Alti Wine Exchange founding member
For this latest take on economic, financial and monetary issues that should be far more discussed (you can read more here), I would like to talk about something that is not so often debated when it comes to economy: myths.
Yuval Noah Harari, author of Sapiens: A brief history of humankind, says that people require myths in order to bind in common cause and function as an extended civilized community.
Among the many that he mentions, banks and central banks are not among them. But banks and the banking system are probably the biggest myth of them all, because most people can’t explain them – hence, having created a myth to make sense of it.
Going to the bank to make a deposit is a myth. A loan is possible because banks are in the business of taking deposits is another myth.
Harari is probably right about the fact that we need stories, and for that reason we are bringing what we hope will be a new myth that will replace the old one someday.
That myth is a Central Bank at the service of people owned by the people, through Social Security, that guarantees pensions and social security instead of banks.
It is a myth that has a different narrative. Banks are not independent entities because they are working as franchises of the central banks, therefore being able to apply the full force of regulation.
Since the end of the 20th century, with Alan Greenspan, and in particular since the crisis of 2007, central banks invented new tools because traditional ones were not working, making the myth of financial and monetary system look like science.
All these new tools are affecting our traditional way of life, or, as Harari would say, are affecting the “narrative”.
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The new narrative requires that we visit the traditional focus on price stability and the relationship between new central banks’ balance sheet policy and interest rate performance.
Rethinking central banks is the result of the observation of 5 years of zero interest policy, and the financial dimension and impacts of this experiment with no scientific credibility.
It is also the result of the fact that central banks have become suspect enterprises and the acceptance of the fact that the banking system can no longer be fixed and needs to be reshaped so we can have true economic freedom and dignity for all people, in a real sense of community.
Such observation is also a factor that significantly inspired the creation and development of Alti Wine Exchange.
This also reminds that I have argued for this reshaping of the system before. You can find some of my arguments below. Send me an email with your thoughts and I will be happy to address them soon.