Why the BOE Will Take Over the World

A quick Google search of the term BOE today came up with the following.

‘UK disadvantaged by free trade in goods says BoE’

Financial Times

‘BOE: Carney had no knowledge of Presidents Club Dinner Auction’

— CTV News

‘BoE: The rate hike window is closing – ING’

— FXStreet

In ‘traditional’ markets the BOE stands for the Bank of England — the central bank of the UK. The current governor of the BOE is Mark Carney. And right now the British central bank is under fire.

They’re in hot water because of a ‘President’s Club’ dinner at which the BOE allegedly donated an auction item. The President’s Club is also a men-only dinner, which has resulted in several accusations of sexual assault.

According to Bloomberg,

The BOE became embroiled in the furor surrounding the event — at which the Financial Times reported that multiple hostesses were harassed, groped and insulted — as one of the gifts on auction was a tour of the bank and tea with Governor Mark Carney.

All allegations aside, the BoE is responsible for monetary policy in the UK. They decide whether to move interest rates within the British economy.

Australia also has a Central Bank, the Reserve Bank of Australia (RBA). And the US has the Federal Reserve (The Fed). All major economies have central banks that are responsible for  applying monetary policy.

Typically central banks operate ‘independently’ of government and fiscal policy. This is to ensure governments can’t overly manipulate the monetary system. As explained by Lorenzo Bini Smaghi, former member of the Executive Board of the ECB in a speech from 2007,

‘It is easy to understand why central bank independence is essential in modern monetary systems. In a paper-money regime, where government liabilities represent means of payment and have purchasing power, there is always the temptation for any government to use such money in an opportunistic manner. The temptation comes from the fact that money creation has positive effects in the short term, on growth and employment, while the costs, in terms of higher inflation, are paid over the medium to longer term. Central bank independence is a way to protect policy makers against the temptation of using monetary policy in a distortionary way.’

Central banks and governments are pure forms of centralised control. There are a few powerful people making massive decisions. Their decisions are supposed to influence the economy. And in turn influence you, your kids, your grandkids and the generations to come. 

The real BOE to make things better

One of the tools central banks have at their disposal is the ability to shift interest rates.

They do this to achieve a ‘stable’ rate of inflation. It’s widely believed that 2% inflation is a stable rate that allows an economy to grow at manageable levels.

Right now the British target inflation rate is 2%. But the economy is currently hitting 3%. Which means prices are growing faster than the BOE wants. Too much inflation can be harmful. But too little inflation, or deflation, can also cause issues.

In Australia the inflation rate is currently too low, sitting at around 1.8%. The RBA is trying to push it higher to their target range of 2% to 3%

The 2% target is the ‘holy grail of inflation’. It’s what central banks work towards. It’s what those in power would have you believe is best for all.

This is the best tool they have at their disposal. However, it might be ineffective.

Remember these figures mean nothing unless you can piece together other parts of the economy. Inflation and prices are also impacted by jobs, wages, savings, spending and endless other factors.

There are so many working parts to an economy that it’s a herculean task to manage it properly. But with the way our ‘democracy’ is set up, we give control to a select few. Often to those not necessarily fit for purpose.

After all in the last decade, how would you really say the economy has been going? Outstanding? Okay? Satisfactory? Poor? Has your life been made better or worse because of actions of the central bank or government?

You need to ask these questions. In particular: Is the current structure of government and central banks working?

No doubt it’s a system that people are losing trust in — especially younger people. And it’s these younger generations that are rebuilding the financial and economic system as we know it.

And they’re doing it through the BOE. Except this isn’t the BOE as above. No, the future of financial and economic systems is with the new BOE.

It’s the ‘Blockchain of Everything’.

Blockchain technology is set to change every industry on Earth. And the driving force is young people, who don’t trust the current system and are trying to build a better one.

Any industry with endless process, paperwork and messaging, is ripe for blockchain to take over. And central banking is one of those industries.

A new financial system?

Consider an economy where the central bank has no control over the regime. The reason is because there is no ‘paper money’. There is no Aussie dollar. There is no British Pound.

Instead there’s a global reserve of digital currency. Think about the implications if bitcoin was this currency.

Where goods and services are priced against one global currency. Where you could get paid in bitcoin and spend it in an economy anywhere. This would render central banks powerless.

They would have no control over money in the economy. Imagine that… Imagine a world with no central banks.

That’s a hard concept for people to grasp. As in our lifetime, we only know centralised control. We assume that the central bank is making a better system for everyone.

But we’ll never know if something else is better unless we try it. This is what blockchain tech is doing. It’s an alternative financial system. And it may end up being better than the ‘traditional’ one we know today.

If it does prove to work better —which I believe it will — it is going to change the world.


Sam Volkering,
Editor, Secret Crypto Network

Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’ opportunities that are often shunned by those in the financial services industry.

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