Central Bank and Bitcoin: A Flawed Argument?
Central Bank and Bitcoin– Central bankers have recently voiced concerns about Bitcoin, suggesting that it is unfair. This perspective paves the way for potentially high tax rates on Bitcoin, ranging from mining taxes to capital gains taxes, and even the possibility of an outright ban. However, much of the economic evidence—even from studies they publish—indicates that central banks themselves are the root cause of the economic challenges we face through their policies of money printing and inflation.
The ECB’s Stance on Bitcoin
In a recent paper from the European Central Bank (ECB), Jürgen Schaaf argues that Bitcoin inherently perpetuates unfairness. He states, In absolute terms, early adopters exactly increase their real wealth and consumption at the expense of the real wealth and consumption of those who do not hold Bitcoin or who invest in it only at a later stage. Schaaf, who serves as an adviser in Market Infrastructure and Payments, claims that the wealth accumulated by Bitcoin holders is essentially “stolen” from those who are not involved with Bitcoin.
Schaaf points to the extravagant lifestyles of early Bitcoin investors—highlighting their luxury purchases—as being financed by the diminishing wealth of non-investors. He suggests that instead of blaming central banks for perceived economic inequality, Bitcoin itself will lead to further economic despair: “This redistribution of wealth and purchasing power is unlikely to occur without detrimental consequences for society,” he notes. He advocates for non-Bitcoiners to oppose Bitcoin, even pursuing legislation against it to prevent its price from rising or to see it disappear altogether.
The Reality of Quantitative Easing
While Schaaf attributes economic instability to Bitcoin, there is substantial evidence that central bank policies, particularly quantitative easing (QE), have a far more disruptive effect on non-Bitcoin holders. QE, often referred to as money printing, has inflated asset prices, disproportionately benefiting the wealthy. A report from the UK House of Lords Economic Affairs Committee states that QE has inflated asset prices artificially, worsening wealth inequality.
Furthermore, research from the University of Massachusetts indicates that the impact of QE on income distribution has been at least modestly regressive. While it has had some positive impacts on employment and mortgage refinancing, it has also resulted in modest increases in inequality.
Understanding Inflation’s Impact
A study published by Ohio State University Press emphasizes that inflation is a pressing concern for disadvantaged groups, such as the poor and unskilled workers, who are more likely to see it as a top issue. Similarly, a survey from the U.S. Census Bureau found that inflation disproportionately affects low-income households, which spend a larger share of their income on essentials like food, gas, and rent.
In light of this evidence, Schaaf’s argument that Bitcoin is to blame for economic suffering seems unconvincing. Rather, it appears that the data points to central banks as the actual culprits behind economic challenges. As such, it might be time for non-Bitcoiners to recognize the compelling reasons to oppose central bank policies instead.
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