E Bank Run, Or Run From The Banks?

Expect government, and the banking system including global central banks of the world to fight hard to establish rules that will maintain their money issue dominance over its citizens.  Neither institution will give in to system that they cannot control.  However, technological disruption will make most banks irrelevant and thereby force and accomplish the change.   Since cryptos allow everyone to be their own banker, the sum of world humanity could thus be emancipated – freeing people from the centralized banking powers in urban areas while also providing a payment system in rural areas where branch banking never existed.  That is truly empowering.


History provides many examples that lead one to question the veracity of any announcement of a government official.  Just consider this intentionally short list of proclamations:  The constitutional definition of money being “nothing but gold or silver” (or even a gold-backed currency) long ago became a lie.  When the Federal Income Tax Act was passed in 1914, the tax rate was set a 1%.  Looking at it just a few short years later, it too became a lie.  Our government officials stated that we needed to stop the global expansion of Communism – as a result wars in Korea, Vietnam and many other smaller and weaker countries followed. But we actually needed to stop socialism and communism in our own country – all that war expense, destruction and suffering was unnecessary.  Many years later FED Chairman Bernanke said that the problems in the 2008 sub-prime mortgage market were transitory and not a danger to the economy.  One could debate even today whether the economy ever recovered from that crisis.  Now similar comments from the FED are intended to assure the citizenry.  Are these statements true, or at least intended to be true, or are they “necessary lies”? In a moment of truth, during the Eurozone debt crisis Mr. Jean-Claude Juncker, the European Commission president stated “When it becomes serious, you have to lie.”

Necessary lies are those which government and central bank representatives must convey to the public via the media, arguably for citizen good.  That is, no public official can or will tell us the truth on the economy or war campaign, if stating it would start chaos or incite public mayhem or riot.  Lies are also necessary to maintain social or geopolitical programs that are nor supported by the public.  Accordingly, we should not condemn these officials for lying to us, but simply understand that the rules by which they must operate makes willingness to lie convincingly to the public a condition of employment. 

There are many erudite and credible men and women who have commented on the faulty actions of central bank and government policies in the past.  One such person is George Gilder, who should require no introduction, as he is one of the leading economic and technological thinkers of the past forty years.  In his book entitled “Life After Google” published in 2018 he observes: “The U.S. Federal Reserve’s inflation “target” is currently 2 percent a year, a program of massive ultimate devaluation.  As socialism advances in many countries, debauching their currencies, people incrementally flee to the one global and relatively secure haven accessible through the Internet.  Traditionally the haven currency was the U.S. dollar, but since early 2018 –from Greece to Venezuela, from Argentina to Zimbabwe – the haven has increasingly been bitcoin.”  So this is a global movement, rather than domestic, in an adoption of the new noninflationary blockchain crypto currencies.  As the technology is still developing and will evolve over the next decades, it is impossible to know which or how many different cryptocurrencies will flourish.  It is certain that governments and central banks will try to snuff out such independent value creation – by any means.   Mr. Gilder’s insight is invaluable as he observes: “Political idealists project visions of liberation onto it; establishment elites heap contempt and scorn on to it”.  So who will you believe as telling the truth?

The internet was originally designed to be a decentralized forum, which was quickly captured by large commercial interests centralizing the access to that space.  The more recent development of blockchain-based trustless computer platforms by libertarian minded systems analysts and coders, which allow value to be transferred directly peer to peer without the necessity of a third party participant such as a fee charging bank - liberalizes and empowers globally all participants of this decentralized system.  

Central banks and their captured governments have been at the core of centralization regarding control of money and even society for well over a century.  Its activities have been private and not subject to government audit, yet its trail of money issue, inflation, financial suppression are fully available for the public to see, and which people have personally experienced.   Now central banks are ready to adopt digital currencies, which because of low transaction costs can improve banking profits greatly, even as fees to customers can be reduced.  But bank digital currencies are subject to full control by the issuer, capturing privacy and freedom of action of all citizens.  As this gigantic technological development battle between liberty-minded innovators and established centralization-loving leviathans takes place, are you expecting to see a run on banks, or are you running from the banks? 

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and ...

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William K. 2 months ago Member's comment

Transitory Inflation? More like permanent intentional inflation to save their banker friends. Bitcoin better than gold??? That is the biggest lie ever told, I think. Bitcoin price is as unstable as it's claimed actual value, which does not exist, except in the minds of the holders.