More and more central banks around the world are in the early stages of creating digital currencies. Federal Reserve Chairman Jerome Powell told the House Financial Services Committee in March that the Fed had already begun testing a digital dollar.
Powell told the House Financial Services Committee, "We're not at the stage of making any real decisions. What we're doing is experimenting in kind of early-stage experimentation. How would this work? Does it work? What's the best technology? What's the most efficient really at an early stage on? But we're making progress on sort of technological issues."
Just like paper dollars, a Central Bank Digital Currency of CBDC would be issued by the Federal Reserve. Those pushing for it say it would have several advantages over physical money. They say it could be used to fight inflation because the Fed would have more direct control over the money supply. It could speed up transaction payments and help fight money laundering.
Backers say the U.S. needs a digital dollar if it wants to remain the world's reserve currency. Opponents warn that it could be a very effective instrument of government control.
Economist Pete Earle at the American Institute For Economic Research does not like a digital dollar.
"The ability to track transactions has a couple of elements that are very attractive to economic policymakers," he said. "One is to know where people are spending their money. Another is to track taxes."
Physical money has been called one of the last bastions of privacy. Laws like the Bank Secrecy Act have already stripped away most of the privacy from bank accounts and financial transactions.
Banking expert Nicholas Anthony at the Cato Institute explained, "As it stands, banks have really a ton of power that people don't realize is to shut down accounts, to freeze accounts, and to end up holding them for really any number of reasons. And we don't get to understand why, because there's many cases in which they're prohibited by law from saying what actually happened."
Currency Expert James Rickards said the removal of cash would move America closer to a totalitarian state.
Rickards explained, "If I buy anything, the government doesn't know it. But with this new central bank digital currency, they will, because they maintain the ledger. So if I buy Ron Desantis's new book or I go to a Donald Trump rally or whatever it may be, the government using artificial intelligence and having that information, are able to profile you. They could say, 'Well, this guy kind of looks like a conservative and maybe he's MAGA.' Then you've got a target on your back."
Last year, a Canadian court froze millions of dollars raised for truckers blocking roads to protest COVID-19 vaccine mandates. When the Pakistani government was faced with almost nonstop protests last year, it threatened to switch off the bank accounts of the protestors.
A digital dollar could not only be "switched off," the Fed would be able to force negative interest rates on Americans if it wanted them to spend more, penalizing savers. Digital cash might also be a hacker's delight. Banks are expected to fight it, seeing a Fed digital dollar as a threat to their existence.
1 comment:
Make up your mind War or digital currency as you cannot have both.
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