Outside of a few scattered comments, I’ve intentionally avoided the Blockchain and Bitcoin craze. Last year I mentioned in passing that the new technology, and cryptocurrencies in general, would eventually be consolidated within the existing currency and bond structures, with it playing a role in the SDR evolution.
This past October IMF Managing Director Christine Lagarde stated that the Blockchain technology would be used to transform the SDR in the future. This fits with the comments I had previously made. The instability of the existing cryptocurrencies, I reasoned, would be used as an excuse to take full control and regulate the technology.
The wild speculations on Bitcoin which is taking place would also support that conclusion. No matter how high Bitcoin goes, in no way will it be considered stable enough to replace national currencies. Bitcoin on its own, will not be able to create a liquid market which would support the international monetary demands.
Yes, the Blockchain technology is fantastic, and will evolve even further to provide enhanced functionality to a globally consolidated system, but it will need to work in conjunction with bond markets. Any asset used to support the system requires a level of stability which Bitcoin, or any other cryptocurrency, will be unable to provide on its own. It needs to be anchored to something which can provide stability and reduce wild fluctuations.
The rise of Bitcoin, and the inevitable bursting of that massive tulip bubble, will cause enough widespread concern that the IMF and Bank for International Settlements, will begin to implement regulations on the use of the technology. Something like a Basel 4.
The method by which we measure and accumulate human wealth is in the process of transitioning to something new and completely different. The advancement of AI and robotics are on the verge of merging and emerging into something which will forever change the concepts of time and labor. The citizens of the future will be issued credits based on a host of personal key performance indicators. As an example, one person may have a genetic pre-disposition to a certain disease. Through the use of an integrated Blockchain technology, that person will be prevented from purchasing certain food and drink products which can aggravate their pre-disposition.
The de-dollarization which is taking place, something we have long discussed here, is continuing incrementally, with slight increases over the last year. China, Russia, Iran, and other nations, are beginning to minimize the use of US bonds and dollars in their interactions with one another. This is shifting the liquidity around the world and contributing to the re-balancing of the international monetary system. But this process takes a long time and those promoting the imminent death of the US dollar, or crypto-takeover of the world, are just spinning the same misleading and fallacious tales as they have year after year about the dollar and economic doom.
The world is changing. That is a fact. But the world has always been changing. – JC
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JC Collins can be contacted at email@example.com