As the establishment axoim goes, if you can’t beat them, co-opt them… and this is just what the Bank of England is looking to do by investigating in the creation of their own digital currency.
Following the Brexit referendum vote last month, Britain has suddenly found itself unshackled from the tyranny of the European Commission. And besides post-Brexit plans for a new round of money printing to stimulate the economy, the Bank of England is also looking into manufacturing its own form of crypto-currency to compete with Bitcoin.
Economists at the Bank of England (BoE) have suggested central banks introduce their own cryptocurrency, claiming it could create a sizeable and long-term jolt for national economies.
According to a BoE report, a new digital currency could boost economic output by around three percent “due to reductions in real interest rates, discretionary taxes, and monetary transaction costs.” It could also help maintain financial stability and provide policy makers with more effective tools to smooth financial booms and busts.
Central banks across the developed world, including the Bank of England and the Bank of Canada, are studying the potential of introducing a digital currency. If they decide to issue digital cash and make it available to the general public, money would exist electronically outside of bank accounts in digital wallets, like physical banknotes. That could radically reshape the present financial system.
A central bank issued ‘bitcoin’ would help policy makers control the amount of money in the economy which is not possible at the moment as commercial banks create money by using deposits as loans thus increasing the money supply. – Russia Today
Sadly, the Bank of England completely misses the boat on how a crypto-currency is supposed to perform for consumers and users. That is because first and foremost, currencies created on the Blockchain are specifically formed to get money creation out of the hands of central banks and government agencies, and instead allow the free market to determine their value, and to establish the real cost of goods and services in that medium.
Yet even in their preliminary research on crypto-currencies, the BOE believes they can simply digitize infinite amounts of a branded currency and expect that the people will accept it no matter how worthless it actually is.
Before the advent of computers and the Blockchain, gold and silver functioned as a checks and balances to both banks and governments from being able to expand their money supplies beyond the point of becoming worthless, or creating too much price inflation. And since central banks have failed to learn that lesson during a period where they could print fiat money infinitely, the idea that simply moving that capability to the digital arena will bring about a different outcome proves why the BOE, and other central banks, are once again bringing the global financial system to the brink of collapse.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com,Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.