Economist’s 30-Year Old Prediction for a Global Currency Arrives: is Crypto Going to Rule World?
The Economist’s 30-Year Old Prediction for a Global Currency
On October 10, 1988, The Economist made an interesting prediction: in 30 years, the world should be “ready for a new world currency.”
Some – like Bitcoinist.com – see this as an important date in bitcoin history. 30 years ago, The Economist made a bold prediction that the world would be ready for a new world currency. 10 years ago, bitcoin launched with the promise of being a new world currency. Today, bitcoin is closer to that mark than ever before. Did The Economist really predict the future so accurately?
The cover of The Economist from 1988 became infamous. Back then, it was greeted with confusion. Why would we need a new world currency when the US Dollar is doing fine?
The distinctive cover featured a phoenix standing over a burning stack of paper currencies from around the world. In front of that phoenix was a plaque saying “October 10, 2018.” The Economist was hinting that a “phoenix” global currency would rise from the ashes of today’s fiat currencies. The Economist was also predicting that today’s national fiat currencies would be destroyed via hyperinflation.
The article is interesting to look back on today. The article predicts a future where international economies have become increasingly intertwined. It’s a future where we have less use for national currencies and more need for a global currency.
You can read the full article here.
“Thirty years from now, Americans, Japanese, Europeans, and people in many other rich countries, and some relatively poor ones will probably be paying for their shopping with the same currency.”
The Economist wrote its article in an environment where few people wanted a global currency. There were discussions in the early 1980s about launching a global currency, but those discussions never went anywhere:
“Proposals for eventual monetary union proliferated five and ten years ago, but they hardly envisaged the setbacks of 1987. The governments of the big economies tried to move an inch or two towards a more managed system of exchange rates – a logical preliminary, it might seem, to radical monetary reform. For lack of co-operation in their underlying economic policies they bungled it horribly, and provoked the rise in interest rates that brought on the stock market crash of October.”
Of course, within a few years of the publication of this article, the European Union would begin discussing the launch of the Euro. By the turn of the millennium, the EUR would be used in countries across Europe.
“National Economic Boundaries Are Slowly Dissolving”
One of the biggest reasons we need a global currency, according to The Economist, is because national boundaries “are slowly dissolving.”
The article explains that relentless integration of global financial markets has created an interconnected financial system. The flow of money has replaced the flow of goods. Differences in national economic policies can disturb interest rates only slightly, yet still call forth huge transfers of financial assets from one country to another.
The Economist also mentions telecommunications technologies. This was before the launch of the World Wide Web, and the internet isn’t mentioned by name. However, The Economist clearly feels that global communications systems are coming soon.
For all of these reasons, natural forces would eventually force the world to adopt a global currency:
“As the next century approaches, the natural forces that are pushing the world towards economic integration will offer governments a broad choice. They can go with the flow, or they can build barricades.”
Governments who fail to prepare for “the phoenix” global currency do so at their own peril:
“Preparing the way for the phoenix will mean fewer pretended agreements on policy and more real ones. It will mean allowing and then actively promoting the private-sector use of an international money alongside existing national monies. That would let people vote with their wallets for the eventual move to full currency union.”
In Time, the Value of the Global Currency Against National Currencies Would “Cease to Matter”
The Economist makes another interesting prediction. The “phoenix” global currency they propose would initially start as a “cocktail of national currencies”.
Then, the phoenix would be measured against national currencies. We would say that 1 Phoenix equals $100 USD, for example. Eventually, however, this would lead to a system where the fiat value doesn’t matter:
“In time, though, its value against national currencies would cease to matter, because people would choose it for its convenience and the stability of its purchasing power.”
It’s not hard to draw parallels between the phoenix and bitcoin.
Is Bitcoin the “Phoenix” Proposed by The Economist?
The October 10, 2018 anniversary hasn’t gone unnoticed by the crypto community. Last week, Viet Nguyen tweeted that the stock market will crash or bitcoin will take off (or both) on October 10 or November 11, for example, citing “globalists” taking over the world:
The Rothschild’s Economist magazine predicted a new world currency on January 9, 1988. Isn’t cryptocurrency a globalist’s 30 years idea for a global currency? Will the stock market crash or Bitcoin will take off on October 10 or November 11? @bensemchee @Timing_BITCOIN #BTC pic.twitter.com/8HWGlhjT5X
— Viet Nguyen (@vietnguyen) October 6, 2018
Interestingly, stock markets are plummeting as we go to press. The S&P 500 is down -1.4% and the NASDAQ is down -2.01%. Bitcoin, however, is staying fairly stable.
Is bitcoin going to become “the phoenix” prophesised by The Economist 30 years ago? We’ll have to wait to find out. Today, however, The Economist’s article on October 10, 2018 and the rise of a global currency seems strangely prophetic.