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Central Bank money = safest money !!!

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1nvest
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Central Bank money = safest money !!!

#601272

Postby 1nvest » July 10th, 2023, 10:12 pm

Mansion House 10th July 2023 speech and Andrew Bailey (BoE) proposed that central bank money and hence a Pound based Central Bank Digital Currency to be the safest choice of money. Better than other cryptos such as stable coin, bitcoin ...etc.

Beg to differ. A safer choice IMO is that of 67/33 global stock index fund and gold based 'digital coin'. Inflation for that did spike to 10%+ levels in the last quarter of 2022, but as of June 2023 is back down to near 0%, and where historically since 2009 consumer price inflation averaged -6.3% (your 67/33 stock/gold "digital coins") gained purchased power).

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Let's call that Enhanced Digital Money (EDM), relatively easily created in any country where a global stock index fund and gold are accessible/available. Stored in a Wallet, such as a ii brokerage account (or whatever brokerage you may prefer). Exchangeable for actual cash in your regular spending account (or converting cash into EDM) in typically T+2 trading time.

The government pushing a central bank digital currency (CBDC) backed by the Pound - that tends to lose purchase power over time, and where such CBDC opens up all sorts of other potential government meddlings ... and for the average individual that is NOT the safest. Safest only if you are one of those in control of that CBDC.

A factor is that they're pushing a inferior product, where given the choice many might prefer a different unit of money, such as EDM, and where their regular spending account from/to which that can be sent/converted isn't controlled by the state/central bank, but instead is private and directly exchanged between individuals.

In the push for CBDC for that to be successful it will require the ending of actual paper/coin money, and will require increases in controls/lack of privacy, and some pretty hefty regulations, much international agreement and collaboration, and considerable controls to block data communications with any country/entity outside of that block. Where failure to achieve all of that could see the Pound collapse as a currency that no one else wants and the associated loss of central bank/government controls that would entail. Along with a period of exceptionally high inflation that such a collapsing Pound would drive.

But we are where we are, the Sunak, Hunt, Bailey first team and their apparent choice of a managed UK decline approach. In other news I read today that thousands of the 1% that pay a third of the tax take have already either self exiled or have preparations for such being established/in-place. Upon completion of their apparent managed decline policy so the remaining rest will be left having to pay 50% more in taxes just to fill that hole. Pretty much a certainty, given that the BJ/LT/KK opposing direction choice has been firmly vilified (largely due to incompetence in actual management/roll-out).

NeilW
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Re: Central Bank money = safest money !!!

#601526

Postby NeilW » July 12th, 2023, 6:43 am

You can't pay your taxes, or your debts with assets. For that you need the particular denomination demanded by your creditors. Fail to deliver that and all your assets will be confiscated by force - including your liberty.

Therefore for people living in the UK rather than in fantasy land, central bank money is by far the safest option - assuming National Savings isn't offering a current account.

When the government bans crypto exchanges, as they have banned Russia from dealing in Sterling, all of a sudden you don't look so smart playing exchange rate risk.

Items will continue to be prices in Sterling in the UK for as long as there is a UK government with the power to tax in Sterling and banks leveraging that capacity.

There is so much BS about Central Bank currencies it beggars belief. It is little more than holding a current account with a debit card at the Bank of England rather than Nationwide, Lloyds or whoever. Even holding bank notes in the UK is just a receipt for a deposit held at the Issue Department of the Bank. That's why it says "I promise to pay the bearer on demand" on the front of them. The Bank, and the Bank alone, decides whether a note is current, much as the Mint decides whether a coin is current.

All the fantasy nasties that Libertarians like to dream up can already be done with the current banking system. That is, after all, how money laundering rules are enforced and fraud hits on credit and debt cards managed. And yet we can still buy cigarettes and alcohol - almost as though the government is elected by us and we notionally control it.

Urbandreamer
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Re: Central Bank money = safest money !!!

#601542

Postby Urbandreamer » July 12th, 2023, 7:44 am

NeilW wrote:You can't pay your taxes, or your debts with assets. For that you need the particular denomination demanded by your creditors. Fail to deliver that and all your assets will be confiscated by force - including your liberty.

Therefore for people living in the UK rather than in fantasy land, central bank money is by far the safest option - assuming National Savings isn't offering a current account.


The first has nothing to do with the subject thread, though exhorting money with threats is known as a crime, when it is not the government that is doing it.

As for the "safest", sure history has proven that in just so many countries! Indeed it is not unknown currently for people to prefer currency, such as the US $, that they can't pay their taxes in. At least when they can't trust the currency of their country.

The "UK" has not been immune from poor money. Henry VIII was know as old copper nose as the silver rubbed from the nose on his silver coins (75% copper). In the last few years some 15% base metal has been added to our money (increase in money supply). In the past we have had to devalue the £, as too much had been "printed".

Like very, very many. I shall render unto Caesar what is Caesar's. Meanwhile I shall keep most of my wealth in forms other than the currency of my country. Like many on this forum, I keep the majority as holdings in companies that supply goods or services.

Crypto currencies are just other currencies. I DO happen to think that there are aspects of bitcoin that makes it a "safer" money than the £, but own very little. As a "currency" the £ is of more use to me, though less "safe". Others have a very similar opinion of gold.

Putting crypto aside, can you honestly claim that Central bank money is "good" money? Compare it to gold is the BoE statement still true? That is a very valid subject for this board.


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