds to more stable currencies. This led to a fall in the gold reserves of central banks (for example, the reserves of the Bank of England decreased by 40 times), creating a threat to the convertibility of national currencies. To prevent this, central banks usually further tightened the policy before the threat of panic. After the abandonment of the gold standard, there were practically no serious banking panics in any country - although it is also true that by the time the gold standard was abolished, most countries had carried out financial reforms to strengthen banking systems, Bernanke and James note.

Economic unrest provoked states to protect their producers from competing with imports.

The 1920s-1930s are considered an "exemplary" period of the implementation of the "razor neighbor" policy - consisting in the desire to improve their own economic situation (for example, by supporting exports) by worsening the economic situation of others (import restrictions). For example, from 1929 to 1932, U.S. exports to Europe decreased by three times, and imports from Europe decreased by almost 3.5 times. In general, world trade decreased by two-thirds during this period.

The subsequent "race of devaluations" did not help world trade at all - on the contrary, it restrained trade, because in response to the devaluation of trading partners, countries imposed restrictions on imports.

Countries that did not have access to raw materials suffered from trade restrictions, countries such as Germany, Italy, Japan did not have it (unlike Great Britain, France, the USSR or the United States), which caused them to "increase the living space", which in turn required large-scale rearmament - in the case of Germany, this meant the rejection of the Treaty of Versailles, which officially ended the First World War and fixed its results.

Freedom of trade was assumed as one of the clauses of the treaty, but it was not included in the final document. At the same time, in order to pay the reparations provided for by it, Germany needed to increase its export revenues significantly above the pre-war level, and for this the United States and its allies had to reduce their tariffs. However, instead of lowering trade barriers, the United States and other countries began to raise them. Due to the lack of export income, Germany became dependent on American loans, which the United States gave it to pay reparations to its European allies (and they, in turn, paid off their debts to the United States accumulated during the First World War from Germany's reparations).

But due to the collapse of Wall Street and the Great Depression that began in the United States, lending was suspended. Germany could not cope with the payments, despite their restructuring, and in 1931 it declared default.

Germany's economic crises led to a loss of confidence in the liberal-democratic government of the Weimar Republic, hatred of the post-war peace agreement, which was considered the cause of all troubles, and the growth in popularity of radicals who shared and fueled these feelings.

This helped the National Socialists to grow from a marginal group gathered in Munich pubs into one of the largest political forces in the country and come to power in 1933, after which Germany refused to implement the Treaty of Versailles and began to restore the armed forces and create a "blockade-free economy".

The lessons of the interwar period were learned, so even before the end of World War II, representatives of countries gathered in Bretton Woods to agree on cooperation and the creation of a system that would contribute to the growth of economies, not crises, and the formation of supranational financial support institutions.

The agreement signed in Bretton Woods provided for the creation of two supranational organizations:

• the International Monetary Fund (IMF), designed to prevent the "race of devaluation" and lend currency to countries with a balance of payments deficit,

• the International Bank for Reconstruction and Development (IBRD), responsible for providing financial assistance to the countries most in need.

World currencies were tied to the dollar, the dollar to gold at a fixed rate of $35 per ounce, and the United States opened a "golden window": at this rate, central banks of other countries could exchange dollars for American gold. The participating countries undertook not to change exchange rates by more than 1% unilaterally (it was allowed to change the rate only after consultation with the fund, and by more than 10% only with its approval).

According to a legend in the American Ministry of Finance, on the night of Sunday, December 14, 1941, less than a week after the United States entered World War II, U.S. Treasury Secretary Henry Morgenthau dreamed that the world had switched to a single currency in international trade. Despite the day off, early in the morning Morgenthau called the economist of the American Treasury Harry Dexter White and asked him to est out how such a system could function after the war.

Two weeks later, White brought the boss a plan to create an international stabilization fund and a world bank. The first was to ensure the stability of the currency markets, the second post-war recovery, growth of economies and trade.

In order for the countries left without reserves to trade after the war, the fund issued loans to cover the deficits of their balances of payments (see the inset below), saving them from the temptation to do so at the expense of competitive devaluations and trade restrictions. The assets of the fund and the bank were formed at the expense of countries' contributions in currency and gold.

The value of national currencies was recalculated in accordance with a universal conversion system for all - White thought it was easier than inventing a new currency.

Balances of payments: surplus and deficit

The balance of payments reflects transactions between residents (individuals, enterprises and governments) of one country and residents of all other countries. If the country exports more than it imports, the inflow of currency into the country will exceed the outflow and the current account will be surplus. If a country imports more than it exports, the volume of foreign currency obtained through exports will not be enough to pay for all imports, and the current account will be scarce. The current account deficit can be financed either by the country's foreign exchange reserves or by capital inflows - for example, foreign currency loans or the sale of securities. Otherwise, the country's currency is devalued, which will increase import prices and thereby reduce it, restoring the balance. In market conditions, with free exchange rate formation, this happens automatically - but in the interwar period, devaluations were resorted to "forcibly" in order to limit imports; similarly, the deficit (or increase the current account surplus) of import restrictions are compensated through, for example, tariff barriers.

Almost simultaneously with White, one of the most influential world economists of the 20th century, the "father of macroeconomics", advisor to the British Minister of Finance John Maynard Keynes, began to work on the plan for the post-war restructuring of the world monetary system.

Keynes' proposals contrasted sharply with White's proposals. As a supporter of state intervention in the economy during crises, Keynes called for the creation of a large global organization with the resources and authority for such intervention in the event of imbalances.

At the center of Keynes' monetary and financial system was the world central bank - the International Clearing Union (ICU), which issued just a single international currency that the American Minister of Finance dreamed of - the "banker". The banker's exchange rate was tied to gold, but by the decision of the ISS council it could change, that is, it was regulated. Bankor could be bought for gold at a fixed rate, but it was impossible to get gold for bankers.

Central banks placed accounts in bankers in the ICS, and if they needed to cover the balance of payments deficit, they received "credit lines" from the surplus of surplus currency of surplus countries.

The mechanism proposed by Keynes encouraged countries to limit not only the deficit, but also the surplus of balances of payments, since the country with an excess surplus had to share bankers with the Clearing Union.

First of all, such a measure could affect the United States and other major exporters.

The USA didn't like the English plan.

Keynes and the Treaty of Versailles

In 1919 Keynes, as a representative of the British Ministry of Finance, participated in the Paris peace talks, during which the Treaty of Versailles with Germany was prepared, among other things. Keynes objected to the huge payments imposed on Germany, calling them punitive: this would lead, he argued, to the fact that Germany would remain forever poor and, therefore, politically unstable, which happened. Keynes was not listened to, and he resigned his powers, and described his rejected beliefs in the book "Economic Consequences of Peace", published in the same 1919. She instantly glorified him - that is, even before he proposed a way out of economic depressions in the 1930s at the expense of fiscal and monetary incentives, and this time he was listened to. Supporting demand in the economy through coordinated actions of the government and the central bank and their active intervention in the market during recessions began to be called "Keynesianism".

The differences in the vision of the British Keynes and the American White of the post-war monetary and financial system were explained by the radically different situation in which Great Britain and the United States found themselves during the war years. "Among the largest consequences of World War II were changes in the economic situation of Britain and the United States. It was almost a complete contrast," wrote Columbia University Law Professor and former American diplomat Richard Gardner in the book Sterling-Dollar Diplomacy.

In 1945, the United States accounted for about 50% of world industrial production, the country was the world's largest exporter with a current account surplus of $11.5 billion, which was more than 10 times higher than the late 1930s.

Great Britain, which before the First World War held the status of the most powerful power and the world's largest creditor, turned into the largest borrower during the Second World War, who needed additional recovery loans. If on the eve of the First World War the ratio of British debt to GDP was 29%, by the end of World War II it was 240%. British exports in 1945 decreased by two-thirds compared to 1939, and the current account deficit increased almost 16 times.

The United States, which expected to maintain its position as the largest exporter and net creditor, was interested in controlling the volume and terms of loans they would have to provide, and not in limiting the surplus of their balance of payments. The small amount of stabilization fund and the loans themselves, assumed by White's plan (unlike the five times larger volume of Keynes Clearing Union funds), was explained by the rate on lending to allies by private American institutions, which was supposed to transfer the heart of the global financial system from London to New York. In turn, Britain was interested in access to resources that would allow it to cover the budget deficit all the time it would take to recover the economy.

The main conflict of interest in the preparation of plans for the post-war international monetary and financial system was that Britain wanted to avoid a situation in which the burden of structural adjustment would fall on the shoulders of borrowers like it, and the United States wanted to make sure that this burden would not be placed on countries with a surplus, such as the United States.

At the beginning of 1943, newspapers began to write about the preparation of a new monetary and financial world order. The White Plan was officially published on April 7, 1943, and Keynes' plan the next day, April 8.

Throughout 1943, both plans were actively discussed at the international level. At the same time, the United States and Britain held separate bilateral negotiations, which one of their participants described as "absolute bedlam", "a duo of disagreements" and "crescendo of mutual insults".

Despite his world fame, Keynes had weak bargaining power, behind him stood a debtor state with depleted reserves, which also expected to receive a large loan from the United States. Behind White's position was the gold of Fort Knox - a repository of the U.S. gold reserve, which, according to various estimates, at that time accumulated from half to three quarters of the world's monetary gold reserve.

The international banker proposed by Keynes caused the Americans to be wary: they saw two threats in this idea at once - the distribution of money to wasteful nations, which, moreover, is not quite money, but unreliable "wrappers" for which the United States will have to sell its goods. When the proposal for bankers and the world central bank was rejected, Keynes proposed to make the White Units a universal means of payment, allowing them to be converted into any national currency.

White was adamant: this, in his opinion, would lead to the fact that all participants would demand dollars and the United States would have to provide them. As a result, both bankers and units disappeared from the final agreement.

Keynes managed to defend the proposal on the possibility of restrictions on capital operations and on changes in the exchange rates of national currencies with the permission of the IMF; another concession to the famous economist was the clause on the regulation of surplus balances of payments by the fund.

However, such a measure could be introduced only if the country's currency became scarce, in this case, the fund could limit the import of goods, the price of which is denominated in a deficit currency.

The role of the IMF

Keynes and White agreed on the creation of the IMF quickly (.pdf) and were in full agreement on its role: the IMF was to become a "Keynesian" institution, that is, a regulator that promotes prosperity through reasonable policies and helps countries avoid actions that "destruin national or international prosperity". Subsequently, for many years, the IMF has been criticized for promoting austerity rather than economic growth. The main argument of the IMF is that prosperity cannot be sustainable if it is not supported by reasonable policies. "Countries in economic distress often have to experience short-term suffering in order to achieve long-term success," notes IMF historian James Bowton.

The unexpecteds continued at the conference itself. The dollar, which remains the main world reserve currency thanks to the Bretton Woods system, was not considered in this status in the working version of the Bretton Woods Agreement.

A joint statement ( .pdf) of the United States and Great Britain, which became a compromise between their proposals and laid the foundation for the creation of the IMF, was published in late April 1944, three months before Bretton Woods, and introduced the concept of a "gold-convertible currency".

It was assumed that all currencies would be used in international payments, since "insufficient access to a certain currency and lack of its liquidity create a serious problem for the fulfillment of international payment obligations" (partly this fear was caused by the establishment in 1969 of IMF special drawing rights - SDR, an international reserve asset, sometimes called "paper gold").

During one of the meetings, the representative of the Indian delegation asked for clarification what kind of "gold-convertible currency" would be accepted as a contribution. To this, the chief economist of the U.S. Treasury Department Edward Bernstein replied that an attempt to define the term currency convertible into gold will turn into a long discussion, so that as such "it would be easier to consider the US dollar".

Thus, a clause appeared in the final agreement, which stated that "the denomination of the currency of each participant will be expressed in gold or in US dollars". This became the legitimization of the dollar as the only global currency - apparently due to chance.

The agreement adopted in Bretton Woods was mainly based on the White Plan. White himself soon became the first director of the IMF, established in December 1945.

Keynes did not hide his disappointment, calling White a "bad colleague" "having no idea about the rules of civilized communication", and the Bretton Woods Conference - "a monstrous monkey man".

Keynes wanted to "make a deal between the United Kingdom and the United States and present it to other allies," writes IMF historian James Bowton. White, on the other hand, organized a series of meetings for small groups of countries before gathering more than 700 delegates in Bretton Woods.

White believed that "prosperity, like the world, is indivisible," Bouton writes: White's message to his compatriots, embedded in the Bretton Woods Agreements project, was that the U.S. economy could not thrive if people and companies in other countries could not buy its products. Part of his vision was to encourage the enemy Axis countries to join the agreement as soon as they were ready to accept the terms of membership, which happened.

Another part of his vision was the preservation of the Great Alliance of World War II - the coalition of the United States, Great Britain and the Soviet Union. In an unpublished manuscript written in 1945, White argued that "no major war is possible if [the United States and the Soviet Union] are not on opposite sides... The main task facing American diplomacy - and the only task that has any real value for solving the main problems we face - is to develop ways to ensure friendship and military alliance between the United States and Russia,".

White personally negotiated with the USSR on a new world order, the Soviet delegation was present in Bretton Woods and signed an agreement.

But the USSR did not ratify it and did not join the IMF, suspecting the West of trying to trap it and subordinate it to its financial interests.

After World War II and with the beginning of the Cold War, the USSR began to form its own international financial system within the framework of the Council for Mutual Economic Assistance of Socialist Countries, based on the "transfer ruble" - a supranational currency with gold support, which existed until 1991.

Shortly after Bretton Woods, White was accused of espionage for the Soviet Union. This caused such damage to his reputation that the "architect of the world financial system" remained a little-known official, but its creation is firmly connected with the name of Keynes. Because of the accusations, White resigned after working as the head of the IMF for about two years, and died in 1948 of a heart attack after testifying to the Congressional commission to investigate anti-American activities.

Keynes, exhausted by difficult negotiations with the United States on a 50-year loan of $3.75 billion at the end of 1945, fell ill, and in the spring of 1946 suffered a heart attack and died. Both antagonists in fact never saw the incarnation of the Bretton Woods system, which was fully operational only in 1958.

Until about the mid-1960s, everything went smoothly: the opportunity to exchange dollars for gold gave full confidence in the value of the new global currency and contributed to the rapid economic growth of countries. But along with the growth of economies and exports, the need for new reserves also grew, to meet which dollars and gold were needed. More and more dollars were printed, and it was impossible to replenish gold reserves just as quickly.

With the growth of world trade in the 1960s, world gold production increased by an average of 7% by 1-1.5%, and gold miners had no incentive to increase production at a rather low "frozen" price of $35 per ounce. U.S. gold reserves were melting: during the 1960s, their volume halved.

Even earlier, in 1950, the United States, counting on long years of surplus, turned into a country with a balance of payments deficit that continued to grow: the current account surplus was insufficient to cover the outflow of capital - American net private investment abroad, military spending and loans to non-residents. In 1961, analysts of the St. Louis Fed sounded the alarm, noting that the deficit and the associated outflow of gold are of serious concern both in the United States and abroad regarding the American position in gold.

In fact, the system faced a problem warned by Congress in 1959 by Yale University professor Robert Triffin and which was included in textbooks as the "Triffin Paradox".

On the one hand, in order to provide the central banks of countries with the necessary amount of dollars to form national currency reserves, it is necessary that the United States has a constant deficit in the balance of payments; on the other hand, the US balance of payments deficit undermines confidence in the dollar and its value as a reserve asset - trust requires a balance of payments surplus. This paradox makes the collapse of the Bretton Woods system inevitable, predicted by Triffin.

Triffin considered the trigger mechanism of the inevitable crisis to be the moment when the volume of U.S. obligations to foreign central banks in dollars will exceed the value of the gold reserve of Fort Knox. In 1964, these indicators equalized, after which American dollar liabilities continued to grow.

Inflation in the late 1960s aggravated global imbalances, playing the role of an "elephant in the room", which could no longer be ignored, says Michael Bordeaux, a professor at Rutgers University. Against the background of accelerated inflation, the dollar exchange rate remained at $35 per ounce of gold. The dollar was overvalued: for the United States it meant cheap imports, expensive exports and problems with competitiveness and employment, for the rest of the world - that gold is becoming much more reliable than the dollar. At the same time, the system of currency parities of the Bretton Woods Agreement did not allow the devaluation of the dollar against other currencies without changing the value of gold in dollars.

Countries were against such a change, fearing the devaluation of their dollar reserves, and, on the contrary, tried to prevent a significant increase in the market price of gold to the officially established parity.

In early August 1971, when U.S. obligations to foreign countries exceeded U.S. gold reserves in dollars by 5 times, France and Great Britain demanded that the United States exchange its dollar reserves for gold, which would almost empty the U.S. gold reserves. In response, U.S. President Richard Nixon announced the closure of the "golden window": central banks of other countries could no longer exchange their dollars for gold. The decision, which went down in history as a "Nixon shock", destroyed the foundation of the post-war world monetary and financial system. By March 1973 The Bretton Woods system finally ceased to exist.

With its disintegration, all world currencies became fiat currencies, that is, not secured by either gold or other assets. They are now secured by trust in the policy of national central banks, confidence in the preservation of the purchasing power of currencies.

At the same time, the exchange rate of many currencies has become floating.

Fiat money

With the collapse of the Bretton Woods Agreement, currencies became fiat currencies (Latin fiat means "decree, decree"), that is, not secured by gold or other goods: their kind of security is now trust in the policy pursued by the authorities of a particular country - the belief that money can be exchanged for something valuable. "The key factor in the success of the gold standard was the credible compliance with the principles of convertibility of national currencies into gold. A key success factor for a floating exchange rate is the credible compliance of central banks with the principles of commitment to the low inflation target,"

Contrary to expectations, the new system that replaced Bretton Woods not only did not deprive the dollar of world domination, but also, paradoxically, strengthened its status as a reserve currency, for which it is often called Bretton Woods II.

However, the digitalization of currencies can radically change the configuration of the global financial system…

Thanks to him, a bridge across the Golden Gate Strait in San Francisco was built, "Gone with the Wind" and Disney's "Snow White and the Seven Dwarfs" were filmed. Turning billions, Amadeo Giannini said that he did not want to become a millionaire. He didn't become one.

Amadeo Pietro Giannini was born on May 6, 1870 in a small hotel in San Jose, California. The hotel with 20 rooms was managed by his father Luigi Giannini, and the money for its purchase was given by his mother's relatives, Virginia Giannini, the owner of a farm in the vicinity of Genoa. Compared to most Italian immigrants, the family lived quite well financially.

When Amadeo was seven years old, his father was killed by a hotel worker - in an argument over one dollar. The mother, who was left with three sons in her arms, soon remarried to farmer Lorenzo Scatenu.

Old Swiss Hotel in San Jose. Amadeo Giannini was born in this building

When Amadeo was 12 years old, the family moved to San Francisco. There, his stepfather started wholesale trade in agricultural products. First he worked for hire, and then founded his own company - L. Scatena & Co. He bought vegetables and fruits brought to the port and then resold them to local stores.

Amadeo's mother wanted her children to get a good education. Amadeo's younger brother, Attilio, succeeded - he graduated from medical college.

Amadeo, although he received good marks at school, was more interested not in his studies, but in his stepfather's business. As a teenager, Amadeo began to help his stepfather in trade. He started from the port, and at the age of 17 he began to travel around the state of California, buying products from local farmers for sale in the city.

At the age of 19, he made a successful deal with oranges (it was in Hollywood, but no one had heard of cinema in those parts at that time). As a reward for success, his stepfather gave him a third of his company's shares. A few years later, they became equal partners - 50% of each share.

In 1892, Amadeo married Clorinda Agnes Cuneo, whose father Joseph Cuneo made a fortune on real estate. Following the example of his father-in-law, Amadeo also invested in real estate. In 1901, these operations brought him $250 per month, which in terms of purchasing power approximately corresponds to the modern $10 thousand. (here and further in the article all figures are given from the book M. and B. James's "The Story of Bank of America: Biography of a Bank" and Felice Bonadio's book "A. P. Giannini. Banker of America").

Amadeo sold his share in his stepfather's company to employees, and he focused on real estate. In the early 1900s, Amadeo Giannini's fortune was about $300 thousand. He bought a two-story mansion "Seven Oaks" in San Mateo, a suburb of San Francisco, for $20 thousand.

His father in law died in 1902 without leaving a will. The deceased's fortune was about half a million dollars (about $18.6 million in terms of modern money). Most of these funds were invested in more than 100 real estate objects. Relatives signed a contract with Amadeo Giannini. He had to manage the funds of the deceased for ten years, providing for the widow and 11 children left without a father. For this, he was entitled to a reward of 25% of the amount by which the capital entrusted to him would increase. For ten years, Amadeo Giannini earned about $37 thousand in this way.

Amadeo also inherited his late father-in-law's place on the board of directors of Columbus Savings & Loan Society.

San Francisco was the largest city on the West Coast of the United States at that time. Both local banks and large European branches operated in the city. But both worked only with the business elite. Foreign ones - with importers and exporters, American - with large manufacturers and traders.

No bank wanted to deal with small customers. They just wouldn't talk to a borrower who needs $100. Such people had to turn to loan sharks and take loans at predatory rates.

Amadeo Pietro (he often pronounced his middle name in the American manner - Peter) Giannini, having come to Columbus, enthusiastically took up a new business for himself. He was just gushing with ideas that, in his opinion, would be profitable for the bank. He tried to convince other directors that the bank should issue more loans, not keep money in safes without doing anything. Especially small loans. The population of San Francisco grew rapidly, business activity grew, and in the long run, the growth in the number of borrowers, even small ones, had to get a return.

He called for increased investment in real estate, he was already well versed in this market.

If the borrower took money as collateral at home, he was obliged to purchase fire insurance. A bank employee, who was also an agent of the insurance company, wrote out this insurance and put the commission in his pocket. Giannini believed that the bank should receive commissions from the insurance company, not his employees.

Columbus Bank operated only in one area - North Beach.

A significant part of the population of the district were Italian immigrants. In San Francisco, North Beach is still called Little Italy. Giannini urged to go beyond the district, look for customers all over the city.

He managed to find like-minded people. He managed to get his stepfather to the board of directors. But he failed to bring his ideas to life. In 1904, he resigned from the board of directors of the bank.

But the story doesn't end there. This is the beginning of it.

Amadeo Pietro Giannini decided to create his own bank. For advice on how to do this, he turned to his old friend, Vice President of American National Bank James Fagan. Giannini called him Giacomo in the Italian manner. They have known each other for a long time. American National Bank had an account for L. Scatena & Co.

The board of directors of the new bank included Giannini's supporters, who resigned with him from Columbus, and several Italian businessmen. James-Giacomo Fagan, who took office, was the only non-Italian. Amadeo Giannini took the post of vice president and general manager of the bank.

Given the national composition of the audience, it is not surprising that the bank was first registered as Italian Bank of California, and then the name was changed to Bank of Italy.

The authorized capital of Bank of Italy was $300 thousand. 3 thousand shares were issued at $100. 11 directors received 100 shares each, making an advance payment of $50 per share. The remaining shares were acquired by 1.6 thousand small shareholders - none of them owned more than ten shares.

The organizers of the new case managed to make a successful real estate deal - to rent the building where Columbus was located. Giannini's former colleagues did not tolerate such humiliation and moved.

On October 17, 1904, the Bank of Italy opened its doors to the first customers. The bank worked with both individuals and legal entities.

On the first day of work, 28 clients put money on a deposit - a total of $8780. Some depositors were relatives of the bank's directors. The amount of deposits was supposed to impress future customers.

By the end of the year, the total amount of funds on deposits was $134 thousand, the total amount of loans issued was $178 thousand, of which $158 thousand was for loans secured by real estate.

At the same time, the bank lent even small sums. The minimum loan amount in other financial institutions was $100. In the Bank of Italy — $25.

An innovation that competitors looked at with disapproval and even contempt was oral advertising. Giannini bypassed Little Italy and persuaded the residents of the district not to keep money under the pillow, but to take it to the bank, put it in a savings account and receive 3.5% per annum.

Giannini also found customers where other banks were not going to work, on farms near San Francisco.

At the end of 1905, the bank's assets exceeded $1 million. The bank's depositors held $387 thousand in savings accounts. Giannini transferred the accounts of the company that managed real estate belonging to the Cuneo family to the bank.

The bank had a convenient location. There was a prison nearby. There were many of the bank's employees. In addition, the constant appearance of people in uniform near the building scared away potential intruders.

In 1906, Vice President Amadeo Giannini began to receive a salary of $200 per month. It was decided to increase the authorized capital of the bank to $500 thousand by distributing 2 thousand new shares. The start of the sale of shares was scheduled for April 21. But it didn't happen. Everything collapsed.

Not just the bank. The City.

On the morning of April 18, 1906, San Francisco was destroyed by an earthquake with a force of 7.7 to 8.3 on the Richter scale, according to various estimates.

Due to the earthquake, fires broke out, which lasted for four days. Some of the houses were set on fire by the owners, as they had insurance against fire, not against an earthquake.

Firefighters couldn't do much - the water supply system was also damaged.

Most of the population of the city, which was about 410 thousand people, was left homeless. Tent towns appeared in the parks and on the beaches, where the fires lived.

About 80% of the city was destroyed, mainly as a result of fires. About 3 thousand people died. The damage from the earthquake was estimated at more than $400 million (approximately corresponds to the modern $14 billion). The overall estimate of the destroyed property that was insured was almost half as low as $235 million (approximately corresponds to the modern $8.2 billion).

The Bank of Italy building was almost not damaged as a result of the earthquake. On April 18, Giannini arrived at the bank at noon. He covered the distance of 17 miles (27.4 km) from his home in San Mateo partly on foot, partly on passing vans. The trains did not run - the railway track was damaged.

When he approached the jar, the fire was already on the same street. The vice president gave an order to stop working and take out the property. Cash was placed in two vans belonging to his stepfather's company, mostly gold coins - for a total amount of $80 thousand. The money was disguised with boxes of oranges, and bank documentation was laid on top. In other, large banks, cash and documents were hidden in huge metal safes. There was no such safe in Bank of Italy. The bank's money was hidden in Giannini's house in San Mateo.

On April 20, Giannini returned to San Francisco to assess the damage. It was huge. The entire business center of the city was destroyed. The Bank of Italy building turned into ruins as a result of the fire. Almost all depositors of the bank lost their jobs and housing.

On April 22, the bank's depositors received a letter that banking operations would be temporarily carried out at the house of Dr. Attilio Giannini (Amadeo's brother) on Van Ness Avenue and on the Washington Street Pier. Dr. Attilio's house was not damaged by fire.

Most large banks resumed work only at the end of May - huge metal safes had to cool down before they could be opened without damaging the contents. Some bankers said that it would be safer to wait even longer - until autumn.

And Bank of Italy began to conduct operations at the end of April. Most of the operations took place on the pier. The board between the two barrels was a counter. A bag of money - a cash register.

In addition to the time factor, Giannini had another advantage over competitors. In many banks, the fire destroyed financial documents. Giannini knew all his clients in person and remembered how much money everyone had in their account.

He personally communicated with all clients. He told each of those who applied for a loan that the city would be reborn from ruins and ashes, it would become more beautiful than before, but only if all the residents did their best to do so. He gave out no more than half of the amount requested by the borrowers, and explained that there were a lot of applications, everything could not be satisfied.

There was a special breed of borrowers who did not need to ask for a loan. Giannini himself offered money to his fellow ship captains - to bring building materials to the city. As a result, Little Italy began to rebuild faster than the rest of San Francisco.

All $80 thousand was distributed, but the money in the bank did not run out. In addition to borrowers, depositors also applied to the Bank of Italy. They understood that it was safer to entrust Giannini with money than to keep it in a tent on the beach.

In early June, the volume of deposits in the Bank of Italy exceeded the volume of loans issued.

At the end of May, the bank moved from the pier to a rented room near the old building. The program to increase capital to $500 thousand was delayed, but it was implemented. Giannini and his stepfather agreed to accept 680 new shares as part of the payment for their land plot worth $125 thousand. At the same time, they got the right to buy it back in the future along with the house built on it at the same price (plus the cost of building a house plus 5% per annum).

A new bank building was built on this site.

By the end of 1906, the assets of Bank of Italy reached $1.9 million, almost doubling in a year. The number of depositors increased from 1023 to 2644. The total amount of deposits was $1.355 million.

In March 1907, Amadeo Giannini decided to rest and went on a trip to the East Coast. He visited Chicago, Philadelphia, New York. From conversations with colleagues in these cities, Giannini realized that a crisis was looming.

Banks were experiencing a cash shortage, due, in particular, to the fact that insurance companies had to pay huge amounts of bills due to the earthquake and fire in San Francisco.

In May, he returned home and began to prepare for difficult times. The preparation took place in three directions.

1. reduction in lending (the mortgage rate was increased from 6% to 7% per annum, consumer loans continued to be issued at 6%).

2. an increase in the bank's gold reserves. Giannini instructed the cashiers to give out money in paper bills, unless the client specifically asks for gold coins.

3. a campaign to attract new deposits.

On August 1, 1907, the Bank of Italy opened a branch outside Little Italy - in the Mission area.

By that time, the banking crisis was already marching around the planet. In April, a bubble of land real estate burst in Egypt. This led to the mass withdrawal of money from banks by depositors and the collapse of a large bank Cassa di Sconto. Following Egypt, banking panic struck Japan, Germany, Chile. In October, it was the turn of the United States.

On October 30, the crisis came to San Francisco - California Safe Deposit & Trust Company collapsed. Bank holidays were announced in the state, but banks continued to work. However, many of them have changed the rules of work. Many, but not Bank of Italy.

Giannini ordered to place cages with bags with gold coins in the bank room. This spectacle was supposed to create a sense of confidence in customers.

Bank of Italy issued gold at the first request of the depositor, while most other banks recalled the old rule according to which the client must first, 10-90 days as the bank, notify of his desire to withdraw an amount over $100.

Despite the imposed restrictions, other banks lost depositors, the volume of deposits placed decreased. Bank of Italy ended the second consecutive difficult year, increasing the size of assets to $2.2 million. $300 thousand was attracted to deposits for the year.

The following year after the panic, the banking community was actively discussing the issue of what measures should be taken to prevent this from happening again.

One of the problems was that commercial banks were forbidden to operate outside their state. And in some states - even outside their district. There was a so-called rule of protection of the local headquarters. If there was a local bank in a city with a population of less than 50 thousand people, banks from other cities of the state could not open their branches in it.

As a result, tens of thousands of small banks operated in the country. In difficult times for the economy, this disunity harmed everyone. At that time, Canada had a system of banks with branches across the country, which had demonstrated its resilience during banking panics.

Giannini went on a trip to Canada to learn best practices. He saw that even in small towns there were branches of banks, the main structures of which were located on another coast. Operations that were inaccessible to customers of thousands of local banks in the United States were carried out in these branches.

At the beginning of 1909, Giannini's salary doubled to $400 per month. The authorized capital of the bank in the same year was increased to $750 thousand.

On July 1, 1909, a new bank law came into force in California. According to this law, the banking system of California was to be supervised by the state bank governor appointed by the governor.

The law distinguished three types of banks - commercial, savings and trust (dealing with property management and other services on behalf and in the interests of clients as its trustee). If the bank is going to operate in several directions, the assets and accounts of the relevant departments should be divided.

The capital of Bank of Italy was divided in accordance with the areas of activity - $500 thousand was received by the commercial department working with legal entities, and $250 thousand - by the savings department serving individuals.

Giannini took advantage of the provision of the new law, according to which the branches of the bank could not be opened without the permission of the state bank governor, after he was convinced that the company would benefit from the appearance of this branch. In addition, the opening of each branch was to be accompanied by an increase in the bank's fixed capital by $25 thousand.

The first branch of Bank of Italy appeared in San Jose. This was done by buying Commercial and Savings Bank of San Jose, which is experiencing financial difficulties.

However, the law prohibited the purchase of shares by one bank of another. But there is a workaround. The directors of Bank of Italy, acting as individuals, acquired a controlling stake in Commercial and Savings Bank of San Jose.

Bank of Italy acquired most of the assets of the troubled bank. Unlike shares, it was not forbidden to buy assets. After that, the merger of the two structures was announced.

On January 1, 1910, Commercial and Savings Bank of San Jose became a branch of Bank of Italy in San Jose.

Brothers Giannini and Hollywood

The first to start providing loans to a new, rapidly developing business sector - cinema - Amadeo's brother, Attilio Giannini, who sayed goodbye to medical practice and started working in his brother's bank. Following his brother, he fell in love with cinema and Amadeo.

The first "film credit" was issued in 1919 - $50 thousand was received by the Famous Players-Lasky company, which made silent films.

In 1921, Bank of Italy financed the filming of the film "Baby", Charlie Chaplin's first full-length film, by issuing a loan of $250 thousand. The film collected $5.45 million at the box office, becoming the main hit of the year.

In 1923, Cecil DeMille received a loan of $200,000 for the filming of the film "The Ten Commandments" (1923).

Bank of Italy participated in financing the creation of the Columbia Pictures film studio.

In 1930, Bank of America approved a $3 million loan to producers Darryl Zanuk and Joseph Schenk to create a new film company Twentieth Century Pictures (after merging in 1935 with Fox Film - Twentieth Century Fox).

Bank of America lent David Selznick's films - "Gone with the Wind", "The Tale of Two Cities", "A Star is Born", "The Prisoner of the Fortress of Zend" and "The Adventures of Tom Sawyer". Samuel Goldwin took loans from the bank for the filming of the films "Kid from Spain", "Wuthering Heights" and "Goldwin's Madness".

Walt Disney received funding from the bank for the production of his cartoons, starting with "Steamboat Willie" and "Three Piglets". In 1935, he received a record loan (according to various sources, from $1.5 million to $1.95 million) for the first full-length cartoon "Snow White and the Seven Dwarfs". To reach zero, the cartoon had to collect about $3 million at the box office. "Snow White" became a sensation, the highest-grossing cartoon in history and held this title for 55 years. The fees in the first season of the rental amounted to $7.866 million. For the entire time of the show, taking into account the re-releases, the cartoon collected $418 million. After the success of "Snow White", three more full-length cartoons were shot with Bank of America - "Fantasy", "Pinocchio" and "Dumbo".

From 1936 to 1944, Bank of America invested $136 million in the film industry.

Amadeo Giannini with Jackie Coogan, who played the role of Baby in Charlie Chaplin's film "Baby", financed by a loan of the Bank of Italy

Following the first purchase in 1910, two banks in San Francisco and a bank in San Mateo, near Giannini's house, were purchased. At the end of 1912, the assets of Bank of Italy exceeded $11 million. In 1913, two more banks were bought in Los Angeles.

California's industry and agriculture, which were booming at that time, contributed to the growth of the banking sector. The rapid increase in land prices in agricultural areas during the First World War led to the fact that the assessment of land pledged by the bank was two to three times higher than the amount of loans issued. New branches were opened throughout California.

In 1918, the Bank of Italy was the fourth largest bank in California in terms of assets. At the end of 1919 - the second in the state, his assets reached $137.9 million. In terms of the number of depositors - 189,511 people, the bank was the first in the country.

At the same time, Amadeo Giannini, by that time already the first vice-president of the bank, received a salary of $9 thousand per year. Some of the bank's top managers had a higher salary. In 1919, he became president of the Bank of Italy.

Amadeo Giannini constantly put forward and tested new ideas in practice, mastering new areas of activity and new market niches.

Bank of Italy issued loans to livestock farmers at the rate of $25-30 per cow at the rate of 6% per annum.

The bank has established an international department that collects and analyzes information on the market situation in other countries, transportation, duties and customs regulations and provides it to exporters and importers in California.

The bank began to accept deposits from schoolchildren. Bank of Italy was not the first to do this, but became the first in the number of young clients. In 1911, the amount of such deposits in the bank was slightly more than $90 thousand, at the end of 1920 - $732 thousand.

The bank received practically no benefit from this type of activity, except for customer loyalty. More than half of young depositors left money in the account after reaching the age of majority.

In June 1921, a bank for women was established in the structure of the Bank of Italy - the only one in the United States. It was located on the top floor of the bank's headquarters in San Francisco. All the staff consisted of women.

In the beautifully furnished room, brochures promoting the economic independence of women were laid out on the tables.

By the end of 1923, the bank had 10 thousand depositors who held $1.5 million in their accounts.

An Italian department has appeared in the Bank of Italy. The mission of his employees was to make all Italians living in California customers of the bank. In a special cabinet in the department, there was a special cabinet with cards with the names and addresses of all Italians in the state, sorted by districts. Employees of the department were sent to potential customers to convince them to take a loan, put money in a savings account, buy shares of "their", "Italian" bank.

By the end of the 1920s, 40% of the bank's more than 100,000 shareholders were Italians, mostly residents of California.

Following the Italian, other similar departments appeared in the Bank of Italy - Yugoslav, Russian, Portuguese, Greek, Mexican, Spanish, Chinese.

Giannini took care of his employees. The bank staff received bonuses for Christmas in the amount of half of the monthly salary. In addition, bonuses were paid for length of service, bulletins and health insurance were paid. An employee with more than 20 years of experience could retire at the age of 65, which was paid by the bank. If he died, his widow received half of his pension for life. However, only if the age difference between the spouses did not exceed ten years. If it was more, the percentage decreased.

A logical continuation of the expansion was going beyond the state of California. Leaders of the Italian community of New York interested Giannini in the possibility of acquiring a bank in the city. His clients were supposed to be representatives of all immigrant communities in New York.

In 1919, the East River National Bank was bought. The purchase was made to Bancitaly, a holding company registered in New York State. The bet on a motley immigrant public turned out to be correct. In the year after the purchase, the volume of deposits in the bank increased from $3.5 million to $12.5 million.

Then Bancitaly acquired a bank that was not only Italian in name, but was also located in Italy - Banca dell' Italia Meridionale with its branches. Later, the name of the bank was changed to Banca d'America e d'Italia.

In the 1920s, many American banks began to copy Giannini's strategy, spreading branch networks across the country. But he also continued to open branch after branch.

In 1924, Amadeo Giannini announced that he was resigning as president of the Bank of Italy. Having refused his salary, he continued to deal with the bank's affairs.

In general, the rosy picture was slightly spoiled by the fact that the growth of the branch network depended on the relationship of the California bank governor to the bank Giannini. In 1927, Giannini supported Republican Clement Young in the gubernatorial election in the hope that he would appoint someone more compliant than Franklin Johnson, who did not like Giannini very much, as bank governor. That's what happened.

In February 1927, the Bank of Italy had 276 branches in 199 settlements in California. The bank's assets amounted to $750 million, which made it the third largest bank in the country after National City and Chase in New York. Under the new state bank governor William Wood, the Bank of Italy bought almost 100 new banks by the end of 1927.

By creating a California-wide banking network, Amadeo Giannini undertook the implementation of the next plan - to repeat success throughout the country.

Giannini did not receive a salary either at Bank of Italy or at Bancitaly. But in April 1926, the board of directors of Bancitaly, in recognition of his outstanding services, decided to pay him compensation for his work - 5% of the corporation's profit, but not less than $100 thousand per year. In 1927, Bancitaly's net profit was about $30 million, therefore, Giannini was owed about $1.5 million.

He refused this money. He said that he already has half a million and this is "all a person needs".

He asked to donate one and a half million in compensation to charity. The money was used to establish a school of agricultural research at the University of California at Berkeley and to pay grants to students.

In an interview with San Francisco Examiner, Giannini said:

"I don't want to have more money. If I had all the millions in the world, I wouldn't be able to live better than I do. I love work. What is called the higher light means nothing to me. I've always said that I'll never become a millionaire. Perhaps this will convince skeptics that I am responsible for my words."

In 1925-1928, there were corporate wars in New York's Bank of America. 45% of the shares belonged to Ralph Jonas. A group of shareholders led by bank president Edward Delafield opposed Jonas to accumulate a controlling stake. Delafield was supported by one of the most influential people on Wall Street - John Pierpont Morgan Jr., son of the legendary J. P. Morgan.

Due to disagreements in the top management, the bank was losing money. Jonas decided to give up and sell his shares. Bank of America was exactly what Amadeo Giannini wanted. A serious financial institution, the opportunity to gain a foothold on the East Coast, and even the name of the bank corresponded to what Giannini wanted to create. The name was ideal for a bank with branches in all states.

Not wanting complications, Giannini got Morgan's approval for the deal. He, however, put forward conditions Edward Delafield remains president, and Morgan gets the right to veto the appointment of members of the bank's board of directors.

On February 25, 1928, Giannini bought 78 thousand Bank of America shares from Jonas at $7.50 each. After that, he merged Bank of America with his already owned New York banks.

As a result, a bank was created, the assets of which amounted to $406 million.

Bank of America's share price has soared. And not only Bank of America. Professional brokers and non-professional players also madly bought shares of Bancitaly and Bank of Italy, playing for a promotion.

But soon Giannini was waiting for an unpleasant surprise - a message from the board of directors of the Federal Reserve Bank of New York. He was informed that the board of directors opposes holding companies owning shares in New York banks.

Therefore, the shares owned by Bancitaly must be transferred to private shareholders within six months. In case of non-fulfillment of the requirement, the issue will be decided by the management of the Federal Reserve System.

In May-June, the price of all shares on the New York Stock Exchange began to decline. The fall affected the shares of Giannini banks especially hard. Stock speculators began to play on their downgrade.

The stock market downturn lasted about a week, then the market stabilized. Amadeo's son, Mario Giannini, spent about $60 million buying up shares of his father's companies, trying to keep the course. Losses amounted to about $20 million.

Amadeo discussed the situation with his son and colleagues. They came to the point that the three structures have grown too much, which creates difficulties both in managing them and on the stock exchange. Therefore, consolidation is necessary.

Bancitaly, Bank of Italy, Bank of America and their subsidiaries were merged into one giant corporation with a market capitalization of $1.5 billion. Transamerica Corporation was registered in October 1928 in Delaware.

Giannini put forward an ambitious plan to increase the number of Transamerica shareholders from 175 thousand to 500 thousand people by the end of 1930. To do this, even in the smallest American town, the shares of the banking giant had to be sold, sold and sold every day.

After that, Giannini decided to completely subordinate Bank of America to a new corporation, that is, to enter into a direct confrontation with Morgan.

But soon it turned out that there are problems more serious than the Fed and Morgan.

On October 17, 1929, a banquet was held in honor of the 25th anniversary of the Bank of Italy. It was Thursday. On Friday, all shares began to fall on the New York Stock Exchange.

On Monday, the collapse intensified. The situation was getting worse every day.

Giannini tried to keep the Transamerica stock price. He spent more than $68 million from the corporation's capital to buy back more than a million shares. Later he admitted that it was a mistake.

And then came Tuesday, October 29. The most infamous "Black Tuesday" in financial history.

Seeing what was happening on the stock exchange, Giannini stopped and stopped buying shares. Their rate fell from $62 to $32 per piece. Transamerica lost more than $750 million in price.

But after the collapse of the stock exchange, he behaved as if nothing had happened, continuing his path to the goal - the creation of a national banking network. In December, it became known that he bought Oakland Bank and added five branches to the Bank of America network in New York.

In early 1930, the name of the new president of the corporation was announced at the Transamerica shareholders' meeting.

It became Amadeo's son, Mario Giannini.

A new corporate war has begun, Delafield against Mario.

On August 8, 1930, the Transamerica share price fell to $18.

In 1930, the attitude towards Transamerica shares was as follows. In one of the pharmacies in San Francisco, everyone who bought medicines for 5 cents was given one share. In the candy store, promotions were given as a consolation prize to the losers of the game for customers.

On February 2, 1931, Mario resigned. At the meeting of the board of Transamerica, the chairman of the board of the bank Elisha Walker informed those present about the catastrophic financial situation of the corporation and put forward a restructuring plan.

It included the sale of stakes in Bank of America divisions in California, New York and Italy, as well as the sale of controlling stakes in banks located in other states. It was also planned to reduce the amount of dividends, reduce the authorized capital of the bank and reissue securities with the transition to shares without a fixed nominal value.

If this plan were implemented, Amadeo Giannini's idea of creating a nationwide banking network would be buried.

On September 22, 1931, the board of directors of Transamerica voted to approve the Walker plan. Giannini said he would resign if Walker's plan was adopted. The resignation was accepted, the plan was approved.

Giannini didn't give up. He decided to collect the votes of small shareholders to prevent Walker from being re-elected at the annual shareholders' meeting on February 15, 1932. The Associated Transamerica Holders (ATS) was established.

Giannini presented his enemy's plan as an attempt to "steal Transamerica", to sell banks at a knowingly low price.

Shareholders were sent voting cards against Walker's re-election. Meetings of ATS members were held throughout the state.In November 1931, 150,000 out of about 200 thousand small shareholders joined the organization.

Meanwhile, voting cards for Walker were distributed among Transamerica employees. Shareholders complained that representatives of the corporation demand urgent repayment of the loan from them if they did not vote for Walker.

While the two groups were fighting, depositors began to withdraw their money from Bank of America - about $3 million a day.

The vote was won by Giannini supporters. The majority of votes was about three to one.

Amadeo Giannini was elected as the new president of the Bank of America and chairman of the board of directors. In the spring and summer of 1932, Transamerica was purged - all Walker supporters were fired. Those who tried to play for both teams were paid.

The financial situation of the bank was catastrophic. The bank owed $70 million to the Federal Reserve System and $40 million to the Reconstruction Finance Corporation (a new state agency that issued loans to save railways, banks, credit and construction associations and other financial institutions).

Giannini supported President Franklin Delano Roosevelt's New Deal, a program launched in 1933 to overcome the consequences of the Great Depression. In public speeches, Giannini stated that "the hysterical stage of depression is already behind us". Bank agents went from house to house and urged fellow citizens to put money on deposits in order to promote the rapid revival of the national industry.

The symbol of economic recovery was the bank's financing of the construction of the bridge across the Golden Gate Strait. Bank of America purchased securities worth $38 million, at the expense of which the bridge was built.

The success of the deposit attraction campaign was stunning. Every month, the bank had about 27 thousand new depositors. In March 1932, the volume of deposits was about $800 million, by the end of the year it increased by almost $100 million.

The main money to the bank in the 1930s was brought loans with repayment in installments - for stoves, washing machines, vacuum cleaners, refrigerators.

In December 1935, such loans were issued for $22 million, in December 1937 - for $95 million.

After the adoption of the National Housing Law in 1934, the bank began to issue loans to home buyers. By 1938, loans totaling $94 million were issued to 163 thousand borrowers. In 1936, the bank began to issue loans for the purchase of cars in installments at 6% per annum, which forced banks across the country to reduce their rates.

In May 1938, the tax office demanded that Giannini pay taxes on the "compensation" of $1.5 million, which he donated to the University of California, $220 thousand. In response, he sued the tax authorities and won the lawsuit.

In June 1945, Bank of America had 492 branches - three fewer than before the war. However, during 1943-1945, Giannini bought about 60 "independent" banks.

On May 6, 1945, Amadeo Giannini announced that he was resigning as chairman of the board of directors of Bank of America. He also announced that he intended to give more than half of his fortune - about $500 thousand - to the creation of the Bank of America Giannini Foundation. The Foundation was supposed to issue educational grants to bank employees and finance scientific research, primarily in the field of medicine. "I always promised that I wouldn't be a millionaire," he said.

After the war, the bank opened foreign branches - in Manila, Bangkok, Shanghai, Tokyo, Yokohama, Guam.

In 1947, Transamerica controlled 41 banks with 562 branches in California, Washington, Oregon, Arizona and Nevada. Bank of America had about 500 branches in California alone.

The corporation's assets exceeded $7 billion.

On May 6, 1949, Amadeo Giannini celebrated his 79th birthday, and on June 3 he died in his sleep. After his death, the size of his fortune became known - $489,254. He donated $50 thousand to various religious organizations, the rest of the money was transferred to the Bank of America Giannini Foundation.

As of December 2024 Bank of America has a market cap of $350.42 Billion USD. This makes Bank of America the world's 27th most valuable company by market cap

There is another explanation: inflation expectations are influenced by the quality of information, or rather, the source on which people rely when forming their estimates and forecasts, Francesco D'Acunto from Georgetown University and Michael Weber from the University of Chicago concluded in a new study. After conducting surveys in 47 countries covering about 75% of the world's population, they came to the conclusion that, firstly, consumers' biased ideas about inflation are truly a global phenomenon. But, secondly, there are noticeable differences between countries in how strongly these ideas are shifted. These differences, as well as the very reason for the displacements, are explained by the sources of information, the authors concluded.

All sources can be combined into two main groups: local and aggregated. Local data is data that people observe and receive in their immediate environment when they shop, receive utility bills, discuss prices with friends and family, read social networks. Aggregated data comes from sources such as government and central bank reports, official statistics, traditional media. Those who rely mainly on local data form systematically more shifted expectations compared to other respondents.

Consumers in countries with historically higher or volatile inflation follow it more closely, but their receipt of more information paradoxically involves an increase in errors in estimates and forecasts. This is due to the fact that periodic surges in inflation or generally higher inflation background can lead to a decrease in confidence in economic institutions and, as a result, in the aggregated information they provide.

Therefore, in countries with higher inflation, consumers often rely on personal observations when forming estimates and expectations, which leads to an increase in errors.

Global survey

Economists conducted a survey in 2023, it involved almost 47,000 respondents in 47 countries, which together account for about 75% of the world's population and 90% of global GDP. There were four parts in the survey. In the first, people noted their demographic characteristics, such as age, gender or employment. In the second part, the questions were devoted to the financial characteristics of households the availability of savings for a rainy day, real estate, the distribution of financial responsibility within the family. At the third stage, the researchers found out what the current perception and expectations of respondents are regarding macroeconomic variables: inflation, the level of real estate prices, interest rates.

Finally, in the final, the authors asked the participants to assess the importance of various sources of information for them: statements and reports of governments, central banks, statistical services, media (aggregated data), as well as household observations, purchases - their own and those of their acquaintances, utility bills, social media (local data).

The analysis of questionnaires showed that in general, people in the world attach more importance to local sources than aggregated ones. For example, more than 80% of all respondents named prices in stores as important sources of information, also more than 80% - utility bills, 70% - information of their acquaintances. However, the importance of aggregated sources, according to polls, is also quite high: more than 70% named official messages of the government and the central bank as important sources, about 60% - information from traditional media.

However, some aggregated sources may be mentioned by respondents simply because they perceive such an answer as more approved, the authors note. By comparing the estimates of the significance of local and aggregated data for respondents of each country, economists built a "source map" reflecting how much local data is prioritized in each of the 47 countries than aggregated data. And then, based on the respondents' estimates of current inflation (for the last 12 months) and its actual values, they built the same "map of deviations" of inflation expectations by country. By comparing both maps, the researchers found that in those countries where inflation expectations are more overestimated, the dominance of local data sources is usually stronger.

Sources of aggregated data give signals about economic parameters obtained from full distribution, that is, for example, about price changes in general for a wide range of goods and services. This implies that the information from such sources is impartial, not shifted towards any separate market or product. Signals from local sources reflect price changes only a small part of the consumer basket, they are non-representative, representing only a subset (part) of the total consumer set.

Therefore, conclusions about the whole based on information about its part turn out to be biased. Local information is easier to obtain: although aggregated data is publicly available, some search efforts have to be made to obtain it (for example, to find and read an article in a newspaper), while local data can be obtained "automatically" simply in the course of your daily activities.

However, although local information is easier to find, it is more difficult to process: you will have to try to take into account a whole series of prices observed on the shelves, while in the case of aggregated data, everything has already been taken into account and it is enough to open an official report.

In the case of local data, consumers often simplify the analysis, relying, for example, on marker products. When inflation is consistently low, people stop paying attention to it at all and, accordingly, update their inflation expectations but as inflation increases, attention to it also begins to increase.

This is consistent with the concept of rational inattention: people make decisions based on limited information and ignore information, the search or processing of which is associated with higher costs than the benefits derived from it. With consistently low inflation, the probability of errors in economic decisions made on the basis of "old" information is low.

But the probability and price of such errors increase if the inflation rate increases: in such a situation, people begin to make efforts to monitor price dynamics.

According to the concept of rational inattention, it would be logical if more attention to inflation and information about it led to greater accuracy of its estimates and forecasts made by consumers.

However, it turns out to be the other way around: in countries with relatively high inflation, more information received by consumers does not lead to an increase in the accuracy of their forecasts - on the contrary, their estimates and expectations are more inaccurate than in countries where inflation is relatively lower.

This is due to the fact that where ignorance entails higher costs, consumers prefer to receive information mainly from local sources despite the fact that the processing costs of such signals are higher.

Local sources do not give representative signals about future inflation and, accordingly, lead to an increase in forecast errors. But how to explain the fact that in the presence of publicly available aggregated data, people rely on local observations?

At least partially, this can be explained by a decrease in consumer confidence in sources of aggregated information, the authors found. During the survey, in most countries they could directly assess the respondents' trust in economic institutions, central banks and governments that produce aggregated economic information.

Where trust is higher, respondents are more likely to turn to aggregated sources - both official reports and television and newspapers. In those economies where inflation has historically been at a high level for a longer time, consumers are more likely to turn to their immediate environment for information in order to extract signals from it and form expectations on their basis. Even if the costs associated with obtaining and processing information from both types of sources are the same, consumers prefer the source they trust more. These results mean that building higher trust in institutions including through direct communication with consumers can encourage consumers to use aggregated sources of information more often when shaping their expectations. Since these sources are more accurate and representative, the shift of preferences in their favor can increase the effectiveness of monetary and fiscal policy.

According to some estimates, in 2022, about $0.6 trillion of the world economy depended directly or indirectly on space, which is comparable to the GDP of Austria or Thailand. At the same time, the average annual growth rate of the "space economy" over the past five years is almost three times higher than the "terrestrial" economy. According to some experts, the expansion of economic activity in space can spur the growth of the world economy - through the development of innovations that increase productivity both in space and "on Earth".

Space economy, according to the definition of the OECD, covers all activities and resources that contribute to the progress of mankind through the development, exploration and use of space.

The space era began with the Soviet Union's launch of the first satellite in 1957. The following decade was a period of "space race" between the USSR and the United States, which invested huge amounts in space programs the most famous of them were the first human flight into space and the landing of astronauts on the moon. For several decades, the governments of the two powers have focused in space programs on what economists call public goods national security and basic science.

Both civilian space exploration institutions (such as NASA) and the military worked for these purposes. As a result, much has been achieved, notes Harvard Professor Matt Weinzirl, who deals with economics and business in the field of space:

"from the space transportation system ("Space Shuttle") to scientific instruments such as the Hubble telescope and the International Space Station the pearls of the first half of the century of the space age and the efforts that united Russia and the United States, among many others, in an encouraging symbol of the power of space, capable of overcoming earthly differences".

Over the past 20 years, the centralized state model of space research has shifted to a new one in which state initiatives coexist with private ones. Today, about 80 countries have their own satellites in space, and about 80% of all satellites are commercial. The key factor in the development of the "commercial space" was the reduction in the cost of launch: according to Terzi and Nicoli's calculations, the average cost of launching 1 kg into orbit fell from $87,000 in 1960 to $15,000 in the early 2000s and to about $4,000 in 2023. Over the past five years, more objects have been launched into space than in all previous six decades since the beginning of its development; in 2023, the number of launches exceeded 2,600.

"The review effect"

Cosmonauts who have been in orbit are undergoing changes in world perception, called the "review effect". It manifests itself in the human sense of beauty and fragility of the Earth, which looks like a ball suspended in the void, defenseless and vulnerable, and in an increased sense of unity with other people and the planet as a whole. According to astronauts, all interstate and national conflicts look insignificant from space, and the need to protect the planet seems obvious. The term "review effect" was introduced by researcher Frank White in his book of the same name in 1987 - he himself experienced a similar feeling in "light form", looking out the window of the window of a flying plane, and then found it in current and former astronauts. The first person to experience the "review effect" was apparently the first ever cosmonaut Yuri Gagarin, who owns the famous phrase: "Having flown around the Earth in a satellite ship, I saw how beautiful our planet is. People, let's keep and multiply this beauty, not destroy it!"

The space economy can be divided into two spheres "space for space" and "space for the Earth". The first includes the production of goods and services in space intended for use also in space. In the 1970s, a study commissioned by NASA predicted the emergence of a space economy that would meet the needs of thousands and even millions of people living in space, but humanity seems to be still very far away from that.

It is just beginning to approach the sphere of "space for space": SpaceX's Crew Dragon flight the first NASA certified flight of a commercial company can be considered the beginning of the upcoming new era of mass private space flights.

But so far, almost the entire space economy is represented by the sphere of "space for the Earth". In the terminology proposed by the World Economic Forum (WEF) and McKinsey, this area can also be divided into two main parts: "core" and "radius of coverage".

The "basis" of the space economy is space equipment and the services it provides: satellites, launch vehicles, satellite television, GPS. They provide income directly to suppliers of space equipment and services. However, this part accounts for only half of the $600 billion space economy.

Its second half is its "radius of coverage". Thanks to "space" technologies, many other businesses "on Earth" are being developed, not directly related to space in any way, from meteorological services to parcel tracking and food delivery. Entire markets would simply not exist if it were not for the "coverage radius" of the space economy: for example, without a combination of satellite signals and chips inside the smartphone, taxi aggregators would not be able to scale and implement their business in many cities.

According to forecasts, the "radius of coverage" of the space economy will grow one and a half times faster than its "basis", and by 2035 will exceed $1 trillion (with the volume of the entire space economy by that year of $1.8 trillion).

Economic activities related to space can be classified on the basis of the connection of goods and services produced with the Earth or with space, Alessio Terzi and Francesco Nicoli offer their typology.

Their classification includes three types of goods and services:

1. pure use of space: activities that can only be carried out in space, such as scientific research or space tourism;

2. space goods and services that can be produced in space for consumption on Earth, if the conditions of competition with "terrestrial production" are suitable (for example, space solar energy can generate energy in space and transfer it to Earth);

3. goods and services that can be produced in space for use in space (e.g. fuel, food or 3D printed components for space stations).

The cost of access to space will continue to decrease, Terzi and Nicoli predict.

According to their estimates, the cost of launch almost perfectly corresponds to Wright's law according to which each doubling of production leads to a reduction in costs for it by a certain percentage. Even in the most conservative scenario in the 2030s, the cost of launching will be almost 90% cheaper than in the 1990s.

This can make the same revolution in the space economy as the invention of containers for shipping, which sharply reduced the cost of international logistics, made in world trade.

This may give impetus to the development of the sphere of "space for space", which so far boils down to supplying a small group of astronauts in space. SpaceX has huge plans to popularize space tourism, but so far all their activity in the segment of "space for space" is the fulfillment of government orders. However, as launches become cheaper, SpaceX and other companies will be able to scale their offers and send more people into space, turning experiments into a large-scale sustainable industry, according to Matt Weinzirl.

The prospects for the development of the "space for space" economy already require the development of "space rules", Weinzirl believes: from preventing the monopolization of markets to thinking about how, for example, the ownership of limited resources will be regulated - water on Mars, ice on the Moon or slots in orbits (a space analogue of parking spaces).

It is necessary to create not only new rules, but also, perhaps, new international institutions that guarantee the implementation of these rules. This will require states to forget about "earthly contradictions": "The growing economy of "space for space" can become a unique force that will unite the whole world," Weinzirl hopes.

Otherwise, space may become a victim of the "tragedy of communities", or the so-called tragedy of common resources. This is an economic concept that describes the contradiction between the interests of individuals regarding the common good.

The "tragedy" is that all users of a common resource benefit from it, but the costs of maintaining such a resource cannot be attributed to someone specifically.

Thus, the reverse side of active space exploration has already become the growing amount of space debris in orbit, which increases the risk of satellite collisions with it and may make some orbital spaces inaccessible in the future. The model in which the satellite, on the one hand, provides services to the terrestrial economy and increases production capacity, and on the other hand, increases the risk of collisions, shows that in the long run, if garbage is not removed, it can cause damage to the world economy in the amount of about 1.95% of GDP, Japanese scientists calculated. But so far, the problem of space debris disposal has not been regulated in any way.

Science will be the main beneficiary of the "space for space" economy, even if its main elements (for example, space tourism, resource extraction activities on the Moon or asteroids and the possibility of large-scale construction in space) do not develop in the first place, argues Ian Crawford, professor of planetary and astrobiology at the University of London.

In the relatively short term (in the next 50 years), as a result of the gradual development of the space economy and related infrastructure, such scientific directions as the construction of large space telescopes, ambitious space missions and the creation of research stations on the Moon and Mars may be simplified.

Interstellar trading and key rate

In 1978, the future Nobel Prize winner in Economics Paul Krugman wrote a humorous scientific article "The Theory of Interstellar Trade", in which he derived two fundamental theorems of interstellar trade. The first is that the interest costs on transported goods between two planets, the Earth and the fictional Trantor, should be calculated taking into account the time on the planets, and not on the ships plying between them, since the opportunity cost of trade for example, if a businessman instead of trading invests money in securities on Earth or Trantor is calculated using a planetary clock.

The second theorem is that competition equalies interest rates on both planets. Krugman's article inspired Tyler Cowan, a professor at George Mason University, to reflect on the economic consequences of interstellar travel. He argues that a person who left a penny in a savings account on Earth could make a space flight at a speed close to the speed of light, and eventually return "many years later" as a billionaire, since it would take very little time for the traveler. In such worlds, the real interest rate and, accordingly, its management by the central bank may lose their current importance, and the concept of people's temporal preferences (comparing the utility of current and future consumption) may be meaningless.

For the Earth's economy, space acts as a powerful incubator of innovation: many technologies originally developed for space exploration made it possible to create products that changed everyday life on Earth.

For example, laptops, CT scanners, wireless headphones and even baby food were created with the help of scientific developments of space.

In the modern world, space technologies are used to monitor climate variables, identify foci of infectious diseases, and economists have the opportunity to analyze and evaluate economic activity, including those not observed by statistical methods, with the help of data from space.

The UN considers space as a driving force of sustainable development: space science and technology and applied space technologies make an important contribution to economic growth and improving the quality of life around the world, according to the UN resolution 2021.

According to forecasts, five sectors of the space economy will develop the fastest in the next decade:

1. supply chains and transport;

2. food and beverages;

3. national defense;

4. retail trade, consumer goods;

5. digital communications.

Their development is associated with the growing demand for:

• satellite Internet, for example, to provide access in remote areas to e-commerce and online services such as banking and education;

• positioning and navigation services, such as vehicle tracking and personal devices;

• information obtained through artificial intelligence (AI) and machine learning

For the space economy, the turning point has come when companies will be able to deploy large-scale activities in space. Although government agencies continue to be a key source of financing, the combination of lower costs and more sophisticated technologies attracts more investment from private investors, a trend that stimulates innovation.

In 2021, private sector funding for space-related companies exceeded $10 billion, showing a 10 fold increase in 10 years, and the share of global space R&D funding from the U.S. government decreased from about 70% to about 50%.

Commercial financing can surpass state financing for 20 years, Brookardt predicted. However, public funding sources remain crucial in key segments of the space industry, despite the fact that access to private financing has improved significantly over the past decade, the OECD report in April 2024 notes. On average, state funding of space by OECD countries is 0.1% of their GDP, the United States - 0.25%.

The space economy is more opportunities than the Internet, which was emerging at the dawn of the millennium, says Chad Anderson, a venture capitalist and founder of Space Capital, author of a book on the space economy. In difficult economic times, one thing is for sure: space technologies play an increasingly important role in the world economy, Anderson believes.

Technologies such as GPS, geospatial intelligence and satellite communications are an "invisible foundation" that feeds the largest industries and play an incredibly important role in everything from financial services to agriculture, insurance, telecommunications and information technology.

Elon Musk, who earned most of his fortune (as of mid-November 2024, it was estimated at $307 billion) at Tesla electric car company, can earn much more on the business related to the space industry and thanks to him become the world's first trillionaire, Morgan Stanley analysts predicted in 2021, a year after Musk SpaceX was the first commercial company to send people into space in May 2020.

SpaceX's Starship rockets, capable of delivering people and cargo to the Moon and Mars, can change investors' expectations for the space industry, explained one of the analysts at Morgan Stanley, adding that "talking about space before the appearance of Starship is like talking about the Internet before the appearance of Google".

Our grandchildren are likely to live in a world where space is just another dimension of economic activity, just as we grew up in an era when the digital market provides services and utility in ways that did not exist for our grandparents.

The sooner humanity understands this, the more likely it is to be able to take advantage of this new economic frontier and era of discovery…

In Vietnam, the "ty vi" divination system is widespread, with the help of which people get predictions about whether their undertakings will be successful. Forecasts regarding the prospects of family life together are especially popular: couples, before getting married, turn to a soothsayer who, based on the time and date of birth of a man and a woman, concludes whether their marriage will be successful or not.

More than 80% of ethnic Vits know about "you vi" and where to turn for the right prediction; about a third (31%) thought about contacting a soothsayer when entering into their own marriage;

45% of respondents believe that the prospect of their marriage from the point of view of "you vi" worried their relatives and friends, a representative survey in 2020 showed.

It may seem that the idea of the success of an astrologically compatible couple is an unsubstantiated superstition.

But marriages, which are concluded on the recommendation of "you vi" predictors, really turn out to be more successful, economists Edo Chiskato (Leuven Catholic University), Quoc Anh Do (Monash University) and Kieu-Trang Nguyen (Northwestern University) found out.

Couples whose marriage, according to the prediction, should be successful have a higher standard of living than other representatives of their socio-economic class.

They earn 2.2% more, their household expenses are 2.7% higher, and their children are more likely to finish school. However, it is not the stars that contribute to the success of the marriage, but the self-fulfilling prophecy, the researchers concluded. If friends and relatives of the couple believe that their marriage is successful, as it is concluded taking into account "you", they are more likely to support her in difficult times.

Thus, successful - according to expectations, couples transfers from their social environment are 9% higher, and in case of hospitalization of one of the family members, such couples receive 24% more support from their loved ones.

As a result, in case of difficulties, prosperous couples are less likely to have to sell their assets or get into debt.

"Even if the spouses themselves do not really believe [in "you vi"], but believe that their relatives and friends firmly adhere to these beliefs, the couple has an incentive to live together successfully," says study co-author Kieu-Trang Nguyen. Successful couples from the point of view of "you-vi" really turn out to be more prosperous, and this belief is passed down from generation to generation, Nguyen adds.

A similar example of a self-fulfilled prophecy can be found in China, where it is believed that those born in the year of the Dragon will have good luck and greatness. Chinese children born in the year of the Dragon do learn better than children born in other years on the Chinese calendar and are more likely to receive a bachelor's degree or higher, according to a study conducted by Louisiana State University economists Naji Mojan and Han Yu. The main factor that affects the educational success of Dragon children is the positive expectations of their parents, which eventually become a self-fulfilling prophecy.

Mothers and fathers of Dragons initially expect their children to be more successful than children born in other years.

As a result, parents spend more time, money and effort to make their Dragons succeed, and even give them more pocket money and assign them less household chores so that they can focus more on their studies. "Althout neither the Dragon children nor their families differ in essence from other children and families, the belief in the prophecy of success and subsequent investments [in it] become self-fulfilling," the authors conclude.

Most people have encountered self-fulfilling prophecies at least once in their lives. One example is "examination neurosis": an alarmed student, convinced that he is destined to fail, devotes more time to anxiety than to study, and really fails, described Robert Merton, professor of sociology at Columbia University.

Merton introduced the term "self-fulfilling prophecy" in 1948 to describe "a false definition of a situation that causes behavior that makes an initially false idea correct". Certain expectations regarding the future development of events encourage a person to act in such a way that these expectations eventually come true, even if they were not originally true. One of the main sources of inspiration for Merton was the law formulated in 1928.

William Thomas, one of the founders of American sociology and social psychology:

if a person considers a situation real, it becomes real by its consequences.

In his work, Thomas wrote about a criminal who was admitted to a psychiatric hospital for the murder of several people who had an unhappy habit of talking to themselves on the street:

"By the movement of their lips, he imagined that they were calling him nasty words, and behaved as if it were true." The criminal's false representations forced him to act in a certain way, which led to real tragic consequences.

"Thomas' theorem", as Merton called it, is, in his opinion, fundamental for social sciences and for understanding how society works.

People react not only to the objective features of the situation, but also and sometimes in the first place to the importance they attach to this situation.

And as soon as they attached some importance to the situation, their subsequent behavior and some consequences of this behavior are determined by this meaning, Merton wrote.

The mechanism of self-fulfilling prophecy can be divided into four stages, psychologists Arthur Stukas from the University of La Trobe (Australia) and Mark Snyder from the University of Minnesota pointed out.

At the first stage, a person accepts certain beliefs about those with whom he interacts. On the second it acts as if these beliefs were true. In the third those with whom a person interacts, adjust their behavior in accordance with his actions. On the fourth, a person interprets the behavior of others as a confirmation of his beliefs, and the cycle closes.

For example, if a person meets a stranger and considers him, even if mistakenly, an intellectual, he can choose quite complex topics for conversation with him and as a result of communication come to the conclusion that the interlocutor is really smart.

On the contrary, if a person considers the stranger he met to be "short-sighted", he may offer to discuss quite simple things and, as a result of the conversation, may conclude that the interlocutor is really limited.

The effect describing situations in which expectations, even erroneous ones, can make a person act in such a way that they are actually realized is often called the "Pygmalion effect". The effect got its name from the Greek myth of a sculptor who fell in love with the statue of a woman he sculpted, and the goddess of love Aphrodite revived her, seeing his strong feelings.

Just as Pygmalion's fixation on the statue allowed it to come to life, other people's expectations focused on a particular person can change his behavior and eventually lead to the realization of these expectations.

Lady and the flower girl

A kind of illustration of the mechanism of self-fulfilling prophecy can be the words of Eliza Doolittle from Bernard Shaw's play "Pygmalion", the title of which is an allusion to the ancient Greek myth of Pygmalion: "You see, the difference between a lady and a flower girl is... how people around them behave. With Professor Higgins, I will always remain a flower girl, because he behaved and will behave with me like a flower girl. But with you I can become a lady, because you behaved and will behave with me like a lady."

This phenomenon has another name - "the Rosenthal effect", in honor of Harvard University psychology professor Robert Rosenthal, one of the researchers who described the "Pygmalion effect" in 1968 in the book Pygmalion in the Classroom.

Rosenthal and Lenor Jacobson, director of one of the elementary schools in San Francisco, found that teachers' high expectations regarding the intellectual competence of their students could become a self-fulfilling prophecy.

They conducted an experiment: at the beginning of the school year, they tested schoolchildren for IQ level, and then told the teachers which of the students, according to the test results, should show a jump in intellectual development during the year. In fact, "successful in the future" students were chosen by the authors of the experiment at random.

However, re-measurement of IQ at the end of the school year showed that the performance of students who were expected to perform high did indeed improve more than the results of other students.

This happened because teachers who believed in the great potential of certain students paid more attention to them, were more patient with them and sought to inspire them more; in turn, these students' ideas about themselves and their motivation to learn improved in response to the favorable atmosphere created by teachers.

The "Rosenthal effect" can manifest itself not only in schooling, but also, for example, in management. Studies for example, on data from employees of large companies in China or research and development employees in one of the chemical companies in the United States show that higher management expectations for staff creativity do lead to increased employee creativity. Managers who have higher expectations for the creative potential of subordinates are perceived by employees as leaders who support creativity, and in response, employees are more likely to show creativity.

Self-fulling prophecies can have an impact on the economy and financial markets. This mechanism can trigger a banking panic, as described in 1948. Merton, who coined the term "self-fulfilling prophecy". He illustrated his concept precisely by the example of the escape of depositors from the fictional Last National Bank, which resembled a real banking panic in the United States during the Great Depression.

As Merton described, rumors about the insolvency of the Last National Bank forced each of its depositors to feverishly try to save their money, and as a result, the bank's liquidity is depleted so much that it is unable to meet all the requirements of customers:

"The prophecy of collapse led to the self-realization of the prophecy".

If we talk about modern examples, we can recall the panic of depositors in March 2023, which became the main cause of the collapse of Silicon Valley Bank and increased the vulnerability of the entire U.S. banking system.

Forecasts of possible economic changes can affect people's perception of risk and, therefore, their economic decisions.

This can become the basis for the realization of a self-fulfilling prophecy, showed a study by psychologists Diamantis Petalas, Hein van Shee and Paul Vettechen from the University of Nijmegen (Netherlands). They conducted a laboratory experiment, during which they offered the participants to inflate balloons, receiving a symbolic reward for each pumping.

During the training, the balloon could be inflated a maximum of 12 times, after which it burst and the reward was zeroed. During the experiment, the participants were informed of positive or negative forecasts, which said that the probability of bursting balls could decrease (or increase), affecting the win.

The message only signaled the possibility of future changes, but not that they would necessarily happen.

However, it turned out that after the negative message, the participants inflated the balloon less actively (they risked less future winnings), and after the positive message inflated the balloon more actively (they risked more).

Thus, the projected changes can reduce or stimulate a person's risk-taking and make him act as if these changes had already occurred, distorting the decision-making process, the authors came to the conclusion.

A clear example of self-fulfilling prophecies in the economy can be inflationary expectations.

Central bankers and economists consider inflation partly as a self-fulfilling prophecy, wrote Carlo Pizzinelli, an economist at the IMF.

If consumers believe that prices will rise rapidly, they can make hype shopping until the necessary goods rise in price and ask for a salary increase. Employee demands to increase wages, in turn, will encourage firms to raise the prices of their goods or services to compensate for higher labor costs.

As a result, a spiral of salaries and prices may arise. To prevent such a self-fulfilling prophecy of inflation, central banks have two ways. The first is the use of traditional monetary policy tools, such as raising the key rate.

However, when inflation got out of control, and inflation expectations formed a spiral of wages and prices, the stabilization of the situation may require extremely tough measures and a large increase in rates, which is fraught with a recession for the economy (an example is the taming of inflation in the United States in the 1980s).

The second way is communication with consumers and markets: by the strength of its impact, communications can even replace traditional tools but when society trusts a monetary regulator.

That is why trust for the central bank is a key element of the success of its monetary policy. In the debt crises of countries, one can also find signs of self-fulfilling prophecies:

when investors fear default, they act in such a way that default becomes more likely, and as a result, the country may be insolvent because investors are afraid of default, described the mechanism by Paul De Grauwe of the LSE and Yuemei Ji from the University of Leuven.

https://www.sciencedirect.com/science/article/pii/S0261560612001829

When investors fear any difficulties in paying the national debt, they sell government bonds, which raises the bond rate and leads to an outflow of liquidity.

As a result, there may be a situation in which the government will not be able to prolong its debt obligations, except at exorbitant interest rates. And the liquidity crisis can easily develop into a solvency crisis.

The authors found that a significant part of the sharp growth in spreads in the peripheral countries of the eurozone in 2010-2011 was not related to the growth of the debt-to-GDP ratio of these countries and was the result of negative market sentiments that had intensified since the end of 2010 - in other words, the debt crisis in the eurozone was largely self-fulfilling.

To survive this we need to start studying the tech accelerationist playbook, the stories and background mental models used by mainstream progress junkies to sell their techno-utopian visions. In this piece, I’ll show you four core moves made by garden-variety tech optimists, and two techniques to disrupt them.

In a typical video game, a player starts with a score of zero and then accumulates a higher score as they move up levels. They also build an inventory of items, and constantly upgrade that inventory as they reach higher levels and scores.

Mainstream stories about technological progress are based on the same framework. We start with a background image of humans as prehistoric beings with a score of zero, and then proceed to describe history as a long march in which we go up levels, moving in a general trajectory towards every higher technology, speed, accumulation, complexity and scale.

Within a high score ideology like this, innovations (such as the aforementioned AI, smartphone apps or digital money) are seen as moving us to a new ‘level’. Not only are they perceived as increasing our score and capacity, but they’re seen as upgrading a previous inventory. Through this lens, something like physical cash belongs to an older inventory, so must inevitably be discarded.

There are two crucial features of this worldview to be aware of. Firstly, in a video game, you always retain your score as you go up levels.

You never reset, or rebase, to zero as you start a new level. Similarly, high score visions of history assume that human society carries over all the gains - or ‘points’ - it picks up over time.

Secondly, a character in a video game only has a single track and single score, and a single storyline that connects the beginning of the game to the end. Likewise, high score history has a sense of a singular path from the past to the future, rather than simultaneous parallel paths.

When looked at from the perspective of the present, the singular path of increasing score going into the future is imagined as a race. For example, it’s extremely common for business journalists, conferences, innovation pundits, think-tanks and political leaders to talk about a ‘race to cashlessness’.

This isn’t unique to the payments sector. It applies everywhere that an automation process is occurring. For example, there’s supposedly a ‘race to AI’ occurring.

Racing metaphors naturally create imagery of those who lead, follow, and lag, and so break down into three sub-narratives, each starring a particular group:

1. The Leaders: the digital tech industry is imagined out in front, ‘leading the way’ towards this future. Tech magazines run stories about inspiring, trailblazing and heroic entrepreneurs daring to do this, funded by visionary VCs.

2. The Followers: society more broadly is imagined as muddling along in the middle of the race. The small business section of a general newspaper might run stories about the need for readers to ‘keep up’ with new trends. This follow-the-leader mentality is reinforced by politicians, who position themselves on the proverbial sidelines, encouraging us to stay up-to-speed with the transition.

3. The Pioneers: If you’re not leading the way, and not keeping up, then you’re languishing at the back of the race. In the case of AI, this turns up in the form of stories about future technological unemployment, or the poor sods who may be outcompeted after failing to adopt it. Similarly, in the case of digital payments we see a sea of stories about those who may be left behind.

If we agree that people are at risk of being left behind, then it must follow that they need rescuing. Those at the front of the imagined race are often the loudest in promoting this rescue. In the payments sector, this takes the form of VISA, Mastercard and fintech firms presenting themselves as eager to help through ‘digital financial inclusion’ programs.

For these firms, ‘inclusion’ simply means onboarding new customers and increasing profits, but the sector is ideologically primed to view its own interests as being in the interests of society more broadly. After all, they imagine themselves to be leading the way into the future, and thereby perceive a responsibility to bring everyone along with them.This progress narrative, and the inexorable feeling that accompanies it, becomes entrenched as a paradigm.

A paradigm is a subterranean framework for thinking, so deep that it goes unnoticed, which governs what questions are considered valid to be asked about any particular issue.

So, rather than reflecting seriously on the question of whether people might reject the direction of travel, reject the race or reject the vision of the destination, well-meaning research communities will channel the paradigm through questions like ‘how can we enable an inclusive digital transition?’

This is how even well-meaning social workers with no commercial interest in digitization can become champions for large financial and technology companies. For example, a whole range of civil society groups and NGOs have joined the Better than Cash Alliance, which describes itself as a “partnership of governments, companies, and international organizations that accelerates the transition from cash to responsible digital payments to advance the Sustainable Development Goals”.

The Alliance is hosted within the UN Capital Development Fund, and was funded by VISA, among others. Here’s the Visa press release about this in 2012:

The mainstream story coming out of tech startups, the corporate sector and government is that we should all experience a desire for these ‘transitions’, but many people feel anxious and threatened by them instead.

Within a high score vision of history, this anxiety will be cast as conservative, in the small-c sense of being frightened of change, and refusing to progress to a new ‘level’.

This creates inner conflict in those anxious people, because they’ve often also absorbed the race narrative, sensing that new tech is ‘coming’ whether they like it or not. When their anxiety collides with this sense of impending inevitability, they’ll start to feel like an old horse-cart driver shaking their fists at passing cars.

This also makes them vulnerable to the so-called ‘populists’, because one strategy used by the latter is to prey upon fear of looming digital overlords, and to channel that valid anxiety through simplistic conspiracy stories that get laughed at in mainstream circles.

Populist movements not only feed on fear, but will attach it to nostalgia, encouraging a person to imagine themselves as part of a movement, like an uprising of horse-cart drivers facing off against the auto industry. Perversely, this strengthens the apparently ‘progressive’ credentials of the tech accelerationists.

After all, if you’re against them, you must be with the crazies. This is how liberal urban professionals might end up seeing the Better than Cash Alliance, or corporate behemoths like PayPal, as representing progressive values rather than capitalistic power grabs.

And it’s the same foundation that lays down the ground for halting progress, if the tech is moving in a direction that compromises their power.

Much like how Elizabeth Warren and her colleagues worldwide have been waging war against Bitcoin and crypto only to provide an alibi for Big Finance to catch up.

There are many more moves in the tech accelerationist playbook, but let’s start deconstructing the ones we have.

A good starting point is to reject two assumptions found within the standard high score vision:

1. The first is that idea that we retain high scores. Learning to deconstruct this takes practice, but here’s the short version: in actual human society, we not only psychologically and culturally adapt to changes, thereby neutralizing them, but we also recalibrate the entire economy to incorporate the new things as new baseline inputs to survival. Put differently, we only start to ‘need’ the new things after they’ve been introduced, and once this happens, the removal of those things takes you negative, because we’ve moved the ‘zero line’ upwards.

2. The second assumption is that there’s a single track into the future, rather than parallel tracks. In a standard high score ideology, older things are always lower and being left behind in the rear-view mirror, but in a parallel track world they can coexist simultaneously, like things moving in different lanes.

The easiest way to grasp this is through the examples of bicycles and stairs. Is it reactionary to call for bicycle lanes in a world dominated by cars? No, that’s considered progressive. Is it outrageous that we ‘still’ use stairs? No, that’s entirely normal, and important.

Bicycles and stairs don’t merely represent older ways of being. They’re parallel ways of being that draw upon a different concept of progress, one of diversity, balance, autonomy and resilience, rather than acceleration and expansion. In this sense, they’re just as modern as escalators and Uber. In fact, a world in which we were only able to use the latter would be a nightmare. We want balanced systems, rather than narrowly ‘efficient’ or ‘convenient’ ones.

From the parallel track perspective, the ‘upgrade’ or ‘level up’ viewpoint starts to crumble. Nobody is going around running research projects into how to help us all make the ‘transition’ from cycling to Uber, and there’s no ‘Better than Bicycles Alliance’ (in fact, if there was it would be seen as an obvious front for industry).

So, what happens when we take things demonized within the single track vision of history, and recast them in a parallel track world?

What if we called cash the bicycle of payments, and ApplePay the Uber? What if we called writing an essay that comes from your own mind with a pen the bicycle of thought, and the generative AI one as the Uber of thought?

Well, the first consequence is that the imagined polarity between progressive and reactionary inverts. The conservatism switches to the digital accelerationist side, because the true thing that’s being held onto in the mainstream is digital progress ideology, the unchanging idea that the only thing that human society should optimize for is ever increasing speed, automation and corporate intermediation.

From a parallel track perspective, digital ideology is a form of economic conservatism that favours a concentration of power into particular industries…

Secondly, the paradigm shift rearranges what research questions are considered to be valid. Rather than asking ‘how will we help people adapt to the digital transition’, we might ask ‘how can we keep a good balance of power between parallel tracks’.

Solving problems can certainly be creative, but it often involves a form of domination. You fix a problem, enticing some chaos to set something in place, to create completion and stable order.

Other forms of creativity are more open-ended, less about fixing-in-place and more about releasing, destabilizing and freeing up. These twin poles of creativity do segue into each other, and can even co-exist in single acts of creation, but have a tense relationship.

The Enlightenment is often imagined a time that freed people from religion, and yet when push comes to shove it has a distinct fixing vibe, a desire to use rational thought to impose order, to steer Creation and make us masters of our destiny.

So, when Enlightenment thinkers referred to multi-gendered humans as Man, they were not talking about actual humans, but rather about their one-sided ideal of a rational problem-fixer.

It is Man at the helm of industrial acceleration, with its militaristic states and megacorporations.

In short, a picture of the metaverse Eden is involuntarily drawn, where waterfalls of patents merge into full rivers of software, on the banks of which fat herds of cryptocurrencies graze.

It would be strange if the picture was different, because blockchain is really an epochal invention.

And it's not even that it frees a person from the mass of people about his well-being, unceremoniously rumming in his personal wallet, and returns us to the blessed times of prehistoric mining, when our ancestors collected shells on the shore of the ocean, which served as the equivalent of goods and services, the currency of the early Neolithic. It's different.

If not consciously, then everyone understands that from now on there is a universal and absolutely incorruptible means of forcing everyone to decency, regardless of his social rank and wealth.

And the main thing now is that the blockchain has a future, and not a sudden death as a result of the operation to remove it as a malignant neoplasm for the authorities and the existing economy.

As for not the future, but the past of the blockchain, years ago, a curious question appeared on the platform of questions and answers among IT specialists and IT enthusiasts Stack Exchange network (this is a kind of knowledge exchange in IT fields, which is actually reflected in its name with a hint of stock "exchange", is included in the top 100 most visited sites in the world).

"I'm writing a thesis on blockchain, and part of my work is devoted to the history of blockchain.So far, I have discovered that the first sentence in this regard - "How to Time-Stamp a Digital Document" was made in 1991 by Haber and Stornet and the second is unknown Satoshi Nakamoto - "Bitcoin: A Peer-to-Peer Electronic Cash System".

So, my question: were there any other suggestions before the introduction of blockchain in the form of a bitcoin system?

In response to this cry of the soul of the degree applicant, someone silently sent him a link to a popular article, of which there were already hundreds on the Internet and which began with the words

And this "what", according to the author of this article, consisted of the PoW (proof-of-work) algorithm developed in 1993 at the IBM Research Center in Almaden, California, by Cynthia Dvork and Moni Naor. "This was half of the magic of bitcoin, and its other half was the formulation of the "time stamp" principle in 1991 by Haber and Stornetta," the article said.

In the second and last answer, the dissertation was advised to look into another 1992 work by the same Stuart Haber and Scott Stornetta from Bell Communications Research (Bellcore) and Dave Bauer from Columbia University - "Improving the Efficiency and Reliability of Digital Time-Stamping". It was said that they included "Merkle's tree" in their previous 1991 design.

It is most convenient to start the history of blockchain with the work of David Chaum from the University of Berkeley "Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups", published on February 22, 1979, which described all elements of the blockchain except for the PoW algorithm.

As well as the relevant U.S. patent №4529870 "Cryptographic identification, financial transaction, and credential device",  from Chaum in July 1985 (with priority from June 1982).

Next, it was possible to smoothly move on to the idea of cryptographic hashing of Berkeley University graduate Ralph Merkel, that is, the transformation using a mathematical algorithm (hash function) of data that is transmitted over an open network into digital stuffing or into "okroshka", as written in the Soviet cryptographic literature, which cannot be reverse recovery.

In 1982, Merkle received a U.S. patent №4309569 for his method (with priority from September 1979). And even earlier, in 1980, he, together with Whitfield Diffie from Northern Telecom and Martin Hellman from Stanford, received a U.S. patent №4200770 (with priority as early as September 1977) to

"a cryptographic system that transmits a cryptogram, computationally protected, over an insecure communication channel without pre-configuring the encryption key".

As written in their patent application, "transformations use unclassified operations that are easy to perform, but extremely difficult to invert. It is impossible for the eavesdroper to invert the initial transformation to receive either the secret signal of the interlocutor or to duplicate the last transformation to obtain a secure encryption key". Now it is called the "Hellman-Diffie Protocol", and sometimes Merkle is added to its name - "Hellman-Diffie-Merkle Protocol".

Further, in chronological order, attention should be paid to PoW. Well, if the dissertation student got into the taste of historical IT research, he might be advised to read the book "Cryptography: from primitives to the synthesis of algorithms" published in St. Petersburg in 2004 (it is freely available on the Internet).

It, however, has four hundred pages in small skibble, but in detail and in clear language the history of designing high-speed ciphers, digital electronic signature systems, hash functions and other things, which in the language of ciphers is called a rather offensive word for IT people cryptographic primitives.

This book is also good for researchers of the blockchain background because it was written literally on the eve of the appearance of blockchain.

And for a further effect, an article by domestic specialists from the Center of Software Systems "Spectrum" of the Research Institute "Vector" could be added to the data from it.

F. Mozhaisky "Multiple signature: new solutions based on the concept of a collective public key".

It was published in January 2008, when no one in in the world still had any dream or knowledge about blockchain.

It proposed options for the construction of protocols of multiple electronic digital signatures, eliminating the need to use a trusted intermediary.

And so, less than nine months after that, the blockchain in the hypostasis of bitcoin jumped out like a devil from a snunctur. More precisely, a publication under the pseudonym Satoshi Nakamoto "Bitcoin: A Peer-to-Peer Electronic Cash System" appeared on the network, and three months later the Bitcoin network was launched.

In short, the main milestones on the way to blockchain are well known and have been described hundreds, if not thousands of times.

The difference in these descriptions is only in the number of these milestones and disputes about who was actually the first to take this or that step towards blockchain.

Disputes are generally fruitless.

As engineer Paul Baran, who once proposed the principle of building the World Wide Web, said in one of his interviews:

"The process of technological development is similar to the construction of a cathedral. For several hundred years, new people appear, everyone puts their own stone on top of the old foundation and at the same time says: "I built a cathedral!" Then a historian appears and asks: "Well, who built the cathedral?" Peter put a few stones here, then Pavel added a few more.

If you are not careful, you may be fooled by forcing yourself to believe that it was you who did the most important part. But the reality is that each contribution follows all the previous work. Everything is connected with everything else."

Wise words, it's even strange to hear them from a successful and prolific inventor (31 patents) and, probably, a tough entrepreneur (to found 8 companies and do business in them, you need a strong character and a good self-confidence).

But just an example of the creation of blockchain, which appeared as a result of the crossing of digital computer encryption technologies and communication technologies on the Internet, is a good illustration of the words of Paul Baran.

Cryptography is a very ancient science, and for thousands of years it has been a self-sufficient science. It remained so even after the encryptors had a new tool after World War II - a computer, then still in the hypostasis of a supercalculator with analytical functions. Such computers, we called them computers, could swallow rivers of letters and numbers and check an unthinkable number of possibilities to find an open text of the encryption among them in an acceptable period of time, that is, before it loses its meaning.

As digital computer encryption and computer decryption developed, by the early 1960s, the situation around cryptography began to resemble the times of the Manhattan Project.

Now, probably, few people remember how two cryptanalysts from the U.S. National Security Agency (NSA) William Martin and Bernon Mitchell escaped to the USSR at once. Their press conference on September 6, 1960 at the House of Journalists in Moscow was a sounding slap in the face of the NSA by the KGB. After them, another NSA employee, Victor Hamilton, asked for political asylum in the USSR. And after the appearance of Hamilton's letter in "Izvestia" in 1963, a certain sergeant Jack Dunlap, a personal driver, and then a courier of the assistant director of the NSA, Major General Harrison Cloverdale, committed suicide in America. The sergeant, as the American press wrote, got a 40-foot motor yacht, a sports Jaguar, two "Cadillacs" of the latest model and a blonde lover with his sergeant salary.

Hardly anyone will tell what and how it really was, but the "spy passions", similar to the espionage of the time of the creation of the atomic bomb, were a weighty indirect sign that computer encryption technologies were of strategic importance.

And they still have, already in the era of the World Wide Web, as shown by relatively recent stories with Julian Assange and Edward Snowden.

But even then, when the Internet existed only at the level of the idea, all IT specialists who worked on the implementation of this idea understood the inevitability of introducing purely cryptographic methods to protect information on the network.

In 1964, RAND Corporation engineer Paul Baran, in a series of his works published in his corporate report note (memorandum) "On Distributed Communications" ("On Distributed Communication Networks") described the architecture of "a highly tenable communication network that will allow several hundred large communication stations to communicate with each other after an enemy attack even in the fusion era".

He proposed a method of packaging in separate bags, which he called "message blocks".

These packets should not be sent according to the centralized (or star-shaped, as Paul Baran himself called it) principle, when all communication channels come from the single main center of their transmission and go from there to each recipient via a separate communication channel, allocated only to this recipient, but are sent in parts and different ways through a "distributed" (metwork or cellular) communication system and are collected in its original form at the destination point.

In fact, it was the Internet, and Paul Baran is rightly considered one of the creators of the World Wide Web, only slightly ahead of his time, that is, the forerunner or prophet, as they said in the old days, of the Internet.

In the same report note by Baran, which consists of 11 independent chapters, Chapter IX describes in detail the problem of the confidentiality of information transmitted over distributed networks.

According to him, communication encryption equipment is very expensive; the cost of providing cryptographic security on each communication channel through which confidential military traffic is transmitted may exceed the total costs for the rest of the system, and therefore in "non-crisis periods" the military does not always afford the luxury of cryptography.

Moreover, as Paul Baran noted, there is clearly a curious pattern: the higher the rank of an officer, the more often he does it. In his own distributed network, Paul Baran believed, there is an opportunity to radically reduce the cost of secrecy.

There is an idea that the money that is now spent on ensuring a high degree of security of cryptographic devices could be better spent on buying much more lower level cryptographic devices," writes Paul Baran.

"If it weren't for the almost unyielding requirement of absolute security, we could consider using many inexpensive cryptographic schemes that provide the ability to process all traffic."

"The proposed network is a universal system of high secrecy, consisting of a hierarchy of less secure subsystems. It is proposed that the network deliberately process all input data as if they were classified in order to increase the price of interception for the enemy to such a high value that the interception would not be worth his efforts,"

Paul Baran said the main idea of information protection in his network. And at the same time prudently made a reverence towards the top military and political leadership:

“Of course, an additional high level of traditional cryptography would be preserved for use in those extremely delicate cases when the proposed approach may seem risky."

Probably for him, that is, the decision-making of the senior management, engineer Baran explained the same thing more clearly:

"Thus, the proposed system uses a mechanism that takes a channel or message and cuts it into small pieces (such as a fruit salad in a bowl), transmitting it in the form of a series of message blocks, each of which uses its own path. In addition, most of the non-secret materials are deliberately transmitted cryptographically, and perhaps even a small dose of outdated traffic is mixed with them. Given a large enough bowl, it becomes very difficult to separate the garbage from the salad."

What is not the prophecy of blockchain or, at least, hashing?

Now they write about blockchain as a cryptographic primitive. But it's one thing to be an idea, quite another to implement it in practice.

In the first half of the 1960s, there were no people willing to implement it, neither in the military department nor in the IT business. In any case, AT&T engineers were skeptical about it.

A year later, in 1965, Donald Davis from the National Physical Laboratory (NPL) in London built a demonstration network for the transmission of information in packets that were independently transmitted over the network along different routes and assembled in its original form at the destination.

But his network, although it existed in a tatictile form, unlike Paul Baran's smetative network, remained a demonstration network.The case moved from a dead point in the second half of the 1970s, and not because the situation in the world changed, the "de-essing" of international tensions began, the Helsinki Agreements were concluded, etc.

For cryptographers, the main task remained the same - to create ciphers that a strategic enemy would not be able to split in a reasonable time.

In any case, the style of publications and even patent applications of Hellman, Diffie and Merkle remained the same, during the Cold War.

For example, Merkel set and solved the task of "ensuring security when the enemy knows everything and the enemy can listen to messages", against which he offered "a cryptographic key on an open communication line, even if the enemy knows everything".

It was different. The appeared cryptographic primitives that fell out from under the "top secret" stamp could be of interest to business.

Paul Baran wrote about this fifteen years ago:

It is interesting to note that, despite the severity of punishments for the protection of state secrets (not to mention patriotism), private "proprietary", commercial secrets are often stored better than secrets affecting national security (if the time between the first disclosure and the open publication of the "leak") is used as a measure of measurement. Nevertheless, most companies allow you to keep their civil secrets in thin wooden desk boxes, discuss them with people whose past has not been studied, and even discuss them through civil telephone networks.

In general, these three people, Hellman, Diffie and Merkel, broke the barrier to cryptography. And in the 1980s, cryptographer David Chaum, directly relying on their work, conceptualized the need for anonymous communications, payments and, ultimately, the need for decentralized services.

But in fact, this need was conceptualized by the then young, 24-year-old graduate student at the University of Berkeley David Chaum a little earlier.

In 1979, in an open report (memorandum) to the university authorities (and at the same time a message to business), he described "Computer systems created, maintained and trusted by mutually suspicious groups".

The euphemism of his formulation would do honor to Aesop himself.

It comprehensively reflected the most intimate essence of blockchain - a civilized tool for doing business in situations where not "good guys" hide their secrets from "bad guys", as in classical cryptography, and when everyone and everyone against everyone, as in the classic market business, where issues were always solved according to the principle described by O. Henry:

"Bolivar can't stand two."

"Security is a relative thing," Chaum wrote. - We will be interested in block diagrams, which make it very difficult to change part of the encrypted block of information without causing radical changes in the entire decrypted block. In such systems, a large serial number can be added to the block before encryption. Its presence after decryption indicates that the block has not been changed. In addition, it becomes extremely difficult for someone who does not have a key to create a block that will contain the desired serial number when it is decrypted by the owner of the key." Chaum's detailed note is long.

It is freely available on the Internet, anyone can read it from beginning to end on their own. But now the only important thing for us is that in order for the Chaum system to work, anonymity and strict unilateral authentication of the signatures of its participants were required.

That's what he tried to do. In 1982, he applies and in 1985 receives a U.S. patent №4529870 for "Cryptographic Identification, Financial Transactions and Credentials" Device, in which "one of the important properties is that the signatory cannot determine which converted message received for signature corresponds to which digital signature, even if the signatory knows that such correspondence must exist".

And in 1983 he applied for the invention of "Blind Signature Systems" and in 1988 received a U.S. patent №4759063 on them. In total, he has about three dozen patents for improving his system, as already mentioned. By the way, these patents expired a few years before the launch of bitcoin. Coincidence? No, I think:)

In the early 1990s, Chaum moved from theory to practice. DigiCash, registered in Amsterdam, made the world's first electronic payment via a computer network, introduced its own electronic currency eCash and deployed a payment system of the same name. Pretty quickly, the number of DigiCash customers reached thousands of people, but it didn't go any further.

In 1998, the company declared itself bankrupt. They say that Chaum had to put even his unexpired patents at auction.

Historians believe that he was too ahead of his time. Of course, he was ahead, but not much. The mythical Satoshi Nakamoto in 2011 in an interview with the New Yorker magazine frankly said that the idea of blockchain came to his mind when the global financial crisis of 2008 broke out, and he, they say, had such a personal dislike for the crisis that he could not eat, and everyone wrote programs for the blockchain, which would not be affected by such crises from now on.

And seriously, by the beginning of our century all the necessary elements for blockchain were available, and figuratively speaking, it remained to put them like a puzzle into an accounting book, which a group of people could have for general and anonymous use bypassing traditional financial institutions and the state regulator.

This ledger consisted of blocks (records) of information, including information about transactions between two or more parties.

The blocks were cryptographically linked to each other to create unchangeable accounting. Nodes could add information to the ledger by calling transactions. At the same time, in each specific case, the access policy determined who could read the information.

The control policy determined who could participate in the evolution of the blockchain and how new blocks could potentially be added to the blockchain. The consensus policy determined what state of the blockchain is acceptable, resolving disputes in case of contradictory continuations.

In 2008, such a scheme was finalized, and Satoshi Nakamoto publicly announced it online in his famous two page message:

"Bitcoin: Decentralized Electronic Monetary System".

But even then the time of blockchain did not come, for another two years the general public was not so interested in bitcoin. But then a boom began, and such that it still doesn't subside.

In 2011, blockchain-based cryptocurrency Litecoin appeared (it was called "silver", a changeable coin of "gold", that is, bitcoin) and Namecoin, both derivatives of Bitcoin.

Peercoin appeared behind them in 2012, and five more blockchains appeared behind it for a couple of years, and there are about fifty of them today and slightly fewer varieties of cryptocurrencies generated with their help.

In 2018, IT specialists from the University of Maryland counted more than 550 patent applications for a variety of distributed registry systems on the blockchain, and the bitcoin hashing rate exceeded 50 million teraheshas per second, consuming more than 73 TWh of electricity per day, which is more than Switzerland consumes. It is clear that in such an environment, the blockchain has finally acquired in the public consciousness the image of a temple of greed and a temple of hope at the same time as the impersonal chief priest in a kamilavka with a black veil.

Attempts to reveal the mysterious identity Nakamoto is an ungrateful occupation primarily because it was the excitement around his personality that he was counting on. They say that such serious offices as the CIA and the NSA, not to mention linguists, programmers and journalists of all stripes, were engaged in the identification of his person or a number of persons hiding behind this pseudonym.

Except that patent critics did not participate in this, although according to the principle of cui prodest, it was they who could more or less accurately outline the circle of the main suspects - those who at the time of the announcement of the blockchain were particularly zealously issued or had already issued patents for its technologies.

For example, between the beginning of 2021 and March 2022 (there is no later data in the public domain yet), more than a thousand patent applications for blockchain-related blockchain-related technologies were filed with the U.S. Patent and Trademark Office.

According to their statistics, it turns out that Advanced New Technologies and Alipay, affiliated with the Chinese Ant Group Co., Ltd. (which in turn is a daughter of Alibaba Group Holding Limited), were most actively sought patent protection for these technologies in the United States. These three companies, all associated with Alibaba Group, are significantly ahead of the next largest patent holder, IBM, in terms of the number of patents.

Everything is very clear here: the Chinese are aggressively moving into the American blockchain business, since American patents are subject to enforcement only within the United States. So the patent here is not only a document for an invention, but sometimes it can be a weighty and the only proof in court.

There are really a lot of patent applications for blockchains of various variations in developed countries of the world.

Now blockchain is considered not only as a source of cryptocurrencies and a tool of a new type of economy.

The first thing that comes to mind is a new voting model (without a guiding central election commission), where it is impossible to rig the results.

You can list other blockchain applications, smart contracts, private computation,data storages, etc.

The list will be long, because blockchain technologies are applicable wherever it is desirable to eliminate the "human factor".

After all, in a broad sense, the key feature of blockchain is the elimination of this factor the responsibility for the reliability of operations is assumed by the science of mathematics and computer, which in this sense are much more reliable.

So far, the attitude towards blockchain of big business (and its derivative - political power) is favorable, because it is a big business, fully controlling the intellectual component of the blockchain in the form of patents.

From there, they migrated to the 1990s and at the very beginning of the zero years of our century in the online version of these games.

And the number of new games based on the accumulation and spending of virtual goods (commodity money) or in-game currency grew rapidly, the popularity of such games was off the charts.

There is no point in looking for which online currency was the first. There were many of them, a rare fantasy world, even inhabited by dragons and other monsters, did without trade and money relations.

Many such currencies have sunk without a trace into the past, others, for example, rupees from Legend of Zelda, simoleons from Sims, coins from Ultima (every gamer with experience can continue this series to his taste), on the contrary, due to the global popularity of games with them not only became legends themselves, but also influenced the economy of the entire gaming industry.

In 2000, Professor of Economics at California State University Edward Castronova estimated the "gross gross national product" of the EverQuest virtual world at $135 million.

The professor was prompted to make such an assessment by the fact that:

"gamers who have accumulated virtual, intangible wealth, such as magic weapons in EverQuest, sell surplus on eBay for non-screen currency".

The rest was, as they say, a matter of technique: using the exchange value of virtual goods determined by eBay, he calculated the gross product of the virtual world inhabited by avatars in the form of people, elves, gnomes, trolls, dragons, etc.

But in reality, in 2003 on eBay, goods created in Internet games were sold for about $9 million, in 2004 for three times the amount. Sales growth was exponential.

However, having estimated the volume of exchange of virtual game currency on its first electronic "exchanges", for real, or rather "full-fledged" (as it is now positioned) electronic money, in several hundred million and, having understood the meagerness of their turnover compared to the world financial market, the economists of the zero years of our century have lost interest in the fate of online game currencies, giving their fate into the hands of MMORPG manufacturers.

Economists then were much more concerned about another problem - cryptocurrencies, which became a real headache for them.

Only now economists have again taken care of gaming money, or rather taxes on trading in-game currencies and items, which have become a real commodity with a global market volume, according to 2022 data of $4 billion. They say their sales are tax-free and can be used for money laundering and terrorist financing.

From the very beginning, the gamers were extremely outraged by the open trade of the values of their virtual worlds, which were obtained with such hard work and enthusiasm.

They believed that "the game should remain a game, otherwise everything comes down to an alternative to gambling with the emptying of the majority wallets and the enrichment of units both in the game and in real life".

But someone was trading these values. It was easy to guess who exactly. They didn't even hide, but on the contrary, they advertised themselves.

Sony Online Entertainment's EverQuest online game was released in 1999 in America, and in 2000 in Europe, and in 2001 two ardent gamers of this game, Brock Pierce and Alan Debonneville founded Internet Gaming Entertainment Ltd (IGE) and opened an online store in Hong Kong, where their Chinese team, which they hired, supplied avatars and virtual values for this game in the assortment.

As the IGE management explained, "gamers can play games all day and earn some money on it. They will sell us additional armor and pay for a subscription to the game."

Sony Online Entertainment has strongly stated that "selling characters, items or equipment in Everquest would contradict the end user license agreement", and it does not support trading, as it causes "more problems with customer service and game balancing than probably anything else that happens in the game".

And having said this, she immediately opened her own exchange Station Exchange to attract gaming money from eBay.In 2005, in a survey of gamers on the EverQuest II trading site, 47.76% of respondents agreed that trading on the side of in-game values is "a betrayal of every real player".

But the others agreed with the famous English proverb "If you can't defeat them, join them".

In its original form, in antiquity, this maxim sounded like this: "If you are in Rome, behave like a Roman."

or,

"To live with wolves is to howl like a wolf."

All the quotes taken above (except for the last one about wolves) are from scientific publications on virtual game currency and from gaming forums.

However, experienced gamers already know all this. For at least twenty years they have been haunted by advertising appeals of something like this:

Buy virtual currency for online games at a wholesale price. Are you worried about authenticity? Don't worry! We employ the best and most reliable specialists.

No matter how tangible the line between play and work (pretence and reality) is, in the currency market of computer games, this line is erased without any entertainment purpose, and players again find themselves in the real world, worrying about exchange rates between game currencies and the US dollar.

Manufacturers of MMORPG, in turn, realizing that where toy money is used as a game tool, saturation of the virtual market with a large amount of money from the outside would lead to the most real hyperinflation and thereby undermine the very essence of the game, but unable to stop the activities of the "exchanges" of game currency, sanely decided to lead this process.

They have directors (managers) for game monetization in the staff, we also have enough such specialists in our country now. At the same time, the profession of a gameologist appeared in science, and within its framework a gameologist-economist.

The same professor of economics Edward Castronova became a professor of telecommunications and cognitive sciences.

By the way, in 2018 he created the game American Abyss about the second Civil War with the United States, which broke out in 2040.

The game had its own game currency, but it was desktop, the professor of cognitive sciences for some reason was wary of its online version.

Gamologists have laid out virtual online currencies: hard, soft, internal, etc., only 11 varieties, that is, twice as many as the main types of modern real money. Warnings to parents of children playing online games with virtual money began to be published more and more often.

Perhaps the most touching such warning appeared in November 2020 on the financial educational platform Rooster Money of the British holding company NatWest Group:

"Where there is money, there are people ready to help you break up with it, so talk to your children about how to identify fraudsters and protect yourself from those who want to take away their valuables from innocent young players by deception."

In short, game money has long hatched from the cocoon of Milton Bradley cardboard coins and Charles Darrow's toy dollar bills, leaned and live their own life. There are many games with money from aggressive risky extraction of them (or their commodity equivalent) rather by looting than trade, with purchases for this weapon for real money, to bucolic games with harvesting crops of turnips, tomatoes and fishing in a pond, their sale on the in-game market for in-game money, which neither scammers nor game monetization managers will not come to mind and which are spent by players without problems and hassle on expanding their virtual farm.

After all these stories, should we be surprised that we played with virtual money independent of the state regulator with such excitement for a century and a half that we eventually invented cryptocurrency?

“Confiscation all comes down to this: the government makes the rules, changes the rules, and enforces the rules. Though it lacks the moral right, it can create legal authority.

Though it lacks the constitutional empowerment, it can turn a blind eye to the Constitution…The Constitution did not stop the government from taking people’s gold in 1933.”

The Eurodollar system emerged as a workaround to the limitations of the Bretton Woods monetary system established after World War II. Under the Bretton Woods System, gold was the basis for the U.S. dollar and other currencies were pegged to the U.S. dollar’s value.

The problem was that in the wake of the war destruction, the sheer amount of money needed to rebuild Europe and initiate globalism was so large, that for the United States to service such demand would mean devaluing the dollar out of existence.

This is known as Triffin’s Paradox, a dilemma where a country issuing the global reserve currency must supply the world with enough of its currency (in this case dollars), leading to potential economic imbalances and conflicts of interest.

In response, the City of London orchestrated the collaboration of private commercial banks in Europe to establish the Eurodollar system i.e. “ghost money system”.

This system, rather than functioning like a traditional currency, operates more akin to a telecommunications network or a ledger. The Eurodollar system made money creation more efficient by combining the processes of creating money and facilitating transactions.

In essence, it operates similarly to bookkeeping, where dollar claims are traded between banks and recorded like an accountant keeping track of who owes what to whom.

It resembles bookkeeping, with banks trading dollar claims and maintaining records like an accountant keeping track of debts.  

For instance, if HSBC owes one million dollars to BNP Paribas, instead of an immediate repayment, BNP deducts the owed amount from a future transaction with HSBC a simple ledger entry, just like in a blockchain.

Banks were able to fuse the money creation function with the intermediation function.

The problem of scalability remained.

U.S. treasuries became a preferred form of collateral for foreign lenders due to their high liquidity, providing a level of standardization that reduced the need for extensive knowledge about the other side of the trade.

If a business needed a loan, all they had to do was show their U.S. Treasury, and a bank would give them the loan. These U.S. claims are also called “pristine collateral”.

Contrast this with the old system based on unsecured transactions and the need for specialized knowledge of each business field. Now private commercial banks could use their U.S. dollar claims and treasuries to lend to other banks, forming a global interbank lending network.

Banks worldwide, having extra cash, wanted to invest it. This led to the creation of a network where these banks could take in deposits denominated in foreign currencies, “swap” them into dollars, and then use these dollars for investments.

In other words, the dealer banks were able to mass produce money outside of confines of Bretton Woods that is physical currency.

By 1971, the Eurodollar system had surpassed Bretton Woods, averting a financial collapse when the U.S. abandoned the gold standard.

In 1981, a financialized economy, featuring fiat money and a 40-year interest rate downturn, emerged, necessitating exponential Eurodollar growth for stability. With its intricate interbank lending system, even a minor default could send ripples across the entire market.

This is where the Repo (repurchase agreement) markets took center stage as lenders of last resort. Money market funds, flush with cash, extended loans to hedge funds, traders, and banks in exchange for collateral.

While they preferred U.S. treasuries (considered the most pristine collateral), they also accepted other securities such as foreign debt or Mortgage-Backed Securities.

Problems arose when the Repo market’s acceptable collateral shrank, as seen in 2008 when mortgage-backed securities ceased to be accepted. Naturally, with fewer options for accepted collateral, a shortage of pristine collateral ensued.

The lack of overnight lending left overleveraged businesses unable to cover day-to-day operating expenses, triggering the 2008 Monetary Crisis that was basically a massive global dollar shortage due to freezing credit markets.

Ever since 2008, the Eurodollar market experienced a huge wakeup call, where banks stopped lending at the same scale as pre-2007. In all Eurodollar instrument charts, lending between 2008 and today has slowed dramatically, which severely contrasts pre-2007 and the exponential rise in foreign exchange derivatives.

This shift challenges the notion of sustained easy money. The data reflects a notable change in the trend after 2008, suggesting that money and credit were not generated at the same accelerated rate as witnessed in the years leading up to the financial crisis.

The Eurodollar market’s growth relies on a continuous expansion of lending by banks. However, ever since 2007 many financial institutions stopped partaking in riskier collateral, only accepting pristine collateral such as U.S. treasuries.

Without more lending, economic growth can only be sustained by massive government borrowing.

The constant expansion of the U.S. debt market is crucial for preventing a collapse in the Eurodollar system due to lack of acceptable collateral.

To secure additional collateral, most of the time those in power have deliberately initiated endless wars. The latest iterations are conflicts in Ukraine and Israel.

Each military involvement serves as a convenient pretext to issue more government bonds, increasing the overall debt in circulation. This influx of debt contributes to expanding the pool of high-quality collateral within the markets.

Wars tend to be inflationary by nature and also offer an opportunity to acquire a nation’s gold and natural resources, which can later be used by global western banks as valuable collateral.

Expect the next decade to be characterized by conflicts on multiple fronts, which will serve as an excuse for governments to pursue stealth quantitative easing.

These wars have been and are kinetic.There is another way for banks to get additional collateral when push comes to shove during the crisis.

The second maneuver is popularly referred to as the “Great Taking”, wherein central banks seek to seize and control various financial assets, bank deposits, stocks, bonds, and underlying properties of the public through engineered crises.

Debt-ridden assets will be confiscated, similar to the events of the Great Depression. In the 1930s, when 9,000 U.S. banks failed, taking $7 billion in depositors’ assets with them, only the Federal Reserve backed banks survived.

However, the depositors’ debts in the banks that went out of business were not canceled; instead, they were consolidated into the Federal Reserve backed banks and enforced.

In the past, one used to receive physical stock certificates, tangible proof of ownership of shares. However, stock certificates have become obsolete, replaced by mere digital entries held with brokers.

Despite the presence of SIPC insurance, which is limited, and FDIC coverage for insured deposits (up to $250,000), the legal claim over the securities with a broker is questionable.

Just like with bail-ins, you do not have a legal claim over the securities that you own.

In the 1960s, the dematerialization trend phased out traditional paper securities, introducing an order book/ledger system. This transition led to a fundamental change in the understanding of ownership, moving towards entitlement.

A subsequent development involved establishing a system where custodians and clearinghouses hold your shares; notably, these entities operate without regulation and lack collateral.

Securities, held with an entitlement claim rather than outright ownership, are then pooled together as collateral for various investments, with a primary focus on derivatives.

Same practice applies to centralized cryptocurrency exchanges

It’s important to note that this intentional setup could serve as a mechanism for a deliberate devaluation or a rug-pull of assets.

The strategy is clear: by obtaining access to energy sources outside the conventional banking system, individuals can survive outside of the traditional banking system.

The most pristine, transparent, trustless energy resource there is:

Bitcoin

This is why weaponized virtuous movements such as the environmentalists and health mandates are designed to remove people from their farmlands and forbid them access to natural medicines, and even more so on the EU regulatory crackdown on non compliant stablecoins, cryptocurrencies.

Every financial bubble has brought in more repossessed wealth to the ultra rich, taking the assets away from anyone not in the 0.1 percentile.

Formally called a Monopsony: when there’s a powerful buyer instead of a powerful seller. No one knows this word because there isn’t a family destroying board game with this name.

This monopsonistic market appears in many different sectors. It’s the motif of the tech sector. Think of Uber, where you have to supply the car; you have to drive it the way they tell you; and everything you do is scripted, down to the finest details. But you don’t know how much you’re going to get paid until you pick up your fare.

Amazon drivers have machines watching their faces and their eyeballs. The company can dock their pay if they fail to comport themselves facially in the way they’re supposed to. Their payment is determined post facto, unilaterally, by the employer. This is a very powerful employer that wields a lot of political influence.

You invest your own money and spend weeks producing a video, and the algorithm doesn’t show it to anyone not even the people who follow you because it violated a rule.

This looks a lot like Uber, the centralized cryptocurrency markets and many labor markets.

It’s akin to a Monopoly game where all pieces and money are reclaimed by the bank, and then starting a new game. Beginning afresh, the narrative becomes one where they possess everything, and you have nothing, would you like to borrow something?

This scenario mirrors what the central bank digital currency (CBDC) represents. It becomes extremely challenging for people to resist using it, given the essential nature of basic needs. Imagine an app available for download the cavalry coming to the rescue. By downloading this app, you can load your phone with digital currency, enabling you to purchase necessities like water.

However, each usage entails borrowing money from the system, creating a subtle but impactful dependency.

They may even provide a “free” initial CBDC offering, which will be a Central Bank loan disguised as Universal Basic Income.

So, what are the solutions?

For starters, individuals in the stock and crypto markets should significantly deleverage.

In many cases, it is more prudent to invest in tangible wealth, such as bitcoin, real estate, land, precious metals, rather than keeping money in a bank, stocks or cryptocurrencies that one does not really own.

Plausible scenarios, such as international power outages or a cybersecurity hack affecting financial institutions, could wipe out one’s trading portfolio, assuming that a margin call doesn’t do it for them.

Also one has to be aware of the responsibility of becoming your own bank and custodian.

However, this does not mean to complete disregard for traditional investments. In fact, contrary to public opinion, having a stake in U.S. dollars may be the best option from all liquid vehicles.

You can still have exposure to US dollars and T-BIILLS, just do it in a private and permissionless fashion using stablecoins in DeFi and cash.

The notion of BRICS nations trading energy outside the US dollar is frequently discussed, but the success of dedollarization initiatives may be overemphasized.

While there is a desire to dedollarize, the ability to achieve this seamlessly is often exaggerated. Dedollarization will happen out of need, not desire.

Historical trends show that the dollar tends to strengthen during crises because of the global dollar shortage (such as in 2008 and during the Covid pandemic) and then weaken afterward. However, this is not necessarily indicative of the end of dollar hegemony.

In times of crisis, such as the events of 2008 and the Covid pandemic, the US dollar typically experiences an initial rise followed by a subsequent fall post-crisis. This could easily happen again in the near future.

However, it is crucial to understand that this does not mean the end of dollar hegemony; instead, it reflects that the existing system continues to work. During periods of dollar weakness, countries, corporations, and individuals often choose to issue more dollar debt instead of paying it down, driven by the high demand for dollars.

For the collapse of dollar hegemony to occur, countries would need to seize the opportunity presented by the weakened dollar to pay down their dollar debt, which is a very rare occurrence nowadays.

Even if dedollarization were to take place, it would be a gradual process rather than an overnight phenomenon.

This does not mean you go all into U.S. equities or dollarized assets.

It does mean however, that when it comes to a cash position, the dollar has outperformed most other currencies in both the Global Monetary Crisis of 2008, and the Covid Pandemic in 2020.

When it comes to the underlying solution, any investment that makes people less dependent on the government and thrive in a redacted environment is a safe bet.

The first thing that governments have access to is their own tax reporting data, and no one wants to have their properties showing up in databases in their own name. Continuing operating in the digital economy without having to give up your privacy or security.

The Eurodollar fiat money system requires more collateral, and the tokenized economy through future Central Bank Digital Currencies addresses this concern.

Many pundits argue for complete disconnection from the grid, avoiding all involvement with future technocratic systems.

As HIM, I believe this is not a sustainable long-term solution because certain services and products cannot be handmade, making it an impractical way to live.

The goal is to harness the best of both worlds, guiding you on how to maintain peripheral access with financial institutions while embracing a fantasma lifestyle, securing your personal freedom.

Securing one’s digital wealth and achieving near-anonymity on the web can turn into a challenging daily task for many, discouraging less technical individuals from prioritizing online privacy and security.

Simultaneously, many Western countries are becoming more tyrannical, with societal breakdowns and city violence on the rise.

While many European, Asian, and American countries appear to be veering towards more restrictive governance, certain countries worldwide, once under the yoke of strict dictatorships, have propelled their populations to a point where they’ve developed a heightened awareness of the perils of government overreach.

The prior communist administrations and military juntas in these nations have contributed to fostering this awareness.

Redacted places where laws are interpreted as suggestions.

To begin, there is no single solution, but rather a comprehensive approach: the willingness to adapt and relocate.

Just as Eastern European migrants who left their homelands before the Soviets arrived in 1944 were spared five decades of oppression, individuals today can choose to move to safer, less oppressive regions.

In a digital era with excessive government information demands, business owners are struggling to keep their trading and bank accounts in restricted jurisdictions.

Recent examples of account closures reflect this growing trend Nigel Farage, a British politician, found his Coutts bank account closed, alongside Bank of America’s Coinbase customers and Canadian truckers in 2022.

Heightened government regulations now mandate stringent Know Your Customer (KYC) protocols, incorporating biometrics.

In response to regulatory pressures, Binance withdrew from several countries, including the Netherlands, U.K, and Cyprus. Their euro-denominated crypto trading share plummeted by 40% in 2023, leading to significant staff layoffs.

Instead of hopping from one exchange to the next, skirting one regulation after another, large trading account holders can set themselves up for long term, stable trading.

Additionally, take into account future U.S. and E.U. taxation and regulation through the establishment of asset protection structures, crypto on/off ramps, and diversification of investments into portable assets.

• Inflation is on the rise.

• The world is at war.

• Governments are borrowing more money than ever.

An increasing number of people are starting to realize that traditional investment strategies, such as debt instruments and pension funds, are actually losing them money. The old concept of ‘sit and earn,’ where wealth is confined to a stagnant wealth management advisory plan, does not work anymore.

For the past decade, banks have been driven by global regulatory pressures to “de-bank” unfavorable customers. This was first put into play by then sitting president Barack Obama and his well-known Operation Chokepoint 1.0, where the White House pressured banks to terminate service with certain legal, yet “unfavorable to the administration” businesses.

Joe Biden, then Vice president and now acting as President, has continued in his former boss’ footsteps with Operation Chokepoint 2.0, which since 2021 has de-banked multiple crypto businesses.

With the advent of the Markets in Cryptoassets (MiCA) regulation within the European Union, Centralized Crypto Exchanges will face stringent measures. By December 30, 2024, they will be mandated to track transfers of crypto-assets exceeding €1,000, ushering in an era of heightened scrutiny and more Know Your Customer protocols.

For example, MiCA regulations will introduce a daily transaction cap of €200 million for private stablecoins like USDT & USDC. For context, Binance’s current Tether trading volume against Bitcoin alone (not counting other trading pairs) is at $2 billion- 10 times more than future transaction limits.

Numerous trading platforms, including Binance, Gemini, Kraken, and Coinbase, have encountered substantial government regulation, leading to the suspension of operations in various European nations.

Traders who find themselves without accounts often resort to hopping to a different exchange , yet this is approach proves unfavorable due to the high probability of continued government crackdowns in countries that have already banned specific platforms.

In light of the imminent introduction of Central Bank Digital Currencies (CBDC) and a monetary reset, our strategy is to play their game to our advantage, own nothing and control everything.

Forget about if you can’t beat them join them, you can beat them by proactively playing their games against them:

Solutions are designed to adapt to the forthcoming times characterized by regulation, warfare, technocracy.

The 2020-2022 Crypto Bull market showed the inevitable trend- central banks will never allow private non-bank companies to control their own money. Centralized exchanges will keep getting regulated, and the only way to participate in the future crypto market is to anonymize your trading.

Recent episodes of de-banking, swift lockdowns and stay-at-home orders trapped those without a portable wealth or contingency plans.

If you believe that these technocratic systems can and will be implemented in the near future, proactive steps can protec your assets and freedom.

The solution is three-fold: first, migrate existing entities and assets to a favorable jurisdiction.

Second, structure KYC out of your personal name if you can’t totally adapt a zero KYC lifestyle.

Finally, create a strong structure to stay in control, trust no one, move assets off-balance sheet and use protective assets ~ BITCOIN to your advantage.

Fantasmas are individuals with direct experience in navigating international jurisdictions, global monetary limitations, and pervasive surveillance.

The goddess of the forest appeared at the lake and found the water transformed into salty tears. She asked the lake why it cried for Narcissus, assuming it had admired Narcissus’s beauty.

The lake replies that it had been enjoying its own beauty reflected in Narcissus’s eyes.

Main character syndrome is a tendency to view one’s life as a story in which one stars in the central role, with everyone else a side character at best.

Only the star’s perspectives, desires, loves, hatreds and opinions matter, while those of others in supporting roles are relegated to the periphery of awareness.

Main characters act while everyone else reacts. Main characters demand attention and the rest better obey.

You have probably heard of MC behaviour or perhaps even witnessed it online or in person.

A TikToker and her followers physically push aside those inconvenient extras ‘ruining’ their selfies and then post their grievances on social media.

A man on a crowded subway watches a loud sports broadcast without headphones while ignoring other commuters’ requests to turn it down a bit. This is no mere rudeness:

in the narrowly circumscribed world of main characters, the rest are merely the insignificant ghosts who happen to intrude on their spaces.

Akin to chess pieces, you have agency only in the development of the MC’s story. In current slang, you are non-player characters (or NPCs) a term that originated in traditional tabletop games to describe characters not controlled by a player but rather by the ‘dungeon master’.

In video games, NPCs are characters with a predetermined (algorithmically determined) set of behaviours controlled by the computer.

Rather than agents with a will and intent, NPCs are there to help the MC in his quest, to intersect with the MC in preset ways, or to simply remain silent, a kind of prop, a part of the scenery.

Another way to view NPCs is to imagine a zombie, a being that, while physically identical to a normal human being, does not have conscious experience.

If a zombie laughs, it’s not because it finds anything funny, its behaviour is purely imitative of the real (main character!) individual. For someone convinced of their MC identity, the rest are, perhaps, just so many zombies.

Our ideas about who we are require each other’s engaged participation.

We must see others as fully human, and be engaged with each other as moral beings to understand who we are, and who we are in relation to others and to the world.

But the main character narrative denies all these possibilities. It is destructive to views of human beings as fundamentally relational and interdependent, and poses a threat to two important experiences of being human: the first is connection to others; the second is love.

In short, anything that can be read, spoken, heard, written, viewed or otherwise expressed and this certainly includes social media. In telling stories, we create and reveal who we think we are; in listening to the stories of others, we help to mould and sustain them as persons.

Stories are thus foundational to how we view the world and our place in it, and through them we can make ourselves morally intelligible to ourselves and to others.

Te answer has something to do with the kinds of stories MCS offers. On the one hand, narrative approaches to morality and identity centre both speaking and hearing, sharing and emphasising the importance of shared discourse, of mutual intelligibility.

They point toward the moral significance not just of one’s own stories, but of the narratives of others as guides to understanding the fundamental human identities.

On the other hand, narratives spun by the main character have little interest in, or patience for, the stories of others; they are anything but interdependent.

They care nothing for mutual intelligibility. Only the main character, his perspective, his story and his solitary self, matter. In this version of narrative selfhood, there is room only for the singular speaker, and his singularly important chronicle.

Yet, as narrativists will often note, not all narratives are good, or desirable, or to be encouraged.

MCS offers the wrong kinds of stories: harmful, isolating, solipsistic, amoral. And it begins, in large part, with the assumed superiority of the main character’s self-conception.

While main characters are singularly important beings in their own minds, this importance comes in many flavors.

Let’s begin with the usual culprit, entertainment and social media, where they can be often found in their native environment.

The ‘main character’ hashtag has been viewed, mostly approvingly, millions of times on TikTok and on Instagram, and #maincharacter accompanies tens of thousands of posts.

Daily, social media netizens are sold the idea that becoming the heroes of their lives is the only thing that matters.

But it is not just social media: so many of our films focus on the central quest of the hero, who must overcome, outsmart, outrun, outperform and, in the end, glory in his victory.

This hero’s journey, this monomyth, is on full display in The Hunger Games movies (2012-23), the Divergent film series (2014-16), the Spider-Man universe (2018-24), and The Maze Runner films (2014-18), which are but a handful of relatively recent examples.

There are sidekicks and other characters, to be sure – but, in the end, to quote the much older film Highlander (1986), ‘there can be only one’.

Absorbing these messages and mimicking the voiceovers of lead characters in films and other media, we also try to narrate our lives often, directly into our smart phones and share with the world all the ways in which our paths, our storylines, our perspectives, are the ones that matter, the ones worth paying attention to; our voices the voices that are worth hearing.

We demand from others, both directly and indirectly:

But isn’t it a bit too easy to blame media for our growing obsession with our own importance?

Long before the internet, let alone social media, people have shared their narratives in diaries, autobiographies, poems and so on, bringing their lives to centre stage.

There have always been narcissists, sociopaths and simple attention-seekers, social media did not invent the me first typology.

And yet, can we help ourselves in this time of global access to others, and to ourselves?

Can we, well, some of us, anyway resist demanding an audience when one is always there, ready to be engaged? Perhaps not.

As the clinical psychologist Michael G Wetter said in a Newsweek interview in 2021, main character syndrome is:

the inevitable consequence of the natural human desire to be recognized and validated merging with the rapidly evolving technology that allows for immediate and widespread self-promotion…

Those who exhibit characteristics consistent with the experience of main character syndrome tend to want to create a narrative that is dependent on an audience to validate their story. What good is a story or movie if there is no audience?

Media, social and otherwise, has made it easier, cheaper and, importantly, more socially acceptable to act out our MC.

We can upload photos, videos, entire films about ourselves and we can choose how we are perceived through clever tricks of light and angles, apps and filters that tell exactly the stories we want told.

All this because we want to get noticed, we want to be seen, and seen as someone who matters, as the main someone who matters. As the influencer Ashley Ward noted on TikTok in 2020:

You have to start romanticising your life.

You have to start thinking of yourself as the main character because, if you don’t, life will continue to pass you by, and all the little things that make it so beautiful will continue to go unnoticed.

Not being seen, not being noticed as someone who matters means relegating oneself to NPCdom, a nobody, a nothing, a mannequin without a personal story or agency, going through a prewritten script of a grey, insignificant life.

To be seen, on the other hand, is to be happy.

This happiness requires making sure that others know that one is happy, successful, better than those NPCs, in other words, it calls for constant curation of one’s image, one’s narrative, one’s self.

If one is not the MC, someone else surely will be.

The dilemma becomes harder when we hear tha we are living in the era of Attention Economy; but outside of mass media consumption channels, there is a real economy that couldn’t care less about attention, in the contrary they seek to have as less attention drawn to them as possible.

Are you the main character?

The story of how the A340 came into Gaddafi's possession is a fascinating story in its own right. The A340 was ordered by Brunei's Prince Jefri Bolkiah in August 1996, who spent $250 million on its acquisition and decoration. Now $250 million is already a lot of money, but it's even more so considering it was not even his own money.

You see, Prince Jefri had somewhat of a habit for misappropriating Brunei's state budget, and was accused of unrightfully taking $14.8 billion from Brunei's treasury and spending it on his many palaces, yachts and no less than nine private jets, including this A340.

Anything but amused by his brother's actions, the Sultan of Brunei exiled his brother and sold all of his belongings. After Prince Jefri spent $250 million on 'his' A340, the Sultan sold it for only $95 million to Saudi Arabia's Prince al-Waleed bin Talal Al Saud, one of the richest people in the world, just three years later.

Looking to make a quick buck, the Prince then attempted to sell it to Gaddafi, which would bring about even more scandals.

The first obstacle Prince al-Waleed ran into was that Colonel Gaddafi simply had no interest in the A340 when it was first offered to him in 2001.

Already not a keen flyer to begin with, Libya's sanctions regime and its increasing political international isolation meant Gaddafi hadn't flown abroad for more than a decade.

In the 1970s and 1980s, when he was still a welcome guest in many parts of the world, Gaddafi simply used a commercial Libyan Airlines Boeing 707, apparently lacking any interest in a private aircraft for his personal use.

This posed somewhat of a problem for al-Waleed, as no other party had shown an interest in the A340. The lack of interest from buyers might have been influenced by the aircraft's interior and exterior, both of which were remarkably unappealing.

Prince Jefri had chosen a largely similar interior design to his brother's three A340s but in a silver-grey finish rather than the gold one used by his brother the Sultan. Seemingly satisfied with the result, the A340's exterior received the same treatment.

Undeterred by Gaddafi's disinterest in buying a $120 million flying limousine, Prince al-Waleed commissioned Daad Sharab, a Jordanian fixer with connections to Gaddafi, in an attempt to convince him to buy the aircraft.

Nonetheless, it took Sharab nearly 1.5 years to secure a meeting with him, which finally occured in January 2003. During the meeting, Gaddafi eventually exhibited an interest in the Airbus but mentioned that he was also assessing several other aircraft that had been presented to him.

Several days later, Sharab reached out to the Prince and advised sending the Airbus A340 and a Boeing 767, which he was also trying to sell, for Gaddafi to inspect.

In April 2003, both aircraft flew to Libya, with the Prince personally traveling on the A340. Gaddafi liked the Airbus, and asked that the plane remained in Tripoli until a sale could be finalised, a measure intended to prevent any tampering with the aircraft. The Prince returned to Saudi Arabia on the Boeing 767, presumably satisfied with the prospect of a successful deal.

Apparently, there was some confusion between the Prince and Sharab regarding the price they were seeking for the A340. Sharab believed it was $135 million, while the Prince thought $110 million would be the maximum they would get.

Even at this price, the sale would still net a $15 million profit for him. Nonetheless, the Prince attempted to increase his earnings by tricking Gaddafi into believing that the cost of the A340 was actually much higher, writing him that ''the aircraft price of $135 million represents what the aircraft cost us. This includes the various extras and modifications that were made to the aircraft since it we bought it.”

When later questioned about these modifications, the Prince admitted that no modifications had actually been made to the A340. It wasn't only Gaddafi who was being deceived: Sharab claimed that the Prince had initially agreed to provide her with any amount exceeding $110 million if she managed to sell the aircraft for more, something the Prince later denied.

In June 2003, it was Sharab who successfully brokered the deal with Gaddafi to sell the Airbus A340 for $120 million, with an additional $20 million in Libyan investments embarked for the Prince's agricultural project in neighbouring Egypt.

The payment was to be split into two installments, with the first $70 million going directly to the Prince.

The Libyan Agriculture Investment Company was to provide the remaining $70 million for the second installment, with $20 million designated for the agricultural project and the remaining $50 million for the aircraft.

The Prince received the initial $70 million payment in August 2003, but the $50 million for the aircraft and the $20 million for his agricultural project did not materialize.

In February 2004, the chairman of Libya's Afriqiyah Airways, who would operate the A340 on behalf of Gaddafi, met with the Prince's representatives.

In the course of the meeting, the chairman said Gaddafi believed $70 million was a fair price and that he wouldn't pay any more than that.

In all likelihood, his decision to acquire the A340 was primarily influenced by its size and the presence of four engines.

While the significance of four engines might not be immediately evident to the average reader, prominent Middle Eastern government leaders typically possess either a four-engined Boeing 747-400 or the more modern and larger Boeing 747-8, as larger aircraft convey greater prestige for the leader and their nation.

The twin-engined A300 may have contributed to a sense of inferiority on Gaddafi's part when he compared his aircraft to those of other Arab leaders, whose planes clearly outclassed his.

If the spectacle of two billionaires bickering over the price of a four-engined private jet formerly owned by a third billionaire isn't sufficiently amusing, the situation is about to become even more comical.

Gaddafi evidently had no intention of paying the $50 million he still owed to Prince al-Waleed, but the Prince had a hidden ace in his hand.

The A340 was still parked in Tripoli, where the Prince had left it since April 2003. However, to keep an aircraft in an airworthy condition, it has to undergo regular maintenance checks, typically carried out in Europe.

In March 2004, it was the A340's turn to be sent to Germany for routine maintenance. The Libyan authorities expected its return to Tripoli, but to their surprise, it never returned. The aircraft had seemingly vanished without a trace.

While Gaddafi previously appeared to have hoped that the Prince would acknowledge his $25 million loss and formally transfer ownership of the A340, the Colonel was now left without the A340 and the $70 million he had already paid for it.

Gaddafi must have assigned his top agents to the task of finding the aircraft, as he would soon discover that Prince al-Waleed, still the legitimate owner of the aircraft, had the A340 flown back to Saudi Arabia after it completed its maintenance in Germany without notifying Gaddafi, an action that deeply infuriated the Colonel.

The Jordanian fixer Sharab found herself entangled in the midst of this escalating dispute and ultimately could do little but convey Gaddafi's demand for the immediate return of the aircraft or a refund of the $70 million. Realising that the aircraft might have been tampered with during its stay in Saudi Arabia, Gaddafi subsequently decided to cancel the deal altogether.

In response, the Prince expressed his willingness to cancel the deal for the Airbus but intended to retain the $70 million as compensation.

Prince al-Waleed had, quite literally, fucked the Colonel.

While Gaddafi had previously attempted to resolve conflicts through outright invasions of other countries, the absence of a land border with Saudi Arabia and the lack of a functional military rendered this option unfeasible.

With the Prince in possession of both the A340 and the $70 million, Gaddafi had no leverage remaining. After three months of deadlock, Sharab devised a plan to resolve the impasse by arranging a face-to-face meeting between Prince al-Waleed and Gaddafi in Tripoli.

After all, she stood to earn a commission of at least $10 million. To avoid the risk of Gaddafi impounding one of the Prince's private aircraft out of revenge, the Prince traveled to Libya on a chartered jet.

A public meeting between the Prince and Gaddafi followed, during which the Colonel finally declared his intention to pay the outstanding $50 million. But when ironing out the details in another meeting a day later, the Libyan side had apparently reversed its decision once more and once again asked for the return of the $70 million.

Having travelled to Tripoli to rescue the deal and enduring a lengthy meeting with Gaddafi, Prince al-Waleed must have been far from amused by this sudden turn of events.

But eventually, the Libyan side relented and agreed to proceed with the purchase. While the $20 million investment in the Prince's agricultural project was no longer on the table, the Libyans would pay the outstanding $50 million to finally get ownership of the aircraft.

The new argeement was signed by the Prince in September. However, the Libyan side waited another six months to put down their signature, and it took them a further six months to actually pay the Prince. In September 2006, the ownership of the aircraft was finally in Gaddafi's hands, concluding a $120 million deal that had taken 3.5 years to finalize.

The Prince gained $25 million in profits from the sale, though the Jordanian fixer Sharab insisted that a $10 million commission was owed to her. Curiously, it was the Prince who, this time around, refused to make the payment.

However, the Prince not paying her was not Sharab's biggest concern during this period, as she had apparently incurred the wrath of Gaddafi to the extent that he had her placed under house arrest in Tripoli, despite her Jordanian citizenship.

The justification for her house arrest seemed to be nothing more than Gaddafi's paranoia, as he claimed that Sharab was conspiring with Abdullah II of Jordan and Egyptian President Hosni Mubarak to overthrow him, stating: "I know what your King is planning against me with the President of Egypt''.

Denied the chance to defend herself against these allegations, she endured 21 months of house arrest in Tripoli until she was freed by Libyan rebels during the 2011 Libyan Revolution.

After her release, she continued her efforts to claim the $10 million from Prince al-Waleed, which she was ultimately awarded by a British court in July 2013.

Despite speculation that Gaddafi had used the A340 to escape to Venezuela or Zimbabwe during the Libyan Revolution, he remained in Libya until the United Nations imposed a no-fly zone, which effectively severed his last viable escape route. Gaddafi was killed in October 2011.

In a society where comfort has become the ultimate goal, the mere mention of suffering stirs discomfort. We view it as the unpopular kid in school, as someone to avoid even being seen with, let alone engaging in. Yet, herein lies the paradox: Our relentless pursuit of comfort leads to stagnation, dulling our senses and depressing our souls.

Consider the "Mouse Utopia" experiment, a controlled environment abundant with food, devoid of predators, and saturated with safety. Initially, the mice prospered, but over time, their community fractured and their essence altered. Females grew aggressive, males withdrew, and soon, their world withered away in a demographic collapse. They were not merely mice living in abundance; they became creatures debased by the absence of struggle.

This mirrors our human story in many unsettling ways. Like those mice, we live in increasingly regulated and structured societies. Our worlds are so designed to alleviate suffering that we are becoming less human and more indulgent. We are losing our nature, our need for challenges, for frontiers to conquer, and for obstacles to overcome.

However, unlike mice, we possess reason, the conscious power to shift our trajectory. We can embrace hardship as a form of spiritual awakening, a crucible where our better selves are forged. Gyms have proliferated not merely for physical well-being but because they serve our inherent need for struggle.

Marathons and obstacle races have surged in popularity, offering us the chance to confront our limitations head-on. Cold plunges and saunas have become popular in part because it stretches our bodies past their normal ranges.

Suffering, then, is not an aberration; it is an integral part of the human experience. To seek a life devoid of suffering is to miss out on the profound depths of love, the intensity of joy, and the soul-stirring power of art. To shun suffering is to remain perpetually a child, forever shielded from the complexities and richness of human life. Sadly, too many choose this much easier path.

Our perception of suffering needs to change. Do not curse it as a wretched plight but celebrate it as a catalyst for growth. For it is in the fires of suffering that we find our purpose, our resilience, and our true selves. Everything worthwhile, every meaningful experience, asks us to walk through the flames.

“Between stimulus and response lies a space. In that space lie our freedom and power to choose a response. In our response lies our growth and our happiness.”

We humans have a terrible habit of comparing our suffering.

They have it worse than you, so your pain doesn't matter. You have it worse than them so how dare they complain?

There is absolutely nothing to be gained from this; it's a habit that only leads to more pain, that only creates a vicious cycle of more suffering.

We do this because we yearn for our own pain to be acknowledged and validated. To know that someone sees how hard we've tried, how much we've lost, how broken our hearts are. And in our deepest yearning to be seen, we isolate ourselves from the very people who could give us what we want most. It's a tragedy.

We all need to learn both how to acknowledge our own pain and how to acknowledge others' pain. That's what will help everyone to heal and move forward.

People are capable, at any time in their lives, of doing what they dream of. - Paulo Coelho!

This book was given to me by one of the smartest people I know: My Mom.

I do not say this lightly, but this gem has truly changed my life…This book motivated me more than any other book I have read to head out into the world and start my own global exploration of deconstructing HIM.

Enjoy.

The book’s protagonist, Santiago, is a shepherd from Andalucía.  He loves his sheep, but he cannot help but notice the limited nature of the flock’s existence.

Only watching down at the grass, eating, drinking water. Santiago notices that the sheep never lift their heads to marvel at the beauty of the green hills or the sunsets.

Santiago’s parents have struggled with the basics of life and have put aside their own dreams, visions, and ambitions accordingly.

Santiago is different. He can read, and he wants to travel. One day he goes into a village to sell some of his sheep, there he encounters a gipsy woman. Santiago tells the gipsy women about his dream.

She urges him to “follow the signs” and leave his “old world” behind. She then points towards the pyramids of Egypt and tells him he will find his treasure there.

Santiago believes her. Santiago then, at a point of despair, meets Melchizedek, who claims to be the king of Salem. He echoes the gipsy’s advice that it is Santiago’s purpose to journey to the pyramids.

He sold all his sheep and sets sail for Tangier. In Tangier, a thief robs Santiago of all his belongings and savings. Weirdly, Santiago is not devasted; he feels that he is on the right path. Things have been set into motion, and going back is not an option.

After being robbed, Santiago starts to work with a local crystal merchant. After learning invaluable lessons from the merchant, Santiago cashes in all his earnings to pursue his personal legend: to find the treasure at the feet of the pyramids.

He joins a caravan crossing the Sahara desert toward Egypt. There, he meets an Englishman who is studying alchemy and who is looking for an Alchemist at an oasis.

He learns that the secret of alchemy is written on a stone called the “Emerald Tablet”.

{hint why my favorite color is green}.

The ultimate goal for the alchemist is the creating of the Philosophers Stone. It can turn things to gold and produce a liquid that can cure all ills and make people almost immortal.

Santiago joins the Englishman who is travelling to an oasis of Al-Fayoum. He learns that there resides a powerful 200 – year old Alchemist.

Because of violent tribal wars, the caravan is forced to stop at the oasis for an extended period of time.

In the oasis, Santiago falls in love with Fatima, who lives in the oasis. On a random walk through the oasis, Santiago has a vision that the oasis is going to be attacked by other tribes. 

He warns the tribal chieftains of the attack, and as a result, Al-Fayoum can defend itself against the assault. The alchemist hears about Santiago’s vision and invites him on a trip into the desert. 

There the alchemist teaches Santiago about the importance of listening to the signs of the universe, and to pursue one owns legend.

The alchemist then convinces Santiago to leave Fatima behind so he can finish his journey to the pyramids.

The alchemist also offers to accompany Santiago on the next part of his trip and teach him.

On their trip to the pyramids, the caravan gets captured by a tribe of Arab soldiers. 

In exchange for their, his life, and the life of Santiago, the alchemist hands over all of his belongings and tells the soldiers that Santiago is a powerful alchemist who will turn into wind within three days.

Santiago freaks out, after all, he has no clue how to turn into the wind. After meditating for three days, Santiago communicates with the wind and the sun to get help from them. 

They help him to create a powerful sandstorm.  He then prays to “the hand that wrote it all”, and the height of the storm disappears. Because of this feat, the tribesman let the alchemist and Santiago go free.

The alchemist continues to travel with Santiago.  In a Coptic monastery,the alchemist demonstrates that it is possible to turn things into gold.

He gives Santiago this gold and sends him to the pyramids alone.  In front of the pyramids, Santiago starts digging. There, two men find him and start beating him.

Santiago opens up about his dream vision; they then decide that he is a hopeless fool who by no chance can have any money.

Before leaving, one of the hoodlums tries to illustrate the stupidity of dreams by telling Santiago his own dream. The dream of the hoodlum is about a treasure buried in an abandoned church in Spain, where a fig tree grows. 

The church is the same one where Santiago had his dream. After hearing this, Santiago returns to Spain, to find a chest of gold and jewels and artefacts. After finding his treasure, he decides to go back to Al-Fayoum where he will reunite with Fatima, his beloved who will await him.

One of the most important concepts from The Alchemist is the necessity of having a dream or a future that is compelling enough that it justifies your suffering.

Santiago, on his journey, very often encounters hardship and crisis.  He can continue to put one foot in front of the other because he outlined a personal blueprint of what his perfect life would be.

Finding his treasure outweighs the suffering and discomfort that undertaking such a daring adventure brings with it.

I believe we all need a “why” that is so compelling that it motivates us to do the hard things.

Every morning, every human being in the world is confronted with the decision: Do I get up today?

One commonality among extremely unhappy people is their lack of meaning and their inexistence of a compelling future.

I think we all agree that life is also suffering. Every morning we are confronted with an evaluation.

Does the pleasure and fulfilment of my existence outweigh my suffering and discomfort?

I firmly believe that to withstand life’s difficulty, we MUST have a dream. 

We must have a WHY.

“He who has a why to live for can bear almost anyhow.” - Friedrich Nietzsche

Dreams, in consequence, are not something for only children or aspiring singers, athletes or artists.  Dreams are necessary for survival.

Jordan Peterson, one of my most favourite eccentric psychologists, does a great job at emphasising how important it is to have a personal concept for hell and heaven.

Jordan Peterson "Heaven and Hell are as Real as You Make Them" - The Joe Rogan Experience

Exercise Time!

Grab a piece of paper. The goal of this exercise is that you outline heaven and hell for yourself on paper.

Ask yourself, what would be your equivalent of Santiago’s treasure?  What would your perfect life look like? 

Then ask yourself the counter questions. What does your personal hell look like? What would be your personal rock bottom? 

After outlining those constructs, evaluates your current behaviours/decisions/people in your life. Which one of them is moving you towards your version of heaven, which one of them is moving you towards hell? 

Life suck’s sometimes. A big difference between people who are happy and unhappy, in my opinion, is their ability to reorganise setbacks.

Failure does not exist. One thing I’ve learned from The Alchemist is that setbacks all have their own lessons. Life is, whether we like it or not, always teaching us something.

The Alchemist was one of the books that helped me to see my own struggle, for example, with mental health and depression, not as a curse but as a resource. If you are overcoming something, you can teach others how to overcome it as well.  Teaching people on “how NOT to do things”,is equally as powerful as giving someone a perfect how-to-do list.

So, the next time you are going through some tough shit, instead of saying that you are having a breakdown, why not say instead that you are having a breakthrough?

One of my favourite mantras of the book is the idea of following your own destiny. We are all authors, writing our own story, each and every day. Weirdly, we rarely take control of the narrative of our own life’s journey. At a certain point, we have to stop compromising and radically answer for ourselves who we want to be and how we want to live.

So whatever you are doing right now: stop, and put on your camera or take a look in the next mirror and ask yourself; Am I living the life I want to live? Take a brutally honest look in the mirror and ask yourself, where am I short-selling my own potential?  Where am I deceiving myself? 

Can I give more? Where am I making my life worse than it has to be? Am I living my best life?

We all constantly have the power the leave a chapter of our lives behind, and start writing a new one. 

Limitless creativity.

Years ago, when I was traveling as a young nephew, I met with a fascinating guy who was struggling with addiction.

I met him when he was in recovery, so he was already on his way back to functionality and health. I asked him what helped him to overcome his crippling addiction.

He told me that one day he was asked in his church by a young priest if he believes that he was sent to this earth to live his life as an addict.

This shook him to the core because it revealed to him that he was living a life less of what he was capable of living. It became obvious to him that he alone was the pain of his existence.

I believe we all have great things waiting for us as soon as we start pursuing our dreams, the very damn title of our life’s book changes.

So for the future, always ask yourself when doing things: Is this action moving me towards my personal hell or my personal heaven?

yeah I have all these flaws…

but look at what I am trying to do,

and why I am doing it…

Fintech firms like the German digital bank N26 will present themselves as innovators serving this transition, but also as efficiency-mongers reducing cost to society.

In the piece above, N26 propagandists lay down a range of costs that the cash horsecart supposedly exerts on our society. They’re not alone in doing this. It’s common for fintech players to raise a concern about the ‘cost of cash’. These costs include the cost of printing it (incurred by money issuers), the cost of banking it, insuring it, moving it around, and the time taken to do reconciliation (incurred by businesses). They harp on the hassle of using it, the time taken to go to ATMs, and the interest not earned by not using bank accounts. They set that against their digital systems and invoke the illusory mantra that technology saves you time, rather than simply accelerating your life.

One of the reasons why the propaganda works is that it plays into existing weaknesses in economic literacy. An economy is an interdependent web of people who draw from the earth, but nowadays that takes the form of a giant transnational mesh structure underpinned by state legal systems and multi-tiered monetary systems. Modern corporate capitalism is a vast network vortex, with sub-vortices.

Rather than experiencing all the underlying connections within this vortex-of-vortexes, a person will experience themselves like a disconnected atom moving from one market to the next. At one point they’re a consumer in the goods market, the next an employee in the job market, and the next an investor in the financial market. In each of these spaces they’re but one tiny node, and rather than recognizing the interlocking nature of the markets they pass through, they experience themselves like a blindfolded person moving around an elephant, imagining each part they touch to be a unique object.

When someone is immersed in a huge system that’s too large to see, it’s easy to get them to fixate on the ‘phenomenological’ elements directly in front of them, rather than the reality beyond their perception. The interlocking markets of corporate capitalism are held together by monetary systems, but many people casually adopt the economics view of money as some kind of mysterious special commodity. We often fixate upon monetary cost, the amount of monetary credits handed over to get something in an act of exchange, while not noticing that the most primal cost of something is a real resource cost - the amount of human energy and natural resources that go into bringing it to life through an act of production. A monetary cost is one leg of an exchange, and the other is a real good or service which exacted a real resource cost on its producers, and which is the actual thing that (theoretically at least) gives us some benefit. The good or service gets used up, but money doesn’t. Once handed over, the money will continue on an onward path that may fork and make its way back to you somewhere else in the multi-dimensional vortex (or will be pulled out of circulation by its issuers).

Fintech propagandists, though, can mobilize misunderstandings about this structure to their advantage in at least three ways:

1. A modern money system is an ecosystem of issuers issuing money in multiple forms in multiple layers, and cash is one component of a balanced monetary foundation. Fintech firms, though, will use the economist idea of money as a series of evolving products, and imagine that ‘money’ will be upgraded if it lapses into one form (somewhat like imagining transport to be ‘upgraded’ if we got rid of bicycles and trains, and relied solely on Uber)

2. They place their audience into the position of the blindfolded person feeling the elephant and get them to fixate on an imagined cost that cash brings to each section (e.g. the investor loses returns by holding cash, the consumer finds it inconvenient, the manager finds it hard to account for, the shareholder loses profits, etc.)

3. They’ll suggest these ‘costs of cash’ are one-way losses without benefits, and then add them up into some total cost to society from this defunct product

Let’s take an example from the N26 article, where they claim that:

Cash needs to be printed, continually inspected, and then transported to and secured in safes. That costs the German economy over €10 billion each year

They’re trying to imply that the €10 billion is like a gas lost to space, but those monetary costs will appear on a bunch of income statements somewhere else as income earned from providing a service and will turn up in GDP figures. Indeed, everything that turns up in GDP ‘costs’ one party money, and another party real resources, but we tend to assume there’s also a reverse flow of benefit to these costs. Indeed, things often incur a higher monetary cost if they’re valuable.

High-quality jeans cost more than cheap shirts because they're better. Similarly, a monetary system with cash is a more resilient, balanced, and inclusive monetary system, which is better. Of course, there's a real resource cost to producing jeans, and maintaining the cash system, but there's also a real resource cost to maintaining an army, a logistics system, or stairs in a skyscraper. Sometimes we use resources for valid reasons.

The best way to understand our N26 propagandists is to see them like an elevator salesperson spinning stories about the wonderous innovation and efficiency of their automated solution while casting stairs as a wasteful and costly use of resources.

I could imagine an ancient Pharaoh ordering the creation of a colossal pyramid of gold-encrusted stairs in a wanton act of wastefulness, but on average our use of real resources for stairs is valid. While the elevator evangelist harps on about the exertion required to walk up them, fitness instructors would see that as a benefit. Moreover, the costs of stairs can prevent far more serious ‘social costs’, like people getting trapped in a building when it’s burning down.

An elevator salesperson would undoubtedly draw attention to people tripping down stairs and breaking their leg, much like our fintech propagandists who do everything they can to draw attention to the social costs of cash. In the N26 piece, they highlight ‘all the illegal activity in Germany associated with cash’, and the ‘astronomical sums of cash’ that are lost or stolen. They ignore the fact that digital systems are constantly used for cybercrime, hacking, extortion, and tax avoidance (ahem, the entire offshore tax system is facilitated via digital bank accounts), but the ‘cash as crime’ line is a major tool in the anti-cash lobby’s arsenal.

There are real costs to cash, but those come with real benefits, the absence of which can bring real social costs, which are just real losses to our well-being. Monetary costs, real resource costs, and social costs are not the same, albeit there are complex interconnections between them.

The shallow rhetoric of the fintech industry does no justice to these subtle concepts and shows ignorance of the actual monetary system. The actual monetary system is a politically anchored multi-layered web of IOUs, in different forms, that holds the so-called economic realm together.

Analyzing the separate elements of that foundation as if they were free-floating commodities subject to monetary cost considerations (that the foundation itself underpins) is delusional on multiple fronts.

Not only does the foundation get weakened if you remove cash, but we incur all those social losses: exclusion, centralization of power in too-big-to-fail oligopolies, inequality that stems from centralization, and data extraction used to disorientate us.

We can have a debate about the relative severity of these ‘political’ losses, but never let banks and their lapdog fintech industry tell you these are side issues.

Money is political, and that’s the starting point of the economics,

but, If our money is not private, we can’t be political…

Coming in part 3;

• The fundamental principle of counter-economics.

• Black and grey markets: the unconscious agora.

• The role of the intelligentsia and Establishment media

• Failure of counter-cultures and the key to success.

• Micro activity and macro consequences.