For the longest period, central banks and the Federal Reserve held all of the power in the financial world. Although very little has changed then, there are concerns regarding the “magical power” associated with these institutions. Moreover, it seems implausible central banks will aid in recovering after the financial crisis.
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When looking for ways to solve the current economic impasse, central banks are not at the top of the list.
Even if they were, their obvious solution would be to print more money. But this helicopter money approach will not fly any longer, as new solutions have to be found for global growth. Artificial stability concepts are not a viable solution.
To put this into perspective, members of the European parliament are begging for helicopter money.
After sending an open letter to ECB president Mario Draghi, 18 members feel the ECB should look into using helicopter money to buy bonds from the European Investment Bank. They justify this demand “to enhance economic development through direct spending into the real economy.”
Moreover, these states feel using helicopter money makes more sense than quantitative easing, and how it would “kick-start the EU economy.”
Central Banks Losing Grip
To make matters worse, the low — or negative — interest rates are not instilling confidence in banks either. There is also the suppression of volatility, leading to a boom in asset-price values.
Unfortunately for central banks, they have to support these artificially inflated prices. Asset prices are collateral for loans, and holding the debt would not be in the bank’s best interest.
Very few people realize that negative interest rates will do more harm than good. These prices affect pensions, insurance, employment rates, and wages, to name a few.
In a way, central banks force consumers to take their money out of an account. But at the same time, cash is steadily losing its value. While this may lead to some level of export competitiveness, it significantly affects consumers.
Domestic policies on finance and money are only adding to the problems. While there once was an era of international cooperation, things have turned rather hostile. Existing options to stimulate global growth have proven to be insufficient.
Central banks are at their wits end, and continue to lie to keep up the charade.
The Federal Reserve still faces a looming threat of negative interest rates as well. Investors are actively betting on the below-zero rate in 2017, which could result in another stock market crash.
If this were to happen, the world’s economy will be off far worse than it is today.
In a way, one could argue these institutions have paved the way for Fintech disruption themselves. Holding on to their legacy way of thinking and acting resulted in the downfall of central banks. New actions proposed by policymakers can’t be defined other than by using contra-factual arguments.
The time has come for consumers and businesses to take matters into their hands.
Time for Plan Bitcoin
Although many people still dismiss the concept of Bitcoin, it becomes clearer every day there are no other viable alternatives left.
Central banks have no idea as to what to come up with next, and refuse to innovate or change. Their negative interest rates force customers to deal with cash, which the banks would like to get rid of entirely.
If we allow for this to happen, we will be at the mercy of these centralized institutions. There is still time to free ourselves from the shackles of banking, and reclaim the financial control that was ours to begin with.
Bitcoin is the only accessible solution to do so, as it removes centralization and third-party control.
Central banks have started to open up towards collaboration in the fintech space. Bitcoin is an integral part of fintech, and financial institutions would be wise to reconsider their stance on cryptocurrency.
Collaboration is still on the table, and all one has to do is extend an olive branch.
What are your thoughts on the central banking system right now? Let us know in the comments below!
Images courtesy of Shutterstock, Fiscal Today.