CBDC has been trending this week on Twitter. I am going to be explaining what it is, and why it is even worse than most people think.
CBDC stands for Central Bank Digital Currency. You may have heard of other cryptocurrencies like Bitcoin. This would be a cryptocurrency issued by the US government. You might think, “What is the big deal?” Why not let the government issue their own version of bitcoin and let it compete in the open market. But the reality is more sinister than that. CBDC’s do not compete in an open market. They establish a new government-owned monopoly.
I want to be as accurate as possible about what is happening. So, in this video, I will be using the government’s own documents to show you what is going on.
Let us start by explaining why CBDC is trending.
Last week, Robert Kennedy Jr announced he is running for president in the US as a Democrat. He is running against the current president Joe Biden. Robert Kennedy Jr is the nephew of former president John F. Kennedy. Robert is most known for his very vocal opposition to vaccine mandates. He is largely considered a fringe candidate, but he does have a very large following, with almost a million followers on Twitter.
On the same day that Kennedy filed to run for president, he posted this tweet. This is a rant about the dangers of CBDC. He highlights that the Fed will introduce the new “FedNow” technology this July. So, he chose this tweet to be the first topic he talked about after filing to run for President. That is how important this is to him. This tweet started CBDC trending.
I want to start by clarifying some of the inaccuracies in Kennedy’s tweet. The first thing you need to understand is there is a difference between CBDC and FedNow. FedNow is simply the app on your phone that allows you to transfer money. Just because FedNow is released in July does not mean that CBDC will exist. FedNow is just the technology to do money transfers. However, FedNow was an important step to happen before CBDC could exist. No one would have been able to use CBDC unless they were first able to transfer the money around.
The second key point is the urgency of this tweet is misleading. Any introduction of CBDC is going to take years, just from a practical standpoint. In 2020, 83% of American adults had a debit card, and 73% of American adults had a credit card. That means that 17% of Americans are relying on cash. That is roughly 56M people. Converting all these people to an electronic currency is not something that is going to happen overnight, just from a practical standpoint. In a lot of these cases, you have to give people bank accounts first.
So, I think Kennedy’s tweet is overdramatic and misleading. However, I think it is absolutely important that he raised CBDC as his first issue in his run for president. What the government is doing with CBDC is horrible, it will directly affect you, and most people do not even know about it.
Let us talk about what the government is actually doing.
- In November 2021, a report was released from the White House called “Report on Stablecoins.” This was written by the President’s Working Group on Financial Markets, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.
- In January 2022, the Federal Reserve released a paper titled “Money and Payments: The US Dollar in the Age of Digital Transformation”
- On March 9, 2022, President Biden issued an executive order where he says, “My Administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.” The President wants this to happen.
These documents show that in a short period of time this administration is working towards creating a CBDC. We had the report on stablecoins, the report from the Federal Reserve, and Biden’s executive order. They are moving forward with this, and it is clearly something they want. Biden’s executive order said he had the “highest urgency.”
I want to walk through these documents and show you what they are talking about.
To start with, what is a stablecoin? A stablecoin is a cryptocurrency that is pegged to the US dollar. Some common stablecoins are Tether and Binance USD. So, you could transact in stablecoins anywhere in the world for the same value as the US dollar in US banks. So why would you do this? First, it makes international transactions a lot easier. Second, there are a lot of regulations placed on your money in US banks. For instance, if you deposit more than $10,000 in your account, your bank notifies the FBI that you made a suspicious transaction. So, there is a lot of government oversight you have to deal with. If you have stablecoins, you can do whatever you want with your money. You get the benefit of a stable US currency, without dealing with the regulations.
Let me just add my opinion here. I do not recommend buying stablecoins. Every stablecoin is issued by a company. There is a big difference to a currency being backed by a government, versus some random company. Do not be misled into thinking it is the same thing. For your money to be secure, that company would have to hold enough dollars in reserve for every dollar you invest. What we have seen with bankrupt companies like FTX, is that they are not holding your money 1 for 1. Even if a company has a terms of service, they could be lying in their terms of service. So, if you give your money to a random company and they go bankrupt, you could lose all your money.
But there are some situations where stablecoins would be valuable, as we can see with more and more people using them instead of US dollars. The US government obviously does not like this and sees stablecoins as a threat. So, the President’s Working Group on Financial Markets wrote the “Report on Stablecoins.”
When I read this report, I was shocked at how strongly worded it was. They talk about the risks of stablecoins and how they are dangerous. Then they say, “[We] recommend that Congress act promptly to enact legislation to ensure that payment stablecoins and payment stablecoin arrangements are subject to a federal prudential framework on a consistent and comprehensive basis.” This statement is written in bold in the report. They are calling on Congress to issue laws regulating stablecoins. They go on to say the legislation should require that only certain banks should be able to release stablecoins, and Federal Law enforcement agencies should be able to monitor stablecoin transactions. In summary, they are trying to destroy stablecoins.
Just so you understand, the President’s Working Group on Financial Markets includes:
- Secretary of the Treasury
- Chair of the Federal Reserve
- Chair of the Securities and Exchange Commission
- Chair of the Commodity Futures Trading Commission
They all contributed to this report, and agree with its recommendations.
Next, the Federal Reserve issued their report. And in this report, they discuss the Federal Reserve issuing their own stablecoin. This would be a CBDC. The big difference between stablecoins and a CBDC is that stablecoins are decentralized, meaning that no government controls it. Obviously, CBDC’s are the opposite. They are centralized, meaning that, in this case, the US government controls it.
Let me explain how CBDC’s work. The first thing to realize is that most of you watching this video are already using electronic currencies. When you go into your bank’s website and check the balance in your bank account, that is all electronic. You do not have custody of your money. The bank has custody of your money. You gave all your money to the bank for safe keeping, and you just check your balance. That is why when banks fail, you can lose all your money if it is not covered by FDIC insurance.
The way a CBDC works is that instead of you keeping your money in your local bank, you keep it in the biggest bank of them all, the US Federal Reserve. As a normal person, you would not notice any difference. You will still log into your local bank website and check your balance. However, your money would no longer be sitting in your local bank. It would actually be sitting in the Federal Reserve. What you would be looking at when you check your balance is an “intermediated wallet” that is managed by your local bank. Your bank would be functioning as a middleman.
So, you can see that a CBDC is different than just another cryptocurrency. CBDC is a massive increase in government control. The Fed is going to issue a new type of US dollar that is all electronic. The old dollars will move out of the old banking system and into the Federal Reserve. You will access your money through an app on your phone to make electronic transactions.
For someone who is new to this topic, this sounds really crazy, but I am not making this up. The description in the Fed’s document is that “CBDC is defined as a digital liability of the Federal Reserve.” This is saying that your money, which was previously a liability of your local bank, would now be a liability of the US government. Your bank does not have custody, the government has custody.
One of the biggest concerns is privacy. This has always been my problem with Bitcoin or any cryptocurrency. Anyone can see your wallet, and see what you are doing with your money. There is a YouTube channel called Coffeezilla. He has exposed a number of scams. A lot of times he finds his evidence, simply by going online and looking at people’s bitcoin wallets. Anyone can go see what these people are spending their money on. This is a huge loss of privacy. Imagine a guy is in a relationship with a girl, and this guy uses mostly bitcoin. She can spy on him really easily by just watching his bitcoin wallet. Good luck trying to buy a surprise gift for your girlfriend. You just cannot do it anymore. With CBDC, it is even worse. The Fed says that they will protect your privacy by blocking anyone from seeing your transactions, except for the Federal Government. They can see everything that you are doing. CBDC is like having an overbearing girlfriend, except you can never get away from them. Technically, the US government can already gain access to your banking information today, but they have to get a warrant. With CBDC, they already have control over your money, so they can see everything.
Another fear is that the government can turn your money on and off whenever you do something they do not like. Maybe they can stop you from using your money to buy certain cars, or certain types of stoves. Maybe they can steal your money altogether and cancel you. Recently we all saw this happen with Andrew Tate. Whether you like him or not, it is still disturbing that someone could be cancelled because people did not like what he had to say. Within 24 hours, he was kicked off all social media, he was kicked out of his bank, he was kicked off of Stripe, so he could not accept payments, he was kicked off Skype so he could not make video calls, he was kicked off of Google so he couldn’t use any Google products. He cannot even use an android phone, because Google will not let him log in. CBDC would be even worse. If the government controls your money, they can just turn you off if they do not like what you are saying.
In case you are thinking that I am being overdramatic, we just saw this happen. When Russia invaded Ukraine, within one week, the US froze all Russian money within the US. Russia had $300B in reserves in US dollars in US banks and it was all frozen. Technically, under international law, the US cannot just take another country’s money unless they declare war. So, Russia’s money is just frozen. However, the Biden administration has been talking about using the Russian money to rebuild Ukraine without Russia’s permission. Now I am not supporting Russia here. I think what Russia did was horrible. My point is that we just saw an example of the US confiscating the money of their enemies. With CBDC, they are going to take this ability and weaponize it against the American people.
This will be a massive change to the economy of the US. The US government is talking about issuing a new type of currency. I think it is helpful to look at the exact language the Federal Reserve uses in their report. They start off the report by saying “The paper is not intended to advance any specific policy outcome, nor is it intended to signal that the Federal Reserve will make any imminent decisions about the appropriateness of issuing a US CBDC.” They are saying this is all just for discussion purposes. They repeat this statement a number of times in the report. But we have to look at their actions and not just what they are saying. Their actions show this is more than just a discussion. This is one in a series of reports from the government pushing to implement CBDC.
There is someone you should know named Lael Brainard. She used to work at the Federal Reserve as the Vice Chair with Jerome Powell. When Biden reappointed Jerome Powell as the chair of the Fed, he was choosing between Jerome Powell and Lael Brainard. When Jerome Powell was selected, Lael Brainard left the Federal Reserve and took a position in the White House as Director of the National Economic Council. The reason why she is important is that she is one of the people who has been pushing to embrace CBDC, and now she is at the White House. She has been giving speeches about this for years.
To put this in context, CBDCs are already rolling out around the world. Around 10 countries are already using CBDCs as test cases. Some of the countries include the Bahamas, Nigeria, China, Jamaica, and Uruguay. The European Union is also talking about releasing one. The Federal Reserve has already been working with MIT on the “digital currency initiative” to develop the technology to release CBDC in the US. The technology already exists. The US just has to turn on the switch.
Recently, Lael Brainard testified in front of Congress. She said, “I would hate for Congress to decide, five Bank] is out there.” She is saying that because all these other countries are doing it, we need to issue a CBDC too.
Let me just stop here and say, that statement is a joke. Just because China oppresses its citizens does not mean that we need to do the same thing in America. Just because China has a CBDC does not mean that we cannot compete against them. In fact, I would argue that the opposite is true. We would compete with them using freedom. Imagine if all these other countries change to CBDCs. Imagine Europe goes to CBDC. South America goes to CBDC. I would think it would be a strategic competitive advantage for the United States not to do that. We would be the one country in the world you could go to hold your money, where the government was not spying on you. Wouldn’t that be attractive? I would think that people would stampede to get their hands on US dollars, and hold their money in US banks. That would solidify the US dollar as the reserve currency of the world.
So, to go back to the statement in the Federal Reserve report. They say, “The paper is not intended to advance any specific policy outcome,” but you have Lael Brainard in the White House clearly pushing Congress to implement this agenda. I have one message for Lael. Keep the government’s hands off of my money.
Next, why do they say people would want to use CBDC. The main reason the Fed mentions a number of times in the report, is that a CBDC is “the safest form of money.” It is safer because it is backed by the full faith and credit of the United States. Your deposits will be 100% guaranteed. This is in contrast to the banking industry, where FDIC insurance only covers 250k of your money. So, for instance, if you are worried about the banking system collapsing, you can simply give all your money to the government, they will hold on to it for you, and you will not have to worry about it.
This is the old argument between freedom and security. In most decisions there is a spectrum. On one side, you have freedom and on the other you have security. If you live in freedom, you also have some uncertainty and risk. You can eliminate that risk by giving control to the government, but you give up your freedom.
This is the same difference between free markets and communism. Let this sink in, because I hope people understand this. CBDC is communism. Now, I am sure the Federal Reserve will disagree with me on this characterization. They are using all kinds of flowery language like “intermediated wallets” to hide what they are doing. But just think about what is happening from a practical perspective. They are asking you to willingly hand over your property to the government for safe keeping. That is communism. Oh, and while you are doing that, they are probably also going to ask you to hand in your guns. Once the government has your money, and they have your guns there is nothing to stop them from doing whatever they want to you.
You might ask, how is CBDC different from the banks holding your money? The difference is, that if you don’t like your bank’s customer service, you have the freedom to pull out your money and move it to the bank down the street. That is free markets. If your only banking option is the government, there is nowhere else you can take it. That is communism. It is centralized control of everyone’s property. And I know they will say, “No, no, it is still your property.” Just wait until you do something the government doesn’t like. They will start controlling your money really fast.
The thing that surprises me the most out of all of this is the bankers, because CBDC will completely destroy the banking industry. If the government moves even a portion of people’s deposits out of the banks and into the government, how are any of the banks going to make any money? Normally, people deposit their money into banks and the banks pay them a little interest. The banks then take your money and lend it out to other people as car loans, home loans and business loans. With CBDC, banks will be reduced to a customer service middleman with no money and no power. This is a power grab, taking all of the power away from the banking industry and putting it inside the government.
Why are the banks going along with this? I do not know if any bankers watch my YouTube channel, but I got to say, you all look like idiots. And I am sorry if I hurt your feelings, but I do not understand why you are not screaming at the top of your lungs about this. The Fed even admits this in the report. They say, “This substitution effect could reduce the aggregate amount of deposits in the banking system…” They then try to explain away this risk, by designing the CBDC in certain ways like limiting the amount people could hold. But any way you talk about it, it is still taking a large chunk of business away from the banks, and potentially are really large amount of business. I do not see how we have any banks remaining at all after this. The US Government becomes the new banking system.
What does the Fed say they are going to use the CBDC for? One of the quotes from the document is “Governments could use a CBDC to collect taxes or make benefit payments directly to citizens.” So, they are going to use CBDC to pay out welfare payments. They are going to take the most vulnerable people, who are not going to know any better, and cannot fight back, and they are going to be forced to use this new currency. Once even one dollar of CBDC goes into circulation, everyone is going to be forced onto CBDC. Imagine a scenario where someone gets their welfare check in CBDC. Well, they are going to spend that money at the store. That store is going to be forced to accept CBDC. Then the store is going to be forced to pay their employees in CBDC, because that is what they have. So, once the government starts using CBDC, it circulates through the entire economy. Our GDP is roughly a third government spending. So, if the government starts paying its bills in CBDC, you can see how quickly it overtakes the entire economy.
So, if you are sitting back thinking, “I am just not going to use CDBC.” You are going to be forced to. You will not be able to run a business without using it. And once your business starts using it, the government can shut your business down if they do not like you. It is like social media today. What if you do not want to be on social media? Good luck. Because you cannot run a business without being on Facebook, Instagram, and Twitter. You cannot reach your customers. And if you say the wrong thing, social media can shut you down. CBDC takes the same social media power, and lets the government do that with your money.
I find this whole report sneaky, dishonest, and misleading. I am going to explain to you why. When the report talks about how the Fed would implement a CBDC, this is what they say. “Under the current “ample reserves” monetary policy regime, the Federal Reserve exercises control over the level of the federal funds rate and other short-term interest rates primarily through the setting of the Federal Reserve’s administered rates.” I know this sounds wordy and boring, but you need to pay attention, because I do not think anyone has picked up on this. I only picked up on this because I read a lot of Federal Reserve documents. This is worded in a very specific way. They use a phrase called “ample reserves.” This is a phrase the Federal Reserve made up, to justify their use of quantitative easing without legislative authority.
Let me give you some context. The banking industry is collapsing. Silicon Valley Bank collapsed. Signature Bank collapsed. Most of the experts agree that the reason for the collapse is that the Fed has had near zero interest rates for years. This happened because of quantitative easing, which is where the Fed dramatically increased the assets on their balance sheet. The Fed started buying all kinds of assets to prop up the market. They did this initially as an emergency measure back in 2008, but they have no legislative authority to continue to carry a massive balance sheet. They just did it, and congress has never told them to stop. They created this term “ample reserves” to mean that they are just holding normal banking reserve funds. This allows them to expand their balance sheet as much as they want.
Now they are using that same term again to describe how they are going to implement CBDC. They are going to take on your deposits, as new liabilities, once again expanding their balance sheet. This balance sheet expansion will once again be more “ample reserves.” They say in the report, “The Federal Reserve might have to increase the size of its balance sheet to accommodate CBDC growth.” This is why this is so sneaky and dishonest. What they really mean here is that they are telling you that they can create CBDC without any legislative authority. Whether congress passes a law or not, they are going to do it anyway. They are being dishonest, because they do not think anyone knows what this term “ample reserves” actually means.
What is even more dishonest is they address this specific point in the report. They say, “The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.” Now, most people would read this and think, “Ok, that sounds like they are not going to do it.” But you have to look closer, because this was worded in a very specific and sneaky way. I am going to highlight two words here. Intend and ideally. When they say they do not intend to do something, that does not mean they are not going to do it. They are just saying that they would like you to give them approval, but even if you do not, they are just going to do it anyway.
This whole report is sneaky and dishonest. And if this is any indication of how they are going to treat you, just wait until they have all of your money.
What I find to be the most dishonest, is they never address the biggest risk of a CBDC. Let us play out this scenario. Let us say that people start turning in their money to the Federal Reserve. Since the Fed is going to have all these new liabilities, they are going to have to buy more assets to balance out their balance sheet to match everyone’s deposits. So, the government is not only going to be holding people’s money, they will be holding a lot more investments. More and more of the economy will be owned by the US Government. So, here is the biggest risk. What happens when the market crashes? If the Fed’s assets decrease in value, how do they cover everyone’s deposits? This is exactly what happened to Silicon Valley Bank, but this time it is happening to the government. Instead of a run on the bank, you will have a run on the Federal Reserve. Why didn’t they talk about this risk in the document? What does it mean when the Fed has a loss? That means the US Government has a loss, and has to print money to cover it. This will cause hyper-inflation, making all your deposits worthless.
In case you think I am being dramatic, just wait until I show you this. This same scenario is already happening right now, and they are not telling you about it. The Federal Reserve is about to recognize their first loss in over 100 years. The Federal Reserve has not recognized an annual operating loss since 1915. But if you look at their official financial statements, they are currently sitting at an unrecognized loss of $720B. They are going to have to start recognizing this. If the Fed is experiencing losses right now, shouldn’t this be a risk they talk about before taking all of your money? This seems like a pretty big risk to me. Am I crazy here? They have a loss of $720B, and they are telling us that we should give them our money for safe keeping. This is insane. This is why this document is misleading. The Fed is trying to convince you to give them your money, because the banking industry is risky without telling you about their own $720B loss. CBDC is not as risk free as they are making it out to be.
This is communism, and it is coming directly from the White House. These documents are a roadmap for how they are going to do it. They have the technology. They just have to turn it on. America will become a communist nation overnight, and most people will not even know about it. They are doing this in secret. There won’t be a vote. There won’t be any shots fired. They are not going to ask us. The Communists are just going to seize power. And one day, everyone will wake up and have no control over their own money. It is wrong. These people are being sneaky and dishonest. And it needs to stop.
This brings us to the final question. What can we do?
Have an opinion. You need to understand that the people in charge are scared to death of you finding out about this. It terrifies them. Why do you think they are being so deceptive in the way they are writing these reports? They do not want you to know. Just having an opinion that CBDC is bad, has a bigger impact than you realize.
Don’t give up your money. Simply do not turn your property into the government. They are going to ask for it. Don’t give it to them. You can choose a life of freedom and prosperity. You can control the decisions in your life. You get to decide what is best for your friends and family. You can decide what you can and cannot talk about. You can decide what you can do with your own money, not the government.
States need to pass laws. Last month, Governor Ron DeSantis announced legislation in Florida to ban the use of CBDCs in businesses in Florida in the event the Federal government issues a CBDC. Now, in my opinion this law would have limited effect because Florida’s state budget is 33% Federal funds totaling $112B. So, if the Federal Government says that they are only going to pay in CBDC, Florida is going to have to accept it. But any pushback from the states is important, and we need more states to issue laws against CBDC like Florida.
We need to pass Federal laws. Just last month, Senator Ted Cruz introduced legislation that would forbid the Federal Reserve from issuing a CBDC. We need to pass more laws like this to limit the power of the Federal Reserve.
Sue the Federal Reserve. I do not know why this has not happened yet. State Attorney generals need to get together and sue the Federal Reserve to stop both quantitative easing and CBDC. The Federal Reserve has no power to do these things under the law. They are not going to stop on their own. We need to send them a court order forcing them to stop.
Let me be clear, I like the Federal Reserve. I like the US dollar. I just think the Federal Reserve should, I don’t know, not implement communism. I just want them to follow the law. The law says that they have one job. They are supposed to sit there and raise interest rates and lower interest rates. They are not supposed to do anything else. They are not supposed to expand their balance sheet. They are not supposed to come up with crazy new currencies. They need to return to the very narrow focus of their jobs and say no to CBDC.
SOURCES
How Many Americans Use Cash https://www.fool.com/the-ascent/research/credit-debit-card-market-share-network-issuer/#:~:text=How%20many%20Americans%20have%20debit,a%20debit%20card%20in%202020
Robert Kennedy Jr’s Tweet
Stablecoin Report
https://home.treasury.gov/system/files/136/StableCoinReport_Nov1_508.pdf
Federal Reserve Document
https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf
Executive Order
Lael Brainard’s comments to Congress https://www.politico.com/news/2022/08/22/crypto-fed-digital-dollar-00052515
Ron DeSantis fights CBDC https://www.flgov.com/2023/03/20/governor-ron-desantis-announces-legislation-to-protect-floridians-from-a-federally-controlled-central-bank-digital-currency-and-surveillance-state/
Senator Cruz bill https://www.cruz.senate.gov/newsroom/press-releases/sen-cruz-introduces-legislation-to-prohibit-the-fed-from-establishing-a-central-bank-digital-currency
MIT website https://dci.mit.edu/opencbdc
Government spending as a percentage of GDP https://en.wikipedia.org/wiki/Government_spending_in_the_United_States
CBDC Tracker
Federal Reserve Financial Statements
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Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.