Alasdair Macleod: Central banks will shun bitcoin and return to gold

Section:

The Psychology of Money

By Alasdair Macleod
GoldMoney, St. Helier, Jersey, Channel Islands
Wednesday, December 23, 2020

The world stands on the threshold of monetary hyperinflation with the U.S. dollar leading the way. The final months of fiat money are coming into view.

What will replace the currencies -- bitcoin or gold?

This article argues that the solution is bound to be with central banks and government treasury departments retaining their control as issuers of money by the only means at their disposal: deploying their gold reserves to back their currencies, not as fiat but as credible gold substitutes.

... Dispatch continues below ...


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Central banks own no bitcoin, which effectively rules it out. Central banks may try their own equivalents, central bank digital currencies, but they are simply another form of fiat money and will also fail -- assuming there is enough time for them to be introduced.

In any event, the eventual replacement for fiat money needs to be beyond government control (other than the state acting as a monetary trustee, ensuring that gold coins are always available for exchange) and flexible enough for its users to collectively set the quantity that acts as money.

A formulaic medium such as bitcoin does not provide this flexibility, but gold clearly does and has proved its suitability in the past. ...

... For the remainder of the analysis:

https://www.goldmoney.com/research/goldmoney-insights/the-psychology-of-...

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