Since the GFC we’ve witnessed the governments manipulate markets and monetary policies the world over. Quantitative Easing, money printing, market stimulation and to what some might seems a little perplexing; negative interest rates, the headlines and terms given for such macroeconomic 'tools'. These appear are reused, revisited over and over, without any thought or consequence on their evolutionary effects are on the capitalistic model in which we have created.
So what are we changing and what are the effects?
"The free market" once based on the underlying principle that market dynamics or trading would even things out: in order to create a perfect system; this approach has suited us well until now. However recently one may have noticied the cumulative effects or the creation of products such as derivatives, CFD's, options and high frequency trading and just how rapidly these products have markedly changed the underlying rules or framework/s to which we are now governed. These markets ironically, the very ones in which our world economies are perched upon and in a growing number of cases are vulnerable too.
How has it happened?
Regulation, lack there off, miss targeted or high level protectionism like shifting sands over the decades. Aligned with political will, provide a autocratic veto often in desperation, to move the pillars in which such a system has been built. This is happening more and more and often this is done in the name of Fiscal policy! Note however, these misguided attempts to manage or improve our growth based economies as identified by many quite openly and on record will be the very demise of the system and with it the livelihoods of many the developed world over.
Till now banks, bankers and more commonly information security experts have provided the intermediary processing and safe passage of transactions the world over. It is the base of our economy. The shifting of funds from Europe to far distant places such as Alaska’s newly resource rich shale oil communities.
Much like the Supply chain evolution with the invention of the internet. In time, our banking systems the outdated and often cumbersome tiered approach, will be replaced by a much more efficient interconnected system, that simplifies the flow of money both domestically and internationally allowing for a much lower cost and fee base.
Good for everyone
Whilst this debate has been raging for quite some time, the problem is clear however solutions seem far and few between. Whilst the Fed's and funds struggle with cutbacks in spending and austerity measures designed to save the system abeit far too late. They don’t have the time to redesign or reequip our markets with new efficient self-regulating tools. This cannot be done with fiscal policy. Our system is now one based on technologies and information. We need to harness the power of technology to create synergies and efficiencies in the banking systems the world over. The regulators seem scared often unwilling or deadlocked in stalemates with stakeholders to allow such technologies. If they fail to embrace these tools we may not have a system to improve.
Since 2010 there has been a ever loudening cry for a new default world currency. A move that’s holds the potential to reset the world economy. Till now the US dominance and control over the worldwide financial system has provided a high quality of life and easy road for some but like many others I call time alongside the fall of the petrodollar we are due for evolutionary change in our financial markets driven wholly by technology.