Hey Brother, Can You Spare a Dime?

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This edition of Random Beach Thoughts marks the one-year anniversary of the blog.  I’ve enjoyed writing for you and I appreciate all the comments and suggestions you’ve been kind enough to make.  Through the year I’ve seen the number of readers grow and I’m thankful for each of you who passed my blog along to their friends and family.

And, to my new readers, thank you for subscribing.  I sincerely hope that you enjoy my work.

I’m looking forward to another year of writing for you!

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Hey Brother, Can You Spare a Dime?

The life of a panhandler may soon change radically, not because of greed creeping into our society, but because the metal dime (or penny, nickel, and quarter) and paper currency may disappear from circulation.

Huh?  How could that happen?

Governments around the world are moving to establish Central Bank Digital Currencies (CBDC).  A CBDC is an electronic form of a country’s existing physical currency.  Essentially, CBDCs are no different than the electronic money we have today.  If your mortgage payment is directly debited from your checking account or your monthly Social Security check is directly deposited to your bank, these are digital payments that are similar to a CBDC.

But the big difference between today’s electronic payments and CBDCs is that CBDCs are sponsored by the government and ultimately will replace all physical currencies.

But wait, aren’t CBDCs really cryptocurrencies like Bitcoin?  (See my stories CryptoMania and Monkey Business.)  No, they’re not.  Bitcoin is its own currency and is not related to any country’s currency.  CBDC is the same as a country’s physical currency.  There are other differences, but that’s the biggie.

“Ok”, you say, “I don’t carry much cash anyway; I use my debit and credit cards all the time now.  Why should I care?”

In doing my research on CBDCs, besides eliminating the need to carry cash in our pockets, I tried to find any compelling reason that individuals would want to have digital currencies.  I couldn’t find any.

There are some big disadvantages to people like us though:

• Because all transactions would become electronic, the government (IRS?) would be able to examine all your transactions.  Imagine buying a copy of Mein Kamph or the Unabomber Manifesto at your local bookstore and having the FBI or other law enforcement agency tag you as a subversive.

• Eliminate the underground economy.  Pay a painter or landscaper under the table to get a lower price?  The government will now know about the transaction and the painter (and possibly you) may get audited.

• Remember those 87,000 new IRS employees that recent legislation just funded?  Well, the IRS will need every one of them if they’re going to have the ability to look at everybody’s transactions.

• Taxpayers who owe back taxes could have all their funds frozen.  With physical currency you could keep a few $20 bills to buy food or gas.  When there are no more $20s you’re stuck.  Friends wouldn’t be able to lend you money because they’d only be able to add it to your frozen account.

• Underserved citizens would have difficulty participating in a digital currency.   It is estimated that 5% of adults do not have a bank account and another 13% may have accounts but use alternative services like money orders, payday loans and check-cashing services.  These citizens would have to enter the U.S. banking system.

There are some benefits to government:

• Every disadvantage to citizens is a benefit to government.

• Decrease the cost of creating new currency.  CBDCs effectively have zero cost.  Pennies, nickels, dimes and quarters must be minted, and their metals and manufacturing cost money.  (In fact, each nickel coined contains about $0.06 in nickel!)  Paper money has high expenses too. With physical currency the profit (called seigniorage) is the difference between the face value of the coin or bill and its manufacturing cost.

There are already a few countries that have already implemented CBDCs:

• The Bahamas

• Antigua and Barbuda

• St. Kitts and Nevis

• Monserrat

• Dominica

• Saint Lucia

• St. Vincent and the Grenadines

• Grenada

• Nigeria

Other countries are considering starting CBDCs, including China, India, Sweden, Jamaica, Canada and yes, The United States.  In March 2022 President Biden directed Federal agencies to evaluate the infrastructure needed to issue a U.S. CBDC.

Our society seems to be headed towards greater control by our government.  The implementation of a CBDC of the U.S. Dollar would be a huge step towards excessive government control.

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"Let us trust God and our better judgment to set us right hereafter.  United we stand, divided we fall.  Let us not split into factions which must destroy that union upon which our existence hangs."

- Patrick Henry's last public speech in 1799

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Hard to Believe They Can Get Up That Much Speed with Those Little Arms……

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