Bank for International Settlements (BIS) general manager Agustin Carstens came down hard on cryptocurrencies last week. The BIS has been very negative on cryptocurrencies. A recent report they released was wholly negative on the crypto space. In an interview with a Swiss newspaper, Agustin Carstens continued to attack cryptos.
Many of the ideas that Agustin Carstens presented were absurd. The central banking establishment has a lot to lose. Today money is created from nothing. Fiat currency represents the debt of governments. There is no physical anchor for the value of fiat currency. It is simply the promise of a government to pay back debt with more debt.
The BIS and Agustin Carstens’ fool’s gold
In the interview, Agustin Carstens referenced Isaac Newton. He made this reference because Isaac Newton was an alchemist.
Some poorly educated people confuse alchemy with the attempt to turn base metals into gold. Alchemical sayings like, “Aurum nostrum non est aurum vulgi,” demonstrate that the gold of classical alchemy was not physical gold. The previous phrase was written by another famous alchemist. His name was Gerhard Dorn. Translated, it means, “Our gold isn’t common gold.”
It is ironic that Agustin Carstens would invoke both Isaac Newton and alchemy. When Isaac Newton was the head of the Royal Mint, in England, the monetary system was very different. In that era, the world used metals like gold, silver, and copper as money.
Isaac Newton was a master of gaining the trust of the lower classes and finding people who were defacing minted coins. Some of the people that Isaac Newton found to be violating the laws were imprisoned. Many others were tortured to death. What the central banks do today would have been totally illegal in the time of Isaac Newton.
Cryptos are money
Agustin Carstens went on to say that cryptocurrencies aren’t money. On this point, he is totally wrong. Anything that is used as a means of exchange, or store of value, is money. Cryptos aren’t the kind of money that central banks issue, which is probably why people like Agustin Carstens are saying things that are blatantly false.
If all that wasn’t enough, Agustin Carstens had this to say on the future of cryptos, “One mustn’t forget that central banks have been providing electronic means of payment for decades – I can’t imagine something coming along any time soon that would be more efficient and generate the same level of trust.”
Think about the above statement rationally. Central banks don’t trade with individuals. They trade with money center banks like Wells Fargo or other central banks. The vast majority of people don’t know that central banks are for-profit companies.
Coding new choices
Central banks exist because they have a monopoly on the creation of money, from nothing, granted to them by a government. People don’t trust central banks, they are forced to submit themselves to the central banking system.
The internet has given rise to a new idea of what money can be. There is no telling if Bitcoin or Ethereum will be the system that replaces fiat currency. It is easy to see that young people are questioning the very foundations of the existing financial system. That may be why central bankers like Agustin Carstens have resorted to disseminating nonsense. Time will tell if it helps them maintain their monopoly on money.
Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.