First published at https://plagueonbothhouses.com.
In January 2022, the House of Lords Economic Affairs Committee issued a report on the Bank Of England’s (BoE) fervent, yet somewhat furtive, desire to breathe life into its Central Bank Digital Currency (CBDC) or ‘digital pound’. The committee mocked the project as a “solution in search of a problem” and concluded that the “concept seems to present a lot of risk for very little reward.”
The mere fact of a House of Lords Committee being unconvinced of the case for a retail CBDC is not, of itself, the main reason to reject the concept. Those of us who have observed the transition over the last three years from the pretence of democracy to bare-faced authoritarianism need no confirmation from the House of Lords that CBDCs are an evil to be avoided at all costs. But the fact that a bunch of Lords, Baronesses and Viscounts – the most unlikely candidates for a financial system rebellion – have poured cold water on the scheme ought to tell us that the BoE is on a hiding to nothing in terms of building credibility for its project.
Why the cynical ‘ ’ around the word ‘consultation’ in the title of this piece? Well, in line with the increasingly authoritarian trend in government ‘consultations’, all of the BoE’s consultation questions presuppose that its CBDC project should be implemented; it seeks opinions only on how this should happen. Disappointingly though unsurprisingly, it provides no option to reject the proposal in its entirety, which is of course highly undemocratic. They’re not asking whether you’d like to be punched or not. The parameters of the debate have been limited to asking you whether you want a black eye or a bloody nose. That is the meaning of ‘democracy’ today in the West. (Those ‘ ’ again.)
The authoritarian framing of the ‘consultation’ is a clear indication that the BoE plans to do exactly as it pleases. So, the purpose of registering dissent in this disingenuous ‘consultation’ is to create a historical record of our rejection of a financial system whose chief purpose will be to restrict our freedom. If we can register a majority of responses rejecting a CBDC, its subsequent roll-out will provide proof, if it were needed, of just how smoothly our glorious ‘democracy’ is working. And who knows – if we can inundate the BoE’s inbox with a flood of firm rejections, it may spark a movement that leads to a victory over the BoE mafia.
If you agree on the need to completely reject a CBDC, I have provided a template for a response to the BoE’s digital pound consultation paper.
Here is the link to that template with instructions on where to email it. The deadline for responding is 7 June 2023.
If, on the other hand, you think that a CBDC might not be such a bad thing, I hope you’ll read this article and reconsider.
A solution in search of a problem
I must commend the House of Lords Economic Affairs Committee on its report caption – “a solution in search of a problem” – which adeptly summarises the BoE’s clumsy attempt to sell a product that only it and no-one else really wants or needs. To grasp this, you need only understand two very simple facts. First, a CBDC would not even begin to address any of the economic or social problems that we face. Second, a CBDC poses grave threats to consumers. In other words, as far as solutions go, it’s an emphatic lose-lose. When put like this, the whole concept seems incredibly stupid. And that’s because it is. I’ll first try to explain this lose-lose equation before going on to speculate on why the financial geniuses at the BoE are serving up a turd and calling it cake.
So, let’s tackle the first part of the lose-lose equation – ‘solving’ a problem that doesn’t exist. The BoE’s headline pitch for the digital pound is both absurd and incredibly cringeworthy because it has the distinct feel of your 85 year-old granddad going before the Dragon’s Den panel and confidently telling them to back an invention that he is absolutely certain will take the world by storm – a machine that slices bread. Here’s the BoE’s pitch for its ‘digital pound’:
“The digital pound…would be used by households and businesses for their everyday payments needs. It would be used in-store, online and to make payments to family and friends. If introduced, it would exist alongside, and be easily exchangeable with, cash and bank deposits. The digital pound would maintain public access to retail central bank money and, as our lifestyles and the economy become ever more digital, it would also promote innovation, choice and efficiency in domestic payments.”
If you’ve read that more than once and failed to find a single clue as to what the digital pound is going to do that isn’t already being done perfectly well by our existing money payment system, don’t worry: you’re not going mad. I think we can all agree that parting with our money, whether “in-store, online”, or “to make payments to family and friends”, has never been easier. The problem most of us face today is how to staunch the flow of money out of one’s bank account, not how to make faster or more efficient payments.
Indeed, the Economic Affairs Committee is of the same view as I am – that “the UK’s existing domestic payments system is secure and efficient”. The FT roundly concurs, pointing out that if the BoE’s aim is to ensure that the public has “access to faster, cheaper retail payments”, this need is being adequately met as “more and more payment services are already providing just that.”
Desperately clutching at straws, the BoE has tried to argue that its digital pound will increase financial inclusion. Countering that, the FT points out that “introducing the basic bank account has already achieved that – by 2018-19, the number of “unbanked” in the UK had dropped to just 1.2m out of a total population of 67.1m.”
To begin to understand the true meaning behind the motivation for pushing a CBDC, we must see it in the overall context of government interventions over the last three years. Whether it was scorching the earth with ruinous lockdowns; addling the population’s already confused and fearful minds with oxygen-depriving masks; coercing everyone to get injected with ‘vaccines’ that killed and maimed more people than any other pharmaceutical product in history; enforcing media censorship on a scale that would have made Goebbels blush; fanning the flames of a proxy war that sent energy bills up by 80% in the space of six months; or presiding over the highest rate of inflation since 1982 – the last three years have seen the most concerted, and successful, attempts by the government to plunge a jagged, rusty knife into your back, twist it violently, and have the gall to tell you that it’s all for your own good or some greater good.
Let’s face it – now is not the time to be fooled, again, by deep-state spooks like Sir Jeremy Fleming, GCHQ Director, telling us that a digital currency presents a “great opportunity” to democratise payment systems. At this juncture, the main point revealed by statements like that from GCHQ spies or BoE bureaucrats is just how low they rate your IQ for thinking you would swallow such garbage. Reflecting my own bemusement about the case for a CBDC, the House of Lords Committee concluded: “We have yet to hear a convincing case for why the UK needs a retail CBDC”. Paraphrasing their conclusion to strip it of its charming understatement – bollocks to digital pounds.
CBDC is not a currency; it’s a DIGITAL PAYMENT SYSTEM
The second part of the lose-lose equation captures the main way in which a CBDC would harm us. Understanding this is the key to understanding why the BoE and every other central bank wants one in the first place. The key feature that distinguishes a CBDC from the system currently in use is that the CBDC will be programmable. Even if that feature is not deployed in the initial phase of roll-out, it is built into the system and can be activated at the metaphorical flick of a switch. The FT sums up the problem:
“The bank [i.e. the BoE] could restrict the future use of money for activities seen to be “socially harmful” in some way. But who will judge what is socially harmful? This has the potential to become as severe a restriction on personal freedom as China’s “social credit” system.”
It’s vitally important to be clear about what a CBDC really is and what it is not. And oddly enough, despite its name, it is NOT a currency. Sterling is a currency. The correct term for the BoE’s proposed CBDC or ‘digital pound’ is a Central Bank Digital Payment System or CBDPS. That’s not my opinion. It’s the unequivocal view of Sir Jon Cunliffe, the BoE’s Deputy Governor for Financial Stability. When challenged by the House of Lords Economic Affairs Committee on the ‘currency’ canard he replied:
“I agree with you entirely on currency [i.e. the use of the word as a misnomer], but the term is out there now and it is difficult to change it. I would probably refer to it as central bank digital money, because money is a means of payment, rather than central bank digital currency. The horse has bolted. Once an acronym becomes established, it is really difficult to change it.” [emphasis added]
The word ‘currency’ creates the misleading impression that something entirely new is being mooted when in fact what is happening is a dystopian revamp of the existing payment system. Just to re-emphasise the lose-lose equation: first, a new payment system is being introduced when there is nothing wrong with the existing one. Second, the new payment system is programmable by the issuer. It is no exaggeration to say that a CBDC allows the government of the day to determine how, when, where and even if you can spend the money in your digital wallet. Are you smelling a rat yet?
The component of this looming nightmare that will give it ruthless efficiency is digital ID. An important security feature of any payment system incorporates being able to identify the authorised owner of the account (or ‘wallet’ in CBDC parlance) to prevent crime. Here we are talking about standard identification which is unique to the platform and used purely to ensure the person attempting to transact on the account is the authorised owner. However, the direction it’s bound to go in is a broader ID system linking activity on your CBDC wallet to a wider digital ID that will integrate your financial CBDC identity with your wider online activity and identity. This is what will turn a payment system into a social credit system. Again, don’t take my word for it. Here’s what the BoE governor said in response to the digital ID question as it relates to his digital pound:
“To what extent that digital ID would be unique to that platform or something that was broader in terms of your identity, it is rather like Jon’s [Deputy Governor for Financial Stability] point about the iPhone: the technology will probably move us on very rapidly in a short time, so it is a bit of speculation to some degree.” [emphasis added]
He’s being a bit coy in talking about ‘speculation’ but you don’t need to be a mind reader to get what he’s saying – “the technology will move us on very rapidly”. It won’t be his fault when we’re being sanctioned for not eating our quota of bugs; it’s just technology. The god of technology is of course the go-to alibi of authoritarian technocrats. If you’re not obeying it and making sacrifices to it, then you’re a pagan Luddite, worthy only of scorn, abuse and ultimately removal from society.
In short, a payment system is being used to transform a key function of money from a medium of exchange into a medium of control.
Distraction – the secret to all magic and deception
The BoE’s remit in its own words is to “keep the whole UK financial system stable”. And how does it do this? Again, in its own words, “by keeping a close watch on any risks and taking action, if we need to.” Full marks for plain, easy-to-understand English. Using this as the yardstick for what it should be doing, I’ll give a quick summary of some financial system instability that the BoE should be keeping a close watch on but isn’t.
While the BoE boldly goes in search of a solution to a payment system problem that doesn’t exist, Global Financial Crisis (GFC) II is well underway with 4 US banks having collapsed since March and the threat of contagion casting a dark cloud over the entire Western banking system. Not only is the BoE doing very little about that imminent and catastrophic threat, but it is implausibly denying that there is anything to worry about.
To understand today’s financial instability, we must cast our minds back to GFC I because, contrary to popular belief, that problem has not been solved. It’s been lingering on like a bad smell in a bathroom that hasn’t been cleaned since, oh… 2008. It was triggered when financial institutions knowingly made loans that couldn’t be repaid. Before these ‘subprime’ mortgages could blow up in their faces, they were surreptitiously repackaged and sold to other institutions. Now disguised in a forest of inscrutable collateralised debt obligations, they sat like buried landmines, waiting to be trod on by innocent passers-by.
When they exploded in 2008, the ingeniously insane solution to the ensuing liquidity crisis in the banking system was to plaster the hole in the ponzi scheme with more debt through money printing. This was given the ridiculous sounding name of ‘quantitative easing’, a practice the BoE, and every other major central bank, wholeheartedly embraced.
Quantitative easing is defined by Statista as “the creation of digital money in order to purchase government bonds”. So, the BoE, the US Fed and central banks across the West created digital money to buy bonds from banks. The banks received the digital cash they needed to plug the gaping holes in their balance sheets and central banks now hold bonds that aren’t worth the paper they’re printed on. Calling it ‘quantitative easing’ stops financially illiterate people – most of us – from asking questions. Had they just called it what it is – money printing – there would have been very little doubt as to its fundamental stupidity. Having cemented the idea that money grows on central bank mouse pads, mouse-click money printing was repeated in 2020, ostensibly as an economic stimulus response to shutting down the global economy in response to a cold virus.
UK public sector net debt has risen from £0.7 trillion in 2008 to £2.4 trillion in 2023. The cumulative value of the BoE’s quantitative easing, or creation of digital money, rose from £200 billion in 2009 to £895 billion in November 2020. The UK’s M2 money supply has grown from £2.1 trillion in January 2010 to £2.9 trillion in November 2021. Meanwhile, there is a serious disconnect between the growth in debt and the money supply on the one hand, and the growth in actual economic activity as measured by GDP which grew from £1.9 trillion in 2008 to just under £2 trillion in 2020, rising to £2.2 trillion in 2022. In short, the money supply and debt burden are ballooning while economic activity is stagnant. And this is why we are in stagflation.
In the US, this monetary expansion policy blew the US Federal Reserve’s balance sheet up from $0.9 trillion in 2007 to $8.3 trillion by the end of February 2023. In the space of three short years the US M2 money supply has risen from $15.4 trillion in February 2020 to $21 trillion in February 2023.
The way to think of this explosion in the money supply and central bank debt is that it represents the cost of the mistakes made in 2008 and repeated in 2020. The illusion created by the steroidal money printing of 2008 and onwards is that the banksters can quantitatively ease their way out of the jam they got into in 2008. But they can’t. First they tried to quantitatively ease their way out of a mountain of rotten loans and then they tried to quantitatively ease their way out of quantitative easing. Yes, it’s that mad. The central banks are now holding the bill for those errors (or more accurately crimes in the case of the subprime mortgage scandal) and, shock horror (!), they want to make us pay for it.
You can’t print that amount of money out of thin air and expect it to hold its value. The headline numbers above provide a glimpse into the inflationary pressures in the economy at the moment. Central banks in the West have responded to the inflationary pressure by raising interest rates. But that has only provoked a banking liquidity crisis increasing pressure on bank margins and capital. As I’ve said, there have been four bank collapses in the US since March and it’s hard to see how things aren’t going to get significantly worse in the near term.
With inflation running at over 10% and Britain forecast to be the only G7 economy to shrink in 2023, it appears that the BoE’s monetary expansion policy has contributed to the current economic stagflation. So much for its vaunted claim to defending monetary stability.
Now pause and ask yourself whether creating a ‘digital pound’ has anything whatsoever to do with solving the ills described above. It doesn’t, and you’re entirely on the right track if the words ‘deck chairs’ and ‘Titanic’ are springing to mind.
While CBDCs are the destination central banks are desperate to reach, the narrative surrounding them will double up as a distraction tactic. At the moment, they’re using the carrot of convenience to sell you the canard of efficiency and “democratisation” (!) of payment systems. But if the banking crisis gets worse, the fear stick will almost certainly be wielded to convince you that your money will be safer in a CBDC, lovingly watched over by Big Brother at the BoE.
The US bank collapses, which at the moment are really banking consolidations, are having the effect of spurring a fear-driven flight of deposits from smaller regional banks to the too-big-to-fail banks. Driving deposits from small regional banks to banking behemoths accelerates the desired consolidations while also herding as many consumers as possible into a small number of large banks which can then more easily administer retail CBDC wallets on behalf of the US Fed. Control by centralisation adopts the view that we are sheep far more easily controlled in large pens.
Why are we being sold a dangerous dud? Crushing crypto (aka the competition)
I maintain that the chief purpose of CBDCs is to transform money from a medium of exchange into a medium of control. So why this new, or certainly heightened, need for control? Well, the need is far from new. The banking cartel, including central banks, exercise control over the economy by controlling the money supply. As already alluded to, there are massive problems with the monetary system that can no longer be fixed using the traditional levers of printing and interest rates – excessive amounts of the former have negated the effect of the latter. All fiat money systems have a limited lifespan because they exist primarily to benefit the controllers and, for that reason, they get abused to the point that they crash. The statistics above strongly hint at the fact that the printing presses have overheated, and the interest rate cooling system can’t extinguish a fire as big as the one that’s raging.
A new payment system cannot fix this and nor is it intended to. But what this new payment system does offer the banking cartel is the prospect of absolute control over us and therefore the future economy that emerges from the attempted controlled demolition of the current ponzi scheme. The current banking collapse which has begun in the US is really a banking consolidation and wealth transfer in which there is a massive scramble for real assets using, somewhat hilariously, the fake money that has been printed over the last 15 years.
There is another reason for herding us into the digital gulag of a central bank digital payment system. The emergence of crypto currencies – essentially private money not issued or controlled by the central banks – is a direct response to the implosion of the prevailing fiat money system and therefore a threat to the central banks’ monopoly control over the supply of money. The BoE would have us believe that shutting down private crypto is part of their remit of maintaining financial stability. It is in fact a thinly disguised ploy to eliminate the competition in the money-supply market.
Again, don’t take my word for it. Listen to what the BoE Governor himself has to say about the threat of crypto when asked how a CBDC supports financial and monetary stability:
“We are seeing very rapid growth…in what you could broadly call the crypto asset world…The crypto world is unbacked by assets. If you like, it is computer code. The crypto world is much bigger. The latest estimate for this now is about $2.7 trillion…
That is a very big growth, and it has happened very rapidly. We do not regard it today as a direct financial stability issue, but we regard it as having the potential to be a threat to financial stability, which is why we think we need to take action on that front. … [T]he question then becomes how we tackle that world. From the history of what often gets called fractional-reserve banking, we know it is an inherently unstable system unless it is put within a framework of regulation, which we have done over the years…Broadly, we face two choices. Is it going to evolve to some world of backed stablecoins that have money-like features, which could be regulated? I must say…I am sceptical about that. Is the better contribution, particularly to financial stability…to say that the better alternative to that may be a central bank currency of digital form?” [Emphasis added]
Note the coyness in the last sentence in which he both asks and answers the question. Here’s the plain-English translation: crypto is too big to ignore and has become a threat to the central bank and banking cartel monopoly on money; central banks are re-branding that threat as a threat to financial stability, notwithstanding that central banks and the banking cartel are, and always have been, the primary source of financial instability; that re-branding makes it palatable from a PR perspective to crush the threat, not just with regulation, but by central banks using their power to get rid of private crypto and re-establish their monopoly position on the money supply with their own dystopian version of crypto currency.
The guvnor’s CBDC plan is an insult to your intelligence. Let him know.
The BoE’s CBDC or ‘digital pound’ is not a currency; it’s a payment system that will grant the government hyper-centralised control over you and your spending habits. It doesn’t solve any of the pressing financial instability problems that we currently face such as the potential collapse of the banking system as a contagion effect of the US bank collapses that began in March. Whatever minor problems we may have with the existing payment systems, they can be addressed completely outside of the CBDC paradigm being pushed by the BoE. As it fiddles with interest rates while Rome burns, the BoE is aggressively pushing for a dystopian payment system to retain its monopoly on the control of money – a monopoly that it has abused, and which is a direct cause of the second looming banking crisis since GFC I in 2008.
The guvnor of the BoE is making us an offer he thinks we can’t refuse. Please feel free to use the template provided in the link below to let the financial thugs at the BoE know that they should not insult our intelligence. The deadline for responding is 7 June 2023.