“People should have an escape valve for their money, their assets. If you have substantial financial assets, the government is going to confiscate the purchasing power of those assets and spend it.”
–Peter Schiff
October 22, 2024 – Leaders of the BRICS nations are descending on Kazan, Russia, and the summit host, Russian President Vladimir Putin, is turning on the charm.
Putin will meet with leaders of 43 different nations over the next two days, including China’s Xi Jinping and India’s Noranda Mohdi, heads of two countries that have held their own grudges with Russia over the centuries.
Today’s meet and greets are all niceties and gladhanding. But we know Putin’s got big plans for the BRICS.
How cool would it be (for Putin) to leave this 2024 with a pact uniting 43 nations in the evolving pipe dream effort to create a “BRICS buck”… a global currency and stiff competitor to the U.S. dollar… possibly even backed by gold?
The Grey Swan research team is at once fascinated by the alternatives being discussed at the summit and, from a mainstream perspective, skeptical that this disparate group of nations, each with their own legal and banking system challenges, can resolve past political issues to any significant degree, long enough to cooperate on something so complex as a unified currency.
And as we began to express yesterday, we’re equally skeptical about the Western banking pipe dream of developing an efficient set of central bank digital currencies to replace cash.
The Fed has been studying the concept ever since crypto became a meme fascination on Wall Street.
Heck, political leaders and central bankers have to dream, right?
Today, while we await more substantial insight or news from Kazan, we take a look at the latter threat to your wealth. The threat from within.
Or what Grey Swan contributor Mark Jeftovic even calls it a form of “monetary apartheid.” Enjoy –Addison
The Coming Monetary Apartheid
Mark Jeftovic, Grey Swan Investment Fraternity
Looking at the big picture, central bank digital currencies or CBDCs, offer a lifeline to fiat currency.
Remember, central bankers are trapped. They can’t go up, they can’t go down. These currencies are completely debased. Changing interest rates does very little to fix fundamental problems with a currency, it can only juice up or slow down an economy.
Enter the CBDC. This programmable money can act as a way to try to extend that runway another few decades.
And what I have always said about them is they will either launch as or morph into social credit systems.
Remember when the “stimmy checks” came out during Covid and the pandemic? It was not used in ways central banks intended.
People used it to buy stocks on Robinhood, rather than pay their rent or continue to spend on other items. That was a clear, unintended effect.
Well, what if you could have permanent stimlus, permanent Universal Basic Income (UBI), you’re going to want to control how and where that money is spent.
CBDC’s: Tracking Your Social Credit, Carbon Footprint, and Programming Accordingly
Meanwhile, there’s the whole World Economic Forum (WEF) mindset that you’ll own nothing, and be happy.
A CBCD will be part of that trend, and, in fact, the key tool. You’ll have money that may come with a use-it-or-lose-it expiration date. And you’ll have an increasing number of monthly subscriptions to spend things on, not just streaming services, but things like food and clothes.
That means a CBDC can also be used not just for a social credit score like in China, but personal carbon footprint trackers.
Yes, all of this is doable with CBDCs. There’s an incredible clip from the World Economic Forum about a Canadian who’s the president in the Valley Baba, this one unit of Baba talk, and we’re going to be able to know what you’re eating, where you’re traveling, all of this stuff.
You can track your own carbon footprint, but really the sort of punchline there is they can control your carbon footprint.
In a way, CBDCs are kind of like an embracing of sound hard money in a way. It’s not. CBDCs come from the same realization as gold, and bitcoin is that fiat money is backed by nothing, and it’s worthless, and it’s kind of a ruse, and we’re running out of runway for it.
So CBDC or so gold says, well, we’ve got this gold, and we’re going to back money. And it’s worked for thousands of years that way.
Bitcoin is saying we’ve got this energy-backed fixed supply currency that’s capped at 21 million, and that’s never going to get bigger. And so that’s going to be a currency.
Well, what the CBDCs are doing is saying, we all live on one planet and carbon is killing us, and we’re going to back your money with a carbon footprint. That’s going to be what backs your “money.”
And I put air quotes around money at that point because it brings us to the big difference between CBDC and crypto.
Bitcoin: The Anti-CBDC and Protection in the Digital Age
Some people look at bitcoin and say, oh, this is just a prototype for CBDCs. It’s actually they’ve got it backwards.
Bitcoin is the anti-BDC. And the reason why is because bitcoin gives you private custody, private keys, personal sovereignty over your keys, whereas CBDC will have no self custody.
Bitcoin’s program runs as-is, and without 51% of network control, it can’t be changed. That’s in contrast to a CBDC, which could be changed on the programmer’s whim.
Alternatively, a CBDC will be a ledger in a central bank. It will not be hard-capped, and it will be more like a social credit score than it will be money, but it will happen.
The only thing that can stop CBDC from happening in my mind is if the global financial system falls apart before they can roll them out.
Currently, the United States is one of the laggards in CBDC development. So I don’t see a CBDC coming out at a federal level in the U.S. for a long time, and Canada’s a little further ahead, but nobody is anywhere close to launching this thing in Western countries.
So, because the global financial system is coming unglued faster than the powers that be hoped, they’re going to have to go with something that already exists to sort of come out with a hybrid quasi-CBDC. That gives investors an opportunity, and a chance to avoid the dangers of a CBDC.
Right now, there are some crypto projects who want to be base layers for CBDCs. One of them is Ethereum, another one is Ripple. They want to be the coding underpinning a CBDC. That’s why the developers of those projects go to World Economic Forum conferences and give presentations on how great it would be to use Ethereum as a base layer for a CBDC. So that may be how we see it deploy on top of some crypto.
It’s not going to happen on bitcoin because nobody can control bitcoin. So that’s why I firmly view bitcoin as the anti-CBDC, and we’re heading into a world where there’s going to be UBI because there’s going to be no jobs thanks to automation and AI.
Future forms of UBI will be delivered via CBDC, and the CBDC will be like carbon footprint trackers and social credit systems. In time, this programmable money will come with strings attached.
Tools For Escaping the CBDC Trap
And so the number one rule is going to be don’t be dependent on the state for any aspect of your economic underpinning.
It goes back to 1998 advice from Agora, right? Own your own businesses, multiple streams of income, hard assets, real estate out of the country, all of second passports, all of that thing, and hold Bitcoin and precious metals outside of the legacy financial system.
Because if you have no self-sustaining economic basis, you’re going to be getting your “stimmy” every month on this CBDC thing. And it’s also going to tell you how many hamburgers you can eat and how many plane trips you can take, and that’s going to be your life.
It’s monetary apartheid, and it’s coming in digital form.
It’s going to be awful. I don’t think it can last,, either. I don’t think it can be sustainable, but there’s going to be this rough period to get through.
So it goes,
Addison Wiggin,
Grey Swan
P.S. We cribbed Jeftovic’s thoughts from our recent Wiggin Sessions @ Grey Swan interview. If you missed it last week, paid-up members can watch the interview right here.
Tomorrow, we’ll take a look at a phenomenon Jeftovic calls The Bitcoin Effect. C’mon back, ya hear?
P.P.S. U.S. bond yields have ticked higher in recent weeks, even after the Federal Reserve has cut interest rates.
The benchmark 10-year U.S Treasury yield slid to 3.6% in September. Following the Fed’s rate cuts, which, being cuts, should send yields lower, the 10-year now stands at a 4.2% yield.
Ironically, while we don’t care much for the dollar’s long-term prospects, readers who have large capital requirements in a year’s time (buying a home, car, paying for college, etc.) still have a chance to lock in approximately 4-5% yields on U.S Treasury bills and bonds, with 30-day T-bills still offering an annualized return closer to 5%.
Please send your thoughts on the dollar’s increasingly fragile status as the world reserve currency to: addison@greyswanfraternity.com
