Blog | Personal Finance

CBDCs: Paving the Way to a Cashless Society?

How central bank digital currencies could shape the future of money

Summary

• It’s never too late to invest in your financial education - even if it was taken from you

• Understanding how CBDCs work will better prepare you for the unknown - like a cashless society

• The Federal Reserve Bank might not be all that you think it is

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In 2009 Robert Kiyosaki wrote a best-seller titled, Conspiracy of the Rich. If only he had met George Gammon sooner, one could imagine what the book would entail.

First, let’s define central bank digital currency (CBDC); as defined by the Board of Governors of the Federal Reserve System,“ A CBDC is a digital form of central bank money that is widely available to the general public.

‘Central bank money’ refers to money that is a liability of the central bank. In the United States, there are currently two types of central bank money: physical currency issued by the Federal Reserve and digital balances held by commercial banks at the Federal Reserve.”

Now, let’s discuss two areas before introducing George Gammon and his theory on the banishment of cash. First, the deliberate and Machiavellian removal of financial education from the school systems and second, the creation of the criminal organization called the Federal Reserve Bank.

The Federal Reserve educational conspiracy

Ask yourself this, who controls education, and who determines what is taught in our schools?

In 1903, John D. Rockefeller created The General Education Board. There was much controversy about why he created this organization. Some people say he created it to improve education. Others say he did so to hijack the educational system of the United States.

Around the same time, another Barons, Andrew Carnegie, promoted his Foundation for the Advancement of Teaching. It seems both Rockefeller and Carnegie were working to influence the American educational agenda to determine what students were allowed to learn in school.

The question is, What was their agenda?

While some people will say Rockefeller and Carnegie were working for the good of our children, others say exactly the opposite.

In reports written 60 to 100 years ago, you’ll find what many deem inflammatory information from credible people, that are hard to believe. What they accused Rockefeller and Carnegie of orchestrating is a crime against the American people.

What were the crimes? Destroying any real future these children could ever have by banishing any form of financial education from the school systems. Without this knowledge children could not become entrepreneurs or businessmen. No, they would become something much more important to Rockefeller and Carnegie. They would be forced to become employees and do the work for the mighty financial titans.

Today, looking back on those reports with decades of hindsight, there does seem to be some validity to their concerns. Rockefeller and Carnegie wanted to break the American spirit—and used the education system to do so.

Americans are individuals who left their countries of birth for freedom from oppression and for the opportunity of a better life—a shot at the American Dream. This made the DNA of Americans too strong, too independent, and too ambitious to be subservient to the rich and powerful. Too strong to be just employees.

Those critical of Carnegie and Rockefeller believed that before the rich and powerful could gain further control over Americans and the wealth of America, the American spirit had to first be weakened, that Americans had to be made dependent upon a job and the government for financial support.

Once the spirit was broken, the minds of Americans would be owned by the very people in charge of the school system. This is important to the “Elites” because now that they own our minds, they can manipulate us to do or believe nearly anything. This is really why there is no financial education in our schools.

One of the major goals in hijacking our minds is the control of our money…

Creation of the Federal Reserve Bank

Let’s discuss the second player in this “conspiracy,” the Federal Reserve Bank. In 1913, after several years of financial instability and the fear of a World War, Congress created the Federal Reserve Bank.

Americans were scared and thought that a national bank would protect them from panics. This happens often. The government uses a time of fear to grab more power. This happened despite the fact that some of our Founding Fathers were against a Central Bank and thought the concept unconstitutional.

American citizens were told that the Federal Reserve would provide a reserve of liquid assets and also allow for currency and credit to expand and contract with the movements of the U.S. economy. The Federal Reserve was created on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law.

The Federal Reserve, as we know it today, has four general responsibilities:

1. It conducts the nation’s monetary policy by influencing money and credit conditions in the economy. In other words, the Fed changes money and credit conditions in order to get as close to full employment and stable prices as possible.
2. It supervises and regulates banks and other important financial institutions to protect the nation’s financial health and (supposedly) the credit rights of consumers like you and me.
3. It maintains the stability of the financial system and contains any types of systemic risk that arises (think: fixing extremely low interest rates during the recession).
4. It provides financial services to the U.S. government, U.S. financial institutions, and foreign official institutions.

In the minds of experts, however, the Federal Reserve Bank only has two powers: to create money out of thin air and to lend money they do not have. As a side note, it’s important to understand that the Federal Reserve Bank is not federal, has no reserves, and is not a bank. Yet, as explained above, the Federal Reserve Bank has the power to control the money supply of the U.S.

Note: We will NOT be calling the Federal Reserve Bank “the Fed.” Instead, we want to drive home the absurdity of the FAKE name they use to fool the public.

How CBDCs Work

Remember when we introduced CBDCs above? Now let's discuss how they work (this is all connected, sit tight).

There are two types of CBDCs: Wholesale, and Retail.

According to Investopedia,“Wholesale CBDCs are similar to holding reserves in a central bank. The central bank grants an institution an account to deposit funds or use to settle interbank transfers. Central banks can then use monetary policy tools, such as reserve requirements or interest on reserve balances, to influence lending and set interest rates.”

Furthermore, “Retail CBDCs are government-backed digital currencies used by consumers and businesses. Retail CBDCs eliminate intermediary risk—the risk that private digital currency issuers might become bankrupt and lose customers' assets.

There are two types of retail CBDCs. They differ in how individual users access and use their currency:

• Token-based retail CBDCs are accessible with private keys or public keys or both. This method of validation allows users to execute transactions anonymously.

• Account-based retail CBDCs require digital identification to access an account .”

Ups and downs of CBDCs

While there are advantages of CBDCs, like enhanced efficiency and payments, promoting financial inclusion and simplifying the implementation of both monetary and fiscal policies, there are the fair share of disadvantages.

What’s the down side? One major concern regarding CBDCs is the risk of erosion of privacy. Having a centrally controlled digital currency system would allow governments and central banks to monitor financial transactions - goodbye anonymity. And don’t forget about the potential impact on traditional banking systems, and the risks that come along with cybersecurity and tech failures.

So, with that in mind, why push the cashless society agenda?

George Gammon’s theory on the creation of a cashless society

If you were to ask Robert Kiyosaki, he would describe George Gammon as a brilliant teacher. A real teacher. You can find his educational videos on YouTube and they come highly recommended. Pay attention to his explanation of his research on the banishment of cash. Beware, it is going to shock you at the end.

There are two main reasons that most people accept as the reason for wanting a cashless society. The first reason is negative interest rates.

Federal Reserve sets negative interest rates

Let’s pretend the Federal Reserve Bank sets their interest rate at 5%. All the banks who have money reserves with the Federal Reserve Bank have to pay 5% on that reserve of money. What is important to understand is that the banks are being charged for not lending the money. The banks are being charged for “saving” the money. That is what a negative interest rate means. The banks don't want to pay the 5% so they lend all of that money into the real economy. All this money is now in the economy and this boosts consumption and purchases of goods. It also decreases savings.

None of these people borrowing this money from the banks want to lose money because the banks are charging them interest rates as well. So they need to use the money. What do they do? They spend it. They buy new cars, new houses, new… everything. They don't save a penny.

According to Keynesian economists, this will produce a booming economy. As the money keeps flowing through the various hands the economy is being propped up by the purchases. To a Keynesian, nothing is better for society than for everyone to spend every single dime they earn, and save nothing.

But, there is a problem. The problem, as Richard Werner, economist and international banking expert has pointed out, is that the banks do not actually lend the reserves that they have on hold with the Federal Reserve Bank. Since the reserves are not being lent out there is no increase in lending, no increased consumption, and thus, no booming economy.

The negative interest rates explanation is a bust

That brings us to the second reason: George’s research leads him to believe that the Federal Reserve Bank and governments want a cashless society. A little lesser-known component of a cashless society would be the government's ability to do “bail-ins.” If there's no cash in the system, all of your excess productivity is held in this banking system, in the form of digital currency. Now your money is in danger. You can’t keep it safe under your mattress or in your home safe. Why is that important? Uncle Sam has trillions of dollars of debt. Look at the way governments in debt have acted over history. They take their citizens’ money… your money.

If your money is digital, then there would be no way for you to extract your money from the bank if Uncle Sam wants to come in and take it for himself. He can just swoop in and pay off his $20+ trillion (and growing) debt, using your money.

Now, although this makes a lot of sense, this isn't the main reason why they want to ban your cash. George has a better reason. Keep reading.

The real reason for a cashless society

So what is the REAL reason for wanting a cashless society? Since the banks can't or won’t lend their reserves, then the Federal Reserve Bank money cannot get out into the economy. So if the Federal Reserve Bank sets interest rates to negative five percent, that basically becomes a tax that all banks have to pay on these reserves that are stuck at the Federal Reserve Bank. That makes it so banks only ask for the bare minimum of reserves. This in turn decreases the amount of reserves in the system. If there's fewer reserves in the system, that means that there is less ability to make loans, resulting in fewer loans.

(Note: To be clear, the banks aren't lending out the reserves, but the reserves are necessary to back up the deposits that are created by the loans themselves. In other words, the reserves make the loans possible without the banks actually lending the reserves themselves.)

Now we are getting to the good stuff. George Gammon explains that these negative interest rates put tremendous pressure on small retail banks. The negative interest rates decrease the small banks ability to lend, and increase the small banks’ cost through additional government regulation. This then, increases the cost to the consumer making loans even harder to give.

Because the small retail banks can't make money through traditional lending, they've got to nickel and dime their customers to death. This makes them a lot less competitive in the eyes of the consumer.

So why would the Federal Reserve Bank want to create this type of environment for the small retail banks? George explains that these negative interest rates and the burden they place on the small banks forces the smaller banks to merge while having to close down many branches. As a result, banks that mainly engage in traditional banking, i.e. lending to businesses for investment, have come under major pressure.

Basically, the agenda of negative interest rates is to drive small banks out of business, and consolidate banking sectors in the industrialized countries, increasing concentration and control in the banking sector. What makes this especially problematic is that these small retail banks are responsible for the majority of productive lending in the real economy. These are the banks that lend to the small and mid-sized businesses that increase production, economic growth, lower income inequality and low inflation.

But, as George Gammon continues, if you wipe out the small retail banks, that means all the business goes to the big banks. The problem is these banks are not interested in small and mid-sized businesses. These big banks are really only interested in doing large transactions that financialize the economy, and create asset bubbles.

It’s about to get crazier…

The endgame of a cashless society

Let’s recap real quick: Cash is banned. The Federal Reserve Bank drops interest rates into negative territory and puts the squeeze on all those small retail banks, putting most of them out of business.

As a result, the real economy shrinks because small and mid-sized businesses (the backbone of economic growth) don't have access to funding. The average person looks to the Federal Reserve Bank and the government and says “oh please protect us, we can't get ahead in the real economy anymore.” The Federal Reserve Bank and the government say “no problem, there's a ‘Federal Reserve Bank Guaranteed Fund’” (our term, not George’s). So all of the citizens take their hard earned money and place them in the economy through the Federal Reserve Bank Guaranteed Fund.

Now, all the citizens are invested in the Federal Reserve Bank because this is the only “safe” game left in town. They are forced to bet on asset prices, speculation and timing bubbles. So, as the real economy is decreasing in size, the financial economy is increasing in size exponentially, making all of these bubbles bigger and bigger and bigger.

The Federal Reserve Bank knows this and they know that at some point this whole game is going to come crashing down. When it does, the big banks go to the Federal Reserve Bank and say “Bail us out! We've got systemic risk!” That is when the Federal Reserve Bank looks at the big banks and says, “No.”

They let them fail. The Federal Reserve Bank has then wiped out the small banks and the big banks. The Federal Reserve Bank is the only game in town. They have 100% control of the money and the credit.

If they control the money and the credit, they control you. And that control is the real reason for a cashless society. Once there is only the Federal Reserve Bank — with both cash and bank credit alternatives abolished — all transactions, money creation, and allocation of that money, would be implemented by the Federal Reserve Bank.

That is a pretty big conspiracy, we know.

So what are you to do about it?

Our advice at Rich Dad remains the same: focus on learning, and investing in your financial education. Continually seek brilliant minds, like George Gammon, to learn from and surround yourself with people who are smarter than you. In other words, invest in things that are real, especially your financial education.