CBDCs: Even The Fed Insults Them
News
|
Posted 30/11/2023
|
1539
Central Bank Digital Currencies - As Fed President of the Minneapolis branch puts it, "I get why China would be interested. Why would the American people be for that?" after a heartfelt speech blasting the only CBDC benefits as being monitoring every transaction, imposing negative interest rates and directly taxing citizens.
1. What's The Benefit?
While advocates for CBDCs may find themselves benefiting from advocacy or securing design contracts, the primary beneficiaries are simply the central banks. The potential benefits of CBDCs to the general public are difficult to find, even for central bankers themselves.
Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, has even aggressivley blasted CBDCs:
"I'll tell you my personal bias is I'm pretty skeptical. I keep asking anybody... ANYBODY at the Fed or outside the Fed to explain to me what problem this is solving.
I can send anybody in this room $5 with Venmo right now. Right? No, seriously. So what is it that a CBDC could do that Venmo can't do? And all I get is a bunch of handwaving.
'Well, maybe its better for financial inclusion, maybe its better for crossborder remittance.'
Maybe - is there any evidence it is?
They say 'Well, what about China? China is doing it.'
Well, I can see why China would do it. if they wanna monitor every one of your transactions, you could do that with a central bank digital currency, you cant do that with Venmo. If you wanna impose negative interest rates, you could do that with a central bank digital currency, you cant do that with Venmo. And, if you wanna directly tax customers, you could do that with a central bank digital currency, you can’t do that with Venmo.
I get why China would be interested. Why would the American people be for that?"
(Neel Kashkari speaking at The Annual Conference of the Journal of Financial Regulation at Columbia Law School in New York.)
2. Flawed Assumptions on Financial Inclusion:
One touted argument for CBDCs is their potential to improve financial inclusion. However, this claim falls to pieces in the most beautifully ironic way:
Surveys by the Federal Deposit Insurance Corporation (FDIC) indicate that people commonly lack bank accounts due to issues like:
- Insufficient funds,
- Privacy concerns, and
- Distrust in banks
Could the answers be any more insulting to the Fed's ambitions? This shows that people are not seeking inclusion, but they are seeking the opposite because they have:
3. Trust and Privacy Concerns:
Trust is a critical factor. Public trust in the U.S. government is at historic lows, rendering a CBDC, perceived as a government-backed, ‘big brother’ initiative, an unattractive project. Additionally, privacy concerns persist, as central bankers dismiss the possibility of anonymity, potentially solidifying CBDCs as a cherry on top for the Bank Secrecy Act regime. If you are not aware what the Bank Secrecy Act is, have a look and you will see why CBDCs grease its wheels.
4. Illusion of Zero Minimum Requirements:
The fantasy of zero minimum requirements and fees may appear as a solution to accessibility issues. However, it fails to address any core problems. A no-fee CBDC account merely transforms cash into a digital format without integrating individuals into the financial system. It lacks the properties of inclusion, merely replicating existing solutions like prepaid cards. In fact, what sort of expensive chips or biometric scans are required for one to have cash or silver? How much easier is it so preserve wealth when the silver coins are not being created out of thin air by a central bank or tagged with an "expiry date" in which they must be spent?
5. The Real Agenda: Control and Profit Motives?
Behind the scenes, it becomes apparent that central banks recognise CBDCs as tools for consolidating control over money and payments. Statements from advisers to President Biden, European Central Bank President Christine Lagarde, and the Central Bank of Indonesia indicate a strategic move to counteract the rise of cryptocurrencies and the strong history or precious metals. Unfortunately, this recognition of CBDCs as a means of control has created an industry of private sector players seeking profit from CBDC development.
The rise of CBDCs appears to be driven more by control agendas and profit motives than by genuine benefits to the public. As critical voices gain momentum, legislative efforts to curb government-backed CBDC initiatives, such as those proposed by Representatives Tom Emmer, Senator Mike Lee, and Senator Ted Cruz, offer a glimpse of hope in safeguarding the public from the potential downsides of this digital currency experiment. As previously discussed, DeSantis of Florida has outright banned CBDCs. We will see if Fed President of the Minneapolis branch, Neel Kashkari, is correct in asking "...why would the American people be for that?"
We have written before here about the Australian government pushing to remove cash and introduce CBDC’s here too. The RBA is actively trialling/piloting CBDC’s here with big 4 banks, fintechs and payment providers. The implications for Australia, however, are exactly the same as the US and this is clearly part of an international agenda. Indeed Klaus ‘Reset’ Schwab and the World Economic Forum (WEF) is pushing for a global set of standards to help govern and streamline transactions worldwide.
On an unrelated note you can buy Ainslie’s increasingly popular “Reset” silver rounds in 1/2oz or 1oz here….