Discover more from Silvermint
CBDCs Would Further Politicize Money in a Sinister Way
Government intrusion into financial decisions is already pervasive. Money and capital is politicized. Paul H. Jossey, an adjunct fellow at the Competitive Enterprise Institute, joins what we and others have been saying for a while now – the Fed or Treasury adopting a central bank digital currency (CBDC) will only make it worse by several orders of magnitude.
Central banks and regulators in most nations like the idea of CBDCs – digital dollars that are centrally controlled and programmed. They empower the issuer to make individual citizens behave exactly as they wish them to by restricting or compelling their buying and investment power, or even deplatforming any activity or business they so choose.
Jossey frames his argument like this:
Without doubt, a CBDC could have sinister consequences for the U.S. should the government gain granular insight into Americans’ everyday transactions, potentially directing them to favored public policies.
So-called sustainable finance and its cousin Environmental, Social, Governance (ESG) investment standards aim to shape corporate decisions towards an elite consensus on issues like environmental policy and the primacy of racial and gender diversity on corporate boards. Proponents already force shareholder votes on their preferred issues, but they want more.
For example, President Biden’s Assistant Secretary of the Treasury for Financial Institutions, Graham Steele, wrote an academic article urging regulators to force drastic action on climate, including ultimately “imposing limitations on an institution’s activities, prohibiting activities, or forcing asset divestiture.” Gary Gensler, chair of the Securities and Exchange Commission (SEC), has overseen the implementation of sweeping new corporate climate disclosures. Treasury Secretary Janet Yellen describes climate change as an “existential threat” and urges “a rapid transition to a net-zero carbon economy.”
A CBDC would go beyond that kind of politicization of finance, imposing government directives on financial transactions to the individual level, to money itself. CBDCs are direct liabilities of a country’s central bank. Financial authorities tightly monitor and control the notes.
Unsurprisingly, the specter of such control appeals to authoritarians. China, for example, has been working on a CBDC since 2014. When fully implemented it will incorporate seamlessly with the regime’s existing social credit system.
A government with the power to record and monitor everyone’s transactions is powerful enough to impose its own version of morality on those transactions. Curtailing them, banning them, stopping them, erasing them, denying the ability for a company or individual to send or receive funds for disfavored people or causes. Once governments gain this control it will never be returned. There will always be some other existential threat to fight, some new clever money launderers, some other terrorists to stop; peaceful truckers denied a living by empirically dubious public health mandates are just the beginning.