War On Cash: The Digital Dollar

https://schiffgold.com/key-gold-news/war-on-cash-the-digital-dollar/
https://mises.org/wire/dangers-lurking-behind-digital-euro
https://www.federalreserve.gov/newsevents/pressreleases/other20220120a.htm
https://schiffgold.com/guest-commentaries/why-should-we-care-about-negative-interest-rates/
https://schiffgold.com/key-gold-news/creepy-imf-paper-teaches-governments-wage-war-cash/

Last week, the Federal Reserve released a “discussion paper” examing
the pros and cons of a potential US central bank digital dollar.
According to the Federal Reserve press release, the central bank hopes
to get public feedback on the idea.

    “We look forward to engaging with the public, elected
representatives, and a broad range of stakeholders as we examine the
positives and negatives of a central bank digital currency in the
United States,” Federal Reserve Chair Jerome H. Powell said.

Government-issued digital currencies are sold on their promise of
convenience and security. But there is a darker side – the promise of
control.

Digital dollars would be similar to bitcoin and other
cryptocurrencies. They would exist as virtual banknotes or coins held
in a digital wallet on your computer or smartphone. The difference
between a government digital currency and bitcoin is the value of the
digital currency is backed and controlled by the state, just like
traditional fiat currency.

The digital dollar could ultimately replace physical cash. Proponents
tout its convenience and security. A Business Insider article gushed
over the idea.

    A Fed-backed digital dollar would then provide many of the
benefits touted by cryptocurrencies without their wild price swings
and usage fees. In theory, a CBDC would meld the best aspects of
physical and digital currencies for the average American.”

Last year, China launched a digital yuan pilot program. The Chinese
government-backed digital currency got a boost when the country’s
biggest online retailer announced the first virtual platform to accept
the Chinese digital currency. China isn’t the only government
exploring the possibility of digital money. Sweden has developed a
digital currency of its own. The European Central Bank is pushing for
a digital euro. And Russian central bank governor Elvira Nabiullina
told CNBC that digital currency is “the future of our financial
system.”

Ultimately, it would take a congressional act to establish a digital
dollar as legal tender.

US officials toyed with the possibility of a digital dollar at the
height of the pandemic. A Democratic proposal for stimulus payments in
the wake of the coronavirus pandemic featured digital currency
deposited into digital wallets.

Government digital currency is sold to the public as a safe and
convenient alternative to physical cash. We’re also told it will help
stop dangerous criminals who like the intractability of cash.

But at the root of the move toward government digital currency is “the
war on cash.” Fundamentally, it’s about control.

The elimination of cash creates the potential for the government to
track and even control consumer spending, and it would make it even
easier for central banks to engage in manipulative monetary policy
such as negative interest rates.

Imagine if there was no cash. It would be impossible to hide even the
smallest transaction from government eyes. Something as simple as your
morning trip to Starbucks wouldn’t be a secret from government
officials. As Bloomberg put it in an article published when China
launched its digital yuan pilot program, digital currency “offers
China’s authorities a degree of control never possible with physical
money.”

The government could even “turn off” an individual’s ability to make
purchases. Bloomberg describes just how much control a digital
currency could give Chinese officials.

    The PBOC has also indicated that it could put limits on the sizes
of some transactions, or even require an appointment to make large
ones. Some observers wonder whether payments could be linked to the
emerging social-credit system, wherein citizens with exemplary
behavior are ‘whitelisted’ for privileges, while those with criminal
and other infractions find themselves left out. ‘China’s goal is not
to make payments more convenient but to replace cash, so it can keep
closer tabs on people than it already does,’ argues Aaron Brown, a
crypto investor who writes for Bloomberg Opinion.”

Economist Thorsten Polleit outlined the potential for Big Brother-like
government control with the advent of a digital euro in an article
published by the Mises Wire. As he put it, “the path to becoming a
surveillance state regime will accelerate considerably” if and when a
digital currency is issued.

Governments around the world have quietly waged a war on cash for
years. Back in 2017, the IMF published a creepy paper offering
governments suggestions on how to move toward a cashless society even
in the face of strong public opposition.

As with most things the government does, you should be wary of the
digital dollar. It has a dark side you can be sure the mainstream will
mostly ignore.