Central bank digital currencies (CBDCs) are coming. China already has a large-scale trial of their digital currency. European officials want to launch a digital euro in less than two years. And President Biden signed an executive order encouraging the Federal Reserve to study its feasibility.
Two years ago, I wrote about the prospect of digital currencies because Chuck Bentley wrote about it in his book, Seven Gray Swans. He expressed the concern that moving to a cashless society would cause us to lose privacy when every transaction can be tracked.
One critic (as a former boxer) warns that many of the issues we deal with daily are merely jabs that distract us from an opponent setting you up for a devastating power punch. He sees these CBDCs as the power punch.
Every transaction could be tracked by the government. It would know even more about you, your family, your clients, and your charities. Although some critics fear we would lose our privacy, I fear a greater issue. If the government controlled your money, the government could turn off your money if those in power disagreed with your financial decisions.
Proponents believe CBDCs would give central banks a new opportunity for monetary policy. It would be easier, they say, to undertake “helicopter drops of money.” But they also add that it would be possible to implement negative interest rates by shrinking balances in CBDC accounts. That is bureaucratic speak for taking money out of your account.
If you think none of this could happen, then have a conversation with one of the truckers in Canada who could no longer access his bank account. That is what the government did even before we had CDBCs. Imagine what the government can do with them.