Readers here know that we have been reporting for some time that unless we see some kind of new major financial crisis, we don't expect to see any major monetary system reform in the near future. For this reason, we have somewhat moved into monitoring mode here and only try to produce a few articles a month when we see something that might be worthwhile for readers.
So, now that we are one quarter of the way into 2019, is there anything new to report?
Mostly no, but perhaps a few tidbits that might be of some interest based on a variety of input sources. Below are a few bullet point items.
----------------------------------------------------------------------------------------------------------------- the political environment (which can impact change) seems pretty status quo. The country remains very divided and there are no signs that is likely to change any time soon. So long as President Trump remains in office, we can expect that without some kind of major economic problem, he will most likely continue along the same path without any major changes to the monetary system.
- Modern Monetary Theory has become a hot topic lately, but more in the political arena than in actual policy making circles thus far. Without a major shift in political power, it seems unlikely that MMT will gain much traction with actual policy makers. It does appear likely that MMT will become part of the political debate heading into the 2020 election cycle. We won't cover it much here unless it gains more political traction since we try to focus on what actually happens.
- Central banks continue to study and talk about the idea of introducing central bank digital currencies, but again we have not seen much change in that direction so far. (as noted in the recent update from Agustin Carstens from the BIS). The IMF and World Bank did announce a project to explore the potential of blockchain technology.
From time to time I do hear from a variety of experts who do discuss various ideas and proposals for monetary system change. I can report that there is lot of interesting discussion that does go on related to this. Some of the issues I have seen discussed include:
- what rules should the monetary system follow?
- what is the best anchor for a currency to provide long term price stability?
- has the Fed monetary policy since the 2008 crisis been the appropriate response?
- was the initial Fed emergency response appropriate, but then carried too far later on?
- is modern monetary theory (MMT) an upcoming force for monetary system change?
- is there any real threat to the role of the US dollar as the global reserve currency?
- are Russia and China working on building a system to bypass the US dollar and the SWIFT system?
- is there any will inside the Trump Administration to propose significant monetary system reform?
One of the main goals of this blog has been to try and document a variety of ideas and proposals related to some of the questions raised above. Readers can find that here on this permanent page of the blog.
Other note: In May 2019 there will be panel discussion held in Fort Worth,Texas which will address the question of whether a free society should have a central bank, and if so, what monetary policies should it follow to be most consistent with liberty? (see 8 am panel discussion on Monday May 20th).
The participants in this panel discussion include Warren Coats, Scott Sumner, John B. Taylor, and Lawrence H. White (not me, the Lawrence White from George Mason University). The panel discussion is part of a multi day conference co sponsored by the SMU/Cox O'Neil Center for Global Markets and Freedom and the Texas Tech University Free Market Institute.
This is obviously a great panel and the topic looks interesting in terms of what we follow here. Eliminating the Federal Reserve or significant changes to the rules it must follow would constitute the kind of monetary system change we watch for.
So, if I can find a way to obtain the contents of the panel discussion (video or text of the papers presented), I will try to cover that here for readers. Meanwhile, in May we will have two interviews upcoming that should be of interest to readers. One with Warren Coats and one with Jim Rickards.
