Editor’s note: Today, we’re revisiting the Daily Cut archives to bring you this essay from last July.
In 1971, the KGB tasked a group of computer scientists and surveillance experts with finding a way to keep track of everyone inside the Soviet Union without them knowing about it… And the solution those experts landed on?
A fully digital currency in which every transaction – down to what you’re purchasing and where you’re at when it happens – is regulated by the government.
And just last year, the Fed introduced its first step towards a digital U.S. dollar – an instant payment service called FedNow. Make no mistake, a U.S. dollar CBDC – or central bank digital currency – isn’t as far off as you might think. And it’s a threat to your financial privacy.
So today, we’ll share what exactly this looks like… and a couple of ways you can work around it.
But first, the markets…
Market Data
The S&P 500 closed up 0.5% to end the day at 5,104.76… the NASDAQ gained 0.6% to close at 16,031.54.
In commodities, West Texas Intermediate crude oil trades at $79.08, up 91 cents…
Gold is $2,155 per troy ounce, up $18 from yesterday…
And bitcoin is $66,970, up $2,963 since yesterday.
Now, back to our story…
Imagine a new type of cash…
Unlike the kind in your wallet, it’s never rolled off a printing press.
It exists only in cyberspace.
The government still issues it. But you spend it through an app on your phone.
And every transaction is recorded in a federal database.
This lets the government see not only what you’re buying… but also where you are when you’re making a purchase.
This new type of cash is called a central bank digital currency – or CBDC. It’s a fully digital version of cash that central banks issue and regulate.
And it’s replacing the currency system we know today.
Plans for this new kind of cash are already in place in more than 100 countries. They represent more than 95% of global GDP.
And the U.S. is one of them.
In July 2023, the Fed rolled out a new digital payments system called FedNow to make this possible in America. So, a U.S. dollar CBDC is closer than most folks realize.
So it’s important you understand the threat CBDCs pose to your privacy… and your liberty.
So, let’s begin by looking back to a piece of almost forgotten history from the Soviet Union’s secret police, the KGB.
In 1971, the KGB investigated a new kind of surveillance system…
The top brass wanted to keep track of everyone inside the Soviet Union without them knowing about it.
So, they tasked a group of computer scientists and surveillance experts with figuring out something innovative.
The proposed solution was to eliminate physical cash… and replace it with a digital currency system.
Digital currency transactions must be recorded in databases. If you own the database, you can see everything stored there.
So, this system could gather data about your financial transactions – including every book you read, every magazine you subscribe to, and every political organization you donate to.
It could also flag where you were every time you made a transaction.
The KGB never built this system – physical cash lived on in the Soviet Union.
But the fact remains that it decided that you couldn’t do much better than digital-only cash if you wanted to build an unobtrusive surveillance system.
CBDC backers say they’ll have privacy protections built in…
If you believe that, I have a bridge to sell you.
America’s spy agencies have made it part of their mission to digitally snoop on us.
In 2013, National Security Agency (“NSA”) contractor Edward Snowden made this clear in his leak of agency secrets to the press.
Among the documents he made public were top-secret slides about a digital surveillance program called Prism. Willing partners included Apple, Google, Microsoft, Yahoo, AOL, and Facebook.
You can see one of the slides below. It shows these companies were providing everything from email, to photos, to video and voice chats.
One of the top-secret slides Snowden made public
And as the Wall Street Journal reported last month, U.S. spy agencies buy vast quantities of our personal data – including from our cars, phones, and web browsers.
That’s bad enough.
In a world where CBDCs have replaced physical cash, we’re at risk of mass financial ;surveillance. Worse, this will be linked to the ability to punish us for our political or economic behavior.
We saw this in response to last year’s Freedom Convoy protest…
In January 2022, hundreds of truckers opposing COVID-19 vaccine mandates occupied downtown Ottawa.
In response, the Canadian government invoked emergency powers and froze protesters’ bank accounts.
By February, it said it had frozen at least 76 bank accounts linked to the protests representing $2.5 million.
Canada still has physical cash. So, the government couldn’t completely freeze the protestors out of the economy. With CBDCs, the feds could have prevented them from using cash as well as their bank cards.
All the government would have to do is shut down their digital wallets… and they’d be completely locked out of the economy.
Anti-vaccine mandate protests are just the tip of the iceberg…
It may sound like we’re dipping into “conspiracy theory” territory here, but consider the implications of what we’re saying.
Your cash would be entirely under the control of the government. That would not only make the government privy to every financial transaction you make… but give it access to – and at least some measure of control over – your accounts.
What would you do if it decided that your financial transactions were at odds with government interests?
Think this sounds far-fetched? Look at today’s America. If I showed you 30 years ago what the government promotes today as “normal behavior,” would you have believed me?
What if Washington’s focus on the green energy movement means taking a specific tax directly from your digital wallet every time you spend your digital dollars on gasoline? With a digital dollar, that sort of “green tax” would be possible.
The government could also get heavy-handed with gun control… setting federal limits on guns and gun paraphernalia and locking down your wallet entirely from purchases of guns and ammunition when you meet that limit.
The United States we knew 30 years ago is gone. If we’re not careful, the wealth we’ve worked hard for will no longer be ours to spend how we wish.
Luckily, there are two assets you can buy today to protect yourself…
The simplest and most effective way to opt out of this digital dollar is to buy assets that let you store your money outside of the traditional financial system… so, bitcoin and gold are your best bets.
When it comes to most cryptocurrencies, you are your own bank when you buy tokens. The same goes for gold. You don’t need to trust a third party to store it for you. Physical gold is about as “off the grid” as it gets when it comes to money.
They’re also both “hard money.” You can’t produce more of them like you can with the dollar and other fiat currencies, making them great inflation-resistant assets as well.
So if you haven’t already, now is a good time to add some bitcoin and gold to your portfolio. These are two of the best ways to escape a CBDC system.
More Markets
Today’s top gaining ETFs…
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Amplify Transformational Data Sharing ETF (BLOK) +4%
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Siren Nasdaq NexGen Economy ETF (BLCN) +4%
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iShares MSCI South Africa ETF (EZA) +3.3%
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Global X Lithium & Battery Tech ETF (LIT) +3%
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Invesco Dorsey Wright Technology Momentum ETF (PTF) +2.6%
Today’s biggest losing ETFs…
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iShares MSCI Turkey ETF (TUR) -1.6%
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Invesco S&P SmallCap Consumer Discretionary ETF (PSCD) -1.5%
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Invesco S&P SmallCap 600 Pure Value ETF (RZV) -1%
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Invesco S&P SmallCap 600 Revenue ETF (RWJ) -0.7%
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KraneShares MSCI All China Health Care Index ETF (KURE) -0.6%
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Regards,
The Legacy Editorial Team