Although Federal Reserve and other major central banks, even the Bank of Japan, do not buy bonds today or are significantly increasing the supply of basic money, many people suspect that the most apparent funding of governments through the money creation process may not be far ahead-that has often taken the form of money in the past. Although today, the process is likely to be more digital. One such person is Lawrence Lepard, author of The great printing (2025).
Lawrence’s new book Laward The Big Print
Just in recent weeks, the market for Japan’s government bonds has had a distribution of prices of this kind that has not been observed since then, perhaps in the late 1970s. People have predicted disasters there literally for decades. But maybe now time is on us. Even the US Treasury market, though one of the best credits in the developed world, had a remarkable tendency to weakness. Bond buyers can see that today’s historical huge deficits – Congress’s budget office predicts that 6%+ of GDP shortages are basically forever – does not seem to have any upcoming resolution. Despite the heroic recent efforts of the Government Efficiency Department, Congress has not yet found the will to reduce its expenditure in any way, preferring small bites instead. But decades of little little bit, instead of important reforms, is what brought us to this point in the first place.
Lawrence Lepard is well suitable as a guide for this season. His story, first in the world of business capital in the 1980s, and later as a Mutual Fund manager, gave him a front -line seat throughout the historical process. Most people do not have the time to follow these things very closely or the know -how to judge them. About the best they can do is read some business journalists. Capital administrators have both time (they are part of their work) and know -how, enough know -how to point out where journalists are wrong, missing the main points or, often, biased by certain interests. My favorite account for the 1907 crisis was that of Jesse LivermoreOne of the biggest speculators of the time. Unfortunately for the rest, capital administrators are often very busy, too busy to write books. Ray Dalio, after his retirement from the daily management of a large risk fund, has benefited us many insightful books. (His last book, How are countries splitdue to June 3.) I hope that other capital administrators also feel inspirational.
Lepard begins his story about the introduction of the Federal Reserve in 1913, which followed the introduction of similar central monopoly banks around the world in the late 19th century. Immediately afterwards, with the outbreak of World War I, these central banks were pressured to help funding to finance the war, resulting in flat Fiat coins throughout the global landscape. But things really took a turn to the worse in 1971, when a combination of unusual impotence, as well as an excitement of spreading to use monetary deformation to try to manage the macroeconomy (President Nixon wanted to be re -elected in 1972) Budget and budget budget.
There is much to say along the way, get things through the 2008 financial crisis and in the Covid era of 2020. The 2020 period, in which central banks around the world deal with unprecedented monetary expansion, showed their growing willingness to “execute printing”. Unfortunately, along the road, Congress (and other governments worldwide) also showed no real discipline, because every problem can eventually be solved with the central banking press.
The natural conclusion of such a logic is a great printing somewhere below the line here, and maybe not far away. The fact is that debt/GDP indicators have become so high, across the developed world, that 10%+ interest rates of the early 1980s are no longer tolerated. Even at 6%, with a 100%debt/GDP index, which entails only 6%-GDP in the cost of debt service only, beyond “primary deficits” (perhaps 3%-4%) driven by unpaid “mandatory costs” programs such as Medicare and Social Security. Either a decrease in the value of the coin, or “monetary inflation” as we named it in our recent book InflationOr even more direct purchases of government bonds from central banks, it can be necessary to inflate existing debt and funding continued the deficits at tolerable rates.
Unfortunately, they come so far, Lepard loses the plot completely towards the end of the book, supporting Bitcoin as a kind of improved “money sound” system. Is not. The idea is that Bitcoin’s offer is limited, so that no “increases in money offer” will occur. This is true, but the reason why “Sound Money” has always meant gold in the past, is because gold has proven, for over centuries of human experience, to be reliable in value. It is this value stability that makes gold work so well as a basis for monetary systems.
This error, the wrong “stability of the offer” for “value stability”, is old, returning at least to the 1950s Milton Friedman’s defective sentences. Or, as I put it here more than a decade ago, “Bitcoin proves that Milton Friedman’s great plan was a joke”.
Basically, the Lepard is a problematic bitcoin speculative. And, maybe Bitcoin will increase in value in the coming years. Seems to be persistently popular. But this tendency to increase in value (or to fall into value, dramatically, from time to time) that makes it useless as a currency. And why not used today as a currency. If you want to see what a coin looks like, look at the US dollar Stablecoin Tether (USDT). Since its value is linked to the dollar, we can be sure that almost no one uses it as a speculative vehicle. (Forex traders have better platforms, such as FXCM, to make their speculation.) But Tether also had a huge increase in popularity, with the number of excellent bonds increasing from $ 2 billion in 2019 to $ 153 billion today. It is popular because it works pretty well, as a kind of monetary alternative.
Bitcoin and gold are not really competitors. They are completely different. If gold is a very good hammer to hit the nail of fixed monetary value, Bitcoin is no better or worse hammer. It’s more like a lemon meringue pie.
It’s not only me. Monetary economist Larry White, who was actively involved with bitcoin back when it was a kind of libertarian dream tubes, came to similar conclusions in Better Money: Gold, Fiat or Bitcoin? (2023)
But if you are wondering why an experienced mutual risk manager may be bullish in Bitcoin today, Lepard will give you an excellent argument list.
For the time being, gold -based Stablecoins were not very popular. They still look like Tether in 2019. Even the golden alternative to Tether, Tether Gold (Xaut), still has a $ 1 billion purchase ceiling. However, since the USDT Tether is linked to the US dollar, the value of the tether will also fall into a state of “large printing”. Around that time, people can become more serious in the search for monetary alternatives that achieve the ideal of constant value. Neither Tether nor Bitcoin will qualify.
