By Angry Old American
Copyright Angry Old American, May 10th, 2023. All Rights Reserved.
A new Central Bank Digital Currency (CBDB) will roll-out throughout the United States in July 2023. Countries throughout the world are already converting to CBDBs.
Are CBDBs like Bitcoin and other Crypto-Currencies?
No, CBDBs will not be decentralized and anonymous, but will be monitored and controlled by banks that follow the dictates of the US Treasury Department. Crypto-Currencies will most likely be outlawed after CBDBs emerge. Governments don’t tolerate competition.
Europe’s CBDB laws have provisions that allow the withdrawal of a limited amount of paper Euros. These can be used to pay cash at the laundromat, for girl-scout cookies, and have the lawn mowed. Most other transactions will be digital for the purpose of tracking and taxation. The Banks will assure that you are not buying bombs or drugs with your cash. When you spend, others receive your money as income with subsequent tax owed. CBDBs result in a totally controlled economy based on a digital “Fiat Currency.”
Initially, the new Digital Dollar will have few strings attached. However, governments by nature are suspicious of their citizens and hungry for more money and control over their populations.
Why are we transitioning to a Digital Dollar? Are we on the brink of financial collapse; and why? To answer those questions, it is important to understand basic economic history in the United States.
I lived at a time when “Silver Certificates” were in circulation. Banks were required to exchange silver coins in exchange for Silver Certificates. A one dollar Silver Certificate would give you a silver dollar containing 90% silver, worth $23+ today. All subsequent “Federal Reserve Notes” in circulation since then are “Fiat Currency,” backed by faith and trust in the Treasury Department of the United States Government. The Federal Reserve was created in 1913 as an independent non-government regulator of US finances. The USA borrows “money” from the Federal Reserve at a specified interest rate, and the Treasury Department prints the money. Our National Debt is the amount of money owed to the Federal Reserve. The Owners of the Federal Reserve are unknown, and kept secret.
We can never payoff our debt in Federal Reserve Notes because the interest portion was never printed. At the end of 2020, over $2 Trillion in US Currency was in circulation according to the US Treasury. In 2023 the Federal Reserve reported that base monetary holdings (MO) was valued at over $5.8 Trillion. To put this in perspective, our National Debt at the end of 2022 was $31.42 Trillion; so the difference between currency in circulation and interest debt must be made up with tangible assets. Soon the United States will no longer be able to make its minimum $232 Billion per quarter interest payment on this debt.
The “Great Depression” of the 1930s was caused by risky investment practices that led to an avalanche of bank failures. Investors could buy stocks “Go Long” betting they would go up. They could also sell stocks they did not own “Going Short” to profit when they decreased in value. Investors could also purchase options to buy “Puts” or sell “Calls” on a stock at a future date “Futures” and profit when stocks boomed or busted. Futures are highly leveraged, purchased at a fraction of the stocks value. Investors in the Stock Market were allowed to “Buy on Margin,” or buy with credit. They could buy $100 in stocks with only $10 on margin. If the $100 stock went up to $120, then they doubled their investment. If the $100 stock lost $20, then the investor lost their entire $10 investment and had to come up with an additional $10 by either selling other stocks or selling their business, home or other assets. The other risky practice was “Going Naked,” or buying stocks with a promise to pay their “Margin” by the close of the trading day. Both of these risky practices made investors millions during a booming market. During the “Roaring Twenties” it was common for the average family to “Play the Market.” Wall Street went bust, due to margin over-leverage, as investors faced a “Margin Call” for payment. Unfortunately, the average Jane and Joe are once again Playing the Market, and the practices Buying on Margin and Going Naked still exist today.
Banks were allowed to invest patron’s deposits in Wall Street stocks. When the stocks crashed, banks went insolvent and depositors lost their savings, many borrowers lost the items they posted as collateral because their savings were wiped out. Wall Street Financier J.P. Morgan, flush with cash from selling stocks at their peak value, bought surviving Banks and assets for pennies on the dollar. As a result of this financial collapse, the Glass-Steagall Act of 1933 limited bank’s ability to make risky investments. The Federal Deposit Insurance Corporation (FDIC) was also created to protect depositor’s savings.
The Treasury Department reported that nearly half of all US Currency is circulating overseas, which is important. After WWII, the Breton Woods Agreement of 1944 established the US Dollar as the World’s Reserve Currency. This meant that large commercial transactions between governments of the “Free World” would be conducted in US Dollars. As a result, national “Sovereign States” throughout the world held a significant amount of US Dollars in reserve. The US Dollar is also the preferred exchange currency for international criminal groups who operate below the radar.
The “Petrodollar” started when Saudi Arabia required that all their oil would only be sold for US Dollars. Other oil producing nations followed Saudi Arabia’s example, and by 2020 the Petrodollar amounted to $3.2 Trillion annually. In financially unstable economies, the US Dollar has been considered safe, and often valued at a premium over local currencies; which has been good news for US Travelers. The US Dollar is also the World’s most counterfeited currency, being mass produced by both garden-variety criminals and nation-states like North Korea and Iran.
A basic economic rule is based on the balance of supply and demand. If there is an abundance of apples, and a shortage of oranges, then the value of apples will be less than oranges. The same applies to currencies; the less money in circulation, the greater its value. Every time a government prints more money, the entire amount of currency in circulation becomes worth less. This is like adding water to a shot of whiskey,. Printing money inflates the supply like air in a balloon, causing “Inflation.” That is why we equate rising cost of goods with inflation. In order to increase sales during inflation, manufacturers package less goods in larger packages, which is called “Shrink-flation.”
With the US Dollar being the world’s reserve currency, and nearly half of all US Dollars away in other countries, only half of our dollars were in circulation here. Supply and demand dictated that those remaining dollars in the USA would have nearly twice their true value. We have lived largely fat, dumb and happy ever since; without thinking of where America’s wealth came from.
Sleazy Wall Street Financiers, Bankers, and Politicians took advantage of our Reserve Currency status. They could inflate the US Dollar globally, and feel only half the pain because other countries would be holding much of the cash.
The next part of this story will show how we are in far worse shape today than the Wall Street Crash that led to the Great Depression of the 1930s. Will most of us be in bread lines, or living in homeless camps? Will displaced workers become hobos riding the rails in search of work?
