In his column, “Why central bank digital currency must be stopped,” Scotty Anderson stressed the dangers of these CBDCs and highlighted concerns about government overreach and the erosion of privacy. I share Anderson’s apprehensions about the implications of CBDCs for personal freedom and financial autonomy.
Bitcoin and other digital cryptocurrencies distinguish themselves as decentralized digital assets, not governed by any single entity. Bitcoin is capped at 21 million coins. This scarcity grants bitcoin a stability that even gold, with its indefinite supply potential, lacks.
Cryptocurrencies stand in stark contrast to fiat currencies and CBDCs, not just in their scarcity (given that central authorities can issue traditional money in limitless amounts, as seen with the Fed’s unrestricted money printing that swelled the U.S. national debt to more than $34 trillion), but also in the privacy and autonomy they offer. CBDCs are designed to enhance the powers of a central bank for regulation and surveillance, marking a clear divide in the approach to individual finance freedom and privacy.
China has launched the digital yuan (e-CNY), making it the first major economy to introduce a CBDC. This development permits unparalleled surveillance and control, merging with the existing social credit system that rates citizens’ behaviors. Through CBDC integration, the government can directly monitor financial transactions and link them to social credit scores, intensifying its grip on personal finances.
The Fed is also examining the prospects of a CBDC. Last July, it introduced FedNow, an instant payment system that allows banks to offer immediate transactions. Though FedNow isn’t a CBDC, it marks a significant move toward centralized payments.
Consider the potential: with each transaction centrally recorded and linked to individuals, the concept of financial privacy becomes obsolete. This scrutiny extends beyond mere expenditure tracking and leads to analysis of personal habits and preferences and then directly influencing behaviors and decisions. This encroachment of a financial system as an instrument of state surveillance and coercion severely compromises the values of freedom and individual rights, challenging autonomy and self-determination in the digital age. The implications stretch well beyond privacy issues, deeply affecting fundamental freedoms and the essence of personal independence.
To comprehend the power of CBDCs, consider Canadian Prime Minister Justin Trudeau’s actions during the trucker protests over vaccine mandates and lockdowns. That administration’s restrictions on bank accounts vividly showcased a financial system’s ability to not only enforce compliance, but act as a potent weapon against citizens to suppress dissent and impose government mandates with force and precision. Such a scenario underscores the critical need to reconcile financial technology advancement with the protection of personal freedom.
The government’s control over spending can extend to penalizing behaviors deemed undesirable, such as using natural gas, not driving an electric vehicle or refusing to take an experimental vaccine. If you are eating too much meat, they can cut off your ability to purchase meat (but bugs are always on the allowed menu).
CBDCs aim to subtly modify behavior through incremental steps. Every time you hit “like” on a tweet that they disagree with, they dock you 50 cents. If you retweet it, that costs $1. If you follow Trump on X (formerly Twitter), that costs $10. If you try to tweet about Hunter Biden’s laptop, that costs $100. CBDCs can be used as a surveillance tool to identify those whom Biden calls “enemies of the state.” The targets will be Trump supporters and MAGA Republicans.
The concept of “geo-locking” accounts can restrict transactions based on location, demonstrated by Bank of America’s cooperation with the FBI following the January 6 Capitol events, showcasing how easily financial autonomy can be compromised.
In a truly free society, financial surveillance would require judicial oversight. However, CBDCs eliminate these safeguards, granting unchecked power to monitor and control personal finances without the need for warrants or probable cause, representing a significant shift from traditional financial privacy protections.
CBDCs highlight a broader use of technology to enforce adherence to state policies. From the actions against Canadian truckers to penalties for everyday choices, it’s clear: CBDCs change the game, and not for the better.
This conversation isn’t just about new tech — it’s about liberty. As we inch towards this financial frontier, it’s crucial we weigh the cost of expanded government surveillance and control against the value of our personal freedom.
Courtney served 20 years as a nuclear engineering officer aboard submarines and 15 years as a graduate school instructor. A political independent, he spends his time playing with his eight grandchildren in Moscow.
