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Monetary Reset
Recently I have heard two people suggest that a global monetary reset, ala Bretton Woods, may be coming soon. Specifically, Russell Lamberti today in the seminar and Simon Dixon of BankToTheFuture. I am curious as to what that might look like. Unlike with Bretton Woods, there is no one country currently strong enough to dictate the terms. Presumably the decision making body would be infested with central bankers, so it is hard to see them suggesting we go back to hard money. That would be tantamount to an admission that the monetary policies of the last 100 years were a huge mistake. But of course, nothing else makes any sense.
Perhaps in 10-20 years enough nation states have stacked enough sats to propose that bitcoin or some combination of bitcoin and gold be the global reserve currency, but in that world presumably bitcoin would have grown large enough so that it was competing against the dollar. In that case it would seem like the Fed would have to stop inflating the dollar supply. That would be Hayek’s world where currencies compete with each other, and that is a world that would not need a monetary reset.
I am curious about other peoples opinions on this. Is a monetary reset likely, and if so, what would it look like?
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3 Replies
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Ask and ye shall receive …
After watching Saif’s SALT talk I watched the one with Raoul Pal (10 Nov 2020 http://www.youtube.com/watch?v=IVu8cAiJ6fY). He says that at the IMF meeting at the end of October there was considerable discussion of a “new Bretton Woods”. The issue for the central banks is that they need to fiscally stimulate (print more money) but they are running up against limits. The proposal being considered is to inflate the world’s major currencies during the switch to Central Bank Digital Currencies (CBDC). The basic premise is that if everyone inflates at the same time, no one country would be advantaged or disadvantaged relative to other countries.
As far as why a central bank would want to transition to a CBDC: it gives them more levers to use to control the economy, allowing them to get around the current limitations of monetary policy. Today they can only print money or set interest rates. But with a CBDC they have a programmable money that they can program to appear or disappear, grow or shrink, and they can do it on a per person basis. So for example, the legislature could pass laws giving a favored class a growth rate for their money, and give a disfavored class a decay rate. So for example, it may be that the government might decide to favor the investor class with a growth rate and disfavor the immigrant class with a decay rate. Or perhaps the favored class would be poor people and the disfavored class would be rich people. All things are possible with programmable money.
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If every country inflated at the same time, that would still make the 99% into all paupers, no? Just checking.
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Here is an expanded version of Raoul Pal on the monetary reset: https://www.realvision.com/shows/expert-view-crypto/videos/the-bitcoin-life-raft-and-the-new-bretton-woods?source_collection=4770472392d44f7eb44d63142109394f
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