An introduction to CBDC

(Central Bank Digital Currency)

Part I

'Building back better' with a sovereign CBDC

Following the April 30th commentary on Universal Basic Income (UBI), we continue now with an introduction to Central Bank Digital Currency (CBDC). I've not woven any art content into this piece (for a change); I feel everyone here understands the importance of  this material,  for the creative class and for society as a whole.


The UBI may be seen as affecting only one end of the economic spectrum, but CBDCs will impact everyone; and particularly that wide (though ever-shrinking) segment in the center – the middle-class. The core of this demographic has traditionally been the merchant-class (the middle-class emerged from this group in fact), and this segment of society will be impacted most; the smaller the business, the greater the impact – as we will see later in: 'The Case for Physical Money.'

Our 'Eyes of Society' and 'New Regionalism' projects have always spoken of this history, in the hope of 'creating an awareness of the correlation between independent culture, free expression in the arts, and open, democratic society.' Not mentioned here, though inextricably intertwined – and long a subject of discussion in these updates – is money. As Christine Desan, Harvard professor, states in her 2014 book, Making Money: Coin, Currency, and the Coming of Capitalism:

'like other modes of governance, money serves both public and private purposes. It can be designed in ways that are democratic or dictatorial.' 

So here, we try to see beyond the marketing buzzwords and social conditioning – past the distractions of postmodern entertainment culture – to the essential stuff of our existence. This is our challenge – our raison d'être no less – as Regional artists.

 

As another commentator explains the importance of understanding money, particularly since March 2020  (given the typical response):

'. . . whether or not our eyes glaze over when we hear bankers talking about new payment systems – Arrgh, that's boring, give me some more entertainment – this is the real fabric of the reality that we are living in. This is the future of our world.  .  . ' 

The 'glazing over of eyes' is a conditioned response, of course, the direct result of our postmodern 'entertainment' culture in which anything of this nature is  to be skimmed over or dismiss entirely. 'Post-literate' society is very much by design, and we will return to this idea (and the comments above) a little later.

As mentioned before: 'The roll out of CBDCs is nothing less than the most important economic development in last one-hundred years' Triple underscored and in flashing neon for added emphasis (if I could) !!! We MUST  begin to understand CBDCs, therefore, because this development is going to change our world more than anything we have known in our lifetimes.

 

If you'd like to jump straight to my overview of the recent Rotman CBDC forum presentations, please follow:  CBDCs defined  Bank of Canada proposals (PART 2) – University of Toronto/York overview specifically (PART 3)

As I start to dig into this subject and provide more context, I'll share material that  will not ever appear in the mainstream media. Television media (and much print too, sadly) provides only the most superficial interpretation of everything (if it provides any coverage at all); and thus far, virtually no attempted has been made to explain CBDCs to the public – no surprise here.

The possibility of a CBDC has been on the table for a long time now. There have been earlier attempts to bring thissystem of totally electronic money into being and it is already operational in China.

Alarmingly, China has become the model many world leaders are pointing to as an example of what the 'New Normal' should look like. What the Chinese famously referred to as 'Capitalism with Chinese characteristics' in the 1990s, many refer to now as 'Authoritarian Capitalism' or 'Surveillance Capitalism.' To this point, from a special feature in the Globe and Mail, Sat June12th, 2021.

wallet.jpg

 'The Next 100 Years'

'Correspondent's letter,' by Nathan VanderKlippe (living in China since 2013):

'A cash system that once kept wallets full to bursting has virtually disappeared, replaced by the frenetic innovation of  a mobile payment economy. Hundreds of human-rights lawyers have been arrested or locked up and millions of Uyghurs indoctrinated, incarcerated and sent to work in factories ' 

It is no coincidence, I would suggest, that these ideas appear together in this article; the disappearance of cash has happened alongside a notable increase in restrictions and abuses of individual rights.

Hand in hand with the UBI and CBDC comes the digital ID, immunity passports, and all manner of new control grid applications; as proposed here too, by the already up-and-running  'Heath Security' apparatus. The United Nations, World Economic Forum, Rockefeller Foundation, all, laud China's model of authoritarian governance, and if we are not able to counter the influence of the neoliberal apparatchiks who are busily implementing the 'New Normal' here, we will witness in just a few short years (perhaps even months) the end of Liberal Democracy and birth of Technocracy – in our very own Total Surveillance State.

Total control of money will be a key aspect of 'The Great Reset,' as outlined by the WEF and the Bank of International Settlements (in almost these same words, as we will see). Understanding the importance of physical cash, therefore, will be essential if we are to resist, or have any say in our future.

 

It is a well-know fact that the WEF (and its acolytes) are not advocates of democracy; they openly praise China's system in fact. They believe in rule by experts (this is the basic definition of technocracy), and this authoritarian model of technocratic governance is described in Covid 19  The Great Reset  – Klaus Schwab's manifesto.

 

It is worth noting that 'The Great Reset' existed as a outline for a new technocratic state before Covid-19 - Covid-19 just happened to come along at a convenient time for those who aspired to take control of the world by means of 'bio security.'

 

So, before we continue with this exploration of CBDCs, I must state that most of us who are watching the monetary system being 'Reset' see what is happening through this lens. CBDC is not just a 'convenient,' hightech (and 'germ-free') form of money; it is the essential tool of the ruling elite (as money has always been).

shackles_edited.jpg

Security of Shackles?

We will look at other views on this subject shortly, from the BIS, ECB and IMF, but for now, I must share my own recent comments to monetary reformers in Canada and the US (in an open and ongoing discussion).

 

You may recall (in 2020) I was exploring the definition of 'sovereign money' in any attempt to build bridges between factions within this community. These divisions came about, I felt, mainly because of different interpretation of this term. I still feel a clearer definition is required however; but as a matter of course, we arrived at a question that may well have become the bridge we have been  looking for.

 

There was also some disagreement over the importance of preserving physical cash (at the time); some felt it could be dispensed with, others felt very strongly that it must be retained. I believe the latter (not surprisingly) and felt compelled to present the reasons why (as I see it) cash must not be allowed to disappear, and something of an understanding emerged from this. (Incidentally, it was the Rotman CBDC forum in April that initially brought both camps together).

 

Here though, with this simple concept, not only do we have the basis for an argument that may garner popular support for monetary reform, we also maintain some hope (as Christine Desan suggests) that liberal democracy might actually survive the coming economic reset. The transition underway is that consequential.

 

As we make a case for the preservation of physical cash, we will have an opportunity to encourage conversations on the nature of money itself. Just as importantly, we are buying time. The general public is likely never going to understand the nitty-gritty details of monetary theory and money mechanics; nevertheless, for many, there remains a visceral understanding that physical cash is important. 'More than 20% of transactions today still happen in cash,' states the UofT/York CBDC proposal – a figure that even I found surprising given all current alternatives to physical cash – and from this base we can build.

 

We will return to this in a moment, but my argument to the group (for not becoming dependent on high-tech, electronic alternatives to physical  money) went as follows:

 

'The Case for Physical Cash'


Open email response to members of monetary reform groups in Canada and the United States.  

April 2nd, 2021

Hi everyone.

Thanks for your insight and thoughts on cash, Joe.
Yes, for sure, electricity [the supply of] and dependence on a massively complex system to create and maintain that technology are big reasons – reason enough, in my mind, to not give up good old-fashioned cash. 


Even the BoC paper says the system isn't reliable enough at this point. . . 

I have a copy of the CPA magazine here somewhere, which I've been meaning to dig out, in which they have a piece acknowledging that the (underground) cash market is the thing that kept most small businesses going. Without this, a great many would simply close up shop. This is actually a much larger piece of the economy than most people imagine.

Of course, most small businesses will likely be gone soon anyway, the result of ongoing lockdowns and uncertainty (It does rather seem like this is the plan).

It's rather like illegal immigrant workers in the United States. People complain about this problem but these workers have become an essential part of the economy there, and there are too many wealthy and influential people who benefit from that cheap labour. So authorities go through the motions of cracking down, but can never seem to eliminate 'the problem.'

Sadly (or actually, it's probably a good thing), the world isn't so black and white.
Same with cash. Criminals use cash, for sure, although I understand a lot of organized crime has already moved to crypto currencies – it's easier to bury transfers in a chain of transactions, or carry a memory stick, than a briefcase of cash.

We might then say it's only petty criminals that use cash. The really big criminals - politicians, bankers and other financial people - simply operate in the grey area, where there are no clearly defined laws (fighting them in court is too expensive). Or they hide behind trusts and layers of shell companies in the offshore world (I'm familiar with this world). And of course, 'too big to fail,' is also too big and influential to prosecute as well.

Cash allows for independent thinking outsiders, who would be considered 'criminals' by corrupt authorities, so I see this as the fail safe in the system. 

Cash can't have much of an impact financially (amidst the massive volumes of institutionalized crookedness) but it provides the possibility for individuals to organize and counter large scale criminality and political corruption.

I've often quoted Bertrand Russel from The Impact of Science on Society on this subject (copied below), and there's was a similar sentiment expressed by Senator Frank Church on NBC after the conclusion of the Church Commission, when he suggested:

"There would be no place to hide. If a dictator ever took over, the N.S.A. could enable it to impose total tyranny, and there would be no way to fight back.”

There being cash to allow 'rebels' to organize behind the scenes is critical. It all sounds alarmist and theoretical, until it's too late of course. Have you read the Rockefeller Foundation's Future Scenarios – on 'LOCKDOWN' ?

Cash is such a simple answer to this problem (only part of the solution of course) but I see physical money as a kind of insurance policy. For this reason, I believe giving up cash should be unthinkable.

Margaret Atwood (even) warned us to "never give up cash" in a recent Master Class. . .

One last thing, to go back to the small business and cash. Since the government is disingenuous (if not outright deceptive) about the role of taxes, then I think these businesses have the right (as an act of Civil Disobedience until the government comes clean) to withhold something of their earnings.

As Randall Wray states: "Taxes are part of monetary policy, not fiscal policy." Yet most people have been duped into thinking their taxes go to pay for services, when a form of seigniorage used to be how federal governments paid for things – until they gave away the privilege (sovereign right) to issue (and profit from) our money. I realize provincial and municipal governments depend on tax revenue (that's where transfer payments come in of course) but this is a discussion for another day.

Sorry for this long diatribe... but you can tell I view this as an issue of great importance. For now, I'll leave you with Bertrand Russell's thoughts (an incredible book, by the way).
Happy Easter, and I will look forward to chatting,
David

The Impact of Science on Society
'EFFECTS OF SCIENTIFIC TECHNIQUE'
pages 23 - 24

Long before the use of electricity as a source of power, it was
used in the telegraph. This had two important consequences:
first, messages could now travel faster than human beings;

secondly, in large organizations detailed control from a center

became much more possible than it had formerly been.


The fact that messages could travel faster than human beings

was useful, above all, to the police. Before the telegraph, a

highwayman on a galloping horse could escape to a place

where his crime had not yet been heard of, and this made

it very much harder to catch him. Unfortunately, however,

the men whom the police wish to catch are frequently

benefactors of mankind.

 

If the telegraph had existed, Polycrates would have caught

Pythagoras, the Athenian government would have caught

Anaxagoras, the Pope would have caught William of Occam,

and Pitt would have caught Tom Paine when he fled to

France in 1792. A large proportion of the best Germans and

Russians have suffered under Hitler and Stalin; many more

would have escaped but for the rapid transmission of messages.

The increased power of the police therefore, is not wholly a gain.
Increase of central control is an even more important

consequence of the telegraph. . . .

I'll continue in a moment with an overview of the recent Rotman CBDC forum papers, but let us first look at some existing definitions of Central Bank Digital Currencies. I've included two at the beginning of the next page.

 

One is from the recent UofT/York CBDC proposal (the 74 pages of which I was bound and determined to wade through) and the other, from Goldman Sachs, as referenced in James Corbett's documentary: 
'Your Guide to the Great Monetary Reset.'

 

The opening quotation – 'that's boring, give me some more entertainment' – is from this documentary. I felt compelled to include Corbett's observation because, in a nut shell, this is the biggest hurdle we face in communicating material of this nature. The history of money, is the history of the world, with all its intrigue and tumultuous twists and turns. Once this connections is made, the subject takes on a whole new complexion. 

 

Corbett is often criticized as been a source of 'conspiracy theory,' though his cited references here (to the extent that I've been able to check them), are genuine, and directly from the same sources the media claims to reference – The IMF, BIS, ECB, etc. How often are we provided in depth commentary on,  and context to, pronouncements from these institutions?  The media is no longer a forum for meaningful public discourse though, on anything; it is a purveyor of statistics, sound bites and catch-phrases, like "The New Normal" or "Build back better."  Don't worry about the details; the experts are on it.

 

The really important decisions about how we are to live our lives are increasingly taken behind closed doors (often behind the closed doors of a luxury resort in another country). The media, meanwhile, has become a tool for the promotion of policy decisions made by the new, self-proclaimed 'decision makers.' This is the most important lesson we've learned (I hope we've learned) over the past year and a half. We are forced, therefore, to go to the sources directly (on anything of consequence in our lives); question everything, learn as much as we can, and decide for ourselves what is best.

 

And with this, lets delve into the Canadian CBDC proposals, and see what we can figure out for ourselves here:  An introduction to CBDC - Part II