Bitcoin Magazine: The Conundrum of Central Planning
The global financial system is centrally planned. A big part of that planning comes from central banks. They decide how much of a currency is in circulation. And they have tools such as interest rates that can be manipulated at whim. That’s why fiat money is called what it is – it’s decided by order, or fiat.
This monetary policy can move quickly. That’s a powerful feature in a crisis. But the flaw is that it’s monetary policy that often leads to a crisis.
In contrast, the rise of bitcoin stands outside this process. It’s a piece of code that can be run by anyone. It’s already planned out. More features can be added to the bitcoin network. But it then has to be approved by a majority, not by fiat.
As a result, bitcoin has significantly depreciated against the U.S. dollar. And the dollar remains under inflationary pressure. Politicians have been able to spend more than they would otherwise, thanks to helpful central bankers.
While inflation’s growth has come down, prices continue to increase in dollar terms. That’s a structural part of the fiat system. It means that inflation is unlikely to ever go away. And that central planners will have to continue to deal with another crisis.
As this process continues, the case for owning bitcoin continues to grow.