The recent ambiguous messaging from the Federal Reserve’s meeting has left markets frustrated and craving more clarity in policy-setting. This comes at a time when the world is embracing artificial intelligence that can interpret and respond to massive amounts of data in seconds. The economic lives of citizens hang in the balance, depending on the decisions of a small group of fallible individuals.
One might argue that we should replace human institutions with transparent, decentralized, censorship-resistant cryptographic monetary systems like Bitcoin. However, the complexity of the global economy, made up of diverse human beings with varying needs, demands some level of flexibility and uncertainty in policy-making. A rigid, deflationary monetary policy might not always be the ideal solution – we still need a human touch.
It is essential to note that the repeated central banking failures and mistakes made by elected officials in the past few crisis-filled decades call for new tools and technologies to guide decisions. Blockchains hold a plethora of valuable data that sheds light on human behavior. Cryptographic verification systems like proof-of-reserves could provide real-time confidence in the liquidity of banks and other vital institutions. Policymakers need powerful analytical tools to keep up with advanced artificial intelligence used by hedge funds and other market players.
Unfortunately, officials seem to be increasingly relying on opacity, deliberate ambiguity, and equivocation, rather than embracing cutting-edge technology. This tendency towards opacity is not limited to central bankers but also extends to entities like the Securities and Exchange Commission. During a recent hearing, the SEC Chair avoided giving clear answers about whether ether is a security or not, leaving the crypto industry desperate for more clarity from regulators.
Congress is also unable to provide this much-needed clarity due to divisions among its members and the broader American population. Policymakers have to navigate within this hostile environment where trust in government is at an all-time low. Their lack of clarity is a survival mechanism to deal with the pervasive uncertainty and distrust.
Blockchain and crypto technologies could offer solutions to cut through the ambiguity and build trust in policy-making. However, the current approach of the U.S. government is to stifle this technology rather than support it. It is high time the authorities recognize the potential of these tools to bring critical clarity and transparency to the complex world of economics and finance. Adopting these technologies may help reduce the impact of human fallibility in decision-making and lead to a more accessible, equitable, and predictable financial system.