The State Of Major Modern Nation-State Economies & The Real Bitcoin Economy
If it weren’t for monumental quantitative easing programs, the world’s economic leaders would not be hiring the bit faster nor creating a few more jobs as they currently are.
Some economists, to the chagrin of government numbers everywhere, say major countries will need help in the form of easy money for years to come. Others are optimistic saying “tapering” will begin in early 2014.
The US, Europe and Japan are all having cash printed by their central banks. The central banks are also keeping loan rates near record lows. Often touted as a hotbed of economic activity, and the world’s way out of Global Recession, even China has depended upon economic programs geared at nurturing liquidity.
The International Monetary Fund expects global growth to rise 3.6 percent in 2014, up from 2.9 percent this year.
That the economy appears better “does not mean that a sustainable recovery is on firm footing,” Angel Gurria, secretary-general of the Organization for Economic Cooperation and Development, said last month. Major economies will rely upon “extraordinary monetary policies” to sustain momentum into 2014.
Many economists believe stimulus will be needed even longer than that.
Seemingly free money from major central banks is not necessarily so free. Instead, all of this cash has pumped into stocks, bonds and commodities, sending prices to unsustainable rises and raising the risks of market collapse.
Janet Yellen faces a confirmation hearing this week as she is to start working as the chairman at the Fed beginning in January. She is anticipated to continue low-rates.
Europe has endured two recessions since 2009. The 17 country currency-pact will have its latest quarterly figures announced Thursday. Some are optimistic, some are pessimistic.
Last week, the European Central Bank cut its benchmark refinancing rate to a new all-time low of .25 percent. The latest change had set the rate at a then record low .50 percent.
That there is no real recovery in the real economy sparked the decision. The ECB is scared the euro zone might fall into deflation, according to Jacob Kirkegaard, senior fellow at the Peter institute for International Economics.
“Once prices begin to fall, you start to see consumers and businesses change their behavior,” Kirkegaard says. “Why should you buy a car today if the price of the car is going to fall tomorrow? Falling into the trap can be very difficult to get out of.”
Japan hasn’t seen economic recovery in thirty years of printing. Abeonomics aren’t working, and Prime Minister Shinzo Abe is losing appeal to the population. The recovery cannot be sustained with out printing.
The Fed, the Bank of Japan, the ECB – central banks all over the world – are really in the same situation. None really know how to time and carry out a change in their monetary policies or when the right time to do comes and goes.
China’s economy grew at a two-decade low of 7.5 percent in three months ending June 2013. Still, it is growing much faster than the rest of the world’s nations. The slowdown, despite the pace relative to meager western gains, sprouted a Beijing based mini-stimulus program for railway construction and public works.
China responded to the 2008 global crisis by ordering its banks to open their lending spigots. The recovery has been based by increased borrowing. China’s central bank has stated that the aggressive lending could result in massive defaults.
In Summation Of Quantitative Easing
So, when the European Central Bank cut the benchmark refinancing rate Thursday, from 0.5pc to a record low of 0.25pc, In Greece, Spain and other economically-fragile eurozone members, where there is little growth, the ECB’s decision only placated a dire situation.
The big picture is clear, with Yellen in the US and the ECB’s move, money printing will persist.
Western QE began in late 2008. The Fed has tripled its balance sheet, and in Britain QE policies have been more aggressive with a four-fold expansion.
Mario Draghi made something clear in Europe: “the eurozone’s central bank would ply the region’s still moribund banks with ‘as much liquidity as required’ over the next two two to three years.”
Still, among high brow bank, credit card and other financial gatherings, to mention Bitcoin “seriously is deeply suspect.”
Are they behind the times?
To say the least, Bitcoin hasn’t needed any monetary policy outside and above its systematic processes to maintain growth.
It’s grown by popularity, a testament to mankind’s affinity towards innovation. The price has been driven by increased demand and limited supply. Something even students of the US education system understand.
Unfortunately, the relevance of central banks begins and ends with people’s disinterest. The notion is obtruse, not exciting and innovative. Bitcoin’s innovation is its best propaganda. And this will continue to drive growth in Bitcoin.