The Danger of the Coming Digital Dollar
The technology the government will use to control your money
A revolution that may be as big as the Internet is occurring right now. Cryptocurrency has grown from a market cap of roughly 20 billion in 2017 to 2.5 trillion today. There are people, me included, who believe crypto (Check out my crypto website, Grumpy Sloth Crypto) will eventually be considered more valuable, trustworthy, and usable than the American dollar in our lifetimes. Along similar lines, the time will come in the next decade when the blockchain technology underlying cryptocurrency will be woven into the fabric of the Internet so tightly that the online world won’t be able to function without it. NFTs, which represent digital artwork and property, are already selling for millions and many people believe we haven’t even scratched the surface of what can be done with them or how they’ll be used on the Internet. We currently live in a WEB2 world, where a handful of monopolies like Google, Facebook, Apple, Microsoft, and Twitter have far too much control of traffic, ad revenue, and what information you’re allowed to see. Because of these new technologies that are becoming available, we’re moving towards a decentralized WEB3 world where governments and monopolies will have much more difficulty controlling the flow of information, speech, and your data.
So, how is the dumb, slow, centralized US government responding to this? By attempting to ratchet up their level of control over your money. You might be thinking, “In a world where the only two things that are certain are death and taxes, don’t they already have control of it? They have the banks. The IRS. The dollar is even the world’s reserve currency. How much more control do they need?” You can get the answer to that question by looking at China.
China has already started implementing a creepy social credit system that allows the government to monitor “bad” citizens and penalize them for “bad behavior” like playing too many video games or driving through red lights. Remember your high school principal warning you that if you misbehaved it would go on your “permanent record?” This is basically the same thing, except it applies to your whole life and the government is doling out penalties such as not being able to get a loan or fly on an airplane for being a “bad citizen.” That noose around the necks of Chinese citizens is only going to get tighter as China fully rolls out the digital yuan. If you run a totalitarian surveillance state, there are few things more useful than being able to see and control how much each of your citizens has and what they’re spending it on.
Here in the United States, we like to pride ourselves on NOT being a totalitarian surveillance state, and in all fairness, we’re not in the same league as China. However, Democrats and our government play many of the same games, albeit in a different way. The Chinese media is full of propaganda organs for the state because they’ll be shot if they don’t comply. The American media is full of propaganda organs for the Democratic Party because the MSM is about supporting the Left first and informing the public second. The Chinese government watches everything its citizens do and uses it to control them. The American government allows private companies to watch everything their citizens do. The government acquires that information when they need it and encourages corporations to control the flow of information and punish threats to the Democratic Party.
We have a lot more in common with the Chinese than most Americans realize or should be comfortable with. That brings us to the digital dollar. Our government, along with a number of others, is following in China’s footprints. Here’s Investopedia on the digital dollar.
The Federal Reserve joins a growing list of central banks around the world that are discussing the utility of a central bank-issued digital currency in their respective country's economies. For example, Sweden's Rijksbank has already issued several papers exploring its use, while China's central bank is conducting pilot tests for its digital currency DC/EP.
But the Fed's task is fraught with national and international implications. For example, the absence of a digital equivalent to the dollar - with fast processing and settlement times for trades across borders - could upend the currency's dominant status as a reserve currency and make other digital currencies, such as China’s digital yuan, more attractive. The dollar accounted for 59% of global currency reserves in May 2021, according to data from the International Monetary Fund (IMF).2
The consequences to domestic economic policy are also complex. A digital dollar would ease monetary policy implementation by removing intermediaries and establishing a direct connection between the Fed and citizens. However, the currency could curtail privacy and enable governing authorities to monitor and manipulate transactions occurring in their network.
That sounds great, right? Faster transaction times! Making it easier to trade! No need to print out all that dirty paper! More efficiency! Heck, the government could even send you money directly to your digital bank account! AWESOME!
Of course, this line seems to be a bit concerning, “the currency could curtail privacy and enable governing authorities to monitor and manipulate transactions occurring in their network.”
First of all, you might wonder how a digital dollar would curtail privacy. It would do that by creating a world where you couldn’t earn, spend, hold, or give away one red cent without the government’s approval. People freaked out when it was suggested that the government wanted to track transactions in accounts that went above $600 at any point during the year. Well, how would you feel about the government potentially seeing every transaction you make? Buy something at a yard sale? Purchase a stick of gum? Give your kid $300 for Christmas and if the government has a digital dollar in place, they’ll know about all of it.
Of course, they will CLAIM that there will be strict privacy protections put in place and that the digital dollar won’t fully replace paper dollars. However, if history is any guide, they will eventually phase out the paper dollar and those privacy protections will regularly be violated while the courts, which tend to be deferential to the government in situations like this, will do little about it. Eventually, those protections will erode away completely, probably after the government does something in an “emergency” that seems “unthinkable” today while the SCOTUS shrugs their shoulders and goes along with it. If you can’t imagine that happening, keep in mind that we just went through a yearlong period where landlords across the country were prevented from evicting people that chose not to pay rent. Yes, the Supreme Court eventually put an end to it at the national level, but Connecticut, Virginia, Oregon, Massachusetts, Michigan, Minnesota, and DC are STILL allowing deadbeats to live rent-free on other people’s property to this very day.
So, what types of things might we see our government do if it could, with a keystroke, take money out of your bank account? Certainly, it would make freezing people’s accounts a lot easier. If this had been in place in America this year, you can be certain there would have been Democrats calling for freezing all access to money for anyone involved in the Jan. 6 riots. How much further do you think people like Elizabeth Warren, AOC, and Ilhan Omar would go if they had the opportunity? The smart bet would be on, “MUCH FURTHER.” For example, could you imagine far-left-wingers calling for directly distributing money “from each according to his ability, to each according to his needs?” Granted, they wouldn’t phrase it like that. They’d say something more like, “What if we just took a certain percentage of the money that people LIKE YOU have and redistributed it to people with less as reparations? What sort of greedy people would oppose something like that?” Today, something like that would be a nightmare to implement. In an America dominated by a digital dollar, it could happen with a few keystrokes. Once it’s a possibility, you could even imagine socialistic Democrats running on a platform of doing exactly that. Although something like that would have many supporters on the Left today, it admittedly wouldn’t fly in 2021 America. However, given how fast things are deteriorating in America, couldn’t you see it happening in a decade or two? I certainly could.
Of course, we also have to think about what happens if some of those ever-more-likely economic nightmare scenarios actually happen. Hyperinflation. A debt-driven collapse. Another depression. What do you think our government could conceivably be capable of if its back was against the wall? Tech writer Naomi Brockwell has speculated the government could, "program money that sits in a bank account to become worthless if it sits too long in order to encourage spending." Given our nation’s fiscal irresponsibility, what happened in Cypress back in 2013 seems like an even more likely possibility:
The European Union has decided – in its infinite wisdom – to rob the personal bank accounts of Cyprus citizens to pay for its bailout of the country. Cypriots got a rude awakening on Saturday that should serve as a lesson to us all.
Specifically, account holders with 100,000 euros or more in their accounts will have 9.9% of their monies levied, while those with less than 100,000 euros will have 6.75% of their money confiscated. It’s all subject to a vote by the Cyprus parliament, but I wouldn’t bet against their likelihood to make nice with the EU and keep using the euro.
Of course, the announcement was made in such a way as to offer no warning and to prevent depositors from having access to their funds before banks re-open on Tuesday. No one can escape.
People might tell you that could never happen here, but we already have many Democrats calling for taxing the UNREALIZED capital gains of wealthy Americans just to pay for the latest pile of useless pork they want to shovel out to their supporters. How much farther do you think they’d be willing to go if we had a real financial crisis and how sure are you that you wouldn’t be targeted if we had a digital dollar that gave them access to all of your cash?
A digital dollar is a dangerous tool that only the most ethical, competent, and responsible people could be trusted not to misuse. Given that people like that are rarer than hen’s teeth in Washington, DC, you should encourage your representatives in Congress to do everything in their power to make sure the digital dollar doesn’t come to pass.
This move is not a good move. Allows too much "control" and possible takeover by others to strip you of your own money.
So in order to use the new digital dollar, will you have to have the number "666" tattooed on your forehead?