As a seasoned crypto investor with over a decade of experience in this dynamic field, I find it ironic that central bankers are accusing Bitcoin of being unfair while their own policies have been the primary cause of economic instability and wealth inequality for the masses. The latest paper by the European Central Bank (ECB) arguing against Bitcoin is nothing more than a desperate attempt to shift blame from their destructive monetary policies, such as quantitative easing and inflation, which have disproportionately benefited the wealthy at the expense of the average citizen.
As a crypto investor, I’ve noticed a concerning trend from central bankers who seem to view Bitcoin as unjust. This rhetoric could pave the way for burdensome taxation on various aspects of Bitcoin, such as mining costs and capital gains taxes, and potentially even outlaw it altogether.
However, much of the economic data, including research they produce themselves, indicates that central bankers may unwittingly inflict pain on us through their monetary policies such as printing money and implementing inflationary strategies.
The ECB argues Bitcoin is unfair
According to a recent publication from the European Central Bank (ECB), Jürgen Schaaf contends that Bitcoin’s fundamental nature is unjust.
According to Schaaf, when looking at the overall picture, the initial investors in Bitcoin tend to boost their actual wealth and spending, potentially coming at the cost of the real wealth and consumption of those who don’t own Bitcoin or invest in it later on.
Schaaf, a Consultant to the Executive Leadership of Market Infrastructure and Payments, contends that the affluence of Bitcoin users has essentially been taken from those who do not use Bitcoin.
He states that the extravagant purchases such as the latest Lamborghini, Rolex watches, luxury villas, and high-value stock portfolios by early Bitcoin investors are primarily funded through decreasing spending and accumulated wealth from individuals who initially did not own Bitcoin.
Rather than blaming inflationary policies by central banks for apparent misallocation of assets and overall unhappiness, he argues that Bitcoin could lead to economic hardship instead.
He argues that shifting wealth and buying power isn’t likely to happen without negative impacts on our society.
As suggested by Schaaf, individuals who do not use Bitcoin might want to advocate against it and push for laws restricting its growth, with the ultimate goal of either keeping its value from rising or causing it to cease existence entirely.
Even while arguing for redistribution away from Bitcoiners, Schaaf argues it’s Bitcoiners are the ones doing the redistributing.
The paper also touches on Bitcoin’s inelasticity — the inability for more Bitcoin to be created — in the form of a graph illustrating how little Bitcoin will be available for late adopters.
The Bitcoin community strongly criticized the paper, with some, including Tuur Demeester, interpreting it as an act of aggression.
On topic X, Schaaf elaborated more on his hypothesis. In his words, “The early adopters’ wealth and spending increases, while others experience poverty, even if they never possess Bitcoin.
Quantitative Easing
Instead of pinning economic disruptions solely on Bitcoin, it might be more accurate to consider the potential damage that central bank manipulation causes to individuals who hold traditional currency (fiat) but not Bitcoin, as this could lead to a greater level of turmoil compared to Bitcoin.
In simpler terms, policies like quantitative easing, sometimes referred to as “printing money,” may have led to an increase in the value of stocks, bonds, and other high-value assets, primarily benefiting the affluent.
The UK Parliament House of Lords Economic Affairs Committee investigated quantitative easing (QE) as a reaction to the 2008 Global Financial Crisis, according to their report titled “Quantitative Easing: Is It a Harmful Obsession?
As a crypto investor, I’ve noticed that certain policies have caused asset prices to rise excessively, which benefits those who already own them significantly. This disparity in wealth distribution becomes more pronounced during economic hardships, contributing to the existing wealth gaps.
In a study conducted at the University of Massachusetts, the researchers investigated how the Federal Reserve’s quantitative easing policy impacted income and wealth disparities.
As a crypto investor, I’ve noticed that the effects of quantitative easing on my investment income have been, to some extent, tilted towards the wealthy. The authors put it succinctly: “The impact of quantitative easing on my distribution income was at least modestly regressive.
They conclude that QE led to “modest increases in inequality despite having some positive impacts” on employment and the refinancing of mortgages.
In essence, the full impact of Quantitative Easing might remain a mystery, even to the most esteemed economists in their academic circles.
According to Vincent Sterk from University College London, the implications of quantitative easing are not clearly grasped, largely due to the fact that conventional theories on monetary policy suggest it’s ineffective.
Inflation
A paper for Massachusetts Institute of Technology (MIT) highlights an international poll of 31,869 respondents in 38 countries.
…”Those who are economically disadvantaged, such as the low-income individuals, those without formal education, and manual laborers, tend to cite inflation as a major issue more frequently compared to others…
It’s worth noting that a survey conducted by the Census Bureau’s Household Pulse Survey indicates that inflation has a greater impact on low-income households. This is due to the fact that they tend to spend a larger proportion of their income on essentials like food, fuel, and housing, which often experience higher-than-average inflation rates. Unlike middle-income households who can afford to buy cheaper alternatives or generic brands, low-income households typically don’t have this luxury as they are already purchasing budget options.
Schaaf fails to convince us that Bitcoin will be the cause of our economic suffering. Academia and even central banks have meanwhile presented all the evidence necessary to suggest that perhaps Schaaf and his colleagues are the problem.
It might be beneficial for individuals who don’t use Bitcoin to “understand that they have solid arguments” against central banks.
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2024-10-25 15:04