Plans for a Digital Dollar Are in the Works
Plans for a Digital Dollar Are in the Works
By Todd Strandberg
For years, several central banks have contemplated the introduction of a digital currency. These talks have never gone beyond the theoretical planning stage because it would be a huge move to switch to something that is outside the current banking system.
The Federal Reserve has been researching the nuts and bolts of a digital currency for some time. The Board of Governors has a technology lab that has been building and testing a range of distributed ledger platforms to understand their potential benefits and tradeoffs. Staff members from several Reserve Banks, including Cleveland Fed software developers, are contributing to this effort.
The business world has made huge advances in creating technology that makes a 100% digital currency system possible. You can now use your smartphone to conduct nearly any financial transaction. The day may soon come when children have no knowledge of paper currency.
The COVID-19 crisis has motivated the Federal Reserve to take a series of bold steps, and a digital dollar is now on the front burner. The Fed is planning to send money directly to Americans In The Next Crisis: “By getting money to consumers, you can limit the depth and duration of a recession.”
Former Fed official Simon Potter sees the Federal Reserve as being able to act faster than the government. If the economy goes to crash mode, the Fed can get money swiftly to people who need it most in a crisis.
Potter added, “It took Congress too long to get money to people, and it’s too clunky. We need a separate infrastructure. The Fed could buy the bonds quickly without going to the private market. On March 15 they could have said interest rates are now at zero, we’re activating X amount of the bonds, and we’ll be tracking the unemployment rate—if it increases above this level, we’ll buy more. The bonds will be on the asset side of the Fed’s balance sheet; the digital dollars in people’s accounts will be on the liability side.”
Cleveland Fed president Loretta Mester delivered a speech to the Chicago Payment Symposium titled “Payments and the Pandemic” in which, after going through the big picture boilerplate, Mester goes straight to the matter at hand.
In the section titled “Central Bank Digital Currencies,” the Cleveland Fed president writes that “the experience with pandemic emergency payments has brought forward an idea that was already gaining increased attention at central banks around the world, that is, central bank digital currency (CBDC).”
And in the shocking punchline, then goes on to reveal that “legislation has proposed that each American have an account at the Fed in which digital dollars could be deposited as liabilities of the Federal Reserve Banks, which could be used for emergency payments.”
The US Constitution states that all spending needs to be approved by the House of Representatives. There is no provision that authorizes the Fed to issue money in any form to the public. Since much of what the Fed does is illegal, it doesn’t matter what the founding fathers had to say.
The Fed realized that sending out cash doesn’t guarantee that will spend the money to reach the goal of boosting the economy. By having a digital dollar, they can add a time limit to each account. If you don’t spend the money in a set time period, it may disappear.
The Fed’s digital dollar will fit perfectly in with the coming mark of the beast. People will line up for days to receive a chip that will give you $1,200 a month for free. I can see now why the Book of Revelation makes such strong warning against people taking the devil’s mark.
“And another angel, a third, followed them, saying with a loud voice, ‘If anyone worships the beast and its image and receives a mark on his forehead or on his hand, he also will drink the wine of God’s wrath, poured full strength into the cup of his anger, and he will be tormented with fire and sulfur in the presence of the holy angels and in the presence of the Lamb. And the smoke of their torment goes up forever and ever, and they have no rest, day or night, these worshipers of the beast and its image, and whoever receives the mark of its name’” (Revelation 14:9-11, ESV).
—Todd