Is the government about to destroy your financial freedom?

Well, you voted unanimously for the tinfoil, so it is tinfoil you shall receive.

Put on your hats ladies and gentlemen, we’ve got a deep hole to dive down today.

1. What is a conspiracy theory?

2. What is a CBDC?

3. This actually sounds pretty good for society.

4. What are the consequences?

I want to start with a little explanation about what makes a “Conspiracy Theory.”

There is obviously the textbook definition of “a theory that explains an event or set of circumstances as the result of a secret plot by usually powerful conspirators” as provided by Mirriam-Webster. Makes sense to me. But this has evolved in to a bit of a pejorative, commonly used to dismiss and shut down those proposing ideas ranging from unconventional and inconvenient (Covid 19 origins) to straight-up batshit crazy (Flat Earth.)

I prefer to look at it as parts of a story. The “Who, What and Why.” Who and What are generally very easy. People are open about a lot of things that you wouldn’t expect them to be. The Why is where people get tripped up and pulled in to insane rabbit holes. I’m going to be discussing some of the “Who, What, and Why” of the concept of Central Bank Digital Currencies.

Okay, so explain what’s happening.

As the name implies a “Central Bank Digital Currency” (CBDC) is a currency created and operated by a Central Bank that does not require a physical representation. Think Bitcoin, but run by Joe Biden rather than no one. In many ways, it isn’t that different than how many Americans and many others around the world currently use US Dollars. Record low numbers of transactions are being settled in cash, with many more payments being made digitally via debit/credit cards, and services such as CashApp, Venmo, PayPal, etc.

Currently, this project is not being actively developed in the US, its only in the “Discussion and planning” phase, but an instant digital payment system called FedNow is slated for launch in July 2023. Developed and operated by the US Federal Reserve, FedNow represents the first major update to the “plumbing” of the financial system since roughly the 1950’s.

Well that doesn’t sound so bad. What’s the problem here?

It really doesn’t sound bad at all. No more waiting 2-3 business days for wires and bank transfers to verify, all the convenience of Zelle and CashApp in a service created, operated, and backed by the Federal Government. No more need to carry something as cumbersome as cash. You won’t need to worry about Know Your Customer and Anti-Money Laundering restriction delays any more, it can all be instantly verified via your Social Security Number.

Sounds like unbeatable convenience in the finance space, but government operated. Sounds like the perfect way to eliminate the need for KYC and AML restrictions. Sounds like the perfect way to eliminate physical money.

With the basics out there, let’s take a moment to establish our Who, What, and Why.

Who is involved?

Anyone who handles the plumbing of the Financial System is involved in some way. Main players are obviously The Federal Government, financial institutions from JP Morgan down to your local Credit Union, and every single person who makes or spends money in the United States.

So What are they making?

A system is being released that puts the Federal Government in the middle of every single transaction made, period, with open discussions on whether or not to eliminate physical cash.

Why should I care about any of this?

Well, this is where I’m going to shrug and say “I don’t know, maybe you don’t need to care.” Those among us who would be called insane would say this is an attempt to give the Federal Government complete and utter control over the entire economy in order to implement Chinese-style Communism. That seems a little out there, and like something that would be impossible to prove without the ability to read minds.

I prefer not to act like someone with Schizoaffective Disorder who’s off their meds. With that in mind, lets just go over the implications of the Who and the What, and add in some details that might add color to the Why without being totally insane.

There is an ongoing effort in the US and Europe to make cash less and less appealing. They’re open about it, no theory here. A system like FedNow is an extremely logical step in the process. Again, no theory in that.
On its face, who cares? You use your debit card for everything already, this is just them making the process easier for everyone, right?

Right?

Well, what happens when you’re buying something the Fed Boys don’t like? I’d like to take this moment to remind everyone that despite the societal movement and state-level legalization, Marijuana is still a Schedule 1 Drug according to the DEA. For anyone here who doesn’t have the convenience of a dispensary in a legal state, can you imagine paying your dealer with a credit card? Can you imagine a faster way to get rolled up by local PD? I can’t. Cash is king when it comes to not being traced, even Bitcoin is entirely trackable and public.

So it’ll make enforcing laws easier? That sounds like a good thing.

It undoubtedly will, but consider the following;

Does your kid mows lawns during the summer to save up money for college/a car/ just because? Better make sure they pay taxes on it. Do you collect scrap metal on the side for some extra beer money? Make sure to set 30% aside for Uncle Sam come tax season. Did you partake in the Devils Lettuce before it was legalized in your area? Bet you didn’t put that shit on your card.

So you’re saying….

No. I’m not trying to say that the goal is utter control over the finances of every American. But the undeniable consequence of this system is that it puts complete and utter control of every transaction made in US Dollars in the hands of the the federal government. The consequences of that range from undeniably good to potentially pure evil with a large, grey swathe in the middle that depends entirely on your personal perspective.

The only question in a world with no monetary privacy is how much control those with power over the system want to exert.

On one hand if those with power are benevolent this will make it almost impossible for your local heroin dealer to stay in business. On the other hand, if their hearts are not full of love for their fellow man, it opens up the ability to do things that wouldn’t otherwise be legal currently, like creating a national registry of firearms, blocking funding for peaceful protests, or compelling the type of speech you are allowed to use. As of right now those actions require a public-private partnership that smacks of a very particular mid-century Italian political ideology.

I’d like to take this moment to remind you that The Patriot Act was written under the auspices of stopping terrorism in the panic that followed the World Trade Center attacks on 9/11/2001. In reality, it shattered several parts of the US Constitution, along with centuries of tradition and Common Law. It was the legal means that gave rise to the warrantless collection of “Metadata” as exposed by Edward Snowden.

This is all just to demonstrate that the government is perfectly capable of dressing their actions up with words that are sweet and appealing in the moment, but later that we learn that the sweetness was covering the taste of poison that has slowly been killing us.

And there is the tin, in all its glory.

I went long today, very long. If you made it this far, I love and appreciate you. Have a successful and prosperous week in the markets, I hope you celebrated your Mother over the weekend in whatever way you’re able and is traditional for you.

Come tell me how insane I sound, or how logical you think I am, over on Discord! I had a lot of fun writing this, let me know if you want to hear more. Also let me know if you think I should just stick to strategies. All opinions have value to me!

Please note that the information provided is for general informational purposes only and is not intended to be financial advice. The information provided is not a substitute for professional advice and should not be relied upon as such. Always consult a financial advisor before making any financial decisions. Additionally, The Hard Road staff and contributors may have a stake in the Securities, Cryptocurrencies, Platforms, and other assets that are mentioned in this article and others.

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