I've decided it is time that I asserted my rights as the person who coined the phrase 'virtual currencies', which I'm informed by Wikipedia was not used until 2005 (my Financial Times report Virtual Currencies was published in 1999).
You might not entirely approve of bitcoin, with its mysterious, anonymous creator, but that need not stop you understanding that new ideas are out there and being put into practice - especially in the broader field of digital or virtual currencies.
There is no longer any need for a city or a nation to be defined by one single unit of value. No reason why, if one country is imprisoned by debt in one currency - like Greece - that it can't open a chink of light that might keep people alive via another one.
Nor is there really any need to leave the euro, however disastrous a framework it has been, since these other options are now possible.
Which brings me to one of the great thinkers in the new economics, the former sidekick of the Australian corporate raider Robert Holmes a Court, and a former holder of the round Australia flying record.
Shann Turnbull has produced a list of 16 great advantages that a bitcoin-style virtual currency has compared with conventional fiat money. He has couched them in terms of the disadvantages that the conventional design of the Australian dollar has compared with a new virtual currency, pegged to the value of sustainable resources:
1. It (the Australian dollar) creates government debt instead of government assets:
2. Australians cannot control its value;
3. It has been overvalued in recent years, closing down manufacturing and other industries to create unemployment.
4. It is impossible for the central bank to carry out its purpose: “to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people”.
5. It misallocates resources by creating misleading price signals.
6. Its value is not defined or determined by Australian sustainable resources.
7. Unlike bitcoin it can earn interest.
8. By earning interest it creates a disincentive for investment in assets that increase productivity that however lose value by wearing out of possessing limited life.
9. It increases inequality by making the rich richer with interest payments whether or not the money owner or the money necessarily increases prosperity.
10. It is not created by producers of wealth but mostly by bankers who consume a disproportion of wealth for their services.
11. It is not tagged like bitcoin to stop its duplication.
12. Its creation is not limited like bitcoin.
13. It allows a 'black' economy to exist from the use of untraceable notes and coins.
14. It cannot be traced like bitcoin to identify fraud, bribery, money laundering, profit shifting, tax avoidance, criminal activities or the funding of terrorists.
15. It does not incur a storage cost when not used like any real commodity used as money.
16. It does not inoculate the economy from internally or externally created financial crisis.
2. Australians cannot control its value;
3. It has been overvalued in recent years, closing down manufacturing and other industries to create unemployment.
4. It is impossible for the central bank to carry out its purpose: “to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people”.
5. It misallocates resources by creating misleading price signals.
6. Its value is not defined or determined by Australian sustainable resources.
7. Unlike bitcoin it can earn interest.
8. By earning interest it creates a disincentive for investment in assets that increase productivity that however lose value by wearing out of possessing limited life.
9. It increases inequality by making the rich richer with interest payments whether or not the money owner or the money necessarily increases prosperity.
10. It is not created by producers of wealth but mostly by bankers who consume a disproportion of wealth for their services.
11. It is not tagged like bitcoin to stop its duplication.
12. Its creation is not limited like bitcoin.
13. It allows a 'black' economy to exist from the use of untraceable notes and coins.
14. It cannot be traced like bitcoin to identify fraud, bribery, money laundering, profit shifting, tax avoidance, criminal activities or the funding of terrorists.
15. It does not incur a storage cost when not used like any real commodity used as money.
16. It does not inoculate the economy from internally or externally created financial crisis.
You don't have to agree with the letter of every one of these to realise that something is happening out there. The multi-currency world is emerging. It is possible to re-design the money we use.
So here is the peculiar thing: how come the only people not talking about the pros and cons of these ideas are politicians and (with the possible exception of the Bank of England) mainstream economic policy-makers?
Subscribe to this blog on email; send me a message with the word blogsubscribe to dcboyle@gmail.com. When you want to stop, you can email me the word unsubscribe.
1 comment:
Great post, as ever.
To your question, why isn't this mainstream political discussion, I suspect there are two parts to the answer. First, it's too complicated - don't forget, many people still get taken by plain old money illusion (that is, they think in nominal, not inflation-adjusted values).
But it's also odd, too. Bitcoin gets an unusual press, and people probably won't feel safe investing their thoughts or assets into these virtual currencies until opinion leaders are, too.
But that all means that if virtual currencies are explained in a simple and straightforward way, they could take on very quickly.
Post a Comment