Now it is the Fed’s turn to complain about cryptocurrencies. U.S. Federal Reserve vice chairman for supervision Randal Quarles says that digital currencies and cryptocurrencies could disrupt the larger financial system.
He said in a speech: “Risk management can act as a mitigant, but if the central asset in a payment system cannot be predictably redeemed for the U.S. dollar at a stable exchange rate in times of adversity, the resulting price risk and potential liquidity and credit risk pose a large challenge for the system.”
He also said, “It is not clear … whether the payment system would be able to function, in times of stress.”
Developing digital money rapidly could cause a significant slowdown in economic functions, he said. The technology was “unproven” and could blow up domestic and international functionality.
He did recommend that the Fed continue to look into pursuing digital currencies but this is because central bankers wish to use digital currencies to track spending and saving. If top bankers have their way, every single transaction will be booked one way or another and sooner or later most of those transactions will be taxed or worse. Cash will likely go away.
Quarles believes that the US dollar is stable during times of adversity. In fact, the Fed printed trillions of dollars and sent them abroad after 2008 to stabilize the financial system. However, the money was printed illegally because the Fed is not supposed to stabilize the world, only the US. No one was ever prosecuted.
The money contributed to the US dollar’s inflation rate which is under-reported. That inflation regularly trickles into the dollar economy even though a lot of it still has to register.
It is simply a lie that central banking functions better “in times of stress.” Bankers like to promote this idea because allows them to take command of the value and volume of money. It is a form of price fixing and price fixing never works. It merely makes things worse, generating intense booms and busts over time that would not otherwise take place.
Quarles is wrong about every aspect of central banking which has been created as a form of price control that gives a handful of people the ability to manage trillions of dollars every day.
Money used to be part of the free market and sooner or later it will be so again. Bitcoin is leading the way, but if bitcoin doesn’t work out there are plenty of other cryptocurrencies that may take its place.