Travis Kling, the founder of Ikigai Asset Management, told MarketWatch today that Bitcoin will inevitably grow because it will prove to be the best hedge against irresponsible monetary and fiscal policies.
The practice of quantitative easing and running fiscal deficits has become the rule rather than the exception nowadays among central banking. So much of it also hinges on policy decisions which could change on a dime depending on political circumstance.
Given these drawbacks, many proponents of Bitcoin (BTC) see the cryptocurrency as the single best hedge against central banking. Bitcoin thus provides us with an alternative to the unstable monetary policy which is currently the foundation of the world economy.
The reality is that today the actions of one central bank are inadvertently linked to every other due to our globalized world. For example, a policy change in the Federal Reserve will follow relative changes in the European Central Bank and the Bank of Japan. Due to the growing politicization of monetary policy and its impact on markets, one can easily see how this could create problems down the road.
“We have now this set up where [the central banks] have become politicized both in the U.S. and globally. It’s the new world we’re living in,” Kling said.
Bitcoin Provides Us with a New Way
According to Kling and other supporters, the strength of cryptocurrencies like Bitcoin is that it provides an avenue away from these existential policy errors.
Central banking poses not a policy problem but an existential one since it is intimately tied to all the workings of the state. This makes central banking especially susceptible to the ebb and flow of political power. Bitcoin, on the other hand, has no politicized body which can change its fundamentals on a whim. Bitcoin is the perfect hedge against central banking simply because ‘code is law’ and there is no changing it.
Although fiat currencies are likely not going away anytime soon, we nonetheless need to be cognizant of the instability present in global world markets. Fiat currencies cannot base their relative values simply on each other’s floating exchange rates.
In a globalized world, the world economy and central banking policy constitute a global power in and of itself. Because a nation’s monetary policy can no longer be even partially separated from another, the politicization of the Fed should be especially troubling. In this way, a crisis could spread like wildfire throughout the world economy from just a minor mistake in American monetary policy.
According to supporters of Bitcoin like Kling, Bitcoin’s strength lies in its apolitical nature: it cannot be altered by policy prescriptions nor by the whims of political power. This makes it inherently stable and why it is the best hedge against central banking today.
[bctt tweet=”Bitcoin cannot be altered by policy prescriptions nor by the whims of political power. Because it is inherently stable this way, Bitcoin is the single best hedge against central banking today.” username=”beincrypto”]
Do you agree that Bitcoin is the best alternative to central banking? Will this inevitably make Bitcoin more valuable in the future? Let us know your thoughts below.