From the White House website:
President Biden often summarizes his vision for America in one word: Possibilities. A “digital dollar” may seem far-fetched, but modern technology could make it a real possibility.
A United States central bank digital currency (CBDC) would be a digital form of the U.S. dollar. While the U.S. has not yet decided whether it will pursue a CBDC, the U.S. has been closely examining the implications of, and options for, issuing a CBDC. If the U.S. pursued a CBDC, there could be many possible benefits, such as facilitating efficient and low-cost transactions, fostering greater access to the financial system, boosting economic growth, and supporting the continued centrality of the U.S. within the international financial system. However, a U.S. CBDC could also introduce a variety of risks, as it might affect everything ranging from the stability of the financial system to the protection of sensitive data.
To be fair, these remarks by Dr. Alondra Nelson, head of the White House Office of Science and Technology Policy, Alexander Macgillivray, Principal Deputy United States Chief Technology Officer, and Nik Marda, Policy Advisor do acknowledge the existence of risks:
For example, these objectives state that a U.S. CBDC system should expand equitable access to the financial system, preserve the role of physical cash, and only collect data that is strictly necessary.
Given the record of the FBI, the CIA and the NSA, I would put very little faith in their definition of “strictly necessary” as a shield against the US government spying on its citizens.
I know 1984 was supposed to be a warning, not a hot-to manual, but who would think the same could have been said about Cyberpunk novels?
I don’t use my phone to pay for things, or access my bank account, or for any other financial transactions. I’m not inclined to start; it doesn’t seem secure.
I stopped at three sandwich takeouts on Friday. The first two no longer take cash. (In Minneapolis, cash in a drawer is not smart, I guess.) If you want to pay, you hold your phone up to their reader, and whichever payment app you’re on displays some bar-code symbol and payment is made. (I think. I don’t do that.)
I chose not to participate, and found the third place that took cash. But what happens when I can’t find that option? It’s not going to be our own choice, if we want to buy something.
When I go to PNC Park to watch the Pirates lose, they no longer take cash at all. It’s either break out the card or phone if I want anything to eat or drink. It was begun because of COVID but it’s never going away.
We don’t need the government to implement a cash-free economy when our corporate masters and the banks do it for them.
@ bobby b – I have noticed this trend also, and I also choose not to participate. I’ve found two things i) you can simply look ’em in the eye and say ‘I have plenty of cash to pay for my (sandwich, coffee, whatever)’ – this works best at places where you pay after they have made your order. It’s surprising how frequently one finds that they do, after all, accept cash – I’ve also scored more than one free sandwich this way. Threats to ‘call the cops!’ are easily diverted with the riposte ‘Go ahead. I’ll wait, and show them the cash I’m offering you and you turning it away. Read what it says on every dollar bill. You can’t accuse me of trying to bilk you when I’m standing here offering you legal tender’. Works like a charm. ii) the ‘we don’t take cash’ places around here tend to be the corporate chains, staffed by functional morons who work off a script. This has driven me to a couple of locally-owned-and-operated joints that a) make a better product and b) happily take cash money. Dom Bakery, Bagels and Bites, Crust, and All Like That. They’ll be taking cash at the Last Trump. The only issue they have is making change, but a certain – flexibility – in that regard is a small price to pay.
llater,
llamas
We already have digital currency so why do we need a US digital currency? Well obviously because they don’t like the fact that they have little control over current digital currencies and want to use this thing — which was designed to take away control from central banks — to have even more control.
FWIW, Etherium, the second largest digital currency after BTC, just made a HUGE change in the way it works (called “the Merge”). I am not an expert in block chain but I have to say, I am not a fan. The way digital currencies work is that they maintain a ledger of who owns what, that is distributed over many computer nodes, and designed with mechanisms to keep it in sync and accurate. When you want to make a change to the ledger you hire a worker process to do some complex and expensive calculation to prove that the change is valid. This is a HIGHLY distributed process called “proof of work”. There is a market place of these workers that is very much a pure free market with bidding on the jobs all happening automatically.
The change to Etherium is to a “proof of stake” which is to say now you can make a change to the ledger based on certain validators who say that it is ok. Their right to do so is based on the fact that they already have a large amount of Etherium and so have a “stake” in the validity of the ledger. So this is essentially a move from a highly distributed system to one where authority derives from a few very rich organizations. And needless to say, were, for example, the US government to buy a large amount of Etherium, they would become the dominant validator. (People who have more expertise in the technical details please feel free to correct my ham handed attempt to explain or correct my unfounded fears.)
This does not seem a step in the right direction.
Oh, and FWIW, the motivation for the change comes from the fact that “proof of stake” takes vastly less computing time, and consequently electricity, than “proof of work”, which is to say they made the change to satisfy the climate change crowd. And that, surely, is never going to be a good thing.
No more Etherium for me.
In capitalist America, you watch your cash flow.
In Soviet America, your cash flow watches you.
How do “digital dollars” work when there is no electricity
@llamas: When I encounter it, it’s always some counter worker who looks about 13, and when I suggest that I might prefer to pay with cash, they always get this look of (honest) wonderment and ask “why?”
And if they truly don’t know, then if I want to eat lunch before it’s dinner time, I should just move on and not try to educate them. It would have to be a seminar. Nobody’s sandwich is that good.
@Fraser Orr: I remember long ago when it was sold on its privacy protections. People stopped talking about that. Is that because it’s really not private at all – that everyone can know what and where you spend?
@bobby b
I remember long ago when it was sold on its privacy protections. People stopped talking about that. Is that because it’s really not private at all – that everyone can know what and where you spend?
Crypto offers several advantages. It is certainly possible to do things anonymously, although you can trace who owns something you cannot necessarily determine who that owner is as a person, only their name within the system, and you own that name by virtue of having the appropriate cryptographic keys. Right now there is a big ongoing court case as to who is Satoshi Nakamoto, the originator of bitcoin, nobody knows and, for various reasons nobody can prove they are him.
however, the US Government has interfered and now US citizens and coin markets usually collect identifying information. This isn’t generally true overseas, it is just another way American are considerably disadvantaged in world banking (it is, for example, extremely difficult for an American citizen to open a bank account in a foreign country because of the massive regulatory burden it involves — the US treasury uses its bullying power to even mess with banks with no affiliation with the US.) It is possible to use mixers — basically what that is is you use a company where you given them your crypto and it gets mixed up with lots of other peoples in a non logged way, so that it isn’t possible to trace your crypto purchase through to the eventual recipient. However, I hear these guys are getting sued by the feds to for facilitating money laundering. So I’m not really sure on the status of that.
I think if you try really hard you can remain anonymous, but there is a fair chance, assuming you were American, that you’d be breaking some new law or regulation to do it.
The main bonus of crypto is that the government can’t print more of it, so governments aren’t constantly diluting it and stealing your money. However, due to the next issue this may be moot. The main disadvantage is that it isn’t widely accepted for purchase enough to be a “currency”, something that leads to its extreme volatility. Governments around the world see the danger and are trying everything they can to crush it, but so far it is still surviving.
It is also a pretty convenient, quick and cheap way to move money around, but there money only stays in crypto for a short time.
Excuse the ignorant question – I just don’t know this process – but is this “complex and expensive calculation” what they call “mining”? Or is that a different “complex and expensive calculation”?
It seems to me that all of the actual value within a given bitcoin system has been generated by the use of computing electricity. Maybe bitcoin is actually the ultimate battery storage device – run $1 million in electricity into the system and end up with $1 million of value.
The Congress (not Mr Biden) has the power to “coin money” (Article One, Section Eight) not to print it – otherwise the “not worth a Continental” Continental paper money of the old Continental Congress could have continued and there would have been no need to call a Constitutional Convention in the first place – the taxes the new government could collect were only tolerated as the price for ending any “need” for fiat (command-whim) money.
No State may have anything other than gold or silver coin a tender in payment of debts (Article One, Section Ten) and so even if paper money (let alone computer money) was Constitutional in D.C. (it is not – see above) it would not be Constitutional outside the ten square miles of the Federal Capital.
The Tenth Amendment should settle the matter – compulsory paper money (money that can be used to pay taxes or a tender in payment of debts) is not Constitutional – whatever corrupt court judgements may say.
Nor are the corrupt Supreme Court judgements – the contracts (public and private) that specified payment in physical gold, were only voided by the two infamous “gold clause” judgements of the Supreme Court in 1935.
The idea that the United States could not have become an advanced country without fiat money and Credit Bubble banking, is a lie. When my own father was born (February 1913) there was no fiat money in the United States – yet it was the most advanced country on Earth. And American banks had a higher (higher – not lower) gold to loans ratio of any nation on Earth.
Mr Morgan was wildly denounced as a crook – but he had, before the creation of the accursed Federal Reserve, one ounce of physical gold for every three ounces of loans in his leather-bound account books (account books being the computers records of the day).
I doubt any English banker (let alone German or other banker) could have said as much.
A scam artist perhaps – but one who was still very much connected to physical reality.
Unlike Wall Street today – which is just madness, screaming insanity.
It is interesting that what they, the international establishment, denounce as “paranoid conspiracy theories” they, only a few years later, openly come out with.
The evil of digital fiat currency being the latest example.
Those who push this evil (the puppet masters of such creatures as Mr Biden) know that it is evil – they revel in its evil.
When asked for something I refuse to provide (digital cash, ID, etc.), I simply play the disabled card since I’m deaf and offer cash from a wallet but nothing else (all my cards and ID are tucked away in my phone wallet in my inner jacket pocket)
Thanks to the Disability Rights behamoth this seems to trump most corporate policies including not accepting legal tender, which is ridiculous.
Over here, IIUC – perhaps some Scots and/or English lawyer can confirm or correct me – both Bank of England notes and Royal Mint coins are legal tender in England and Wales, but in Scotland only Royal Mint coins are legal tender. In both, the courts will regard payment in legal tender as fully discharging a debt.
So, while any Scots establishment can legally refuse cards, either wholly or for small transactions, I believe that I can legally insist that any Scots establishment accept payment in legal tender – but only if I have coin to the required amount.
That said, it’s a pretty safe guess that a Scots cashier (even if a nat – maybe especially if a nat) does not know it’s legal to refuse Scottish banknotes 🙂 – and up here, your wallet likely has more of those than English ones.
Which is why (among other reasons) I withdraw cash from HSBC in Perth High Street, because they issue UK pound notes rather than Scottish ones. Mostly my rationale is that I do occasionally visit Englandshire and don’t want to have the faf of dealing with English objections to Scottish notes (which are reasonable), but the legal tender aspect adds a frisson to the equation.
It should be remembered that we have had “digital money” for decades.
Most “money” is now just lights on the computer screens of governments and banks – lights that can be turned off on the order of the powerful.
These proposed changes are just about making the process of tyranny easier – the principle was established long ago.
In the United States it was established in 1935 when the Supreme Court ruled (by five votes to four) that the gold clauses in all public and private contracts could be voided at the whim of the government and its friends.
If they can do that to gold clauses – they can do that to any form of contract (any private property right), in which case the principle of tyranny is established.
The Dissenting Justices pointed this out – that the principle of tyranny had been established by these criminal (oath breaking) judgements, that everything else was just a matter of time.
The United Kingdom?
“I promise to pay the bearer….” has been a lie since 1931. Even before 1914 the Bank of England pushed far more notes than it had gold.
And, again, most money here is not even token notes and coins – it is mostly (already) just lights on the computer screens of governments and bankers, which can be changed (or turned off) by order.
@Niall Kilmartin (Stirling)
Over here, IIUC – perhaps some Scots and/or English lawyer can confirm or correct me – both Bank of England notes and Royal Mint coins are legal tender in England and Wales, but in Scotland only Royal Mint coins are legal tender. In both, the courts will regard payment in legal tender as fully discharging a debt.
When you used the phrase “legal tender” I was reminded of a comedy skit that I thought was hilarious, so I looked it up. I think Scottish people can totally relate.