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So did Bitcoin, for that matter, so at least I can feel the pain with the rest of you. Misery loves company, indeed.
Jerome Powell’s renomination is not good news for cryptocurrency investors. Still, I doubt the nomination of any of these other slimy reptiles crawling around the halls of the treasury building would have been much better or worse. Well, I’ll take that back; Joe Biden could have nominated Saule Omarova, author of Karl Marx's Economic Analysis and the Theory of Revolution in Das Kapital, for chairman of the Fed, but she’s been nominated for comptroller.
Anyway, getting back to Mr. Powell, he is no fan of cryptocurrencies, and he made his views quite clear during congressional hearings this past summer saying,
The reason Mr. Powell said this is because he knows central bank digital currencies can’t compete with cryptocurrencies. Cryptocurrencies offer people a way around the annoyingly slow and inefficient SWIFT system, and they hold more value than the dollar. Secondly, cryptocurrencies can’t be manipulated by politicians, bureaucrats, and bankers, at least not as much as fiat currencies.
A CBDC would have all of the aforementioned features. It would be inefficient because anything the government rolls out is dysfunctional. Just look at all the problems with Obamacare’s website or any bureaucracy they created in the last 50 years, from the FBI to the Department of Education.
Worse is that bureaucrats would be able to manipulate it more directly than they can the dollar. Nick Carter of Castle Island Ventures was quoted as describing CBDCs as a
In other words, you would no longer control your purse strings; some woke bureaucrat would.
Not only could they use CBDCs as a tool to police behavior they don’t like, but they could very well force you to stimulate the economy by blackmailing you into spending your money on things you don’t want lest you find it disappears overnight, which is what Mr. Carter means when he says your CBDCs could disappear in 60 days.
If you’re a sane person who wants to buy the things you want and save money, why would you want to use a CBDC that enables someone else to control your financial life? So naturally, these people would not use Powell’s CBDC; they would instead stick with paper dollars and cryptocurrencies. And when Powell or one of his minions realize their new digital currency isn’t catching on, they’ll ban alternative forms of currency the way China has done.
You may think that’s alarmist, but the Covid lockdowns and restrictions have opened a Pandora’s box, as I have said several times before, so anything’s possible.
I don’t like making predictions, but I’m going to make one anyway. I think Jerome Powell’s nomination will put the Treasury on a path towards issuing a digital currency, and that the Treasury, with the help of Congress, the White House, and numerous bureaucracies, will ban cryptocurrencies outright, or make it so difficult to use them that people will use their new digital currency instead.