Central Bank Digital Currencies (CBDCs) are on the horizon and they are arriving sooner than many realize. Are you prepared for this significant change?
Currently, around 90 central banks, including prominent institutions like the European Central Bank and the Federal Reserve, are either piloting or actively developing CBDCs. Notably, all G20 nations are included in this trend, which collectively accounts for over 90% of global GDP.
Understanding the implications of adopting a CBDC is crucial, as it would likely coincide with the phase-out of cash. This transition would presumably be in the interest of minimizing illicit activities and the black market.
If you cherish financial privacy and the freedom to use your money as you wish, the imminent introduction of CBDCs should raise alarms. The mandatory utilization of a CBDC, like a digital dollar, would afford central planners sweeping oversight over your financial transactions.
In a CBDC-dominated environment devoid of cash, every transaction you make would fall under government scrutiny. The very essence of financial freedom, privacy, and anonymity would be obliterated. But there’s more at stake…
CBDCs would empower authority figures to do much more than just monitor your financial activities. They would possess the capability to dictate how and when you can spend your money.
This concept may seem far-fetched to those who value personal integrity and modesty. Nonetheless, it reflects a core objective of CBDCs. Years ago, Agustin Carstens, the General Manager of the Bank for International Settlements, emphasized the extensive control that CBDCs would grant to central authorities. Here’s how he put it:
“There is a huge difference [between CBDC and cash]. For example, with cash we don’t know who’s using a 100 dollar bill today. We don’t know who’s using a 1,000 peso bill today. A key difference with the CBDC is the central bank will have absolute control under rules and regulations that will determine the use of that expression of central bank liability, and we will have the technology to enforce that.”
Do you grasp the implications? The aim of central planners is to achieve total control over your spending.
Traceable and Programmable
On March 9, the Biden administration issued an executive order (EO) requiring numerous federal agencies to explore digital currencies and determine regulatory strategies. A significant portion of this EO concentrates on blockchain-based cryptocurrencies such as Bitcoin and Ethereum.
Importantly, the EO also instructs federal entities and the Federal Reserve to establish the groundwork for a potential new U.S. currency—a CBDC, potentially a digital dollar.
Specifically, the EO mandates the U.S. Treasury and other agencies to evaluate the creation of the new CBDC and provide findings on potential risks and benefits within 180 days. Additionally, the EO directs the Treasury, the Office of the Attorney General, and the Federal Reserve to develop a legislative proposal for a digital currency within 210 days, roughly seven months.
The digital dollar is on the way, and it’s arriving quickly.
It’s important to recognize that the establishment of a digital dollar, as envisioned by Biden, would represent a significant increase in federal power. This digital dollar would differ substantially from a mere digital version of the current U.S. dollar and from decentralized cryptocurrencies like Bitcoin and Ethereum.
Digital dollars would be traceable and programmable. Government agencies, including the Federal Reserve, could generate digital dollars at will, and these dollars could be embedded with various rules and limitations regarding their usage.
Earlier this year, the Federal Reserve published a report detailing potential designs for a CBDC. The Fed noted that “a central bank might limit the amount of CBDC an end user could hold.”
Biden’s EO concerning the digital dollar also includes design elements geared toward granting the federal government comprehensive control over economic freedom and financial systems. The EO indicates that the CBDC and related digital asset policies must address “climate change and pollution” while promoting “financial inclusion and equity.” This is a focal point.
From this, one might surmise that “financial inclusion and equity” implies wealth redistribution, while “climate change mitigation” indicates restrictions on fossil fuel consumption. These and other governmental directives, such as direct withdrawals for taxes and fees from your account, could be coded into the digital dollar.
But why is this happening now?
Blowback
Recent sanctions imposed by the U.S. and European Union against Russia—such as restricting Russian financial entities from accessing SWIFT and freezing the Russian Central Bank’s foreign reserves—may result in unintended consequences. The potential backlash is already manifesting.
Europe, which relies on Russia for approximately 40% of its natural gas, is beginning to face the repercussions. Reports indicate that Putin has mandated payments in rubles for Russian gas supplies starting April 1. Will Europe comply?
There are indications that some European countries are covertly purchasing rubles. The recent increase in the ruble’s value on the foreign exchange market to pre-invasion levels suggests that something is in the works.
Regardless, the U.S. is losing its grip on the global financial and payment systems. By pushing Russia out of SWIFT, Putin is compelled to seek alternatives. Specifically, China has been developing its own Cross-Border Interbank Payment System (CIPS) as a substitute for SWIFT.
These sanctions might hasten the adoption of CIPS by those countries opposed to Western dominance. Additionally, cryptocurrencies and blockchain technologies offer banks and individuals ways to facilitate transactions without relying on dollars or SWIFT.
Ironically, the very success of Western nations’ sanctions is driving Russia and other nations toward alternative systems. As a result, diminished international transactions in dollars could threaten the dollar’s status as the world’s reserve currency, leading to severe implications for the U.S. economy, including a potential devaluation.
In the U.S., consumer price inflation (officially) has reached a 40-year high. Unofficially, it has surged to levels not seen in over a century.
Considering the ongoing financial conflict, soaring consumer price inflation, a $30 trillion national debt, trillion-dollar deficits, and unfunded liabilities amounting to hundreds of trillions, some shift is inevitable…
…specifically regarding the U.S. dollar.
Countdown to U.S. Government Default
A common misconception in America is that the government has never defaulted on its debts. Frankly, this is far from the truth. In fact, the U.S. government has unofficially defaulted on its obligations twice in the past century.
Executive Order 6102, enacted in 1933, compelled American citizens to surrender gold coins and bars, effectively representing a default. For the next 40 years, ownership of gold in the U.S. was largely illegal.
Under EO 6102, Americans received $20.67 per troy ounce of gold—paid in paper dollars. Shortly after this confiscation, the Gold Reserve Act of 1934 raised the price of gold to $35 per ounce, thereby robbing American citizens of over 40% of their wealth.
The second instance of default occurred in 1971 when President Nixon “temporarily” halted the convertibility of the dollar into gold.
Before 1971, a foreign bank could exchange $35 for one troy ounce of gold according to the Bretton Woods international monetary system, established in July 1944. Post-1971, however, foreign banks offering the U.S. Treasury $35 received only $35 in return, with no gold backing.
In both scenarios, the U.S. government did not openly default but rather altered the fundamental terms and conditions associated with the dollar. By all reasonable evaluations, these instances constitute defaults.
Similarly, the introduction of a digital dollar (a CBDC created by the Federal Reserve) while being traceable and programmable, effectively changes the terms and conditions of the existing cash dollar.
This is indeed a default, and it is one you will not appreciate.
Furthermore, according to Biden’s EO, this default could materialize as early as 210 days from March 9—structuring a timeline toward October 4th.
If that doesn’t fill you with concern, we don’t know what will.
[Editor’s note: The opportunity to safeguard your wealth and financial privacy is swiftly closing. I find this situation alarming, but I refuse to remain passive while Washington’s regulation-hungry officials threaten everything I’ve worked so hard to achieve. For this reason, I have invested the last six months researching and identifying straightforward, actionable steps that everyday Americans can follow to protect their wealth and financial privacy. The insights from my findings are compiled in the Financial First Aid Kit. If you’d like to learn more about this vital publication and how to obtain a copy, visit here today!]
Sincerely,
MN Gordon
for Economic Prism
Return from Countdown to U.S. Government Default to Economic Prism
