Balances can be held in digital wallets or digital vaults without the use of traditional banks. A blockchain is not needed; the CBDC ledger can be maintained in encrypted form by the central bank itself without the need for bank accounts or money market funds.
In the future, customers will discover that paper money deposits will be accepted at a discount to face value when depositing to the new digital system. A deposit of $1,000 may be credited as $975.00 when put into the digital system, if it was after an arbitrary cut-off date, for example.
A system of such discounts (really taxes or penalties) was actually suggested by a prominent economist at a Fed symposium a few years ago. That economist was later nominated for a seat on the Fed board of governors.
As always, the new digital banking system will be promoted on the basis of convenience, ease of use and lower costs. Who needs bank accounts, checks, account statements, deposit slips, and the other clunky features of a banking relationship when you can go completely digital?
In reality, customers will discover that their digital assets are at risk for seizure or taxation not only for criminal reasons (that’s true today) but for political, medical or social reasons.
Could China’s Social Credit System Come to the U.S.?
Such a “social credit” system is being implemented in China. China already uses facial recognition software, mobile phone GPS tracking and the purchase of plane or train tickets to track their citizens. This surveillance can be used to detect anti-state activities and to arrest dissidents, or anyone who doesn’t strictly follow government orders.
Elements of China’s social credit system could end up being used here in the U.S. It might not be exactly the same, but it would nonetheless punish those who don’t comply with government decrees.
“Hmmm, the official record says you haven’t been vaccinated. That’s unfortunate. We’re sorry, but…”
An all-digital cash system could be used to impose fees on those who cannot prove they have received a COVID vaccine or some other medicine. This would amount to universal forced vaccination, although it would surely be imposed under some other more benign-sounding name.
If cash is no longer permitted, savers will be forced into buying land, gold, silver, or other tried-and-true ways of preserving wealth without exposing it to government pirates. The Chime account freezes are the shape of things to come.
Meanwhile, the big banks are also happy to kick you out of the banking system.
Such a “social credit” system is being implemented in China. China already uses facial recognition software, mobile phone GPS tracking and the purchase of plane or train tickets to track their citizens. This surveillance can be used to detect anti-state activities and to arrest dissidents, or anyone who doesn’t strictly follow government orders.
Elements of China’s social credit system could end up being used here in the U.S. It might not be exactly the same, but it would nonetheless punish those who don’t comply with government decrees.
“Hmmm, the official record says you haven’t been vaccinated. That’s unfortunate. We’re sorry, but…”
An all-digital cash system could be used to impose fees on those who cannot prove they have received a COVID vaccine or some other medicine. This would amount to universal forced vaccination, although it would surely be imposed under some other more benign-sounding name.
If cash is no longer permitted, savers will be forced into buying land, gold, silver, or other tried-and-true ways of preserving wealth without exposing it to government pirates. The Chime account freezes are the shape of things to come.
Meanwhile, the big banks are also happy to kick you out of the banking system.
- Source, The Daily Reckoning via James Rickards
