Rethinking central banks for economic freedom is a feasible myth

by Jul 6, 2020Thinking outside the bottle0 comments


Paulo Pinto

Alti Wine Exchange founding member

Dear reader,

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”.

(Alan Greenspan, former long-time chairman of the US Federal Reserve)

(Alan Greenspan, former long-time chairman of the US Federal Reserve)

* * *

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.


Explore More from Our Blog

Would you bring your child to a winery?

DEAR READER, What a pleasure to be back! I admit it: these mailbags are now my favorite point of the week. Even during the contentious back-and-forth, I always enjoy opening my inbox to see words from you all. “Kind” ones, sometimes—but as you know from last week—I...

Our Sommeliers suggested wine

DEAR READER, I must be honest—I expected many more well wishes after posting that old journal entry. Everyone is modest when they say they don’t want well wishes, and so I expected there would be a few of you who saw through my “plea for privacy”. But, I forgive and I...

Because Life Needs Good and Evil

Black and white. Chaos and order. Sinner. Sinless. Life is a constant search for the happy medium, the yin and the yang. It’s as renowned psychologist Jordan B. Peterson explains, “Order is not enough. You can’t just be stable, and secure, and unchanging, because...

Thank you, Lehman Brothers?

On this day, 13 years ago, the world broke out in a panic when Lehman Brothers filed for Ch. 11 bankruptcy. Still the largest bankruptcy filing in US history, it was the climax of the Great Recession of 2007-2009. Subprime mortgages were to blame, lending money to...

Beer vs Wine, a timeless debate…

DEAR READER, Blah blah blah let’s get right to it! Dear Sommelier Ferdinand, You’ve dropped some hints that you look down on beer. Why is this, Sommelier Ferdinand? You have a growing fanbase—surely, you’re aware the effect that your insults have? And before you...

What would you do if you found an expensive wine in a cellar?

DEAR READER, Never in my life have I been happier to pontificate about wine than at my computer desk. In person is stimulating, sure, but they always talk back at some point. My lovely readers, however, only speak when I like! This internet thing has utility!...

The Beginning and The End.

Alas, the sun has crossed the celestial equator from north to south. Summer is now quite uneasy, shifting into fall in the north, while life is springing into action down south. What a beautiful time of the year! When grapes are cut from the vine to create new wine,...

Ever heard of a wine cocktail?

DEAR READER, I hope some of you learned from the reader letter last week [hyperlink to Week Ten post] and checked your attics! You never know how much wine sits above you, waiting to be uncorked and decanted—on someone else’s dime! Dear Sommelier Ferdinand, I have a...

The Future of Wine

We humans are bold if nothing else. Unlike any other species (that we know of), only we have chosen time and again to go boldly where no other has gone before. This holds especially true to the modern European, the first to really “discover” ignorance. Though they...

Could Mozart Make Your Wine More Complex?

We usually do three things when drinking wine: look at it, smell it and taste it. We activate three of our five senses to understand what’s going on in the glass. I propose we go further by incorporating sound and touch. Surely what we’re listening to while...

What on earth is a ‘Wine Decanter’?

DEAR READER, It’s come to my attention that many of you are ill-informed, misinformed, and frankly, uninformed about how wine is to be consumed. Were I only a wine enthusiast, it would be wholly dispiriting. But—wine is my profession, and I’m obligated to recognize...

“What’s My Next Question?” – Benjamin Kaplan

What’s My Next Question? On a random day like today 11 years ago, a legendary Harvard Law professor and lawyer, Benjamin Kaplan, died at 99 years of age. A rich, marked life that left an impact long after his last breathe. Apart from influencing the likes of Ruth...