• CBDCs are controlled by central banks, not governments
  • Central banks don’t have a good track record at managing money
  • How to prepare for an even bigger debacle

The fearmongering over central bank digital currencies (CBDCs), like Britcoin, is badly misguided. People are afraid that their government will impose all sorts of mad policies on them via CBDCs. But that’s simply not true. I believe it’s actually much worse…

Politicians, after all, fear the people’s electoral power. Have you seen how quickly the establishment can make a U-turn on things like Brexit, net zero and lockdowns?

One minute you can’t even question a diktat and the next everyone is denying they supported it…

So, governments are unlikely to get anywhere when it comes to CBDCs because people clearly don’t want them.

They fear the surveillance-state ability of CBDCs to record all of your transactions and profile you accurately. And they are terrified of the ability of governments to use CBDCs to control your life. And so, they’ve completely missed the point…

If only they knew the truth…

It’s not about the government trying to surveil or control you. CBDCs are, after all, not called HMDCs – “His Majesty’s Digital Currency”. They’re called CBDCs.

This is about central banks getting that power.

Now, I don’t know about you, but I’ve never voted for a central banker before. Not that I’ve voted for anyone else either, but you take my point…

Central bankers are unelected, unaccountable and downright mad people who think they can control the entire economy by fiddling around with interest rates and the money supply.

Given the results, so far, in the sordid history of central banking, I can’t imagine what they’d come up with if given total control of the monetary system via CBDCs.

Central banker, treasury hack and investment banker, Neel Kashkari explained at Columbia University what CBDCs are really all about, with my emphasis added:

I keep asking anybody, anybody, at the Fed or outside the Fed, to explain to me what problem this [CBDC] is solving.

I can send anybody in this room $5 with [digital wallet] Venmo right now. No, seriously. So what is it that a CBDC can do that Venmo can’t do? And all I get is a bunch of hand waiving.

I get a bunch of, ‘Well, maybe it’s better for financial inclusion. Maybe it’s better for cross border remittances.’ Maybe? Is there any evidence that it is?

They say, ‘What about China? China is doing it. Well I can see why China would do it.

If they want to monitor every one of your transactions, you could do that with a Central Bank Digital Currency. You can’t do that with Venmo.

If you want to impose negative interest rates, you can do that with a Central Bank Digital Currency, you can’t do that with Venmo.

And if you want to directly tax customer accounts, you can do that with a central bank digital currency, you can’t do that with Venmo.

Why would the American people be for that?

Of course, CBDCs are being advertised as such today. But such control is the only plausible reason for establishing them in the first place.

Augustin Cartens, general manager of the Bank for International Settlements, which is often described as the central banks’ central bank, put it best by contrasting the power of CBDCs with cash:

A key difference with the CBDC is that the central bank will have absolute control on the rules and regulations that we determine the use of [CBDCs] and also we will have the technology to enforce that. Those two issues are extremely important and that makes a huge difference with respect to what cash is.

And, by the way, cash is also issued by the central bank, not the government.

Now, if you don’t see the problem with having an unelected, unaccountable bunch of economists in charge of the country’s currency, with the ability to monitor all transactions, know everything about your spending habits, and the power to impose controls and restrictions, then you’ve subscribed to the wrong newsletter. But I’d still be happy to enlighten you.

You see, central banks have a bit of a track record when it comes to managing currencies. That’s why the US managed to get rid of its first two central banks.

Hyperinflations, financial market bubbles, the Great Depression, the 70s inflation, the 2008 crash, the 2021 inflation and just about every other financial calamity to occur can be traced back to central bankers. Sometimes, they even admit as much.

Chairman of the US central bank, the Federal Reserve, Ben Bernanke even apologised for causing the Great Depression by saying, “Regarding the Great Depression. You’re right, we did it. We’re very sorry.”

Oops… Oh well, nobody’s perfect.

The Great Depression merely featured as a lowlight in a century of being too tight or too loose with monetary policy around the world, causing bubbles and busts, deflation and inflation.

Now, does this sound like the sort of institution you might want to have in charge of your money with extraordinary new powers of surveillance and control?

The alternative might prove insightful. When John James Cowperthwaite was asked how poor countries should turn around their economies, he recommended abolishing the office of national statistics. Why? Because, given such information, policy makers simply cannot help themselves but to meddle. And when they meddle, it turns into a disaster.

By refusing to collect such statistics, Cowperthwaite managed to engineer an economic success story that we call Hong Kong…

In May, Hong Kong announced its own CBDC project.

Anyway, when it comes to CBDCs, we’re talking about absolute information and absolute power in the hands of central bankers. A whole new toolbox of policies becomes viable.

And let me tell you, central bankers have plenty of policies they’d like to take your money for a spin with. The sorts of things no democratically elected politician could say out loud, however much they dream of it.

So, for those of you who have been scared by warnings that Jeremy Hunt or Rachel Reeves could be running your finances, I’m afraid it could get even worse. Unless you take evasive action.

We’ll be calling Britcoin by another name that closely rhymes soon enough.

Not that politicians have given up on ruining your finances in other ways, they still like to quintuple tax every pound of income you earn…

But it’s time to prove Benjamin Franklin half wrong about the certainty of death, taxes and death taxes. Find out how, here.

Until next time,

Nick Hubble
Editor, Fortune & Freedom