Source: Hot Air
The crypto market is being slammed by yet another scandal. With the collapse of FTX you would expect that the market would be hesitant to jump onto yet another digital token.
You would be wrong. The collapse of FTX has opened up a whole new world for…the US federal reserve, of course. The federal reserve is the king of fiat currency, so it only makes sense that they expand into even new layers of evanescence by putting the dollar on the blockchain.
— Watcher.Guru (@WatcherGuru) November 15, 2022
NEW YORK, Nov 15 (Reuters) – Global banking giants are starting a 12-week digital dollar pilot with the Federal Reserve Bank of New York, the participants announced on Tuesday.
Citigroup Inc , HSBC Holdings Plc (HSBA.L), Mastercard Inc (MA.N) and Wells Fargo & Co (WFC.N) are among the financial companies participating in the experiment alongside the New York Fed’s innovation center, they said in a statement. The project, which is called the regulated liability network, will be conducted in a test environment and use simulated data, the New York Fed said.
This is what I would call “dipping one’s toe in the water,” and hardly a sign of diving in head first from the high dive. Which, you have to admit is a very good thing. As much as the US dollar is a fiat currency house of cards, it is at least the devil you know, and we all pretend that the dollar has some inherent value.
It is that pretending that keeps it and the US economy afloat. That is no small thing. Especially since all forms of currency –even gold and silver–have value beyond their physical properties only because we have all decided they do. There is a form of arbitrariness to every medium of exchange. We use them because they reduce friction in trade tremendously. Currency can be seashells, smooth stones, diamonds, or electronic bits. Paper has been a popular choice.
Blah blah blah. I am not here to give you a lesson in currency, and if you want one there are far better places to go in any case. Google “fiat currency” and have a blast.
The pilot will test how banks using digital dollar tokens in a common database can help speed up payments.
Earlier this month, Michelle Neal, head of the New York Fed’s market’s group, said it sees promise in using a central bank digital dollar to speed up settlement time in currency markets.
Frankly I am not exactly certain what they can possibly mean by these statements–most dollars are already digital. It’s not like the physical dollars move from one bank to another when accounts are settled. That would make your Zelle transfer to your kid pretty useless. Seems like a dodge to me. I couldn’t tell you what is currently in my wallet, but it is under $20. I haven’t checked in weeks.
What is significant to me about the Fed getting into the digital currency biz–something they have hinted at for a long while–is how much more control they will have over the flow of money. In particular the move to a “digital dollar” will allow the government to track your purchases with a level of precision unmatched in history.
And that is the goal. Already the big payment processors have enormous amounts of data about you, but moving people away from currency into a purely digital realm is a surveillance tool unsurpassed in human history. Physical currency has been the bane of the government’s existence for decades, allowing unmonitored transactions. That irritates the government watchdogs to no end.
The excuse for monitoring transactions is fighting crime. The promise of digital currency is ease of transactions. The goal of a Fed digital currency is surveillance.
The growth of the virtual money economy is already well on its way. Most of us barely carry any cash. Cryptocurrency was intended to allow for unmonitored transactions and a brave new unmonitored world, but that hasn’t been working out too well. Although I do have to put on my tin foil hat and notice the coincidence between the Fed’s rollout of this idea, the closing of the 2022 campaign, and the collapse of FTX–a firm very much tied to the Democrat Party and the Establishment.™
I suspect that the last two are deeply connected–FTX could only be allowed to fail once its collapse couldn’t harm the Democrats–but I am mostly skeptical that the Fed’s timing on this is anything but coincidental. I could be wrong, though. Just sayin’. Adjust your own tin foil hat and decide for yourself on that one.
The Fed dipping its toe into the crypto market is a sign of things to come, but as with all things government related and especially currency related, it will probably take a while to get this going. Screwing up the way dollars work is always dangerous–look at the price we are paying for printing a few trillion virtual dollars over the past few years. Ouch.
I am anti-surveillance, even though bad things happen in places that aren’t monitored well. Keep the cameras aimed at the places most likely to be dangerous, not on everybody’s bank accounts. But I suspect I am spitting in the wind on this one. A digital dollar is coming; the economy will be tokenized. Crypto, as with everything else inconvenient to the powers-that-be, will be tamed.
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