FOR BETTER UNDERSTANDING OF FREE MONETARY SYSTEM

Since 2008 financial crisis Federal Reserve System has purchased vast sums of bonds - of $4, 5 trillion. For better perception of Q.E. programs, it should be mentioned that, total assets held by Federal Reserve until 2008 was less than $ 1 trillion. As last researches of the CATO Institute show, there is no scientific evidences, which claims Q.E. programs impact on the real economic and employment. Amid of Q.E. programs failure, we see media campaign against physical cash. The official reason of “war on cash” is preventing criminal and terrorism by constraining financial support. 25-year investigation in 90 states showed that, there is very small amount of bribery and criminal cases where payments are made by cash, in most cases there are involved banks. Hence, we could have doubts about above mentioned reasons of a cash prohibition. Real aim of the campaign may be disguising inherent problems of current financial system and Q.E. interventions by applying negative interest rates on private deposits, for forcing investment and growth. It will be one more populistic monetary experiment (after Q.E. failure) for saving fractional reserve banking and fiat money system which finally breaks principles of free market. Instead of translocation an existing financial system into digital environment, we can discuss different reality, another way of the evolution, which was explained in 1992 by Milton Friedman „The Island of Stone Money“, The population of Yap uses big round stones (heavier than a car) as a money. Stones are collected in the remarkable place and according to trade results, part of stones change an owner, but location of stones remain the same. Beyond the external forms, this is an example of free monetary system, which is operating without any central authority and monetary interventions. Anonymous programmer with nickname Satoshi Nakamoto solved the problem of external forms in 2009, by creating of bitcoin. Now Mankind is on the crossroad of strategic importance, it will remain in the inherently incomplete monetary and financial system of fiat currencies or it will build a free monetary and financial system according core principles of bitcoin ecosystem, where populist politicians will not have a power and ambition to plan GDP, inflation and other growth rates.