Money. It’s deeper than that physical paper, or numbers on a spreadsheet. It’s a social construct that allows us to exchange and store value. This common bond is what allows all of us to save up for our long-term future. Consider, for example, that a shiny diamond has high market value, while a source of life-giving water can be practically valueless. That's the Diamond-Water Paradox in action, showing us that value isn't just about need. It's about perceived worth, scarcity, and what we're willing to exchange.
From salt and wampum to gold doubloons emblazoned with kings’ heads, currency has historically been linked with authority. Coins provided political rulers a method of guaranteeing value while maintaining political control. The gold standard that brought such stability – until it suddenly stopped. When Nixon closed the gold window, it was the formal beginning of our current fiat arrangement. Today, it’s governments that decide what a unit of currency is worth. And with that decree comes the power to print — inflate, and by that very act, possibly devalue your hard-earned savings. The Austrian School of economics has been warning us about the inherent flaws of fiat for decades: market distortions, debt-fueled bubbles, and the slow erosion of purchasing power.
Then along came Bitcoin, a punk scream at the top of its lungs and a middle finger to the establishment. A new, decentralized cryptocurrency that had a fixed supply and promised their enthusiasts freedom from the control of governments. Ethereum went further by implementing smart contracts, which introduced us to the world of decentralized finance (DeFi). Let’s be honest, the crypto wild west produced a ton of shitcoinery, volatility, scams, and tons of terrible projects.
There’s no question that governments are entering the global digital currency race with Central Bank Digital Currencies (CBDCs). They tout efficiency and greater financial inclusion, but to what end?
Privacy Vanishes? Big Brother Watches You
Picture this, every transaction that you engage in, every purchase you make, every payment you’re making, tracked and recorded by the federal government. Say goodbye to surreptitiously slipping a few bucks to the kid mowing your lawn. No longer being able to hide your donations to organizations that you care about! CBDCs open the door to unprecedented surveillance.
Think this is far-fetched? They’re already monitoring our browsing history, our social media posts. And you seriously believe they wouldn’t monitor our spending patterns if given the opportunity? What if your views run afoul of the intolerant benevolence of the party in power? Could your account be frozen? Can you be locked out of your own funds? Don’t brush this off as conspiracy theory, this is a real threat that must be quelled before CBDCs become the status quo.
Central Banks Gain Absolute Power
Such powers would give central banks unmatched control over monetary policy – far beyond anything imaginable today. Negative interest rates, directly stimulating spending – these tools might become not just familiar but routine. Sounds good in theory, right? What if those policies misguide the public’s need? What could possibly go wrong when they put political agendas ahead of wise economic fundamentals.
Don’t forget, the road to hell is paved with good intentions. Granting our central bankers this much autonomy is akin to giving a 3-year-old the keys to a nuclear arsenal. They may not be trying to kill us, but the ability to wreak havoc is just too great.
Financial Inclusion's Dark Side?
CBDCs are always pitched as being the solution that will provide financial services to the unbanked. But then, what about people who don’t have smartphones or internet service? Instead, are we not creating a two-tiered system that leaves those who are digitally excluded even more so?
Don’t overlook the seniors, the disabled, the digitally illiterate. Are we prepared to provide the necessary support and infrastructure to ensure that everyone can participate in the digital economy? Or are we just shoving them off to the edges?
Cybersecurity Nightmare Unfolds
A private, centralized digital currency is a honeypot for hackers. A huge single point of failure that might just bring down the whole financial system. Now picture the havoc if some foreign power hacked into our new super CBDC system. Bank accounts emptied, transactions frozen, trust shattered.
Are we truly convinced that any of these governments can even create such a perfect CBDC system? History tells us otherwise. The more efficient and consolidated the system, the larger the target.
Geopolitics Gets A Digital Makeover
CBDCs have the potential to drastically reconfigure international trade and the balance of power between countries. Now, picture a world where countries are able to avoid the US dollar entirely from transaction pairs and instead trade directly in their own respective digital currencies. Challenging the dollar’s dominance in this way would upset the global economic landscape as we know it.
Some governments will attempt to deploy CBDCs to bypass sanctions or extend their dominion over poorer countries. It’s a digital arms race, and the stakes could not be higher.
What Can You Do?
The future of money is uncertain, but one thing is clear: CBDCs are coming. We must inform ourselves of the great opportunities and the dangers they can present, and demand progress with appropriate oversight. We cannot afford to retreat in the name of security, silence dissenters and shield the powerful. We all need to stand together and make sure we are standing up for our financial privacy and not allowing government overreach.
Don't let fear paralyze you. Instead, channel it into making you more educated, involved and empowered. Engage your elected officials, work with advocacy organizations, and educate your social networks.
The time to act on them is now, before their reauthorization becomes a missed opportunity. The choice is ours: a future of financial freedom or one of government control. Choose wisely.
