11th September 2021 > > CBDCs.

tl;dr

Central bank digital currencies (CBDCs) are a huge risk to our financial independence.

Market Snap

Market Wrap

BTC is failing to gain upward traction since the leveraged sell-off earlier this week. This does suggest that perhaps the breach of $50k was driven by over exuberance in the futures markets. Getting through that level again is inevitable, but the timing is very unclear. A second period of consolidation in the mid-40s seems a likely scenario.

Occasional Series – 20 years ago today

I lost a friend who I had got to know quite well in the course of my work. I was on the phone, negotiating a trade with him in the minutes before the first attack. Based just a few floors above the point of impact on the North Tower, his remains have not been identified.

Occasional Series – Watford F.C.

Dominic, a frequent contributor to the CCC family discussion, and I will be at Vicarage Road this afternoon.

Our next three fixtures – today Wolves at home, then Norwich away and then Newcastle at home - are three games in which we could potentially gain enough points to add to our defeat of Aston Villa that we are one third of the way to retaining our rightful position in the world’s greatest sporting competition.

I know you all wish us the best of luck.

Curious Cryptos’ Commentary – Wall Street Journal and Central Bank Digital Currencies (CBDCs)

The WSJ can often be relied upon to provide sensible and accurate commentary even when straying into the quagmire of wokeness (hint: they take a robust line against those who decry all the positive aspects of western liberal democracies).

Now they have joined forces with the CCC in bringing the world’s attention to the major shortcomings of CBDCs and the significant risk of financial damage which CBDCs will engender.

As always, it is my duty to remind readers that CBDCs are not crypto currencies, and never will be crypto currencies. They rely on a centralised database masquerading as a blockchain, a database which is fully mutable at the whim of government, and subject to no controls and no audit.

The only reason I feel compelled to comment on CBDCs in the CCC is that the pretence of using blockchain technology has fooled almost everyone into believing that CBDCs are cryptos. As much as it pains me to waste time on CBDCs, I must fight the good fight to educate everyone about the horrors that await us when CBDCs are unleashed on an unsuspecting world.

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The article was titled “Digital Currencies Pave Way for Deeply Negative Interest Rates” which shows the focus on this one aspect.

Senior columnist James MacKintosh argues that the imposition of negative interest rates (the US is currently at 0.25% but the ECB is at negative 0.5%) is made easier and more effective when the government can impose them by force on those holding CBDCs.

Even though the ECB is at negative 0.5% my French bank account, held at Credit Agricole, has 0% for the current account and paid a grand total of EUR 15.95 interest at the end of 2020 for my deposit account.

This demonstrates that the transmission, or otherwise, of negative interest rates from the government (acting through its subsidiary the central bank) to individuals and businesses is determined by the decisions and actions of the commercial banks, and not by government itself.

As interest rates approached and then breached the zero bound, the realisation about this lack of control must have been hurtful for all the bureaucrats and civil servants working at the central bank and in the treasury department.

CBDCs allow the pen pushers to regain the control they so desperately desire to exercise over their rather more productive fellow citizens working in the private sector.

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The description of this problem as negative interest rates disguises the fact that this is no more than theft, pure and simple.

The government can decide at any point in time to remove whatever portion of your CBDC holdings they wish, and you will have no avenue for recourse.

The government could even decide to put a time limit on your CBDC, at the end of which it simply expires, and you are left with nothing.

The government can decide where you can spend your CBDC and on what, allowing it to take moral decisions over expenditure on legal goods and services (gambling, pornography, and heavily sugared food would be the first up against the wall. But, strangely, not tobacco).

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These are just some of the many reasons why CBDCs are one of the scariest inventions of all time.

My advice is to never get involved.