New Money Review podcast

New Money Review podcast

Fintech and the great rupture

September 22, 2021

The combination of finance and technology is driving us towards the biggest change in human history in 500 years, says Viktor Shvets, my guest on this week’s podcast.

Shvets, a Hong Kong-based investment banker with Macquarie and a widely followed markets analyst, specialises in the intersection between finance, technology, politics and history. 

Viktor’s background—he grew up in the former USSR before moving to Australia in his early 20s—has given him a unique perspective into the great geopolitical shifts we’re living through.

He’s recently turned that perspective into a new book, “The Great Rupture”, a study of the profound impact of technology and financialisation on our collective future.

I found the book erudite, thought-provoking, convincing and at times a little scary.

Here are some excerpts from the podcast discussion:

The past is no longer a guide to the future

“The recipe for success over the last 500 years is now changing very rapidly.”

Economic success, personal and political freedom

“Is it possible to be wealthy, prosperous and even innovative even though you don’t enjoy the same degree of freedom? The lessons of the last five centuries are that without freedom you can’t have those things.”

The industrial age and the information age

“There are fundamental differences between the two. In the industrial age, capital was scarce, most activities were highly capital-intensive and labour was a primary driver of productivity. That’s why you needed literacy and a skilled workforce.”

“In the information age, we are drowning in capital and we have 5-10 times more than we require. Most activities these days are not that capital-intensive. The capacity constraints are much more fluid. And labour is losing marginal pricing power.”

Capitalism is over

“What we have right now is not capitalism. It’s just a question of how we define it and what are the rules for the new world.”

Financialisation is driving us towards a black hole

“We are rushing towards a black hole. On the other side, a different world lies. The two forces pushing us there are financialisation and the information age.”

“Any idea gets very easily funded. The low cost of capital is like pouring kerosene on the bonfire of the information age. It’s accelerating the progress of technology.”

Central bank money creation is no longer inflationary

“The more you grow the money supply faster than nominal GDP, the more you create disinflation rather than inflation. Money is getting stuck in the cloud of finance, rather than reaching the ground where people live.”

The end of the corporation

“In the future, the idea of having a long-living corporation, transacting in its own name, will seem ridiculous.”

Freedom may be optional

“The mixture of technology and financialisation could lead us into a world where freedom becomes optional.”

“Baby boomers’ obsession with freedom, choice and efficiency led to many bad outcomes, from environmental degradation to income and wealth inequality. Going forward, we will have less freedom. An emphasis on fairness and equality will be far more prevalent.”

Curtains for Facebook, Amazon and Netflix?

“The large digital consumer platforms are sunsetting. They’re suffering from diseconomies of scale and they are going to be attacked from a political, regulatory and societal level, as well as by start-ups.”