Just a few days ago, on Friday the 24th of November, 2023, Argentina's president-elect Javier Milei said the closure of Argentina's Central Bank is non-negotiable. That is, he is going to close Argentina's Central Bank when he's sworn in and that is final!
This is massive on so many fronts, and as you'll come to find in the course of this post, very Web 3!
So, Javier Milei just won the presidential election on the 19th of November, this year in the biggest landslide Argentina's democracy has ever seen and he's set to be sworn in on the 10th of December.
He taught macro and microeconomics at the university and taught about economic growth and mathematics for economists. He's been described as a Libertarian economist and an anarcho-capitalist and is known for his wild views and economic policy ideas, and some of these ideas of his are so Web 3.
Take a look at what he said about Bitcoin being a better option than the money being printed by the Central Bank:
The point is that the first thing we have to understand is that the Central Bank is a scam. It is a mechanism by which politicians cheat the good people with the inflationary tax. What Bitcoin is representing is the return of money to its original creator: the private sector. Money is a private invention in order to be used to solve problems, for example in a bartering economy, the "double coincidence of wants" and indivisibility. Then paper money appears to solve portability. Actually you had different currencies: linen, wheat, salt where the word "salary" came from. And then that was evolving and the currencies that the people chose was silver for small transactions and gold for the bigger ones.
Then because back then it was very dangerous to move the gold, people used to deposit the gold and get in exchange a receipt. And then in the year 1445, in the first Genovese congress, the States appropriated the exclusivity to issue the money. That's the legal tender, which is a keypoint, because the legal tender allows the politicians scam you with inflationary tax.
Bitcoin has an algorithm that one day it will reach a certain amount and there is no more. And it can compete with other currencies, in fact, it completes with Ethereum and others. And what is the good thing? It's the return of the private money. But what is the problem? The problem is that the governments will not give up the legal tender. Because with the legal tender they can scam you with the inflationary tax. The Bitcoin is the natural reaction against the Central Bankers scammers and to make the money private again.
In economies with high inflation, the scam problem is bigger that's why, as I suggest, you can propose to close the Central Bank.
What could be more Web 3 than that?
Web 3 is all about decentralization, and letting the people decide. From his explanation, we get to see that letting people decide what to use as money and what value this money has is very important.
The current system of having Central banks control money is so centralized that the people hardly have a say. The Central banks can print money at any time, increase its supply, and therefore reduce the value of money. But in the case of Bitcoin, more can't be printed, which means its value would never diminish unless the people decide it should reduce by selling it for lesser prices or reducing their demand for it, etc.
That is what decentralized money and leaving money to the private sector is all about. When people decide what to pay with and what to accept as payment, the value of that being used to pay would depend on what the people decide over time.
Some other interesting part of what he said that is worthy of expatiation is the part about inflation tax. Inflation tax is simply the fact that say a currency is worth $1, the government or corrupt politicians can print it and use it for whatever they want to do and enjoy the fact that it is $1. But the effect of their printing is that it would have more supply and reduce to, say, $0.8.
Those who hold the money have to suffer the loss of that $0.2, and so that loss is called inflation tax. It's like they have just paid $0.2 out of their money. Whereas the government/politicians who printed the money enjoyed it at $1 because inflation takes time to set in.
This reason, and because money is better left decentralized and in the hands of the people are the reasons he wants to close the Central Bank in his country. That's one huge Web 3 move if he does that!
But I wonder what happens after the Central Bank is closed. No more inflation tax, which is a good thing, but how would the commercial banks be governed? It seems they might come up with an agency to check the commercial banks, but this agency wouldn't be a Central Bank who are in the business of printing money.
It would be very interesting to see this policy play out. It is a brilliant policy, and so many jurisdictions/countries might find it a Herculean task to implement, but if Javier Milei succeeds with this, so many other countries might follow suit and this decentralization can spread.
But then, there is a little drawback that reduces how Web 3 this guy is with these ideas. He plans to also dollarize the Argentine economy, which means they'd begin to use US dollars instead of their own currency, and guess what? The USA still has a Central Bank printing their money. Take your time to giggle or laugh out loud.
In all of these, though, it is great that he's such a huge supporter of Cryptocurrencies and decentralization. A lot can be built from there.
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