There is a global, generational, economic battle that in a few years historians and economists will teach us as they teach the battle of Thermopylae between the Greeks and Persians in class.
But to understand it, we need to make an effort. Unfortunately, the battle includes a lot of noise and propaganda, you have to look beyond the big headlines, because this is a complex issue that requires hours of study, reading, debates,… I’ll give you just a few examples:
What they say.
The IMF, the central banks, the OECD,… said a few months ago that inflation was transitory. Fake.
They also said there would be no recession. Fake.
They said that only a few countries, a few, would go into recession. Fake.
All this comes from the monetary policy that they have been promoting for decades and that leaves us with an exaggeratedly high public (and private) debt problem, with many countries exceeding 100% of their GDP (USA, Canada, Spain,…).
And the only solution they can think of to solve this is with an inflationary monetary policy. In other words, every day we are all poorer.
They also warn us that the alternative to their financial system is empty of content:
Maybe so, but let’s see how Bitcoin has fared as an alternative to current monetary policy:
And while they warn you about this, they keep fighting to be the first to launch their CDBC (in France they are already going through the pilot test, in China 4 Million people already use it):
But then, if the cryptos are empty, why are they going into? It’s for the social controll?
On the other hand, we have those of us who clearly see that this is an obsolete model and for first time there is an alternative will eat slowly the ground paved with decades of monetary policy, exchange rate crises,… it is decentralized finance. A whole new world of opportunities that no one knows where it will take us but that at least will surely force the old system to integrate into a new paradigm.
At this point it is normal for one to react with a “Buff. What a mess, all this is very complicated, I don’t know who to believe anymore ”. Normal.
Let’s see what Harvard says about all this.
This past November 17, an academic paper by an economist called Ferranti was published. He is advisored of Ken Rogoff (IMF economist well known for answering Stiglitz when he criticized the IMF’s work in his book Globalization and Its Discontents, that is, a great representative of the old financial system).
In this paper, Ferranti explains that Bitcoin and Gold are not perfect substitutes and recommends that central banks buy Bitcoin to balance their reserve positions, as both are a necessary mechanism to avoid the impact of sanctions.
Ferranti’s conclusions regarding central banks are based on two variables: what level of risk of suffering international sanctions does your country have and what level of confidence the dollar generates in you. With these two variables, CBs should structure a reserve plan, the higher the risk and the lower the confidence, the higher level of reserves they should have.
As a store of value, gold is much less volatile, therefore much better than Bitcoin, but for all those countries that have little infrastructure, storing it, transporting it, … can be a problem.
And let’s not forget that gold has a monopolistic problem that is rarely taken into account. The US has 27% of the total world reserves. The first 4 countries, more than 50%. 75% of world reserves are in the hands of 10 countries, and the first 20 control more than 90%!! Does anyone see a problem with that? What about the rest of the world’s economies?
We’ll see, but considering Bitcoin as an alternative to the gold’s reserve-of-value system doesn’t seem like such a crazy idea to me, even though they say so at Harvard
Yours in Crypto