The negative impact of central banking was made clear in the previous sections:
the cause of destructive inflation to the currency, the decrease in purchasing power and
thus standard of living for citizens, an invisible tax on all citizens to help fund wars and
social welfare programs and float the bill to later generations, the cause of too big to fail,
and a host of other economic atrocities. Bitcoin can bring all of that crashing down. As of
201 6, most individuals in the central banking industry are dismissive of bitcoin and
cryptocurrency. Alan Greenspan has publicly announced that he doesn't understand how
or where bitcoin gains its value from to satisfy the regression theorem; he also views
bitcoins high prices as a speculative bubble (Tadeo, M. 2013). Mark Williams, a senior
executive Federal Reserve Bank examiner and a contributor for Business Insider thought
that bitcoins would plummet to $10 by mid-2014 (Williams, M. 201 3) yet bitcoin was
instead worth between $660 and $550 between June 2014 and August 2014 according to
CoinDesk.com (Wong, J. I. 2014).
The Federal Government is getting to the point that
they are not just dismissive of bitcoin, but are actually becoming afraid of bitcoin and
trying to fight back. The Consumer Financial Protection Bureau has gone as far as issuing
warnings about the risks associated with bitcoin to help warn and scare people away from
the cryptocurrency (2014). So despite how much Fed supporters and the federal
government attempt to down play the significance and potential of bitcoin, the market is
ripping apart their predictions and assumptions and favoring bitcoin more and more every
day by maintaining bitcoins high value and continued and growing use.
The Fed will take a long to be end. The first step in this process has occurred.
People are beginning to question the Fed and its role in our economy, largely thanks to THE EFFECTS OF CRYPTOCURRENCIES ON THE BANKING INDUSTRY AND MONETARY POLICY
Dr. Ron Paul's 2008 and 2012 presidential campaigns (Blodget, H. 2012).
The second
step is where society currently is; looking for a possible replacement to the Fed. The
market has produced an answer to replace and undermine the Fed; bitcoin. The third step
is the slow process of replacing and eventually disbanding the Fed once it's clearly
shown how ineffective and unnecessary the Fed is and how the alternatives (bitcoin) are
more efficient and chosen by the market as the preferred option.
One example that critics might use to counter this argument is that of the Post
Office. The United States Post Office costs tax payers twenty-five million a day in net
loss (Bradford, H. 2013). On the USPS website they stated that during the first quarter of
2016 the Post Office lost two billion in just those three months. Despite these massive
loses and gross inefficiencies, the post office still remains even. Despite there being
highly efficient market alternatives like UPS, a company that, according to the earnings
report on their website, earned over one billion in net profit in 2015. So why does the
inefficient Post Office still exist? The reason for this is the Post Office is part of the
constitution in Article I, Section 8, Clause 7.
It's also against the law for a private
company to do what the post office does in regards to letters due to the Private Express
Statutes. However, the Fed is not in the constitution, the Fed is only alive because of the
Federal Reserve Act and congress can terminate it far more easily than they can ratify the
constitution to end the Post Office.
As more people show resentment and disdain for the Fed, public outcry will force
politicians to either abolish the Fed, or lose their jobs to candidates who are willing to do
39
THE EFFECTS OF CRYPTOCURRENCIES ON THE BANKING INDUSTRY AND MONETARY POLICY
it due to the Overton Window effect (Lehman, J. 2014). In September 2014 congress
passed the Federal Reserve Transparency Act; a bill to help audit the Fed. This was a first
step and clear indicator of grov.ring disillusionment of the Fed and the first of possible
future congressional actions against the Fed. As bitcoin becomes more widely accepted
and more understood, the bells will toll louder and louder for the Fed.
