Cryptocurrency: FedCoin - #1 Shitcoin

grarpamp grarpamp at gmail.com
Tue Mar 9 00:51:10 PST 2021


"
Fedcoin: A Central Bank Digital Currency

The Fedcoin has bipartisan support. Jay Powell, appointed as Federal
Reserve Chairman by President Trump, said in October that the Federal
Reserve is conducting research into issuing a digital currency, on its
own and also in partnership with other central banks and the Bank for
International Settlements.

Janet Yellen, appointed as Fed Chair by President Obama, said last
week, “It makes sense for central banks to be looking at issuing
sovereign digital currencies.”

They give different stated reasons. Powell is more conservative, and
his focus is on addressing the potential competitive threat of bitcoin
and digital currencies from countries such as China. However, if he
really wanted to make the dollar more competitive against the yuan,
then he would just abuse the Fed’s credit less.

Yellen nods to a progressive idea, saying that a Fedcoin, “could help
address hurdles to financial inclusion in the U.S. among low-income
households.” However, if she really wanted the “unbankables” to be
able to open accounts, then she would just repeal anti money
laundering and other regulations that penalize a bank for crimes
committed by its clients.


Both Powell’s and Yellen’s statements are disingenuous. A Fedcoin is
coming, because it’s necessary. Allow us to explain the two real
reasons. The first is sinister. The second is more pernicious.



Why Fedcoin? Two Real Reasons

The first reason is the pathological fall of interest rates over the
last four decades. Interest in the US dollar has not gone negative
yet, though it has in the Swiss franc, the euro, the pound, and the
yen. Interest will continue to fall.

When the rate goes negative enough, the banks will not be able to hold
the line on paying zero interest in deposit accounts. They will be
forced to pass through their pain to depositors. This will provide the
first incentive to withdraw cash from the banks—thus pulling out
capital—since the 1930’s. The paper dollar bill has zero yield. People
will prefer zero to negative yield. Free is better than paying to hold
your money.

The central banks have three ways to try to fight this. One, they
could try to impose losses on dollar bills. They could create an
algorithm that deducts from the face value, based on serial number. If
they roll this out to point-of-sale devices, then every merchant will
know the legal tender value of your cash. That “twenty” could actually
be worth $19.93. But this seems impractical and confusing.

Two, they can demonetize cash. People are given until a certain date
to turn in their cash for a credit to their bank accounts. After that,
the paper will have no legal tender value. But, as Yellen noted, many
people are kept out of the banking system.

Or, three, they could issue a Fedcoin and force everyone to trade
their paper cash for Fedcoins. Fedcoin would be nothing like bitcoin.

Fedcoin would be programmed to erode at a rate to match the Fed’s
negative interest rates. Thus, it would not provide a haven to anyone
seeking to hold cash to avoid the erosion of bank balances. They will
have you totally trapped.

This is an extension of the same idea behind banning gold in 1933. The
people were disenfranchised, unable to opt out of the government’s
debt. The most conservative saver was forced to hold government bonds,
rather than gold. Indeed, after that, the definition of risk-free
asset is the government bond.

After 1975, you can hold gold. But now, it’s not a dollar balance. It
has dollar price volatility. Hence, it’s unsuitable for many
conservative savers (and financial institutions). If you have a
billion dollars of cash, and a liability to pay a billion dollars in
two months, then you cannot take the risk on gold. As we write this,
the price of gold has dropped $244 dollars since the start of 2021, or
about 13% in about two months.

An individual may be able to escape the system by buying gold (or
bitcoin), however the dollars are trapped in the system. The seller of
the gold (or bitcoin) is the new owner of those dollars. And faces the
same awful choice of the tiger or the tiger.

The Fedcoin will be designed to further tighten the noose. Even cash
will become entirely electronic, and subject to slow confiscation. Not
by inflation. But by negative interest rates that reduce the account
balance.
"

... and by inflation, tax theft, bail-ins, bail-outs, war bonds, govt
paychecks, debt, etc.


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