Fully agree with your views on CBDCs vs the benefits of Bitcoin.
In zeitgeist terms there’s a real storm of resistance to CBDCs (rCBDCs) to do with potential state monitoring, privacy, enforced limitations or restrictions of use and control or exclusion of citizens.
But, with respect, CBDCs — or specifically retail rCBDCs — may be an irrelevant deflection to a far greater concern for all the same reasons you list about rCBDCs.
rCBDCs are planned to be part of fiat money supply in their respective countries. But there’s a widespread, fundamental misunderstanding of how deposits - ie money supply - come about. Deposits are created by the commercial banks out of thin air as a balance sheet liability entry when banks lend. 97% of money is created this way. In other words, it’s NOT central banks or governments that issue most of our money. Here’s a useful intro to Money Creation by Commercial Banks from the #BoE:
rCBDCs are just fiat money redeployed on centralised, digital ledgers. However, because only ~3% is central bank money (cash notes & coins), rCBDCs will be mostly IRRELEVANT— Even if implemented, rCBDCs will make little difference to the ~97% of money created by commercial banks and used for today’s digital money payments and banking. The bottom line is rCBDCs will only impact part of the 3% cash supply.
But, because of the 97% of money supply, BANK-issued, fiat-backed STABLECOINS and TOKENISED DEPOSITS will be a much bigger deal.
When you further realise that Bank Stablecoins and Tokenised deposits can be deployed with (smart contract) programmatic features — just like rCBDCs — then this is where THE SAME CONCERNS AND FEARS ABOUT rCBDCs APPLY, and then some more too.
So here’s why I think it’s ironic and misdirected that so many people are focussed on CBDC concerns:
First, if rCBDCs are implemented it will be commercial banks who manage and OWN the deployment on behalf of central banks. It’ll be analogous to KYC checks on steroids, but with further powers to constrain who, how and why rCBDCs get used, with banks given a free rein to do as they wish within loose regulatory parameters. Banks will help collect data on how rCBDCs will be used. It will be banks in practice that will control citizens (customers) programmatically through smart code; and
Secondly, as mentioned, I believe that it’s not rCBDCs but Deposit Tokens and bank Stablecoins that will be the big deal. Programmatic, smart versions of these represent ALL the same libertarian concerns as CBDCs but likely without a scrap of regulation to protect customers (under commercial contract). Regulators will be blinkered! Banks will have unfettered control and influence.
So, it’s banks, not central banks and governments, that we really need to worry about and the real irony is that CBDCs are currently providing a total deflection away from what is really happening with bank money.
Currently, Commercial Banks are paying lip-service to rCBDCs but are actually forging ahead with their own stablecoins and deposit tokens, especially smart ones. By doing so, they’ll not only be Too Big To Fail, but will be unassailable, especially as they’ll also be strengthening their collective competitive advantage over wholesale-funded non-bank lenders who simply don’t possess banking licenses / charters that enable banks to create money out of thin air.
Governments, meanwhile, because of their levels of debt-to-GDP (another irony, because debt is partially linked to bank-created money-supply, as well as QE Stimulus and other monetary policy failings), will need commercial banks more than ever to help transmit ever-increasing levels of money stimulus just to service their debts. It’s a vicious spiral that bank-issued stablecoins and deposit tokens will not only reinforce but could further accelerate.
Ultimately, at some some point the whole fiat banking model (money supply / sovereign debt) — ie the fiat experiment that started post 1971 when the ‘sound money’ gold standard was dropped — could implode … It’s why everyone should hold a small amount of bitcoin (a personal opinion, not investment advice!).
Richard
ps Enjoy Lugano — it’s one of my favourite cities with great memories!
however - the shorter explanation and "way in" into people's minds, who are completely unaware of this takeover of their freedoms and finances, is best done in stages. So you can lure them in with CBDC which is easier to understand, and later proceed to explain the rest.
I suggest you write an article with your above insights, and share it everywhere. it's important.
One of many important quotes in this excellent Efrat Fenigson interview: "...we the citizens are starting to feel the tightening control over and growing erosion of our assets, the unstable nature of most investment assets, and in general we’re just tired of the yields-chasing race, to try and beat inflation. In such a reality, Bitcoin is a refreshing paradigm shift."
Fully agree with your views on CBDCs vs the benefits of Bitcoin.
In zeitgeist terms there’s a real storm of resistance to CBDCs (rCBDCs) to do with potential state monitoring, privacy, enforced limitations or restrictions of use and control or exclusion of citizens.
But, with respect, CBDCs — or specifically retail rCBDCs — may be an irrelevant deflection to a far greater concern for all the same reasons you list about rCBDCs.
rCBDCs are planned to be part of fiat money supply in their respective countries. But there’s a widespread, fundamental misunderstanding of how deposits - ie money supply - come about. Deposits are created by the commercial banks out of thin air as a balance sheet liability entry when banks lend. 97% of money is created this way. In other words, it’s NOT central banks or governments that issue most of our money. Here’s a useful intro to Money Creation by Commercial Banks from the #BoE:
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy
rCBDCs are just fiat money redeployed on centralised, digital ledgers. However, because only ~3% is central bank money (cash notes & coins), rCBDCs will be mostly IRRELEVANT— Even if implemented, rCBDCs will make little difference to the ~97% of money created by commercial banks and used for today’s digital money payments and banking. The bottom line is rCBDCs will only impact part of the 3% cash supply.
But, because of the 97% of money supply, BANK-issued, fiat-backed STABLECOINS and TOKENISED DEPOSITS will be a much bigger deal.
When you further realise that Bank Stablecoins and Tokenised deposits can be deployed with (smart contract) programmatic features — just like rCBDCs — then this is where THE SAME CONCERNS AND FEARS ABOUT rCBDCs APPLY, and then some more too.
So here’s why I think it’s ironic and misdirected that so many people are focussed on CBDC concerns:
First, if rCBDCs are implemented it will be commercial banks who manage and OWN the deployment on behalf of central banks. It’ll be analogous to KYC checks on steroids, but with further powers to constrain who, how and why rCBDCs get used, with banks given a free rein to do as they wish within loose regulatory parameters. Banks will help collect data on how rCBDCs will be used. It will be banks in practice that will control citizens (customers) programmatically through smart code; and
Secondly, as mentioned, I believe that it’s not rCBDCs but Deposit Tokens and bank Stablecoins that will be the big deal. Programmatic, smart versions of these represent ALL the same libertarian concerns as CBDCs but likely without a scrap of regulation to protect customers (under commercial contract). Regulators will be blinkered! Banks will have unfettered control and influence.
So, it’s banks, not central banks and governments, that we really need to worry about and the real irony is that CBDCs are currently providing a total deflection away from what is really happening with bank money.
Currently, Commercial Banks are paying lip-service to rCBDCs but are actually forging ahead with their own stablecoins and deposit tokens, especially smart ones. By doing so, they’ll not only be Too Big To Fail, but will be unassailable, especially as they’ll also be strengthening their collective competitive advantage over wholesale-funded non-bank lenders who simply don’t possess banking licenses / charters that enable banks to create money out of thin air.
Governments, meanwhile, because of their levels of debt-to-GDP (another irony, because debt is partially linked to bank-created money-supply, as well as QE Stimulus and other monetary policy failings), will need commercial banks more than ever to help transmit ever-increasing levels of money stimulus just to service their debts. It’s a vicious spiral that bank-issued stablecoins and deposit tokens will not only reinforce but could further accelerate.
Ultimately, at some some point the whole fiat banking model (money supply / sovereign debt) — ie the fiat experiment that started post 1971 when the ‘sound money’ gold standard was dropped — could implode … It’s why everyone should hold a small amount of bitcoin (a personal opinion, not investment advice!).
Richard
ps Enjoy Lugano — it’s one of my favourite cities with great memories!
Thanks for that important addition Richard.
Yes I agree with you re. the importance of stablecoins and tokenized assets. I do mention it in my work, both on this article: https://efrat.substack.com/p/on-the-brink-of-a-dramatic-change
and in my lecture (which I gave already in Prague, Mallorca and Miami): https://efrat.substack.com/p/cbdc-vs-bitcoin-a-world-of-control
however - the shorter explanation and "way in" into people's minds, who are completely unaware of this takeover of their freedoms and finances, is best done in stages. So you can lure them in with CBDC which is easier to understand, and later proceed to explain the rest.
I suggest you write an article with your above insights, and share it everywhere. it's important.
Bitcoin is the CBDC. Roger K Ver, Bitcoin whistleblower, talks about it in his new book Hijacking Bitcoin. He also discusses it in a recent interview:
https://odysee.com/@RogerKVer:9/btc-has-fallen-behind-cbdc's:0
More about how Bitcoin through stablecoin is buying US Treasuries/Debt:
https://unlimitedhangout.com/2024/07/investigative-reports/trump-embraces-the-bitcoin-dollar-stablecoins-to-entrench-us-financial-hegemony/
Bitcoin is also being labeled as God's currency for the World and the Abrahamic Faiths:
https://odysee.com/@BITCOIN:98c/god-bless-bitcoin-full-movie:d
A view I disagree with.
One of many important quotes in this excellent Efrat Fenigson interview: "...we the citizens are starting to feel the tightening control over and growing erosion of our assets, the unstable nature of most investment assets, and in general we’re just tired of the yields-chasing race, to try and beat inflation. In such a reality, Bitcoin is a refreshing paradigm shift."
Thanks Tom!
Get wise to the truth about CBDCs in my podcast series here:
https://soberchristiangentlemanpodcast.substack.com/p/s1-cbdc-deception-1-of-3-rebroadcast