The Bank of Canada is consulting Canadians regarding a digital currency.
I have always been fascinated by economics, particularly monetary policy. Perhaps some of that can be chalked up to my paternal grandparents who witnessed three different currencies pass through Germany before they were 30, then finally a fourth in the form of the Euro as senior citizens. Conversely, we have had the same dollar since 1867. But all of that is about to change, as the Bank of Canada undertakes consultations regarding a digital currency.
Before we dissect what it might mean when a group of bureaucrats, particularly central bankers, begin to discuss an entirely novel idea with the public while designing the infrastructure but assuring us such a course of action is far in the future, let us define “money.” While what we use today is actually “currency” - a debt note issued by an authority - not money, its function is to act as a medium of exchange, a storage of value, and a keeping of account. Let’s call it cash.
As rational animals in an economic universe, we have made all sorts of market decisions to either stretch the value of our cash or to find a new vehicle in which to store our value. From crypto currency to the casino stock market to insane housing prices, all of this is tied up in the fact that as the cash supply is inflated and a dollar decreases in value, people choose vehicles that appear resistant to inflation in order to retain value and increase their economic prosperity.
But that would require sacrifice, and our central bankers are not interested in helping us discipline our spending in an economy that is based on consumption as well as a great deal of waste. Instead, to counter people using non-monetary vehicles to hold value, particularly crypto currency, which also acts as a medium of exchange and a keeping of account, while being nigh untraceable as well as uncontrollable by any nation-state, the plan is to implement the CBDC’s.
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