Trump's crypto mania poses a risk for our super
One of the most likely reasons for this loosening of regulations (gold and private investments are also set to be added to what US funds can invest in) is that the industry is under increasing pressure globally to find new investment options and maximise returns because of our ageing population. The pension system in the UK, for example, is expected to reach a crisis point within the next two decades, with many people predicted to retire with less than they may have expected.
Loading
You can see, then, why cryptocurrency suddenly looks promising. But here is where another likely reason for this shift also arises and, depending on your politics, is either a problem so glaring it might as well be an entire herd of elephants in the room, or is simply shrewd business ingenuity.
The US government is currently led by a man who, along with his family, has a bitcoin mining farm and reserve. They have launched their own crypto coins, stablecoin and crypto trading app. It's estimated that $US2.9 billion ($4.5 billion) of the Trump family's wealth – roughly 40 per cent – is tied to their digital investments. And on Wednesday, the White House launched a 160-page document outlining how the government will bring to life the president's promise to bolster digital assets. Trump isn't just pro-crypto, he's driving the pro-crypto bus.
Again, investing and being hungry for risk is one thing. But when the money being invested is retirement funds, it's a different ball game. Considering cryptocurrencies are still such a new asset class, there's no long-term performance data to assess their suitability for super investments. But already, there is a cautionary tale to look to.
In 2022, a Canadian pension plan for teachers that invested in crypto lost $147 million in invested funds following the collapse of digital currency exchange FTX. While retirement funds are worth billions and $147 million might not sound like all that much in the grand scheme of things, try telling that to the hardworking teacher who was a year away from retirement and suddenly faced working longer due to bad investments.
Currently in Australia, the only way to invest in crypto using superannuation is through a self-managed fund. But two things are worth noting here. The first is that there are more than 600,000 self-managed funds, and that with more than $750 billion in assets, they represent roughly a third of our national super sector.
The second is that in February, soon after Trump's return to the White House, Australia's industry leaders and Treasurer Jim Chalmers travelled to the US for a 'super summit', in an attempt to try to win over American financial executives and the US government.
Loading
Currently, about $US400 billion of our super is invested in US assets, which translates to roughly 14 per cent of all Australian investments. However, that's expected to grow to more than $US1 trillion over the next decade.
Whether these assets will one day include crypto remains to be seen. But the fact that American funds – which have the biggest pool of money in the world – now can more freely look to crypto than ever before, and that Australia is so hungry to remain economically close to the US, is something that should make us sit up and pay attention.
Victoria Devine is an award-winning retired financial adviser, bestselling author and host of Australia's No.1 finance podcast, She's on the Money. She is also founder and director of Zella Money.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Age
28 minutes ago
- The Age
Roundtable will fix nothing unless we can all park our self-interest
I'm not sure if it's happening by accident or design, but we may be about to convince ourselves that, though our democracy isn't nearly as stuffed up as America's, we're fast making ourselves ungovernable, unable to agree on how to fix our problems. I fear that Treasurer Jim Chalmers' economic roundtable in a fortnight's time won't reach agreement on any measures of substance. The players – business on one side, the unions on the other, plus assorted experts – confidently assume that the Albanese government will use this indecision to come up with its own set of solutions. But what if it doesn't? Everyone complains that this government's too timid, unwilling to risk losing votes by making the controversial changes we need. Surely, it could use the roundtable's failure to agree on anything as its justification for doing nothing. 'When you guys can agree on what we should do, we'll do it.' Initially, the roundtable was to discuss the great worry of our times – productivity. Almost every year since forever, our economic production machine has got a fraction more efficient at turning economic resources into goods and services, thus raising our material standard of living. But for the past decade or so, it seems to have stalled. Why? And what can we do to get it going again? Loading But Treasury would have been quick to remind Chalmers that the budget is expected to be in deficit for as far as the eye can see. Something needs to be done about this, and the government is certainly in no position to try to fix productivity by cutting taxes. And, led by former Treasury secretary Dr Ken Henry, the nation's economists will tell you our biggest economic problem is that our tax system, which is little changed since the introduction of the goods and services tax 25 years ago, is no longer working properly. It needs a major overhaul. In economics, you can't get away from tax. Our productivity is determined largely by what happens inside the nation's factories, mines and offices. Ask any economist what can be done to make our businesses more productive, and they'll want to do it by changing the 'incentives' businesses face. Translation: pull some kind of tax lever. So it's no surprise that, when the Productivity Commission was asked to offer some suggestions, its first was to rejig company tax in a way that encouraged greater business spending on more and better machines for the workers.
Sydney Morning Herald
28 minutes ago
- Sydney Morning Herald
Roundtable will fix nothing unless we can all park our self-interest
I'm not sure if it's happening by accident or design, but we may be about to convince ourselves that, though our democracy isn't nearly as stuffed up as America's, we're fast making ourselves ungovernable, unable to agree on how to fix our problems. I fear that Treasurer Jim Chalmers' economic roundtable in a fortnight's time won't reach agreement on any measures of substance. The players – business on one side, the unions on the other, plus assorted experts – confidently assume that the Albanese government will use this indecision to come up with its own set of solutions. But what if it doesn't? Everyone complains that this government's too timid, unwilling to risk losing votes by making the controversial changes we need. Surely, it could use the roundtable's failure to agree on anything as its justification for doing nothing. 'When you guys can agree on what we should do, we'll do it.' Initially, the roundtable was to discuss the great worry of our times – productivity. Almost every year since forever, our economic production machine has got a fraction more efficient at turning economic resources into goods and services, thus raising our material standard of living. But for the past decade or so, it seems to have stalled. Why? And what can we do to get it going again? Loading But Treasury would have been quick to remind Chalmers that the budget is expected to be in deficit for as far as the eye can see. Something needs to be done about this, and the government is certainly in no position to try to fix productivity by cutting taxes. And, led by former Treasury secretary Dr Ken Henry, the nation's economists will tell you our biggest economic problem is that our tax system, which is little changed since the introduction of the goods and services tax 25 years ago, is no longer working properly. It needs a major overhaul. In economics, you can't get away from tax. Our productivity is determined largely by what happens inside the nation's factories, mines and offices. Ask any economist what can be done to make our businesses more productive, and they'll want to do it by changing the 'incentives' businesses face. Translation: pull some kind of tax lever. So it's no surprise that, when the Productivity Commission was asked to offer some suggestions, its first was to rejig company tax in a way that encouraged greater business spending on more and better machines for the workers.
ABC News
28 minutes ago
- ABC News
Australia's productivity roundtable should consider what actually makes life harder
Only a fortnight to go before the Treasurer's National Economic Reform Roundtable! With submissions rolling in to the Canberra summit, the nation finds itself in the exciting middle stage of our triphasic national economic policy cycle: "Let A Thousand Flowers Bloom". That is to say, we've moved past Phase One (Grumbling About Why Politicians Don't Do Bold Reform Anymore) and are enjoying the brief efflorescence of Big Ideas before we initiate Phase Three (Methodically Weed-Killing Every Single One Because They All Make Someone Sad). See also: Kevin Rudd's 2020 Summit, Tony Abbott's 2013 Budget, Malcolm Turnbull's Ideas Boom, and whatever it was that Scott Morrison was going to do before the world caught the spicy cough. Treasurer Jim Chalmers has valiantly called for participants to bring budget-neutral ideas that are not motivated by sectoral self-interest. But these are hard habits to kick, and in the Big Ideas so far submitted, the customary palimpsest of tax reform is already evident; big business has some compelling ideas for how they could pay less tax, the unions for how they could pay more, and so on. Here's a submission outlining how we could have more of the things we like, and how those things could be funded by taxing more of the things you like. Thank you, the end. Carbon pricing! A cashflow tax! Retooled R&D incentives! Taxes broadened! Tax rates flattened! If there's one sector where productivity isn't a problem right now, it's economists with big ideas writing beefy submissions on how to address the nation's productivity rate, curving gently earthward these last ten hectic years. Submissions no ordinary citizen will read. Why would we? Productivity is something only economists understand, like the non-accelerating inflation rate of unemployment, or the difference between real and nominal GDP. But what if the conversation about productivity didn't start at an economics reform summit? What if it started in the nation's kitchens? At the school gate? In the dentist's waiting room? Because that's where a huge chunk of Australia's productivity gains could be made. And where some of the least-acknowledged productivity engines in the country currently lose a lot of time blowing smoke. What if we reframed our way of talking about drags on productivity so that you wouldn't need an economics degree to whistle along? Even the term "productivity drag" is deceptive. It is, literally, a human phenomenon in economic drag. What it really means, in the baldest terms, is "headache-inducing and unnecessary complication that gets in the way of getting sh*t done." So if we're going to be in the business of asking big questions, let's make sure we ask not just the big economic questions, but the big human ones. Remembering that they're not always the same thing. Questions like: Why does the school day end at 3pm, when in the vast majority of households with two parents and kids aged under 14, both parents now work? In the 1970s, only 40 per cent of such families had both parents in employment. The more common arrangement — in 55 per cent of households even by the late 70s — was that dad worked, and mum took care of the rest. But today, in 73 per cent of two-parent families, mum and dad both work. Which means we are now running a national economy where the backup plan for sick days, school pick-up, dental appointments, and Oh-My-God-I-Forgot-My-Book-Week-Costume is… Well. It's a matter of day-to-day improvisation. And while the human brain's relentless capacity for innovation has coughed up artificial intelligence, and seamless transition to a new iPhone, and a means of firing Katy Perry into space, it hasn't managed to work out a stress-free way of getting a child's teeth looked at in the middle of the day at a dentist across town, with extra time for janky online approvals at both ends to bounce the juvenile owner-operator of the teeth from the custody of the school, plus traffic. Nor can we design a human interface for the Australian aged care system that enables a normally intelligent adult to look after an elderly parent without taking six months off work and feeling like they're the first human on earth to attempt the task. This is a failure of economic design. A brutal one. Because in this country while we have umpteen trained theorists looking at in-built incentives in the tax system or whatever, we still haven't found a way of absorbing the fact that one in seven school children will require mental health assistance every calendar year in Australia, and adding another fact — that children seeking assistance from a trained mental health professional currently wait an average 99 days for an appointment — and deciding that in total this amounts to a national productivity issue. Who's spending hours on the phone chasing appointments for these children? Losing sleep worrying about them, and standing in as best they can in the meantime? Who's forcing themselves through snowdrifts of confusing paperwork for NDIS registration or in-home care or even just the daily Sisyphean task of finding clean socks, or the shirt without the weird paint stain because everyone just remembered it's school photo day? We know who's doing it. Australian Institute of Family Studies researcher Jennifer Baxter asked perceptive questions during her COVID-era research and elicited evidence that in around 78 per cent of heterosexual couples, mum is carrying most or all of the mental load. Every family is different, of course. Many will buck the trend. (Including mine! I'm finishing this column in peace, in a busy week, because my other half has prepped dinner in advance.) But there's no doubt at all about the broader pattern here. Australian women are better educated than their male counterparts, live longer, do more unpaid work and — where they do get paid for work — get paid less than men. In productivity terms, they are a powerhouse waiting to happen. They account for 70 per cent of the part-time work in Australia, and 70 per cent of the housework. Usually, the flexibility of the former facilitates the accomplishment of the latter. Australian women work part-time at internationally-remarkable rates so that they can manage the unpaid work that is still generally understood to be their responsibility. In New South Wales' Public Instruction Act of 1880 — the legislative instrument that established the secular public education system in Australia's largest state and set the school hours that are unchanged to this day — the assumptions are magnificently broad. For instance, clause 79 of the accompanying regulatory schedule provides that: "In schools containing female children but no female teacher, it will be the duty of the teacher's wife to teach needlepoint to the girls during at least four hours in each week." It's funny to read this antiquated text. But also, it's worth remembering that the assumptions underpinning school hours have not changed since 1880. This is kind of wild. And as fast as our assumptions about the rest of the world are changing, there isn't much change to the assumption that women will pick up the extra slack when it comes to caring for other humans, young or old. It's proper work, in that it requires dedication and expertise, and it's not rendered less valuable economically by the mere fact of being powered by love and concern. But because we don't count this work using the usual economic measure (ie, paying for it), it sometimes escapes conventional calculations and is just assumed to happen magically, as if fairies do it. Imagine what could be achieved if the productivity drags were removed from the life of the juggling parent! Imagine — for instance — if schools were serviced by dedicated teams of dentists and psychologists and speech pathologists who were right there to help kids exactly when they needed help! Imagine if managing all this was easy, instead of hard! Imagine if sports and activities were part of the school day, towards the end, so that parents could get their work done and pick up kids who'd made it to footy without having to be ferried there by a distracted parent trying to do a Zoom at the same time, or fretting about having to double back to work later? Productivity is an economic concept, but it's fired — or should be fired — by the universal human experience of being driven mad by unnecessary bullsh*t that makes life harder. Let's lean in to it!
