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AMA 116 – Mobile and Digital Banking in the United States with Jay Sidhu

 

 

Jay Sidhu is the CEO of Customers Bank and his bank has just come out with a new digital banking service called Mobile Bank that can be done right from your smartphone. Jason Hartman is interested in learning more about Mobile Bank and talks to Jay about how America’s banking system is riddled with inefficiencies, Bitcoin, and more on today’s show.

 

Key Takeaways:
1:40 – Customers Bank is a business bank and Bank Mobile is a consumer bank.
5:20 – What’s the difference between Bank Mobile and Allied Bank? Jay explains.
8:45 – Jay shares his thoughts on Bitcoin.
15:40 – Jay believes the FDIC definitely has the money to pay in case a crisis happens.
22:10 – Uber is great because there’s finally some competition in the taxi monopoly and the same thing needs to happen in banking.
24:00 – How does Mobile Bank make money if they have no fees? Jay explains.

 

Tweetables:
“Banks charged $32 billion dollars last year in just overdrafts alone.”

“32 billion is three times what America spends on lung cancer and breast cancer alone.”

“I think Bitcoin can replace the real aluminum coin, but it’s not going to replace the real currency.”

 

Mentioned In This Episode:
BankMobile.com

 

Transcript:

Jason Hartman:
It’s my pleasure to welcome Jay Sidhu to the show. He is the CEO of Customers Bank and we’re going to talk about digital banking, mobile banking, and the big Wall Street banks and make some interesting comparisons today. Jay, welcome, how are you?

Jay Sidhu:
Oh, thank you very much. It’s great to speak with you.

Jason:
Good to have you. Give our listeners a sense of geography tell us where you’re located.

Jay:
We’re located in Pennsylvania outside of Philadelphia and the market we serve extends to Boston down to Philadelphia.

Jason:
Okay, fantastic. How do you define yourself? Are you, for example, are you a regional bank, a mobile bank, a digital bank, how do you define your company?

Jay:
Yes, we are actually more of a business bank, it’s a commercial bank, and we’re broken into two different divisions. So, Customers Bank, which you introduced me with is a business bank where 95% of our revenues come from our businesses and then earlier part of this year we start a consumer bank that we call Bank Mobile, which is purely a digital bank and Customers Bank, which is the business bank works very few branches, so it’s not like a traditional bank, but it’s a very high growth, very high touch, very much a personal service, so we call our strategy a high touch supported high-tech. That’s at Customers Bank and we call our strategy bank mobile, which is a digital bank more like high-tech with high touch like features.

Jason:
What do you mean when you say a digital bank? If you could define that for us.

Jay:
Yeah, it’s a very good question. A digital bank to us is where you can do all your banking that traditionally you had to go to a bank branch to do such as, open an account, get some advice, talk to a person about anything that’s important for you, be able to open any kind of banking relationship all through your smart phone, your tablet, your laptop or your desktop, so bank mobile, at bank mobile, by taking a picture of your driver’s license. It fills up about 85% of all the information that’s needed to open an account, so the other 20% is you’re ask a couple of questions and your account with bank mobile is open and the account could be a single account or a joint account and we can have, you can have a checking account, you can have a high-rate savings account, on top of it you get line of credit and lots of other features. If you’re interested, we can talk about, but it’s very revolutionary because customer’s today believe that you can buy a ticket around the world in 5 minutes, but it takes you 25 minutes after you walk through a bank branch to ever do business with a bank.

Jason:
That is true, but I would submit to you, Jay, that buying that airline ticket isn’t very easy either.

Jay:
Yeah.

Jason:
Given the way the airlines have figured out how to manipulate the consumer so much, but yes, certainty you can do it online and it’s probably a lot more convenient than it used to be. I guess we can agree on that. Now, when you talk about the digital bank, would that be the same or similar to Allied Bank, because they don’t have branches, is that, is that how you make that definition or is there some other nuance that I’m not hitting on there?

Jay:
No, it would be Similar to an Allied Bank, except is not the pure digital bank. Allied Bank, you can deal with Allied Bank once you open an account and an account opening involves also some communications like sending your signatures, sending your authentication of your ID and those kind of things through the mail and Allied Bank is principally for folks who are looking for a high rate on their savings account. So, as you know, they say no branches equals high rate, that’s Allied proposition. Our proposition is effortless banking and no fee banking and no fees whatsoever as well as high rate on your money that you are keeping in a savings account plus you get a personal banker plus you get a financial consult based upon any issue that you’re facing right now, plus you get 55,000 ATMS, now that’s similar to Allied Bank, and on top of that, if you ever want to send money to your friends or what not, you can do it totally free if you only have their email address or their cellphone and the like. These are the kinds of features that you would normally expect to make your banking transitions effortless. So, we are like a traditional bank in the palm of your hand.

Jason:
When we talk about traditional banks, I mean, everybody has always complained about all of the little garbage fees here and there and they’re so hidden and you can’t really analyze them very well. I’m sure this is by design. What is the movement in the banking industry? I’m sure you see the banking industry or at least the consumer side of it wanting what you offer and your type of plan, but what’s going out there with this? I mean, do you feel it’s kind of scammy all these little nickle and dime fees with these big banks.

Jay:
I think it’s outrageous. To give you an example why I feel that way and why I believe you are absolutely right is one example of one fee and that’s called an overdraft fee or a bounced check fee. When you add up all the money that the banks collected from consumers including those who made honest mistakes, now here I am a bank chairman CEO and even I have bounced checks in my life and it’s because everybody can make a little mistake, but banks charged $32 billion dollars last year in just overdrafts alone. That equated to, if you look at the amount of money that they advance to their customers, they equated to about 1800 percent on the money you give to the customer when you pay their check. Now, is that fair? Is charging something like 30 times than what payday lenders charge? Is that right?

Jason:
No, it’s not. It’s not right. Yeah, so when you’re saying payday lenders, those are like outrageous, outrageous rates they charge.

Jay:
You know there’s 32 billion is three times what America spends on lung cancer and breast cancer alone. 3 times!

Jason:
Unbelievable, unbelievable. Speaking of fees and so forth. One of the things the crypto currency people like to talk about is, you know, they believe this whole monetary system will be decentralized and Bitcoin or something like that will really be the future and I would love to be wrong about this, but I think they’re wrong, because I think the powers that be are so big, governments and central banks, but what are your thoughts about crypto currencies and Bitcoin and so forth. Do you see this as any significant movement or is it just a flash in a pan.

Jay:
I think it’s more of the latter, the flash in the pan and I’ll tell you why. The technology behind Bitcoin is really fascinating and that technology is based upon the technology that’s used when you play game. It’s amazing what you can see and what can happened and you get real-time impact and you can have the little symbols on your laptop or your tablet pop up and start talking to you. It’s a similar technology so that you can actually create sort of a synthetic currency and if the other party is willing to accept that, it becomes a currency, but the fundamentals of currency go way beyond that and currency has been around for centuries based upon real value as perceived by the recipient and that value is dependent upon the economic strength of the issuing country or the issuer of that currency and that can not be replaced by technology.

So, in my view is in certain cases like large funds transfer, money transfer or in certain very small instances like admittances of $5 or $100 or $50, there is bound to be a revolution because our existing system is very inefficient and the technology that’s been developed for Bitcoin will be the technology that will be used for real-time transfers of payments, but Bitcoin replacing the dollar or the euro or any other current, I don’t think it’s going to happen in my life time and I don’t think it’s going to happen in this whole century.

Jason:
Yeah, I would have to agree with you. I don’t know what these people are thinking. It’s almost like a religion these debates I’ve had with people. They have furor, these huge belief in this, and the same is trust of the gold bugs and I don’t know why they think the governments of the world and the central banks of the world would sit idly by while one of their greatest powers is just taken away from them. These are the most powerful entities the human race has ever known. They run militaries, they control so much of the entire world, and currencies are a huge part of their power. Why would they give it up? And then they say, okay, well they don’t have the answer to that one, so you can, you can answer that one in a moment, but then they say, well look at the technology of Bitcoin, well that technology is not unique to Bitcoin, yes, maybe the block chain came from Bitcoin, but it’s open source, you know, they can make a new dollar called Dollar 2.0 and it can have digital block chain technology.

Jay:
Absolutely right. It’s a little bit like the gold rush, it’s greed that’s driving the development of Bitcoin technology and they’re hoping that they’ve built a strike gold like all the, you know, the people went to the west to strike gold in a big way or to strike oil in a big way and by the time people realized that this is not the real stuff, they already made their money and they’re out spending it some place.

So, beware to rely on Bitcoin. You can buy cars with it, you can even buy tickets to stadiums to go see a football game on Bitcoin today, but I think it’s all just to try to create a differentiation in this technological field and I completely agree with you. Certain small transactions just like coins that replaced paper currency in certain ways, I think Bitcoin-type stuff, which is a digital coin, can replace the real aluminum coin, but it’s not going to replace the real currency.

Jason:
I just want to say that everything I just said about Bitcoin, I hope I’m actually wrong about it, but I’m not. I would love to be wrong about that, by the way, I just want to say that for the record. So, is there any difference in terms of the safety of ones money in a physical bank or a virtual bank?

Jay:
Not at all, not at all.

Jason:
Because it’s all virtual, really, in the final analysis isn’t it?

Jay:
It is all virtual, you know, when you put your money in a regular traditional bank. It gets shipped out of there, it’s kept in a safe, and it’s shipped out of there for the reserve or some place else and it’s moving around, it’s all a virtual currency. The main thing is that now rather than you have to go the bank, with an aide of a smartphone, the bank can come to you and you can conduct your banking. It’s a whole lot safer than relying on a postman delivering all the information about you including your name, your address, your account number, your signatures, where you spent the money the last 30 days, all the checks written behind it, and when you get the credit card statement where all you spent all your credit card transactions. Imagine somebody following that mailman and picking all of that up. That is a threat. Over here, all that information is coming to you in a secure way, in your hands, without a threat of anybody taking stuff out of your mailbox and compromising it.

Jason:
Yep, you’re absolutely right. No question about that. So, speaking of safety though, during the financial crisis, the FDIC increased insurance limit to $250,000 per account investing. If, and this is a huge question obviously, but if there is, and many people think there will be, a banking crisis in the future or a financial crisis or a Wall Street collapse or a dollar collapse. There’s so many flavors of this, but it certainty will all affect the banks in one way or another, whether it be a huge inflationary or deflationary crisis or whatever happens. If something happens and if a lot more banks insolvent, the FDIC doesn’t have the money to pay. Now, granted, the government can turn on the printing press and bail out the FDIC, but what are your thoughts on that?

Jay:
I think first of all FDIC definitely has the money to pay it because FDIC is owned by the United States government. If the United States government in this case of FDIC or in the case of all the consumers goes totally bankrupt, like you said, they can still control the printing press and so I think I would be absolutely clear that there should be no American who has any account in an FDIC insurance institution who should lose any sleep over the safety of their money whatsoever, because the day an American consumer loses their money, you might as well forget about living on earth.

Jason:
The faith in the system will be destroyed, of course, if and when that ever happens, but interestingly though, and yes, they could turn on the printing press, but if you look at it from the actual, and I can’t remember the numbers at all, the amount on deposit and the amount the FDIC has, and then I’ve read some articles where it’s compared to other types of insurance and other insurance companies and it’s been said by some that any other type of insurance would require a much higher reserve ratio to pay claims, right?

Jay:
I think they are misinformed and there is no other insurance company that is has the United States government behind it and the monetary system behind it and the monetary fund behind it. You’re talking about the dollar which is the international reserve currency. That’s why I think they’re just using scary tactics and there is no truth to it whatsoever because I know in 2009 we had a customer come in who took out a million dollars and we asked him what are you doing with it and he said, I’m going to dig a hole and put it underneath it, and guess what, that money was stolen. It’s kind of stuff is nonsense and very extremely irresponsible and there is no better place to keep your money than in a FDIC insured guaranteed bank and the reserves can be tremulously changed and (#17:50?) and they are based upon the risk profile that the government saves and that is the way the insurance system works, but the largest and the strongest insurance company in the world is the federal departed insurance corporation.

Jason:
Well, okay, so I agree with you there in terms of the backing by the government, but I was without a bailout. That’s what I was addressing, without a bailout, okay. You don’t need to be defensive about it. I mean, I’m not saying you are.

Jay:
This is a fact though. I’m sorry, but when I’m passionate about it, when people try to..

Jason:
Let me make a distinction though and this is what I was going to say, okay, is that I had Peter Schiff on the show and we all know where he stands and he’s been wrong massively. I will remind you Peter Schiff, I remember when candidate Obama was running for president the first time, Schiff said that there’s going to be massive inflation and gold is going to be $5,000 an ounce by the end of Obama’s first term. Well, he was so wrong about that, it’s not even funny, but he did say something kind of interesting about the FDIC when he was on my show and this was a while back and he says, the FDIC will give you your money back. You’ll get your money back, you just don’t know what it’ll be worth, because if they do turn on the printing press to cover claims, if there’s a crisis and all of these things are huge ifs, I completely understand that, but since you’re a banker, I wanted to ask you about it, then the money would be inflated, it wouldn’t be debased, that’s all.

Jay:
It’s always a possibilities, but that has nothing to do with losing your money. Does economic inflation and deflation has nothing to do with reserves of FDIC. So, that’s why I think inflation and deflation are the policies of the federal reserve to really avoid deflation into a worried inflation and there are controls installed by the governments of the different nations and especially the one that’s in the United States. Every body was talking about that the money supply surged that we had in the last recession or the great recession would cause a high level of inflation, well, guess what the biggest problem in the world today is deflation, risk of deflation, not inflation. So, it’s amazing, It’s amazing. Things do work! You know, in our systems and the trust in the government of the United States.

Jason:
It’s certainty not in the government’s interest to have problems or defaults or anything like that, so I completely agree with you. I’m just asking a few questions here. So, back on to the subject of whee you are, I mean, do you see, your service has been called the Uber of banking, okay, and Uber has revolutionized an industry obviously and it’s been a great thing and all of the other companies out there like Lyft and so forth that are in that business are just doing great things for people, do you see the big banks coming into this market. I mean, they must be, right?

Jay:
Yeah, I think they are saddled with inefficiencies, so the reason why Uber is doing so well and I think there’s a need to have Uber-like experiences in banking is because the Taxi medallions by having a control on the supply created a value of a medallion like in New York to be somewhere between $800,000 to a million dollar. That is like a monopoly.

Jason:
That’s unbelievable. Russian guys own all the medallions in those cities.

Jay:
Yeah, so whenever you have a monopoly like that and you have a control on the supply rather than a free enterprising system, you artificially hike the prices and you need the competitive forces to come in and make it balanced and provide the kind of benefits. So, here it is, somebody can drive a brand new clean car for five to six hours a day, provide an exceptional service to the customer and the driver who drives from six to seven hours a day he also buys his own car and he makes two times as much money as a driver off a taxi cab.

Now, that’s the benefit of technology and that’s the benefit of Uberization of the taxi field and that’s what’s needed in banking. It’s the biggest ripoff that exists in our economy that the banks are ripping off consumers because they didn’t know how to attract consumers, so they’ve built all these branches in the most expensive street corner and now they don’t know what to do about it because in their wisdom they signed leases for 15 years, guess who’s paying for it? It’s the customer’s who are paying for it. It’s the baby boomers who are paying for it and the middle income American’s who are paying for it.

I would love to see the research dollars going into cancer and into breast cancer and into vegetables and health of the country be doubled and tripled and quadrupled without any debt being going to the country rather than having the most inefficient banking system in the world. In Africa you can do more mobile banking, but mobile banking in the United States is still considered like, wow, that is crazy. That’s why we started Bank Mobile with the idea that we want to create a new revolution and we’re going to charge no fees whatsoever. That forces us to use technology to make the customer experience fantastic and provide and guarantee them if you bank with us if you don’t feel like you’re getting the top notch experience, you gotta find some place else, but you should never be charged a fee.

Jason:
It’s unbelievable. I mean, it’s awesome. So, Jay, let me ask you though, for your bank when you do the mobile banking, I mean it’s a great vision you have, when you do that, how does the bank make money? Is it simply on deposits and loans? I mean, there’s no fees at all? It’s just a clean, completely simple thing, right?

Jay:
The principle is you keep your costs low. The costs of running a bank can be very low if you don’t have branches.

Jason:
I was at a Wells Fargo branch just a few days ago and I even commented to the woman there. I said, you have all this real estate. I mean, you’ve got branches everywhere. There’s just too many of them. You don’t need this many branches. You walk in and these branches are huge and there’s no body in them. What do they do with all of this real estate? My God.

Jay:
I know Jason, they just keep charging more and more fees. They’re charging more and more fees, they’re paying less and less interest. Now, here we are as a bank, Bank Mobile pays 75 business points on savings and JP Morgan, Chase, and Cities of the world and what not, they one to five business points. What is the difference? That’s billions of dollars. The difference is it’s not just the fees, but they’re paying for the branches by paying consumers less on their savings by charging more for their loans and by charging fees. Now, is that good for the economy? No.

Jason:
You’re absolutely right. It’s just going to a very small group of banksters. Absolutely. Well, Jay, this has been a very en lighting discussion. I appreciate your passion. Give out your website, tell people where they can find out more about you.

Jay:
Okay, well it’s BankMobile. That’s an app on the app store or on Google store and BankMobile.com

Jason:
Yeah, fantastic. Jay Sidhu, thank you so much for joining us today.

Jay:
I appreciate it so much, Jason. Thank you.

Announcer:
This show is produced by the Hartman Media Company, all rights reserved. For distribution or publication rights and media interviews, please visit www.hartmanmedia.com or email media@hartmanmedia.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network Inc. exclusively.

California’s Drought Hits Wallets – and Health

AMA3-28-15It takes nearly five gallons of water to cultivate a single walnut – more than it takes to grow a head of lettuce. But in drought stricken California, the water it takes for those and other fruit and vegetable crops is in drastically short supply – and that has effects far beyond the borders of the Golden State.

The entire state of California is in the throes of a drought of epic scale, with conditions ranging from “abnormally dry” to “exceptional drought” from North to South. Drought conditions have persisted for so long that even heavy rainfall does little to mitigate the problem.

California’s water shortage has many causes, some related to climate change and shifting weather patterns, others entirely due to human interventions. In a heavily populated state, residential consumption is part of the problem. According to new statistics reported by Mother Jones, Palm Springs residents account for a staggering 700 gallons of water per person per day.

In less affluent areas, consumpti0on is significantly less. Riversiders use around 300 gallons a day, and in working-class Long Beach residents use under 200 gallons a day. But although residents are warned to limit toilet flushes, restaurants are asked not to serve water unless a customer asks, and the “drought police” issue citations for watering lawns, the big consumers of the state’s finite water supplies are large corporations, industries and tourist attractions.

Fracking, mining, golf courses and Disneyland may be among the leading water consumers in the state. But a major part of California’s water goes to agriculture. The state is the little known “breadbasket“ of the United States, responsible for producing the bulk of the produce the rest of the country eats every day.

California produces 95 percent of all US broccoli, 92 percent of the country’s strawberries and 90 percent of its tomatoes. But while those crops are also grown elsewhere in the country, California leads the nation in the production of nuts. Accounting for 99 percent of all almonds and walnuts and 98 percent of pistachios, California dominates the US nut market.

And nuts take a lot of water. Drought conditions are threatening to create a shortage of almonds and push prices up for all nut sand nut products such as pistachio ice cream and almond milk. And while the drought’s impact on nut production may seem extreme, it’s just one example of the impact drought conditions in California will have on the rest of the country – and the world.

Economists expect California’s drought to push prices for most of the fruits ad vegetables America consumes every day to near record levels. That’s not counting the higher priced organic versions of these products, which are generally higher under all conditions.

It’s not just the drought that creates higher prices. The cost of bringing those fruits, nuts and veggies to markets across the country also plays a role, in pushing prices out of the reach of some consumers.

And that could have a major impact on other aspects of American life. Dietary guidelines old and new emphasize the consumption of fruits, vegetables and nuts as the cornerstone of healthy eating. All of these are rich in nutrients and healthy fats that contribute to heart health, weight loss and a strong immune system. They’re potent weapons in the fight against obesity and the leading causes of death in the US – but if they’re priced out of the budget of many Americans, that could change.

Getting Americans to eat their veggies has long been a frustration for nutritionists and healthcare professions –even in the best of times. But the higher prices caused by California’s drought could push people toward less healthy alternatives – and that, some economists fear, could have a long term effect on the health care system.

The effects of the drought may prove to be a boon for other agricultural states, though. The production of some of California’s leading crops could shift to states in the South and Midwest where water is more plentiful and cheaper. That could also draw other commercial enterprises away from California, which could boost the struggling economies of states suffering from a stagnant job market and limited opportunities.

But what won’t happen right away. It takes time for crops to grow and get to market, and for other kinds of businesses to set up operations. There may be ways to reduce the impact of California’s drought on the heath and the pocketbook of American consumers – but those changes are a long way off.(Top image:Flickr/EvgenyDodorov)

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Wikimedia Fights NSA For Your Civil Rights

AMA3-26-15The National Security Agency’s domestic surveillance operations hit the headlines last year to a volley of outraged objections from civil libertarians in the US and abroad. But while the news coverage has faded, the spying hasn’t – and a new lawsuit filed against the agency by the ACLU on behalf of an unlikely coalition of plaintiffs aims to change that.

As Newser reports, the new suit, called Wikimedia vs NSA, was filed on March 10 2015 by civil rights watchdog the American Civil Liberties Union. The named plaintiff, Wikimedia, is the parent of popular online encyclopedia Wikpedia and several other online “wikis,” or online information communities.

Wikimedia isn’t alone in challenging NSA’s right to spy. Joining the online information giant is a long list of plaintiffs committed to human rights and civil liberties including the Global fund for Women, the National Association of Criminal Defense Lawyers, PEN American Center. Amnesty International, Human Rights Watch, the conservative think-tank the Rutherford Institute and the Washington Office on Latin America.

The suit challenges the NSA’s domestic operations as a violation of US cttizens’ First and Fourth Amendment rights. But it also alleges that the Agency’s snooping puts the entire Internet communications structure at risk with its “upstream surveillance” practices.

In the old days, government snooping was accomplished by simpler means, such as intercepting a target’s mail, tapping phones or bugging rooms. In the digital age, though, it’s possible to expand the scope of spying on a mass scale, simply by tapping into the structures everyone uses every day to conduct business and make personal connections.

That’s what “upstream surveillance” does. The Wikimedia suit, which also names the Department of Justice as a defendant, calls it the “suspicionless seizure and searching of Internet traffic” on US soil by NSA and its related intelligence agencies. Upstream surveillance involves is accomplished by tapping directly into the physical “backbone” of the digital communications structure that connects the US with the rest of the world.

By jacking into the actual cables and routers that carry Internet communications, NSA can capture enormous amounts of data from communications while they’re in transit, either domestically or headed out of the country. The operation seizes both business and personal communications indiscriminately in a search for tens of thousands of search terms it considers sensitive.

NSA isn’t alone in this operation, though. Investigative reports revealed that ajar US telecommunications carriers were only too happy to help, making their hard and software available to the snoops – and also, their customer databases.

Wikimedia and its fellow plaintiffs charge that by tapping the “backbone” of the Internet, NSA threatens the very foundations of democracy itself. By capturing masses of data without grounds for suspicion, they say, NSA is violating constitutional protections against unlawful search and seizure, and threatening personal privacy and intellectual freedom.

That’s why Wikipedia heads the list of plaintiffs in the case, which also names the US Department of Justice for giving NSA the green light on its domestic spying efforts. Wikimedia stands for freedom of expression and information – and the expansion of knowledge. It’s those principles that NSA threatens most, they say, by compromising people’s right to privacy and the ability to share information without the fear of government intrusion.

But it’s precisely that freedom that concerns NSA and the other major players in the intelligence game, such as the CIA and State Department. The claim that free sharing of knowledge and information lets terrorists hatch plots and grow cells of followers that could one day destroy the country. Putting as many communications as possible through the sieve of red flag search terms is essential to protect the nation.

Whether those concerns are founded or not, the NSA itself fell victim to the free flow of information when former contractor Edward Snowden famously blew the whistle on its domestic spying operations. Details hit the headlines and well-publicized investigations began, shining unwelcome light into the shadows surrounding the nation’s number one spy.

As a new report from the consumer site Common Dreams points out, documents leaked by Snowden specifically name Wikimedia as a good surveillance target due to the high volume of traffic related to its sites. Now the online information collective is fighting back,  not just for the privacy of individual Internet users – but for the security and freedom of the Internet itself.  (Top image: Flickr/ju-x)

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Virtual Reality Tecnology: Big Changes for Business?

AMA3-24-15No more real estate agents? No more brokers and financial advisers and money managers? Those jobs and many others could be obsolete in the next five years, thanks to advances in digital technology that put many of their functions into the hands f users who can take full control of a range of financial transactions with the click of a mouse.

Online financial management isn’t mew. For years, a variety of websites and apps have been helping users find and buy homes, trade stocks, conduct banking transactions and more. It’s possible to browse home listings, apply for a mortgage and conduct credit checks in minutes – and get 24/7 support for all those things on any device you choose.

Advances in video and “smart” applications are pushing the envelope even farther, though, with even more sophisticated uses that promise to bring major changes to the way we do business in just about every sphere of life. Leading the way: virtual reality and artificial intelligence applications that can eliminate distance and streamline decision-making.

Some forms of VR-inspired technology are already in use. In real estate, for example, its now possible to take “virtual home tours” of properties via videotaped walkthroughs of homes up for sale on a listing site. Video technology also lets doctors consult on cases and examine patients that are halfway around the world.

But advances in VR tech make it possible for an individual to be “present” in places miles away, with a 350-degree view of surroundings in real time – and to virtually move in space. That technology has enabled fathers far from home in military deployment or other job situations to be virtually present for the birth of a child or milestone family events. It’s also allowed consulting doctors to “sit in” on medical procedures and surgeries.

Thanks to Amazon and other online retailers, the concept of the “recommendation” engine is already familiar: based on your previous choices, the site you’re browsing offers other suggestions you might like. But artificial intelligence is getting even smarter, with the potential to mine a user’s history for clues about what they’re looking for and construct an entire catalog of potential choices – all on its own.

In combination, those technologies have the potential to forever change the way the world does business – not just for large corporations or specialized industries, but for the average consumer in daily life. They have the potential to save money, reduce energy waste – and out users in control.

That could eliminate a wide range of professions that evolved to assist people in handling complex transactions that until recently, they really couldn’t do easily on their own. Take real estate, for example.

In pre-digital days, a prospective homeowner usually needed the services of an array of professionals to finalize a home purchase: agents with access to property listings, mortgage bankers, and more. The process could take weeks or even months.

Today, many of those tasks are accomplished via online listings, mortgage pre-qualifying applications ad more. And with advances in virtual reality technology, they may well be accomplished entirely online at the user’s leisure, with virtual home tours that let browsers try out the property by uploading images of their own furniture and décor, or by adding landscaping and other features to the scene.

Smart technology on the site would also store a detailed set of user preferences to make new recommendations – and initiate bids or financial transaction right from the site, without the need for an agent, broker or other third party professional at all.

These technologies are now in their early stages in a variety of other consumer and business related environments too. It’s possible now to “try on” glasses, hairstyles and even new facial feature before plastic surgery – just by uploading a photograph. The fashion world also embraces aspects of VR and AI tech to show buyers outfits and accessories before they buy – and make other recommendations based on those choices.

Widespread applications of VR and AI technology could eliminate the “middleman (or woman): in many situations, with less need for travel and professionals to bring two parties together on a deal. Since information is available to everyone, any consumer can make educated decisions about finance, commerce and more.

Advances in VR and AI applications are coming fast, putting the world of tomorrow into the hands of consumers today – and offering them more control than ever over the decisions that shape their lives. (Top image:Flickr/webtrends)

Read more from The American Monetary Association:

AMA115: Learn About The New Advances in Regenerative Technology with Patricia Cox

Millennial Entrepreneurs Change the Economic Game

The American Monetary Association Team

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AMA 115 – Learn About The New Advances in Regenerative Technology with Patrick Cox

 

Jason Hartman invites Patrick Cox on to the AMA show to talk about the Apple watch, stem cell technology, and why the FDA is holding back on amazing advances in the scientific and medical community. Patrick Cox specializes in the field of transformational technology and has worked closely with scientists all over the world. You can visit Patrick at PatrickCoxDNA.com to see him experimenting on himself and creating brand new muscle tissue.

 

Key Takeaways:
4:10 – There’s a lot of scientific advances going on, but the media has always been bad at reporting science.
9:40 – Right now there are drugs that can cure common life-threatening diseases, but the government takes a long time to approve them.
15:10 – The FDA banned a natural product that reduced inflammation and one of Patrick’s friends had a stroke because he couldn’t take the plant anymore.
22:30 – If the FDA is the problem, what are other countries doing in the regenerative field?
26:00 – Patrick gives his opinion about the Apple watch.
28:00 – Big technology companies are supporting medical companies, which can help with a lot of roadblocks the medical/science community is currently experiencing

 

Tweetables:

“The problem is that the media has never been good at covering science. The profits in big media have disappeared.”

“The SSA is underestimating our lifespans.  It would make the debt over hangings appear even worse than we think it is.”

“It was thought that damage to the heart caused by cardiac events couldn’t be repaired, but we know that is not true.”

 

Mentioned In This Episode:

http://www.patrickcoxdna.com/

https://www.mauldineconomics.com/

 

Transcript

Jason Hartman:
It’s my pleasure to welcome Patrick Cox to the show. He’s editor of the transformational technology alert at Mauldin Economics and we’ve had John Mauldin on the show before. It’s great to be talking to Patrick about some interesting stuff today. We’re going to be talking about Apple’s new smart watch. We’re going to talk about longevity and what’s going on in that field and, you know, how this all interplays with the economy. Patrick, welcome, how are you?

Patrick Cox:
I’m fine, thank you, Jason.

Jason:
Good, good. It’s good to have you. Just give our listeners a sense of geography and tell us where you’re located.

Patrick:
I’m on Marco Island or maybe in Marco Island, which is about the same latitude as Miami. I’m on the west side of the state off the coast from Naples.

Jason:
Okay, fantastic. So, you’re in Florida, good, good stuff. What are you covering mostly in the transformational technology alert newsletter.

Patrick:
Bio-technologies, disruptive bio-technologies for the most part.

Jason:
And what’s the hot topic of the day? There’s so much going on out there. It’s really just an exciting time to be alive.

Patrick:
It is. It’s actually overwhelming. It is my job to keep track of it and I’m not sure that I do, frankly. There’s so much going on. The point that I try and get across to people is everybody knows Moore’s law. Everybody knows that microcircuits double in power at a given cost every 18 months to 2 years. Well, bio-technology is actually making faster advances. The cost of a genome is falling at twice of the rate of, genome sequencing, is falling at twice the rate as the cost of a chip.

We’re seeing this across the board and all kinds of tools in bio-technology, but we’re not hearing about the results for a variety of reasons. One is that the FDA won’t let companies involved in the research say anything, really. So, you really have to dig to find out what’s going on, but it’s worth it because it’s going to have a profound impact on everybody’s lives.

Jason:
Is the FDA just saying that would be like a forward looking statement and it’s kind of like a public company in a quiet period, is that why they’re not letting people talk?

Patrick:
Yes, that’s part of it. It’s a big part of it. The FCC and FDA are both very restrictive. My wife is a nutritional biologist and she calls this phenomenon information hoarding and just about everybody in the profession hates it, but if you’re apart of a business, you’re really restricted in what you can say, what kind of forecasts you can make.

Jason:
Okay good, well, what are some of the exciting things? It’s interesting that you say, it’s more exciting than what we’re hearing. Most people would think probably that would be the opposite. You know, they’d think, there’s all these people out there promoting their wears and trying to get attention in the market place, but it’s actually a little bit more quiet than the reality, I guess, huh?

Patrick:
Well, you know, part of our problem is the media, which has never been good at covering science, is disintegrating. The profits in big media have disappeared. I’m proud to say I actually played somewhat of a role in that. I was at Netscape when we destroyed the dominant paradigm and did away with the monopoly and information dissemination that was keeping the old media in power and now that’s gone.

As a result of that, however, the number of journalist who are covering science, even badly, has diminished. You have to read the journals, you have to be attending the conferences, you have to be talking to scientists to know what’s going on, but it’s worth it because we’re seeing true revolution in human life and the important thing to understand though it’s a continuation of a revolution that’s been going for 100 years, during which time average health spans, life spans, in North America have doubled, but that will accelerate.

Jason:
It’s interesting the distinction you just made. It maybe more important that the health span has increased so much more than the life span, because, you know, people are living healthy, active lives right up until the day the croak and now if we can increase that life span and health span, move it up another 20-30%, that would be pretty amazing. Big implications for the economy too. Both positive and negative, I’m not sure.

Patrick:
Absolutely and you’re right, it’s a two-edged sword, but the pain is largely political. Right now the social security administration is underestimating our actuarial lifespans, because it would make the debt over hangings appear even worse than we think it is. The only solution to that given a rapidly falling birth rate and a rapidly expanding older population is that we invest longer, we work longer, and all of that is possible with technologies that already exist. I’m not speculating about what’s coming around the corner, by the way. I’m telling you right now, if we had the permission to roll out these technologies, we can increase lifespans by decades.

Jason:
So, what’s stopping us from rolling out these technologies? Is it something as simple as FDA approval or what?

Patrick:
That’s a big part of it. Forbes magazine estimates that for every approved drug, the pharmaceutical industry spends $4 billion dollars. Now, some people say that’s too high and it’s only $1.5 billion dollars, either way, it’s crushing. Fortunately, the Japanese who are farther along this road, they have a much larger older population and even lower birth rates in America and Canada has just recently done away with phase 2 and phase 3 clinical trials in the area of regenerative medicine, which may be, arguably, the most important area of medicine today, stem cell medicine. We’re seeing, out of necessity, governments begin to recognize the need to start looking for cures instead of trying to stop therapies from coming to market, which is essentially what the FDA is doing today.

Jason:
Milton Friedman did some writings about the FDA years ago.

Patrick:
He was a friend of my, by the way.

Jason:
What an incredible friend to have, boy, wow. You must have had some conversations with him. Wow. I would have loved to talk to him if I could go back. You know, he did some really good writings about the FDA and what you’re saying is very reminiscent of that. Why is the FDA getting in the way like this?

Patrick:
Well, this is the nature of bureaucracy. If you know Friedman, you know the iron triangle. Bureaucracy once created doesn’t want to go away. In fact, it’s on impulses to self-interest. I mean, bring up some other economists if you look at the public choice school, George Mason, bureaucrats and politicians act in their own self-interest and that essentially leads to the institutionalization of these organizations, which have enormous power over everything that we do.

So, for instance let’s take viruses, there is a, there are several new technologies, brand new platform, completely new sciences that are off the radar. The average medical journalists are not hearing about them, DNA vaccines, and then these contragate nanomole ligand structures, which are in fact nanotech machines, either one of these technologies, both of them have been proven in multiple animal models and because they work in fundamentally different ways than the small molecule drugs, which is what we think of in terms of drug discovery and approval.
\
I’ll just tell you they were working people. These companies can’t for legal reasons, but they were working people, but instead of rushing them to market, instead of helping these companies bring these new technologies to fight influenza, Ebola, HIV, herpes, the government is obsessed with not being put in the position where they let something through that may have some side effect later on, which is an absurd position to take when so many lives are at stake.

Jason:
Yeah, it really is. So, we’ve heard a lot of talk about super bugs and the scary proposition of these bugs, you know, these viruses becoming immune or bacteria I should say.

Patrick:
They do adapt. Viruses also can adapt, but normally when we talk about super bugs it’s bacteria.

Jason:
Right, absolutely. So, it’s interesting what you said about the viral aspect. You know, of course, all we really had for viruses, so far as I know, is interferon, which is, of course, massively expensive.

Patrick:
It doesn’t work.

Jason:
Yeah, questionable too. Give us maybe your top three, if you would, your top three technologies that would extend life, extend health. I would just assume all the creators of these technologies would just be pushing, pushing, pushing the FDA to get it out there.

Patrick:
Yeah and it’s really dangerous. If you offend the FDA, there’s no telling what’s going to happen because, bureaucrats and the FDA are human, they’re no different than any of the rest of us, I don’t want to paint sort of conspiracy, but they are, many of them are really well meaning and dedicated to public health, but they are incentivized to avoid any kind of risk and what that leads to, institutionally, is way too much caution, especially in these days of personalized medicine. In the old days, you know, if you took a drug and it only worked half of the people and 20% got sick, it was failed. It was not allowed on to the market.

Today, we can take, with a small test, you can check gene expression and find out whether or not this cancer drug will work for you or not and give the drug just to those people who need it and for whom it works, but the FDA has not adjusted to the new model of personalized medicine. Cancers, there’s half a dozen new technologies that right now are paying tens of millions of dollars and waiting slowly through this swamp like labyrinth of regulatory process to get them to market, but I predict when they make it, which is in the next five to ten years, cancer will be come a minor irritation. It will be, essentially, solved. I think cancer is already solved.

By the way, since you bought up super bugs, bacteria, I think we will see clinical trials in the next six months that prove that is beating, both in terms of systematic infections, but also in terms of hospital acquired infections, there are topicals that can be used in surgery that will do away with most of them. This is a non-problem that media loves to, you know, the big scare story, and they’re incapable of looking at the science and tracking the companies that have solutions. There is one in particular that I’ve been following for five years that’s just getting very close right now.

Jason:
What’s the name of it?

Patrick:
That’s Cellceutix.

Jason:
So, that’s one. Do you have two more sort of leading things?

Patrick:
I’ll give you two more, you know, people pay me a lot of money for this, so that’s all I’m going to give you, but one, because I haven’t been able to actually include it in the portfolio, which is an alkaloid, which is being researched and moved forward by the Roskamp Institute in Sarasota, Florida. Roskamp is the world’s leading neurological research group. It was founded by Robert Roskamp who made an enormous amount of money by providing assist living facilities to mostly to Alzheimer’s patients and when he retired, I dunno 10-15 years ago, he put 100s of millions of dollars into an institute, hired two of the scientists who were responsible for the most important discoveries in Alzheimer’s and gave them probably the best equip lab in the world. I don’t know how many PhDs there are now, close to 100.

The best tools that exist, the most modern equipment, and they’ve been looking at various approaches to Alzheimer’s and someone came to them with an accidental discovery, which is an alkaloid related to nicotine called anatabine. Now, they were as skeptical as I was when they first heard this, but they did the tests and what they found was it was the most effective anti-inflammatory agent ever discovered. Nothing comes close. Nothing comes close. It knocks down CRPs and because it’s a national product, it was available for hundreds of thousands of people to use, but we know that it knocks down your C-reactive protein panels to useful levels.

So, for me, it did away with my arthritis almost immediately, changed my life. So, for four years this was available and was expanding rapidly through word of mouth for the most part. A friend of mine here on the island ran out about a week ago, he was using it, one of the effects of using it was to control really serious supraventricular tachycardia and within days of running out, because the FDA decided it was going to have to go through an approval process about 3 months ago, he had a stroke and other people are saying Crohn’s disease remanifested itself, arthritis.

This is a national product that everyone in your audience has eaten multiple times. It’s in tomatoes, eggplants, the nightshade family, the solanaceae plant family. This is a remarkable discovery, which I think is going to be worth many years of additional health span, but the FDA decided based on a study that showed, beyond shadow of a doubt, that it prevents long-term brain injuries following a concussion, traumatic TBI brain injury, that it was obviously a drug, therefore it had to be approved.

The company is in fact, the spin-off company, which is Rock Creek pharmaceuticals is in fact taking it through the drug approval process, but the FDA has apparently pressured the company to take the nutraceutical from the market in order to give them the IND, initial drug development, permission. So, now it’s off the market and it’s just a catastrophe. That’s one.

The other one, now we’ll go to the other end of the spectrum, which is stem cell medicine and that’s bio-time energy. If you’d like to see some of the stuff that they do, I have a web page called PatrickCoxDNA.com. If you go to that web page you’ll see pictures of my fiberglass skin cells taken from inside my left arms, which were engineered to become identical to the embryonic stem cells that I came from and then engineered into cardiomyocytes, heart muscles, heart muscle cells. I, in fact, have a video of my rejuvenated heart muscles cell beating in a dish in Northern California.

Jason:
You really do like being the guinea pig. This is interesting that you do your own stuff. I love it. This is great.

Patrick:
I do. I could tell you more. There’s a lot more than this, but those cells, those rejuvenated, those are essentially zero year old heart muscle cells where as my heart muscle cells are 63 years old. We know from animal studies and we know from experiments that if you introduce those cells into an aging animal, which I am, that they can graph and they express growth proteins that then repair the heart.

So, until recently it was thought that damage to the heart caused by, you know, cardiac events, could never be repaired, but we know now that is not the case. There are a number ways, GDF11 is a protein that the English scientists have proven can be used to rejuvenate the heart, but these heart muscle cells in this video were just one of many. We can essentially, bio-time, take your cells, take them back in time to become immortalized embryonic light stem cells, and then engineered them to become anything you need.

They have a subsidiary in Israel, which is working on retina fills to replace blindness caused by macular degeneration and we know that works. It’s only a matter in time before that goes into clinical trials. It could be knee joints, connective tissue, it could be liver or kidney, there really is no end to this. So, rejuvenate medicine is really the biggest breakthrough of our era.

There’s lots of more traditional kinds of medicine that I discussed before, cancers, I think Alzheimer’s we have a really good handle on. It won’t be one solution, it’ll be a number, because dementia is actually a lot of different conditions caused by a lot of different conditions of aging, but we’ll get that. So, that type 2 diabetes, obesity, all of these conditions are in fact solvable many of which with generative medicine, but that takes us to the end of hayflick limit, which is the number of times naturally that our cells can replicate. It’s about 120 times, which is why, you know, these ultra centenarians that we read about live to be about 120, sometimes 122.

Jason:
So, is it replication is only once a year? I thought they replicated, you know, every 90 days or something.

Patrick:
No, it really depends on the cell types and there are some tricks whereby the cell will replicate once and that cell will then split, but essentially you have 120 telomeres in each of your cells. When you’re a kid, when your healthy, you have no inflammation, no fibrosis, you have perfect myocardial function, we’re on the solar cycle. As we get older, as we get sicker, inflammation, and all these other factors that start to affect the way we age, then we will accelerate that process. Typically, then they will localize one organ, burn through all your all your telomeres, completely stop replication, and you’re die, but regenerative medicine can fix that. So, really what we’re looking at is the end of the traditional 120 year limit.

Jason:
Amazing. This is really interesting stuff. When do you think we’ll see the dam-break at the FDA? And if it’s FDA that’s the problem, you know, what other countries are doing this stuff and using these technologies?

Patrick:
Japan is leading the way. Japan, because they, Japan made a decision, and were criticized for it at the time, to not to bring in a bunch of immigrants, because they were afraid that these people would not assimilate. They were afraid that were going to bring people who were essentially hostiles for the Japanese tradition. At the time they were accused of being racist, etc. Now..

Jason:
They’d probably love some immigrants. They’ve got a huge demographic problem over there.

Patrick:
Well, it’s not clear that they would. I mean, they could, but they’re very selective. As a result of that, I don’t remember what their birth rate is, but I think it’s about 1.2, their population is plummeting. At the same time, their older population is growing and getting older, so they know they can not keep the promises that they have made to their older population…

Jason:
Neither can we, but we have the reserve currency so we can just print it. Yeah, that’s another discussion. I agree, I’m just joking.

Patrick:
But, they face their problem. That’s one of the reasons the Japanese have been so focused on robotics is they knew they don’t have the labor to take care of all of these older people, so they put a huge amount of money into robotics that can help care for older people once they’re no longer capable of taking care of themselves. However, that’s not going to fix everything, so they have really begun to reform to their regulatory process and started to think about encouraging important technologies rather than just discouraging them, which is what we, in essence, are doing in America and also in Europe.

wThose are beginning to change. This necessity is forcing governments, even Great Britain for example, despite the fact on the surface they have national health care program, they’re broke, and the people hate the health care system in practice, though not in theory; so they’re beginning to deregulate a lot of various different medicines that are strictly regulated in the United States. So, your question, when will the FDA reform? I think it will be shamed into it when other countries start to take business away from American and begin to pull people through health tourism.

Jason:
It makes me wonder, you know, if I should be flying over to Tokyo to get some kind of longevity treatment, you know?

Patrick:
Well, at some point, this is October 1st that these new rules kicked in, so it’s going to take a little while, but the first clinical trial for stem cell therapy is already scheduled in Japan.

Jason:
Well, before you go, just talk to us of the significance of the Apple watch. You know, this whole quantified self-movement is pretty interesting and I think we just got a huge new tool coming our way that’s going to make it even more interesting.

Patrick:
Right, my interest in..I’m really exciting about this, but it’s not specifically about the Apple watch, more it is about the entrance of Silicon Valley, the IT crowd, into health care, because, you know, I worked in Silicon Valley and I have friends still stay in contact with them, the IT world moves fast. When something is happening, people work long hours and they rush, they want to be the first to the market. So, we saw what happened when Google spinned off 23andMe, tried to push genomics, genetic sequencing, interpretation for health into the market, which is they just ran up against this wall of FDA which basically lend to disaster.

That was a good thing, because it signaled to the industry what they were up against. Now we’re seeing with Apple, they’ve already withdrawn their health app and it’s probably for regulatory reasons. I don’t think it’s actually a bug in the software.

Other people are also entering into this phase by-times in-health applications. This really interesting startup with Eric Schadt from Mount Sinai genomic center in conjunction with the Weizmann Institute in Tel Aviv, which is the master databank of all genomic knowledge. Rafael (41:56-41:57) is the CTO who built really the first search engine, Excite, and is also very well known in the Valley and is now on board with this project.

What this means is we’ve got tech folk now coming up against the roadblock of regulatory resistance and that’s a good thing, because these people don’t take no the way the medical industry does.

Jason:
That’s great. So it’s really like a new vibe, you know, it’s like the tech community is different than the AMA, which has wanted to preserve it’s monopoly, it’s business, and so forth. It’s just a whole different vibe, it’s a different mentality, right?

Patrick:
It is, Google has announced they have a new startup with one of the board members from Genentech, who says we want to cure aging. When Google wants something, they pull out the stops, which means for the first time in our lifetimes, the medical establishment has allies in this desperately important task of reforming our regulatory agencies.

Jason:
And it’s interesting because the tech companies really have something to bargain with when it comes to the government. Google can just agree to let the NSA run rampant through the servers. *Laughter*. They’ve got something to trade, unfortunately. Of course, I’m being massively sarcastic and I hate that idea, as I’m sure you do, but I just had to throw it in for morbid humor if nothing else, but yeah, it’s really interesting, it’s really interesting. Well, Patrick, give out your website, tell people where they can learn more about your newsletter.

Patrick:
Well, if you go to Mauldin Economics, there will be some link. You know, I actually don’t know the URL.

Jason:
Okay, so just the general website, Mauldin Economics. We’ve had John on the show a few times, so you guys do great work there and keep it up. This is an interesting conversation.

Patrick:
Thank you.

Jason:
Thank you.

Announcer:
This show is produced by the Hartman Media Company, all rights reserved. For distribution or publication rights and media interviews, please visit www.hartmanmedia.com or email media@hartmanmedia.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network Inc. exclusively.