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Crypto Attack Is Explicit Consolidation Of Power
Gensler has intentionally misrepresented the idea of "digital" currencies in an interview with CNBC.
There has been widespread speculation that the war on crypto is part of a process to establish a more centralized fiat system, in the form of FedNow and ultimately a CBDC.
This has previously been dismissed as a conspiracy theory, though widespread awareness of Operation Choke Point 2.0 has made that position harder to maintain. More recently, the aim of killing crypto entirely (at least in the US) has been more widely aired.
In a recent interview on CNBC, SEC Chair Gary Gensler betrays his views: He wants to get rid of crypto assets and claims there is no use case for "digital currencies".
"We don't need more digital currencies, we already have a digital currency; it's called the US dollar." #FEDNow in July, with #CBDC’s world wide. Only a fool would think that Gary Gensler and the United States government aren’t killing #Crypto— KingBob (@KingBob53) June 6, 2023
Digital Vs Decentralized
This was a wilful misinterpretation of what crypto assets are, and what they do. "Digital" is an unhelpful description to use in this instance, unless your aim is to confuse the issue. While electronic fiat currencies and cryptos are both "digital", and they're both "currencies", that's where the resemblance ends.
As Gensler knows perfectly well, fiat money is centralized, relies on middlemen, is controlled by a small group of elites, and is typically inflationary.
Cryptocurrencies, meanwhile, are decentralized, cut out sources of control and single points of failure, are used on a peer-to-peer basis. Issuance is algorithmically determined and known in advance. In fact, cryptos like bitcoin have far more in common with gold than they do with fiat money.
FedNow And CBDC
All of this takes place against the backdrop of the development of new fiat payment solutions. FedNow, which will launch in July, has been created by the Federal Reserve as a 24/7/365 instant payment system that will be rolled out via banks and credit unions. As well as being available all the time (unlike the current system, which is closed on weekends and holidays), transaction costs will be reduced by around 80%. Individuals won't get direct access to FedNow, but will be able to use the service if their bank or credit union joins.
FedNow resembles a CBDC in some respects, but they are not the same. FedNow is a set of payment rails, a kind of update to existing interbank payments like ACH. It's not the currency itself, and it doesn't allow the same kind of direct surveillance and control that a CBDC would.
Nonetheless, CBDCs are a live topic, in the US and around the world. Opposition to CBDCs has been fierce in some states. Texas Senator Ted Cruz has introduced an anti-CBDC bill, and Ron Desantis has stated that Florida should be a CBDC-free state.
It's possible that FedNow will decrease the "need" or demand for a CBDC. Still, the level of concern only shows how strong that demand is, and that tendency towards central control. Ultimately, the only way to avoid that is to create a separate system that operates independently and cannot be shut down by the incumbents.
Back in 1984, economist Friedrich Hayek described a new kind of decentralized currency. It wasn't Bitcoin (or anything like it), but it shared the aim of being outside of the control of central banks and governments.
How to bring this about? Governments wouldn't give up their control of the money supply easily. It wouldn't happen by force, he said, only by stealth.
"I don't believe we shall ever have good money again [unless] we take the thing out of the hands of government, that is, we can't take them violently out of the hands of government; all we can do is by some sly roundabout way introduce something that they can't stop."
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