Weekly Market Update by Retirement Lifestyle Advocates

          With the recent bankruptcy of the cryptocurrency exchange FTX, there has been a lot of renewed focus on cryptocurrencies.

          While there are many alleged improprieties relating to the failure of FTX, this week, I want to focus on the bigger picture and the ambitions of many policymakers and politicians when it comes to digital currencies.

          It is no secret that many of the ruling elite would love digital currencies for a number of reasons.  As a freedom-loving, libertarian capitalist at heart, I can’t think of anything more oppressive.

          Robert Aro wrote a piece on this topic for the Mises Institute this past week that I thought I’d share.  (Source:  https://mises.org/power-market/fedcoin-it-starts-trial-run)

A cashless society would be the nail in the coffin for liberty and freedom, offering centralization, the likes of which Marx could only dream. The existence of a government backdoor or spyware becomes a real possibility and given the State’s track record, a real likelihood. Then, of course, the ability to track, freeze, and even set expiry dates on money, will be marketed as “features” to protect the public.

As for the 5.9 million Americans considered “unbanked,” i.e., those who have no checking or savings accounts, (the poor, weak, and vulnerable) they can expect life to get more difficult. This is the price we pay for free market intervention.

Earlier in the week, the Federal Reserve Bank of New York made the announcement:

Members of the U.S. Banking Community Launch Proof of Concept For A Regulated Digital Asset Settlement Platform

The explanation may only make sense for those well-versed in crypto technology:

Members of the U.S. banking community today announced the launch of a proof of concept (PoC) project that will explore the feasibility of an interoperable digital money platform known as the regulated liability network (RLN). Using distributed ledger technology, the proposed platform would create innovation opportunities to improve financial settlements and would include participation from central banks, commercial banks of various sizes and regulated non-banks.

Basically, Fedcoin is advancing and is now in the testing stage:

The 12-week PoC will test a version of the RLN design that operates exclusively in U.S. dollars where commercial banks issue simulated digital money or “tokens” – representing the deposits of their own customers – and settle through simulated central bank reserves on a shared multi-entity distributed ledger.

Some of the largest financial institutions are involved in this 12-week program:

BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo.

Plus:

The technology is being provided by SETL with Digital Asset, powered by Amazon Web Services. Swift, the global financial messaging service provider, is also participating in the initiative to support interoperability across the international financial ecosystem.

From Bitcoin to Dogecoin, there seems little long term hope for those who love privacy and autonomy when the largest corporations and fintech firms work with the Federal Reserve to roll out a Central Bank Digital Currency (CBDC).

Would you like to know who else is was working with the Feds? Courtesy Coindesk:

Former FTX CEO Sam Bankman-Fried was, until last week, a major political donor – he gave $5.2 million to U.S. President Joe Biden’s presidential campaign If of the November midterm elections – and an influential figure in Washington.

Bankman-Fried regularly met with regulators and lawmakers, weighing in on how the crypto industry should be regulated. He was a vocal supporter of one bill, in particular: the bipartisan Digital Commodities Consumer Protection Act (DCCPA), a still-in-progress bill…

We know for certain CBDCs are coming, as well as more regulation. And given the trajectory of both, a cashless society is too. What is less certain is whether or not Sam Bankman-Fried, for his culpability in what may amount to one of the largest thefts of all time, will ever see jail time.

          If you’ve been a long-time reader of “Portfolio Watch” and the monthly “You May Not Know Report”, I have been commenting on this periodically.

          This Fedcoin test program is not surprising given the executive order issued by Joe Biden in March.  This from “The Sun” on March 10, 2022, after Biden’s executive order  (Source:  https://www.the-sun.com/money/4867165/fedcoin-replace-cash-hurt-savers-gov-track-payments/):

A NEW "Fedcoin" digital currency could replace cash, hurt savers and allow the government to track payments, crypto experts have warned.

President Joe Biden announced the move towards a US Central Bank Digital Currency (CBDC) on Wednesday in a historic executive order on cryptocurrency regulation.

He gave the heads of federal agencies including the Treasury, Justice Department and Homeland Security 180 days to come up with a report on how the new digital currency would work.

Biden also asked the chairman of the Federal Reserve Jerome Powell to “develop a strategic plan for Federal Reserve and broader United States Government action” on CBDCs.

It comes as governments around the world are scrambling to respond to the explosion in cryptocurrencies which are not state-controlled.

But experts say there are worries the new CBDCs could pose a threat by allowing the government to program money to control how and by who it is spent.

Alex Gladstein, chief strategy officer of the Human Rights Foundation and a well-respected voice in the Bitcoin community, told The Sun: “I'm concerned because there's a lot of language about Central Bank Digital Currencies in the executive order and I think they are dangerous for civil liberties.

"It looks like Fedcoin is coming and I don't think that'll be good for the average American.

“Fedcoin would replace cash, it would replace paper money and coinage.

“It would permit instant analysis of transactions, as opposed to the privacy that cash affords.

“It would also obviously allow for blacklisting of people that the government doesn't like, which I'm sure would rotate through different administrations.

“These are concerning powers and they would also permit monetary powers that are concerning.

“Just like withdrawing from an ATM gives you the power to be private with your spending, withdrawing from an ATM also gives you the power to save in different ways.

“And if you don't have an ATM, the government will be very easily able to do things like negative interest rates, expiration dates on money, stuff like that.

“I don’t think it's gonna be great for savers, let’s put it that way.”

Gladstein added that he is concerned about how CBDCs would give the government even more power to keep spending and inflating the currency.

He said: “CBDCs pave the way for a truly expansionary monetary policy.

“It allows the central government and the central bank to do programmable stimulus, basically.

“They could just program credits like the stimulus checks that we saw post-COVID.

“It just lends itself to a lot more loose, easy spending.”

          There are two things you might consider.

          One, make your voice heard.  Let your representatives know that you are opposed to a digital currency.  Write and call over and over again.

          Two, protect yourself.

          Have some of your assets outside the US Dollar and outside the banking system.  Gold and silver are good options for many people.

          If you’d like to discuss this, feel free to give my office a call at 1-866-921-3613.

 

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          The radio program and podcast this week features an interview with Larry Reed, president emeritus of the Foundation for Economic Education.

          I talk to Larry about politics, Fed policy, and his take on the current economy.

          The podcast is available to listen to now, just click on the "Podcast" tab at the top of this page.

          Best wishes to you and yours for a Happy Thanksgiving.

 

“All would live long, but none would be old.”

                                                                -Benjamin Franklin