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How cryptocurrency is changing basic economics

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Central bankers increasingly sense their obsolescence — and rightly so. The more people turn to private currencies and conduct transactions without intermediaries, the less bureaucrats control the economy.

In February 2019, a 33-page Bank of Canada discussion paper unwittingly admitted the vulnerability.

The authors, James Chapman and Carolyn Wilkins, noted widespread adoption of cryptocurrencies as a means of payment would weaken domestic monetary policy "because monetary policy transmission requires borrowing and other transactions in sovereign currency." Competing currencies threaten "the central bank's ability or willingness to provide services of lender of last resort."

The paper demonstrated the lens through which central bankers see themselves in an economy, at odds with the people they purport to serve. While constituents seek wealth preservation, privacy, autonomy and convenience, central bankers prioritize seigniorage — the inflation tax — and tinkering with our buying patterns. Stuck in the Keynesian mindset and obscured behind economic jargon, they fret about using interest rates to incentivize us to borrow and spend more.

For those who would rather the economy not be manipulated, competition is good........

© St. Catharines Standard