CBDCs Will Be the End of American Freedom | Opinion
Opinion by Aubrey Strobel, Newsweek, 1/28/2022
If the Federal Reserve adopts a central bank digital dollar, the American government will be on a surefire path to authoritarianism.
Central bank digital currencies, or CBDCs, have in recent months as the agency explores developing a digital dollar based on the blockchain, fueled by the meteoric rise in popularity of cryptocurrencies like Bitcoin. While some compare CBDCs with Bitcoin as CBDCs can be based on the blockchain, similarities between the two end there. In fact, CBDCs are a wolf in sheep’s clothing, co-opting Bitcoin’s appeal while undermining every one of its underlying principles.
A CBDC adopted by the U.S. government would involve digitally represented dollars sidled with all of the issues of fiat currency that Bitcoin was created to solve—with a sinister new spin: by centralizing Americans’ financial information and holdings in a digital database controlled by the U.S. government, CBDCs would create an authoritarian surveillance state and constitute a severe overreach of government power. With an American CBDC, the government would become both money printer and bank, destroying any checks and balances to the governments’ power over Americans’ financial holdings. By granting the government ownership over the root technology of money, CBDCs allow the government complete discretion over how and whether people can use their money.
They would give the government total control and oversight over every person’s holdings and transactions. In an ironic inversion of bitcoin’s fundamental objectives as an anti-inflationary, decentralized currency free from third-party mediation, CBDCs would appropriate mainstream interest in Bitcoin and principles such as security and decentralization that have become synonymous with Bitcoin, while being its antithesis. CBDCs are a highly centralized form of currency absent of Bitcoin’s anti-inflationary properties as the government could continuously mint more of the digital currency just as it does with fiat currency, constantly devaluing it.
CBDCs have been embraced by the Chinese government. One might think that by being championed by an authoritarian state as a mechanism of financial surveillance, CBDCs would lose their charm to the American government; however, China’s interest has served as the impetus for American exploration of the technology. Having banned Bitcoin numerous times, most recently in September of 2021, China has barreled forward with plans for its digital yuan or e-CNY, which is now being trialed by millions of consumers across the nation. The digital yuan will be an invaluable tool for the Chinese government to obtain vast amounts of public data and strengthen its surveillance state. CBDCs will give the Chinese government authority to turn off people’s money like a light switch. While fiat currencies may be devalued over time by inflation, CBDCs can be devalued in an instant at the government’s whim.
Russia is also currently developing its own digital currency, the crypto ruble, which contrary to its name, will be issued by the government with no mining involved. Numerous western nations, including England, Canada and the central banks of Uruguay, Thailand, Venezuela and Singapore are also exploring CBDCs.
CBDCs would plunge American democracy and free markets into crisis. Representative Tom Emmer recently introduced a bill to prohibit the Federal Reserve from issuing a central bank digital currency. “It is important to note that the Fed does not, and should not, have the authority to offer retail bank accounts,” said Emmer, stressing that the move would launch the Fed onto a “path akin to China’s digital authoritarianism” subverting financial privacy and leaving Americans vulnerable to attacks and government surveillance.
The supreme and dark irony of CBDCs is that they are riding on the coattails of Bitcoin’s popularity while undermining every element that makes it a force for good. By adopting CBDCs, American and Chinese monetary systems would converge—both destroying the financial sovereignty of individuals and luring citizens into a financial mousetrap predicated on a false sense of security, by appropriating Bitcoin’s virtues of decentralization and immutability at the expense of unsophisticated account holders.
It is imperative that Americans become aware of the dangerous implications of CBDCs and quell any efforts to develop an American CBDC currently at play in the government, as the Fed prepares to launch its discovery report on CBDCs exploring future applications.
In looking into CBDCs, the government is also driven by the ethos of “if you can’t beat them, join them.” Bitcoin’s rise to astronomical heights of popularity over the last year has been ruefully received on the Hill. While members of the American government may remain stubborn adversaries to Bitcoin and other cryptocurrencies, I urge members of Congress, for the good of the nation, not to give further consideration to assets that can only be used as devices of authoritarianism that would destroy the fabric of our nation.
CBDCs are an urgent threat to people across the world. The Hill must support Emmer’s bill to prevent further action toward CBDCs—the alternative would be the death of American freedom.
Aubrey Strobel is head of communications at Lolli.