The commentary below is not intended to be support for any one political group, but rather an observation of the system at large. I offer these opinions now as we seem to be on the eve of many governments adopting CBDC’s (central bank digital currencies).
Politicians and bureaucrats around the world seem to have an interesting relationship with reality these days. I supposed it has always been this way but for some reason, it sure feels worse now than it did 30 years ago. Under the guise of advancing a particular public agenda, they tend to cherry pick snippets of truth to give themselves aircover (propaganda) while most of their attention and energy is actually spent advancing their real agenda, which is often something quite different. In too many cases, the real agenda seems to be nothing more than the proper care and feeding overinflated egos while working to preserve their influence so they and their friends can stay in power. This is not the type of sacrificial leadership or service that has inspired humanity since the dawn of time. Sadly though, it is what we keep allowing when we overwhelmingly let the same people stay in power with changes happening only at the margin. The pendulum keeps swinging predictably back and forth and we all lurch forward with consequences that seem to be getting more and more severe.
It would seem these same people are now on the eve of trying to sell us a new story: That CBDC’s will be the answer to our economic problems. Isn’t this like saying centralization repackaged will be the answer to the problems that the same people who have held the centralized power for so many years caused in the first place? Do any of us doubt that they will do everything in their power to sell this narrative and pull all the levers at their disposal to get it across the finish line?
This got me thinking about what levers they have at their disposal to get the outcomes they want. I’d like to spend a few posts unpacking these ideas together as it strikes me that getting this right could be really important. Because of that, I’d really welcome some objective comments below as I think we have a better chance of accurately reading the tea leaves together than we do alone.
To start with though, what incentives do the powers that be have to allow decentralized crypto programs to spread and what incentives do they have to kill it? Off the top of my head, here’s a few for and against:
The case for allowing it to spread:
- They can tax it, providing much needed revenue
- By opposing it, they run the risk of falling behind as other governments move forward with it
- It brings innovation with a variety of benefits that they can’t generate in a closed system.
- For the have-not countries, it can improve access to a set of basic functions that aren’t available to much of their population
The case for trying to kill it:
- As it spreads, they lose control over traditional fiscal and monetary levers
- In the US, it could represent an existential threat to the power structure of the status quo banking system which represents a tremendous amount of wealth.
- It represents an existential threat to the status-quo generational power structure
Would love for anyone interested in joining the conversation to add to the to and for lists. If you want to explore this together over my next few posts, please like, follow, tip, and share!