Central Bank Digital Currencies: Funny Money That Will Destroy What's Left Of Private Property, Free Markets, & Personal Liberty
During the Cold War, the East-West divide was commonly portrayed as pitting communism against capitalism. The Soviet Union, its satellites, and allies operated command economies in which centralized authorities directed the allocation of resources, agricultural production, and industrial manufacturing of the State. The United States and the Western Bloc championed liberal democratic norms and free markets. That division, of course, was always too simplistic. Not only did the US support third-world dictatorships when doing so would produce strategic advantages against the USSR, but also the demarcation between free and controlled markets was never so plainly cut-and-dried.
When young students mature, however, they realize that throughout the West, private ownership and free markets are neither quite so private nor free. Property may best be understood as a bundle of sticks tied up together with a bow. In an economic system in which what you own is yours and no-one else's, all those sticks stay bundled together tightly. However, when others have an independent claim on what you "own," then one by one, those sticks come undone.
You might think you own your home after you have made every payment, but what happens if you fail to pay local property taxes or refuse to grant the municipal government permission to build a sewer system below your dwelling? You will soon learn that any number of city administrators, revenue agents, state regulators, Environmental Protection Agency bureaucrats, public utilities commissioners, and even a motley crew of private citizens objecting to how you choose to use your property all believe that they have an ownership stake in what you own, too.
In most places throughout the West, they would be right. Statutes, regulations, and tax obligations all encumber what you think is yours, and even when you have followed every law to the letter and paid every fee to the cent, there is still no guarantee that government agents will not later invoke eminent domain laws to swipe what you own because they believe they can use your private property more fruitfully for the "public good" – and, since Kelo v. New London, even for someone else's private good. So much for private ownership.
If neither private property nor free markets exist outside of abstraction, the rise of fiat national currencies — whereby gold money has been replaced with government-imposed, innately-worthless paper notes — has only exacerbated the problem.
By slowly replacing the use of gold coins with mandated paper currencies, however, nation states have engaged in a bit of hocus-pocus to conjure funny money out of thin air. Although the particular order of events has been different for different nations over the last century and a half, the important steps have all been the same: First, some form of paper money is introduced and backed by the government's promise to pay the holder of each note a fixed sum in gold or silver. Next, the introduction of a private central bank comes into existence holding a de facto monopoly power to print paper money according to its best judgment for maintaining a healthy national economy. Finally, the gold or silver backing of those paper money currencies is revoked.
Now with the central banks printing money and reckless government spending pushing Western economic systems to the brink, a new kind of financial hocus-pocus has been proposed: central bank digital currencies (CBDCs). The idea is that consumers and producers will transact entirely in virtual currencies that do not physically exist outside of the stored memories of interconnected machines. If replacing sound gold monies with worthless paper was not bad enough, now worthless paper will be replaced with the ephemeral ones and zeroes of computer code. What could possibly go wrong?
Put aside the financial system's fragile house of cards destabilizing global markets today and central banks' suicidal penchant for playing Russian roulette with eight billion lives linked through common dependence on money. Instead, consider what the transition to CBDCs would mean for the West. Succinctly put, any lingering Cold War distinctions between capitalism and communism would vanish.
If governments and central banks control the creation, distribution, and exchange of virtual money, whatever remains of free markets will disappear.
If governments and central banks monitor every transaction between consumers and producers, then all industries will be subjugated to the centralized command of the State.
If governments and central banks assert the legal power to determine who may store value, how much value may be personally stored, and how long that value will be permitted to last, then whatever remains of private property will cease to exist. If governments and central banks maintain a digital monopoly over the only legalized forms of money, then they may redistribute wealth or penalize personal behavior without regard for individual rights or limits to their control.
The same surveillance systems and social credit scores that are already pervasive in communist China will invariably become pervasive throughout the formerly free West, as well.
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