Our Masters don't want us to be able to buy and sell to each other without everything showing up in official centralized ledgers. They don't like ca sh. They don't like cryptocurrencies either, but they have learned from them. The new step in the War on Cash is the central bank digital currency (CBDC). This simulates a cryptocurrency, but of course the decentralized feature that has long been part of its appeal is gone. As James Rickards wrote recently on Zero Hedge , "[A] CBDC is not a new currency. It's just a new payment channel. A digital dollar is still a dollar. A digital euro is still a euro. It’s just that the currency never exists in physical form. It is always digital, and ownership is recorded on a ledger maintained by the central bank." You might well say: so what? a lot of dollar transactions are already digital in one way or another. I use a plastic card to change the digits in various databases. By swiping the card, an account that indicates...
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Yesterday, I began a discussion of the work of Professor Guillermo Calvo, now of Columbia University’s School of International and Public Affairs, in an effort to answer the question in the headline of this blog entry, and I got so far as to introduce the word "stickiness." Let's proceed from there. Calvo does acknowledge that fiat money contains within itself the principle of its own destruction. But ... why does its destruction take so long? Even if deliberate government buttressing of the use of its money were "completely absent," he says, this factor would slow the aforementioned destruction. Stockiness is simply a convenient name for the behavioral fact that suppliers of goods and services "broadcast, far and wide, their willingness to take fiat money in exchange" for what they are selling. Further, private sellers often "reaffirm their willingness to do so over extended periods of time." The suppliers find it useful as a mar...
We have reached a critical moment in the life of the institution known as a "central bank." A central bank, as many of you likely know, is paradigmatically a bank that is NOT part of the government that it serves, an institution that has both private and public characteristics, and an institution that serves as the grease for macro-economic gears in the machinery of governance. Alexander Hamilton, an admirer of the London model, brought the institution to The United States. We now have a rather peculiar form of central bank, the Federal Reserve Board, created by the Wilson administration more than a century ago. Its peculiarities need not interest us today. But as I said above, we have reached a critical juncture. The central banks of the developed world appear to be running out of their usual arrows. They'll have to come up with something non-traditional when the traditional quiver is empty. What might that be? They might adopt distributed ledger technology -- ...