NCFA Fintech Confidential December 2020 (Issue 3)

of the planet. Her terms and conditions, her
rules, override all regulations.
Secondary wealth is derived from the things
we make from primary wealth. Ore becomes
steel, plants become your dinner, trees are
used to make lumber, paper, etc. Because
we do not follow the rules set by Mother
Nature, the conversion is 96% inefficient.
Some experts say that is low, and it’s really
98%. Simply stated, that means for every
$100, you are getting $4 or $2 of value.
The final layer, tertiary wealth are all the paper
abstractions that we layer on top. Tertiary
wealth is entirely dependent on the primary
level being healthy, and rests precariously
on top of the pyramid, only kept in place
by trust. When we put the primary layer of
wealth at risk by our decisions or actions, you
can see where this is going.
The Stockholm Resilience Centre has
estimated how the different control variables
for seven planetary boundaries have changed
from 1950 to present. (Insert Figure 2) We are
in the red on three critical variables, and this
is causing instability in ecosystems, social
systems and risk, including stranded assets.
What may be surprising to many is that
with all the concerns posted in the media,
the push for disclosure on climate-related
financial risk, climate change is still not the
biggest crisis according to experts. It’s the
loss of biodiversity. It’s the impact our way of
doing things had burdened our ecosystems
with nitrogen and phosphorus. So not as
much a tragedy of the horizons as stated
by the former Chair of the Financial Stability
Board, Mark Carney, but a tragedy that’s in
our face, but that we are not managing.
I find it extraordinarily perverse that the
decisions and actions we continue to make,
which diminish the quality of our lives today,
and certainly undermines the quality of life
for our children and our children’s children,
we seem to be okay with. Perverse, yes, but
predictable. As early as 1738, Dutch polymath
Daniel Bernoulli figured it out, and this was
echoed in a Ted Talk by behavioural expert
Dan Gilbert who said “the expected value of
any of our actions -- that is, the goodness that
we can count on getting -- is the product of
two simple things: the odds that this action
will allow us to gain something, and the value
of that gain to us.” So, basically we overvalue
what we have in our hands today, and
undervalue what the future holds. Part of this
challenge may be that we mistakenly trust
other people to manage our money, and at a
cost to us that is no longer necessary.
Digital finance offers a range of values that is
only starting to be understood by the market.
And in the time and space remaining I can
only hint at some of the opportunity. Digital
finance and the value it offers to greening
finance deserves a much, much deeper
discussion (and one that I hope NCFA will
enable). The democratization of capital
markets offers individuals the opportunity to
direct their tertiary wealth to the things that
matter to them. It means that every dollar,
peso, euro, can be a vote and support an
action to bring human endeavours back
within the boundary conditions necessary for
a quality of life that is sustainable.
FEATURED
A group of entities, including the World Gold
Council, The Silver Institute, the European
Central Bank and others, stated that the
value of the global money supply was 600
hundred times higher than the value of new
gold coins minted in 2019. In the first six
months of 2020, digital currencies increased
1,600 times over minted coins. While any
currency carries a carbon and a broader
environmental footprint, digital currencies,
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