The Pomp Podcast - #782 Should We Ban Central Bank Digital Currencies?

Starting point is 00:00:00 What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Hey, everyone. Today's podcast episode is a breakdown of the recent decision by Representative Tom Emmer to put forward a legislative proposal to actually ban the Federal Reserve from creating a central bank digital currency. Before we get into this episode, I want to quickly talk about our sponsors though. Today's episode is brought to you by Abra. Based in California and backed by top VC firms, Abra is an all-in-one, simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral, and earn interest with

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Starting point is 00:02:04 It's the first U.S. public company to secure many of the top Layer 1 protocols. This quarter, BTCS just launched the beta version of a new digital asset analytics dashboard. From across multiple exchanges, the BTCS data analytics dashboard lets you evaluate your entire portfolio's performance with plans to enable year-end reports and yield earning on your crypto by linking to BTCS staking pools. This groundbreaking dashboard is currently in beta mode. Test out the BTCS data analytics dashboard now by visiting btcs.com. Again, that's btcs.com. Go check it out. Anthony Pompliano runs Pomp Investments. All views of him and the guests

Starting point is 00:02:43 on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Bitcoin critics have been proposing the idea of a government ban for the digital currency over the last decade. Their argument is that Bitcoin threatens the U.S. dollar or other fiat currencies, so governments around the world will intervene to stop the adoption of the asset. Most critics are willing to admit that it is unlikely that governments, militaries, or central banks could actually shut down the decentralized computing network. Instead, the critique revolves around the idea that governments will ban or outlaw ownership. While this argument may seem absurd to the Bitcoin community, there is historical precedent for these types of government actions.

Starting point is 00:03:34 President Franklin D. Roosevelt signed Executive Order 6102 on April 5, 1933, which explicitly was aimed at forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States. According to Wikipedia, the next few days and months were much the same. On April 6, 1933, the New York Times wrote under the headline, Hoarding of Gold, the executive order issued by the president yesterday amplifies and particularizes his earlier warnings against hoarding. On March 6th, taking advantage of a wartime statue that had not been repealed, he issued Presidential Proclamation 2039 that forbade the hoarding of gold or silver coin or bullion or currency under penalty of $10,000 and or up to 5 to 10 years

Starting point is 00:04:21 imprisonment. They go on to explain the impact of this executive order. Executive Order 6102 required all persons to deliver on or before May 1st, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve in exchange for $20.67, that is the equivalent to $413 in 2020 dollar terms. Under the Trading with the Enemy Act of 1917, as amended by the recently passed Emergency Banking Act of March 9th, 1933, a violation of the order was punishable by fine of up to $10,000, which is about $200,000 in 2020 terms, and up to 10 years in prison or both. Now, the U.S. government shouldn't be able to shut down gold or gold production. They couldn't put gold bars in jail or financially fine the inanimate asset. The only

Starting point is 00:05:13 option was to outlaw ownership and require citizens to turn in their gold. Ultimately, the Bitcoin critics have argued that the U.S. government could pursue a similar strategy with the digital currency. Regardless of whether the network can be shut down, the government will simply ban ownership and require all U.S. citizens to turn in their Bitcoin. The idea would be twofold. The government would financially gain from the ownership of Bitcoin, but they would also open an opportunity for a national central bank digital currency. In effect, the CBDC would replace Bitcoin as the digital store of value, medium of exchange, and unit of account. The central bank would maintain their monopoly on the production and distribution of money, along with centralized

Starting point is 00:05:53 control over the variable monetary policy that it holds today. Something happened yesterday, though, that the Bitcoin critics did not expect. A sitting U.S. congressman put forward legislation to outlaw the Federal Reserve from creating and distributing a central bank digital currency. Yes, you read that right. Representative Emmer is attempting to ban the central bank digital currency rather than trying to ban ownership of Bitcoin. He tweeted, Today, I introduced a bill prohibiting the Fed from issuing a central bank digital currency directly to individuals. Here is why it matters. Emmer's main issue with the current CBDC proposals is that they will likely lead to a lack of innovation and an increase in financial surveillance capabilities.

Starting point is 00:06:33 It is telling that the congressman decided to explicitly call out China's CBDC efforts as an example of what the United States must avoid doing. Representative Emmer also said, as other countries like China develop CBDCs that fundamentally omit the benefits and protections of cash, it is more important than ever to ensure the United States' digital currency policy protects financial privacy, maintains the dollar's dominance, and cultivates innovation. Lastly, Representative Emmer left the door open for a central bank digital currency in the United States, but appears to require it to fit within a specific framework. That framework would produce an open, permissionless, and private central bank digital currency, which frankly is the exact

Starting point is 00:07:13 opposite of what the Federal Reserve and other central banks around the world want. Representative Emmer continued, any CBDC implemented by the Fed must be open, permissionless, and private. This means that any digital dollar must be accessible to all, transact on a blockchain that is transparent to all, and maintain the privacy elements of cash. The Bitcoin critics have been pontificating for more than a decade about the potential government ban of the asset.

Starting point is 00:07:37 None of them anticipated that sitting U.S. politicians would actually attempt to ban the creation of a central bank digital currency. This is interesting because we have yet to see a politician put forward legislation to attempt banning Bitcoin or other digital currency assets. My big takeaway on this development is that politicians, business owners, and everyday citizens recognize the issue at hand. The blind belief in the Federal Reserve is eroding quickly, and the concerns of future infringements on financial privacy are getting louder.

Starting point is 00:08:04 Majority of people believe that government should stay out of their financial life, including how much money they have, who they transact with, and what they are purchasing. The United States has historically served as the shining example on a global stage when it comes to freedom, innovation, and economic prosperity. Our country was built on the idea that the government should fear the citizens, not the citizens fearing the government. Authoritarian governments, such as China, see an opportunity with central bank digital currencies. They want to increase financial surveillance and significantly hamper the freedom of their citizens. The United States is better than that. We don't need to trust the government or central bank. The technology exists now to avoid giving them the power, control, and ability to potentially violate our trust in the future.

Starting point is 00:08:43 It is encouraging to see Representative Emmer taking this courageous step forward. The conversation changed yesterday. We shouldn't be outlawing ownership of Bitcoin. We should be outlawing our government's ability to spy on their citizens. I hope that you guys enjoyed this one, and we'll talk again tomorrow.

The Pomp Podcast - #782 Should We Ban Central Bank Digital Currencies?

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