Newsletter - February 2023

Do you remember the song from “Cabaret” called Money, Money, Money?

“Money makes the world go around      A mark, a yen, a buck or a pound

The world go around                                  A buck or a pound

The world go around                                  A buck or a pound

Money makes the world go around       Is all that makes the world go around,

It makes the world go round.                  The clinking clanking sound

                                                                        Can make the world go round.

Yes, money does make the world go around.  Money also can control the world and everyone in it.  Now in order to understand what we will be discussing it is necessary to provide a bit of history.  The Federal Reserve was created in 1913.  The Treasury Department prints our money and the Fed decides how much money will be in circulation.  The Fed buys Treasuries and put the money into circulation.  If the Federal Reserve did not exist Congress would determine how much money is in circulation.  (Prior to the Federal Reserve the country did have National Banks). The Fed is a semi-private bank supervised by seven governors serving 14 year terms. The Federal Reserve sends it budget request to the White House Office of Management and Budget.  The Federal Reserve request is then included in the budget the President sends to Congress.     

Let’s think for a moment about how power can be exerted over people. When a person’s livelihood or even their existence is tied to how much money they earn and where they spend their money, then it becomes very important as to who has control of that money and ultimately a person’s life.  If you extend this to nations, that is control over huge groups of people.

We are not really free if we do not have freedom regarding how we handle our money.

The technology that has given us the internet and modern communications such as computers, phones and social media has opened up many other possibilities. Digital currency. 

Digital Currency is any currency that’s available in electronic form.  Electronic versions of currency already predominate most countries’ financial systems.  What differentiates digital currency from the electronic currency  that’s already in American bank accounts is that digital currency never takes physical form.  There are no banknotes or coins and transactions are nearly instantaneous.

There are three dangers to digital currency or digital money.  1) It is programable which means that it could only be spent on specific items or services.  For example: per a government’s rules, guns could not be purchased.  2)  It can expire.  In Canada when people were not vaccinated their bank accounts were frozen.  3)  It is centralized. Therefore, it is in control of the government which means that it is basically a surveillance tool.

We are all used to having electronic balances in our checking accounts.  On March 9, 2022 President Biden issued a sweeping executive order directing a laundry list of government agencies to develop a detailed plan to study the potential creation of a central bank money  (CBDC) for the United States.  If this is done, it would be the first time in a century that the United States has released a different form of currency.  The Federal Reserve (our Central Bank) plans to study the idea of launching a United States digital currency.  The Fed released a detailed report about digital currencies early in 2022 that served as “the first step in a public discussion between the Federal Reserve and stakeholders about central bank digital currencies.”  Central bank digital currencies are similar except the liability is on the central bank rather than the developer of a specific crypto currency.  On November 15, 2022 the Federal Reserve announced they are now testing the “Digital Dollar.”  They will be joined by major banks like Citigroup, HSBC, Mastercard and Wells Fargo.  Banks have been tracking paper currency since 9/11. Imagine how much easier it will be to track digital currency.  Banks already are required to  question cash withdrawals of $10,000 or more and report it to the government.

The Digital Dollar is really a block chain programmable currency and potentially puts all your money and financial transactions in the purview of the government.  The danger is in the fact that your actions and thoughts will determine your permission to use the programable currency.  The government will be able to know what is in your account and what you buy.  Per the example of what happened in Canada the government will be able to limit what you purchase and the causes that you support. If the government doesn’t approve, it can take everything away with the click of a button. National and international payment systems would be strengthened with the potential of lowering transaction costs.  The “unbanked” could access the financial system by means of a direct account with the central bank. 

Many experts warn that present day digital currencies are extremely vulnerable to theft, scams and illegal trade.  Money that is turned into nothing more than a computer code is very easy to steal.

Some experts also warn that a digital dollar would be similar to our existing print currency.  The Federal Reserve would continue to set policies and interest rates tied to the currency.  People would be able to pay vendors using their bank accounts and credit and debit cards.  However, a digital dollar would not exist in print form.  Once the transition to digital dollars is complete, a person may be unable to go to the bank or to an ATM and withdraw physical cash out of an account that contains your digital currency.  Government plans are unknown.

The concept of a central bank has drawbacks.  If this system became widespread central banks would have unprecedented power over the financial system.  Unless significant safeguards were utilized, virtually all transactions would become public record.  Realistically, there would be no financial privacy.  Since this currency would be a liability of the Federal Reserve, the Federal Reserve could place conditions on its use to push users in the direction that the Federal Reserve wanted. 

The Federal Reserve is already involved in pushing the latest bright ideas including social and environmental policy.  It is pushing initiatives to support economic “equity” and is quietly pressuring banks to disclose their plans for mitigating climate-change risk.  Just think of all the other “woke” (aware of and actively attentive to important facts and issues – especially issues of racial and social justice- and identified as U.S. slang) agenda items that could be pushed by a central bank digital currency.  As a note, China is a major economy that has made the most steps toward a central bank digital currency. Is it possible that China could use this technology to monitor the economic activity of citizens much more closely?

Some examples of digital currency include crypto currency, virtual currency, central bank digital currency and e-Cash (a system to transfer money anonymously).

A Cryptocurrency is a digital, encrypted and decentralized medium of exchange. (examples are bitcoin, tether, ethereum)  Unlike the U.S. dollar or the Euro, there is no central authority that manages and maintains the value of a cryptocurrency.  These tasks are broadly distributed among a cryptocurrency’s users via the internet.  Currently, there are over 12,000 cryptocurrencies with more being added every month.

Virtual Currency or Virtual Money is a digital currency that is largely unregulated, issued and usually controlled by its developer and used and accepted electronically among the members of a specific virtual community.

Crypto Currencies are extremely volatile and lack government backing.  Electronic Currencies overcome these concerns while using the same underlying distributed ledger technology of Crypto Currency.  Governments recognize Crypto Bank Digital Currencies as legal tender in the issuing banks’ jurisdiction meaning anyone can use them for payments and every merchant must accept them. 

Our technology brings with it specific benefits and convenience.  It also brings the danger of much closer control of people everywhere.  Dictator states such as China already use technology as a way to control the population.  Getting access to a person’s finances is one of the best ways to control a person.  How about having knowledge of the entire country’s finances?  Talk about control!

There are many forces in the world today aimed at restricting or taking away individual freedom.

Many of these forces are subtle and happen without people understanding what is happening.

The Digital Dollar is a force that will look harmless to many people.  This is why there must be education about this issue.

WHAT IS THE BOTTOM LINE OF THIS ARTICLE?

BOTTOM LINE:  IF THE GOVERNMENT COMPLETELY REPLACES PHYSICAL CURRENCY THE GOVERNMENT WILL BE ABLE TO FOLLOW AND  KNOW EVERY ASPECT OF YOUR FINANCIAL LIFE.