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Fedcoin Report Issued – Robert Aro

edcoin is inevitable. Yet many issues surround it while the Federal Reserve continues engaging the public and experts on this matter. The Board of Governors recently issued a report: Money and Payments: The U.S. Dollar in the Age of Digital Information detailing various ideas without definite conclusions.

It starts with the Executive Summary:

This paper is the first step in a public discussion between the Federal Reserve and stakeholders about central bank digital currencies (CBDCs). For the purpose of this paper, a CBDC is defined as a digital liability of a central bank that is widely available to the general public.

They don’t use the word Fedcoin; perhaps CBDC sounds more official. But they’re discussing a Federal Reserve cryptocurrency, created by the Fed functioning exactly like the dollar bills in your wallet.

One hurdle is the transmission process required to get the new coins into circulation. CBDC’s could simply be exchanged for existing dollars, or can used to expand the money supply through new loan arrangements directly to the public.

The potential expansion of the money supply, and the Fed gaining new powers by stepping into the commercial banking/government transferor/collection agency role, is most concerning if not completely terrifying. In the Fed’s own words:

A widely available CBDC would serve as a close—or, in the case of an interest-bearing CBDC, near-perfect—substitute for commercial bank money.

Consider the implications of an interest bearing CBDC. The Fed could grant Fedcoin loans at favorable rates to the entire country or only to those deemed most in need of funds. Consider if someone were to default on a CBDC loan. Would the Fed not be obligated to seize that person’s assets? This is hardly a conspiracy theory as default risk would be an eventuality of issuing Fedcoin loans if repayment of principal and interest is required.

Alternatively, forgivable Fedcoin loans could be granted; much like the Paycheck Protection Program, where, as of January 9, 2022, $680 billion in loans were forgiven across America.

In what could become the ultimate error in monetary policy, next time a financial crisis hits, Fedcoins could be deployed to stimulate demand, meaning citizens could receive an instantaneous stimulus check deposited into their bank account, courtesy of their neighborhood central bank.

A faint hope of averting disaster remains. Earlier this month, legislation was introduced by Congressman Tom Emmer (MN-R), who anticipated the trajectory of Fedcoin. He issued a bill prohibiting CBDC from being issued directly to individuals, saying:

It is important to note that the Fed does not, and should not, have the authority to offer retail bank accounts.

He also had concerns over the Fed having the ability to:

…collect personally identifiable information on users, and track their transactions indefinitely…

History provides many examples showing what the Fed can do as the lender of last resort. The continual boom and bust cycle, a dollar that can only decline in purchasing power, a country never more divided economically while facing a booming stock market are just some of the implications of central banking. A significant amount of economic destruction will be avoided if the Fed is not afforded the opportunity to become the lender of first resort.

For one of the most powerful institutions on the planet, Fedcoin is an idea that Marx himself could only dream of when he asked for:

Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.

Concerned citizens may want to alert their state representatives to the potential dangers a CBDC poses, including privacy concerns while having the Fed compete against commercial banks. Additionally, you can fill out the Fed’s feedback form on the matter here. Even if they don’t take your feedback seriously, at least your comments will be made available for public viewing!

THIS ARTICLE ORIGINALLY POSTED HERE.

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