A new law called the Genius Act removed banking leverage limits that were put in place after 2008, allowing banks to create crypto stablecoins with unlimited leverage. The speaker warns this mirrors the over-leveraging that triggered the financial crisis and will trigger another massive wealth transfer from poor to rich.
Synthetic duplication on stablecoins have been legalized by shadow banks, and they're expanding our monetary supply on stablecoins. You do not understand this. I promise I'll make it simple. The future of finance is at stake. I'm gonna break it down for you. So basically, in 2008, they did pretty much the same thing. It was a bubble that transferred wealth from the poor to the rich and had devastating consequences when the bubble popped. Because the bubble popping was so devastating, they put into law the Dodd-Frank Act, which literally stops banks from synthetically taking on that much leverage and doing what we call shadow banking. Look at the Dodd-Frank Section 171. It says each banking entity should comply with the leverage ratio requirement under Section 104. Essentially, they have to keep a healthy leverage ratio. The 2008 financial bubble wasn't because of housing itself. It's because there were overleveraged selling junk bonds to anyone. It was the leverage that created the bubble. Section 171 of the Dodd-Frank Act requires the banks to keep at least $3 of real capital for $100 in financial exposure, so that caps the banks at 33x leverage. In July, the Genius Act got passed into law, allowing banks to create stablecoins on crypto blockchain. And in the Genius Act, they completely removed Section 171. The Financial Stability Act shall not apply. That means the same type of leverage they took in 2008, they can now do it on stablecoins legally. For the Dodd-Frank Act to be put into law, it took 18 months of hearings, debate, and revisions. They fought against the Dodd-Frank Act aggressively. It took a total of 7 hours to remove those leverage restrictions by removing the Dodd-Frank Act From stablecoins, 18 months to put in the leverage restrictions, 7 hours to completely remove it. The shadow banks are having a field day right now. Basically, through stablecoins, they have the capability to have almost unlimited leverage with DeFi protocols and tokenization. I'm gonna break it down for you one more time. Look, Section 171 of the Financial Stability Act of 2010 shall not apply. This is from the Genius Act. The Genius Act allowed stablecoins to be created by banks, so it shall not apply. What is Section 171? Section 171 of the Financial Stability Act states each banking entity shall comply with the leverage ratio requirement under Section 104 of the Financial Stability Act of 2010. They say that they need a minimum leverage ratio of at least 3%, which is supposed to cap these banks at 33x leverage. Now they can go crazy and take it further. I will be dropping a complete report on this in my groups on Friday, but until then, I'll be exposing it over and over from different angles until you comprehend it. Follow me.
