The ECB is now turning to a new mechanism by which a bond’s value can be legally reduced by the issuer in times of hardship. The purpose is to allow central banks and governments new ways of ripping off the private sector.
Americans have benefited mightily by holding and trading with the world’s reserve currency, though most people haven’t given it a thought. No one remembers when the pound sterling held this distinction a hundred years ago.
Central bank digital currencies need to be centralized and manipulable to some extent in order to use them to implement monetary policy, which is central bankers' goal. This characteristic makes them a very risky proposition.
It seems the reach and influence of central banks has never been higher, yet they are increasingly flying blind in an environment where central bank tools are growing ever more imprecise and dangerous.
It is often claimed that inflation reduces the true burden of debt. This is true for existing debt, but those who advocate it as a remedy for government indebtedness fail to understand that it also increases the cost of the government’s future debt.