This is what CBDC’s are being built for

Anybody who seriously thinks that Universal Basic Income (UBI) programs of the future won’t be full blown social credit systems need look no further than Brazil, where newly selected socialist / globalist Lula da Silva just decreed that the Bolsa Familia program will require family members to be vaccinated in order to continue receiving benefits.

“we can’t play around. It is a question of science. If there are ten covid vaccines, 50 to take, I will take as many as necessary because I like my life. I think everyone has a duty to their children’s life, take them [to vaccinate] at the right age ”.

The news comes via The Rio Times, which describes the Bolsa program as “a social welfare program for the poorest families in Brazil” and “a kind of Universal Basic Income”.

Lula says Brazilians can receive financial aid only if they have taken the vax. Bolsa Família will require vax certificates from participants & their children: We can’t play, it’s a question of science. If I have 10 covid vaccines to take, I will take all that is necessary. pic.twitter.com/hqrYq4jO6r

— Geopolitics & Empire (@Geopolitics_Emp) February 7, 2023

UBI is considered by many to be beneficent and inevitable. I personally believe the latter but not the former.

However it shouldn’t surprise anyone that if you’re dependent on The Saviour State for your sustenance (as Charles Hugh Smith calls it),  you are, in effect, their chattel.

CBDCs will be the rails for UBI programs

The emergence of Central Bank Digital Currency (CBDC) initiatives in nearly every nation on earth clearly signals the direction this is going. Nearly every CBDC white paper or proposal I’ve come across have the following three characteristics spelled out in plain text, and I expect every CBDC to have these five capabilities baked-in, whether or not they are initially enabled (or  documented).

#1) Expiry dates / use-by dates

CBDCs will have expiry dates after which their value will evaporate or erode. What I’ve noticed is white papers coming out of central banks started framing it as a feature, not a bug, to facilitate “recovery of lost funds”.

Abstract
An important feature of physical cash payments is resilience, which is due to their indifference to power outages or network coverage. Many central banks are exploring issuing digital cash substitutes with similar online payment functionality. Such substitutes could incorporate novel features, making them more desirable than physical cash. This paper considers introducing an expiry date for online digital currency balances to automate personal loss recovery. We show that this functionality could substantially increase consumer demand for digital cash, with the time to expiration playing an important role. Having more information available to the central bank improves accuracy of loss recovery but may decrease welfare.
— Best Before Expiry? Expiring Digital Currency and Loss Recovery, Bank of Canada Staff Paper, December 24, 2021

However the real reason CBDCs will have expiry dates is to stimulate money velocity and keep recipients dependent.

#2) “Anti-hoarding” features

Saving for the future is being rebranded as “hoarding” and it is becoming officially unfashionable because personal savings reduces dependancy on the state. The easiest mechanism for achieving this will be through negative interest rates on savings accounts, as per this IMF white paper,

…which goes on to outline the challenges there would be in eliminating the “arbitrage” between digital and physical cash:

A zero lower bound can be broken through a combination of (1) adopting or strengthening an electronic money standard in which electronic money is the unit of account and (2) implementing a time-varying interest rate (or more generally, rate of return) on paper currency (cash). Then, as the interest rate on cash moves in line with the official policy rates, there is no arbitrage between cash and money in the bank. Operationally this can be done while remaining quite close to the current monetary system, but there are several legal, communication, and political challenges to a transition to such an electronic money standard (Agarwal, and Kimball 2019).

(Despite the current rise in rates, once the money printers fire back up, this is where we’re headed).

#3) Total Information Awareness

Once it’s digitized in a centralized database (central banks) as opposed to being cryptographically secured on a decentralized blockchain (Bitcoin) – everything becomes known to central authorities instantly. Taxation can be applied per-transaction, but more interestingly – prices can also be modified on the fly.

If you’re behind on your property or income taxes – or have an unpaid fine (maybe because you’re fighting it), for example, they could simply enable a rolling garnishee on your wallet until it’s paid off.

While all transaction signatures are public on Bitcoin – they are pseudonymous and more importantly, unalterable. It’s true it may be known or discoverable that A sent sats to B, but there’s nothing any third-party can do about it. With Lightning on the ascent, combined with  various privacy enhancements there – Bitcoin development is moving in the direction of more freedom and more privacy – which is the opposite direction of most CBDC initiatives.

Finally, whether CBDCs are launched with the noblest of intentions, there will at some point arise “an emergency” which will make it necessary for The People in Charge to “flip the switch” and turn them into:

#4) Social Credit Systems

Imagine if “LoonCoin” was a thing last year when the #FreedomConvoy hit Ottawa (and signalled the beginning of a worldwide revolt against Covid tyranny). Instead of emailing a list of bank accounts to be frozen that were cribbed from a (hacked) spreadsheet, they could simply direct the Bank of Canada to turn off everybody’s digital wallets who were in the vicinity of the protest, or who contributed to their crowdfund, or who retweeted the #HonkHonk hashtag.

Do you think they wouldn’t have done it?

Covid vaxports have already been weaponized in China, Brazil is doing it with their UBI program and when this is all formaized into a CBDC, they will probably not launch it without the framework for widespread social credit and control systems being part of the plumbing.

We all know from our experience with the pandemic, emergencies tend to drag on in perpetuity. The “War on Terror” is still in effect, and there are still legions of collectivist automatons tweeting #CovidIsntOver.

So when “The Long Emergency” (to use James Kunstler’s term) becomes a never ending, rolling climate crisis, the social credit systems built into CBDCs will be used to enforce:

#5) Carbon footprint tracking

Back in Carbon Rationing, CBDCs and Sound Money I wrote how this trajectory is more or less baked-in now, and that the state-run financial system is undergoing a shift from a debt-backed monetary system to one based on carbon quotas.

This is the ultimate end-game of CBDCs. There is no hidden agenda or conspiracy around this (there’s already a Mastercard that cuts off your spending when you exceed your carbon quota), and globalist elites are quite up front about it….

Notice how he pitched it as “track your own footprint” then described it as “track their”, “what they’re eating”, “where they’re travelling” https://t.co/omHLzwqJAZ

— Mark Jeftovic, The ₿itcoin Capitalist (@StuntPope) February 9, 2023

Why CBDCs will ultimately fail

The developments of CBDCs is something we monitor in The Bitcoin Capitalist (formerly The Crypto Capitalist). Every month we put out our coverage of CBDCs  in the “Eye On Evilcoin” section and it’s not always bad news:

There is still  some time to stop CBDCs

Despite all the jawboning about CBDCs, nobody has really deployed anything viable. It’s all still design and planning – with some test beds going on. The few projects that have launched formal, actual CBDC’s have largely stiffed: Nigeria’s Enaira, Venezuela (lol). Even China’s much vaunted Digital Yuan had an underwhelming reception at last year’s Olympics (my suspicion is that the global financial system is unraveling faster than CBDCs can be developed, so they may have to go with something already out there, like Ethereum).

Worth noting, is that Brazil plans to deploy its CBDC next year.

I should note one exception to all the proposals out there in former CFTC Commissioner Chris Giancarlo (a.k.a “CryptoDad”) and the Digital Dollar Project. So far it’s the one proposal I’ve seen bucking the trend among all CBDC specifications in that there is no talk of expiry dates, and an actual emphasis on tokenization, custody and privacy.

CBDCs will not be permanent

It amuses me that when I read these plans around social credit flavoured CBDC’s, policy makers still continue to believe that by hobbling “cash”, making it impossible to save, eliminating privacy and layering on Orwellian levels of social control, they still get something that the public will prefer to cash, crypto or Bitcoin.

Only a central banker would be worried that people are going to want to hoard a statist shitcoin. (Especially after they put expiry dates on it).

— Mark Jeftovic, The ₿itcoin Capitalist (@StuntPope) February 8, 2023

It’s delusional.

Incentives matter, and that’s why nobody in their right might isn’t going to hold any wealth in CBDCs and keep their transactions within it to the lowest practical level.

The overall global system of governance is in a Fourth Turning style restructuring. With institutional legitimacy in tatters and public trust plummeting, CBDCs are typical and symbolic of the last gasp of industrial era, centrally planned economies.

The transition period between where we are now (Late Stage Globalism) and where we are headed – decentralized Network States, is going to be rough, so I advise battening down the hatches and reducing one’s reliance on government entitlements as much as possible…

Pro Tip: Don’t be poor

This is where we’re headed folks, so at the risk of sounding flippant, the solution is not to need financial aid.

Anybody depending on state entitlements or financial support will be CBDCerfs, their affairs fully regulated by the state, their carbon footprints metered, and rationed, while their lives are gamified through their smartphones.

Among the affluent G20 nations where woke-ism reigns supreme and neo-Marxism is still fashionable,  a lot of them may even like it.

But for the rest of us, who would prefer not to “own nothing and be happy”, it’s imperative that you have zero reliance on government subsidies, entitlements or support payments.

If you haven’t already:

1. Start a business. (Even a kitchen table business or an online venture)
2. Start stacking sats (Bitcoin) – get off zero, today.
3. Start taking sats at your business.

If you already own or run a business, buy, start or invest in another one.

It’s going to get a lot more expensive to be free. It’s not right or fair, but that doesn’t matter.

The good news is there’s never been a better time in history to learn, create, innovate and grow and these are the dynamics and incentives that will ultimately prevail. We’re in a period of Peak Collectivism and Peak Centralization now (for the next few years). This dominating ideology is ultimately an anti-human philosophy and this too shall pass.

Be ready for it, either way.

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Ironically, the push toward carbon-rationing and CBDCs is based on the same insight by sound money advocates: Fiat is worthless.

Let me tell you a parable about value. It’s about how the “thing” that everybody assumes has value can change over time, and by the time it changes, people have completely lost touch with the original measure of value.

In the early 00’s, easyDNS was getting ready to move our servers out of our physical office and into an actual data colocation center in downtown Toronto.

When we got our first cabinet, we were billed in terms of how much rackspace we were using, and what our bandwidth consumption was. In those days, the servers were trying to pack themselves into smaller enclosures and compress the data payloads to reduce bandwidth. There were 2U boxes, the bleeding edge stuff coming out was 1U, and if you were a dinosaur from late-90’s, you might have some legacy 4U servers, which were costing you a fortune to rack.

What was missing from that equation?

Power. There were no power costs, or if there were, they were negligible to the point where I can’t even remember having them. The power costs were just built into the price of the rackspace and bandwidth.

Fast forward 20 years, and it’s inverted completely. The number one cost when you provision new cabinet space these days is typically your power commit. Then bandwidth and transport. Now the rackspace is practically a throw-in. In many cases, what people think of as “servers” today are just virtualized images that don’t even take up any physical space.

What changed? The world did.

Who cares? Mostly nobody.

What I mean by this, is nobody thought that switching to charging for power consumption instead of rackspace was a big deal. The overall economics of the space changed, and as a result so did the pricing model. In other words, the underlying value commodity switched from Thing A (physical space) to Thing B (power). Other than adapting to it, nobody really cared.

The same thing happened with “money” -and it’s about to happen again

Money used to be backed by gold (Thing A) and then by a national currency exchangeable for gold (Thing B). In practical day-to-day terms, most people didn’t care and continued to use whatever they had in their wallets for currency.  Thing B even became the global reserve currency.

Then in 1971, it switched again and that reserve currency could no longer be exchanged for gold (Thing A) while Thing B would henceforth be …nothing. It was supposed to be temporary. 

People continued to use the reserve currency to denominate exchange and found that using nothing to back the value of the currency actually made life better, for awhile. At least for those who were in close proximity to the people who were able to mint more of this new “nothing money” out of thin air (they’ve come to be known as Cantillionaires).

Since all the other currencies were backed by the reigning reserve currency, this meant that they were now all backed by Thing B as well. And Thing B was nothing.

There were people who sounded the alarm that the the new Thing B (nothingness) was unsuitable for backing a currency, let alone a global reserve asset. Over time, they warned, it would create ever-increasing wealth inequality, blow up serial asset bubbles followed by ever worsening financial crises and probably end in a hyper-inflationary blow off.

They were dismissed as cranks and conspiracy theorists. In more recent times, right-wing extremists or Kremlin stooges.

Even so, as ignorant and retrograde as these people were and still are, today even mainstream commentators and anointed experts realize we’ve more-or-less run out of runway for having a global reserve currency backed by nothingness.

The fiat currency era is essentially over.

Goldbugs knew it wouldn’t last and invested in gold for centuries. They still do today. Now there is also Bitcoin, which captures the same mechanism: in this case using energy to back currency.

But globalists and central bankers are in a conundrum.

There is the realization that the fiat era, backing money with nothing is about to hit the wall.

But even central bankers know they can’t print energy out of thin air.  It would render Cantillionism obsolete overnight, and we can’t have that.

What is needed is some basis to backstop that currency that has some kind of value, a perceived scarcity or cap attached to it, in order to reestablish faith and legitimacy in the “money”. Further, it needs to be something that can be controlled and distributed from within the central bank / state mechanism – it must be entirely outside the influence of market forces.

Finally, it has to have an ideological pillar that can be used to shape public opinion around its acceptance.

The New Thing B is Carbon

The last legs of the failing monetary system will see another of these transitions where the value medium shifts from Thing A to Thing B.

There will at least be an attempt to implement one. Whether they get it out the door before  the monetary end-game plays out remains to be seen.  The destruction of the current system has been so accelerated by the ubiquitous mishandling of the Covid pandemic by policy-makers that the current system may come off the rails entirely before a new one can be implemented (subscribers of my premium newsletter have been getting our coverage on CBDCs and how far behind the curve nation states and central banks are in actually developing them. This why I think, ultimately, they try to go with something that already exists, like WEFereum Ethereum).

But the plan from on high is that we will go from pricing goods and services based on their input costs of production and distribution (Thing A), to pricing privileges and consumption based on their perceived carbon emissions (Thing B).

We’ve all seen the latest think piece out of the World Economic Forum, characteristically shrouded in their benevolent-sounding euphemisms, pushing for individual carbon rations and justifying it that because the world’s population sat still for, and complied with, global lockdowns. They suggest that the plebes are ready to accept having their individual carbon footprints metered by unelected bureaucrats and opaque AI-driven algos.

The WEF piece linked to a 2021 paper by Nature that mapped out Personal Carbon Allowances, and the impetus to define one’s  “fair share” of carbon emissions and the “setting of acceptable levels of carbon emissions”.

When you set aside (for a moment) the totalitarian implications of this,  it does make a certain amount of sense. In its own way, it proves the point that hard money advocates have been making for decades, if not centuries: fiat money is valueless.

Beneath all this climate alarmism driving the move to carbon rationing, there lies an implicit admission, conscious or not, that for money to be viable it has to denominate an economic trade-off.

You cannot print value ex-nihilo. In so doing these last 50 years (since the commencement of the fiat era in earnest), we’ve gotten to a world where the price of capital – and thus, time, if you read Edward Chancellor’s latest book (and you should) – is nominally zero, which collides with the reality of the finite (or with the laws of physics – as somebody like Doomberg would say).

The central bankers of the world made one big divide-by-zero error, and the result is what we actually see playing out across many dimensions, right now. Bitcoin and the coming CBDCs are both reacting to the same thing, but what’s different about them is who would be served by the adoption of one mechanism over the other.

What’s important to understand is that, similar to the Cantillion Effect, when the underpinnings of a monetary system transition from Thing A to Thing B, the outcomes are non-neutral. One example of this is the Gini Coefficient, which is a measure of wealth inequality.

In the chart below via @WTF_1971 we see how after a period of secular decline under the Bretton Woods system, it suddenly reversed and blasts off right at the inflection point where the global monetary system abandoned its last link to hard money (Thing A) and the fiat era began (Thing B).

All indications are that the coming CBDCs will be carbon-based, social credit schemes, and they are being promoted and implemented by the same vested interests who profited and consolidated unimaginable wealth throughout the prior 50 years of the fiat era – the Cantillionaires.

This path is ultimately doomed, because as I frequently point out, it seeks to extend an industrial era worldview (top down, centrally planned and linear), onto a new architecture: one that is decentralized, self- organizing, adaptive and non-linear.

Because it’s one iteration behind in the level of mental abstraction, it’s like breeding faster horses in an era of cars. No matter how good you get at it, you’re still playing the game on an obsolete playing field and will ultimately be unable to compete on the new one (if you’re wondering why I frequently reference the level of mental abstraction as being such a game changer that ensures the eventual supremacy of networks over nations, I refer you to a relatively obscure book by W R Clement called “Quantum Jump: A Survival Guide For the New Renaissance“).

The only advice I can offer for navigating the coming transition is to be as financially independent and resilient as possible. Do not allow yourself to become reliant on government entitlements and if you are now, figure out a way to end that reliance immediately. That these systems will become tightly coupled with CBDCs and carbon footprint rationing is a foregone conclusion.

You’re going to have to be ready for at least a transitionary period where the lifestyle choices you take for granted today will be priced in terms of carbon credits in the future. If you are reliant on government entitlements, get used to eating plant-based protein patties. If you aren’t, get ready to have to pay more for those Wagyu burgers. A lot more.

Hold as much of your wealth outside of the state run banking system as possible. Bitcoin (off the exchanges, I also like Monero), hold gold, silver, and own cash-flow producing businesses, and multiple revenue streams. If you have a job, start a business on the side. If you own a business, start another one.

Start connecting with people and tribes who are opting out of the current system, because the one we’re in now is either going to come off the rails entirely or try to go full CCP in the near-term.