One money for one world.
If the Coronavirus has taught us anything, it’s that we’re one human species. The virus doesn’t see national boundaries. The virus doesn’t see skin color or religion or socioeconomic class. The virus sees one human host.
To defeat the virus, we’ve got to think like a virus.
On a practical level, that means working together to #SlowTheSpread of COVID-19, so that our healthcare systems can treat more sick, more slowly. When we work together, we win.
On a financial level, that means we’ve got to fundamentally rethink how we do money. We’ve got to do money as one human species. Here’s why.
$2 Trillion Hiding in the Couch Cushions
The U.S. Senate recently passed a landmark $2.2 trillion stimulus package, which led me to wonder: where did they find $2.2 trillion? Hiding in the couch cushions?
The answer, of course, is that it will be created by “printing money,” otherwise known as quantitative easing (QE). The problem with printing money is that it makes money less valuable. Here’s the diagram from my book Blockchain For Everyone, which is a simple way of visualizing it:
In other words, if you own 10% of a pie beforehand, and the pie magically grows 10 times larger, you now only own 1% of the pie. (Economists will say this is a gross oversimplification, and they’re right — but unlike their explanations, you’ll remember “Magic Pie.”)
Magic Pie happened a lot with early blockchain projects, when the founders decide to magically “mint more coins” (i.e., print money) which devalued everyone’s investment. It’s why we place such a premium on the “tokenomics” in our Blockchain Investor Scorecard.
Look: people are out of work and need money to buy food. We need to do something, and Magic Pie is the best food we’ve got right now.
But there are other problems that run much deeper: high levels of indebtedness, and extremely low interest rates. Here’s a tweet this week by a guy named Mikenson, which states the problem beautifully:
While economists will say this is a gross oversimplification (and they’re right), you will definitely remember “whole economy full of broke bitches.”
In other words, these things have domino effects. If you’ve seen The Big Short (highly worth a re-watch during these times), you’ll remember the crowds of people lined up to place the bet at the gambling table — or the Jenga tower that suddenly collapses. It’s a global economy, and it’s all connected.
In a global economy, it’s all connected.
For decades, the United States has enjoyed the privileged position of being the world’s reserve currency (think “world standard”). But in the age of Coronavirus, that era may be coming to an end. The Jenga tower may fall.
Here’s a scene from Diary of a Wimpy Kid that illustrates the problem in a funny way.
A surprisingly profound lesson in economics for a kids’ movie.
Things go horribly wrong for “Mom Bucks” when the kids discover the currency she’s using was taken from a board game. They find friends who also own the board game, drain their money supply, and flood the market with unauthorized Mom Bucks.
Under any other circumstance, to compare the U.S. dollar to Mom Bucks would be unusual. To say the dollar may lose its dominance — and quickly — would be unusual. But these are unusual times.
In summary, we have several compounding problems making up the Jenga tower:
- The high levels of indebtedness,
- plus the lack of ability to push down interest rates further,
- plus the uncertainty caused by a global pandemic.
“Broke bitches” plus “Magic Pie” means we could be looking at a new type of money within the year. That’s the bad news. Now for the good news.
One Money, One World
There is a higher monetary authority than the United States: the International Monetary Fund.
If you’re new to the IMF, it is an organization of 189 countries that work together to keep the global economy running. Forged in the Bretton Woods agreement after World War II, it has managed to do its job pretty well, even though it has not been without criticism. (Hey, running the world economy is tricky.)
The IMF already has something called Special Drawing Rights (SDRs), which are kind of like global credits that member countries can draw upon in times of crisis.
You may remember this scene from It’s a Wonderful Life, which is required viewing in these times.
Not just a holiday movie, but a lesson in how to deal with “bank panics.”
Now picture George Bailey as the IMF and the panicked townspeople as member nations. The SDR is like the money that Jimmy Stewart is handing out. (Again: oversimplification. But you’ll remember it.)
Now, let me take you one step further. Let’s imagine that the cash that he’s handing out are blockchain-based stablecoins, tied to SDRs overseen by the IMF.
In plain English, I’m saying that we’ll all have a “digital currency” overseen by a “United Nations of money.” We’ll use this like we use dollars today —direct deposit and debit cards — but no longer denominated in dollars.
To make it even simpler, it’s like when you go into Dave & Busters and you transfer your dollars into points. Your points get loaded onto a card, you spend the points to play games: a mini-economy, designed by Dave and Dr. Buster.
I’m making it seem fun, but it’s really quite serious. We need to quickly “flip the script” and start planning for a global currency. Mark Carney, the former Governor of the Bank of England, was saying this back in 2019. He called it a “multipolar IMFS,” but he was really saying “global money.”
He had to tiptoe around the idea, because it seemed so radical. In the age of Coronavirus, it no longer seems radical: it seems necessary. Here’s why.
Frequently Asked Questions About Global Money
Why will we create a one-world currency? Because we’re facing a global economic crisis brought on by a global pandemic. The United States cannot handle this alone.
Why hasn’t this been done before? Because it’s hard to convince the U.S. to give up its dollar dominance if the dollar is dominant. People don’t want to change the rules for a game they’re winning.
Who will make this happen? There needs to be strong political will — meaning strong, motivated leaders who can lead the charge on this project. And the blockchain community can help figure out the tech.
Will we have dollars/Euros/etc.? Yes. This new money will be pegged to a “basket” (or mix) of existing currencies: dollars, Euros, renminbi, etc. Think of it like a superset of these currencies, like a Dave & Busters credit that can be used across multiple games.
How will it work? Just like your regular currency today. You’ll still get direct deposits into your bank account. You’ll still use your regular debit and credit cards. You’ll still get paper money when you need it. The difference is that your national money will now be protected by this “world money.”
In short, a “world money” will save us all from economic disaster, create a more prosperous planet, and be the financial fuel for the #GreatRecovery of Planet Earth.
There’s only one problem: I can’t figure out what it should be called.
Contest: Help Us Name the New “World Money”
We kicked around a bunch of names. “World Money” is too boring. “Earth Bucks” is funny but dumb. “Units” or “Credits” is straight out of a sci-fi novel (then again, so is this pandemic). John Edmunds, who joined us recently on our Blockchain Investor Supergroup call, uses the term “Cybercurrency.”
Imagine a global unit of money, like a dollar, but freely accepted by any country, anywhere in the world. One money for one planet.
What do we call this stuff?
We’ll be taking your suggestions all week. We’ll award the name we like best with an autographed copy of Blockchain for Everyone. Plus, you’ll have the bragging rights of, you know, naming the new global currency.
One money for one world. Help us name it.