Can Digital Gold Solve Democrats’ Digital Dollar Dilemma?
Digital currency has already arrived in the form of Bitcoin. However, governments are concerned about the untraceable nature of cryptocurrency transactions, which could facilitate criminal activities. As a result, they see an opportunity to exert control beyond what is possible with cash by introducing a Central Bank Digital Currency (CBDC).
President Joe Biden’s March 9, 2022, executive order on digital currency reveals the left’s intentions. The order states that digital currency has “profound implications for… the ability to exercise human rights; financial inclusion and equity; and energy demand and climate change.” This is a lofty expectation for a medium of exchange, and it is likely that the left’s plans for a CBDC will be even more ambitious.
Fear of an intrusive CBDC is why Florida Gov. Ron DeSantis signed two bills in May to prohibit the use of CBDCs in the Sunshine State.
However, CBDCs do offer advantages, such as improving the efficiency of the financial system. This is why China and its BRICS allies are moving forward with the development of CBDCs.
In China’s case, the appeal of a centrally controlled digital currency goes beyond being a first mover. It also presents an opportunity for absolute control, with China’s emerging social credit system potentially expanding from regional to national and even international levels.
A Possible Solution
The challenge in addressing the CBDC threat is that you can’t combat something with nothing.
This is where best-selling author Kevin Freeman comes in with his latest book, Pirate Money: Discovering the Founders’ Hidden Plan for Economic Justice and Defeating the Great Reset. In this book, Freeman proposes the creation of a digital currency backed by bullion and supported by states as legal tender.
Why “pirate money”? Because pirates of the past considered gold and silver as real money, although it is inconvenient to carry around in today’s world.
Freeman begins his argument by highlighting that the value of the dollar has declined by 87 percent since President Richard Nixon removed America from the gold standard in 1971. This means that what costs a dollar today could have been purchased for 12.5 cents 52 years ago. This is because the dollar is essentially unbacked “fiat” money.
When it comes to CBDCs, Freeman explains how they could be misused by the federal government, resembling something out of George Orwell’s dystopian world. In China’s case, a CBDC would grant the Chinese Communist Party (CCP) the power to exercise control over personal spending, issuing fines or rewards at will.
Recognizing the flaws of the digital dollar, Freeman suggests an alternative:
The ideal money today would be based on gold and silver, held and protected by a sovereign state, and available electronically. … If that gold were stored in a Texas vault, for example, and the state kept precise records of your holdings down to minute fractions of an ounce, and facilitated payments to whomever you directed, it would be the perfect form of money.
Freeman points out that a similar method of exchange already exists in the form of Glint. This app allows users to buy gold and store it in a vault in Switzerland. Additionally, they can use their phones to make everyday purchases, just like with a credit card.
However, there are a couple of drawbacks. Firstly, since it is not legal tender, the Internal Revenue Service requires the reporting of transactions, and any earnings are subject to taxation. Secondly, the gold is located in Switzerland, and while it is insured, there is always a concern about its security and availability.
To overcome the IRS reporting requirement, the bullion-backed method of exchange would need to be recognized as legal tender. For example, it could be based on the gold deposits of the state of Texas in its own Texas Bullion Depository, established in 2018.
Unsustainable Debt and China Competition
With his concept outlined, Freeman issues two warnings.
Firstly, the national debt is on an unsustainable path, and rising interest rates could overwhelm the federal government’s ability to repay. He refers to this as “The Coming Storm and the Great Reset.”
Secondly, China will attempt to exploit this impending crisis to challenge the dollar’s status as the world’s reserve currency.
However, the second scenario is unlikely without the first. China also faces significant economic challenges, exacerbated by the Chinese Communist Party’s relentless pursuit of total control. While the United States has its financial problems, at least they are transparent, and our political class is less capable of engaging in currency manipulation compared to the CCP.
Nevertheless, Freeman’s suggestion that states, led by Texas, develop their own gold- and silver-backed legal tender, as permitted by Article I, Section 10 of the Constitution, seems like a prudent backup plan in the event of a dollar collapse. Having such a backup in place would likely strengthen the dollar and reduce the effectiveness of China’s monetary meddling as a weapon.
I make a similar case in a paper titled “Texas Defense,” released by the Texas Public Policy Foundation on September 12.
Drawbacks of Gold and Silver
Lastly, like many advocates of bullion, Freeman does not address certain aspects of gold and silver that diminish their appeal.
Firstly, gold and silver, like any commodity, are subject to the laws of supply and demand. Following the Spanish empire’s conquest of the Americas, the influx of silver led to inflation not only in Spain but also in the rest of Europe. From 1500 to 1600, prices increased 2.5 times. This was due to the relatively stagnant productivity growth compared to the increase in the money supply (although by modern standards, inflation was relatively low at around 1 to 1.5 percent per year).
Additionally, a significant portion of gold and silver is used for jewelry and industrial purposes, rather than being stored in central bank vaults.
Nevertheless, as Freeman points out, “throughout history, gold and silver have never been worth zero,” which is more than can be said for paper money.
The main value of Freeman’s Pirate Money lies not only in raising awareness about the weakening dollar and the potential dangers of CBDCs but also in offering a practical and constitutional pathway for states to establish an alternative exchange system. This system could ensure the functioning of the economy in the event of a dollar crisis and prevent the creation of a federal Central Bank Digital Currency.
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Why did Florida Governor Ron DeSantis prohibit the use of CBDCs in the state and what are his concerns regarding government surveillance of personal finances? How do these concerns reflect the fear of an intrusive CBDC
Digital Currency and the Role of Central Bank Digital Currency (CBDC)
Digital currency has already made its mark with the emergence of Bitcoin. However, concerns have arisen about the untraceable nature of cryptocurrency transactions and the potential facilitation of criminal activities. In response, governments are exploring the idea of introducing a Central Bank Digital Currency (CBDC) as a means to exert control beyond what is possible with traditional cash.
A recent executive order signed by President Joe Biden on March 9, 2022, sheds light on the left’s intentions regarding digital currency. The order emphasizes that digital currency has “profound implications for… the ability to exercise human rights; financial inclusion and equity; and energy demand and climate change.” Such lofty expectations for a medium of exchange hint at the left’s ambitious plans for a CBDC.
This fear of an intrusive CBDC is precisely why Florida Governor Ron DeSantis took action by signing two bills in May to prohibit the use of CBDCs in the Sunshine State, citing concerns about government surveillance of personal finances.
However, despite these concerns, CBDCs do offer certain advantages, such as improving the efficiency of the financial system. This is why China, along with its BRICS allies, is pushing forward with the development of CBDCs. For China, the appeal goes beyond being a first mover in the space. It presents an opportunity for absolute control, with the potential expansion of its emerging social credit system from regional to national and even international levels.
Addressing the potential threat of CBDCs is not a straightforward task. Merely resisting them without offering alternative solutions is not enough. This is where best-selling author Kevin Freeman comes in with his latest book, “Pirate Money: Discovering the Founders’ Hidden Plan for Economic Justice and Defeating the Great Reset.”
In his book, Freeman proposes the creation of a digital currency backed by bullion and supported by states as legal tender. This concept, coined as “pirate money,” derives its name from the historical perception of pirates valuing gold and silver as real money, albeit inconvenient to carry around in today’s world.
Freeman argues that the value of the dollar is at risk due to the erosion of trust in fiat currencies and the potential consequences of an unchecked CBDC. He proposes that a digital currency backed by tangible assets, such as gold or silver, would provide a more stable store of value and safeguard against potential abuses of power.
As different countries and governments venture into the realm of CBDCs, it is crucial to thoroughly consider the implications and potential risks associated with centralized control. Alternative solutions, like Freeman’s proposal of a bullion-backed digital currency, offer an interesting perspective that seeks to strike a balance between the advantages of digital currencies and the preservation of individual liberties. Only time will tell how nations choose to navigate this rapidly evolving digital landscape.
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