This is a complex issue. I am not an expert on anything that follows. In fact, after a brief attempt at research, much of it remains a bit murky. I also know that there are people out there that understand all the ins and outs of digital currency. But that’s not what I’m about.
First, I try to provide a “Joe Shmoe” understanding for the common man – but this is so complex that I apologize up front. This is a LONG piece. Please hang in 'til the end!
My goal is and always has been to provide a perspective based on thinking about what is going on in the world using a freedom principles framework. (And hopefully get people thinking – especially if they disagree or know more than I do!)
One of my Freedom Academy members posed several questions about “the coming digital currency.” Here are some of them:
Is it a real thing – or just another “conspiracy theory”?
What will happen if BRICS bring on their own currency and the dollar is no longer the global standard?
Given the policy goals of our current leadership, do we need to be concerned about our “Social Credit” (i.e. China)?
Maybe some of you have had similar questions – or maybe you’ve never given any of this any thought. Either way, these questions should definitely be addressed using a freedom principles framework.
We are only going to scratch the surface to give everyone something to think about, but even so, before we can talk about “the coming digital currency” we have to know what we are talking about. What is “digital currency”?
Digital currency is any currency available ONLY in electronic form.
Electronic versions of currency already exist. We all know that the “money” in our bank accounts is really just represented by ones and zeroes and there is not a drawer or room in the bank vault with our cash value of gold residing inside it. But what differentiates digital currency from the electronic currency that we are already familiar with is that while we can transform the numbers in our bank accounts to cash amounts in hand, digital currency never takes any physical form.
Crypto and Blockchain
How many of you get confused between cryptocurrencies and digital currency? I have to say I was – and I am not anywhere close to being an expert on crypto either. So I did a deep dive into what “mining” for bitcoin was and why it takes a lot of water and energy, but I’m not going to include all that here. I’m just going to list a few things you need to know about crypto to differentiate it from CBDCs (Central Bank Digital Currencies).
Crypto currency is ONE type of digital currency, but not the only kind, and not the kind the FA member was asking about.
Mining, the process that Bitcoin and other cryptocurrencies use to generate new coins and verify new transactions, is a zero-sum game.
There will only ever be 21 million bitcoin. The final block should (theoretically) be mined in 2140. At that point, miners will not be able to rely on newly issued bitcoin as their reward and will instead have to rely on fees they charge for making and tracking the transactions.
Mining is also what provides security for the system as it verifies and secures the blockchain – allowing cryptocurrencies to function as peer-to-peer decentralized networks without any oversight from a third party.
The miners of bitcoin already maintain and secure the blockchain – so they will remain in control of the “network” or “server” or “mining operation” after the final block has been mined.
The lack of oversight is key to the value of the currencies. Governments cannot touch them.
Now, there are companies who have come in and filled the gap in the market – willing to do crypto trading for others and there are regulations on them – but they are, as far as I can tell, self-regulated based on competition and digital security.
Many people believe that investing in cryptocurrencies will help them stay outside government reach – and outside the taxing structures imposed by governments.
They see this as a new market system regulated by the decentralized users themselves, contributing to true economic freedom – free from government intrusion.
However, there are some caveats to this idea:
Many of the companies dealing in crypto that regular people are investing in make at least some of their money the old-fashioned way, which, of course, is taxed. AND
Just a thought from Dorothy:
As crypto increases in value, the elites will have their hands on more and more of it – and the ordinary citizens who “invested” will not be able to spend it due to the obstacles the elites impose outside the decentralized system. Just my immediate thought at the moment.
The main thing to know about cryptocurrencies for this conversation, though, is that crypto is outside governmental control and regulation.
Central Bank Digital Currencies
The digital currency that freedom loving Americans should be concerned about is the CBDC because Article I, Section 8 gives Congress the power to coin money and regulate not only the value of that money – but also of foreign money.
And remember, a digital currency exists only electronically, so another term we need to understand is “fiat money”.
Fiat money is a government-issued currency that has no physical backing from a commodity like gold or sliver – or even oil. But as it is government-issued, it is considered a form of legal tender that can be used in exchange for goods and services.
Most of us already use several versions of “fiat money” because not only can banknotes and coins that are not backed by gold or silver be used to purchase goods and services, technology has allowed physical currency to be supplemented with a credit model that records balances and transactions digitally.
And while physical currency is still widely accepted (and still used almost everywhere), western industrialized countries, including the United States, have experienced a drop in its use, a drop that accelerated during the pandemic.
Unlike cryptocurrencies CBDCs can be used as legal tender.
Digital Currency & the WEF
The World Economic Forum is not a “conspiracy theory.” They exist and they post much of their content online. They don’t keep their plans secret. And one thing they have done is create a Global Consortium for Digital Currency Governance.
They are designing a global governing framework for digital currencies that involves (or will necessarily involve) collaboration between governments and the private sector. They are already providing – and intend to be the ones to continue to provide - global policy recommendations to ensure the framework is secure and functioning.
The stated goal is that of shared prosperity and inclusion of all peoples.
The U.S. and Globalizing Digital Currency
Surely, though, the United States would not give up its own sovereignty and prosperity for the goals of the WEF?
There were 35 countries developing CBDCs in 2020. By 2023, that number was 114, and among them? The United States. Our government is developing its own CBDC (Project Cedar).
Do not fear, though! A U.S. CBDC (in a constitutional framework) needs legislative approval to be issued. However, many Americans are excited at the prospect, so it is likely an American CBDC will be issued with congressional approval. There are other reasons too.
With the War in Ukraine came the realization that any country could be cut off from ability to transfer funds between banks.
More and more countries are skirting the U.S. dollar.
Currently, the U.S. dollar is involved in 88% of all foreign exchange transactions – and dominates 60% of all international exchanges. It is an expediency issue due to the historical stability of the U.S. dollar. International transactions rely on the stability of the dollar to save time.
However, in the past year, we have seen several big economies decide they no longer want to rely on the U.S. dollar. We have seen Russia and China establishing cooperation between their financial systems (leaving the dollar out). Brazil, Argentina, the UAE, and India have circumvented the dollar in oil transactions. And we have seen de-dollarization in Southeast Asia.
And here is the fun bit that brings the entire conversation together: In November 2022, Hong Kong, China, Thailand and the UAE used blockchain, not the dollar for cross-border transactions totaling $22 million.
Using digital currencies saves more time than using the U.S. dollar as an intermediary.
As more leading and emerging global economies develop and implement their own nations’ CBDCs, the U.S. dollar will become irrelevant. And if the U.S. economy does not jump in on the digital international transactions, we will become less than irrelevant in the global economy. We’ll be on the outs.
So, should we be concerned about the “coming digital currency”?
A U.S. CBDC will definitely be seen as necessary and good for international trade and diplomacy – and we live in a global commodity world now.
With local banks losing favor (think Silicon Valley Bank and Signature Bank in New York) and with regional banks consolidating, the time is ripe for those that desire centralization of our banking system to step in and offer solutions.
One solution just might be a Central Bank issuing its own digital currency as legal tender.
Not to mention, we already de facto rely on fiat digital currency with the amount of credit card debt most Americans find themselves in. If Project Cedar comes up with a way to secure our money digitally, there will be few arguments against issuing a CBDC in The United States.
Freedom Academy graduates know that centralization of power is the greatest threat to freedom. So yes, we should be concerned about a coming CBDC in the United States.
The Threat to Freedom
While businesses and governments in the United States must still accept cash in exchange for goods and services, said cash is still being backed by the U.S. government. What if the U.S. government recalls all “notes” (printed money) and replaces it with a central bank digital currency? Is that possibility just a fever-dream of a conspiratorial mind?
They will also be able to freeze accounts with very little recourse, even for law-abiding citizens. Do we trust our government not to employ punitive financial tactics against political enemies?
Should we thus be concerned about our Social Credit? (A great topic for another blog, I think!)
But having centralized government control over all the wealth in the United States is just an intermediary threat. (I'm not even going to mention their power over all domestic and international transactions.)
Remember that Global Consortium for Digital Currency Governance? The U.S. Government has already demonstrated a willingness to hand over power and sovereignty to an international body. (See International Health Regulations, specifically Article 12).
So in the end, as the global elites seek inclusion of all nations within their global digital currency governance structure, who will actually be directing our nation’s financial and economic policy?
If the U.S. Government and our own central bank simply become the proxies, it establishes conditions where we will not only have all transactions tracked, (possibly removing cash tips, street begging, anonymous donations, etc. - just a thought), but we will have absolutely no method by which to counter policy or unconstitutional actions by our own government.
Just some things to think about. And then TELL me what you think!