Thanks to central banks’ easy money policies, historically low interest rates and a desperate search for yield have created new danger zones for investors trying to stay out of trouble.

Sixty percent equities, 40 percent bonds. What has been considered the golden rule of portfolio theory for decades is of less and less value to investors today. Because central banks have backstopped almost every market, essentially mimicking the market maker of last and first resort, returns have been low, correlations have increased, and valuations are deprived of their meaning.

Government-mandated money in the form of legal tender is a historical anomaly. For much of mankind’s history private monies and quasi monies competed alongside each other. Now, again, a new era of private money competition is resurging and reshaping our world.

In the eyes of many, covid-19 has truly accelerated things. Tech aficionados have been rejoicing as virtual meetings, Zoom calls, and overall digitization within companies have seen a serious boost. At the same time, the corona crisis has intensified another contemporary development that people generally don’t really care about: today’s ongoing expansion of the money supply.
Although monetary policy had been ultraexpansionary even well before the virus hit the world, central bankers are currently upping the ante once again. While it took the Federal Reserve almost six years to create 3.5 trillion in new US dollar liquidity, this time around it took only ten months to unleash a monetary tsunami of $3 trillion with the projection of at least another $1.8 trillion next year.

It seems the reach and influence of central banks has never been higher, yet they are increasingly flying blind in an environment where central bank tools are growing ever more imprecise and dangerous.

Today’s Western institutions have long been deemed to be sacrosanct. As a matter of fact, though, nation-states are increasingly met with reservation or even outright resentment. Public trust in government is near historic lows, and pillars like the media or democracy are suffering from a loss of confidence.

Negative interest rates have long since become a reality. But we are not talking about negative real interest rates. This is the case when the return on an investment is lower than the officially stated inflation rate. In today’s context, negative interest rates are rather negative nominal interest rates; that is, the nominal interest rate is below 0 percent.

Anyone who has ever been to Japan knows: Japan is special. The country has many strange habits. The Japanese culture is simply different and many peculiarities are hardly understood in the West. But it’s not only the old established traditions that are foreign to us Westerners.

Since the beginning of the year, Bitcoin has seen its price cut in half and beyond. Other crypto assets have fallen even more. Although the king of the crypto world has rebelled from time to time over recent months, Bitcoin’s occasional price increases have always been met with follow-up downturns.

The publication of the Bitcoin white paper immediately after the outbreak of the global financial crisis in 2008 is hardly a mere coincidence. The financial collapse especially touched on one crucial question: Money talks, but who talks money if you will? According to Satoshi Nakamoto, the pseudonym behind Bitcoin, it’s the world’s central and commercial banks which rule over our money.

Bitcoin’s origin can be traced back to September 15, 2008. This is the day the investment bank Lehman Brothers announced its bankruptcy and the financial crisis reached its peak. With the bankruptcy of Lehman Brothers a ripple effect set in, several other banks had to be saved by their patrons, the states. These bail-outs wreaked havoc on the debt of many countries, which is why central banks initiated their massive government bond purchase programs.

Towards the end of 2017, Bitcoin — and with it other cryptocurrencies — experienced a real hype. Within a few months, prices shot through the ceiling. The euphoria was ginormous and in hindsight pure madness. With the new year, the disillusionment arrived. The market capitalization of all cryptocurrencies fell by more than half and prices plunged.

Am 10. Juni stimmen wir in der Schweiz auf nationaler Ebene über die Vollgeld-Initiative ab. Diese widmet sich einer der wohl komplexesten und zugleich wesentlichsten Thematiken unserer Gesellschaft: unserem Finanzsystem. Die Idee des Vollgeldes geht weit über die Initiative in der Schweiz hinaus und ist heute in erster Linie Bestandteil der «Modern Monetary Theory». Ihren Ursprung lässt sich in das 19. Jahrhundert zurückverfolgen. Auf der Webseite der deutschen Vollgeld-Vereinigung ist zu lesen:

Im zweiten Teil dieser Analyse wurde zu zeigen versucht, weshalb es für das eigentliche Verständnis unseres heutigen Geldsystems und dessen spezifischen Eigenschaften wenig sinnvoll ist, in der Kritik desselbigen zwischen Staat, Zentralbank und Geschäftsbank zu unterscheiden. Alle drei Akteure sind für die in Teil Zwei beschriebene «monetäre Revolution» unabdingbar und haben die von der natürlichen Knappheit losgelöste Kreditgeldschöpfung erst ermöglicht.

Wie der erste Teil darzulegen versuchte, muss einer Ausweitung der Geldmenge durch Geschäftsbanken zwangsläufig eine Vermehrung der Basisgeldmenge vorausgegangen sein. Ohne eine Entscheidung der Zentralbank, den Geschäftsbanken –vorgängig oder nachträglich – Basisgeld zur Verfügung zu stellen, ist eine jede Geschäftsbank aufgrund der gegenseitigen Konkurrenz untereinander in deren Möglichkeit, Geld zu schöpfen, beschränkt.

Eine Kritik ist im Aufwind. Was vor ein paar Jahren noch als Phantasterei verrückter Verschwörungstheoretiker abgetan wurde, beschäftigte jüngst sogar die Deutsche Bundesbank. Gemeint ist die Idee des Vollgeldes und der damit zusammenhängenden Abrechnung mit unserem modernen Geldsystem.