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A friend and colleague of mine, Molly Elmore, wrote an intersting thread above demonstrating why America may move to a Central Bank Digital Currency. Although compelling, there were some points where I disagreed and required further conversation. Below is an expansion to my response thread on some of the points that were made, and why the Fed will not allow a CBDC at the retail level to be implemented for the sake of preserving the banks and the credibility of the American financial system.
Molly makes the argument that the dollar will lose value as the petrodollar comes to an end, and that America could make the dollar more valuable via a CBDC as a solution to solve for hyper inflation. That’s assuming the most powerful lobbying firm in the world (the commercial banks who are the shareholders of the Fed), would willingly give up their control and be proponents for a policy of Modern Monetary Theory. This will not happen. The Fed is doing everything in its might to regain its credibility. A policy calling for more easy money and destroying it’s shareholders’ existence is a sure way to make the markets lose confidence in the American financial system.
Yes, the need to settle oil transaction in dollars has given the dollar value for decades. However, recently the dollar has been more valuable than usual due to the global economy being “biblically short dollars” as TL likes to put it. I’m not sure a CBDC would make the dollar more valuable overnight. This has been due to the Fed’s policy of tightening via raising rates and sucking dollars into Reverse Repo Facilities. What would give the dollar even more value and prevent the hyper inflationary scenario is if the US follows the steps of Russia and China and enable a commodity-backed currency.
The US WILL ALSO be incentivized to remonetize gold to 50/100 year treasury coupons. They may even build their new monetary system on top of Bitcoin as hinted in multiple Fed papers. The Fed’s policy doesn’t align with the Davos-backed ethos of a CBDC or MMT. That’s a desire and demand from Congress (Davos). The Fed is controlling Davos’s purse by removing dollars from the economy and destroying the liquidity of the offshore dollar market. Plus, Davos believes central banks should dictate their monetary policy around climate change, which Powell and the banks have resoundingly said “no” to.
Powell has said the dollar is already “digital” and that there is no real need for a CBDC at the retail level. Overall, you don’t need a blockchain to do a CBDC in the first place, and it would just make the process less efficient (more so than it is now). This is what the ripple people get caught up on. They think the adoption of Ripple/XRP to replace SWIFT is a win for them, when in reality it’s a regulatory honey pot by the global commies backed by Davos. Moreover, ripple is anything but “sound money.” It is centrally controlled and can be inflated at will by the issuer.
This is why the Fed will ultimately build their new monetary plumbing in top of #Bitcoin to preserve credibility via the most (and only) decentralized/secure crypto asset in existence. Hints of this are seen via multiple Fed papers from this year.
Exhibit A: The Lightning Network: Turning Bitcoin into Money via @federalreserve bank of Cleveland (2022)
Exhibit B: (updated 2021)
https://research.stlouisfed.org/publications/review/2018/07/16/payment-systems-and-privacy
A retail CBDC ruins US financial credibility and ends the commercial banks by destroying the money transmission mechanism - AKA the creation of private capital via loans thanks to the banks. A CBDC being implemented in America would render them (and the Fed) completely useless. That is the desire of Davos; to destroy the flow of dollars throughout the world via the Fed. The WEF is going after Powell and his shareholders’ lunch. They’re not putting up with a Davosian CBDC, nor adding climate change as a central bank mandate. Just look at Jaime DImon standing up in front of congress saying these policies are paving “a road to hell for America.”
Powell doesn’t want to castrate his shareholders. If anything they’ll do a wholesale CBDC because their system is long overdue for a makeover/upgrade in efficiency. The Fed will not let this happen. Its shareholders are the banks. Similar to what BRICS is looking to implement, America will probably back the dollar to a basket of commodities before the hyperinflation occurred, or it’d at least be a step taken before even considering a CBDC. CBDC by default means MMT as the Fed’s monetary policy, which destroys the Fed and is what Davos wants. That’s not Powell’s nor the banks’ mandate.
Powell has also said publicly multiple times no to ESG and climate change. It’s not what these people say, it’s what they do. They have to play politics. They can’t say the quiet parts out loud…except for Dimon’s recent takedown on Rashida Tlaib saying the banks won’t be divesting from oil and gas companies.
Vice Fed Chair Brainard among others have said a Digital Dollar Would Take 5 Years to Launch. Generally when engineers give you a deadline like that, multiply it by about 3 or 5. So a CBDC would be as flawless as the Obamacare website in about 15 years. Additionally, Brainard says the project can only start once Congress and the White House sign off.
The bottom line is, I don’t see how the Fed would go along with implementing a CBDC without it devolving into fiscal, hyper inflationary chaos when they’ve clearly been working against global communist within Washington.
The goal of the Fed is to preserve its credibility. A CBDC would cause the opposite result. The Fed will not willing castrate itself by forfeiting its monetary transmission mechanism (the creation of private capital via commercial banking).
A RETAIL CBDC would mean the end of the creation of private capital via commercial banking/US sovereignty over monetary policy. Something the Fed is currently fighting to keep via raising rates/moving away from LIBOR to SOFR, and being America’s bank, not the globe’s. Despite and political pressure the banks and the Fed face, they are the ones in control of the purse strings of the global communists out of Davos and will stand tall to protect their industry, the creation of private capital, and the preservation of American capitalism.
State of Bitcoin podcast with Phil Gibson
Have a great week everyone,
Brandon & Phil
Follow Phil Gibson on twitter at @MrPseu, subscribe to his free newsletter and check out his podcast on @BitcoinSimply. For business inquiries for Phil, email him at heyQPOL@gmail.com.
Disclosure: The article was written by Brandon Keys or the occasional guest writer, and it expresses the author's own opinions. I am not receiving compensation for it. I have no business relationships with any company whose stock is mentioned in this article. The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock. Brandon is not a financial advisor. I encourage all readers to do further research and do your own due diligence before making any investments.