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by SkyMarshal
1140 days ago
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Central banks aren’t needed to keep the economy running, you really just need some areas of law (contract, commercial, etc) and an effective court system for that. The economy ran on its own prior to the Federal Reserve being created in 1913. Central banks may be useful in preventing banking crises every ~20yrs as happened back in the 1700s and 1800s. But even that’s not a certainty since the two most severe banking crises in history - the Great Depression and Global/Great Financial Crisis - happened under the watch of central banks. Some even argue the latter occurred because of the central bank keeping interest rates too low too long. One benefit of central banks is to depoliticize monetary policy by moving it away from the Executive Branch, and giving it a consistent, Congressional mandate that it must prioritize in its policy and operations - low inflation and high employment. That’s probably one of the few indisputable advantages they have. As for whether inflationary or deflationary money is better, I don’t know. Both have their pros and cons. The more I go down rabbit hole on each of these, the less decisive I am about it. But this website makes a comprehensive case for deflationary money, fwiw: https://wtfhappenedin1971.com/ |
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After the switch to burn a portion of funds on every transaction as well as the switch from proof of work, to proof of stake, Ethereum is now deflationary [0].
Say what you will about the cryptocurrency experiment, it will be fascinating to watch the effect of this over time.
[0] https://ultrasound.money/