Bitcoin: The cure is worse than the disease - Natixis

Patrick Artus, Research Analyst at Natixis, explains that Central banks in OECD countries have for 20 years managed their monetary policies in an extremely questionable manner: considerable increase in liquidity, bursting of asset price bubbles, excessive debt, highly expansionary monetary policies currently being maintained, even at full employment.

Key Quotes 

“Central banks are therefore criticised for their destabilising behaviour, their manipulation of financial markets and the distortions their monetary policies give rise to.”

“This has led to the desire for a form of currency that is not under the control of governments and central banks and which escapes their destabilising behaviour: the Bitcoin is clearly a result of this desire, with a Bitcoin creation process (money supply) that is algorithmic and exogenous and cannot be controlled by governments and central banks.”

“But the cure is worse than the disease. Since the supply of Bitcoins is exogenous, the increase in demand for Bitcoins has driven up its price considerably, creating a bubble that is also extremely destabilising. The price of a financial asset whose supply is not adjusted according to demand can go to any level: the money supply must be managed so as to correspond to the economy’s need for money; this is unavoidable.”

“The right solution is therefore not the Bitcoin, but "reasonable central banks" that can manage the money supply process in a way that is not destabilising.”