Tuesday, March 2, 2021

Money reconsideration: Letter to President Biden – Kindesk

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Welcome to re-imagine this week’s money, you have two days to be the new president of the United States.

Meanwhile, with various executive orders and the names of most of the nominees for cabinet and agency emerging, President Joe Biden has a clear idea of ​​a slate clean.

What cryptocurrency means is that White House turnover Sheila Warren and I have been invited to our weekly podcast by Christine Smith of the Blockchain Association and Amy Kim of the Digital Chamber of Commerce. We have discussed the aspect of control under the Biden administration. Watch the episode. But first read the newsletter, which will start with an open letter to the new US President.

Is Biden ready for money in the new world?

Dear President Biden, Congratulations on an inspiring inauguration.

Exciting speeches, brilliant poems and glittering fireworks expressed a real sense of purpose and expectation. But now they are over. Time to get to work.

Let’s check out the dashboard first:

  • Cavid-19 deaths: 408,000
  • Unemployed Americans: 1 crore
  • Fiscal deficit: 3 3.3 trillion
  • Government debt to GDP: 98.2%

You need to handle the first two items very urgently. But it will push the third and fourth numbers much more.

What’s more, the dashboard is dangerously simple. The problem is not every U.S. balance sheet, however Global Accounts in November, Forecast of the Institute of International Finance By the end of the year, global public debt was $ 2.7 trillion, or 355% of world GDP. As a developed economy, their total debt in the third quarter was 432% of GDP.

Delivering the task: To help the international community collectively bring these numbers into a sustainable state and avoid global frustration in the style of the 1930s.

Ignore the deficit hawks that tell you financial contraction is the answer. You can’t tell bankers and hedge fund managers tired public to spend the whole thing unless they want a much bigger violent uprising than Jan.

Nevertheless, it is impossible to estimate the amount of economic development required to repay these debts.

The only way is through synchronized debt monetization. That means addressing the elephant at home: the US dollar king in the global financial system is overhauling them. That means restoring that system around digital currency.

Integrated action

Why should it be an international solution? Okay, let’s first see how a unilateral solution works if possible first:

  • The Federal Reserve will be full MMT (Modern Monetary Theory) Dollar printing with abandonment.
  • The higher the circulation dollar, the higher the nominal U.S. tax collection.
  • Voile! Fixed-price debt is easily repaid.
  • Meanwhile, rate tanks of Euro, GBP, RMG and JPY vs. USD exchange rates.
  • The cheaper US exports, the more expensive imports lead to an increase in US production.
  • U.S. employers hire like crazy.

I’m appealing, aren’t I? In this case, the cost – inflation – is mainly exported to foreigners.

The problem, of course, is that it only works if every other major economy has the opposite problem – if their economies are very strong, their currencies are very weak and their government debt is well controlled. Since it is not, such a unilateral move would have catastrophic consequences as it would cause immediate counter-deviation from other countries. You will find something like a destructive currency war driven by it 1933 Smoot-Howley Act.

This is why, in particular, monetization must be calibrated collectively.

What does it look like? Well, for everyone, the balance sheets of all the central banks will already explode further from them – see the chart below. But this time they will probably have bonds bought directly from the government.

The government used the money to repay the donors, the money that was now available in abundance, bought less than before. The biggest question is whether this inflation is a one-off-price combination or breeds self-sustaining hyperinflation – the results may vary from country to country depending on the level of confidence ordered by the government.

But whether they provide one-off transfers from creditors to savers or hurt everyone as a result of the ongoing collapse, the extra dollars, euros, yen and yuan must go somewhere. As all currencies increase supply at the same time, their holders will instead search for rare resources such as gold, real estate and of course bitcoin.

(Pro Tip for the new President: When Bitcoin (BTC) ’s high altitude in early January is completely off, with its spectacular festivities in mid-December suggesting that people are watching the scenes end. Its price a Useful temperature gauge. Keep an eye on me.)

Mark Carney
(Pictures by Peter Summers / Gate)

New system

Synchronized monetary policy has a structural problem aside from the inflation challenge: not all currencies are created equally, which makes it difficult to find common ground. The dollar rule, a currency that is universally used as a pronoun for assets and liabilities outside its own country, differs from others.

This creates an encouraging confusion for the Federal Reserve, which has an obligation to serve the U.S. public but also serves as a facilitator of the latest report to the outside world.

We witnessed last March. When the world economy took over because of COVID-19, banks around the world were shaken to look for greenbacks to ensure they could meet dollar obligations. So before the Fed sometimes traded asset-buying, created bank reserves and international swap lines that have spread trillions of dollars into the global banking system.

But what if the interests of the outside world conflict with the United States? If the US needs a weaker dollar, why does the world need a stronger dollar?

Over time, this disparity has created an imbalance in the world economy. Many economists have expressed concern that it has reached a breaking point.

William Middelkup and David Marsh of the Forum on Official Currency and Financial Institutions, a high-level think tank, this week called on the United States and China to face an integrated digital solution or “financial breakdown.” They point to the advice of Mark Carney, former Governor of the Bank of England, for a new, International Monetary Fund-compliant digital international reserve currency as a possible process. (Carney mentions this dollar as an alternative “Synthetic Hedgemanic Currency.”)

What is the answer to multilateral currencies? Or can we instead move to a common protocol enabling decentralized exchange between the central bank digital currency and other digital assets such as bitcoin? In the latter case, this new, programmable form of money can enable low-value exchange-rate hedging, rendering an intermediary reserve currency relandant.

The bottom line is that the US now seems to be omnipotent, with digital alternatives to the dollar-centric financial system emerging. Washington, Wall Street and Silicon Valley must be ready.

This is a good sign to meet regulatory bodies with crypto-intelligent leaders, all the people are well placed to solve the big questions raised here. (See “Read Related” below))

But the changes will come huge. It will take leadership, bold vision and openness to new ideas to navigate them.

Parabolic expansion

Consistent with the theme of this week’s column, there’s a look at the central bank’s balance sheets.

This chart, created by Damanik Dantes and Shui Hao of Kindesk, using the Federal Reserve Bank St. Louis Fred database, gives a pretty good idea of ​​the financial expansion provided by the world’s five most important central banks over the past decade and a half, and especially in 2020.

They will probably do a lot, calculate as debt and COVID-19 results. This is why many bitcoin enthusiasts do not come back to the back of this week’s price.

(Damanik Dantes and Shui Hao / Koindesk)

Conversation: CSW strikes again

Craig S. Wright
(Modified using Kindesk Archive / Photomosh)

“Fekatoshi” is it again.

Craig S. Wright, the guy you want to believe he’s satisfied Nakamoto, is pulling more stunts. This time, he is doubling down on his May 2016 move to register two long-running Bitcoin sites: Bitcoin.R.Grace and BitcoinQuer.RC to the U.S. Copyright Office for the famous 2006 White Paper.

Next, let’s be clear: anyone can register US copyright. The registration is simply a recognition that has been claimed; This is not the author’s proof. In fact, The U.S. Copyright Office is in pain Clearly, after Wright’s registration, it stated that it “does not investigate the veracity of any statement” and that it “does not investigate whether there is any credible connection between the claimant and the pseudonymous author.”

Nonetheless, the removal of the response from Bitcoin.r and BitcoinQuar.org sparked further controversy over Wright’s actions and how to deal with a pensioner for such a legal action.

Bitcoincore.org, which deals with a group of developers focused on maintaining the basic protocols of Bitcoin, has decided that the site will remove the white paper. This is a request Angry reaction from the cobraBitcoin.org’s pseudonymous moderator, who accused BitcoinCour.R moderators of “surrendering” in such a way that “Bitcoin’s enemies were given ammunition, engaged in self-censorship and compromised on its integrity.”

This, in response to longtime Bitcoin core developer Greg Maxwell on a Reddit thread, is unreasonable. “With due respect, Cobra is absolutely wrong about ‘capitulation’: the real title is agreeing with this conman that his incomplete drama about white paper could be important or really achieve something.”

Maxwell defended Bitcoincore.org’s decision as a “choice of your fights” and argued that the right to well-funded rights should not be forced into a costly legal fight when it does nothing for the resilience of Bitcoin itself. There’s no reason to take it, Maxwell said, MIT-licensed white paper is already everywhere. And “with the promotion of this nonsense it is going to be published in 1,000 more places.”

Certainly, a competition to host and republish the White Paper is fast approaching. A Twitter thread by Jerry Brito, executive director of the Coin Center, which began with a tweet with a list of five websites hosting the white paper and asked, “Who else wants to join this party?”, Has become longer and longer. At the end of the day, 124 answers were in that thread, most of which included fresh links to white paper hosting sites. An answer from Michael McSweeney’s The Block, even To mark Was one of the U.S. federal government sites.

For the record, Coindesk has been hosting the White Paper for some time. You can find it Here. Free reading. Shares are free.

Relevant reading: Biden’s crypto gang

Last week, we saw the most positive response from the crypto community to the news that former commodity futures trading commission chairman Gary Jensler is likely to head securities and exchange commissions. This community likes people who understand the technology and there was good news to celebrate this week as well.

  • We learned from former CFTC commissioner Chris Brumer, who runs DC Fintech Week outside of Georgetown and wrote a book on crypto assets, He is expected to be nominated to lead the organization.
  • The Wall Street Journal reports that former Treasury official Michael has repeatedly been nominated to head the Office of the Controller of Currencies, which regulates banks. As Nikhilesh Dey of Koindesk has indicated, Bar was once a board member of the crypto firm Ripple.
  • Even after Treasury Secretary and former Federal Reserve Chair Janet Yellen spoke harshly about Bitcoin in her testimony to the Senate on Wednesday, Bitcoins were pleasantly surprised to see her. Written testimony on Thursday Took a much more irrational position towards cryptocurrency.

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