The concept of a “blockchain stock” is simple enough, but it can be difficult to comprehend why so many people are interested in this technology. Look up the term “blockchain” and you will find something like this: A distributed, decentralised, public digital ledger. To really appreciate how this technology can benefit your portfolio, it is best to understand what this innovation is not.
For instance, think of a central bank, that has three different characteristics: it holds a great deal of currency, it controls a great deal of banking, and it maintains a record of its own activities. Those characteristics are important to the central bank; however, they do not benefit you or I as they relate to our investments.
Central banks have an important role in society because they regulate the supply of money. They ensure that interest rates are maintained at the appropriate levels and that monetary policies are designed to increase the supply of money and decrease the use of money in the economy. Without the ability to influence the supply of money and the degree of its control, central banks have little control over the state of the economy. This lack of control is reflected in the central banks’ failure to increase the supply of money, or even increase its supply to the point where it reaches equilibrium with the demand for money in the economy.
Central banks can also create a lot of volatility in the marketplace through their ability to adjust interest rates. The lower their interest rates become, the more money a lender wants to lend out. When the value of their money falls, a lender would have to pass on the benefit to their clients. Because they can’t raise their interest rate, they can keep interest rates artificially low and pass this benefit on to their clients at the expense of other investors.
Of course, the central bank cannot create the money it needs to lend out. Instead, the central bank is required to purchase that money from a lender. It has a fixed amount of money to lend out, but it must have the ability to do so. In order to purchase the money that it requires, the central bank must have access to a private bank. In order to access a private bank, the central bank must maintain a relationship with the bank that it is borrowing from.
Private banks exist all around the world. Private banks are banks that make the decisions for themselves and don’t share these decisions with other banks. When one bank does this, it is an indicator that the decision was made by a highly educated manager, not a highly informed central banker.
Central banks that don’t control the supply of money or who manage it do not always make a good decision. For instance, a central bank may decide to buy up bonds from one bank and sell them to another. This strategy is designed to increase the supply of money, but in reality it is actually hurting the economy as the money is not being generated in the economy. Rather than creating money in the economy, it is creating debt.
The private banks, on the other hand, manage the supply of money and create money that is not created in the economy. By creating money, they increase the supply of money that increases the overall value of the economy. While the value of the dollar decreases, the real assets that are produced are worth more as well.
Private banks can only do this because they are in business to make a profit. They have the financial means, and resources, to do this. However, when they make their decisions about the supply of money and the size of their balance sheets, they are not making decisions that are beneficial to the economy. Instead of increasing the value of the economy and its wealth, they are only reducing the value of the wealth. They are creating more debt than they are creating equity, and therefore, they are causing more harm to the economy than they are adding value.
Because the public is not aware that private banks are making these decisions, they don’t take advantage of this unique opportunity. to help the economy by choosing to work with private banks. Because they aren’t aware of the benefits of working with private banks, they aren’t choosing to use private banks to provide financial services and the financial systems they use in their own businesses.
This lack of awareness causes many people to work with private banks. The public doesn’t know that the public works with private banks. Because they don’t know, they don’t use private banks. They don’t take advantage of the power that private banks have in creating money. They also don’t have the choice of investing in the markets that the private banks do because they’re not aware that they have that power.
