Will Central-Bank Digital Currency (CBDC) Swoop In To Save The Day?

Will The Federal Reserve time the debut of its central-bank digital currency [CBDC] with a major crash in cryptocurrencies?

The Great Recession Blog

You cannot necessarily see the fall of any one part coming in an event like this, but you can certainly see coming the fact that many parts will be falling. That’s how it was was with Silvergate directly from the Cryptocollapse and then with Silicone Valley Bank, as the leader of a larger-scale banking collapse where crypto also played a major role because many of SVB’s big clients were crypto companies.

While the financial media and the Fed heads and the treasurer all assured us there would be no contagion from the Cryptocrisis last summer, which continues into the present, I began pointing out warnings to the contrary. So, before I get in to explaining crypto’s role in the SVB collapse last week, let’s go back over what, in fact, could be seen coming — at least as a high risk if not a definite prediction so no one can say the Fed couldn’t possibly have seen any of this coming.

Powell and Yellen and all the parrots in the financial media that mindlessly regurgitate whatever those two “experts” say. Let’s start with my earliest warnings about crypto about two-and-a-half years ago and work toward the most recent:

Then, half a year before the big summer bust of 2022, I gave the following warning as something I considered fairly evident:

 

The next obvious stage of the present ongoing crash … will likely also pull down a great number of crypto currencies with only a few survivors (as we saw in dot-com companies around the year 2000 that had huge valuations but no real profitable use).

“Economic Predictions for 2022” Dec. 20, 2021

As the year of the big Cryptocrash began, I gave a stronger warning but with no specific timing:

 

Already in another one of their own bear markets, cryptos have proven to be highly speculative vehicles. Many of them, like those promising tech companies that made no actual profits or merchandise back in 2000 will nova into their own collapsing cores. A few companies survived the rumble and the tumble in 2000 and went on to do very well, but most disappeared in the dust of time and space. The same will likely be true this time for the hoard of crypto currencies.

“How Bad Is the Stock Market Rout Now, and How Bad Will its Collapse Get?” Jan. 7, 2022

After the crash happened, I noted that I had in my Patron Posts always said the Federal Reserve would likely time the debut of its central-bank digital currency [CBDC] with a major crash in cryptocurrencies, so I pointed out some of those earlier private writings for my general readership to become aware of as soon as the Fed announced last fall it was going to start testing the ledger system for its CBDC:

 

Conveniently, the announced testing [of a Fed CBDC] is happening during a time of major crypto-currency scandals and carnage. I’ve been on the CBDC beat for about as long as it’s been whispered between central banksters. Clear back in 2019, I wrote that the Fed would try to convince the US populace that,

“It is in the ‘best security interest of the American people’ to let the Fed issue the ONLY legal digital currency in order to avoid some of the scandals we’ve already seen (more of which are certain) There are bound to be some digital currencies that aren’t anything other than a digital Ponzi scheme.…”

“The rapid implosion of many cryptos opens the doors wide for the Fed to ride into the cleared-out battlefield like the cavalry with something that will appear to the general public to give similar benefits but with none of the risks that blew up in the grand crypto explosions we recently saw….“

Now, you know I don’t think the Fed is the one [that should] come in and save us from anything. We need to be saved from the Fed, but most of the US population do not think like me … and most do not think like the cryptoverse either. So, I am certain the recent unravelling in crypto will play directly into the Fed’s hands as I said back in 2019 would happen once the coming out of the Fed’s debutant currency [CBDC] finally arrived.Whatever god central banksters offer their sacrifices to, they were praying or whirling their magic chakras or whatever for a moment just like this to frame the emergence of their champion onto the digital currency scene … because it [their CBDC] will seek to overcome the liabilities seen in those wild-west digital cryptocurrencies as its selling point.…

“The Money of the Apocalypse is Rising in US Banks from the Ashes of the Cryptocrisis THIS WEEK!” Nov. 22, 2022

So, the stage is now set for the public debut of the system they have been experimenting with as soon as they are confident the bugs have been worked out. I also stated the significance of the summer blowout in crypto in that article:

 

“At the periphery of the US financial world, the crypto bubble has popped— the “periphery” being the fringes of finance where the greatest risks are taken in hopes of the greatest gains — the parts likely to go down before the core of finance. As with the dot-com bust or the consolidation of major auto manufacturers after WWII, the strong hands will survive. However, most cryptos will end as a quivering heap of rust, burning under the desert sun….“

While I am not by any means a crypto expert, I imagine Bitcoin will rule with a few others … just like the Big Three did — Ford, General Motors and Chrysler — after numerous other contenders like Hudson, Desoto, Packard and Studebaker got absorbed or went broke or faded away. Huge and highly speculative gambles are made on the fringes of new industries, and they may look promising for a long time, but in the end only a core survives, the industry consolidates and fortunes are lost, even if they were a beloved product to many. Crypto is at that stage of a great consolidation.

So, here we are: crypto banks breaking, then venture-capital banks deeply involved in the cryptoverse breaking, and now stocks back on the plunge as the avalanche of contagion builds. It could all be anticipated by just seeing the shear scale of perils built into the whole unregulated house of cards that was built inside of a massive black box. Now the whole hillside is moving to such a degree you naturally wonder what additional big piece might crack off tomorrow … and the Fed and feds are scrambling to try to make certain that doesn’t happen, which shows you they are seriously afraid it COULD happen.

When “Big Short” investor Michael Burry warned the “mother of all crashes” is coming, I noted that he believed it would start a crypto crash first and foremost. (“Why ‘Persistent Inflation’ Will Become an Intense Fire Tornado, Greater Than the Fed Even Imagines” June 25, 2021) It looks like he got that big short right, too.

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