Is crypto ready for mom and pop investors?
May 9, 2022
Episode 659

Is crypto ready for mom and pop investors?

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We kinda don't think so.

Today we talk about a potential win for privacy advocates, as facial recognition company Clearview AI reaches a settlement with the American Civil Liberties Union. But we still have questions. Another new story with a lot of questions? Crypto, of course. We’re still skeptical about the stability of cryptocurrency, but that hasn’t stopped investors and others from jumping right in. We’ll discuss what has us … a little nervous.

Here’s everything we talked about on the show today:

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Make Me Smart May 10, 2022 transcript 

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Kai Ryssdal: But if we don’t start talking, then you know, who knows? Who knows what might happen?

Kimberly Adams: I know, what if we just don’t speak?

Kai Ryssdal: Who knows what happens might happen? … Hey, everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart, making today make sense is what we do around here.

Kimberly Adams: And I’m Kimberly Adams, thank you for joining us on this Monday. We are going to do the news. We’re going to do some making smiles. And so yeah, let’s get into it. Hope you had a good weekend.

Kai Ryssdal: I did. I did. Although as we were chatting beforehand, you just decided to mellow out which I think is awesome.

Kimberly Adams: Oh yeah, I hid from the world. It was great. All right. What’s your news?

Kai Ryssdal:  All right. I got a couple and then I got one I haven’t even put on here and I’m debating whether or not I should mention it because Bridget Bodnar is going to climb through the Slack and climb onto this podcast. I’m out. But number one, this seems, this seems – it’s a story. That’s not what it’s about. Okay, so here’s the deal. There is an item that I saw on NPR today on their website. And I’ll just read the first sentence, authorities have discovered more human remains in Lake Mead, the country’s largest reservoir by volume, which is located east of Las Vegas, the reason they are discovering more human remains, and this is the second one in like a week they found a body in a barrel about three or four days ago, is because water levels at Lake Mead and other key reservoirs out west are at record low levels. And that’s really, really bad because that’s drinking water and agricultural water. And it’s all kinds of stuff for the bajillion of us who live out here in what is fundamentally a desert. But the the titillating part of it is that as these water levels go down, and let’s remember this is right near Las Vegas, and Las Vegas is you know, not exactly the most hospitable place. Sometimes if you’re on the wrong side of those who are in charge of Las Vegas. They’re finding all these bodies in the water, what used to be the water, but now it’s dry land. And I’m like, Oh my god. Oh my God.

Kimberly Adams: There was a whole episode of Criminal Minds. Like based on this concept. Have you ever seen that show?

Kai Ryssdal: I have not. I have not.

Kimberly Adams: I’ll look it up and try to find out which episode it was. But yeah, it was that there was a drought and water levels, some kake dropped. And I mean, I hope maybe some families are gonna get some closure. But that’s awful. And also climate change. Dear God, we’re in trouble for sure.

Kai Ryssdal: For sure. Okay, that’s item one. Item two is crypto. Crypto writ large. Now I say this actually on a day where Bitcoin the granddaddy of all cryptocurrencies traded below $31,000 piece which is off I think it’s like 40 something percent counter year to date could be more than that. I’m not really sure but it’s definitely down 50% from its peak of $64,000 and I mentioned that because an article in the Wall Street Journal caught my eye and I just need to very quickly say I’ve got a I’ve got a very high-level understanding of by which I mean not in-depth, as opposed to high-level, I understand it all of the various cryptocurrencies and stablecoins and all this stuff, right. But there’s a headline an article in the Wall Street Journal today that says “Cryptocurrency TerraUSD falls below fixed value triggering sell off now.” TerraUSD is what’s called a stable coin. And these stable coins are supposed to be oh, guess what? stable against the dollar. Okay. One coin of a stable coin variety is supposed to keep its value of $1. Right and that is a way to let the extremely volatile crypto market have a little little bit of stability. But Tara USD fell below a buck this past weekend in trading. Now, I’m just gonna read you something.

Kimberly Adams: Okay.

Kai Ryssdal: Okay, hold on, hold on, hold on. So this stable coin tether USD is an algorithmic stable coin. So it’s not actually backed by actual real American dollars. And here’s the quote, “These pseudo dollars aren’t necessarily backed by any assets at all, instead relying on financial engineering to maintain their link to the dollar in TerraUSD’S case, if its price falls below $1 traders can quote burn the coin or permanently remove it from circulation in exchange for $1 worth of new units of another cryptocurrency called Luna.”

Kimberly Adams: I had to read that I read this before the show. And when you put it in, I had to read that section several times for it to make sense. And I still am like, you do what to what?

Kai Ryssdal: Right so so yeah, go ahead. Yeah. Yep. Well, no, look, I’m just gonna say this, there will be amazing things that cryptocurrency and the blockchain and stable coins can do. But as of right now, it’s not there. And my fear, see also Fidelity letting people put their retirement accounts into or Bitcoin into their retirement accounts. Right. My fear is that Joe, Mom and Pop is going to say, oh, TerraUSD can’t go below a buck.” And bang, it goes below a buck because these dollars aren’t necessarily backed by assets at all, instead of relying on financial engineering to maintain their link to the dollar. It’s not there yet, crypto is not there yet. And and inexperienced investors are gonna get involved in it and bad things are gonna happen.

Kimberly Adams: I mean, experienced investors are gonna get involved in bad things.

Kai Ryssdal: Yeah, oh yeah.

Kimberly Adams: But as you said, there are surely going to be good uses for this technology. But –

Kai Ryssdal: Yes, oh yes!

Kimberly Adams: This was a story. I saw this story earlier today. CNBC has a whole crypto world section. And today, one of the stories they have the headline is 40% of Bitcoin investors are now underwater.

Kai Ryssdal: Oh. Oh, man. Yeah, yeah, yeah.

Kimberly Adams: Yeah. I mean.

Kai Ryssdal: So those are, you know, I don’t want to be there’s a, there’s a case to be made that we should do a show on Web –excuse me, Web 3 and the upside of crypto because look, the blockchain can be an amazing thing. I just – I’m not. Let me rephrase that. I am sure that we’re not there yet. That’s not, I’m not sure we’re there yet. It’s I’m sure we’re not there yet.

Kimberly Adams: Have you seen all these stories coming out about all these people who are now starting to recognize that their NFT’s are worthless? And…

Kai Ryssdal: Oh, yeah, please come on. Come on.

Kimberly Adams: It’s sad.

Kai Ryssdal: I got a I got a bridge in Brooklyn. I want to sell ya. And I feel honestly I feel bad but but how did how did how was that supposed to work? Here’s a thing that I can get a screenshot of off the internet, but you’re gonna pay $6,500 for X, Y & Z? I don’t I don’t get it or, you know, six figures or eight figures? Right.

Kimberly Adams: I mean, I’m gonna go back to the sort of name of star registry example that somebody gave me an interview. People did that for years, you know, I think you still can people artificially create value on lots of things. And then you get sort of the mind hive of the internet, like gassing you up and telling you that you’re missing out on this great investment opportunity. And all these things and people look, because none of us have pensions, and people are trying to – and because this understanding the stock market is hard, I get why people are looking for, you know, looking to people who they think are smarter than them on these things, for guidance, and when that person guides you wrong, you’re screwed. And I have a lot of distaste to put it mildly for the celebrities and the sports people and the podcasters who lead people to these things. But that was actually not my news item, so I’m gonna go to mine…

Kai Ryssdal: Wait wait, wait, can I just wait, can I slide one in here? Can I – I gotta half a one.

Kimberly Adams: Oh, right. You had another go for it.

Kai Ryssdal: This this. This is the Bridget Bodnar item. I’m just gonna say I’m a little worried about Queen Elizabeth. I’m little worried. She’s not going to make the State Opening of Parliament tomorrow. She’s 96. That’s it. Just want to get that out there. I’m a little worried.

Kimberly Adams: I’m trying to figure out a way that I can say this and not be murdered when I next go to St. Louis. My grandmother is aging very well. And I do not think that being in 96 by itself is a cause for concern. I think that’s safe. She will murder me if I say her age on the radio. Or in podcast.

Kai Ryssdal: No, you did well. You did well. I just want to get that. Please go on, now that I’ve hijacked it.

Kimberly Adams: Yeah. But no, I, you know, wish her the best to health Queen Elizabeth and to the family. I mean, and also like she she recently lost her husband. And that does things to people. Especially when you’ve been married a long time. Like, that’s, that’s hard. Okay. Um, right. So, two stories from me. The first one is this pretty significant settlement between ClearView AI and the ACLU. Have you seen this story?

Kai Ryssdal: No.

Kimberly Adams: Okay. So facial recognition company ClearView AI, this is the one that basically scrapes photos or in the past has scraped photo – photos from like social media companies, from dating sites, and all these other places where you put your picture online and think that it exists in a bubble. But it actually doesn’t exist everywhere. And they built a facial recognition system that includes like massive chunks of the world that you can run, you know, somebody’s photo through, and it can match with your face and all these things. And lots of people are very concerned about the privacy implications of that government abuse in various parts of the world. And even here in the United States. A lot of activists has complained that when police departments use this, they can use it to sort of profile and, you know, track people without a warrant and stuff. So ACLU sues them. And in a settlement announced today, and I’m reading the The Verge covered up, it’s lots of places, “ClearView AI has agreed to permanently ban most private companies from using its services. And it also will not sell or distribute freely its database and its technology within the US. It can still work with federal agencies and local police departments, but not outside of Illinois,” which is where this case was because Illinois has a data privacy law, that’s pretty strict on these things. Another thing that the settlement includes is that they won’t give free trials to individual police officers. Without like the department being involved, because apparently that was another thing. That was very much of a concern for people that you know, you know, a police officer, even if your department didn’t have a subscription, you might be able to get like a free trial and use this very powerful software to identify people. So this is a big deal. However I wonder how enforceable this is? Because okay, so if you can’t sell the tech in the United States, and private companies in the US won’t use it can’t use it services anymore. What’s to stop any US company from subcontracting out to a company in another country that can use the tech? I mean, but I don’t know. Anyway, that’s a big deal. And then, quickly, I guess I’m probably not going to get through this quickly. There’s an opinion piece in The Washington Post that talks about an interview that Senator Chris Murphy did, I think it was on one of the Sunday shows. Right. And in it, they’re talking about this, you know, looming Supreme Court decision, probably, almost certainly overturning Roe versus Wade. Right. And Congress, the Democrats in Congress are trying to push through legislation to basically make abortion legal in the United States and make sure the individual states can’t get around it right. This legislation is probably not going to pass, almost certainly not going to pass. And Democrats are pushing to basically get rid of the filibuster or the legislative filibuster to allow some version of legislation to get through on a party line vote if they can get Manchin and others on board. Because according to Murphy, I mean, let me just see if I can find a good point of this article. Senator, Senator Murphy says “If the court overturns Roe, the Connecticut Democrat says, Once Republicans take control of Congress and the White House, they’ll end the legislative filibuster to pass a national abortion ban. With a simple majority in the Senate. When the opportunity presents itself, there’s no doubt in my mind that they’ll change the rules to pass a bill criminalizing abortion federally, this law  – this lays bare a nightmare scenario for Democrats. It isn’t just that Republicans might succeed in passing such a ban. It’s also the Democrats might fail to suspend the filibuster themselves to pass national abortion rights protections, and then see Republicans successfully end the filibuster to pass a national ban. ” Does that make sense?

Kai Ryssdal: It does make sense. And I think that’s an entirely likely outcome of the next, let’s see, when are the midterms? 180 days from now. Yeah, absolutely.

Kimberly Adams: And, and they’re really kind of stuck. Because, you know, there’s a big contingent, it’s like, don’t blow up the filibuster, don’t blow up the filibuster. And Mitch McConnell is like swearing up and down, that he would never, you know, end the filibuster. And so Democrats shouldn’t do it. And he’s not going to do it. You know, once. You know, if the Republicans get back in power. Let’s also remember his promises around Supreme Court confirmations and things like that, and how well that stood up. So this is a, this adds another layer of stakes to the midterm elections. And Democrats are certainly planning to run on this. And basically saying that if Republicans win your reproductive rights are at risk forever. So that is, it was a very interesting opinion piece and lays out the argument and the freakout moment that a lot of Democrats are having at the moment.

Kai Ryssdal: Yep. Yep. Lots of freaking out for sure.

Kimberly Adams: Well, I mean, and not just Democrats, lots of I don’t want to diminish how to how serious this is, and many people all over the country. Also, freaking out.

Kai Ryssdal: Yep. Yep. Absolutely. Okay,

Kimberly Adams: From freak out, to smile. We need a smile. All right, I saw yours over the weekend and it made me chuckle.

Kai Ryssdal: Oh, my God. It’s amazing. So Trevor Noah, the host of The Daily Show, great observational humor and a great raconteur of those observations. I just – we’re gonna put this link on our on our show page. But he did a riff there a couple of days ago, about Federal Reserve and interest rates. But then he got into Elon Musk, and how Elon Musk at $260 billion, the richest man in the world can be really cash poor, but still can manage to borrow a bunch of money against all his Tesla shares to buy Twitter, and that’s the only way I can summarize this thing is you gotta see it. It’s about four minutes long. Trevor does a great job. And I’m just gonna – I’m just gonna leave that right where it is.

Kimberly Adams: Yeah, it was great. Because the crux of it is like, he can’t be taxed on the money, but he can spend the money.

Kai Ryssdal: Right? Yeah, that’s exactly it. That’s exactly. It’s really easy to be rich in this economy. It’s you can you can make a lot of money when you’re rich without spending a lot of money.

Kimberly Adams: It’s very expensive to be poor.

Kai Ryssdal: Yeah. Yep. Yep. Yep.

Kimberly Adams: Mine’s is a sports one. This is la ovely story in The New York Times, about a man named Tom House, who is basically this expert on throwing things. And he works with baseball players and football players. And he has like, broken down the way that the human arm throws things to this extreme level of science. And he’s so good at his job. And he’s working with this group, and they’ve created like an app to, because even though he works with very famous people, he wants to extend this knowledge so that kids can can learn how to throw things better for sports, ideally, but we’ll see. But it’s like an app that allows them to get some of these techniques and to learn from one of the best in the business. What drew me to this piece, it has an amazing opening, and I’m just gonna read it and I hope you go back and read it’s a long piece, but it’s lovely. “When most of the world first became familiar with Tom House, he was catching Hank Aaron’s record breaking 715th homer in 1974. House then a relief pitcher for Atlanta, was stationed in the bullpen, just in the bullpen beyond the left field fence at Fulton County Stadium, just where the ball happened to come down exactly as House had planned it.”

Kai Ryssdal: Yep, it’s great. It’s a great piece.

Kimberly Adams: He, he knows how these things how like the physics of it, and the physics of the human body works so well, that he knew exactly where to position himself to catch that ball. I think that’s amazing.

Kai Ryssdal: It is. It is absolutely amazing. Yeah it’s a good piece.

Kimberly Adams: Also, what’s amazing is all of the support that we’ve been getting –

Kai Ryssdal: Nice turn. Nice turn, good job.

Kimberly Adams: Thank you. Thank you. The amazing support we’ve been getting from everyone who has donated over the weekend, and so far in our fundraising drive, thank you so much from that, we do still have about $20,000 left in that pot of matching funds from Tim Ranzetta and next gen personal finance. That’s, you know, money that we’re gonna use to help educate teens and kids about money with our programs like Million Bazillion. Yay, Bridget and Ryan and all the other team that’s working on that. And yeah, so if we can please get more support, that would be awesome.

Kai Ryssdal: marketplace.org/give smart is where to go. And if you hook us up while that match is still in effect $20,000, your money goes twice as far marketplace.org/give smart, or you can click the link in the show notes. And and there you go. There you go. Yeah. All right. Super quick on the way out because we went a little long today we are back tomorrow with a deep dive into Title 42 and immigration during the pandemic it is. Look, it’s complicated. It’s political. It’s a labor force story. It’s also social because there are people on the other end of this policy we’re going to talk about that and we hope you’re there.

Kimberly Adams: And please tell us what you thought about today’s show or any of the shows so you can send us a voice memo or an email to makemesmart@marketplace.org . Or you can call and leave a voice message at 508-U-B-SMART.

Kai Ryssdal:This podcast that is in your feed right now is called Make Me Smart is produced by Marisa Cabrera or intern’s Tiffany Bui. Today’s program was engineered by Charlton Thorp.

Kimberly Adams: Our senior producer’s Bridget Bodnar and the director of On Demand is Donna Tam.

Kai Ryssdal: Boom.

Kimberly Adams: I have to say there was almost a Jasper crisis a moment ago. He really looked like he was about to knock something over and I was like don’t do it cat! Don’t do it.

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The team

Marissa Cabrera Producer
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