For these esteemed economic gurus Fiat currency or Pounds, Dollars and Yen are being devalued over decades by inflation and poor monetary and fiscal policy. Global macroeconomics works for a select few, but for the ordinary man and woman in the street, it has been a disaster as the pound in their pockets is worth less today than it was in 1971. This being the year that America came off the Gold Standard and in effect devaluated currency across the globe over time.
But, there is far more pressing argument for Scotland as we head into the Independence war with England. The man who has fired the first shots on this debate is the Ex First minister Alex Salmond and now big cheese at the newly formed Alba Party. Like him or loathe him, Salmond knows how to steer the narrative away from him, but at the same time have it focused firmly on him. And this time, he is raising the spectre on a currency for Scotland. A ghost that has spooked the SNP in all its attempts to win “freedom” from the United Kingdom. Let’s explore.
First, we had the oil premium. Yes, with all that oil we should be a rich nation. Wrong! Scotland, like Venezuela, is probably one of the only countries in the world to discover vast deposits of black gold off its shores and end up skint. And we can’t blame Margaret Thatcher or any subsequent Westminster governments. We have had plenty time to get our act together and demand a bigger slice of the oil premium. Then to go on and create a sovereign wealth fund. But, nope, even under Salmond, this never took seed.
Then there was the wish-washy let’s keep the pound malarkey at the last independence referendum. I recall watching endless TV debates, where this was muted as workable. Alas, the majority of Scots did not think so. It will no doubt raise its head again. But, while oil and the pound have not been convincing arguments for a solid Scottish currency, perhaps there is a way forward out of this stalemate and middle ground. It is called Bitcoin.
If we work from the the premise that Scotland is skint and its borrowing costs will rocket should the good citizens of Scotland tick the “Yes" box in sufficient numbers, then there may be a way to get a quick, but sustained win. And perhaps Mr Salmond is onto something here….. But he just doesn’t know it yet, because the economic advisor feeding him his lines has not thought it through completely. But, that said, this advisor is onto something.
Borrowing rates globally are almost at negative. Scotland could borrow billions at these rates, locking in big slugs of cash that we can then use. But, rather than feed the cash down the usuals political sinkholes, Scotland could then buy a ton of Bitcoin. Hear me out….
Singapore is pretty clever right? They have a sovereign wealth fund worth hundreds of billions of pounds. And now they are investing in Bitcoin as they have done their arithmetic and due diligence. Sovereign wealth funds don’t rush into things lightly. So, maybe Scotland could borrow at minuscule rates and invest in this appreciating asset too. Thus, being an early adopter in the nation state acquisition of Bitcoin, while taking its lead from Singapore.
I’ll let that sink it….
What it is, is a contrarian, but potentially smart way of not doing the “same old same old” issuing bonds and creating long term debt. I would argue that there is a sound monetary policy rationale within this approach. Perhaps even entrepreneurial.
And perish the thought that Scotland would want to be just that -post independence - eh?
Jim Duffy, Create Special