The America First Policy Institute (AFPI) recently sounded the alarm on the potential dangers of transitioning to a central bank digital currency (CBDC). This revelation, in a report penned by Michael Faulkender and David Vasquez, highlights the probable perils associated with the Federal Reserve’s direct issuance of a digital dollar.
AFPI: A CBDC ‘Would Represent the Greatest Threat to What Little Financial Privacy and Data Security Americans Enjoy’
According to the AFPI’s report, introducing a CBDC could grant the government unparalleled access to all financial transactions, eroding citizens’ privacy. They reference the IRS’s recent data exposures as an indication that federal agencies might not be equipped to handle Americans’ transaction data safely.
Moreover, the report cautions that a CBDC might allow authorities to selectively ostracize certain groups from the financial landscape. A case in point: the covert Obama-era Operation Choke Point, which saw officials nudging banks to sever ties with entities like payday lenders and gun dealers.
“The operation was hidden from the American people for four years until it ended in 2017, with several high-level officials even lying about the existence of the program,” the AFPI report notes. “The actions of the federal government during Operation Choke Point underscore the heart of the issue with giving the federal government full authority to bypass the law in accessing and censoring Americans’ financial privacy and assets.”
Faulkender and Vasquez further emphasize the dangers of equipping the federal government with unchecked power, as seen in their ability to circumvent legal processes, accessing and potentially censoring Americans’ fiscal data and assets.
The report also casts doubt on the Federal Reserve’s capacity to launch a CBDC, given recent missteps — namely unprecedented inflation and major bank crashes. Notably, in H1 of 2023, the U.S. witnessed three of its largest bank failures. The AFPI authors firmly believe that it’s Congress, not the Fed, that should decide on the creation of a digital dollar.
The AFPI report urges clarity, stating:
The fact is: The Federal Reserve cannot issue a CBDC without Congressional authority. Congress must make this clear by enacting legislation that restricts the creation and use of a CBDC.
In summation, the report suggests that while emerging payment innovations might be advantageous, these gains needn’t be at the expense of consolidating fiscal control under the Federal Reserve’s authority. Both authors implore Congress to delineate boundaries on the Federal Reserve’s scope to initiate a digital currency, alluding to severe invasions of privacy and autonomy.
Echoing this sentiment, U.S. congressman Warren Davidson advocated for a CBDC ban this past week, while 2024 presidential hopeful Vivek Ramaswamy recently labeled CBDCs as formidable threats to individual freedoms. Presidential candidates Robert F. Kennedy Jr. and Ron DeSantis have also emerged as vocal detractors, firmly opposing CBDCs.
What do you think about the America First Policy Institute report about a Federal Reserve-issued CBDC? Share your thoughts and opinions about this subject in the comments section below.
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