There has been much discussion recently amongst global leaders regarding the creation of central bank digital currencies (or “CBDCs”). China is likely still the leader in this effort. However, the United States is now one step closer to having its own digital dollar.
This week we learned that some of the biggest names in banking and finance, like Citigroup, HSBC, Mastercard, and Wells Fargo, teamed up with the New York Federal Reserve to launch a pilot program to explore the possibilities of a programmable digital dollar. A programmable digital currency may sound harmless, but it has serious implications for how our government and society operate.
Digital Dollar And Its Consequences
As an initial matter, one of the most significant consequences of a digital currency is that it enables the government to instantly confiscate money from citizens’ bank accounts. This is a worrisome situation that we should take seriously.
As an attorney, I have seen firsthand police and government officials abuse civil forfeiture laws to wrongfully seize property from citizens. These sorts of seizures happen all the time in America, and they are likely even more prevalent in other parts of the world.
However, digital currencies pose additional issues for society because they can be programmed to do a variety of harmful things. For example, digital currencies may well have expiration dates in the future. This would be an enticing option for governments to pursue if they want individuals to spend their money to stimulate the economy quickly.
Digital currencies can also be programmed to decline certain transactions that authorities don’t want citizens to make. For instance, if your leaders decide they do not want you to eat meat or fill up your SUV with gas this month, digital currencies provide them with a powerful instrument to ensure your compliance. Digital currencies also make it way easier for governments to print more money, exacerbate inflation, and engage in currency manipulation.
Let us not forget, however, that these undesirable outcomes are not inevitable. They are only possible if the people lose focus and do not pay attention to what their government is doing. To quote President Reagan, “freedom is never more than one generation away from extinction.”
It is up to the Millennials and Zoomers to ensure they are not the generations that lose it.
Ashton Cohen is an attorney, investor, writer, and host of Ashton Cohen: The ELECTile Dysfunction Podcast.
If you enjoyed this article, check out Ashton’s conversation with Amity Shlaes.