News Mar 12, 2024 05:24 PM EDT

The Federal Reserve's 'Death Star'. The Battle Over America's Wallets.

By Patrick Mondaca

Concerns over the exploration of the creation of a central bank digital currency in the United States, commonly referred to as a CBDC, has some lawmakers up in arms regarding its potential for increased government surveillance and control. While Treasury and Federal Reserve officials have repeatedly emphasized the opposite, a litany of GOP lawmakers and presidential candidates have long seized upon the idea that such a digital currency could be used to spy on Americans or repress their shopping freedoms. 

Photo by Piotr Makowski on Unsplash
(Photo : Unsplash) Photo by Piotr Makowski on Unsplash

In July 2023, United States Representative Warren Davidson (R-OH 8th District) said in a tweet that "The Federal Reserve is building the financial equivalent of the Death Star. Central Bank Digital Currency (CBDC) corrupts money into a tool for coercion & control." He's also called it "an existential threat to western civilization," and called for the criminalization of any attempts to establish one. Another congressman, U.S. Senator Ted Cruz (R-Texas, introduced the CBDC Anti-Surveillance Act that would prohibit the Federal Reserve's exploration and issuing of CBDC. 

"The Biden administration salivates at the thought of infringing on our freedom and intruding on the privacy of citizens to surveil their personal spending habits, which is why Congress must clarify that the Federal Reserve has no authority to implement a CBDC. I'm proud to lead the fight in the Senate to restrict the Federal Reserve's exploration of and attempt to introduce a CBDC to the American economy," Cruz said about the bill last month. He and his fellow sponsors fear that a CBDC issued by the Biden administration could be programmed to infringe on the rights of Americans.

CBDCs: Orwellian Future?

Cornell University economist Eswar Prasad noted at a June 2023 World Economic Forum event regarding the "programmability" of CBDCs, such a currency could hypothetically be "used to purchase some things but not other things that are deemed less desirable, like, say, a munition or drugs or pornography or something of the sort." Prasad's comments were promptly taken out of context and circulated on various social media outlets in heavily edited clips with the caption "The global cabal are all calling for the cashless society." 

The author of "The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance," Prasad was at the event to discuss the themes of his book and was not calling for a cashless society. And while the dystopian myths surrounding digital currencies may be markedly untrue, at the root of those conspiracies are the very real fears of increased governmental surveillance in some segments of Western society. Here in the U.S., where such fears abound, conservatives have been quick to politicize the CBDC issue and twist it from one of "financial innovation" into one defined by government overreach. 

Donald Trump Vs. CBDCs

Former President Donald Trump has also weighed in, vowing to protect Americans from "government tyranny" if reelected. Before the New Hampshire primary election in January, Trump promised that "As your president, I will never allow the creation of a central bank digital currency." The former president's so-called desire to protect Americans is a somewhat fluid one though, as demonstrated by his March 11, 2024 reversal on a potential TikTok ban after meeting with GOP megadonor Jeff Yass "who reportedly has a major financial stake in the popular social media platform."

As an increasing number of countries work to implement CBDCs, however, the challenge to the U.S. dollar's global dominance as a medium for international exchange is a growing one. China's development of a digital yuan and Russia's digital ruble could both be used to circumvent Western sanctions. By banning or criminalizing the exploration or creation of a U.S. CBDC outright, as some conservative lawmakers have introduced legislation aimed at doing so, the threat to the U.S. dollar hegemony is compounded. And any potential decline in the U.S. dollar's power does not increase the security of the American people.  

Related Article: Senate Adopts Stopgap Spending Measure, Preventing Immediate Government Shutdown 


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