"Bad-boyfriend-style" central bankers make me love crypto

With inflation the highest it has been in a generation, telling workers not to ask for higher wages is just distasteful.

"Bad-boyfriend-style" central bankers make me love crypto
Photo by Zck_ / Unsplash

It's easy to bash central bankers. Maybe too easy and we (in crypto) probably do it too much, but...

On Friday morning, England’s central bank chief Andrew Bailey surprised his country with a controversial quip that people should hold off asking for pay raises in the name of fighting inflation.

When the head of the Bank of England tells workers not to ask for pay raises to offset the obviously much higher costs of living they're experiencing, it just makes the bashing thing hard not to do.

If there's one thing the COVID pandemic instilled in me, it's a deeper appreciation for workers. Service workers, factory workers, transportation workers, basically anyone and everyone who put their necks on the line so we could keep the essentials flowing while everyone else huddled at home and dialed into Zoom.

I (-1)*heart politics, so please don't take these pointers to mean I weigh in one way or another towards a political position, but I believe that:

  • Loose monetary policies benefit those with assets
  • There is wide disparity in ownership of financial assets
  • This is a major contributor to wealth inequality
  • Loose monetary policies are inflationary, even if inflation doesn't manifest for a long time

The cynical amongst us could surmise that central bankers cause wealth inequality and inflation. At a minimum we can probably say that the "Greenspan put" kind of mentality of bailing out financial markets and banks with every stock market drop shuffles wealth from U.S. dollar users (everyone) to asset holders or bankers (not everyone). If nothing else, a central banker asking workers not to push for higher wages amidst the highest inflation we've seen in decades is simply distasteful.


A good finpunk isn't cynical. Cynicism is a systematic bias that we should go out of our way to stamp out with clear hypotheses and data. So if I'm not cynical do I think that central banks have caused wealth inequality and inflation? I have no idea, but the story sure does make sense.

I don't share the common meme in crypto that central bankers are either conniving or morons. In fact, I think most are extremely intelligent and deeply sophisticated subject matter experts in subjects that most critics simply don't understand. The world is much more complex than the stories we tell ourselves.

On inequality...I recommend The Grumpy Economist in general for deep economic thought and Inequality mirage in particular for a contrarian view on income inequality. There is a big difference between wealth inequality and income inequality.

Auten and Splinter (2022) Figure 3

How's that chart for a bombshell? For all the talk of rising inequality, we have to be careful we're measuring apples-to-apples. Wealth inequality may be increasing, but how we measure income inequality matters big time. Accounting for taxes and transfers wipes out the seemingly shocking jump in income inequality.


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