A central bank digital currency (CBDC) is a digital form of a country’s fiat currency, regulated by its central bank. It is a liability of the central bank and is widely available to the general public.
This is the definition of a central bank digital currency according to Perplexity.ai. And it spells out exactly why the Federal Reserve (the Fed) has a direct incentive to oppose the CBDC push.
We’ve been diving into the macro talk this week.
On Monday we explored the idea that the “Great Taking” already happened. And yesterday we talked about how Keynesian economics has been dead-wrong on pretty much everything – including its view that recessions are bad.
As we explored, there’s a school of thought that says the Fed raised rates aggressively to cause a financial collapse and usher in a CBDC. I think the opposite is true…
The Fed’s rate-hiking campaign was about defending the dollar and slowing capital-flight out of the US financial markets. The Fed’s incentive is to save the commercial banking system as it currently exists.
This seems ironic on the surface. If the Fed would be in charge of the American CBDC, wouldn’t that mean it gets more power and control? And wouldn’t the Fed want that power?
Well, under previous Chairs Ben Bernanke and Janet Yellen it certainly would.
Under their leadership the Fed coordinated its monetary policy with the European Central Bank (ECB) and catered directly to globalist interests. And the CBDC push is a big part of the globalist “Great Reset”, as spelled out by the World Economic Forum (WEF).
But a silent coup took place within the Federal Reserve system in 2018.
That’s when Jerome Powell took over as Fed Chairman… and he began laying the groundwork for the Fed to break ranks with the globalists.
Powell is a Wall Street guy. He’s deeply connected within New York’s banking cartel. Their power, wealth, and influence depend on a robust commercial banking system here in the US.
And this is where the Fed’s unique structure comes into play.
The Bank of England (BOE) is wholly owned by the British government. The European Central Bank (ECB) is owned by the central banks of the 27 EU member states.
By comparison, the Federal Reserve is composed of 12 regional banks. Those banks are private corporations. And those corporations are owned by commercial “member banks” – not the government.
And those who understand the Federal Reserve System well know that it’s the New York Fed that holds all the power. Its member banks are the iconic New York banks on Wall Street. That’s who Jerome Powell works for.
With that in mind, let’s look at the definition of a CBDC again:
A central bank digital currency (CBDC) is a digital form of a country’s fiat currency, regulated by its central bank. It is a liability of the central bank and is widely available to the general public.
I bolded the most important piece of the puzzle here.
In the commercial banking system today, deposits are the liability of the bank. Loans, securities, and reserves are its primary assets… but the bank can only make loans and invest in securities if it has deposits.
A CBDC would take those deposits away from the commercial banks and house them at the central bank. That’s what the language above in bold is telling us.
So if we take deposits out of the commercial banks… what’s left?
This is why the Fed has a direct incentive to oppose a CBDC. It would gut the commercial banking system and transfer immense power, wealth, and influence away from the big New York banks that dominate American finance today.
Sure, maybe a CBDC would allow the New York banks to continue operating as proxies. But they would not have full decision-making authority if they didn’t have their own deposits to lend against.
And neither would the Fed. Because if we’re going to have an American CBDC, it would require legislative and regulatory approval from the US government.
So there’s more to the CBDC story than meets the eye…
It’s not just a power grab by the insiders to exert more control over the rest of us. It’s a direct attack on the commercial banking system itself. Tomorrow we’ll look at why…
-Joe Withrow
P.S. For a deeper dive on the whole saga, see Beyond the Nest Egg: How to Be Financially Independent Outside of a Broken System. It’s up on Amazon right here.