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Saturday, November 18, 2017

Cato Institute Monetary Conference - Speakers Lament "Opportunity Missed"

The Cato Institute held its 35th Monetary Conference recently in Washington DC. There was a strong list of speakers including Dr. Judy Shelton. This Reuters article however notes that the mood at the Conference was more along the lines of an "opportunity missed" to get some true monetary system reform. Below are some excerpts and then a few added comments.

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"The Cato Institute’s annual monetary policy conference on Thursday could have been a celebration of President Donald Trump making good on his 2016 campaign promise to shake the pillars of official Washington, including the Federal Reserve.

Instead, the event at the libertarian think tank became a eulogy of sorts for the idea that Republican control of the White House and Congress would significantly change how the U.S. central bank operates, and an acknowledgement that the political center is holding firm in some key ways."


. . . .


“It is a bit demoralizing to realize that after delivering the same message for decades - that the world needs a rules-based monetary system - we have made virtually no progress,” Trump economic adviser Judy Shelton said to the crowd gathered in the Cato Institute’s F.A. Hayek auditorium in Washington.


“I have not been able to make the case ... I have not convinced lawmakers on the Hill, let alone a sitting president, that it is time for the U.S. to initiate reform.”


. . . . 


“I don’t expect to see invitations going out next week for a new Bretton Woods conference at Mar-a-Lago,” she (Dr. Shelton) said, referring to the conference that established post-World War II monetary arrangements and institutions like the International Monetary Fund.


“I do think we will see more language out of the Treasury emphasizing the importance of stable exchange rates,” she said. “People are willing to talk about this in a way they have not been before.”


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My added comments: Here we have more evidence that it is not likely we are going to see the kind of major monetary system changes we watch for here unless some kind of significant new crisis forces change to take place. 

When I started this blog in January 2014, it truly seemed as if we were on the verge of some kind of major monetary system change. It is why I started this blog and why I have continued to monitor events for all this time. Instead, what has actually happened is that the prospects for any kind of sudden dramatic change have been reduced in favor of enormous efforts to just try and maintain the status quo. 

This is what we have been reporting here for some time in an effort to try and publish the most accurate assessment of the situation we can as we see it. Without a doubt, there are never ending articles, websites, etc. constantly predicting that some kind of major shakeup to the existing system is on the immediate horizon. I am sure articles here seem somewhat boring in contrast to many I see that predict major change is coming right away.

By no means am I criticizing the idea that there are all kinds of potential triggers for that kind of major change out there. I fully agree there are and that a new major crisis could arrive really at almost any time that does start the process into motion. 

Based on years now of following all this pretty closely. I think at least some reasons why that has not happened yet are:

- the 2008 financial crisis scared the existing banking and central banking system nearly to death. They have been in somewhat of a survival mode ever since just trying to keep the existing monetary system we have afloat. While there are many reasons why good and positive reforms might help the present system, trying to implement them in an environment of near systemic collapse was not appealing to those running the present system because there is no way to predict who the public will blame if things go wrong

- while there are all kinds of people (and nations) who would love to see the US dollar dethroned as the worlds global reserve currency, the age old problem of reality tends to assert itself. You can't suddenly replace the US dollar unless you have something viable in place that can take over that role without major disruption to world commerce. The power of the so called "petro dollar" has been overwhelming and everyone around the world is so tied to it that changing that dynamic is not easy to do. Also, there is no consensus around what the replacement should be. Some like another currency like the Yuan, some like gold, some like a new version of the SDR, some like all kinds of combinations of these alternatives. To have a universal standard, YOU MUST HAVE UNIVERSAL CONSENSUS OF AGREEMENT. So the US dollar wins by default because it is already in place in that role and there is NOT universal consensus on what to replace it with or on the mechanics of how to actually do that in the real world

- the enormous political divide in the world (and especially in the US) makes obtaining a broad consensus for change very hard to do for anything, much less changing the system that impacts the money people will use and how to administer it. Trust in governments, officials, etc. is so low that it is virtually impossible to get a solid majority of people to trust anything now (and its hard to blame them when almost every day a new example of scandal in leaders emerges).

I have tried very hard to report what is actually happening here on this blog as best I can with the information I have. I don't push an agenda on purpose because I am not an expert myself (so any agenda I might have would not be worth any more than one my readers may have) and because I truly believe that what really matters for the average person like myself is WHAT ACTUALLY HAPPENS, not what any one analyst or group of people thinks will happen or should happen.

To make intelligent personal financial decisions, it is critical to base them on what is actually happening. Sometimes what is actually happening may seem somewhat boring compared to exciting headlines that declare something dramatic will happen any day now. But I would prefer to be boring and present accurate information even if that means far less reader interest. If I attract readers with some kind of hyped headline and then report bad information, I am not serving or helping anyone.

Right now it appears that the most likely path for systemic change is for the new Fintech technologies to gradually prompt change over time so that is what I have focused on lately.

I will continue to monitor events at least until mid 2018. By then I feel it will be clearer if something dramatic leading to the kind of major change I watch for here is coming soon or not. If something does arise and I am aware of it, I will surely report it here. 

Meanwhile, I feel the best service I can provide readers is to present the most accurate information I can find from what I feel are highly credible sources so that people can hopefully use that information to better inform their opinions on monetary system issues. These really are important issues and if some day something does prompt calls for major change, the better informed we are, the better off we will be. That is my view on it here and the goal of this blog.
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Added note: I just got back the answers by email for a really great Q&A style interview from Glint CEO Jason Cozens. I plan to publish the interview next Monday after Glint launches their new global currency product. I think readers will really enjoy this interview which describes some really cool new technology that I think can potentially impact the global gold market. 

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