Might Central Banks Replace/Eliminate Private Banks using Digital Coins?
Former hedge fund operator, current co-founder and CEO of RealVision, Raoul Pal, lays out his vision of how Central Banks can (will?) use Central-Bank-denominated stablecoins to incentivize behavior at the granular level, and perhaps cut out banks as middlemen.
The question to consider: As (not “if,” but “as”) Central Banks create digital accounts for every citizen, why are private banks or financial institutions even necessary? Inherent in that line of thinking is the question whether, going forward, there is any distinction between fiscal and monetary policy.
Nathaniel Whitmore (NLW), former entrepreneur, now host of the podcast “Breakdown,” sets up the topic.
You need to know —
Stable coin: a digital coin that trades one-for-one with a fiat currency. Ex: USDC is a US dollar token; it represents one US dollar, is backed by that dollar, and can be exchanged for one dollar on any exchange that lists it.
Relevant portions of this interview:
Link picks up at 17:14: https://youtu.be/T1dfNEWgxwo?t=1034
Core concept runs to 22:51
For concept partly fleshed out, watch to 28:53
For thoughts about geopolitical implications, watch to 30:48
Dear Lord, no!!! Unfortunately I think they are going to use this opportunity to go for it. You think to have no privacy now? Wait until we get our own “social credit score” system like China. Well there VT we can see from your financial records that you have been buying what we consider to be an excessive amount of adult beverages. So, we will not allow you to buy adult beverages for the next few weeks. remember, it is for your own good…
no chance of abuse in this new system right?
@Mysterymet: Please don’t think I like this likely development. On the contrary, I think we need to recognize the dangers if we’re to equip ourselves for them.
One reason I’m a big fan of Bitcoin is because of its potential as an antidote or alternative to State digital currencies. Bitcoin is the one system with no central control, hence no easy “pinch point.” It is already used in China as a way to work around – at least partially – the social credit system of that totalitarian government.
Lynette Zang has had a number of interviews over the past 4-6 weeks on this topic. From her website:
EDIT: Adding list of related links
Palisade Radio 8/29/20 Lynette Zang: The currency reset is here
Lynette discusses how the Fed has been unable to hit their 2% inflation target, but she says, “The Fed is getting prepared because they expect to lose control of inflation soon.” The Fed plans to quietly introduce a cashless system with an 18 step plan early in 2021. This new system will enable the Fed to deposit money directly and will give them absolute control of their policies. This coming UBI stimulus scheme will be the fuel that starts hyperinflation fire since we are a consumer-driven economy; they have to get us to consume. This pandemic crisis is very convenient for central bankers as it provides an excuse for all the systemic problems. The data shows that this is a lie since numerous indicators were foretelling a recession. The fiat monetary system today is a con game. A reset of the financial system is coming, but quite likely, only sovereign debts will be forgiven, not individuals. We should be prepared for the worst-case since, during resets, currencies usually get adjusted several times before the process is over. Those countries with gold (ie, not Canada) will be in a much better position during a financial reset. Gold is severely undervalued today and heavily leveraged in paper equivalents on exchanges like the Comex. Futures traders are now standing for delivery, and these exchanges are running out. When they no longer have the physical gold, we will see fireworks. Time Stamp References: 0:40 – Thoughts on the Fed annoucement. 2:45 – Moving to a cashless system. 15:00 – Blame it on the pandemic. 21:25 – Fiat by decree and inflation. 25:20 – Currency reset predictions. 32:40 – Why Canada will be in trouble. 40:30 – Money velocity and savings. 41:50 – Revaluing currency against gold. 46:10 – ITM Trading.
FedNow from the Federal Reserve website: https://www.frbservices.org/financial-services/fednow/what-is-fednow.html
Senate “Banking for All Act” bill, full text: https://www.banking.senate.gov/imo/media/doc/SIL20449.pdf
Breaking Through the Zero Lower Bound, 2015 IMF Working Paper https://www.imf.org/external/pubs/ft/wp/2015/wp15224.pdf
The Digital Dollar Project: Exploring a US CBDC, May 2020: https://static1.squarespace.com/static/5e16627eb901b656f2c174ca/t/5ecfc542da96fb2d2d5b5f15/1590674759958/Digital-Dollar-Project-Whitepaper_vF.pdf
WEF Great Reset: https://www.weforum.org/great-reset
Digital Dollar Project: https://www.digitaldollarproject.org/
BIS 2018 paper on cryptocurrencies: https://www.bis.org/publ/arpdf/ar2018e5.pdf
Central Bank Digital Currencies are very likely coming. They are too tempting a tool for governments to not implement. They combine automated economic surveillance down to the penny with the ability to add/subtract funds from citizens’ accounts with a click of a button. Want 10% inflation? Click.
And they could get more fancy. Suppose they want to encourage spending but citizens are saving out of fear of upcoming unemployment. They could put an expiration date on the digital currency; after 90 days maybe 10% disappears. That would be a way for the central planning tyrants to push up velocity of money.
Want to leave the country? Maybe they freeze your account. Want to transfer funds over $10k? Maybe they put a hold on your account for “suspicious activity.”
This is a tremendous step away from political and economic freedom, but the “Banking for All Act” is before Congress right now.
And, if the dates are correct, they want all Americans to have an account in their name by Jan. 1.
My guess is they are trying to move quickly while folks are distracted. Put the infrastructure in place now and ASAP and under the radar.
It fits in with the idea of a cashless society as many central planners openly argue for.
No problem VT didn’t mean to imply that I thought you liked the idea. I could have easily used someone else for an example. Actually, the more likely example of how this would go down is the powers that be don’t like Chris and Adam talking to people about being resilient and demonetize their own personal site. I agree with you that bitcoin should help be some kind of power against it but I worry that once the powers that be decide to go after this whole heartedly they will make plans to go after bitcoin too. Maybe I am just wrapping my head a little too tightly in foil these days but some seriously strange stuff has gone down this year so I wouldn’t put anything past anyone at this point.