Central Bank Digital Currency

Potential Impact of Central Bank Digital Currencies on the Future of Money

Master Investor
April 25, 2024

Summary:

Investing in our financial education is never too late, even if it was robbed from us.
Knowing how CBDCs operate will help us be more ready for the future, such as a society without cash.
It's possible that the Federal Reserve Bank is not what we think it is.

First, let's define central bank digital currency (CBDC). According to the Federal Reserve System Board of Governors, a CBDC is a widely accessible digital version of central bank money.

Money that is the central bank's liability is referred to as "central bank money." Currently, the Federal Reserve issues physical currency, and commercial banks hold digital balances maintained by the Federal Reserve are the two forms of central bank money in the United States.

Before we introduce the theory on the banishment of cash, let's talk about two things. First, the Federal Reserve Bank was established as a criminal institution; and second, financial knowledge was purposefully and ruthlessly removed from school systems.

The educational conspiracy of the Federal Reserve

Consider the following: who decides what is taught in our schools and who governs education?

John D. Rockefeller established the General Education Board in 1903. The reasons he founded this organization were hotly debated. Some claim he made it to enhance learning. Some claim he did this to take control of the US educational system.

Andrew Carnegie, another Baron, was promoting his Foundation for the Advancement of Teaching at the same time.

It appears that Rockefeller and Carnegie were attempting to shape the American educational agenda in order to decide what subjects students may be taught in the classroom.

We would like to know what their agenda was.

Some claim that Rockefeller and Carnegie were working for the benefit of future generations, while others make the exact opposite claim.

Reports from 60 to 100 years ago contain hard-to-believe, provocative information from reliable sources, according to many. They are accusing Rockefeller and Carnegie of planning a crime against the citizens of the United States.

Which offenses were they? removing all financial instruction from the school system, so destroying any genuine future these kids may have. Children could never become business owners or entrepreneurs without this knowledge. No, they would develop into something far more significant for Carnegie and Rockefeller.

They would have no choice but to serve as employees for the powerful financial titans.

With decades of experience behind us, we can now look back on those reports and see some merit in their worries. In order to undermine the American spirit, Rockefeller and Carnegie turned to the educational system.

Americans are people who emigrated from their native countries in search of an opportunity to live better lives—a chance to realize the American Dream—and freedom from oppression. Because of this, Americans' DNA is too strong, independent, and ambitious to be dominated by the wealthy and powerful. Too powerful to be just workers.

Those who were critical of Carnegie and Rockefeller held the view that in order for the wealthy and powerful to continue controlling the American people and their money, the country's spirit needed to be undermined and the people forced to rely on government assistance and employment.

The very people in command of the school system would own American minds once the spirit was crushed. The reason this matters to the "Elites" is because they can now control majority of people’s thoughts and influence the world to do or think almost anything. This is the true reason our schools don't teach financial literacy.

Controlling our finances is a primary objective of the mind-control operation.

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Federal Reserve Bank Establishment

Let's talk about the Federal Reserve Bank, the second participant in this "conspiracy." Following years of financial instability and the threat of World War I, Congress established the Federal Reserve Bank in 1913.

Fearing a panic, Americans believed that a national bank would shield them. This occurs frequently. Fear mongering allows the government to seize additional authority. Even though several of our Founding Fathers opposed central banks and believed they were unconstitutional, this nonetheless happened.

It was explained to American residents that the Federal Reserve would maintain a reserve of liquid assets and permit credit and currency to fluctuate in response to changes in the country's economy.

President Woodrow Wilson signed the Federal Reserve Act into law on December 23, 1913, thereby founding the Federal Reserve.

Four general duties comprise the Federal Reserve as it exists today:

By affecting the availability of credit and money in the economy, it implements the country's monetary policy. Put another way, the Fed modifies credit and money policies to achieve the closest practicable state of full employment and stable prices.
In order to safeguard the country's financial stability as well as the (purported) credit rights of individuals, it oversees and controls banks and other significant financial institutions.
In addition to containing any potential systemic risk, it preserves the stability of the financial system (think: establishing exceptionally low interest rates during the recession).
It offers financial services to foreign official institutions, American financial institutions, and the US government.

But experts believe that the Federal Reserve Bank can only do two things: generate money out of thin air and lend money that they do not possess. As an aside, it's critical to realize that the Federal Reserve Bank is neither a bank, nor is it federal. It also lacks reserves. However, as previously said, the Federal Reserve Bank is able to manage the US money supply.

Note: The Federal Reserve Bank shall not be referred to as "the Fed." Rather, we aim to emphasize how ridiculous the FAKE moniker they employ to deceive the audience is.

How CBDCs Operate?

Do we recall when we first discussed CBDCs? Let's talk about how they function now (sit tight, everything is connected).

CBDCs come in two varieties: wholesale and retail.

Wholesale CBDCs are comparable to storing reserves in a central bank, claims Investopedia. The central bank grants an institution an account to deposit funds or use to settle interbank transfers. Then, central banks can control lending and set interest rates by utilizing monetary policy instruments like reserve requirements or interest on reserve balances.

Moreover, "Retail CBDCs are digital currencies used by businesses and consumers that are backed by the government." The risk that private digital currency issuers would go bankrupt and forfeit their clients' investments is eliminated by retail CBDCs.

Two varieties of retail CBDCs exist. The ways that different users obtain and utilize their money vary:

Retail CBDCs that are token-based can be accessed using either public or private keys, or both. Users can conduct transactions anonymously with this validation technique.
To access an account, account-based retail CBDCs require digital identification.

Ups and downs for CBDCs

There are advantages and disadvantages to employing CBDCs. Advantages include increased payments and efficiency, financial inclusion, and easier fiscal and monetary policy implementation.

What's the downside? The primary concern regarding CBDCs is the potential for privacy to be violated. In the event that a digital currency system came under their jurisdiction, governments and central banks might monitor financial activities. Bid adieu to solitude. Additionally, keep in mind the potential consequences for traditional financial institutions as well as the risks related to cybersecurity and technological failures.

Given this, why promote the idea of a society without cash?

Hypothesis about the development of a society without cash

Most individuals agree that there are two primary justifications for having a cashless world. Negative interest rates are the first explanation.

Negative interest rates are determined by the Federal Reserve.

Assume for the moment that the Federal Reserve sets an interest rate of 5%. Each bank that maintains money reserves with the Federal Reserve Bank is required to pay 5% of that amount. It is crucial to realize that the banks are being penalized for not making the loan. The banks bear the cost of "saving" the money. That's the meaning of a negative interest rate. The banks lend all of that money into the real economy because they don't want to pay the 5%. Now that there is more money in the economy, consumption and product purchases are increased. Additionally, savings are reduced.

Since the banks are also charging them interest, none of the people who are borrowing money from them want to lose money. Thus, they must spend the funds. How do they go about things? They use it up. They purchase brand-new homes, vehicles, everything. They do not make any savings.

Keynesian economists predict that this will result in a booming economy. The purchases are supporting the economy as long as the money is passing through different hands. Nothing is better for society, according to a Keynesian, than for everyone to spend every penny they make and save none.

However, there is an issue.

Economist and specialist in international banking Richard Werner has identified the issue as the banks' failure to lend the reserves they have with the Federal Reserve Bank. There is no rise in credit, no rise in consumption, and thus no flourishing economy because the reserves are not being given out.

The theory of negative interest rates is false.

This gets us to the second justification: Based on studies, we can conclude that governments and the Federal Reserve Bank favor a cashless world. One little-known aspect of a cashless society is the power of the government to perform "bail-ins." All of your surplus output is stored in this banking system as digital currency in the event that there is no cash in circulation. Our money is now at risk. It cannot be kept secure in our house safe or beneath your mattress. Why does that matter? Uncle Sam is deeply in debt—trillions of dollars. Examine the historical actions of indebted governments. They embezzle your money, the money of their inhabitants.

If our money was digital, Uncle Sam could swoop in and steal it all for himself and there would be no way for you to get it out of the bank. He may just swoop in and use our money to pay off his $34+ trillion (and rising) debt.

Now, while this makes a lot of sense, it isn't the primary justification for their desire to outlaw cash transactions. George's motivation is superior.

The true motivation behind the cashless society

Then why is there a REAL desire for a cashless society? The money from the Federal Reserve Bank cannot enter the economy since the banks are unwilling or unable to lend their reserves. Therefore, all banks would essentially be required to pay a tax on these reserves that are held at the Federal Reserve Bank if the Federal Reserve Bank were to set interest rates to minus five percent. As a result, banks merely request the barest amount of reserves. The system's reserve capacity is subsequently reduced as a result. Less reserves in the system indicates a reduced capacity to provide loans, which in turn results in fewer loans.

(Note: Just to be clear, the reserves are needed to support the deposits that are generated by the loans themselves; the banks are not lending out the reserves. Stated differently, the reserves enable the loans without the banks having to lend the reserves themselves.)

We are now approaching the juicy stuff. Small retail banks are under a great deal of strain because of these negative interest rates. Due to increased government oversight, negative interest rates make it harder for small banks to lend money and raise their costs. This raises the cost to the customer and makes it more difficult to grant loans.

Small retail banks have to nickel and dime their customers to death since they are unable to turn a profit through traditional lending.

From the perspective of the customer, this greatly reduces their competitiveness.

What does the Federal Reserve Bank want to set up the tiny retail banks in this way, then? According to research, the impact of these negative interest rates on smaller banks leads to their merger and the closure of several branches. Consequently, traditional banks—those that lend money to companies for investments—have been heavily pressured.

Negative interest rates essentially aim to drive out small banks and consolidate the banking industries in industrialized nations, hence increasing concentration and control within the financial industry.

This is particularly troubling because most of the productive lending in the actual economy comes from these tiny retail banks. These banks provide loans to small and medium-sized companies that boost output, spur economic expansion, reduce income disparity, and control inflation.

However, if the tiny retail banks fail, the major banks will end up with all of the business. The issue is that small and mid-sized firms are of no interest to these institutions. Large transactions that financialize the economy and inflate asset bubbles are essentially the only things these major banks are actually interested in doing.

Things are about to become crazy.

Final destination of a cashless society

Let's quickly review: Cash is not permitted. The Federal Reserve Bank squeezes all those tiny retail banks until they go out of business by dropping interest rates into negative territory.

Because small and mid-sized firms are the foundation of economic growth, their inability to obtain capital causes the real economy to contract. "Oh please protect us, we can't get ahead in the real economy anymore," is how the common individual looks to the Federal Reserve Bank and the government for assistance. "No problem, there's a Federal Reserve Bank Guaranteed Fund," the Federal Reserve Bank and the government say (our term, not George's).

Thus, every citizen uses the Federal Reserve Bank Guaranteed Fund to invest their hard-earned money in the economy.

Since the Federal Reserve Bank is the only remaining "safe" game in town, all of the inhabitants are now invested in it. They are compelled to wager on speculation, asset values, and bubble timing. Hence, all of these bubbles are getting bigger and greater as the actual economy contracts and the financial economy grows rapidly.

The Federal Reserve Bank is aware of this and anticipates that eventually the entire scheme will collapse.

The major banks then approach the Federal Reserve Bank and demand, "Bail us out! There is a systemic risk. That's when the Federal Reserve Bank responds, "No," glancing at the larger institutions.

They permitted them to fail. Then, both the large and small banks were destroyed by the Federal Reserve Bank. The lone player in town is the Federal Reserve Bank. They are in complete control of the credit and money.

They have control over us if they own the credit and the money. And the true cause of a cashless society is that control.

After there is only the Federal Reserve Bank and bank credit options have been eliminated, the Federal Reserve Bank will handle all transactions, money generation, and money allocation.

We are aware that the conspiracy is really large.

What then should we do about it?

At masterinvestor, we still encourage all for studying and investing in our financial literacy. Seek out bright minds to learn from and surround ourselves with more intelligent individuals than us. Stated differently, place our money on real cash flowing assets, particularly our financial education.