The interconnectedness of personal, political, and economic freedoms is undeniable. Economic liberty thrives in an environment where transactions occur with honest money that is free from coercion. Recent developments regarding digital currencies raise important questions about the future of this freedom.
Throughout American history, the evolution of money has been documented extensively. Here, we highlight several pivotal moments.
Article I, Section 8 of the U.S. Constitution grants Congress the authority to coin money and regulate its value. Meanwhile, Article I, Section 10 prohibits states from making anything other than gold and silver coin a legal tender for debt payments.
Passed by the 63rd Congress and signed into law by President Woodrow Wilson on December 23, 1913, the Federal Reserve Act established the Federal Reserve System as the central bank of the United States. This act transferred the authority to issue money from Congress to the Federal Reserve.
Consequently, the current U.S. dollar, recognized as a Federal Reserve Note, can be viewed as illegal money because it is issued by the Federal Reserve, not by Congress, thus contravening the Constitution. Additionally, when states collect taxes in a currency that lacks backing by gold or silver, they violate constitutional mandates.
Over the years, Washington has significantly undermined economic freedom. For instance, Executive Order 6102, enacted in 1933, compelled American citizens to surrender their gold coins and bars. As a result, ownership of gold became illegal in the U.S. for nearly four decades.
The attack on economic freedom continued when President Nixon suspended the convertibility of the dollar into gold in 1971. This eliminated the last vestige of protection for workers and savers against the inflation of their hard-earned dollars.
As we approach the end of 2022, another potentially damaging shift looms on the horizon…
Proof of Concept Project
Over the past 110 years, economic freedom in the United States and globally has been on a downward trajectory. Through a continuous process of debasement, the Federal Reserve has eroded 96 percent of the dollar’s value.
To put it succinctly, today, it takes $1 to purchase what $0.04 could buy back in 1913. This reality is deeply concerning.
Despite this decline, the paper dollar still offered some semblance of economic freedom. Cash transactions provided a level of privacy that made it difficult for the government to easily trace purchases.
However, this may soon change…
Have you heard of the New York Innovation Center? On November 15, the Federal Reserve Bank of New York released a significant press release. A key excerpt states:
“The Federal Reserve Bank of New York today announced that its New York Innovation Center (NYIC) will participate in a proof-of-concept project to explore the feasibility of an interoperable network of central bank wholesale digital money and commercial bank digital money operating on a shared multi-entity distributed ledger.”
“This U.S. proof-of-concept project is experimenting with the concept of a regulated liability network. It will test the technical feasibility, legal viability, and business applicability of distributed ledger technology to settle the liabilities of regulated financial institutions through the transfer of central bank liabilities.”
This clearly indicates a critical step in the Federal Reserve’s attempt to implement a Central Bank Digital Currency (CBDC). The project aims to outline how the Fed plans to collaborate with actual banks to launch a digital dollar, ultimately replacing physical currency and compromising the privacy of cash transactions.
Traceable and Programmable
David Haggith, publisher and editor-in-chief of The Great Recession Blog, has been tracking the rapid emergence of CBDCs and digital dollars for years. Recently, he provided insights on the implications of this transition, emphasizing:
“We’re on the brink of a dramatic change where we’re about to — and I’ll say this boldly — we’re about to abandon the traditional system of money and accounting and introduce a new one…. The new accounting is what we call ‘blockchain.’ It means digital. It means having an almost perfect record of every single transaction that happens in the economy, which will give us far greater clarity over what’s going on…. It also raises huge dangers in terms of the balance of power between states and citizens.”
It is crucial to recognize that the U.S. government’s adoption of a digital dollar would represent one of the largest expansions of federal authority in history. Furthermore, this digital dollar would differ significantly from decentralized cryptocurrencies like Bitcoin, which have limitations on supply.
The essential difference lies in the fact that Federal Reserve issued digital dollars would be traceable, programmable, and integrated with the Federal Reserve and private banking systems. Specifically, these digital dollars could be programmed with specific rules and restrictions regarding how and when they can be spent.
The executive order issued by the Biden administration on March 9 mandated various federal agencies to assess digital currencies and explore regulatory measures, with suggestions that CBDCs and policies governing digital assets should address “climate change and pollution” and strive for “financial inclusion and equity.”
What does this actually entail?
At the World Economic Forum (WEF) earlier this year, one enthusiastic planner stated with clarity that the aim of traceable and programmable CBDCs is to monitor, “where you are traveling, how you are traveling, what you are eating, what you are consuming – individual carbon footprint tracker.”
Will Your State Reject the Fed’s Digital Dollar?
Currently, U.S. government debt has surpassed $31 trillion. When considering unfunded liabilities such as Social Security, Medicare, and other federal debts, the total rises to over $172 trillion.
Additionally, annual trillion-dollar deficits suggest that the government is borrowing to cover interest on its debt. At this juncture, it appears there is no viable way for Washington to repay this immense debt.
The monitoring capabilities of CBDCs are undoubtedly appealing to central planners and those seeking government control. Nevertheless, the urgency behind the Federal Reserve’s digital dollar initiative may stem from the need to obscure an impending default.
While your account might receive credits in digital dollars, these will likely come at a cost. The precise nature of this cost remains unclear, but it may correlate with the staggering levels of debt the government is responsible for.
In essence, this could be a desperate attempt by Washington to disguise a government default. If you haven’t secured physical gold and silver yet, now is the time to act. Visit your local coin shop and consider acquiring a few coins today.
As the NYIC develops plans for the digital dollar, several states are contemplating their own responses. Some may not favor a federally issued—traceable and programmable—digital dollar.
States like Utah, Nevada, Wyoming, and New Hampshire are already issuing “gold-backs,” which are privately issued notes backed by actual gold and recognized as legal tender.
In Tennessee, State Senator Frank Niceley is exploring the establishment of a Sovereign State Bank modeled after North Dakota’s model, potentially including a state bullion depository to provide support for local banks and credit unions against the encroachment of a Fed issued digital dollar.
While many details still need to be clarified, it’s encouraging to see state and local jurisdictions beginning to challenge Washington and the Federal Reserve. Developing gold-based alternatives to the digital dollar is a promising start.
Your economic, personal, and political freedoms hinge on these developments.
[Editor’s note: The opportunity to protect your wealth and financial autonomy is rapidly diminishing. As distressing as this may be, I refuse to remain idle while government overreach jeopardizes my hard-earned achievements. Over the past six months, I’ve dedicated my efforts to researching practical steps everyday Americans can take to safeguard their wealth and privacy. The insights I’ve gathered are compiled in the Financial First Aid Kit. If you’re interested in learning more about this essential publication and acquiring a copy, visit here today!]
Sincerely,
MN Gordon
for Economic Prism
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