First, the idea that the fed might issue FedCoins, which would be exchangeable for USD. It would make QE much easier to pull off. Amazing thought:
It is interesting to think about why this is so implausible. There are a few reasons:
1. YellenCoin would be a means of payment but not the medium of account. This would move the economy into a currency substitution model, a’la Girton and Roper, but would not have the effects of a straightforward monetary expansion.
2. Cryptocurrencies are much more likely to be used for some kinds of transactions than others. So this act of “monetary policy” would be very much non-neutral.
3. Central banks are not supposed to be seen as taking major risks or overturning the established order of things. They are highly risk-averse when it comes to their public reputations, and their very much prefer sins of omission to sins of commission. If the Fed established Fedcoin and something went wrong with the idea, they would be subject to especially heavy blame. In the meantime, few people (are there exceptions?) are blaming them for not establishing a cryptocurrency.
Next, a cas podcast where the idea is floated that P&C actuaries are more like technical stock analysts than fundamental stock analysts. Actuaries are a scientific bunch and no double would freak out at being lumped in with the ‘stupid’ stock pickers, though there is some merit to the comparison. We don’t even an attempt to analyze the fundamental drivers of claims activity when valuing insurance liabilities: we mostly do voodoo extrapolation of recent trends.
I can imagine a world where the cure to such a problem is even less comprehensible than the disease. We’d need data sources too immense to understand and apply to them tools that we can’t comprehend.
The day isn’t far off…