The U.S. Needs a Better Digital Dollar
China’s new digital yuan could compete as a reserve currency and undermine America’s financial dominance.
China is giving the U.S. a run for its money. The recent launch of a digital form of the Chinese yuan—bolstered by a disruptive new technology—threatens the dominance of the U.S. dollar and American hegemony. U.S. policymakers should heed the moment and respond with a strengthened form of the dollar in service to the national interest.
[OCS: A few important points to consider. One, we don’t need a “better digital dollar” because America does not require a digital dollar at all – especially one that creates a surveillance state open to command and control by the regime in power.
Two, competing with China to enable a state-controlled economy is a race to the bottom, in this case, domination and loss of freedom.
Three, appealing to national interests to create a digital dollar only benefits the elites and the current ruling regime.
And four, one need only consider the civil rights abuses perpetrated by the regime in the name of national security, namely the Patriot Act and the open, unpunished abuse of the FISA Court by the FBI and Department of Justice.]
Enter the game-changer of cryptocurrency. Don’t be deceived by the thousands of private cryptocurrencies masquerading as money in some form of circulation. Many of these schemes are fraudulent, and most are worthless. Cryptocurrency is a misnomer. It isn’t secretive and it isn’t money. It is software. And it is a significant technological breakthrough that poses promise and peril for the American-led global financial system. In the hands of a powerful sovereign such as China, the new software is an effective way to launch the yuan into the big leagues.
[OCS: The regime would do anything to kill cryptocurrency as a relatively anonymous medium of exchange.
No, it is not money or currency as the government defines it, but nevertheless, it is a medium of exchange beyond the control of central banks and financial institutions that serve as fee-driven gatekeepers .
And, any government-sponsored digital dollar is also software and vulnerable to the same hacking and loss risks.
For those who believe the government can protect its software from hacking or exposure from radical partisans with the keys to the kingdom, just remember the government lost all of its personnel records to China, including the details of security clearance interviews. And the NSA, the nation's crypto specialists, lost a treasure trove of classified software and documents.
And, to position the adoption of an American digital dollar as a check on Communist China and other despotic nations is a false and misleading premise as both the Chinese and North Koreans have created “superdollars,” almost undetectable currency counterfeits and are most likely to do it with hacking the digital dollar creation or wallet storage.”
That’s why China’s new central bank digital currency, called e-CNY and launched in April 2020, is so consequential. China’s e-CNY will be the technology backbone for most wholesale transfers among the People’s Bank of China, financial firms and foreign institutions. If foreign businesses want continued access to the vast Chinese market, they will be compelled to use the digital currency and its wholesale payment network to conduct business. When fully implemented, e-CNY will also be the dominant retail protocol, eventually handling most personal financial transactions. China’s central planners will have a powerful tool to monitor transactions and enforce compliance with government directives.
[OCS: As you can clearly see, adopting a U.S. digital dollar is meant to protect the financial institutions and the ruling regime – not the American citizen who are surrendering another God-given freedom for nothing of intrinsic value.
Any U.S. government claim of “but we’re different" is a big lie. The government knows that man cannot control climate, yet they continue bilking the public. The government knows they cannot protect against committed terrorists, yet they tighten domestic surveillance on American citizens while leaving our borders unprotected.”]
China’s sphere of influence is expanding in Asia, Russia and the Middle East. Its leaders envision e-CNY as a parallel international payment and currency network to that of the West. If a new bipolar world emerges—by some imprudent mix of Chinese force and American fatigue—the dollar’s dominant role could be undermined. Decoupling the world’s two largest economies wouldn’t be limited to imports and investment, munitions and might. It could well include the rise of a powerful alternative reserve currency.
[OCS: Yes, China’s sphere of influence is expanding – because of the fecklessness of our government leaders and those being coerced or bought by hostile foreign regimes. The government and specific corporate interests are selling out America and then blaming innocent American citizens whom they punish with confiscatory taxes, increased rules and regulations, and increasing surveillance, including DOJ/FBI intimidation.]
Absent leadership by the U.S., authorities in China—with a decidedly different view of the public good—are trying to use the new technology to erode America’s global standing. The Fed and Treasury should cease to play the slow game while China builds a new digital monetary and financial architecture. America’s other big trading partners won’t wait around while U.S. authorities consider incremental reforms. The status quo is neither satisfactory nor sustainable.
[OCS: I smell bullshit! Don’t speak about the “public good.” The public good is being unmolested by your government. The public good is protecting America’s sovereignty and Constitution. The public good is having the most powerful military possible. The public good punishes those who have stolen our intellectual property by destroying offending knock-offs wherever they occur or are used.
The privately-owned Federal Reserve and the Department of Treasury are corrupt and caught in a conspiracy to defraud the American public as they protect the elites’ assets.]
One option, popular among some in Washington, is for the U.S. to create a dollar copycat of China’s digital yuan. The Fed would intermediate wholesale and retail payments, including as the direct counterparty to U.S. consumers. This is at odds with the American ethos of privacy from government intrusion. The specter of state surveillance of individual spending is dangerous. The interface with citizens should rest with the private sector.
[OCS: This is prime bullshit. Do you see what they are doing here? The powers that be openly acknowledge that state surveillance of individual spending is dangerous – but suggest the answer is to protect the public by using private sector entities as an interface to the system.
Bullshit! Bullshit! Bullshit! Three bags full.
Look at the private tech companies and financial institutions that are accountable to government regulatory agencies and serve as their proxy agents.
The number of financial institutions that refuse to serve gun-related manufacturers and vendors. The number of financial institutions that refuse to serve politically-connected companies that offer opposition to the regime.
The private companies that depend on government rules, regulations, monitoring, and sanctions, not to mention government monopolies, contracts, grants, subsidies, and favorable tax policies, are susceptible to coercion. Already they are infiltrated with former government agents with loyalty to their former agency and not above doing favors.]
The Biden administration appears to promote another alternative: Give the government’s imprimatur to privately issued stablecoins. I am skeptical that a host of private cryptocurrencies are sufficiently strong and reliable proxies for the U.S. dollar. I also doubt that bank-like regulation of private stablecoins would ensure their stability in stressful times, absent government bailouts.
[OCS: The Biden Administration and an unknown segment of our government are owned or controlled by China. Especially the corrupt Biden Crime family subject to blackmail.]
So what to do? The U.S. should announce the essential design features of a digital dollar to be used exclusively for wholesale transactions. The existing wholesale payment system is slow, cumbersome, opaque and expensive. The new regime would more effectively intermediate payments among the government, financial firms and foreign central banks. Settlements would be made faster. Payments would be cheaper. Cross-border transfers would be seamless. Money creation would be more transparent.
[OCS: More bullshit! Most current government transactions are presently done electronically – regardless of the base currency. Settlements are made at the speed of light over fiber networks. Artificial fees determine the cost of payments. And cross-border transfers are already seamless. Money creation is transparent and documented. What is not documented is how funds are spent and who benefits. Something the government is loathe to disclose.]
A currency reigns supreme until it doesn’t. The new digital dollar would strengthen the currency for a new era, and bolster America as leader of the global economic system. Compared with China’s e-CNY, the proposal has superior attributes of sovereign control, monetary soundness, financial innovation and individual privacy. The U.S. and its allies need sound and stable money to escape a period of weak output, high inflation and geopolitical conflict. A digital dollar backed by America’s full faith and credit would be an important part of a reformed financial and monetary architecture.
[OCS: More bullshit! This is about protecting the elites and their financial institutions, not the American public. Stop wasteful and profligate government spending, curb inflation, and you can create a stronger dollar. Creating a digital dollar when a viable dollar already exists, along with the means to transmit it effectively, renders the concept of a fiat-based digital dollar worthless. A digital dollar's intrinsic value, like that of the dollar, is government-controlled – subject to inflation and confiscatory taxation.]
Kevin Warsh, the former member of the Federal Reserve Board, is a distinguished visiting fellow in economics at the Hoover Institution. <Source>