The Great Reset and Freedom Bucks

In the field of economics, there are many possible outcomes when predicting the future. And, considering the numerous variables, very few are certain. There is one thing that can be said unequivocally about the future, and with a definite degree of certainty, and that is that all fiat currencies eventually fail. All of them, without question. This includes our almighty dollar. Various roads are taken to reach their demise, but the result is always the same – they fail.

What makes our current situation unique is all the major central banks are openly discussing what the replacement will be prior to the current currency’s death throes. In the macro space, you keep hearing the word “reset” slip into governmental or central bank white papers. Around the time “reset” started coming up (2009-ish) there had been no major war, there had been no virus, no pestilence, no famine. Therefore, a reasonable conclusion is that this new currency is by design and that design is frightening. It is very telling that this Kung Fu Flu manifested itself along the same period as the technologies required to enact this “reset.” The Kung Flu is a custom-made smoke screen, not necessarily to undermine Trump, but to gloss over the system that has robbed us blind for over a century and to bring economies to their knees.

To anyone that was paying attention, last September saw the train leave the rails when the repo market broke. This market, which services the financial sector, is the vehicle for short-term currency lending, greasing the wheels of dollar denominated world banking behind the scenes. In September, the interest rate in this market went from just above 1% to roughly 10% overnight. The Fed had to immediately start pumping $40 billion per night into it just to keep it afloat. This was the major tell that the emperors’ clothes were transparent, it was here that the “reset” talk began picking up steam.

The following is a partial list of countries who’s central banks are openly enacting policies to usher in this brave new world of buying and selling: United States, Britain, China, Sweden, Russia, India, Canada, Uruguay, etc. The list goes on but the idea is, for the majority of the earth, if you do not get onboard with this new wave, you will be crushed in the surf.

This new currency is digital, think bitcoin but controlled by governments. Now, it is at this point that I have difficulty getting through to people that find it hard to differentiate between “what is now” versus “what is upon us.” They say, “We already have digital currency” or “A debit card is a digital form of money” or “It’s all digits anyway” and my favorite “It’s all fake and gay.” While I agree with the last one, they fundamentally miss the point. The point being that the “reset,” which is what the banks are calling it, is not a brand spankin’ new debit card for your wallet. Rather, it is a digital wallet with (let’s call it) “Freedom Bucks.” What makes this so intriguing for governments, and the banks that control them, is that they can be programmed to force spending in certain areas and discourage spending in others.

Here are a few examples that are being bandied about:

• If there is a pandemic and the government doesn’t want you to travel, your Freedom Bucks can be programed to only be redeemable within 5 miles from your home. How can you travel if your currency is only good near your home?
• If they deem you have spent too much of your Freedom Bucks on items they determine as “non-essential,” then they can be programed to prohibit such spending.
• If an area of the economy is falling behind (think the hospitality sector right now) then they can be programed to act as double coupons in that sector.

The Chinese have come up with these lovely features: if your social credit score is below a certain point, then they can “throttle” back your Freedom Bucks until you’ve learned your lesson. Conversely, if you are a perfect member of society and report on folks doing something wrong or, even worse, engaging in wrongthink, you could get extra Freedom Bucks. And, who wouldn’t want to take advantage of this extra income stream?

Velocity is another concern for central banking economists, this controls inflation and deflation. The faster currencies change hands, the better. For reference, think paycheck to gas station, to mechanic, to grocery story, to new cleats for soccer, to dining out, to the tip for the waitress. When people save currency, as they tend to do in a crisis, this leads to quite the problem for the central backs because they can add all they want but if you’re not spending it, then they are not reaching the desired inflation levels. This problem has been thought through as well.

If the Freedom Bucks are not being spent fast enough, then a timer can be applied to the digital currency. For instance, every month you get your stipend (or paycheck from your employer) there can be a timer applied on your currency, i.e. spend it in 20 calendar days or it expires. If that doesn’t do the trick, then it can be one (1) week. Pick a block of time and insert time limit. There’s really no limit to what they can do to manipulate your spending, while simultaneously curbing your saving. And, that’s the plan.

Now, If the normal, rational person follows the above, they immediately ask “Why in the heck would anyone consent to such an Orwellian monetary scheme?” Or, as I like to think, “What would it take for the average consumer to jump onboard?” Not just jump onboard, but leap joyfully as if they were doing themselves a favor? It’s not that difficult of a thought exercise. If I told you a year ago that you’d be derided at the grocery store by a crazy catlady for not wearing you government-approved face panties, you’d have told me I was crazy. However, let us explore some plausible scenarios under which this could be accomplished.

1. If you are struggling, as most are that are not in the top 1%, you can be offered twice your current stipend/paycheck if you convert your current dollars into Freedom Bucks, thereby doubling your purchasing power. Or,
2. It can be as simple as just offering you a monthly stipend, even if you do not already have one for this new currency (think Yang Style Universal Basic Income) for free. Now, who would not want to take advantage of this? Its free! After all, you have mouths to feed.

Our brave and new currency is already in its final stages of development and needs only activation. The “Banking For All Act” proports to create a digital wallet for every American and have their own bank account with the Fed. U.S. Senator Sherrod Brown (D-OH), ranking member of the Senate Banking Committee, introduced S.3571, here he lays out the argument for every person to have access to their God given right (free currency). He states in the following press statement: “At the height of this pandemic we must do more to protect the financial wellbeing of hardworking Americans and consumers. They are on the front lines of this crisis and are already feeling the effects of the economic fallout. My legislation would allow every American to set up a free bank account, so they don’t have to rely on expensive check cashers to access their hard-earned money.”

In other words, you deserve this $2k a month, never you mind that you will lose the anonymous nature of your current currency. Further driving that last point home is from the head of the Cleveland Federal Reserve in a paper she published titled, “Payments and the Pandemic.” Loretta J. Mester stated, “The experience with pandemic emergency payments has brought forward an idea that was already gaining increased attention at central banks around the world, that is, central bank digital currency (CBDC). Legislation has proposed that each American have an account at the Fed in which digital dollars could be deposited, as liabilities of the Federal Reserve Banks, which could be used for emergency payments. Other proposals would create a new payments instrument, digital cash, which would be just like the physical currency issued by central banks today, but in a digital form and, potentially, without the anonymity of physical currency.”

This would eventually take over, as the old-style dollar would lose favor due to it being a virtual antique. This could be compounded further with retailers and service providers preferring the new digital currency due to regulations that the government could implement on the old-style currency (think coins and dollars being dirty, germ bearing relics). It could be similar to when the Fed note became our official currency in 1913, or as harsh as in 1933 when Roosevelt downright outlawed gold ownership.

I am still torn as to whether this will be a sudden change due to a catastrophic event or a gradual frog in the boiling water type scenario. To be honest, I can see the public buying anything after what we have seen in the year of our Lord 2020.

Here is the case for how we would accept a digital currency as laid out from The Stanford Graduate School of Business:

“The technology enablers are now there and were gonna be making that transition just as we are into self-driving cars into things like digital currency transactions without hardly even noticing it. For example, when you buy that cup of coffee from Starbucks and you pay on your mobile phone, it could be that the application program interface in your phone last week flipped from using your bank account to a payment system based on digital currencies and you might have gotten a brief notice with 5 pages of fine print saying ‘I agree’ at the end. As long as you hit that button you just made that transition without noticing it. I think it could be, at the consumer level as quick as that.”

Regardless of the when, the why and the how, it is coming and now you know.

I will leave you with this final thought from Christine Lagarde, IMF Managing Director, from her article “The Case for the New Digital Currency”:

Conclusion

Let me conclude. I have tried to evaluate the case this morning for digital currency.

The case is based on new and evolving requirements for money, as well as essential public policy objectives. My message is that while the case for digital currency is not universal, we should investigate it further, seriously, carefully, and creatively.

More fundamentally, the case is about change—being open to change, embracing change, shaping change.

Technology will change, and so must we. Lest we remain the last leaf on a dead branch, the others having decided to fly with the wind.

In the world of Fintech, we need to harness change so it is fair, safe, efficient, and dynamic. That was the goal of the Bali Fintech Agenda launched by the IMF and World Bank last October.

When the winds of change pick up, what will guide us in our journey? The captains sailing through the Straits of Singapore followed the North Star.

And today? Tomorrow?

I suggest we follow a girl. A young girl. A fearless girl. If you are lucky, you might be able to meet her in person in New York’s financial district.

She is bold. She is brave. She is confident. She faces forward, toward the future, with grit and determination—a future she herself is going to shape, with eyes wide open, eagerly, steadily.

I hear her say: Let us sail ahead. I am not afraid. (pause) I, am not afraid.

Thank you.”

-By Anti-Spoofer