Beijing takes the lead in central bank digital currencies (CBDC) and the new era of expanding monetary and currency control around the world.
Leave it to the world’s largest slave state to roll out the first national digital currency. Leveraging the global attention of the upcoming Winter Olympic Games in Beijing, the People’s Bank of China (PBOC) is preparing to present the digital yuan to the world.
It may well be the worst thing to come out of China since the CCP virus.
To understand why that may be, we need to know what a digital currency is.
A New Form of Money
Bitcoin was the first of a new form of money that was digital-based, not paper, coins, or any other form controlled by any financial institution. Cryptocurrency, via its many offerings today, is anonymous money that can be used throughout the world over the internet, beyond the control of central banks.
That’s the “crypto” part of the name, as “crypto” means “hidden.”
All cryptocurrencies are based on some form of blockchain technology, which simply put, is a distributed ledger system that provides an immutable but anonymous record of all transactions.
In short, digital or cryptocurrencies allow users to make untraceable transactions globally, that are unknown and untaxed by any financial authority.
An Antidote to Central Banks’ Loose Money?
Of course, the cryptocurrency world is complicated, with too many aspects to go into detail here. But it’s helpful to consider why digital currencies came about in the first place.
Bitcoin was the world’s first cryptocurrency, created, as you may recall, during the global financial crisis of 2008-09.
The crisis was largely brought about by risky, unsound policies by the Federal Reserve and other central banks and financial authorities around the world.
Loose monetary policies—such as printing money, lowering credit thresholds for borrowers, and ultra-low interest rates—distorted the U.S. housing market, triggered skyrocketing stock prices and prices for dollar-denominated goods and services around the world.
That dynamic is easy to understand. In a dollar-based global economy, when more dollars are printed by the Federal Reserve and injected into the economy, every dollar becomes less valuable, so prices for goods and services in dollars rise.
When such currency manipulation continues to the extreme, it often results in economic catastrophe. Markets and economies overheat and then collapse. Unfortunately, billions of ordinary people pay the price as their investments lose their value almost overnight.
Avoiding these recurring meltdowns was the idea behind the emergence of Bitcoin.