Eight years after the crisis of 2008-09, central banks are still injecting $200 billion a month into the global financial system to keep it from imploding.
If you want a central banker to choke on his croissant, read him this quote from socio-historian Immanuel Wallerstein: “Countries (have lost the ability) to control what happens to them in the ongoing life of the modern world-system.” Stated another way, Wallerstein is asking: what do central banks no longer control? The quote is from Wallerstein’s recent meditation on China: China is Confident: How Realistic? “The question is how realistic is this self-assessment of China? There are two premises embedded in China’s self-confidence, whose validity need to be investigated. The first is that countries, or rather the governments of states, can actually control what is happening to them in the world-economy. The second is that countries can effectively contain popular discontent, whether by suppression or by limited concessions to demands. If this was ever even partially true in the modern world-system, these assertions have become very dubious in the structural crisis of the world capitalist system in which we find ourselves today.”
Central banks still claim absolute control over their currency, interest rates,what’s legal/outlawed in their financial systems, and so on. Wallerstein is suggesting that era has ended and central banks are losing control of the value of their currency, their role in the global economy and the social discontent that is the ripening harvest of central bank policies that have greatly enriched the rich at the expense of everyone else. I don’t think Wallerstein picked China out a hat. Though every central bank is experiencing the same erosion of control, China is visibly losing control of the value of its currency, the yuan, and its runaway debt burden, which has skyrocketed from less than 20 trillion RMB 13 years ago to over 160 trillion RMB.
This matters because instability in a nation’s currency quickly spreads to the economy and then to society: as a currency depreciates, the value of everyone’s money declines, i.e. the purchasing power of their money is diminished. When a currency is devalued, everyone holding that currency is instantly poorer. When people become poorer through no fault of their own, they become angry with the authorities who engineered the devaluation or let it happen. This leads to the social discontent Wallerstein references. Another erosion of purchasing power occurs when wages stagnate while the price of goods and services rises. Can central banks control the erosion of wages’ purchasing power? There is little evidence they can.
As for a central bank’s control of its role in the global economy: those confident in China’s ascent to global #1 power assume China will remain the world’s workshop at least until its domestic populace can absorb all the goods it produces. But it seems increasingly evident China’s role as the world’s workshop is under threat, and that it doesn’t control the erosion of that role. Domestic populism is trending against globalism, wages are rising in China as the populace urbanizes, prices are rising faster than wages and the potential for disruptive trade wars is rising. As for what’s outlawed/banned: recently, I’ve been engaged in some lively online debates about the possibility of China banning bitcoin transactions. Most people in the discussion reckon China (or any government with a high degree of control of its populace) can shut down bitcoin with no difficulty. The threat of a severe penalty would be enough, or so I’m told. I’m not so sure. Look what prohibiting alcohol did: it created an entire economy devoted to bypassing the authorities’ restrictions on alcohol. The penalties were fairly severe, but threats didn’t work when profits beckoned. If a nation’s currency is losing purchasing power, threats are unlikely to be effective. Indeed, threatening the populace as they try to retain the purchasing power of their capital/savings would be an act of desperation born of a recognized loss of control.
Wallerstein is right: central banks–including the Federal Reserve– are losing control of the value of their currencies, their role in the global economy and the social discontent that arises as central bank policies negatively impact average citizens. It’s by no means guaranteed that central banks will be able to maintain their death-grip on interest rates, either. Eight years after the crisis of 2008-09, central banks are still injecting $200 billion a month into the global financial system to keep it from imploding. The returns on their “investment” is diminishing rapidly, and they’re losing control of everything that matters.
Are central banks losing control? There could be evidence for it.
The bubble can’t be inflated forever, at a certain point it will pop.
Many common financial policies and social programs are acknowledged as being unsustainable.
What does everyone think about this?
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I think banking needs a reshuffle. They are controlling nearly everything through their manipulations which is annoying.
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Any entity without reasons will not survive and I believe this is time for banks to change themselves. By considering bitcoin as game changer, we can expect the total banking concept itself may get fade away. When people are not finding their comfort with banking system, it would be obvious that banks will lose their dominance.
Hmm, Banks exist because of a reason, certainly bank will survive. They are critical for to the stability of world wide financial system and the government themselves won’t allow it to collapse. We can see bitcoin long faded but Banks, never.
Central Banks maybe losing control at this point but they are always evolving, changing policies and rules to adopt for the current situation, they are even backed by the government legislation to make sure that they are always strengthen. Once they had adjusted, they will again regain control.
I also think that the banks will survive. They are controlled by the government. Banks control the distribution and flow of maternity money. Without them, the functioning of the monetary system is no longer possible.
Published at Sun, 23 Apr 2017 17:07:16 +0000
[wpr5_ebay kw=”bitcoin” num=”1″ ebcat=”” cid=”5338043562″ lang=”en-US” country=”0″ sort=”bestmatch”] Free seamless pattern. I made this in photoshop so many years ago. It was a pattern concept I had been sketching since I was 10.
Attribution license. You may make derivative works. It might make a good texture map or background. commercial projects OK.
Chat platform Kik has revealed that it is launching its Kin token that will deliver the basis for a decentralized ecosystem of digital services.
Ontario-based chat platform , which has over 300 million active users registered worldwide, including around 40 percent of American teens, has announced today that it is launching its Kin token, a digital currency that will provide a foundation for a decentralized ecosystem of digital services.
Today’s technology has meant that it is impossible not to stay connected with friends and family worldwide with many using messaging apps to do so.
So much so, that by 2019 more than one-quarter of the world’s 7.5 billion population will be using messaging apps, according to data from .
Aside from being a cheaper alternative to SMS and MMS, messaging apps are big business that offer a slew of functions: group chats, gaming, GIFs, videos, stickers, emojis, photos and in-built web pages. Not only that, but a majority of messaging apps users are young, which is an extremely important demographic for messaging apps.
Kik believes that through its token it can bring together the areas of communications, information and commerce in a new way that will fuel how today’s generation and future ones will connect. Founded in 2009, Kik was the first chat app that went viral in 2010 from zero to one million users in 15 days. Since then the company has continued to meet the innovation space by becoming the first chat app to become a platform in 2011 before establishing itself as the first app within the Western world to add bots in 2014. Now, Kik is the first chat app to add its own digital currency.
Speaking to bitcoin Magazine, Ted Livingston, Kik’s CEO said that the main motivation for launching their Kin token, which comes from the word “kinship,” came down to two main insights: digital services, which are becoming more important to our daily lives, and the fact that these services are being owned and controlled by fewer and fewer companies. This, in turn, is bringing about less innovation and choice. According to Livingston, this centralization is the result of both economics and competition.
“From an economic side, it’s very hard for independent developers, including companies as big as Kik, to monetize,” he said. “There are a few companies that have huge scale that use that scale to monetize their advertising.”
Livingston adds that, when these bigger companies monetize their advertising, they then give everything else away for free. This means that for independent digital services who don’t bring in enough money through advertising, they live in a world where these giants have set the expectations where everything should be free.
“As a result, it’s very hard for all these digital services to monetize,” Livingston adds. “Those that do, these giants then turn to a copy-and-crush strategy where they take all the ideas from the players, copy it and use their much larger resources to crush the other competitors who do make it.”
As a result, Livingston states that now is the right time to put forward an alternative ecosystem of digital services that isn’t just open, but through digital currencies and decentralization, better. By launching their Kin token, Kik is attempting to set up a new economic system that can monetize digital services and deliver a new way to compete together with the larger companies.
The Kin Token and the Kin Foundation
Through the advanced developments in digital currencies and the blockchain, Kik is planning on creating a decentralized ecosystem of digital services through four steps: creating the Kin token on Ethereum, integrating Kin into Kik, developing the Kin Rewards Engine and launching the Kin Foundation.
Implemented on the Ethereum blockchain as an ERC20 token, Kin will serve as the basis of interoperability for all transactions within the Kin ecosystem. By adopting the token within the Kik app, it’s hoped that millions of users will facilitate widespread adoption of Kin, establishing demand and value for the cryptocurrency. In preparation for the eventual launch of Kin, Kik has been experimenting with the integration of a cryptocurrency on its platform since 2014.
“In 2014, we launched an experiment called Kik Coins and the question we were trying to answer was: Could we get millions of everyday consumers earning and spending natively in a digital currency?” Livingston said. “The result is that we created a transaction volume that was three times better than bitcoin’s global transaction volume at the time.”
Kik also realized that the best way for consumers to understand cryptocurrency was for them to earn it through digital services like Kik.
“The biggest flaw with all the other cryptocurrencies is that nobody gets their paycheck in that cryptocurrency; the only way to get it is to buy it, for 99.99 percent of people,” he added. “This is where teenagers are another big asset for Kik in that they don’t have a ton of spending power and this is a way to earn that spending power by offering value inside the community itself.”
Over time, Livingston explained, there will be various ways that users can earn Kin. One of the examples he gives is through exclusive group chats by charging an entrance fee with Kin to then spend within the Kik ecosystem.
Kin Distribution
Kik is planning on starting a crowdsale where the amount of Kin tokens available will be $1 trillion. However, the majority of the Kin will be set aside to form the Kin Rewards Engine. Modelled similarly to the bitcoin mining system, the Kin Rewards Engine will release a certain amount of Kin every so often to all the developers that build digital services within the ecosystem.
“Every day there will be a daily reward, which we think will start roughly at $100,000 per day,” he said. “As an owner of a service, if you integrate Kin and get people transacting Kin inside your digital service, which generates 10 percent of all transactions within the ecosystem, that would entitle you to 10 percent of this daily reward.”
Ultimately, the more services that join the Kin ecosystem computes to more transactions that happen each day, which increases Kin’s value on public exchanges and, in turn, boosts the daily reward.
“It creates this amazing network effect where all these digital services work together to grow the overall value of the ecosystem,” Livingston adds. “They all get a fair and equitable piece of that economic value they create, and consumers get this ecosystem of services that continues to grow in both size and quality.”
According to Livingston, one of the most underappreciated values of digital currencies is how much economic opportunity they can produce. For instance, he said even though they are giving away $100,000 per day, the amount of Kin available won’t run out anytime soon.
“If Ethereum was giving out $100,000 of Ether a day at its current $10 billion market cap, it would take them 273 years to give away all the Ether,” he said. “If bitcoin was doing it at their $30 billion market cap, they could give away $300,000 a day for 273 years, and these are both cryptocurrencies not used by mainstream consumers.”
As such Livingston believes that the Kin reward could easily go to $200,000, $500,000, even $1 million a day, incentivizing the creation of an open and compelling ecosystem of digital services for consumers.
Through the Kin Foundation, the team are ultimately trying to achieve a decentralized system where the developer doesn’t need to trust the Kin Foundation. As a nonprofit, the foundation will oversee the open and fair growth of the system where it will provide three things: it will administer the rewards system, it will offer an identity service for users to move between the digital services and it will provide a transaction service for users to earn and spend Kin in a secure and frictionless way, Livingston states.
Kik is due to release their whitepaper today, at which point they expect to start working with the crypto community, which will lead to their crowdsale in the next few months.
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