Howard Marks of Oaktree Capital says the US central bank has over 400 economists with PhDs working at the Fed, just as the world’s most impactful central bank (or others like our Reserve Bank) try to beat inflation down with an interest rate stick. And as one wit observed about the 400 ‘doctors’ at the Fed: “That could be the problem!”
I don’t know how many RBA doctors of philosophy they have but with the stock market, bonds and house prices falling, and everyone with a super fund getting poorer as the Reserve Bank and other central banks raise interest rates, it worries me that our RBA is focusing on introducing an Australian rival to bitcoin!
Seriously, with the worries at hand for investors, wealth builders, retirees, super fund members and self-directed SMSF people, what central banks are doing to stocks right now is getting into the worry zone.
Why the worry zone? Well try these economic realities:
So, with all this on our central bank’s plate, some of our PhDs at the RBA are distracted by something that’s likely to be called eAUD.
This is a digital currency that will do many of the things that bitcoin was designed to do but because there won’t be a limited supply and demand from tax dodgers and other criminals, it won’t be a great source of speculation like the king of cryptocurrencies.
It will be an above-board digital currency that a central bank can monitor, which is pretty important for the official body that regulates the money supply and the price of money in important markets.
The SMH’s Swati Pandey explains why the RBA can’t ignore this issue that other central banks are getting into as well: “Central banks worldwide are acting swiftly to ensure they don’t fall behind as money edges towards its biggest reinvention in centuries, with alternative concepts (such as cryptocurrencies) taking hold. “That new technology, as well as events such as the coronavirus pandemic, are among forces pushing consumers to go cashless.”
eAUD won’t be here any time soon but there will be a pilot program next year. It does look like it will be a ‘live and happening’ thing in the not-too-distant future.