The FedCoin Endgame
In a previous article, George describes Fedcoin, the new central bank digital currency that the government plans on adopting. He discusses how it benefits the government and federal reserve, and how it will ultimately become a tool of mass control.
This article talks about step #3, the end game.
This isn’t a prediction. This is George thinking about probabilities and possibilities.
FedCoin (5-10 years Later)
It goes back to the government and Federal Reserve's main objectives of maintaining high asset prices, low interest rates, and high inflation.
In order for this scenario to work, the Fed must continue being the buyer of last resort. This is sometimes often called the Fed Put.
What Is The Fed Put?
The Fed Put is the widespread belief that the fed will step in and rescue markets if it falls below a certain level.
The Fed can't let the system collapse. So they must step in and manipulate markets.
Let’s say the Fed doesn't want the S&P dropping below 3,000. Three thousand would be the floor at which the Fed would intervene. This would be their ‘fed put'.
If the S&P starts selling off and falls below 3,000, then the federal reserve could inject liquidity into the market, manipulate interest rates, and coordinated monetary policy to rescue markets.
Daytrading.com does a great job explaining what a ‘fed put' is.
Is it legal for the Fed to buy assets and set prices?
Here’s how Robert Barnes, free speech and constitutional lawyer, explains it.
“There’s a legal theoretical definition of what’s the scope of power the government has to control the means and medium of the interchange. Can they ban bitcoin? Can they ban cash?”
George Gammon: Can they confiscate gold?
We have unfortunately. Franklin Delano Roosevelt.
After FDR got elected, it was within a year or thereabout that he said everyone had to forfit their gold. And if anybone was caught with gold, then bad things were going to happen.
So, there’s always a risk, but there were a number of people who didn’t do so. They estimate somewhere 10% to 15% weren’t trackable. There were a lot of high profile arrests, along with serious doubts whether or not he could confiscate gold from a constitutional standpoint.
The courts were the ones that turned a blind eye because this was the crisis of the depression.
So nobody was going to meaningfully contest because he was depriving people of their property without any due process, or showing how it was necessary to take away someone’s gold to protect some other compelling public interest.
The analysis of constitutional law in the United States is, if you’re violating someone’s core constitutional rights, the government has to show a compelling public interest and the means they’ve chosen to protect that compelling public interest narrowly tailored to it.
What’s happening currently in the pandemic is not narrowly tailored remedies. The seizure of gold was not a narrowly tailored remedy. But we live in an environment where the New York governor has suspended laws, anti-bribery, gift-giving to politicians, and transparency laws about state contracts. All in the name of the pandemic
It's like, how exactly do anti-bribery laws correlate with the pandemic? Only a politician would think the best way to solve this pandemic would be by getting rid of anti-bribery laws.
So, is there a risk of currency seizure or them prohibiting the use of certain things as mediums of exchange? No doubt.
Their ability to enforce it constitutionally, is still an open question, but their ability to do so practically is probably the bigger question.”
In other words, even if it was against the law, they’d simply change the law or ignore the constitution altogether.
As Robert puts it, they simply look the other way.
But, what about small and mid-sized businesses? How would the government and the Fed prop those up?
As an example, let’s imagine Joe has a coffee shop and he isn’t doing well because he’s losing a lot of money, but, Joe has a social score of 10 because he has played by all the government’s rules, explicit and implicit.
But before we continue with Joe's example, I'll explain how a Chinese social credit score system could possibly work in the US.
how a Chinese style social credit score system could work in the US
First, let’s go over the things that would most likely reduce someone’s social score.
If a person went out and bought too much alcohol, or what the governments deem to be too much alcohol, then their social score could be lowered.
The same thing goes for someone buying a gun, gold, or Bitcoin. Or maybe they criticize the Fed’s ledger or the government. Or maybe they get caught speeding or they get banned on social media.
Any negatively perceived behavior can be turned against you.
What if your Twitter account got blocked by a political elite. How might that look on your social credit score?
This social credit score system can replace your traditional credit score. Now it's about both your behavior and your ability to repay a debt.
The Government's Economic Leverage Over You!
Keeping with the scenario, that the Fed is the buyer of last resort, and every loan created ends up on the Fed balance sheet. Since all of the debt ends up on their balance sheet, and they don't have a profit and loss, it doesn’t technically matter if the loan gets paid or not.
The counterparty technically has no P&L. So there is no counterparty.
The Fed can create as many FedCoins as they want. With FedCoin, someone could get a loan not based on their ability to pay it back but on their social score.
Whatever they wanted, any type of loan would start with the social score.
And because the Fed and the government don’t want Joe’s coffee shop to go bust (because he has a great social score), they could program other people’s Fedcoins to be spent at Joe’s coffee shop.
Of course, this brings in a lot of money, making the business profitable again.
This way, the Fed/government would make sure no one ever loses money.
Social Scores Matters More Than Merit
An economic system based on social score and not merit is possible because of a government-backed digital currency.
Nonetheless, many of you might be thinking about the Fed's actions of purchasing everything and the massive inflation that comes with it.
But, this won't happen, not at all. They’d go straight to the MMT playbook because the federal government is just spending these coins into existence, it’s not part of the Fed anymore, they don’t have to sell bonds or debt.
Then, to lower the money supply or reduce the amount of inflation they just need to get money or Fedcoins out of circulation, and to do so, they would simply raise taxes.
Everybody has its Fedcoins on the app, so the Fed/government would reduce everyone’s balance by 20% or 30% to make sure there are fewer FedCoins in circulation to keep inflation under control.
This is central planning at its finest.
What would you do if they banned cash, confiscated gold, and made Bitcoin completely illegal?
Let us know in the comments.
Modern Monetary Theory: Utopia OR Catastrophe? (ANSWER REVEALED)
Comments are closed.