(Paulo Pinto
Alti Wine Exchange founding member)
Dear reader,
Today I am answering a question we got from different readers after my latest article about the proposed idea of a so-called Central Bank of Social Security: is this new form of Central Bank a way for universal basic income?
That is a very important question. I will get back to it in a minute.
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First, some weeks ago, we read in the Financial Times, regarding the covid-19 pandemic: “The Bank of England will directly finance the extra spending needs of the UK government on a temporary basis, allowing the Treasury to bypass the bond market”.
The coronavirus crisis is eroding the standards of living and creating social disunity with layoffs and unemployment.
The British government felt the need to help easing the situation, and since it will not be able to acquire financial resources in the markets, it gets a hand from its Central Bank. That is what it means.
The British are preparing for the millions of people who won’t be able to pay their rent or their mortgage, their credit card bills, or their auto loans.
How will they do to help those people? Actually, they won’t.
What they will do is support financial institutions that will be in trouble with these situations created by the “people” while creating few programs to help them directly.
Politicians are not silly, they do this with the good intention of being re-elected. But the system is like this, and that is how it works.
It is easier to bail out credit markets than to bail out households for the simple reason that governments are already dealing on a regular basis with credit markets, and financial institutions are dealing with households.
Reconfiguring the system
Now, dear reader, it is much easier to answer your question.
A Central Bank of Social Security will reconfigure the system by extracting people from the equation: its proposed universal basic income will guarantee that any financial crisis or any other type of crisis will have a minimum impact on people.
I know some of you have said that this is just another way of spending public or other people’s money.
But that is exactly where I beg to disagree: this is nobody’s money. This is money created out of thin air, as Central Banks do, but with rules and a specific purpose: keeping people’s dignity and making them responsible.
Shifting away from rising gaps and debts
Governments and Central Banks are treating this crisis as if it were a financial crisis, trying to give money to people directly but in a disorganized way.
Meanwhile, many businesses are closing and will close, and current social protecting systems are not prepared to face this crisis.
We know where this will end: a bigger gap between rich and poor, higher taxes at some point to pay for all this debt created, more inequality, lower standards of living and crony capitalism planned by governments.
A new Central Bank for Social Security would change all that.
It would normalize interest rates at the new banking system with 100% reserves, also normalizing lending without preventing people from their basic universal income and eliminating excess debt by transferring debt to the new Central Bank of Social Security.
While this is not happening, the system is not immune.
Personally…
We will continue to buy fine wines with the possibility to resell them on the Alti platform – because they are real assets, and real assets are the protection against the current policies of Central Banks.
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Hopefully you will tune in for more on this topic.
Thoughts, opinions, suggestions? Write me an email and I will be happy to know more from you.
You can read more below.
Until then.
Paulo
