UBI 101: Central Banks Effect
(Edited)
Central banks play a big role in the economy. It also has a part (if not the cause) of the income and wealth inequality.
In this video I discuss how the process central banks use is as much to blame as the actions they took. This will lead up to the video tying it all together.
▶️ 3Speak
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In Nigeria we have just one sole central bank while the rest are commercial banks
When you say central banks are private institutions, do you mean have more than one central bank in the US?
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The Federal Reserve is the only central bank in the USA. It is owned by the commercial banks. They do not have total control over it, however. There is legislation that applies only to central banks. It works the same way everywhere.
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This is totally different from how it works in Nigeria. In fact in Nigeria it's the government that controls and regulate the central bank which in turn controls the commercial banks.
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The government does control and regulate central banks everywhere. But the government does not own the central bank and it has some degree of independence. It's not a government agency and its operating budged is not paid out of tax dollars. But it can't do anything it wants. It's regulated by special legislation.
I would see that for central banks to issue a digital currency as an efficient way of being a universal basic income. Now if that should be pegged or have some other mechanism to preserve its value or even increase it, beats me but surely should be considered. Nevertheless maybe this is what humanity needs as a whole and than see how this social and financial incentive pays off.
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The usage alone would give it the value. If a central banks issued a currency to everyone that they used, then there would be the value in that currency. In the US for example, that would be 300 million people engaging in tens of trillions of dollars worth of commerce.
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If the central bank balance sheets are not going away by themselves (ie the status quo strategy of 'quantum easing' via powerful central banks will not put itself outa biz), the possibility remains that the current system itself will be superseded and rendered obsolete (decentralised becoming mainstream + realisation that we don't have to give a fuck about balance sheets of abstract private companies)....no? There will surely be a big pushback to centralised financial control over the next decade.
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I would say there is a lot of changes taking place, including how we look at things economically. We are moving into a different era, one that could take a couple decades to play out. Certainly central banks will have to adopt.
As for them being obsolete, in the near term, I do not see that. Even if cryptocurrencies become the norm, there will still be a place for central banks. Decades into the future, perhaps they might end up being non-essential.
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Summary:
In this video, the speaker delves into the concept of Universal Basic Income (UBI) and its relation to central banks and monetary policy. He highlights the vast amounts of money required in the coming decade due to technological advancements causing deflationary pressures. The speaker emphasizes the continuous need for central banks to print money and discusses the private nature of central banks and their impact on the economy. He contrasts the actions of central banks with government deficit spending and addresses the disproportionate benefits received by financial entities like Wall Street compared to the general population. The video ends with a teaser for the next installment where the speaker will discuss changing the delivery mechanism for UBI.
Detailed Article:
The video revolves around the intricate relationship between Universal Basic Income (UBI) and central banks, with a primary focus on the monumental amounts of money necessitated by technological advancement-induced deflationary pressures. The speaker starts by drawing attention to the staggering figures expected to be printed by central banks, ranging from $100 trillion to possibly $150 trillion in the 2030s. He compares this to the approximately $23 trillion printed in the 2010s, highlighting the exponential increase in required funds.
A key point of discussion is the role of technology in driving deflationary pressures, necessitating continuous money printing to prevent a deflationary spiral akin to Japan's economic struggles. The speaker underscores the symbiotic relationship between technological advancements and the economy, accentuating how technology absorbs existing money, necessitating additional printing to sustain economic equilibrium.
The speaker elaborates on the symbiosis between central banks and governments, emphasizing that deficit spending, facilitated by central banks printing money, is inevitable to address economic demands. He delves into the dynamic of quantitative easing as a vital strategy to combat deflation and stimulate economic growth. The speaker highlights the interconnectedness of central banks and private entities, emphasizing that transactions involving asset purchases are essentially private transactions.
Moreover, the video touches on the disparity in benefits derived from money printing and deficit spending, with financial entities like Wall Street and the banking sector reaping more substantial gains compared to the general populace. The speaker critiques the current delivery mechanisms of stimulus measures, asserting that for UBI to be effective, there is a pressing need to revamp the delivery system to ensure a more equitable distribution of resources.
In conclusion, the video sets the stage for the subsequent episode by teasing a comprehensive exploration of alternative delivery mechanisms for UBI, hinting at a deeper dive into the structural changes necessary for UBI to succeed. The speaker leaves the audience with a thought-provoking insight into the complex interplay between central banks, monetary policy, technology, and societal welfare, paving the way for a more nuanced discussion in the next video installment.