Will Bitcoin Replace Central Banks with Lyn Alden - WBD521

Lyn Alden is a macroeconomist and investment strategist. In this
interview, we discuss the rise and role of Central Banks: their
intermittent role in the US’s history, the piecemeal erosion of a
gold standard, the new era of easy money, and whether Bitcoin
could replace Central Banking.


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Central Banks have played such a dominant role in our societies
it’s easy to assume that they are required institutions within
modern governmental systems. The idea that the market can
determine a monetary policy and the price for money is well
outside of the Overton window.


Yet, for long periods in the industrialised era modern civilised
societies have functioned, developed and prospered without such
institutions. Further, there is ample evidence that central banks
are now far from being a steadying force that brings stability to
economies.


For around 100 years, the international monetary system was
pegged to gold; albeit there were debasements, new controls, and
periodic abandonments during this period. Then in 1971, the
monetary system was taken off any remnants of a gold standard.
Its constraints on US fiscal policy had become too burdensome. It
led to the development of fiat currencies and a period of easy
money.


Governments have become increasingly dependent upon Central Banks
in creating new money to assist with economic shocks: following
the global financial crisis the production of dollars markedly
increased. But these events were dwarfed by the injection of new
money during the pandemic. Inflation is now catching up, but at a
time when economies are stagnating.


Cycles of debt accumulation always come to an end. Without
careful political judgement, coordination and luck, the
resolution of unsustainable debt at the global level can lead to
domestic and international conflict. So, we’re entering a
transformative decade.


The question is whether Bitcoin, the strongest form of money ever
invented, can enable society to navigate through this unwinding
of the long-term debt cycle? Additionally, can it enable the
market to again determine the price of money?