Central Bank Digital Currencies (CBDCs) and Financial Policy Issues

Overview

• Financial System Issues: System is imploding due to prolonged borrowing since WWII without repayment plans.
• Historical Spending: In 2024, interest expenditures are projected to be $1 trillion—matching the entire national debt in 1980.

Government Borrowing and Default

• Governments issue new debt to pay off old debt—a Ponzi scheme.
• Default occurs when new debt can't attract buyers.
• Fiscal policies in Western governments rely on continuous borrowing.
• Keynesian economics: Ineffective because it was designed for balanced budgets (1930s).
• Current dilemma: Raising interest rates doesn't curb government spending, leading to increased interest expenditures.

Modern Monetary Theory (MMT) and Keynesian Economics

• MMT falls short because the government is the biggest borrower—raising rates doesn’t reduce government spending.
• Historical trend: Governments never repay debts, leading to default.
• War as a pretext for economic reset and default.
• Examples from history include defaults in Ancient Greece and Middle Ages.

The Role of CBDCs

• Control Tool: CBDCs aim to eliminate cash and control the underground economy.
• Tax Collection: Governments aim to boost tax collection by 35% through CBDCs.
• Privacy Concerns: CBDCs can be used to control personal expenditures and political donations.
• Economic Impact: Predicted to worsen economic conditions by reducing investment and economic activity.

Economic Predictions

• Recession: Expected from May 2024 to 2028 with stagflation due to shortages and poor policy decisions.
• Capital Gains Tax: Proposed increase to 44.6% by Biden, likely to reduce investment.

Historical Parallels

• US Civil War & Panic of 1837: Illustrates long-standing inability of governments to manage finances responsibly.
• Federal Reserve History: Past instances where the Fed refused to comply with unsustainable government spending.
• Global Historical Patterns: From the Soviet collapse to the planned economies of ancient times, centralized control/command economies fail.

Future of CBDCs and Global Economy

• Inevitability of Failure: CBDCs likely to fail by imposing too much control and unifying diverse economic cultures under one policy.
• Breakup of Nations: Potential breakup of the US into three regions and similar splits in Canada and Europe.
• Historical Issuance of Private Currencies: Expected re-emergence of local and private currencies as CBDCs fail.

Policy Recommendations

• Prohibit Government Borrowing: Only realistic long-term solution is to ban governments from borrowing.
• Term Limits for Politicians: To prevent the formation of a perpetual political class.
• Return to a Republic of the People: Ensure governance is by the people, eliminating career politicians.

Conclusion

• Collective Learning: Society must learn from historical mistakes to redesign government structures post-2032.
• Resilience of Human Nature: Despite attempts to control via CBDCs, private and alternative currencies will emerge as solutions.