CBDC’s – It’s Even WORSE Than You Thought
Most of us here understand the disaster that implementing a CBDC would be. Eventually, it would result in a removal of cash(otherwise there is no point in implementing one). That is horrific in itself, because it gives total control over everyones life because those controlling it can limit what and when you can make purchases and actually tax you anytime they want by removing funds from your account. As if that isn’t bad enough, one of the most talked about features is actually also one of it’s worst bugs. Advocates say that if the economy is lagging the government can up the amount of money(UBI or some other type of stimulus) and put a time limit on when you have to spend it.(use it or lose it) That is going to cause a much bigger problem. We all know there are two major components to inflation. The first and most important is the actual supply of money. That is what we have been experiencing this last year and a half as a result of all the created stimulus money during the pandemic. The reason we have double digit inflation and not hyper inflation is because the second inflation factor has not really accelerated. That factor is the velocity of the money. People currently aren’t freaking out to rush and spend their money before it becomes substantially worth less than the month, week or day before. That extreme velocity is what leads to hyper inflation like in Weimar Germany, Zimbabwe and other places in the past. If the government has a CBDC and in an economic slowdown provides stimulus funds and also puts a time limit on the use of those funds, they are going to unleash BOTH elements that lead to hyper inflation. Extra amounts of created money and a frenzy for people to spend it while they still can. A sure recipe for disastrous hyper inflation. Just another reason why every effort needs to be made to prevent this abomination from EVER getting started.
I enjoyed this post CM but paragraphs do add an element of topical order for the reader.