Digital dollars? Sounds innocuous
enough, but it’s not. In a recent column
at Based Underground, Claudio Grass
points out the dangers in the imminent move to digital currency. Here’s a sample:
As Reuters reported on the 15th of November, “Global banking giants
are starting a 12-week digital dollar pilot with the Federal Reserve Bank of
New York. Citigroup Inc , HSBC Holdings Pl, Mastercard Inc and Wells Fargo
& Co are among the financial companies participating in the experiment
alongside the New York Fed’s innovation center, they said in a statement. The
project, which is called the regulated liability network, will be conducted in
a test environment and use simulated data, the New York Fed said. The pilot
will test how banks using digital dollar tokens in a common database can help
speed up payments.”
. . .
[T]he stakes are too high for
people to ignore this development. Whoever controls the money, controls
everything and the rise of CBDCs [Central Bank Digital Currency] threatens to make that control absolute,
closing whatever little “loopholes” of freedom may still exist today.
To most citizens, savers and
taxpayers, the transition to a digital dollar might seem harmless, or even
beneficial, given that most of the population today associates digitalization
with convenience and speed. Indeed, if one doesn’t understand the ins and outs
of monetary history, of fiat money and of digital currencies, this concept
appears totally innocuous. But even for many who do understand these things, it
might seem like such a step would really make no difference. Junk money is junk
money after all, be it physical or digital, it’s still backed by nothing,
right?
Well, that is right indeed, but
there’s a lot more to it. While the currency itself will continue to be
worthless, its digital form will come with a bunch of perks and advantages for
central planners. As Eswar Prasad, professor of trade policy and economics
at Cornell University, puts it:
One should recognize that the CBDC
creates new opportunity for monetary policy. If we all had CBDC accounts
instead of cash, in principle it might be possible to implement negative
interest rates simply by shrinking balances in CBDC accounts. It will become
a lot easier to undertake helicopter drops of money. If everybody had
a CBDC account, one could easily increase the balance in those accounts.
What this essentially means is that
any choice that remains and any degree of financial sovereignty that is left in
the present system could be easily wiped out by CBDCs. And its not only
financial freedom that’s at stake: these centralized digital currencies can be
used by governments to monitor, to control and even to directly punish
dissenters, by blocking transactions, freezing their accounts or seizing they
assets. Some might find that farfetched, but those are probably the same people
who thought that China’s “Social Credit System” was implausible too, right up
to the moment it was actually implemented.
Full article is here.
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