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The European Central Bank held a question and answer session on Twitter yesterday. Obviously, it turned out exactly as you would expect.
At one point, Twitter user Gianluca Nervegna asked “Where did you get the money for QE?” — for those that don’t know, QE stands for Quantitative Easing and is when a central bank conducts a large-scale, coordinated purchase of assets in an attempt to stimulate the economy and increase liquidity.
Traditionally, the central bank will purchase government bonds or other financial instruments during quantitative easing. Over the last four years for example, the European Central Bank has spent almost $3 trillion on bond purchases. [Side note: the US spent ~$3.7 trillion between 2008 and 2015 on QE, but because the ECB got started so much later they had to accelerate their purchases compared to the US]
This brings us back to the question on Twitter: Where did the ECB get this $3 trillion??
According to the ECB’s Chief Economist Peter Praet, they just printed the money out of thin air! We obviously all know this is what central banks are doing, but the fact that they are comfortable enough to brag about it so nonchalantly on Twitter shows how untouchable they feel.
As a reminder, when central banks and governments decide to simply print more money, they are stealing wealth from majority of the population and enriching the elites. According to the IMF, inflation is one of the leading causes of income inequality in the world.
The citizens of a country who store their wealth in cash (living paycheck to paycheck) have their wealth devalued away over time. The citizens who don’t have inflation-adjusted wage contracts continue to get paid the same dollar amount year after year, even though their purchasing power is eroding annually. And lastly, inflation leads to rising prices for real assets (real estate, etc), which are owned by the elites generally.
So when the ECB is saying “we can create money to buy assets,” what they are really saying is “we create money out of thin air, the wealthy benefit greatly, and the common man or woman gets screwed!”
Central banks may be able to print more fiat dollars, but eventually the Ponzi scheme will end. When it does, Bitcoin will be there, as scarce as ever, with the inability for anyone to print more. As the IMF said in their 1998 paper on inflation and wealth inequality, “There are no medium- or long-term income inequality costs of disinflation, only benefits."
”Long Bitcoin, Short the Bankers!” becomes more applicable every day :)
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IBM Quietly Enters Crypto Custody Market With Tech Designed for Banks: IBM is coming to the crypto custody space. Later this month, Shuttle Holdings, a New York investment firm, will launch the beta version of a custody solution for digital assets built on IBM’s private cloud and encryption technologies. The companies won’t be storing cryptocurrencies and tokens themselves, but offering tools for others to do so. Potential users include banks, brokers, custodians, funds, family offices and high net worth investors who want to do self-custody, as well as exchanges, Brad Chun, Shuttle’s chief investment officer, told CoinDesk. Read more.
US Sanctions Moscow-Based Bank Accused of Financing Venezuela’s Controversial Petro: The United States Treasury Department has added Moscow-based bank Evrofinance Mosnarbank to its sanctions list, alleging it was the “primary international financial institution willing to finance” Venezuela’s controversial national oil-backed cryptocurrency, Petro. In its statement, the Treasury accused Evrofinance — which is reportedly jointly owned by Russian and Venezuelan state-owned companies — of materially assisting efforts to launch the cryptocurrency, which it characterized as a “failed” project. Read more.
HSBC Seeks Banking Partners in South Korea to Launch Voltron Blockchain Platform: United Kingdom-based banking giant HSBC is seeking banking partners in South Korea to deploy the blockchain platform Voltron in the country. As reported, Voltron is a platform that enables companies to process and settle their trading invoices via blockchain. The solution was launched in October 2018 by blockchain consortium R3 and eight banks — including HSBC, ING and Standard Chartered — and is currently at the pilot stage. Read more.
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