If both white and blue collar workers can lose their jobs due to companies investing in automation then why can’t the Federal Reserve System and central banks across the globe experience the same thing?
One software executive thinks that’s what the future of banking will look like.
Speaking in an interview with CNBC on Monday, Vivek Ranadive, founder and CEO of Tibco Software, said Wall Street, including the Fed, will pretty much mimic Silicon Valley, and financial markets will be operated by computer programs. This means financial institutions will be non-existent and future banks will be virtual as it will be controlled by big data and mathematics.
Ranadive believes the Fed still needs to enter the 21st century, but inevitably the central bank of the future will be entirely a computer program. This could indicate that the Federal Open Market Committee and the board of governors would vanish into thin air, a promising scenario to contrarian investors like Peter Schiff, Jim Rogers and Marc Faber.
I fully expect that the Fed will be displaced by a closed-loop computer program where you will constantly be making measurements and making adjustments based on what you’re experiencing, said Ranadive. Wall Street should certainly look at Silicon Valley as a disruptor, as a potential threat. Every industry has the danger of getting Amazon’d, where the use of technology dramatically changes the value proposition.”
However, despite the staunch criticism that the Fed has received in recent years, the fact that a machine could manage important monetary policy directives may very well frighten the general public. Critics foresee system failures, destabilization and crumbling financial infrastructure.
Of course, the question could be asked: if a group of 12 individuals think they can determine what interest rates or how large or small the money supply should be then why not computers?
Ranadive thinks computers will soon be able to regulate and contain food shortages, transportation disasters and international pandemics. Computers might even allocate capital to regions that need it, which can establish more efficient markets. He didn’t provide any specifics as to how it could happen, but technology experts can surmise of cloud networks, big data storage and intense computational algorithms.
In the meantime, when does he project such a collision between Silicon Valley and Wall Street will take place? It could be sooner than 2039.
Although it doesn’t necessarily mean the ending of the Fed, it could still be a step in the right direction for libertarians and proponents of abolishing the central banking system. However, individuals like former presidential candidate Ron Paul want the market to figure out what interest rates and money supplies should be. Here is what he said in a recent interview:
“Manipulating interest rates is an immoral act. It is economically destructive. A central bank setting interest rates is price-fixing and is a form of central economic planning. Price-fixing is a tool of socialism and destroys production. Artificially low rates of interest orchestrated by the Fed induced investors, savers, borrowers, and consumers to misjudge what was going on. Multiple mistakes are made. Prosperity can never be achieved by cheap credit. If that were so, no one would have to work for a living.”
