The idea that an increase in the monetary base in Argentina implies by itself a reduction of the inflation seems to be wrong, because those who fit the issue of money, they argue -or presume – that its distribution is equitable between the citizens and the commercial banks, including the Central Bank. This is one of the reasons why those who thought the monetary policy of Bitcoin chose a model that did not rely on the individual decisions.The strategy seems simple: as a result of the difficulties to finance the Treasury bills and the significant devaluation of the peso, the authorities decide each time to inject more money into the private system and the public to the tight liquidity does not create a bottleneck that prevents the payment of commercial commitments. What a monetary policy based on the precepts of Bitcoin could defraud the actors of the economy only on the basis that every time there is more or less liquidity? Do liquidity problems had not been anticipated precisely by those who profit from the loans or of the devaluation, that is to say, those who have advantages in the negotiations of assets as preferential tax rates or those who are not affected by the exchange controls?In theory, the measure allows an increase in the amount of banknotes and coins in circulation, taking into account the reserves of the commercial banks and the Central Bank. But in practice, the goals are difficult to meet, due to that each quarterly adjustment is set based on an expectation about how they are expected to behave with the economy in a period of 90 days.The factor most discussed in this point is the need for the government not to violate the agreement that has Argentina with the International Monetary Fund, which accept only the increase of 2.5% in the monetary base if it does not interfere with the credit program of the international agency. By the way, Christine Lagarde, exdirectora of the IMF, said that without the intervention of the body, “the crisis in Argentina would be much worse.” Of course, this judgment is built around the idea that they are the banks that hold the global economies. And if you fall over banks fall all. This is, to say the least, ironic.In particular, I have the impression that both the use of credits immoderate imposed by the IMF to “save the economies of the countries of middle-or few resources, and the exchange controls, and monetary policy contractionary Central Bank, are nothing but a warm wet cloth for a problem that is precisely at a model that was set up to privatize the profits and socialize the losses.
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The supply of money without limits
In general, the currencies of countries such as the united States, Venezuela, Zimbabwe had a sufficient supply at the time of their respective releases in the markets, but a policy issue without measurement or even contemplate the possibility that the distribution of value has been mistaken from the beginning and does not support the objective of the issuance is to finance a spending unscrupulous governments.So has grown the monetary base in Argentina in the last four years, with the issuance of more money backed in debt or expectations unrealistic.The economic crisis and the issue of money seem to be related in terms of cause and effect. Source: Statistics BCRA.Given that the monetary inflation, in the context of speculative markets, is usually a snake of eight heads, governments have increased the supply of liquidity, with the goal of blaming subsequently of the crisis, the speculators and the market. But what is certain is that public spending, for example, could be financed in many countries on the basis of the tax or the self-management of resources. If the governments would be forced to use bitcoin, they could not devalue the currency with the argument of the need for more liquidity.What has happened in Argentina is the perfect formula to further erode the economy, because the spending is financed through two fronts: the IMF lending to banks and the issuance of more money. Obviously, taxes are not very popular and the self-management of resources needs regulations and a culture that is not present in our societies by now. What has happened, as a result, is that it has created a culture of people who believe in an alternative model, based precisely on Bitcoin, which is a criptomoneda ideal in order to evade inflation and the controls of governments.
The monetary policy of Bitcoin
The value of bitcoin is in the ability to confront the status quo of the monetary policies that governments impose on citizens as a form of control. As suggested by Camilo JorajurÃa, “In comparison with Bitcoin, the States are entities archaic’, therefore, measure the two systems, it would seem a brusque remark.The amount of bitcoins issued will decrease over time. During the last one hundred years, it will undercut just a few coins each day, but given its value, will continue to be profitable for the miners. Source: BTC Direct.The paradigm shift has to traverse this dichotomy in the value of money introduced by a new generation of platforms and methods for exchange of money.Bitcoin does not alter its monetary policy by personal decisions or governments of any kind. The basis of the changes in the code of Bitcoin is in the discussions of the community and the developers. And yet there are defined limits to regulate the amount of cryptocurrencies that enter into circulation on the market. The measurement is in the computational capacity, which has the network at a given time, due to the difficulty of the Proof-of-Work is adjusted automatically according to the amount of participants that bring their tools to process transactions and to prevent an attacker to modify the history of these transactions.Have been issued almost 18 million of bitcoins in ten years. Is determined by little more than 3 million in the following decades, because every 210,000 blocks the bounty is halved and decreases the supply. Today is mined to 1,800 bitcoins daily. Source: Buy Bitcoin Worldwide.A trait distintitivo of Bitcoin is that any participant of the network of miners has the possibility of issuing cryptocurrencies as a reward for his willingness to contribute to the safety of the transaction history. There is not a single entity that issued the cryptocurrencies and, as you already know, it is only possible to issue 21 million over a preset time. Satoshi Nakamoto said in an e-mail of November 8, 2008 how I saw this proposal, even when the inflation rate of bitcoin was 35% according to a user identified as Ray Dillinger, who argued that this figure would be amended, given the conditions of the network: the number of miners in that time and the non-existent demand.
As computers become faster and increases the total power to generate bitcoins, the difficulty increases proportionally to maintain constant the new total production. Therefore, it is known beforehand how many new bitcoins will be created each year in the future.The fact that they produce new coins means that the money supply increases by a planned amount, but this is not necessarily given as a result of inflation. If the money supply increases at the same speed, which increases the number of people using it, the prices are stable. If you do not increase as fast as demand, there will be deflation and the first owners of money will see that their value increases.Satoshi Nakamoto.
The frequency with which bitcoin comes into circulation in the market still depends on many factors. For example, the need to have each miner of exchange value, or the longer-term possibility that some traders accumulate more cryptocurrencies than others. But it is virtually impossible for the rate to increase, even by accident, as seems to have happened recently, when the nodes of Bitcoin have prevented someone inflated the market with 1.265 BTC.The model of emission contemplates that the bitcoins distributed to be used as money is being used in each of the human activities that require the exchange of value. But with the extenuating circumstance that nobody, at least that there is consensus, can modify the frequency in which it grows the monetary base. For this reason, developers like Luke Dashjr insist that there are that create mechanisms to prevent the centralization of mining, even though he knows that is not something that can be “solved overnight”.A policy of scarcity seems to have contributed value to an asset for which demand grows with the time. The rest, as is due to supply and demand. Some addresses of bitcoin have more or less bitcoins. And to the extent that there are more users and it diversifies the market, competition among services that use bitcoin could be the preamble to the competition between the currencies that are issued by governments and broadcast, distributed, bitcoin.Except that in that race the coins fiduciary, as the argentine peso, appear to be losing, because even though there is more demand for bitcoin because it is useful and has more and more value, the demand for pesos has been imposed, and more and more people believe that the loss of value does not justify its use.Disclaimer: the views and opinions expressed in this article belong to the author and do not necessarily reflect those of Breaking News.