China has started distributing free “cryptoyuans” to its citizens. Ditto for the FED which should get started very soon with the Digital Dollar. Far from being threats to Bitcoin (BTC), these “central bank currencies” will fuel the inflationary headlong rush that feeds Bitcoin.
Yuan “crypto” airdrop
The Chinese Central Bank to introduce 10 million yuan (1.25 million euros) in the form of digital currency in Shenzhen. In a rather burlesque way, the famous CBDC (Central Bank Digital Currency) will be distributed to 50,000 people via a lottery… The goal of the operation is obviously to get millions of people to download the cryptoyuan application (the wallet).
Let us be very clear from the outset about the nature of this “digital yuan” often wrongly called ” cryptoyuan “. We call cryptocurrency, a currency based on a blockchain, Furthermore, DECENTRALIZED.
On the one hand, the digital yuan is not based NOT on a blockchain … and, on the other hand, is controlled by a Bank CENTRAL. The Digital Yuan will at best be a “Stable Coin” whose money supply will absolutely not be fixed. Unlike that of Bitcoin (21 million) …
Chinese authorities maintain the amalgam with cryptocurrency to attract the naive. But behind this smokescreen lie two dark designs:
- The end of cash
- The internationalization of the Yuan
Internationalization of the yuan
“China must become the first nation to issue a digital currency in its drive to internationalize the yuan in order to reduce its dependence on the global dollar payments system. ”
Chinese Central Bank (PBOC)
Difficult to be clearer. China fears disconnection from SWIFT system through which all international bank transfers pass. Indeed, any country can find itself cut off from the rest of the world with one click if the United States demands it… This is the case with Iran, the only Gulf country to refuse to sell its oil exclusively in dollars …
Which poses a problem for the Middle Kingdom which has promised to invest 2.5 trillion yuan to develop Iranian oil industry… Hence the creation of this “digital yuan” which is primarily intended to become an international payment system bypassing the SWIFT network.
China (and Russia) has been making no secret of its efforts to internationalize its currency in order to get rid of the dollar for a long time. This ambition will however depend on the willingness of other countries to challenge the United States by agreeing to connect to the Chinese payment system. All this is in reality a geopolitical question more than a technological one.e.
Banking For All Act
The United States is not left out and is also preparing to introduce a “Digital Dollar“. The legislation is already in the pipes under the name of “Banking For All Act”. This law has not yet been passed, but it will not be long. Especially since it states that “all banks must, at the latest January 1, 2021, make wallets available to all residents and citizens of the United States and businesses domiciled in the United States“.
This bill was introduced in the Senate 4 days after the “Cares Act” which made it possible to send a check for $ 1,200 to every American. The ambition was to pay this check as a digital dollar right from the start but that did not happen. Perhaps the senators were afraid to give too much power to the FED. Another explanation would be that the digital dollar was not yet operational. Either way, the governors of the FED have already expressed three times in the US Senate the need to create a “Digital Dollar”.
Bets are open on whether the second check currently under discussion in the Senate will be paid in “Digital Dollars”. No doubt this will be more effective than the Chinese lottery …
Inflation to deflate the debt
It would appear that the United States is not pursuing exactly the same goals as China. After all, the dollar is already the international currency par excellence … We said it above: monetary domination is first and foremost the result of geopolitical and not technological balance of power. The hegemony of the dollar rests above all on the “petrodollar”. In other words, on the fact that all the oil in the world is sold exclusively in dollars. An “exorbitant privilege” that US troops deployed throughout the Middle East are working to uphold. In the blood…
The instigators of the Digital Dollar therefore probably aspire more to flood the US economy with dollars to generate inflation. The latter is absolutely necessary to reduce the burden of the debt of the US government.
To be convinced of this, it is enough to recall that the Fed recently announced its intention to let inflation gallop above 2% per year. A total paradigm shift when we know that its mission has always been to keep it strictly below 2%.
The ECB is getting in the loop
The European Central Bank is also working on the creation of a digital euro. And great coincidence, Christine Lagarde The question also arises as to whether the Euro Zone would not be doing better with an inflationary shock treatment… Here is what we recently wrote about it on TheCointribune:
“Complicit in the big masquerade of inflation figures, the ‘owl’ of the ECB laments in its speech that it has failed to generate inflation close to 2%. She even launches a little further that one must “ask the question whether central banks should not explicitly commit to compensating periods of low inflation with periods of inflation above 2%”.
The ECB has no choice anyway because leaving the Fed to print on its own would result in a sharp rise in the EUR / USD exchange rate. This would ultimately hamper exports and therefore growth in the Euro Zone.
But while the Japan also sent a check for 100,000 yen ($ 1,000) to each of its citizens., such generosity is not in sight in Europe. This suggests that the Eurozone would also not take a negative view of the possibility of breaking free from the SWIFT network. For example to buy Iranian oil and gas in its own currency, and no longer in dollars? Hoping that the Iranians do not suffer the same fate as the Iraqis …
End of Cash and negative rates
No one will complain about receiving free money. This is likely to create inflation. It is true. But does it matter if everyone benefits equally from the newly injected money?
Why not ? It would be a universal income allowing direct growth and employment to be revived. Much more direct than the “Quantitative Easing” which only serves to enrich billionaires …
It is permissible to doubt the generosity of European technocrats taking themselves for elites … Let’s not immediately rule out the possibility of a nightmare scenario … One in which a digital euro would replace cash. The purpose of the maneuver is to prevent us from withdrawing our money. Impossible then to escape the introduction of negative rates on savings to encourage us to consume rather than lose money.
Such consumerist to the end would probably only delay the collapse of the system of money creation through interest-bearing debt. This system worked well as long as we had oil in abundance as well as a world population of less than 3 billion souls (until 1960). This recklessness inherent in an era of strong growth when no one worried about land limits must stop. We are reaching them and unfortunately things are not going to work out.
Pushing consumption with punitive negative rates, when the big oil companies tell us we hit the peak in 2018, is not the solution. It is even the reverse that should be done.
Bitcoin vs Digital Fiat
Bitcoin is not THE solution to all our problems either.. It will neither push back forests, lower sea levels, nor rain in arid areas. Neither will it resuscitate extinct species, reform the Arctic ice cap, lower
acidity in the oceans, suck all the carbon out of the atmosphere, run gasoline cars, etc.
But he has the merit of protect your savings against inflation, not to rest on a gargantuan debt threatening to explode in the first oil shortage. Your Wallet will not charge you a negative rate either… Bitcoin is nothing more and nothing less than digital gold. It will undoubtedly be the last currency to remain standing when the enforced decrease makes it impossible to repay the fiat currency debt.
Bitcoin has nothing to do with the Digital Dollar, the Cryptoyuan, or the Digital Euro. The emergence of these new currency gadgets is absolutely no threat to Satoshi Nakamoto’s cryptocurrency. Quite the contrary. The inflation sought by central banks will be a formidable driver for the barbaric relic and its alter ego, Bitcoin.