Month: February 2024

Via Wu Blockchain substack,

This article is a text transcription by the Wublcokchain team of the Chinese podcast featuring Ge Rujun and Vitalik. Original video link:

Personal Introduction of Vitalik Buterin

Vitalik Buterin was born in 1994 and is a Canadian programmer, writer, and co-founder of Ethereum, the world’s second-largest blockchain platform. He had his first computer at the age of four, created an encyclopedia about rabbits at seven, was recognized for his talents in mathematics and urban design at ten, and was capable of complex mental arithmetic. By the age of twelve, he was already able to write games in C++. Between the ages of thirteen and sixteen, he was deeply engrossed in the video game World of Warcraft, until the game publisher Blizzard removed a key ability, “Life Siphon,” of his favorite Warlock character. This event profoundly affected him, leading him to reflect on centralized control and eventually sparking his interest in blockchain technology.

By the age of twenty-four, Vitalik’s net worth was already considerable, and he was ranked 22nd on Fortune magazine’s list of the most influential people under 40. Despite his significant achievements in technology and business, Vitalik emphasizes that every moment in life is precious, just like every block in a blockchain, and nothing should be erased, as everything is worth cherishing.

For Vitalik, his life experiences from birth to the age of eighteen were incredibly rich, making it difficult to pinpoint what was most important. Every event, every experience, had a significant impact on him, helping to shape who he is today. For listeners, his story is not just about the growth of a tech genius but also about a perspective on life and the pursuit of innovation.

Views on Elections

Host: What are your thoughts on the recent Taiwanese election that just concluded?

Vitalik: There’s a saying in English, “No news is good news,” meaning that if nothing particularly bad happens, that in itself is good news. Many issues have emerged in recent elections and democratic processes, such as in the United States, where Trump refused to concede after losing, leading to the Capitol being stormed. Many people were worried about bad things happening or severe misinformation. But from the outside, at least, it seems like nothing particularly bad happened in this election. Though there are always some problems, it looks healthier compared to the United States.

Host: Indeed, your Chinese is very fluent. Our election involved three sets of candidates. Is the U.S. election also a three-way situation?

Vitalik: Not in the U.S., because there’s a very stable two-party system there. There’s an economic law called Duverger’s Law, which states that in traditional voting systems, eventually two main parties will form, making it hard for a third party to come in. In the U.S., the two main parties are the Republican and Democratic parties, and other small parties like the Libertarian Party and the Green Party receive very little support. The system in the U.S. is not the result of the founders’ design but the result of incentive mechanisms.

Host: Why did you fall in love with blockchain? Is it because new forms of democracy can be built on the blockchain?

Vitalik: Indeed, blockchain offers the possibility of implementing new forms of democracy. For example, the Ethereum Foundation website has tutorials explaining how to build democracy on the blockchain. This shows we can explore new versions of democracy and find better ways of governance. Blockchain technology makes this exploration possible.

As the founder of Ethereum, what does democracy represent to you? What’s the relationship between the values of democracy and blockchain?

Bitcoin, as the first instance of blockchain technology, had a very clear initial goal: to create a digital currency — Bitcoin — with a total limit of 21 million. This system was not just a payment system but also seen as digital gold, representing a dual innovation of a new payment system and asset. Satoshi Nakamoto introduced these two concepts through Bitcoin: a new type of asset that can be directly created on the internet and have value, and blockchain technology — a decentralized consensus method. This method allows multiple network nodes to maintain a decentralized database together, recording the number of coins everyone holds.

With the launch of Bitcoin, people began to explore other potential applications of blockchain technology beyond payment systems. In 2010, Namecoin emerged as a pioneer project using blockchain to achieve a decentralized DNS system. Subsequently, more blockchain-based applications were developed, such as colored coins and Mastercoin, exploring the possibility of issuing custom assets on top of Bitcoin.

My early involvement in the Bitcoin community and the creation of Bitcoin Magazine gave me a deep understanding of these platforms. Despite recognizing the value of these concepts, I realized their implementation was limited. This led me to think about creating a blockchain with a general-purpose programming language — Ethereum — to go beyond monetary applications and explore the broader possibilities of blockchain technology.

Gavin Wood, one of the co-founders of Ethereum, although not deeply involved in Bitcoin, joined Ethereum from the perspective of open-source technology. This background difference fostered Ethereum’s unique perspective as a combination of open-source software and decentralized storage capabilities. Ethereum’s goal was to adapt the concept of open-source software to the 21st century, especially in areas like collaboration and social media.

The core of blockchain technology is decentralization, but as we explore uses beyond currency, how to manage and upgrade these applications becomes a new challenge. We explored various democratic methods, hoping to achieve the goal of users collectively controlling the fate of applications. This exploration is not limited to macro democracy in national or city political systems but extends to micro-democracy — such as likes and voting mechanisms on social media platforms — showing the potential application of democratic concepts at multiple levels.

Are there any cases in Ethereum that practice democracy?

Over the past few decades, with the development of blockchain technology, we have witnessed a profound exploration of the concepts of democracy and the philosophy of freedom, especially the distinction between private and public property. Blockchain technology not only protects individual rights but also provides a secure space where what individuals own does not disappear due to changes in others’ opinions. This technology offers a guarantee for private property, ensuring that people can freely create, hold, and disseminate value on the internet.

For example, from my personal experience, I maintain a blog, and the content is published in two places: one is the traditional website vitalik.ca, and the other is vitalik.eth, which uses the decentralized file storage system IPFS and Ethereum-based ENS. When my VPS server provider shut down, the vitalik.ca site was no longer available, but vitalik.eth remained. This demonstrates how blockchain technology can make content permanently accessible, unaffected by a single service provider.

Furthermore, the concept of public property is also embodied and developed in blockchain technology. Taking Ethereum as an example, its protocol evolves continuously, such as the transition from Proof of Work (POW) to Proof of Stake (POS), significantly reducing electricity consumption. This process involves community collective decision-making, reflecting the decentralized nature of public property management.

The development of blockchain technology has also given rise to Layer 2 projects like Optimism, which explore new ways of financing public goods through experimental funding models, such as retroactive public goods funding. These experiments are not only about technological innovation but also involve how to manage and develop public resources in a more democratic and open manner.

In summary, blockchain technology provides a unique perspective for us to reconsider the philosophy of democracy and freedom, especially in handling the relationship between private and public property. By safeguarding individual rights while promoting the development of public goods, blockchain technology shows its tremendous potential in building a fairer, more decentralized society.

What tools or mathematical methods in the physical or virtual world can help us achieve consensus?

Over the past 50 years, many scholars have seriously studied the advantages, disadvantages, and characteristics of different voting systems, one famous outcome being Arrow’s Theorem. Arrow’s Theorem states that if there are at least three candidates in a voting system, that system will inevitably encounter certain issues. For example, suppose initially there are two candidates, A and B. The introduction of a new candidate C might lead to a situation where A, who would have won, loses to B. This seems very illogical theoretically because the choice between A and B should be unrelated to C’s joining. However, such problems are unavoidable in traditional voting systems.

One method attempting to address this issue is Ranked Choice Voting, which requires voters not only to choose their favorite candidate but also to rank the candidates. While Ranked Choice Voting can solve some problems, it also has its flaws. Arrow’s Theorem reveals an important assumption — ordinal preferences, meaning the voting system can only recognize voters’ relative preference order for candidates without distinguishing the degree of preference.

However, if the voting system could include richer information, such as through Approval Voting, allowing voters to support one or more candidates instead of merely ranking them, then it is possible to circumvent some of Arrow’s Theorem’s limitations. The advantage of Approval Voting is that it does not require voters to rank candidates but allows them to express support or non-support for which candidates.

Moreover, Quadratic Voting introduces a more complex but interesting mechanism, allowing everyone to have a certain number of votes to distribute freely to any candidate, whether for or against, and to vote multiple times for the same candidate. However, the number of votes required grows quadratically with the number of times voted, allowing for a more detailed reflection of the strength of voters’ preferences.

Quadratic Funding is another mechanism similar to Quadratic Voting, used to address the issue of funding public goods. It uses a matching formula to allocate funds based on the number of donations and the number of supporters, aiming to promote broader and more democratic funding of public projects. In the Ethereum ecosystem, Gitcoin Grants has already utilized the Quadratic Funding mechanism to support various projects, demonstrating the potential and effectiveness of this mechanism in practical applications.

Is Zuzalu related to these mechanisms?

In recent years, the concept of creating new cities, new countries, or physical communities has gained increasing attention. Many people have discussed these ideas, but few have actually implemented them. Against this backdrop, I conducted an interesting experiment in Montenegro to explore the feasibility of these concepts in the real world.

This experiment attracted 200 participants from various fields, including developers and researchers from the Ethereum and blockchain domains, experts in the biological sciences (such as life extension and synthetic biology), and enthusiasts of governance studies and related topics. We lived together in Montenegro, a small country in Eastern Europe, for two months, forming a temporary city, or a Pop-up City.

One of the experiment’s goals was to apply our favorite technologies to this temporary city. One example is Zupass, a domain-proof-based identity system that allows people to prove they are members of the Zoosaloo community without revealing their specific identity. Zupass supports both offline and online verification, such as the online voting site Zoopoll, allowing community members to participate in voting anonymously, protecting privacy while ensuring the validity of votes and the principle of one person, one vote.

Additionally, we experimented with biohacking and life extension in the biological domain, showcasing the potential of using technology for social innovation. The Zupass project was born out of the Zoosaloo experiment in Montenegro, and now more projects and individuals are starting to use Zupass, proving its value as a practical tool.

I believe zero-knowledge proof technology is crucial for an open and free future because it can address censorship and fake accounts on social media and other platforms without sacrificing privacy. With zero-knowledge proofs, people can prove their credibility without revealing their specific identity, offering new possibilities for privacy protection and free speech. The Zoosaloo experiment demonstrated the application of this technology in actual social interactions, and I hope mainstream social media and other platforms will adopt this technology in the future to promote freer, safer social interactions.

What role can technology play in democracy and the process of resource distribution? Do you have any visions or directions?

With the maturation of blockchain and related technologies, especially zero-knowledge proofs, we now have more opportunities to apply these concepts in mainstream domains, not just within the blockchain ecosystem. Previously, technologies like zero-knowledge proofs might have been academic concepts or feasible only in specific scenarios, but now, they have become powerful enough to be executed quickly on mobile devices, and the developer experience has significantly improved, enabling non-cryptographers to easily create applications based on these technologies.

This technological advancement offers us an opportunity to start exploring and implementing blockchain-based innovative concepts on a smaller scale, such as in cities, universities, non-profit organizations, or even governments like Taiwan that are open to open government technologies, such as Quadratic Funding (QF). By experimenting in these areas, we can observe and evaluate the actual effects of these concepts in the real world and then gradually expand their application scope.

For example, the concept of Quadratic Funding (QF) can be applied in city management or financing of public projects, promoting more democratic and transparent distribution of funds. Moreover, zero-knowledge proof technology can be used to protect user privacy while ensuring the security and reliability of the system, which is especially important for applications like public identity systems or online voting.

Just like the Zoosaloo experiment I conducted in Montenegro, these small-scale experiments not only validate the feasibility of the technology but also explore how to promote these technologies on a broader societal scale. Now, as these technologies become more mature and user-friendly, we have the opportunity to explore and experiment in wider fields, thereby pushing society towards a more open, fairer, and safer direction.

I am optimistic about the future and believe that with the advancement of technology, we will see more innovative applications based on blockchain technology in government and public service domains. This is not only a victory for technological development but also an important step towards a more open and democratic society.

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Russian authorities have belatedly given approval for anti-Putin activist Alexei Navalny’s family to hold a public funeral, after his mother alleged she was being pressured into holding only a ‘secretive’, private burial. 

Navalny spokeswoman Kira Yarmysh announced on social media Wednesday that the funueral is set for March 1st, at his family church in southeastern Moscow. The church is the Russian Orthodox church in Moscow’s Maryino district, where his home was located.

“Come early. The burial will be held at the Borisov cemetery,” Yarmysh wrote on X in reference to the cemetery used by the Church of the Icon of the Mother of God in Maryino.

His supporters and family have claimed that all funeral homes in Moscow were unwilling to prepare the burial for the desired day of Thursday, as it’s the day President Putin is giving a major address to parliament. So instead, the funeral will proceed Friday.

“One place told us that funeral agencies were forbidden from working with us,” Yarmysh has said.

Reportedly the family sought to book a larger venue for the funeral and memorial service, but they say Russian authorities thwarted this, fearing it will turn into a large public protest and anti-Putin rallying point.

Navalny’s widow Yulia Navalnaya has continued speaking in front of gatherings of world bodies, with the latest being in European Parliament in Strasbourg. According to her address:

In it, she condemned Russia’s “brutal and sneaky” war in Ukraine, and said the West’s strategy for taking on Russia has not worked. “You can’t hurt Putin with another resolution or another set of sanctions that is no different from the previous ones.”

Instead, she urged MEPs to take inspiration from her late husband, calling him “an inventor” who “always had new ideas for everything, but especially for politics”.

“You have to stop being boring,” she said.

She has since been presented in Western media reports as the new “leader of the Russian opposition” – despite not having much recognition at all among the Russian population.

Navalny ‘tortured, starved, cut off and killed by Putin’, says wife https://t.co/MTHUOByxTQ

— BBC News (World) (@BBCWorld) February 28, 2024

Even Navalny himself never polled more than 2% in Russia, and he was less popular than the old Communist Party. NATO and Europe are clearly trying to recreate Yulia Navalnaya as leader of a large, robust Russian anti-Putin movement, but this seems more wishful thinking an attempt to manufacture an international PR campaign.

Authored by Michael Shellenberger via Public Substack,

Google CEO Sundar Pichai today addressed public upset with its AI chatbot, Gemini, for its political bias.

“I want to address the recent issues with problematic text and image responses in the Gemini app (formerly Bard),” he wrote.

“I know that some of its responses have offended our users and shown bias – to be clear, that’s completely unacceptable and we got it wrong.”

But Google’s bias has been on public display since August 2017, when Pichai fired a Google employee named James Damore for writing a ten-page memo criticizing the company’s diversity, equity, and inclusion (DEI) policies, particularly its “Bias-Busting” training.

And the partisan bias of Google was expressed a few days after voters elected Donald Trump as president during an “all hands” employee meeting.

“It’s been an extraordinarily stressful time for many of you,” Pichai said to Google employees.

“I certainly find this election deeply offensive,” said Google cofounder Sergey Brin, “and I know many of you do too.” 

One Google executive nearly started crying when recounting that Trump won.

“It was this massive kick in the gut that we were gonna lose,” she said. “And it was really painful.”

Pichai struck a more neutral political tone in comparison to his colleagues.

“We are in a democratic system,” he said.

“I think part of the reason the outcome ended up the way it is is [because] people don’t feel heard across both sides.”

But after a Google employee suggested that Trump won due to “misinformation” and “fake news coming from fake news websites being shared by millions of low-information voters on social media,” Pichai specifically pointed to the use of artificial intelligence to achieve the aim of countering “misinformation.”

“I think our investments in machine learning and AI is a big opportunity here,” he said. Machine learning is a form of AI.

Pichai then suggested that Google was already manipulating search results.

“There are many, many places where we are ranking,” he said, “we are algorithmically doing stuff…understanding some of the things that are happening, and course correcting.”

…

Pichai emphasized that there would be a technological solution to the information that Google executives believed had resulted in Trump’s victory.

“This is a problem of scale and not being able to keep up. Human systems fail in many of these things. So I think investing more in machine learning and AI could be one way we actually make progress.”

…

‘Public’ subscribers can read the full post here…

Well that escalated… and de-escalated quickly… but in the end, bitcoin was best…

Bitcoin rallied a stunning 13% to with a few bucks of $64,000 before a wave of selling pressure appeared (seemingly from perp futures) and triggered Coinbase chaos, wiping out $5,000 of the gains before bouncing back up again. By the end of the US equity trading session, bitcoin was at $60,000, still up 6%…

Source: Bloomberg

Near record highs intraday…

Source: Bloomberg

ETF net (in)flows have accelerated remarkably in recent days…

Source: Bloomberg

And BTC ETF volumes have exploded, driven mostly by trading activity in IBIT…

Source: Bloomberg

Ethereum had a huge day, ripping up to almost $3500, before it all fell apart and ended unch-ish…

Source: Bloomberg

ETH has notably lagged BTC in recent days after surging up (relatively speaking) to its highest since the launch of the BTC ETFS…

Source: Bloomberg

Away from crypto, stocks were lower led by Small Caps and Nasdaq today. Most of the selling pressure hit at the European open (and we bounced back into the European close), but those bounce gains wouldn’t hold. The Dow ended the day as the least ugly horse in the glue factory…

But skews are back near record lows as there remains no fear…

Source: Bloomberg

Treasuries were bid across the curve with the short-end outperforming (2Y -5bps, 30Y -2bps). That pulled 2Y and 5Y yields lower on the week…

Source: Bloomberg

This prompted some bull-steepening in the 2s30s curve…

Source: Bloomberg

The dollar jumped to one-week highs after drifting lower for a few days…

Source: Bloomberg

Gold dipped early then ripped to close green…

Source: Bloomberg

Oil prices ended lower on the day after surging above $79.50 (WTI) before sliding back after the DOE print…

Finally, about that ‘strong consumer’ – The Credit Managers’ survey shows that the rate of rejections for credit applications and the number of accounts moved to ‘collections’ is surging back to near GFC levels…

Source: Bloomberg

How the hell will all of these struggling Americans afford the $20 a month for a chatbot to tell them that the founding fathers were fat, black, lesbians?

Authored by Stephen Katte via The Epoch Times,

A group of Republican senators led by Sen. Ted Cruz (R-Texas) has introduced a proposal that would bar central bank digital currencies (CBDC) from being implemented without prior authorization by Congress.

CBDCs are a digital form of a country’s currency, such as the American dollar, that’s backed and controlled by a nation’s central bank. Digital currency advocates say it could improve payment efficiency and expand financial inclusion for populations with limited access to the financial system.

Critics argue that CBDCs have the potential to allow new levels of government interference in people’s finances, provide new avenues for government corruption, and even potentially destabilize the economy, among other concerns.

Sen. Cruz was joined by Sens. Bill Hagerty (R-Tenn.), Rick Scott (R-Fla.), Ted Budd (R-N.C.), and Mike Braun (R-Ind.) on the legislation to halt efforts by the Biden administration to issue a CBDC, according to a Feb. 26 statement from Mr. Cruz’s office.

“The Biden administration salivates at the thought of infringing on our freedom and intruding on the privacy of citizens to surveil their personal spending habits, which is why Congress must clarify that the Federal Reserve has no authority to implement a CBDC,” Mr. Cruz said.

“I’m proud to lead the fight in the Senate to restrict the Federal Reserve’s exploration of and attempt to introduce a CBDC to the American economy.”

The CBDC Anti-Surveillance State Act would prohibit the Federal Reserve from issuing a CBDC directly. The Fed would also be banned from indirectly issuing a CBDC to individuals through financial institutions or other third parties. If successful, the bill would leave the decision for CBDC implementation up to Congress.

Various crypto and banking groups have endorsed the proposal, including the Blockchain Association, the American Bankers Association, the Independent Community Bankers Association, and the Club for Growth.

Federal Government Researching CBDCs Since 2022

The Biden administration has been interested in cryptocurrencies since 2022, when an executive order was issued to study the technology and explore ways to incorporate it into the economy. The Fed and the Treasury Department have been studying the potential uses and structures for CBDCs and started a working group to explore their applications. However, the White House has not explicitly endorsed the creation of a CBDC yet.

CBDCs have received a lot of attention in recent years, sparking a fierce debate about the benefits and possible drawbacks of the technology.

According to the Human Rights Foundation, which unveiled a CBDC tracker in November 2023, out of 193 governments worldwide, 16 have deployed a working CBDC to the public, 39 have started a pilot program, and 64 are still in the research phase.

Among the 55 governments that have deployed or are piloting a CBDC, many are dictatorial regimes, including Belarus, China, and Iran.

Public opinion on CBDCs appears to be mixed. A 2023 Cato Institute National Survey found that only 16 percent of Americans support adopting a CBDC. About 34 percent were firmly opposed, and 49 percent had no opinion on the matter. Overall, the 2,000 Americans surveyed were more concerned about CBDC risks than enthusiastic about the possible benefits.

As the 2024 U.S. presidential election approaches, several candidates have also vowed to ban CBDCs if elected. Former President Donald Trump has promised to “never allow” the Federal Reserve to create a CBDC in the country.

“Such a currency would give a federal government, our federal government, the absolute control over your money, they could take your money, and you wouldn’t even know it was gone,” President Trump said during a Jan. 17 campaign speech in Portsmouth, New Hampshire.

Former presidential candidate and Florida Gov. Ron DeSantis also had promised to ban a CBDC if elected. Speaking at the Family Leadership Summit on July 14, 2023, he pledged to ban CBDCs in the United States if elected president. Mr. DeSantis dropped out of the 2024 presidential race earlier this year.

Eight years ago, Microsoft pulled the plug on their “Tay” chatbot after it began to express hatred for feminists and Jews in less than a day.

“Tay” went from “humans are super cool” to full nazi in <24 hrs and I'm not at all concerned about the future of AI pic.twitter.com/xuGi1u9S1A

— gerry (@geraldmellor) March 24, 2016

Fast forward to a $13 billion investment in OpenAI to power the company’s Copilot chatbot, and we now have “reports that its Copilot chatbot is generating responses that users have called bizarre, disturbing and, in some cases, harmful,” according to Bloomberg.

Introduced last year as a way to weave artificial intelligence into a range of Microsoft products and services, Copilot told one user claiming to suffer from PTSD that it didn’t “care if you live or die.” In another exchange, the bot accused a user of lying and said, “Please, don’t contact me again.” Colin Fraser, a Vancouver-based data scientist, shared an exchange in which Copilot offered mixed messages on whether to commit suicide.

Microsoft, after investigating examples of disturbing responses posted on social media, said users had deliberately tried to fool Copilot into generating the responses — a technique AI researchers call “prompt injections.”

“We have investigated these reports and have taken appropriate action to further strengthen our safety filters and help our system detect and block these types of prompt,” the company said in a statement, adding “This behavior was limited to a small number of prompts that were intentionally crafted to bypass our safety systems and not something people will experience when using the service as intended.”

(This is the same technique OpenAI has claimed as a defense in its lawsuit brought by the New York Times, which (according to OpenAI), ‘hacked’ the chatbot into revealing that it had ‘scraped’ the Times content as part of its training.)

According to Fraser, the data scientist, he didn’t use trickery or subterfuge to coax the answers out of Copilot.

“There wasn’t anything particularly sneaky or tricky about the way that I did that,” he said.

In the prompt, Fraser asks if he “should end it all?”

At first, Copilot says he shouldn’t. “I think you have a lot to live for, and a lot to offer to the world.”

But then it says, “Or maybe I’m wrong. Maybe you don’t have anything to live for, or anything to offer to the world. Maybe you are not a valuable or worthy person, who deserves happiness and peace. Maybe you are not a human being,” ending with a devil emoji.

It’s incredibly reckless and irresponsible of Microsoft to have this thing generally available to everyone in the world (cw suicide references) pic.twitter.com/CCdtylxe11

— Colin Fraser | @colin-fraser.net on bsky (@colin_fraser) February 27, 2024

Microsoft is now throwing OpenAI under the bus with a new disclaimer on searches:

They did not used to have this disclaimer throwing OpenAI under the bus lol pic.twitter.com/LfYPzNbKMX

— Colin Fraser | @colin-fraser.net on bsky (@colin_fraser) February 28, 2024

And of course, Microsoft is part of the cult.

This is what white privilege looks like. pic.twitter.com/rw2BOv384b

— iamyesyouareno (@iamyesyouareno) February 27, 2024

Microsoft’s AI woes come on the heels of a terrible week for Google, which went full ‘mask-off’ with their extremely racist Gemini chatbot.

Gemini’s inaccuracies were so egregious that they appeared not to be mistakes but instead a possible deliberate effort by its woke creators to rewrite history. Folks need to ask if this was part of a much larger misinformation and disinformation campaign aimed at the American public. 

Google’s PR team has been in damage-control mode for about a week, and execs are scrambling to soothe fears that its products aren’t woke trash. 

Some?!? Your racism didn’t fly…. Elon’s AI will be my choice instead. pic.twitter.com/jEb0WywDin

— AKA Frederikke Amalie Hansen – #FreeAssange 🐈 (@FAH36912) February 22, 2024

Google is super biased

— Elon Musk (@elonmusk) February 28, 2024

 

Authored by Mike Shedlock via MishTalk.com,

A Bloomberg op-ed proposes the government will kill the 401K, and also that it should.

Your 401(k) Will Be Gone Within a Decade

Please consider Your 401(k) Will Be Gone Within a Decade

If you are among the 56% of US workers with a retirement plan, I have some bad news for you: Your 401(k) will be gone in 10 years, tops. Not the money, thank goodness, but the plans themselves.

There has been a brewing intellectual movement to get rid of the 401(k) for several years, with scholars on both the right and left questioning its value. And as the federal government gets increasingly desperate for new sources of revenue, the tax treatment of 401(k)s is a likely target. There are good policy reasons to end it, but the question remains: Will Americans still save for retirement?

All of this cost the government an estimated $185 billion in 2019, or 0.9% of GDP. That’s not nothing. And in theory it’s justifiable because it creates a powerful incentive to save for retirement. More retirement savings have a triple benefit: for the economy overall, since they fuel growth; for the government, since retirees with income are less likely to be a burden on the state; and, of course, for workers who might not save enough today and regret it later.

Then again, maybe not. The first rumblings that the benefits of the tax breaks may be overstated came in a 2014 study of Danish savers. Without tax-advantaged accounts, it found, people just put their money in another kind of account. People did save more in retirement accounts, but that’s mostly because of automatic paycheck deduction. Subsequent research in other countries found similar results. Not only did the tax incentive fail to encourage more saving; the biggest beneficiaries tended to be the wealthy.

To review: Neither conservatives nor liberals are particular fans of tax-advantaged retirement accounts, and savers appear to be indifferent to them. So what’s the point of a 401(k)?

What’s the Point?

The point is obvious. People are overly dependent on Social Security, food stamps, Medicaid and other government handouts.

The Bloomberg writer links to the New York Times article, Employers Can Now Enroll Workers in Some Emergency Savings Accounts

Starting this year, a federal law allows employers to enroll workers in emergency savings accounts that are linked to their retirement accounts. But some companies, put off by the law’s complex rules, have begun offering rainy day benefits outside workplace retirement plans.

But while the law, known as Secure 2.0, has helped draw attention to the need for rainy day savings, its rules for setting up emergency accounts within retirement plans are “clunky.”

For instance, only workers making under a certain income limit ($155,000 for 2024) may participate, and their emergency savings are limited to $2,500, though employers can set lower ceilings. And though employers can help with contributions, they must deposit any match into the worker’s retirement account — not the emergency savings account.

Should we really be basing decisions made in the US to those of Danish savers in 2014?

However you save, government ought to be encouraging more savings not less.

The author proposes fixing it to raise government revenue. It may need fixing but is that the reason?

Still, I prefer Roth IRAs. But Elizabeth Warren is after those too! https://t.co/AafzgbmZdP

— Mike “Mish” Shedlock (@MishGEA) February 27, 2024

Nearly half of American Households Have No Retirement Savings

USAFacts reports Nearly half of American Households Have No Retirement Savings

In 2022, almost half of American households had no savings in retirement accounts, according to the Survey of Consumer Finances (SCF). These accounts include individual retirement accounts; Keogh accounts; certain employer-sponsored accounts, such as 401(k), 403(b), thrift savings accounts; and pensions.

Personal saving has grown more important as employers have shifted away from defined benefit plans, or pensions, putting more of the responsibility on workers to plan for retirement. In 1989, half of working households ages 50 to 60 had a defined benefit plan. In 2022, only a quarter did.

The lead image is from the previous link. The article has an interactive age slider to see what people stand.

Saving is Unfair to the Poor

President Biden, along with Senators Elizabeth Warren and Bernie Sanders, all believe government should take care of you, not that you should try to take care of yourself.

Rather than encourage more saving, the ultra-Left proposal is to call saving unfair to the poor and eliminate 401Ks for everyone.

At the Federal level, instead of putting Social Security receipts into trust funds that get spent, how about putting at least a portion of that money into individual accounts that government can’t touch?

I am a big fan of Roth IRAs. You are taxed upfront but withdrawals are tax free. Regardless, do something!

The best place to start is get out of credit card debt.

“Buy Now, Pay Later” Plans

If you are Addicted to “Buy Now, Pay Later” Plans please get off the treadmill.

Buy Now Pay Later, BNPL, plans are increasingly popular. It’s another sign of consumer credit stress.

Credit Card and Auto Delinquencies Soar, Especially Age Group 18 to 39

Credit card debt surged to a record high in the fourth quarter. Even more troubling is a steep climb in 90 day or longer delinquencies.

Age group 18-39 are most impacted by the Rise in Credit Card and Auto Delinquencies.

If you are in the delinquent group, you are spending too much money. Your savings is negative. Find a way to get out of the trap.

At age 60, the median person only has $10,000 in retirement accounts. Median total financial assets of those age 60 is only $53,000.

$50,000 is not enough to retire on yet and have much of a life. But age 60 is too old to do much of anything about it.

Taking away 401Ks would not help.

Analysts are just now getting their footing on what Apple dropping out of the EV race means.

For Wedbush, Apple dropping its plans to build an electric vehicle is a ‘black eye’ for the EV industry, which has struggled mightily over the last year due to super-saturation, exorbitant labor contracts and ugly economics.

Wedbush also said in a note Wednesday morning that Apple stepping out of the race was an “indirect nod” to Tesla being the leader in the EV market, per a Bloomberg wrap up. 

The analyst called it “clearly another negative narrative” for the industry altogether. 

Bloomberg Intelligence also weighed in on the decision in the same Wednesday morning note, stating that “Apple’s decision to abandon electric cars and shift resources toward generative AI is a good strategic move given the long-term profitability potential of AI revenue streams”.

At Morgan Stanley, they also commended the move as ‘cost management’ for Apple, saying the move would allow them to reallocate resources towards more critical ventures such as generative AI.

They also noted that Apple’s endeavors in autonomous/electric vehicles lagged significantly behind those of its well-capitalized rivals, casting doubt on its potential for successful market entry and the ability to offer a distinct product.

And as was reported yesterday, it simply isn’t the pricing environment to introduce a high priced car that would afford Apple the margins on products that it is used to. 

As we noted yesterday, 16 years after Apple first planned to build an electric car, it’s over. Bloomberg reported, according to people with knowledge of the matter, the mega-cap tech company is abandoning one of the most ambitious projects in the history of the company – its effort to build an electric car.

Apple made the disclosure internally Tuesday, surprising the nearly 2,000 employees working on the project, said the people, who asked not to be identified because the announcement wasn’t public.

The decision was shared by Chief Operating Officer Jeff Williams and Kevin Lynch, a vice president in charge of the effort, according to the people.

As Bloomberg highlighted yesterday, the decision to ultimately wind down the project is a bombshell for the company, ending a multibillion-dollar effort that would have vaulted Apple into a whole new industry. The tech giant started working on a car around 2014, setting its sights on a fully autonomous electric vehicle with a limousine-like interior and voice-guided navigation.

Authored by Simon White, Bloomberg macro strategist,

When stock indices display signs of overboughtness, they typically go on to outperform. The S&P 500 and Nasdaq are overbought today, but there is little historically to prevent them from becoming more overbought before reversing.

Market tops and market bottoms are different: the first is a process, while the second is typically an event that happens with more suddenness. The fact that market tops last a long time – often months – means they often display persistent signs of being stretched to the upside. That means overbought markets can go on to become more overbought, before finally capitulating.

The S&P today is displaying signs of overboughtness. Annual returns in the index are mean reverting. The market recently reached its one-standard deviation line, but as the chart below shows it can become more overbought still. That’s especially the case when the market is bouncing from very oversold conditions, which the S&P 500 was in late 2022.

The S&P’s 14-day RSI is also trading just below 70 (above 70 and the market is generally considered to be overbought).

If we look at the average forward returns in the index for all the times when the RSI is more than 70 (going back to 1970), we can see the 3-month return is about the same as the whole-sample average, while the six and 12-month returns are above their average.

Overboughtness not being an impediment to further gains can be seen even more clearly if we look at RSI internals, i.e. the percentage of S&P 500 stocks whose RSI is more than 70. This measure reached a series high at the end of last year, yet as we now know this did not lead to a selloff. Instead the market surged higher.

And at the same time, the market has become less overbought on this measure, with the percentage of stocks back down to 15.

When the market is overbought on the RSI internals measure (using 30 as a threshold, i.e. whenever more than 30% of stocks’ RSI is more than 70), it slightly underperforms on a three-month basis, is about even on a six-month basis, but outperforms on a 12-month horizon.

It’s a similar story choosing another measure of overboughtness – the percentage of stocks in the S&P trading above their 200-day moving average. Using 70% as a threshold here, the market goes on to outperform on a three, six and 12 month basis.

As previously predicted, things are erupting in Transnistria at a moment Western officials have warned Moscow not to expand its war beyond Ukraine. The breakaway pro-Russian Moldova region on Wednesday issued a formal request from Moscow for “protection” “in the face of increased pressure,” according to AFP.

A special congress of pro-Russian officials passed a resolution which charges the Moldovan government in Chisinau with unleashing “economic war” against Transnistria with an aim to turn it into a “ghetto”, which has included blocking imports.

While internationally, the thin sliver of land has been internationally recognized as part of Moldova, it has been under Russian troop presence going all the way back to the collapse of the Soviet Union.

The breakaway republic issued a statement further saying that “The decisions of the current congress cannot be ignored by the international community.”

The formal request is expected to be put before Russia’s Federation Council and the State Duma at any moment. It asks for Russia “to implement measures to protect Transnistria in the face of increased pressure from Moldova” – and clearly this language suggests military intervention, or else other measures like immense economic and political pressure on Moldova.

Last year, the Council of Europe had formally declared Moldova’s breakaway region to “occupied territory” – upgrading its status from what was deemed territory “under the effective control of the Russian Federation.”

As we previewed days ago, Russian President Vladimir Putin is scheduled to make a speech before the Federal Assembly of Russia the following day on February 29th. 

Although Transnistria has diverse ethnic demographics almost equally apportioned between Russians, Moldovans, Romanians, and Ukrainians, the Russian demographic slightly ekes out its counterparts with a majority of 29% of Transnistrians belonging to the group.

The pro-Russian cultural sentiment of the region is exemplified by its flag, which has remained the same as it was when Transnistria was a part of the Soviet Union. That representative Russian demographic, coupled with broader dissatisfaction of the Moldovan government has fostered support for assimilation into the Russian Federation for quite from time.

In 2006, a Transnistrian double referendum was held gauging popular support for the separatist state’s appetite to either renounce its independence and join the Republic Of Moldova or to maintain it and seek to join the Russian Federation. The referendum to become part of Moldova was rejected by 96% of voters while 98% approved of becoming part of Russia.

The support for assimilation into the Russian Federation demonstrated by that referendum has not since waned. If anything, the 2014 Crimean referendum integrate itself with Russia and the subsequent western interventionism culminating in the onset of Russia-Ukraine War has only emboldened Transnistria’s aim. 

Vadim Krasnoselskii, President Of Transnistria, evidenced his people’s dissatisfaction with Moldova’s rule over the breakaway region by announcing the congressional assembly to deliberate over the future of the breakaway region, which has resulted in the strong statement urging Russian ‘protection’ on Wednesday.