A Central Bank Digital Currency would enable a totalitarian nightmare

A Central Bank Digital Currency would enable a totalitarian nightmare. By N.S. Lyons. First, the dystopian future:

You awake to find that today is special: it’s Stimmie Day! When you roll over and check your phone, you see a notification from your FedWallet app letting you know that another $2,000 in FedCoins has just been added directly to your account by the U.S. Federal Reserve.

To be honest, part of you would love to save that money for the long term, given that things have been getting rather uncertain and actually kind of crazy lately, what with the war and the economy and all… But you can’t, since these FedCoins are coded as usable for consumer purchases only, and will expire and vanish in seven days. So you’d better spend em while you’ve got em! …

Your morning starts to go downhill quickly, however, when you realize that your SUV is almost out of gas. You pull the old clunker, with its antiquated combustion engine, into the nearest open station you can find — it looks pretty run-down — and roll up to the pump. A dull-eyed teenager in a facemask inserts a nozzle into your vehicle and waits for you to pre-pay. You wave your phone at the pump. Nothing happens. You try again. Your phone buzzes, and you look at it. There’s a message from the Fed: “You have already spent more than the $400 maximum weekly limit on fossil fuels specified in the FedWallet User Agreement. Your remaining account balance cannot be used to purchase non-renewable energy resources. Please make an alternative purchase. Have you considered a clean, affordable New Energy Vehicle? Thank you for doing your part to build a more just and sustainable world!”

You have in fact considered purchasing a clean, affordable New Energy Vehicle. But they still aren’t very affordable for you, what with the supply chain shortages. Despite the instant credit the Fed would add to your balance when buying an electric car – plus the permanent ten percent general subsidy you automatically receive on every purchase as a BIPOC individual thanks to the Fed’s Reparations Alternatives for Comprehensive Equity (RACE) program – the down payment on a new car would still be more than you can afford, even with your new stimmie coins. …

You notice there’s a classic fast-food joint next door. … Entering the establishment and sidling up to the old touchscreen kiosk, you order a McKraken with extra bacon. But when you wave your phone to pay, an error message pops up again. “You have exceeded your weekly purchase limit for complex animal protein, as stipulated in the FedWallet User Agreement. Have you considered purchasing a delicious vegan or mealworm alternative? Thank you for doing your part to build a more just and sustainable world!”

This is a sandwich too far for you during an especially hard week. “Ugh FedWallet is so fucking lame!” you post on Twatter as you idle hungrily in front of the kiosk. “Your message has been flagged for review,” says an immediate notification. “As a reminder, using ableist hate speech may impact your ESG score and future financing opportunities. Thank you for doing your part to build a more just and inclusive world!”

“Omg this is absurd, life was so much better before FedCoin, when we still had cash!” you post again to Twatter, unable to control yourself. “Your account has been locked pending national security review,” says a notification from FedWallet. “As a reminder, the proliferation of false or misleading narratives which sow discord or undermine public trust in government institutions is classified as a potential domestic terrorism offence by the Department of Homeland Security. We value your feedback.”

Last week:

President Biden has just released a “sweeping” executive order directing the government to immediately begin moving to comprehensively regulate cryptocurrencies while developing a digital dollar issued by the Federal Reserve. …

What is a Central Bank Digital Currency (CBDC)?

It’s digital money issued directly by a central bank. …

A customer opens an account directly with a country’s “independent” central bank (let’s say the Federal Reserve), and the central bank issues (creates) digital money … in that account. … Using digital tools (like say a “FedWallet” app) the customer can initiate direct transactions between Fed accounts. The digital money is deleted in one account and recreated in another essentially instantaneously. No promises or trust is necessary; every transaction is permanently recorded on a digital cryptographic ledger in real time. Kind of like Bitcoin, but exquisitely centrally managed. The Fed retains complete oversight and control over the creation, destruction, and “movement” of money, no matter who “has” it, or where it “is.”

Or as Agustin Carstens, General Manager of the Bank of International Settlements (BIS), helpfully put it at a 2020 summit of the International Monetary Fund:

“We don’t know who’s using a $100 bill today and we don’t know who’s using a 1,000 peso bill today. The key difference with the CBDC is the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that… and that makes a huge difference.”

Because these digital coins are minted out of code, they are easily “programmable” to function, or not function, however or whenever the central bank wants them to …

Why the push for CBDCs now? Competition from the Chinese:

It’s the Chinese that have pioneered the development of a CBDC (the Digital Yuan) and even begun putting it into limited circulation and testing its cross-border functionality.

Right now the dollar’s overwhelming use by those conducting global commercial transactions means that the United States has quite a bit of leverage to strong-arm banks, or the whole SWIFT network, into not doing business with anyone we don’t want them to do business with –- i.e. it can impose sanctions.

But if there was some easier, faster, less-interdictable-by-Yankees alternative, something that could move money across borders and be exchanged instantaneously with zero-cost, such as a Digital Yuan, then some people around the world might be tempted to start using that instead of the dollar– in fact many might in time find they have much less use for the dollar at all.

In the long-run, only the development of a similarly fast, convenient, convertible, widely used, and easily controlled digital architecture seems certain to allow the West to maintain its collective dominance over global financial flows, preventing the enemies of America and its allies from escaping the long arm of the liberal international order’s sanctions regime. …

Bureaucrats rule … everything:

The unique “programmability” of CBDCs happens to open up a huge range of intriguing possibilities …

We could of course directly subtract taxes and fees from any account, in real time, with every transaction or paycheck, if we wished. And there would be no more tax evasion, either, since we have a complete record of every transaction made by everyone.

And say goodbye to unapproved money laundering, terrorist financing, or financial crime in general. With a CBDC, all transactions are clean and transparent transactions.

In fact, we could levy fines in real time too, as long as we’ve hooked up the Internet of Things by then — speeding and jaywalking will become the scourges of an uncivilized past! …

A Fed-funded discount could even be applied to those businesses the people most want to help; Google and Yelp already flag which businesses are or are not black-owned or LGBTQ-friendly, presumably so people can preference their patronage, so why not assist with a little nudge here and there? Or we could go in the other direction and effectively change the price of anything based on the identity of who’s buying it. …

We could help nudge consumers away from organizations and businesses that are undesirable, too. Why not collect additional fees for transactions with “risky” businesses or charities that have low ESG scores? Or slow down their transaction speed to allow for greater “verification.” Just as a nudge, of course; people would still have free choice.

In fact why not create comprehensive credit scores based on behavior and number of associational connections with dangerous, risky individuals and organizations? It’s only logical as a next step.

Though if it were ever really necessary, like if they were honking truck horns too many times in a row, the most dangerous individuals or organizations could simply have their digital assets temporarily deleted, or their accounts’ ability to transact frozen, with the push of a button, locking them out of the commercial system and greatly mitigating the threat they pose to our democracy — no use of emergency powers to compel cooperation by intermediary financial institutions required! …

A constitutional amendment is needed for protection from CBDCs, but there’s not a chance with the current rulers:

Meanwhile, in the United States there happens to be no constitutional right enshrining the freedom to conduct property transactions. Which is very convenient for circumventing all those other pesky rights if their bearers happen to stand in the way of the greater good.

Freedom of speech? Sure, but it’s not much good if no one can buy those rabble-rousers’ books and they can’t buy ink, let alone web hosting services.

Freedom of assembly? Sure, but only if they’re prepared to walk! There’s nothing really in the way of the Fed working to “allow the trustworthy to roam everywhere under heaven, while making it hard for the discredited to take a single step.”

In fact, the implementation of a CBDC could represent the single greatest expansion of totalitarian power in human history. Never has there been any regime with such omnipotent insight into and control over its people’s every transaction as what CBDCs may soon make possible. No Xerxes, no Caligula, no Stalin, no Kim Jong Un has ever held such power. And yet this is what will soon be smuggled into use in our societies in the name of convenience, social justice, and patriotism.

It’s hard to see how it can be stopped until it’s too late.