23rd December 2022 > > India.

tl;dr

The Reserve Bank of India stakes its claim to be the most out-of-touch central bank in the world.

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BTC appears to be staking its claim to be the most stable reserve asset in the world.

Curious Cryptos’ Commentary — India

Shaktikanta Das is the Governor of India’s central bank, the Reserve Bank of India (RBI).

He cannot be described as a crypto supporter:

“Cryptocurrencies have … huge inherent risks for our macroeconomic and financial stability.”

He is taking the usual view of crypto naysayers of only ever looking at the potential downside, without any acknowledgement or appreciation of the actual upside. This may be due to ignorance, a lack of intellectual heft, a fear of losing control, or simply preferring to obfuscate for his own personal advantage, but whatever the reason, he is damaging his own credibility.

His desired outcome is predictable though utterly impractical:

“I … hold the view that it should be prohibited”.

He then repeats an argument that has recently been getting some airtime that goes something like this:

“… if it is allowed to grow — if you try to regulate it and allow it to grow — please mark my words, the next financial crisis will come from private cryptocurrencies.”

I am impressed that he has such a specifically accurate crystal ball in his armoury, but perhaps it would have been wiser to use such a powerful weapon before now with regards to the actions of central banks in the recent past.

…

There is no doubt that the current, and potentially long-lasting, financial crisis of over-indebted governments, corporates, and individuals, is due to the excessive amounts of money printing over the last decade enjoyed by all governments and actioned by central banks.

If Das believes that cryptos should be banned because he believes they will cause a financial crisis, I am curious as to why he fails to use the same logic regarding his own institution. After all, his tax-payer funded pension is undoubtedly a fat one.

He could take the line that sovereign states need a central bank as the lender of last resort, and I will accept that.

But this belief that central banks are somehow independent of their paymasters, and that they should be allowed to engage in wholesale market manipulation of interest rates across the yield curve is frankly absurd, and far more dangerous to the man in the street than cryptos could ever be.

…

There is a beautiful irony at work here.

BTC was invented by Satoshi Nakamoto (who is definitively not the fantasist Craig Wright) precisely to combat the action of central banks and their money printing incontinence.

Famously the first BTC block ever created contained a reference to the UK’s bailout of its retail banks, which far exceeded the lender of last resort mandate, and made the UK public shareholders of what were previously private institutions. Let us be clear here, this is not a political stance. I am happy to be corrected on this point - but I don’t believe there is any example in the history of humankind when state ownership of banks ever resulted in a better outcome.

The crypto revolution is a necessary bulwark against the technocratic and political elite who try to rule the world as they wish it to be, rather than as it is.

They brought it upon themselves.