Inflation

Inflation

A Q&A with the founders of the new Prosperium Cryptocurrency

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Prosperium Inc. CEO Doug Coyle (L); President and COO Tony Humble (R)

The following is a sponsored Q&A with the founders of the firm behind Canada’s new Prosperium cyryptocurrency.

Tony Humble is President and Chief Organizational Officer of Toronto-based Prosperium Inc. and Doug Coyle is Chief Executive Officer (both pictured on the left).

You can find the introductory blog in this series by clicking on Blockchain Revolution, Global Prosperity and Prosperium.  

Also, a new white paper has just been published. The overall Prosperous business model is described on its home page. And for a layperson’s perspective, see Tony’s blog. 

The Q&A will continue tomorrow. 

 

Jon Chevreau: In the first blog, we mentioned Ethereum and Prospereum as two examples of cryptocurrencies spawned in Canada. Clearly, the name Ethereum inspired your name and it was a clever stroke to get the word Prosper in there too. Can you confirm this genesis of the name?

Tony Humble

Tony Humble: Well, the name Prosperium was a natural, but we tried a few others first, like Prosperus, as in “prosper us all” and “prosperous” and ProsperX.  But the elemental affinity with Ethereum was irresistible:  like atomic bonds.  Ethereum is named for both a celestial region and an “element” in the periodic table.  On earth, it is both a currency and a platform for smart blockchain contracts: revolutionary and brilliant.

Jon: Can you elaborate on what the name means in practice, relative to Ethereum? Is it the same business model?

Tony: Like Bitcoin, the total number of coins issued by Etherium will be fixed, aiming for continuous growth in value.  In comparison, Prosperium is also named as an element, is a crypto-currency, and is a platform:  for growth in real prosperity.  In contrast, however, once Prosperium has reached a target value it will be fixed in price and supported at that value, but the number of coins issued will continue to grow.  It will be minted for measurable value, created by regional accelerators to generate jobs and production, and its use for transactional purposes will be tracked on the Prosperium blockchain.  It will be 100% open and auditable by governments, and will maintain a large reserve to support the price in the marketplace.

Jon: A prospectus for Canada’s first Bitcoin ETF was recently filed. I’m not sure if that shows your timing is impeccable or whether you’re late to the party?

Doug Coyle: I do see that there are more and more ETF funds being launched in Canada and around the world for Bitcoin.

Jon: Starting with the Winklevoss twins of Facebook fame?

Doug: Yes, they tried to get a Bitcoin ETF going and ran into some barriers but they prepared the ground a great deal. I feel it’s adding infrastructure so I’m in favor of multiple ETFs for Bitcoin or any other crypto currency being established.

Jon: Is Prosperium going that route?

Doug: Not directly. In some ways we do provide the ability for clients who hold Prosperium tokens to trade those tokens and eventually the currency itself will be freely trading; so we have a very sophisticated way of doing a — call it an ETF — but we hold a reserve account that is core to how we stabilize the Prosperium coin. Buyers can find a ready market there at all times; they don’t have to count on any broker to find a match on buying and selling; it’s all done automatically in the software.

Why Prosperium isn’t going the ICO route

Jon: You chose not to go the ICO (Initial Coin Offering) route although it sounds like you were thinking about it. Why not, or are you doing the same thing under a different name? Continue Reading…

Half of us fear rising interest rates will be negative for our finances

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Now that interest rates have finally appeared to bottom, consumers are starting to worry about the prospect of rising rates and their impact on their personal finances.

This is explored in my latest article, which is in Monday’s Financial Post (e-paper and online). You can access it by clicking on this self-explanatory highlighted headline: Only a quarter of Canadians have a  rainy day fund, but more than half worry about rising rates.

It describes a new Forum Research Inc. poll that shows more than half of Canadians (51%) fear rising rates will negatively impact their personal finances. The national poll of 1,350 voting-age adults was conducted after the Bank of Canada raised the prime interest rate from 0.75 to 1% on September 6th, which in turn followed an initial 0.25% hike in July.

After an amazing run of nine years of ultra-low interest rates, it’s clear consumers are starting to fret the party is over. Anyone with variable-rate mortgages might well be petrified that interest rates could again reach the high teens, as they did in the early 1980s. Little wonder that many homeowners are starting to “lock in” to fixed mortgages while rates are still relatively low.

Of course, as Credit Canada’s Laurie Campbell notes, for the longest time it’s paid to stay variable and flexible, whether with a variable-rate mortgage or a line of credit. It does cost a bit more to “lock in” to fixed mortgages, as Campbell notes, but the ability to sleep well at night in my opinion more than makes up for the difference.

While the poll asked specifically how consumers felt about the second hike, “they are worried more are coming,” Forum Research president Lorne Bozinoff told me. 12% say the negative effect will be extreme. However, 17% believe rate hikes will have some positive aspects:  you’d expect debt-free seniors to welcome higher returns on GICs and fixed-income investments. Another 38% don’t think it will have an effect either way.

Lorne Bozinoff

A quarter have no emergency savings at all

Bozinoff is more concerned that 26% of respondents have no emergency savings, and 40% have a cushion of a month or less: 9% have less than a month and 11% just a one-month cushion.

Financial planners generally recommend three to six months as a hedge against job loss or other setbacks. A minority do: 14% have two to three months, 9% four to five months, and 13% six months to a year. Only 15% have a year or more and predictably, 56% of the latter group are 55 or older. Continue Reading…

Debt Ceiling to rise: “Clark … Could you maybe spare a little extra cash?”

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By Kevin Flanagan, WisdomTree Investments

Special to the Financial Independence Hub

I’ve written a couple of posts about the debt ceiling debate over the last few weeks, but let’s move past that topic and assume the U.S. government will be able to resume its borrowing needs in full, come the fourth quarter. (Editor’s Note: On Thursday, President Trump struck a deal with Democrat leaders to raise the debt limit and finance the Government until mid-December.)

What will investors find when Treasury has the ability to come to market with its full arsenal of t-bill and coupon issuances? The latest press briefing from the nation’s debt managers reminded me of the scene from the movie National Lampoon’s Vacation when Cousin Eddie asks Clark, “Could you maybe spare a little extra cash?”

The Details

For the period of July through September, Treasury estimates it will borrow $96 billion in net marketable debt, but its financing requirement will then ramp up to a hefty $501 billion in the fourth quarter. Remember, the calendar’s fourth quarter is actually the first quarter of fiscal year (FY) 2018. To put the fourth quarter number into perspective, the figure would be more than the projected $426 billion for all of FY 2017 combined, underscoring the added burden for the upcoming quarter.

The “Whys”

What’s causing such a huge increase in the government’s borrowing needs? First, the underlying budget deficit will need to be addressed. For the record, thus far in FY 2017, the red ink total has come in at -$523 billion through June, leaving one-quarter of the current fiscal year still remaining. For FY 2018, the Office of Management and Budget is projecting the deficit to come in at -$589 billion, up $149 billion from the prior estimate. Second on the list is Treasury’s goal to lift its quarter-end cash balance back to a more “normal” level of $360 billion for the end of December.

The debt managers foresee their September quarter-end balance dropping down to a low of $60 billion, compared to $353 billion a year ago. This drawdown reflects outlays that will be needed as a result of the stagnant debt ceiling. Along those lines, Treasury stated that it “expects to be able to fund the government through the end of September.”

The Final Piece

Continue Reading…

Is the Fixed Income Market buying what the Fed is Selling?

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Fed’s Balance Sheet Normalization Guidelines (in billions)

By Kevin Flanagan , WisdomTree Investments

Special to the Financial Independence Hub

In the post-Federal Reserve (Fed)-meeting world of the money and bond markets, there seems to be a disconnect between what market participants are thinking and the Fed policy decisions actually being made. It is a case of the market not buying what the Fed is selling.

In other words, the term “policy mistake” has begun to enter the discussion, as the U.S. Treasury (UST) arena appears to be operating under the assumption that the Fed should perhaps ease up on its tightening campaign because

(a) inflation has been slowing in recent months, and

(b) economic growth has been lackluster. This line of reasoning concludes that the policy makers will go too far with their rate hike and balance sheet normalization plans, to the detriment of the economic setting.

Based on the Fed’s actions at the June FOMC meeting, the policy makers do not seem to be deterred in their “full steam ahead” outlook, as they envision yet another rate hike this year and expect “to begin implementing a balance sheet normalization program this year” as well. (On Wednesday, July 27, the Fed kept interest rates unchanged — Editor.)

So, let’s assume economic and financial conditions do live up to the Fed’s expectations, what then will their plan look like for phasing out their reinvestment program.

Continue Reading…

Why aren’t robo-advisors being used by those who need them most?

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By Edward Kholodenko,  Questrade

Special to the Financial Independence Hub

Uber has quickly become the largest personal transportation company in the world, yet it  doesn’t own a single vehicle. That’s because there’s more to Uber than just hailing a ride from your phone. It’s providing more convenience at a lower price and in turn, transforming the transportation industry.

Substitute Uber for Amazon, Airbnb, or any other tech disruptor and a common theme emerges. On the road to becoming mainstream, applications that reduce cost and improve convenience are often first adopted by millennials and the tech-savvy. While the early adopters reap the many benefits of these innovations, those who hesitate are missing out.

Retirement challenge and the Robo-Revolution

When it comes to financial technology, there are certain populations that can no longer afford to be late adopters. Thanks to the innovation in the investment space, preparing for retirement has become easier than ever. Enter robo-advisors: an online wealth management service that provides diversified investing, much like a mutual fund, but at a much lower cost.

Given the current state of retirement savings in Canada, it’s apparent that this technology has great value to those willing to take the leap.

There is concern that 80 per cent of middle-income Canadians nearing retirement won’t have enough to support themselves. The average Canadian’s retirement savings of $71,000 will last only a few years, and, 50 per cent of Canadians are not confident they will have enough to retire comfortably.

Not only are Canadians saving far too little for their retirement, but also many can no longer depend on company pension plans to provide the income needed to stop working.  Our golden years are increasingly self-funded and investment decisions now fall on the shoulders of the individual. There’s a fantastic opportunity for new solutions in this space, and those willing to embrace a solution provided by fintech providers are reaping the reward.

Robo-advisors, in spite of the name, aren’t actually robots. Professional (human) portfolio managers handle all of the investments. In fact, there are two types of managed robo-advisor accounts: actively- and passively-managed:

Actively-managed advisors have a dedicated team of portfolio managers who select investments and adjust the portfolio to take advantage of market opportunities, all of this at a low cost. Passively-managed advisors typically invest according to set investment rules that only track the market.

These advisors use leading technology and proven strategies to provide a better investment experience at a lower cost to the consumer. And, by reinvesting the money you save in fees, individuals are able to increase their retirement savings and returns.

Robo-advisors are helping Canadians retire wealthier

Continue Reading…