In this article we are going to take a look at a Bloomberg recent article and discuss why England may want a crypto type substitute instead of the dollar to be the global standard of trade. There are a lot of implications that can go along with the article, so let’s try to cut through the smoke and discuss the importance of the remarks while also revisiting why the dollar is so dominant.
Nothing should be considered investment or financial advice. Enjoy the ride.
Bank of England Wants Crypto
Based on a Bloomberg article released on September 25, 2019, the bank of England has formally stated its position on the Libra project and crypto in general. The speaker representing the bank, Mark Carney, is expanding on his opinion to have the dollar’s dominance removed from the global financial system with potentially crypto.
The article also digs into a rebuttal from Federal Reserve official Simon Potter who defends the dollar’s position. The main purpose of the defense stands to reason that a globally accepted currency for trade and exchange has benefited every nation in the long run more than impeded them. Mark Carney, and other countries may see things different due to the U.S. constantly leveraging the dollar’s dominance to extend its reach and reduce borrowing costs.
Global Currency Crypto Solution
While both men have fair points, the fact is the dollar’s dominance actually started back in the early 1900’s with the very start of the industrial revolution and transportation revolution. Due to men like Andrew Carnegie (Steal) , John Rockefeller (Oil), Cornelius Vanderbilt (boats & railroads), and Henry Ford (Automobiles) America soared back into competition with many of the other top world countries.
At the same time, WWI and WWII served to let America breeze by almost every other countries on the planet due to the limited impact on America, and the lack of debt accumulated during the wars. Since America was one of the only countries not in debt, it ended up loaning out money to the United Kingdom in the Anglo-American loan. Over time, the dollar become the global standard since it was backed by gold at the time, and the only currency staying afloat.
Fast forward about 75 years, and today the world is in a completely different scenario. No longer is the dollar backed by any raw material or anything besides the U.S. military. The global economy is stronger than it has ever been, and there is more wealth currently in the world than ever before in history. Specifically, more wealth in the private sectors.
Private Sectors Love Crypto Currency
One thing the Bank of England and America’s Congress are starting to fear is the private sector creating their own currency. This has already almost happened with Facebook announcing and attempting to launch their own (fake) cryptocurrency, Libra. If you know anything about fiat, it is a tool the governments use to control things in the economy like the banking systems, interest rates, government funding, and just about everything important.
If this tool shifts in control from the governments into the private sector through something similar to the Libra project, the government loses almost all of its leverage.
Potter agrees. While it’s unlikely that “individual sovereigns could ever coordinate” around a virtual currency, the risk is that companies might.
“Central banks should be very concerned about the private sector doing this,” Potter said. A nation’s control of its currency “is designed to protect people and get good outcomes. The private sector is much more interested in selling products.”–Bloomberg
Potter, has a very clear point that should be highlighted and repeated. The private sector has no alliance with the consumer, or the buyer of its products or services. Large companies like Apple, Google, Facebook, Amazon, Uber, and similar companies do not care about the average person. The average person is just another conversion for these companies.
The government on the other hand, has a sole purpose of protecting it’s citizens. That is the only true purpose of the government by maintaining law and order, supplying proper amenities, providing affordable healthcare, maintaining infrastructure, and defending the land with an armed force. The private sectors does not do and will not do any of this.
Crypto Good for Government
This is why Potter agrees with the official from the U.S. in that the next globally adopted currency, crypto or not, needs to come from the public sector. It can not come from a greedy consortium of firms and large companies looking to leverage control over the public. Therefore, public based crypto assets like Bitcoin and Ethereum are the government’s best bet at a new global currency standard.
They may not realize it quite yet, but these publicly designed, protected, and implemented chains are the future and the best bet at launching stable coins for foreign and domestic currencies without private sector intervention or control. Only time will reveal this, but one thing is for sure: you do not want Facebook to be in control of the worlds distribution of wealth.