Preparing For The MOTB - Cashless Society Comes First

The cashless society will be the first step in this process:

Preparing For A World Without Cash

The Wall Street Journal has published an Op-Ed - authored by two NYU professors: Max Raskin and David Yermack - on the subject of the digitalization of currency. The strawman offers several pros and cons to a 'world without cash' but before we start, one commenter summed up our own skepticism...

"Given the fact that the trust in The Fed is at the level of Clinton; why is there any discussion regarding providing them any additional powers? Look at the deplorable track record of these clueless bureaucrats!"

Raskin and Yermack begin: The Federal Reserve has done almost nothing to study how a digital currency might work...

Central bankers throughout the world, from Canada to Ireland, have recently indicated that they might issue digital currency in the future. Yet the U.S. has been absent from the debate. As the world’s central monetary power, America should play a leading role in studying the benefits and pitfalls of a digital-currency future. While plenty of risks would come with such a conversion, the potential perks are so great that it merits serious consideration.

What would a government-backed digital currency look like? A country’s central bank would need to become a deposit-taking institution and hold accounts on behalf of citizens and businesses. All of their debits would be tracked on the central bank’s blockchain, a digital ledger resistant to tampering. The central bank would pay interest electronically by adjusting the balances of depositor accounts. While the current system of physical notes and bills could be continued in parallel, it would likely wind down over time.

Though such a system seems relatively simple, implementation wouldn’t be easy. In “Digital Currencies, Decentralized Ledgers, and the Future of Central Banking,” a new paper prepared for a forthcoming research anthology on central banking, we analyze potential costs and benefits of a sovereign digital currency.

Yet the centralization of banking under this system would also create a Leviathan with the power to monitor and control the personal finances of every citizen in the country. This is one of the chief reasons why many are loath to give up on hard currency. With digital money, the government could view any financial transaction and obtain a flow of information about personal spending that could be used against an individual in a whole host of scenarios. In other words, it would be virtually impossible to hide money under your mattress. But creating and respecting privacy firewalls and rethinking legal-tender laws could mitigate the dangers of monopoly and stifled competition in currency markets.

Despite its shortcomings, would this system make sense for the U.S.? With less physical currency being used every year, the Federal Reserve would be negligent not to consider the possibilities. The march of digital commerce may eventually make the benefits seem overwhelming, and it would be wise to be ahead of the game rather than trying to catch up at the last minute.

So, while carefully worded, it seems the authors recognize that digital dollars are an asset only to heightened Federal government tyranny... and yet believe this idea should be pursued?