EDITOR NOTE: When it comes to governance, there’s a long history of draconian outcomes originating from well-intentioned causes. Treasury Secretary Yellen’s support for the development of the digital dollar is no exception. It allows the government and central bank to better control the distribution of money, ensuring the “financial inclusion” of low-income households. What to focus on here is not the part about low-income households but the part about control. The digital dollar would make it easier for the government to shift the country into a 100% digital cash system. Once that’s achieved, the government has full control over the distribution, surveillance, and regulation of all fiat currency. Wrested from a market-driven system, the government and Fed can intervene as they wish, issuing currency unfettered, and forcing people to spend in order to control the economy under threat of indirect confiscation via negative interest rates. Once completely digitized you lose the ability to stash cash under your mattress to shield your family's savings from the destructive forces of government manipulation. This complete monopoly over money can shift from a Socialism 2.0 to a Corporatocracy 2.0 depending on the ruling regime. Either way, what’s abolished along with physical cash would be any vestiges of free-market capitalism, financial privacy, and American freedom.
Treasury Secretary Janet Yellen signaled the Biden administration supports research into the viability of a digital dollar, a shift from the lack of enthusiasm shown for the concept under her predecessor, Steven Mnuchin.
“It makes sense for central banks to be looking at” issuing sovereign digital currencies, Yellen said at a virtual conference on Monday hosted by the New York Times.
She said a digital version of the dollar could help address hurdles to financial inclusion in the U.S. among low-income households.
“Too many Americans don’t have access to easy payments systems and banking accounts, and I think this is something that a digital dollar, a central bank digital currency, could help with,” she said. “It could result in faster, safer and cheaper payments, which I think are important goals.”
A number of central banks, including the U.S. Federal Reserve, have been conducting research into how digital versions of their own currency would work. Officials generally see both opportunity and risks and many central banks have moved slowly to embrace the idea, while China has proceeded with pilot-program tests of a digital yuan.
“This is the most forward-leaning a Treasury secretary has ever been in endorsing a digital dollar,” Josh Lipsky, director of the Atlantic Council’s GeoEconomics Center, said of Yellen’s comments Monday. “I read it as an endorsement for Treasury to be involved in the exploration of central bank digital currencies, and we hadn’t seen that before.”
The U.S. central bank announced last year that staff members at the Federal Reserve Bank of Boston were conducting research in conjunction with the MIT Media Lab in Cambridge, Massachusetts, seeking to construct and test a hypothetical digital dollar.
Some lawmakers have expressed interest. Senate Banking Committee Chair Sherrod Brown, an Ohio Democrat, has advocated using digital technology to help reduce costs for accessing and transferring money, especially those outside the traditional banking system.
Bitcoin, for its part, is championed by its supporters as essentially a separate financial system, independent from the control of central banks and any potential state-sponsored digital currencies.
Even so, Fed Chair Jerome Powell has stressed it’s more important for the U.S., as keeper of the world’s most popular reserve currency, to be right rather than first on this front.
Yellen echoed that, saying officials must first address a number of issues -- including how a digital currency might affect traditional bank deposits, financial stability, consumer protection and illicit transactions.
“There’s a lot to consider here, but it’s absolutely worth looking at,” she said.
Yellen’s predecessor was cool on the idea. In 2018, he said the Fed and Treasury were studying the pros and cons of digital dollars, but “we don’t think there’s any need for that at this point.”
Originally posted on Yahoo! Finance