Banking Disrupted: An Exploration into the Digital Evolution of Finance

Ever wondered why Silicon Valley Bank took that risky decision or where the Peer-to-Peer model stumbled? Buckle in as we journey through an era of transformational changes in the banking sector with Emmanuel, the author of 'The Great Transition: Personalization of Finances Here'. We challenge the norms, revealing how digitizing the deposit business is reshaping wealth creation and confronting the evolution of familiar financial products. 

Don't miss out on our intense discussion on the societal implications of the platform economy as we grapple with questions of artificial intelligence and ethics. We question the fabric of our rules and regulations, exploring their power to both enable and restrict our freedoms. From the role of influencers in the digital world to the impact of the metaverse, we leave no stone unturned. 

Together with Emmanuel, we raise thought-provoking questions and seek answers, leading us to ponder the influence of icons in the network world and the transformative power of fiction in shaping new realities. By the end of this riveting discussion, you'll find yourself with more questions, a renewed curiosity, and an eagerness to continue exploring these modern-day finance conundrums. So, are you ready to challenge the status quo of the banking world?

Thanks for listening. Please check out our website at www.forsauk.com to hear great conversations on topics that need to be talked about. In these times of intense polarization we all need to find time to expand our Frame of Reference.

Transcript

Speaker 1: 0:04

Welcome to Frame of Reference. Informed, intelligent conversations about the issues and challenges facing everyone in today's world. In-depth interviews to help you expand and inform your Frame of Reference. Now here's your host, raul Labresch.

Speaker 2: 0:21

Welcome, folks, to another edition of Frame of Reference Profiles and Leadership. Last week, I began a conversation with someone that I began a conversation with back in May, I believe, of this year. He was in Dubai at that point. Now he's in Singapore, and we were just talking while we were off the air, off recording that he's now heading from here to Beijing and then to what was the next place after Africa, to Africa. Okay, okay, which is we actually? There's some really interesting things going on in Africa as well, but he is the author of a book called the Great Transition a Personalization of Finances here and is in the midst of writing a second book called the Winning Civilization and Emmanuel.

Speaker 2: 1:03

Thank you again for being my guest and being so gracious with your time For someone that is only going to be home for five days. I hope that your family is forgiving me for taking up any of that time right now. So, but so we started talking and got into. I'm just always amazed at the twists and turns and and additional topics that come up through our discussions, but one that that we've kind of talked around and is of concern to me, I guess, in terms of this transition that we're making from, you know, centralized banks to individualized personalized banks, banking or transactions is the process of displacing those banks and or power brokers the middle people, if you will that currently profit, you know, substantially from being in that position, from being the ones that provide a resource you know and ability to be a part of a collective where their money, their assets, is held.

Speaker 2: 2:13

And even though that process is obviously broken and we had talked about Silicon Valley Bank, and part of the problem with Silicon Valley Bank was the people making the decisions of what to do with those assets, to far greater risks than, in retrospect, were, were they should have made. But their motives were the same motives that have been motivating people in that industry forever, and that was greed. You know their, their desire to amass more wealth through the. You know their ability, their astuteness, their acumen in the world of finance and taking a risk on things that, had they had any vision of what that would mean, down the road they would have maybe hedged a bit more than they did. So how do we break that when it has so much amassed power at this point? And will they let us break it?

Speaker 3: 3:08

So so one of the so one of the themes that I wrap my mind around in the book or you know, the personalization finance is here is the end of intermediation that, technically, you and I, transacting with each other, do not need an intermediary. We do not need a bank for payments or transfer of assets, you know, for borrowing from each other, and the technologies for all this exists today. It's not like we're talking about something that we wish exists in the future Peer to peer platforms, for example and in the first 15 years of the end of intermediation, intermediation didn't end. It had its life extended somewhat. That's a lot to do with regulation, which insists that we need to use the licensed intermediators instead of going off and building our own digital ecosystems. And the second reason they've existed is that the new players that promise decentralization or they call them, in finance, decentralized finance were not as decentralized as they claim to be, which is, if you're dealing with Ethereum as a cryptocurrency, you actually dealing with the Ethereum foundation that holds the whole relationships together, or by Nance, you know that you're actually dealing with, by Nance, the corporation. So the role of the platforms continued to, you know, to function. Then the question is you know how is it that we are now in decentralized finance and we still need an intermediator to either provide liquidity or validity of the transactions? And the interesting thing is that some of the regulatory actions in the US, like the SEC trying to call cryptocurrencies a security and to take the exchanges to task, had the effect, the cathartic effect, of purifying them and keeping them, taking them back to the road of decentralization. So the decentralization of finance, the deconstruction of the intermediary function, is a work in progress and it's taking a long time building because it's being distracted by certain human activities, such as regulation, as well as by the nature of society itself to aggregate information around certain players, because they provide us the safety, the security you know, and they validate the parties with each other.

Speaker 3: 5:56

Now, what's interesting about the power of the ability to process information that chat, gpt or, you know, generative pre-trained transformers are creating for us and large language models and neural networks, is that it's increasing the power of the ability to transfer to, to process information. And when you add power to the ability to process information, there is new meaning that is being created in the transactions. So if you take a peer to peer platform, for example in the US. You have so far and and and in a prosper. These were the first versions of the peer to peer platforms that you know.

Speaker 3: 6:44

Guess what, after 10 years of being disruptor in finance, they all just threw in the towels and they said you know what? We're going to apply for a bank license. And almost all the peer to peer players ended up, you know, applying for bank licenses. And then you scratch your head and say so, what happened to the peer to peer model? You know. And what went wrong? And you know. And where is it going now?

Speaker 3: 7:10

So with new processing technology, the future of peer to peer platforms is not the product that sits on the platform. So the thing about prosper and so far and all the other peer to peer platforms was that in the original iteration, while they said that you now don't need a bank, we can bring a lender and a borrower of money for a mortgage to make a transaction, they still call the product of mortgage. In other words, it had all the characteristics of the original mortgage that the banks were selling, you know, and they couldn't imagine it as anything other than the mortgage. So when somebody wants to buy a property, he goes out there, you know, he puts a lien on the property and then and then he gets the title deed to that as a mortgage. Now, when you put a lot more information, our processing capabilities, on the information, the product changes from traditional banking products like a mortgage, into something totally different that can be constructed between the parties interacting with each other. So what I say is that the conversation is the product. Okay, so when you talk, when you think about the future of finance, the future of intermediation, it's now time to start thinking that what the best thing that any platform can do is to bring as many users as possible and make them talk with each other. And the more they talk with each other, the more the you know, the learning platforms will be able to generate meaning, from which they will create products that don't exist today. Okay, so what I tell bankers is that when the product doesn't change, nothing changes. So if all the technology that you're putting into into digitization is designed to sell the same products that you've been selling in the analog world, it means that, despite all the technology, nothing changed.

Speaker 3: 9:32

So when we look at what happened to Silicon Valley Bank, they thought that what they had on their books was a deposit account, the liabilities business. What they didn't realize is that once you digitize the deposit business, it starts to take on new characteristics. That requires you to define it something other than deposits. So in the old days, deposit means you give the best possible interest rates to your customers, they leave the money with you and then you lend it to other people. But money is digital. The interest rates that you give are not interesting enough for people to want to leave the money with you at all. The only reason they leave the money with you is not to generate wealth, but as a platform for utility. In other words, when people are able to use the money that they leave with you as a deposit for their digital transactions, for their payments and so on. The aggregate of that is what you call deposits, and when you digitize it, that deposit is turbocharged, it's dangerous, it can evaporate on you and you need to figure out where it's taking you.

Speaker 3: 10:53

So that is why today, there is a large and growing digital wallet industry that has everything from traditional bank deposits to cryptocurrencies on the other extreme, and all of these have a similar function in there, which is the utility, the utilization of deposits for digital transactions and the value of the player is no longer based on how much interest you give.

Speaker 3: 11:23

In fact, banks really don't give any meaningful interest anymore. It's not possible to become rich on the back of a bank deposit today. So and the rules of the game have shifted and the banking industry hasn't figured it out yet. They are still looking for excuses why Silicon Valley Bank failed on the balance sheet, which is a valid reason and an important reason, but they're not paying attention to the transition that the industry is making, that one day, all the same elements on the balance sheet will have a different function than they used to have in the analog days. So the long way to answer your question is as to whether how intermediation will evolve, is that it is evolving and it's looking for new forms and new purposes. And we will know that it's made the transition when the products start looking differently, and then they're coming to that very, very shortly.

Speaker 2: 12:28

So mortgages won't be mortgages anymore.

Speaker 3: 12:30

There'll be something else, completely different, that assigns a value, perhaps even on different characteristics than what we yeah, we talked about it last week which is, imagine what a mortgage would look like if a young kid you know a Gen Z or a Gen A, you know also a Gen is able to complete a mortgage in three. You know push of a button on the phone and what used to take three months to get validated what took three months to get validated.

Speaker 2: 13:07

Sorry, did you lose me there. You just paused for a moment and now you're back. You're fluent again.

Speaker 3: 13:14

And what caused three months to be completed on a mortgage transaction, whether it's the need to look for caveats and liens on a property and so on, before the lawyers release it for transmission. And once all of that information is digital and a kid is able to complete a mortgage transaction in a second, what do you think mortgages will look like then? It will be a plain thing. It won't be something in which you are going to build. Well thought you might slip mortgages three times a day. It's highly liquid and the information on the mortgage is out there for everybody to see. So we are coming to that world where the products that we become accustomed to are going to start looking very, very different.

Speaker 2: 14:02

So won't there, even in that sort of interaction, still be a need? For? I'm trying to think about how this works because if I'm the mortgagee, I can sell mortgages and I can, as you said, push them with almost instant kind of transaction, but I'm still as the person that has to pay that mortgage. Who do I pay it to? If the owner that was the owner this morning is now something else, won't there be a need for some sort of centralized hub, if you will, in which that hub may just have different spokes depending on the time of the day and the person that's decided that they want that particular mortgage for that particular residence or building or whatever? Won't that function as, or won't there still be a need for, that kind of intermediary, because I have to certainly pay for that asset?

Speaker 3: 14:58

Yeah, that side of the balance sheet also changes, because you will not be taking a mortgage for 30 years of your life. Your source of funding will not be just one source, because you have access to so much information that you can break down your mortgage into various top types of lending or borrowing. Part of it can be a long term loan, part of it can be a short term lease. Another part of it can be turned into a timeshare. There are lots of things that you can do on the other side, the liability side of the balance sheet, to be able to fund the mortgage. And then your purpose of having the mortgage comes into play. Which is your purpose to save up for a 30-year asset, or is your purpose to flip your asset in the next 30 days? So both sides of the balance sheet starts to change, and it's us, that the older generation that is not able to imagine this. It is the generation that is being born today that are native to digital assets and native to a whole amount of information being thrown at them, which to us, when we look at the TikTok account, we say it's so distracting, it's so much information being aggregated into one minute, and when you think of that amount of information being aggregated on a mortgage portfolio. It starts to look different and the purposes for which people transact it starts to be liberated, in that they will be able to use it for whatever purpose they want and, at the end of the day, what a Gen Z or a Gen A considers to be an asset of value is going to be very different. It's already very different, in fact. This is the other thing that we talked about, I think, which is your influencer, and an influencer has a value to it. What is an influencer? It didn't have a value before that, and it's got a serious value. It's an economic value that can pay your bills for a long time, so it's career now and therefore your lifestyle and what you consider to be valuable changes. A lot of it has to do with the symmetry of information, which is the information that you have, I have, and that we both become richer because we both have the same information, and when we make that information available to everybody else, that's when that information becomes more valuable. So your question is to how will the intermediation business disintegrate? It's when you start throwing more information into it.

Speaker 3: 18:02

In fact, I do say this in my book, by the way, that Adam Smith said that the most productive form of business or operations is the small business, it's not the large corporation.

Speaker 3: 18:16

And the reason is the small businesses keep their costs to themselves, they have control over the inventory and so on. But what happened was it was the large businesses that aggregated the information and aggregated the profit of any enterprise. And then, about 300 years later, in the 1970s, there was another and I say this in my book Ronald Koss, the Chicago economist, who said why is it that the small business didn't thrive and why do we now exist in the world of big businesses? And the reason was that in Adam Smith's time, right up to the 1970s and even up to today, there's a dissimetry of information that the small business doesn't have access to, information such as the cost of labor, the cost of raw material, and so he's always dependent on somebody else, whereas the large businesses aggregate all of these values and therefore have a bargaining power that a small business doesn't have. So we are going back to the ability to liberate the value in the individual, to have the same power as the large industry. And that's what information is doing to society to finance the whole intermediation game.

Speaker 2: 19:44

Let's do that to education as well. Teachers used to be able to stand up and just be able to stand up and just espouse facts that now can be fact checked all over the place. Where I come back to with so much of that, though, is and we talked about that a bit in the first episode is that the value of lying becomes decreased because it interferes with the accuracy and the importance of information, because it devalues the information, but what it has done is it's also produced an incentivization for narcissism. So my question is then how and I think you've alluded to it that the systems don't exist yet and are perhaps becoming rapidly, if not at light-year speed. More important are to determine the code of conduct or the rule set that will be utilized by people participating in this new economy, because without some sort of framework that says this is okay, this is not, if you do this you're penalized, if you do this you'll be rewarded. That just human nature seems to require that sort of framework in order to coexist.

Speaker 2: 21:06

I come back to Star Trek again, the world in which there is insidious, in which there is incentivization for being a positive contributor to society, versus there is no crime anymore. In that world. There is no conflict because the profitability of it long ago faded, when everyone had their essential needs met and there was no need to do anything other than increase the value of yourself through learning and skill sets and things that you found interesting, which is interesting, kind of a form of Marxism, and every time you bring up Marxism it becomes oh, you're a communist and I always think have you ever read anything? So how do we get to that place and who determines what that rule book is, what it contains and what it does not?

Speaker 3: 22:01

You know, raul, during the early days of the platform economy, and that's the last 20 years, america was the firstborn child of the platform in the day. And all the deceivals, the issues that we saw in the US in the last 20 years, the polarization of ideas in society, the silos that were formed and the accentuation of biases all of that is the result of the platform economy. It creates echo chambers. That accentuates biases, like you wouldn't believe, and we saw that all played out in the economy or the politics of the US. And the US was using a structure in politics that was created in the 1700s to deal with problems that were arising in the 20s In some of the other countries had sort of modified the structures to contain, to absorb the issues that were being created. And one of the issues is this that Minority communities that were considered economically insignificant and intellectually too small scale to be of influence on the national stage, all of them got accentuated, so all of them were being heard and were becoming players on the national platform and the political system chose only either this or that. It reduced all of them into the lowest common denominator and so you get ridiculous outcomes. Which is the person or the leader, who is the lowest common denominator, who actually gets the national stage, whereas in Europe, for example, there's all these proportional representation and alliances and so on, help to absorb all these different interest groups that get a platform in a platform economy. So America didn't deal with it well, but that's only because it took the brunt of the platform economy in its face. It was the cold face of the platform economy. A lot of the other countries in the world could pick and choose what they liked about the platform economy and they could even shut down aspects of it. So you have countries like China which can have entirely shut down parts of the ill effects of the platform economy that they didn't want to influence them, and they look a lot more organized as a result. That doesn't mean that they found the answer. It's just that they bought a little bit more time for themselves.

Speaker 3: 25:10

Now we're entering another phase where, with even more information that's processed in real time and it's now not even platform anymore, each of us is a platform. I can create a community around myself. You can, whether it's on crypto or blockchain, the empowerment of the individual and then you get a whole new set of factors that we now need to digest and then see how it's going to be playing out. And the most important indicator or symptom of the empowerment of the information age, as we talked about, was deception. In fact, the interesting thing is this that someone said this that the crime in the market space was test. The crime in the network phase is deception, and in the network phase, you and I can decide to be different things to different people.

Speaker 3: 26:26

In the digital phase, we can decide to transact differently. In the market space, you are you and you will always be you and I'll be me and I'll always be me. And so the early days of the platform age was in the market space, where platforms were used to transact. You got the Amazon, where there's a buyer and a seller transacting with each other, and it was very important that there was only one you and there's only one me. But in the network phase, with avatars and with multiple identities, you could be different things to different people. And it's an important part of your, of your self worth, which is that you have multiple identities in the network, in the network universe, and that gives you incredible amount of power to interact and to create communities, different communities that are relevant to you.

Speaker 3: 27:27

Now, how will all of these different communities come together to make a consensus, to agree on something? Those rules are not written yet. In fact, the problems that will create those rules haven't happened yet. And once they start happening, america once again will be on the cold face of the next iteration of the information age. And in some ways I'm grateful that it's the US, because it's decided for itself that it will not hold back on information, it will not censor information, it will not curate information, that all players have equal access to it. But the US will pay a huge price for that, for that set of values, you know, helping them navigate, helping the US to navigate its way through. Nobody has the answer, and it is. Any society that wants to embrace artificial intelligence and the network economy fully will have to pay a price. So we haven't got there yet, but the early days is not very promising because there are no structures yet put in place to curate the process.

Speaker 2: 29:03

Right and we so desperately need those structures in order to constructively build a future which will be, frankly, worth living in. It strikes me that it is. Well. It's part of what people have talked about AI being so dangerous is that we don't. Yet it's all happening so quickly that we don't really understand the implications, all the implications that that technology and that moment of reasoning that computers are going to develop. That will their morality, will their code of ethics be one that, if we assume that it's the same as ours, then there could be very positive benefits. If we assume that they will look at our code of ethics and morality as being preposterous because no one follows it, or at least not everyone follows it, then will we become like an anthill that's in the way of a superhighway. They're interesting a little bit, but they're so passe. Now we've moved on. So I don't know. I strive, I wish that there could be some set of mutually agreed upon, and I think some, except the Ten Commandments, were that for a while I forget.

Speaker 2: 30:30

There's a series of laws within the Mesopotamian culture that were, you know, hanorabi, is it?

Speaker 2: 30:39

Yeah, hanorabi, you know that. You know, and those were an attempt by larger groups of people to come up with behaviors, and you know ways of conducting oneself that were yeah, yeah, and they are restrictive of our freedoms, which you know, America oh, you can't restrict my freedoms but they also make it possible for us to coexist in the same places without the kind of, you know, as you've said, we're taking it in the face right now in America because we've allowed opinions and you know influence, because there are people with opinions that have very great influence, but they're based on lies. You know the influence that they're utilizing is based on a set of biases that appeal to one group of people and are absolutely detestable to another group of people. You know so we get into the whole argument of well, what's truth your truth may not be my truth that we're in such a precarious place right now, not only in the US but, I think, across the world, and so how do we discern what's?

Speaker 3: 31:46

real. The problem with rules is like this, and this is the example that I use If you took a photograph of New York City, a street in New York City, in 1901, you'll see lots of horse-drawn carriages on the streets, you know, on Broadway, you know on any of the streets on Fifth Avenue. And then the photographs of those streets, you know, you just need to Google them, it's there. And then you and that would be the one motor vehicle that every Ford had released. Okay, and guess what, in 1901 or 1902, all the rules were stacked against the motor vehicle, not the horse carriages, right?

Speaker 3: 32:29

And the reason is the motor carriage was heavy, it was noisy, it damaged the roads, it frightened the horses, you know, and it was uncomfortable, you know, and it was not a gentlemanly thing to be using. It's a novelty. And then you take a photograph which is 1910, okay, just 10 years later, and you'll see the streets are full with motor vehicles and very few horse-drawn carriages. And today, of course, in New York, you would find the horse-drawn carriage just one, you know, flying the tourist route, and then everything else is, you know, vehicles. So what happens is that as the vehicles became quieter, lighter, you know, didn't damage the roads more comfortable, much faster. All the rules that were stacked up against the motor vehicles started to just fall apart. There was no reason to apply them anymore. You know, they weren't frightening the horses there were not many horses anyway, and they were cheaper to buy than to have a horse-drawn carriage and the rules just peeled away.

Speaker 2: 33:40

Well, and the rules became a whole different set of rules right Over time.

Speaker 2: 33:44

You have to have turning indicators and you have to have speed limits, and you have to have seat belts and you have to have, you know, crash bags and all of the things that we've demanded as consumers are built around that new set of things. And now we have, you know, automated cars, you know self-driving cars, that we have to develop a whole new set of rules for those. Now, right, so yeah, the thing does seem to determine the set of rules that apply. And so here we have, you know, a whole new environment, a whole new construct of personalization of banking. So there, you know, as personal as it needs to be and as individualized as it needs to be, it also needs to be, you know, ruled by, to some extent, by a set of commonly agreed upon principles. You don't cheat people out of things, you don't. You don't treat people like you know they're idiots, you don't. You don't behave in such a narcissistic way that you know you're only building your own wealth at the expense of other people's livelihoods. You know greed and fear.

Speaker 3: 34:44

You know, raul, I'm a big believer in society's ability to respond. You know I'm a big salsa of dancing fan. Okay, I spent 10 years learning this. This can't think. You know, I was two left feet, I couldn't dance. And then I, you know, I went for class and after one year of learning I couldn't I had no guts dance on the on the ground, on the on the dance floor, and then, over time, my, my, my sense of confidence built.

Speaker 3: 35:18

And something that I learned about dancing is, which is magical is that if I went to New York today and I my dancing lessons were a lot in Singapore and Beijing and then if I went to New York today, a cross body lead in New York is exactly the same as the cross body lead in Singapore, a cross body lead in Colombia, which is where salsa you know the two step, sorry. You know, one of the forms of salsa was formed, was, was originated. Cross body lead is the same, and then chou fla is the same anywhere in the world, in Berlin and in Argentina. Then you ask who put these rules together? There is no global council of salsa dance steps instructors.

Speaker 3: 36:10

There is no governing body at all and yet, on one and on two and then on top of it, is able to absorb variations and evolve into new forms of dancing, like Kizomba and Zook. It's not just static, it just keeps moving and as it evolves, everyone around the world understands the rules as they evolve. And then you look around me and I can't find the guy who puts it together. And that's because in that universe rules are created and commonly understood. So what I've seen in the dancing scene, it gives me faith that human society is able to organize and in some ways it's governments that get into the way and distort that organization capability that human society does have that tendency towards forming normality in the interactions with each other. Courtesies are the same anywhere in the world. You don't have to teach it. People understand that when you stand up for a lady, you're being kind or you open the door for somebody, it's just thought. So we need to lean a little bit on the human capacity for organization and not think that everything is created by state. And in many instances state is the problem because it's self-serving and it's got agendas which are not commensurate with what everybody else wants to achieve.

Speaker 3: 37:51

So I think that in finance I see this a lot that a lot of the so-called innovators and the disruptors in finance have finally came down to say that you know what we need to be regulated in order to give us a certainty in the trust. But that's only going so far, because there's a world beyond regulation. There's a world beyond the need for a third party to regulate you, that you are able to be self-regulating, as it were, but not in the way that self-regulation is usually referred to, which is usually an interest group that is again organized as a formal structure to regulate that communities have a way of finding the common ground. We need to have a little bit of faith on that to know that we need to lean on that, because, coming from Singapore, when people here want to think about entrepreneurship, their first response is the government must encourage entrepreneurship. That's exactly what entrepreneurship is not. So the idea that something has to be formally regulated to give it shape is something that we need. We shouldn't get too comfortable with that. It's the easy answer out.

Speaker 2: 39:19

You make me think as you're talking and this is one of the primary rules of interviewing that I shouldn't be breaking but it strikes me that the regulator will come from the arts. It strikes me that when I think of things like a Taylor Swift concert going for I forget what they're selling the seats now behind the stage for some astronomical amount of money, like hundreds and hundreds of dollars, because people just want to be a part of that. Because Taylor Swift is a very talented artist, because Taylor Smith's songs speak to a wide variety of people, because her artistry inspires people, just like art. Art has become one of the great methods of raising wealth now, because people have found a way to contribute to parts of various pieces of art and as art increases in value, their investment increases in value. But then I think of theater, which is where my training is, and theater's great skill sense, the Greeks and who knows before that that just isn't recorded.

Speaker 2: 40:25

One of its great abilities is to not only tell the stories of humankind that are important to the groups. So whether it was telling the tale of the great buffalo hunt that you just returned from and the people that were able to really illustrate how big the buffalo was, and how the buffalo came charging at us and we threw. Those were the people that were. Oh, I love it when he comes back and tells those stories. So not only the story aspect and the communication of history, but the other thing that theater does, I think, better than anything else any other art form, is that it represents the realities of human beings in ways that are universally translated.

Speaker 2: 41:04

I don't have to necessarily understand the language, although it helps to understand the themes of the play, and they are. They have not changed in thousands of years. The themes are still the same and what they do is by exposing the theme. We aspire to something greater. We see the consequences of that behavior and we see the reality of if only they had, things would have turned out differently, and a comedy has one way of establishing that. A drama has another way of establishing that. But it strikes me that maybe there's a key there that if we can find a way to utilize the power of the arts, that we will, by virtue of the organics of the situation, we will figure out a way communally to dance a salsa that is both unique but is understood by a great variety of anybody who's ever danced a salsa will go.

Speaker 2: 41:58

Oh, I really like that way or oh, I really like that way. That's a neat addition to it.

Speaker 3: 42:04

And just let me add to what you just said. Right, you take Taylor Smith Taylor Smith, sorry and you see how the journey that Taylor Smith had to go through to get to where it is now which is oh, by the way, I was in Warsaw and Beyonce was playing. No, I was performing just tonight and I couldn't leave the city for four days and I got kicked out of my hotel room. I mean, that's the mesmerizing effect that these artists have in entire cities. Now Entire economies are being created around entertainers and just think about the journey that they went through, because in the old days of the long playing record, the skill was about selling a record, an LP, for $35, then you went into digital forms and so on and it destroyed the price of a song. And today you can buy a song for less than a dollar or a few cents on your iPhone. And yet look at how wealthy it's made and how powerful of an influence it's made of these artists. And also, that's the other side of the story and what's made them powerful is the networking fact, the influence that they have not just on individual listeners, but entire communities of listeners, generating value on top of each other and then wanting to be at the concert all at the same time. So that's the journey that the platform economy has taken artists and has created a new powerful force in the universe that didn't exist before. In fact, while it was getting here, it looked like the value of artists was going to be destroyed because songs were being sold for a song for very little value, and yet it was the network effect that gave them the power that they have today and they make their money not from that individual songs that they sell, but from their branding, their marketing, their influence on society. I mean that's a very, very powerful illustration of the ability to disintermediate and disintegrate the existing form and take it to a new realm that we don't even realize what's going to look like in the future.

Speaker 3: 44:42

So artificial intelligence, the personalization of platforms and personalization of finance, and then the personalization of platforms they look like destructive forces, but they're creating new forces.

Speaker 3: 44:57

That's going to hold us together that we're not aware of right now, that even as we become empowered individually, it might have a positive effect on how society holds together, except that I can already see that to exist in that society, the average knowledge, or the knowledge of an average person, has to be much, much higher than it is today.

Speaker 3: 45:26

You can't enter the network economy with a lower knowledge base, which means that people in far away countries or in underdeveloped countries are going to have the same amount of knowledge as people in highly developed countries. And imagine what's going to do. What's that going to do to them and their influence on the whole ecosystem of global trade, global relationships. So we are looking at both positive and negative effects. The lessons to be learned from the first iteration of platform economy shows that the power of people like Taylor Smith and Beyonce and it's going to create new icons of reference that entire communities are going to hold on to. So to be an icon of reference in the network world is a very, very powerful role to play, indeed much more powerful than influence.

Speaker 2: 46:30

I would hope that those influencers would be people of good character. That's my hope, honestly, is that we can develop a set of mores that will incentivize not only appearing to be a good person, but being a good person. That people will become more valuable by virtue of the good that they imbue or the good that they transmit to others. It's part of my view, Taylor Smith, you know something wrong.

Speaker 3: 47:03

They will just be a reflection of the value, because they are an aggregation of the society that they represent. So they're actually reflecting back on the values that exist in that society. So we already know that in that society, transparency of information is important. The truth of information is important, because if you lie you're struck out of the game. So those things will get reflected in those icons. But there will be bad things that will get reflected too. So we'll just have to see how that works out.

Speaker 2: 47:38

Yeah, it strikes me that another one we'll need to be contended with will be arrogance I don't know if there's a word for it, you would know better than I the desire to exploit others at one. It's sort of that narcissism that you talk about. That if I'm only in it for me again, and that's where I think theater in particular has as a replete with examples of plays that show the consequences of narcissism, and either you get it and say I don't want to be like that, or you go oh yeah, well, he was just stupid, he should have done this, and then he would have been successful. I don't know how you get people to choose the better of those two.

Speaker 3: 48:33

You know, something I've learned when I meet and you and I should meet at some point, by the way, you know, you have a court, have lunch or dinner together Um is that I've met a number of podcasters and the thing that really struck me in my face was that how what they are on their podcast was totally different from what they are in person.

Speaker 3: 48:57

I'm sure that you are not the same in that way, because in a lot of cases, when podcasters enjoy their profession a lot, they are so engrossed in getting those likes that they become a persona just to get those likes, whatever it is that they are in reality, and then, when you meet them in reality, it's like oh, they are actually not at all what they, the way they project themselves, so the projection itself becomes an art in itself. Now the thing is that, and that's why in the network world, there is this concept called the avatar, which is that you can be something else in reality, but whatever you do, as you interact others in the digital platform, you have an avatar of what you want to be, and that's why I said earlier that we can have multiple identities in a digital network, and it's perfectly valid and I see the growing of that when I meet with influencers, because we all become influencers in the network world, because we all have to build our own community and so, therefore, we all projecting ourselves to the people we like. So I think that this idea of identity and projection of identity, that's a game that we need to ace, and what you were saying just now about influencers were put a positive impact. Not only are they a reflection of the society that created them, but also they don't even need to be what they really are in person. So that's why David Downfeld, who wrote that paper in 1990, said that the crime in the network world is deception. It's not theft, it's deception, and it's both a crime as well as a survival to, I guess.

Speaker 3: 51:15

Yeah.

Speaker 2: 51:16

I have seen over the course of my lifetime, especially from my wife. Honestly, I talk her up quite a bit. I cannot deceive my wife, for she just knows when I'm you know what you know and I have to, I buckle immediately because I know she's just going to see through. So I have learned, my friend. I have learned that there is no value in deception Because you will get caught in my life. So I am what you see, I you know. Anyone that sees his podcast and real life says, yeah, that's wrong, that's wrong.

Speaker 3: 51:51

You're the pre, you're the pre trained in the GPT.

Speaker 2: 51:56

Perhaps, perhaps. Well, my problem is my ego, my theater, you know self, wants the applause, right, you know what a good job. What a good job. So you know I have to. Perhaps we can wrap up and then, you know, plan our next time together, because it's just it's so fun to talk with you, emmanuel.

Speaker 3: 52:15

But you ask them, you ask the most interesting questions, and then you may not realize it, but you then go into a sentence that teaches me something, right? And I say, oh, yes, yes, that's. You know, I'll put my finger on that and you know, the lying thing was a very good one, and so I'm enjoying this conversation and it's something that's going to the back of my head and I'm going to come back to it and say, yeah, you're right, we'll talk to your dad and he's still alive, so yeah, you know, we are in this conversation.

Speaker 3: 52:47

We've asked a lot of questions. We need to have a conversation later, maybe a year or two years later, you know, reflecting on the questions that we've just asked, you know, and then saying how it's how it's evolved. I would like to do that with you.

Speaker 2: 53:02

You know you, you mentioned in our first interview that I asked a question that you wanted to touch on and I went back and listened to that interview and I just didn't catch the right point. But do you remember what that question was that I raised and you was like that's a very interesting point, we need to talk to that the next. Do you remember?

Speaker 2: 53:22

Now I don't Okay, well, we'll go back, I'll go back and we'll figure it out. My last point, though, was it speaks somewhat to the nature of human beings. You talk about the Gutenberg press and how it was developed. In what? 1540, and then it took. You know it took 15 years for the Gutenberg Bible to be printed, and you know history common history teaches that we made the Gutenberg press so that we could print the Bible, and that's absolutely fallacious. In fact, the first things that were printed, though widespread use of it, had to do with religious propaganda, and you know incendiary religious pamphlets and pornography, which not only is it the oldest profession in the world to be a prostitute, it is the oldest printed material in the history of people as pornography. I suspect it would have even been on clay tablets had it been possible to you know, actually, although Egyptian hieroglyphics arguably has some pornography in it, who's the state? Who's the state right?

Speaker 2: 54:30

Yeah those things. They were so widely disseminated that they got destroyed, just like old playboy magazines, you know. So is that? Do you think that's indicative of what's going to happen with this? You know, personalization.

Speaker 3: 54:46

Yes. So the thing about how the printing press and the popular ideas were the first to be propagated very quickly, because the you know the early printing press, they needed to recoup their investment. And also, by the way, the reason Bibles were not the first is because people still like to have their hand drawn Bibles at that time and they wanted printing press that they still would. They were still doing screen printing to replicate beautifully. You know, calligraphed Bibles in that time, you know. And then it was much later that it got the Bible itself became printed.

Speaker 3: 55:32

Now the thing is that what it tells us is that and this I sort of came to me as a realization when I was traveling in the Caribbean you know the fact that the Caribbean even exists was because it was driven by a number of fiction. As to, you know that that that was the way to India and to China. That was, there was a reason to preach the gospel to the natives. That was gold in South America, you know. So the propagation of ideas or new realities always starts on the basis of fiction. You know factors that eventually we come to realize as being an excuse for getting there. You know, in the same way that the reason for going to Mars is because the you know Comet might hit the earth one day and we need an alternative planet, and the probability of that is neither here nor there. You know it's the real reason is because we can afford it today, right, and it's just that we you know, people at Elon Musk has to create an excuse for funding that whole process.

Speaker 3: 56:51

So, you know, even as we had entered the, you know, the age of artificial intelligence, the first beneficiaries of artificial intelligence will be the perfunctory, the. You know, the, the things that we would consider to be non economically essential, but but but for which people do provide value. One of it is gaming. You know, you think that gaming is just a creativity of recreation, but it's actually an economic activity in its own right, and then it creates the power of the network effect, from where real economic activity eventually takes place. But if there was no gaming, there will be no network effect. If there's no gaming, there would be no investment in virtual reality glasses.

Speaker 3: 57:46

You know that Apple has, you know, just created and, and then, if there's no fiction, there would be no desire to be able to, you know, create a lifestyle that interacts with multi-versus, which is, you know reality and and the metaverse reality coexisting with each other, everything everywhere all at once, and also, so I think, it's a fiction that takes us to the next level, and then we create the reality, you know.

Speaker 3: 58:20

And so what we're seeing in in artificial intelligence right now is that a lot of fiction, a lot of nonsense being created, but that's what needs to happen before the knowledge and the and the value is formalized, and then we start seeing. So one writer pointed out that it was 150 years after the Gartenberg press, before the first scientific journal was published. So, yeah, so so we need that whole process of the, of the entertainment, the perfunctory, you know, shaping the industry, before we see the value. And 150 years is a long time, you know. And and then you think that you know that in fact, the Gartenberg press was, was a weapon, because the church couldn't proliferate ideas as fast as as Martin Luther, you know who is.

Speaker 2: 59:20

50 years after the Gartenberg press while in the King James Bible was the same thing, it it disseminated the reality of the word versus the transmutation of the word and what it had become through manipulation and deception. So I would think that, given the speed at which knowledge is progressing, that we're probably not looking at 150 years, maybe 15.

Speaker 3: 59:43

So who knows that that'll be my prophecy that's the, that's the fear, actually, and that's the. You know, the. The effect it has what you just said has on me is that I'm saying to myself that, my goodness, I spent 50 years learning everything I did and then, and then it's irrelevant, and then it'll be irrelevant again, more irrelevant in 1115 years. That's a certain sadness in there, that that, that that we didn't you know, we didn't grow up and grow old and grow wise to something that we could handle, but only to hand over to something that it will not be ours to learn. You know, it'll be the next generation.

Speaker 2: 1:00:27

That's a certain sadness in me for that one, you know, on that one well, it's a yeah, it's a a big problem in my mind that you know even things like atomic energy and you know nuclear bombs, that we, we developed that capacity way beyond our ability, our wisdom, to understand what that capacity was going to mean. Then, in fact, I want to see Oppenheimer the movie because I think they explore that.

Speaker 3: 1:00:51

I watched it did you I love. I absolutely was grateful for that movie. It was a journey in geopolitics, it's a journey in history, it's a journey in values. In fact there were phrases in that I mean, and it's a well-stripped movie. And there were points in the movie because I knew the historical facts that I was just waiting for someone to say it and then he did so. Like you know, there's a point where they decided to bomb Hiroshima instead of Kyoto and that was because the foreign secretary at the time had said that, you know, let's preserve this historic city. And I visited it before and he said it in the movie and I said I could almost have preempted the script at several points. So it's very well and the script runs so well. I totally enjoyed it.

Speaker 2: 1:01:50

I'm looking forward to it. The same reason I have enough understanding of the historical perspective of what was all happening there. I saw the scene that I had read about where they had a pool.

Speaker 2: 1:02:01

Going as to whether or not the bomb was going to ignite the atmosphere or not, and when, I read that the first time I thought, oh, my god, there was absolutely, absolutely, actually a supposition that that could happen and we still blew it off. My lord, that tells you reams about the human race that such gifted intellectual minds would still say, yeah, okay, let's try.

Speaker 3: 1:02:26

But it also yeah, that was so funny because I was going like, yeah, well, 20% of atmosphere is oxygen, right? So yeah, and the thing is that you know what they were able to prove mathematically? They had no idea how it's going to show up physically and it actually reflects the entrepreneurship at that time, the sense of personal ownership of a decision or an idea, and the fact that the various people had the opportunity to do that. Today, if you try to create an atomic bomb in the EU at least, maybe not in the US very much in the EU the number of regulatory hurdles that you need to get through to get it approved, it will never be approved, it will never get off the ground. So you do need a kind of a cavalier, you know, like let's just make it up as we go, kind of thing.

Speaker 2: 1:03:35

That was a disaster before right. Sorry, I'm sorry.

Speaker 3: 1:03:38

Yeah, which I hope will continue to be a hallmark of the US. Actually, because when I think about all the different major economies and how they've evolved, the role of government has become front and center, and I call it the age of the competent government. When Ronald Reagan said the government is a problem, government was, at that time, incompetent. Today, the US, the EU, china, india, these are highly competent governments, and then they become the creator of new realities, which you don't want them to have that role, but they seem to be the most capable of. And the only thing that the US has which the other economies don't have is a countervailing force, which is the power of the free enterprise. So they are actually equally as powerful as each other, and that's why there's attention, and that's why there's Elon Musk throwing a bop at the president, and so on. You can only do that in the US. You can't do it in almost any other country.

Speaker 2: 1:04:51

Yeah, you'd be arrested very quickly and never hurt from again. You won't be influencing anyone, then unless you're Nelson Mandela.

Speaker 2: 1:04:57

I suppose then things do turn around. But anyways, emmanuel, I do look forward to our next conversation and I hope it's not a year away. I hope we can find other things to talk about in between now and then, just because it's so enjoyable. But Emmanuel Daniel spend my guest again this week with. He is the author of a book called the Great Transition, subtitled the Personalization of Finances here. Go back and listen. You know, I know I will be going back and listening to our conversation because it's so, I think, rich with with things to think about, and I'm big on thinking about things because I find that is not happening as often as it needs to in our contemporary society.

Speaker 3: 1:05:40

The conversation we had were preliminary conversations on, you know, the the transformational things happening today. We actually ended up asking more questions than we answered in this conversation, so so it's given me reason to to go back and think a little bit more and, yes, I'm looking forward to our next conversation.

Speaker 2: 1:06:03

And I will look forward to meeting you in person too, and then you can tell me whether or not I am the same person in real life as I am in the podcast and you can attest to it then in your community. That would be wonderful if you could say oh yeah, that's him, he's not. So anyways, thank you, emmanuel. Thank you so much for your time. I really appreciate it. Take care, folks Tune in next week. Hopefully we'll have somebody as interesting as Emmanuel, but that's going to be hard. So take care, take care.