- Before we conquer deep space let’s try to bridge inter-human space.
- You have broken the wall of your cell with your head. What are you going to do in your neighbor’s cell?
- Maybe your God wants you to boast about him in front of all other gods.
- Cannibals using fork and knife – is this progress?
- Everyone is an actor but is there a script for everyone?
- The peak of human morals: moving-prisons for nomads.
- Once again, I will start from the beginning, but before that, how do I end?
- How does the wind know which way to blow?
- The ultimate nightmare: bureaucracy takes over the country after it has eliminated ignorance.
- I welcome all thoughts that prevent me from thinking.
- I was forced to use wings as I was thrown out of the airplane without a parachute.
- I prefer “Entry forbidden” to “No entry”.
- I do not agree with math: the sum of zero is a humongous number!
- Some leaders would cut the hands of their citizens if they did not need them to clap.
- I was dreaming of reality. I woke up relieved.
- Do not turn your back on reality? How is this possible if reality surrounds us everywhere.
- Can the devil tempt me in believing in God?
- If you want to climb high, you have to fold your wings.
- Humans: live before it becomes fashionable to do something else.
- Be careful dramatizing your life – what if there is a better actor for your part?
- Be careful when fame shines on you. Your enemies are the ones hiding in the shadow.
- Don’t waste the energy accumulated from going down the slope.
- If there is no precedent that’s also a precedent.
- The first condition of immortality is death.
- Can you make up lack of talent with character?
- Many things were not created because of the impossibility of them being named.
- The fact that he died is not proof that he lived.
- When you think about it, the same fire which Prometheus stole from the gods was used to burn Giordano Bruno.
- As we get closer to the truth, we move away from reality.
- If you want to get to the source, you must swim against the current.
- Some people want to believe in the things they understand; others want to understand the things they believe in.
- His conscience is clear as it has never been used.
- Usually, the exit is where the entrance was.
There is a bit of paradox between the advance of technology and the subsequent emergence of the “cashless” society, on one hand, and the rise in demand for physical cash in the developed world, on the other hand. This dichotomy can be explained, however, with the fact that the former has to do with “cash” as a unit of account/medium of exchange and the latter with “cash” as a store of value: while we use less and less physical cash for transactions because technology allows for alternative methods of payment, we demand more physical cash because interest rates are 0% (or even negative).
The emergence of the shadow banking system in the early 2000s and the rise of the cryptocurrencies post the 2008 financial crisis may have the same roots – the lack of or the unequal distribution of safe assets (USTs, physical cash, etc.). The response in the early 2000s was the creation of ‘fake safe’ assets within the shadow banking system (subprime CDOs and the like), and now it is the creation of alternative ‘safe/blockchain’ cryptocurrencies. In both cases the free market is responding to the need for a genuinely safe asset available to everyone, but unfortunately delivering something different. Inequality does have a big role to play here (the ‘work->income’ channel being broken). But the authorities, probably inadvertently, also affected these processes: in late 1990s, the Clinton administration decided that it wanted to generate a budget surplus and reduced the issuance of USTs; post 2008, as part of QEs, the Fed took out of circulation a good chunk of USTs.
In other words the shadow banking system emerged and developed because the monetary transmission mechanism was not working properly – money was ‘siphoned’ out of the economic system as savings and financial investments and never found its way back. In the mid-1990s the shadow banking liquidity surpassed the traditional monetary liquidity and by 2007 it was totally dominant. In an environment like this, the central bank was powerless to conduct monetary policy using the traditional mechanisms such as interest rates. Lehman Brothers was one of the main cogs in the shadow banking mechanism. Were the authorities blindsided by the fact that the bank was not a depository institution and thus it was safe to let it go as there will be no bank runs like in the 1930s? Nevertheless, Lehman Brothers’ failure produced a massive run on all shadow banking centers and thus total monetary liquidity collapsed. Even to this date, despite years of zero interest rates, and despite an increase in traditional liquidity, total liquidity is still barely above the level reached pre 2008 crisis because the shadow monetary liquidity is still decreasing.
So, we have these cryptocurrencies emerging and taking the place of the traditional monetary mechanism as a result. The idea of a cryptocurrency is similar to shadow money because it uses a private legal tender (‘fake safe’ money). It is digital cash but the electronic money that had existed before (for ex. credit and debit cards) were always denominated in the units of the sovereign currency (GBP, USD, USTs). However, it is revolutionary because it uses highly sophisticated blockchain technology (eliminating the need for intermediary and addressing the issue of trust) and because its digital format allows instantaneous dissemination.
Cryptocurrencies should be a massive headache for central banks because they are a direct competitor to their legal tender. Why some central banks are so eager to endorse them is a mystery to me. Authorities already have so little control over monetary policy that if they indeed allow cryptocurrencies to proliferate without the central bank’s control, the monetary transmission mechanism would be further jeopardized. In addition, cryptocurrencies are a direct competitor to the commercial banking model which uses the central bank’s legal tender in the process of creating its own ‘private’ money. At the moment the existing cryptocurrencies are used mostly as a store of value, but if more and more retail outlets start to accept them, they would begin to be used as a medium of exchange and unit of account.
However, a lot of central banks are also in the process of testing their own digital currencies (most of them are also blockchain-based). For example, in 2015 Ecuador was the first country to introduce its own digital cash after it had banned Bitcoin. If the central banks allow the public, and not just a select group of financial institutions as it is the system now with central bank reserves, to have direct access to this form of legal tender (the so-called Chicago Plan), then that would be truly a revolutionary monetary policy turn.
Army (3500 BC): walled city -> Navy (1210 BC): walled city -> Air Force (early 20th century): walls provide no security; in fact, institutional and physical infrastructure concentration reduces security rather than increases it -> Cybersecurity (early 21st century): decentralized security essential as centralization runs the risk of total destruction. Will the trend of decentralization spurred by the advances of technologies like the blockchain, for example, speed up the process of de-urbanization in the developed world? Can technology also start to reverse the developing world urbanization?