Dispelling 13 economic myths of the 21st century

Myth # 1. Is Cryptocurrency Another Financial Bubble That Will Burst?

Yes, it might be a financial bubble.

At least at the current stage. I would even call the first cryptocurrencies a beta version or a probe. But the blockchain technology itself, the underlying crypt, has already turned the world around. Fintech and its influence is spreading at a tremendous speed and penetrates into all possible areas: from entertainment, simple services and services to serious competition for banks. Bank analysts and central bank officials are very concerned about this. Those who have not had time to rebuild or have not even begun to do so risks being left behind. Lose turnover, commissions and, ultimately, customers. Now, at a time of economic uncertainty, when the world's major banks are forced to print new fiat money, cryptocurrency is in high demand. You can protect yourself with at least banal diversification.

Cryptography for confidential payments has been used since 1990 in the DigiCash system of David Chom, whose company went bankrupt in 1998. This payment system was centralized.

For the first time, the term "cryptocurrency" beganused after the emergence of the "Bitcoin" payment system, which was developed in 2009 by a person or group of people under the pseudonym Satoshi Nakamoto. The term "cryptocurrency" became widespread after the publication on April 20, 2011 in Forbes of Andy Greenberg's article Crypto Currency ("Cryptographic currency" - "High-tech").

Later forks appeared: Namecoin (decentralized DNS for registration within the .bit domain zone), Litecoin (uses scrypt hashing), PPCoin (uses a hybrid proof-of-work / proof-of-stake mechanism, has no upper limit on the issue volume), Novacoin (similar to PPCoin, but uses scrypt) and many others.

Myth No. 2. Will globalization "kill" local economic characteristics and poor countries?

Globalization has been going on for almost 40 years, and itit's time to end already. The example of China, which temporarily abandoned the export type of economy and, like a phoenix, rose from the ashes, caused discontent among other participants in the global economy. The struggle for influence in the world arena, the expansion of large companies in India and African countries clearly confirms this. But global associations are losing their power. Argentina's latest default shows the weakness of the International Monetary Fund. The UN and NATO have been unable to cope with serious issues for many years, periodically being distracted by trifles. WHO just missed the coronavirus outbreak ... Effective management is only possible with a decentralized approach. It is unrealistic to react quickly to local problems, being in another part of the world and not seeing the whole picture. Now this understanding is only getting stronger.

Myth No. 3. It is impossible to trade profitably on the stock exchange, but are there those who know the "holy grail"?

Who said it's impossible? Trading is a job, and it is just as complete as programming, for example. There is an incoming stream of data, ways of processing it and methods for making decisions. Perhaps the "grail" means a specific method or case. But each trader has his own approach, which can only be reached by trying several options, going through different styles and methods. Not everyone has enough perseverance, motivation is a fact. In my courses, I give several tools and show what I personally use, but my students can choose a different set, no less effective. Someone quickly, already in practice, by the end of the second week gets the desired result, and someone after a couple of months says that they have found the best approach for themselves and boasts of the results.

Grail - this kind of trading model in which completelythere are no losses. Novice traders think so. In the understanding of a professional trader, the Grail is a trading model that combines profitable and unprofitable trades, time-tested, which is close to the trader in spirit and brings stable adequate profitability, taking into account all market changes.

Myth No. 4. Economic crises deliberately cause large corporations, which can benefit from it?

Each crisis is different from the previous one, startingwith its causes and ending with consequences that can be stretched over years. I strongly doubt that there is anyone who can predict the consequences of the crisis for years to come. And this can turn out sideways for the "organizer" himself. The dot-com crisis forced the market to take a sober look at high-tech, the mortgage crisis showed the disadvantages of banking regulation. Who could be the beneficiary of all this? Big banks? Perhaps, but then it would become obvious: an awl cannot be hidden in a sack. Any event in the world is like a stone thrown into water. Waves can travel far around, but how many will there be, with what frequency will they propagate? Too many questions. To catch the effect of the crisis, you need to be as close to the center as possible, which means that in everyone's sight.

Myth No. 5. Trading is a casino where everyone can make money?

First, the casino always wins in a casino. The simple math of roulette is proof of this. The mathematical expectation over a long distance at the casino is always in the positive zone. Of course, there are some lucky ones who break the bank, but these are only isolated cases. Secondly, even in a casino, for example, when playing Black Jack, you can develop a system and apply it successfully. True, for the time being: until they are kicked out.

In trading, we are talking about a systematic approach, aboutself-improvement and mistakes. Here the probability is initially 50/50. The price either goes up or down. But we can find situations in which the probability of price movement upward is higher, and use only them. And then expectation will be on our side. Another option: take not in quantity, but in quality. We have control over the risks in every trade. We made 10 attempts, 7 of which were unsuccessful, each with a loss of 100 rubles. But three are successful, and the profit in each is 300 rubles. Total: we have +200 rubles as a result.

Expected value - one of the most important concepts in theoryprobabilities, meaning the average (weighted by the probabilities of possible values) value of the random variable. In the case of a continuous random variable, weighting by the distribution density is implied.

In practice, the expected value is usuallyis estimated as the arithmetic mean of the observed values ​​of a random variable (sample mean, sample mean). It is proved that under certain weak conditions (in particular, if the sample is random, that is, observations are independent), the sample mean tends to the true value of the mathematical expectation of a random variable when the sample size (number of observations, tests, measurements) tends to infinity.

Myth No. 6. The business model of the banking system is not viable, and is it the most “explosive” link in the market economy?

This model is already many years old, and during this time the connectionbetween banks and all areas of activity has become very close. Judge for yourself, both individuals and organizations use loans. Consumption is promoted alongside cheap lending. As soon as a cataclysm occurs in the world, it affects the banking system, even if not globally, but locally, but it still affects. This forces banks to adapt and come up with new ways to generate profits. We can say that at this stage this link is necessary, but I will not undertake to assert that it is forever. The 2008 crisis shook up this sector a lot, and now we see that the rescue operation of the economy is being implemented through banks.

Myth No. 7. Capitalism will not be able to meet the challenges of the 21st century? Post-capitalism coming?

Capitalism is a system that hasproduction, recruitment and distribution of goods. Even if not always uniform. As long as this model works and flourishes, all good or bad comes to an end. It is difficult to say what it will be in this system, but instead of something old and worked out, something new comes. Humanity, in principle, develops through mistakes. Is the capitalist phase a mistake? Or something separate in this model? The answers, I think, will be learned only by our grandchildren. Post-capitalism takes more time and more driver events to emerge.

Capitalism Is an economic abstraction in whichthe characteristic features of the economy at a certain stage of its development are highlighted, while the less significant ones are discarded. The real economy of specific countries has never been based only on private property and did not provide full freedom of entrepreneurship. To one degree or another, there have always been features unusual for capitalism:

  • estate privileges;
  • state property;
  • restrictions on the ownership of property, including restrictions on the size of real estate or land;
  • customs barriers;
  • antitrust rules, etc.

Myth # 8. Is the digital economy just "money out of thin air"?

Most importantly, it's money! Not entirely from "air", but from an understandable consumption of services and goods associated with this activity. The technological process cannot be stopped; it spreads to all significant areas: medicine, education, defense. Each of these spheres has points of development and whole vectors. The question is more about the effectiveness of this development. If it brings tangible results, then "money out of thin air" will continue to flow.

Myth No. 9. Corruption cannot be defeated?

Philosophical question. Perhaps, with the help of chipping, improved lie detectors, it will be possible to reduce the share of corruption, but this must be a total digitalization of everything. Not all countries and even regions can afford this. It turns out that today corruption is invincible, but let us have at least a ray of hope that it will ever decrease.

International anti-corruption movementTransparency International has published the Corruption Perception Index (CPI) for the past 2019. Russia scored 28 points out of 100 and climbed one position higher, taking 137 place out of 180. The Dominican Republic, Kenya, Liberia, Lebanon, Mauritania, Papua New Guinea, Paraguay and Uganda scored the same number.

Myth # 10: Can the stock market be left unregulated?

If it is not regulated, then we will facewave or even invasion of unscrupulous market participants. This threatens with serious losses not only for individual investors, but for the entire economy. Therefore, regulation is necessary. The question is, rather, in her ways. Now it is a huge and clumsy mechanism. Perhaps, with the help of technologies, for example, blockchain, it will be possible to optimize and automate this process. Control methods can and should be improved too.

Myth # 11. Will market mechanisms deal with discrimination on their own?

I totally agree. The modern market does not matter: who you are, what your age, gender or education. There is you and there are technologies for making transactions, there is a market with whom you make a transaction - it does not matter, it is just an impersonal counterparty. You bought, sold to you, sold, bought from you. Who! What's the difference?! You don't even think about it. Especially if the deal is profitable. I strongly doubt that anyone will decide to create an exchange only for representatives of any community.

Myth No. 12. Does the rich get rich at the expense of the poor?

Who are the rich or the poor? There is someone who knows how to think, manage, create, and someone who does not know how to do anything or just do what they said. Anyone has the opportunity to break out of the usual framework, to find something for themselves. It is believed that Brazil is quite close in economic terms to Russia, but there is a social lift there, for example, football. Trading can become a social ladder for those who are willing to work on themselves, think and work hard.

The richest 10% of Russians own more than 80% of the country's national wealth.

For the year (from July 2018 to the end of June 2019)global wealth rose 2.6% to $ 360.6 trillion, Credit Suisse writes in its annual global wealth survey. On average, for every adult in the world in 2019, there is $ 70,849. Over the year, this figure has grown by 1.2%.

But behind the averages hides a lotinequality. So, almost half of the world's wealth (45%) is accounted for only by 1% of the super-rich people, another 10% of the richest people on the planet accumulate 82% of the world's wealth, and 10% of the poorest people account for only 1% of the world's wealth. In just a year, the number of people with a fortune of more than $ 1 million increased by 1.1 million to 46.8 million.

Myth No. 12. With the help of algorithms and knowledge, you can get rich guaranteed by trading on the stock exchange?

With the help of knowledge and the ability to apply them. If a person has a head on his shoulders, and he knows how to not only eat into it, then successes, and even more so on the stock exchange, will not be long in coming. Algorithms of different levels of complexity are already working on various stock exchanges, but new ones are constantly appearing! This means that certain unsolved problems remain, and this opportunity cannot be neglected. Work, diligence and a drop of creativity will help create, if not ideal, but profitable algorithm, or even several.

Myth No. 13. Large corporations want to control humanity: chipping, data collection, and so on?

They want and do. Almost any device, software is already collecting information about us. Contextual advertising, targeted offers come to us from everywhere. I really liked the film "100 things and nothing more." It perfectly illustrates the consumer attitude of people and shows the ability of smart devices to adjust our purchases, the choice of vacation spots, going to the cinema or cafes, roughly speaking, our behavior. We are not talking about the urgent need to flee to a desert island or wear foil hats, but rather about the fact that this is inevitable in our time. Even if you want to buy yourself a separate island, you must first make money on it. And again we are back to trading. There is enough market space for everyone.

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