WORLD MONETARY SYSTEM CAREENING?
CRYPTO TO THE RESCUE!
Money is boring. So are a lot of the people who do money for a living. And that’s a good thing. Most people don’t know the name of the Federal Reserve Chairman or what he looks like (or at least, they didn’t USED to know) and that’s as it should be. I don’t want to know if the Fed chairman was nearly killed in a bungee slingshot ride or that he tells great stories over flaming cocktails. I want my Fed chairman good and stiff and boring.
Because his job is to keep things steady. Adjust short-term interest rates when needed to keep inflation in check, or spur job creation. Small little adjustments. A little-a shnoop on this side. A little-a shnoop over there. Nothing flashy. Nothing exciting. The only way you know he or she is there is that the economy hums along.
CAN YOU CHAIR THE FED?
If you think it’s easy, play a few rounds of “Chair the Fed.” It’s an actual online game created by the Federal Reserve of San Francisco. Just tick the interest rate up and down and watch what happens, quarter by quarter. Guaranteed, as you strive for full employment, you’ll see inflation shoot up and the word “crisis” start to appear.
In contrast, our real monetary policy is not a game. But thanks to trade wars, tariffs, charges of currency manipulation, and wild swings in the stock market, monetary policy has become too interesting. Hell, it’s a carnival attraction. Not the roller coaster. More like one of those spin paintings from the midway with too much color splattering in every direction.
In the wake of this week’s events in the ongoing battle between the U.S. and China, we now have a Central Bank Chief suggesting digital currency could be the way to calm things down again.
Wait, what?
UK BANK CHIEF CALLS FOR CALM THROUGH CRYPTO
Not the U.S. central bank chief. We’re talking about the guy from the Bank of England, Mark Carney. According to reports, he suggested Friday at the Economic Policy Symposium in Jackson Hole that U.S. policy may be inflicting too much impact on the world’s economy. Among his suggested improvements? A digital currency not controlled by one sovereign nation, but rather by a consortium of banks around the world.
He noted that with so many transactions today handled online and through electronic funds, such a new system could offer advantages in speed and lower costs — both for transactions within a nation and cross borders. In other words, we now have a central bank chief echoing a version of what many in the digital currency space have been advocating for years.
Since the earliest years of the 20th Century when the Fed was created, it’s been believed that a firm hand in control is what can keep our monetary system safe and stable. The problem is, we’re seeing in real time what happens when the hands in control are out of control.
STEMMING THE DOLLAR’S IMPACT
For all intents and purposes, the U.S. dollar IS the global reserve. Most trade worldwide relies on it. And like most forces in power, the U.S. and the nations that trust in it will not give it up voluntarily. Not unless something better comes along.
That something better may see its first flowerings where a new system is desperately needed. As analysts have pointed out, international markets are less friendly to emerging countries, and in the nations of Africa especially, where trade has followed a more predatory pattern, we are already seeing great support for digital currencies and trading systems. Nations could work in some sort of association or consortium, avoiding the fees and inconvenience of the big banks. Individuals could trade peer to peer through apps on their inexpensive smart phones. It’s the U.S. dollar that would be cut out of the equation, and if the U.S. and other nations wanted to participate, they could be forced to adapt.
So that’s Africa. But now, we have a central bank chair proposing something similar for the entire world, and while it wasn’t expected, it’s not so surprising. Let’s not forget the whole reason people innovate: dissatisfaction with, or failure of, the status quo. If our system weren’t broken, no one would be calling for alternatives.
Meanwhile, look at the prices for digital currency this week. Many coins up. Bitcoin, not at its highest for the year, but high. And relatively stable.
Whoa. Fiat systems running wild, and Bitcoin is stable? Stable as in, almost boring. Doesn’t that sound lovely?
