Respected economist Professor Steve Hanke has chanted down central banks. While Hanke doesn’t tout cryptocurrency as an alternative, he does say that the world needs fewer central banks because these government-controlled entities are messing up economies and abusing monetary policy, while fueling inflation and loss of wealth.
Central Banks Have Crashed Economies Through Reckless Money Printing
Central banks have come under fire for aiding struggling economies to crash through reckless money creation, thereby fueling inflation. Prominent economist and currency expert Steve Hanke, who played a key role in establishing new currency in Argentina, Estonia, Bulgaria and Ecuador, says the world needs fewer state banks to prevent economic and cash crises.
He said central banks, armed with discretionary powers to create money and credit, are behind currency crises in most emerging markets. “They are also the engine that generates inflation. And it is inflation that destroys wealth, undermines growth and destabilize societies,” Hanke said, in an opinion piece on September 20.
The Johns Hopkins University professor of applied economics said 10 countries – Argentina, Iran, Venezuela, Turkmenistan, Turkey, Sudan, Yemen, Zimbabwe, South Sudan and Liberia – have annual inflation rates exceeding 35%, which risks collapsing their economies further.
Monetary authorities in these countries continue to print money to cater for their respective government’s high expenditures, worsening economic decay. According to Hanke, any nation which exceeds 35% in annual inflation would have failed his inflation test.
Cryptocurrency Is a Viable Alternative
This is exactly why cryptocurrency was created: to stop governments from pushing bad economic policies. That’s why it all started with an anti-establishment rhetoric. As the legacy financial ecosystem has developed, the need for regulation, in order for bad players to be kept in check, has heightened. Central banks have objectives that are aligned to governments and these do not necessarily revolve around innovation and cost reductions. Their involvement in cryptocurrency regulation should be more observant than instructional.