Fed Coin - The Government’s Cyber-Swindle?
Does the US government have a shady knock-off of Bitcoin (BTC) up their sleeve to cope with the increasingly likely collapse of the US dollar? Doug Casey thinks they might.
Doug Casey is a writer, speculator, and the founder and chairman of Casey Research. He describes himself as an anarcho-capitalist influenced by the works of novelist Ayn Rand. Doug has a very prescient hypothesis of how the US government, and indeed world governments, might try to solve their debt and currency-value problems.
Mr. Casey’s idea is within the realm of possibility and smart patriots, citizens, and consumers would be wise to, as the Bible says, “Pay attention!”.
First of all, we must recognize the reality that although the US dollar is still fairly well regarded internationally, that’s only because it’s living off of the reputable reputation it once had. See this article.
But don’t delude yourself that lots of countries haven’t been looking for currency and financial system alternatives. They have.
In fact, a growing number of countries have already taken proactive action to set up their own international settlements network that bypasses the New York City banks. These countries are already starting to trade in their own currencies.
This group of countries is known as BRICs ( Brazil, Russia, India, China, and S.Africa) and is described in Wikipedia in the following manner:
“In the aftermath of the Yekaterinburg summit, the BRIC nations announced the need for a new global reserve currency, which would have to be "diverse, stable and predictable". Although the statement that was released did not directly criticize the perceived "dominance" of the US dollar – something that Russia had criticized in the past – it did spark a fall in the value of the dollar against other major currencies.”
Some background to the chain of events which led up to this point: Since the US dollar went off the gold standard and US coinage lost all silver content by the mid 70’s to mid 80's, US currency has barely been worth the paper it is printed on or the value of the base metal it is minted with.
The only thing that has kept the US economy afloat, other that the fact that the US has been pretty good at intimidating and destabilizing other countries, is the ability unique situation whereby the Fed can print all the money it wants, America does have a large consumer base, and other countries have been dumb enough to take it our worthless dollars in return for the merchandise they manufacture and ship to us.
But accepting US ‘funny money’ is like building a skyscraper with fake steel. Such a structure is inherently unstable and nobody in their right mind would want to rent on one of the upper floors. Foreign governments are realizing that US dollars, especially with the US government influence that comes packaged with it, is not a smart deal.
So what would happen if foreigners stopped taking US dollars for their ‘stuff’? Today, there are multiple economic scenarious that could bring the US economy down. And of course when the US economy fails, the rest of the world would suffer too. Everybody except the politicians of course.
Many experts have quietly been warning for several years that one such precipitous event could be a collapse of the US derivatives market. Although derivatives might theoretically be a sound financial product in some circumstances, the problem with most derivatives, especially in the US, is that most of them are based on lousy collateral.
Lots of foreign governments also own US derivatives. And when these governments eventually decide they don’t want to refinance their US debt securities anymore and would prefer to take their money and do something else with it...the US won’t be able to comply with that request because it simply doesn’t have the cash.
A derivatives crash, or anything of similar scope which might cause a run on the US banking system, would be bad news not only for America but also for the world economy.
US banks don’t have enough cash to cover all the debt they’ve issued. No US bank, including the Fed, even meets its own reserve requirements.
In such an event, even if the US government resorted to printing more of the worthless money they’ve been printing for several years, it would be a practical impossibility to print the amount needed. And that presumes that debtors would even want US “dollars” at that point…. Which they probably wouldn’t.
This looming catastrophe has been in plain view for several years now.
To summarize the problem to this point: US currency is worth nothing, the US government is up to its eyeballs in debt, there is growing suspicion and outright lack of confidence in US geopolitics and the US economy (e.g. we don’t ‘make’ anything anymore except war), the US middle class is ‘feeling the pinch’ and they’re not very happy about it, the US has a bloated and unproductive bureaucracy and and welfare class, and the list goes on.
So, if you’re in the government, there’s not much to be positive about economically. Unless you think you can ‘dance between the hailstones´.
Enter Bitcoin (BTC) and Mr. Casey’s theory: Since US cash is worthless, what if the government tried to come out with their own version of Bitcoin? Wouldn’t that tend to reset the clock and buy them more time to kick the can down the road?
Could such a nefarious scheme actually work?
Yes, it could. It all depends on how it would be packaged to the public and whether the public accepted it.
What would the government have to do to pull off a ‘caper’ like this?
First of all, they would push the mantra that ‘government is good’ and ‘market forces’ are bad.
Next it would enact laws ‘to protect the public’. These laws would probably favor their plan over the private market option (i.e. BTC et.al.). Similar to what the Indian government is doing now with gold ownership laws...ostensibly to protect Indians. See that article here.
Simultaneously they would use their influence with the vestiges of the almost obsolete US banking industry to regulate or curtail conversion between the cryptocurrency domain and traditional types of ‘money’ in the US. They would use regulatory powers to make Bitcoin, Dogecoin, et.al. more difficult to use.
Also they would probably become more intrusive into the citizen's cyberspace...including trying to control capital flight from the US.
And of course, they would use their power to try to throw in some proprietary ‘perks’ to their “Fed Coin” scheme to make it more attractive than alternate type of cryptocurrency.
They could have other tricks up their sleeve. Don't be surprised if they even try to tie Fed Coin in with anti-terrorism. But Mr.Casey’s point is valid: The government might figure, “If we can’t beat’em….join 'em!”
It sorta has a patriotic, SuperHero ring to it, doesn’t it?
Don’t fall for it. Fed Coin: Bad. Bitcoin: Good.