Warning: Central banks to launch digital currencies…

The Illuminati are plotting…

One of the themes I have returned to again and again over the last eighteen months has been how the priestly caste of the world’s central bankers, disproportionately drawn from the upper echelons of Goldman Sachs – a kind of mysterious, self-perpetuating, secretive elite which I (only half-jokingly) call the “Illuminati” – have taken control of global economic policy with almost no democratic accountability.

They have pursued a zero interest rate policy (ZIRP) and then a negative interest rate policy (NIRP) which ministries of finance (which are at least run by elected politicians) are powerless to undo. Despite the fact that NIRP has lowered rates of return – and therefore savings and investment – to record lows. They have engaged in the dark arts of monetary manipulation – quantitative easing or QE – which have pushed up asset prices for their friends, the elite class of globalist billionaires – and with very little public scrutiny.

Now they want to abolish cash. The next step after that will give them a stranglehold over the global economy. They are planning to launch parallel digital currencies, even competing with the conventional legal tender in circulation – using the same technology that powers Bitcoin. It is not only your cash that is under threat – but your freedom as well.

Strange goings-on at the Fed

It was reported in June last year that experts in Blockchain technology met with Chair of the Federal Reserve, Janet Yellen, during an event in Washington DC ostensibly to discuss ways in which the technology can improve the financial system and strengthen cybersecurity[i]. Central banks from over 90 countries participated at the event entitled Finance in Flux: The Technological Transformation of the Financial Sector, which was themed around blockchain and Fintech.

According to the speculator and guru, Doug Casey, the real purpose of this meeting was to discuss how state monopoly digital currencies could revolutionise the global monetary system. Mr Casey thinks this could be as big as the foundation of the Federal Reserve back in 2013[ii]. There is now evidence that the Fed and other central banks are plotting to launch their own digital currencies.


The monetary system in the USA right now is highly unstable. The US Dollar is still the world’s reserve currency even though the USA is a debtor country with a massive trade deficit. In fact, the USA’s greatest export for many years has been the greenback – such that there are an estimated US$10 trillion of US Dollar denominated liabilities outside the USA. This makes America very vulnerable to the trend that is emerging: the abandoning of the Dollar for major trade transactions. If those overseas Dollars came flooding back into America in a single wave, that would precipitate massive inflation. And President Trump’s objective to repatriate the Dollars of American multinationals will only make that worse.

Evidence of this de-dollarisation is that Russia’s second largest financial institution, VTB (MCX:VTBR), and the Bank of China signed a deal in May 2014 to bypass the Dollar and to pay each other in domestic currency[iii]. This deal was signed in tandem with a massive energy deal under which Russia will supply an estimated US$450 billion of natural gas from eastern Siberia into China over the next 30 years. Of course, both countries are still users of Dollars, but the direction of travel is clear.

Doug Casey thinks that the Fed is already planning to respond to the de-dollarization of world trade by creating a parallel Dollar in the form of a digital currency in the mould of Bitcoin, using Blockchain (also called distributed ledger) technology. Casey has christened this proto-currency Fedcoin.

Presumably, at the outset, one Fedcoin would equal one Dollar. But that exchange rate could be amended at any moment by the click of a central banker’s mouse.

What makes Blockchain so attractive to the central bankers?

The real appeal to central banks of a Blockchain currency is that every unit of that currency can be tracked from the moment that it is digitally “minted”. Imagine that the Pound coin in your pocket contained a microchip. The central bank would know precisely who possessed the coin, when it changed hands, what it was used to buy and when the transaction took place.

This digital currency will have no paper form but will be accessible via laptops and smartphones. The technology operates an electronic ledger that is continuously updated and verified in “blocks” of records. It is shared on computer servers between various parties and protected cryptographically to prevent it from being modified. Putting a fiat currency on a distributed ledger could pave the way for citizens to deposit money with the central bank directly rather than using commercial banks. Then the central bankers could then bypass the banking system altogether, if they so choose.

…the central bankers could then bypass the banking system altogether, if they so choose.

Proponents of Blockchain argue that it will save billions of dollars of costs caused by payment delays within the financial system. Attacks on banks using existing payments infrastructure such as Swift (which is itself exploring Blockchain[iv]) have highlighted security flaws. Sceptics of blockchain say the technology does not fundamentally improve existing settlement systems. Some also say that the technology’s promise cannot be fulfilled until a government-backed currency is issued on the ledger.

Digital currencies could also be used as “tokens” for other financial assets by storing additional information in the Blockchain. This development could allow any type of financial asset, for example shares, to be recorded on a distributed ledger. Distributed ledger technology could even be applied to physical assets where no centralised register exists today, such as gold or silver.

In other words the central banks will know exactly what financial assets you possess at any given moment and exactly how and when you acquired them. And they could even manipulate the price of such assets in pursuit of their monetary policy at will.

So what have the central bankers got against Bitcoin?

In a report on cryptocurrencies in September 2014, the Bank of England stated its position with regard to bitcoin[v]. It said that in its current fixed supply form, Bitcoin would expose the economy to significant deflationary risk if it were ever to be widely adopted by the public. As they put it: “The inability of the money supply to vary in response to demand would likely cause welfare-destroying volatility in prices and real activity”.

Further, the BoE warned that in the event that Bitcoin was widely adopted by the public this would seriously limit its power to manage systemic risk or to influence aggregate demand. In short: it saw Bitcoin as a threat to its own ability to pursue monetary policy.


Remember that all the major central banks are pooling their research on this. It is possible that sometime between that report and now they have decided that if you can’t beat them, join them: the central banks should become the monopoly issuers of digital currency. Also remember that Mark Carney, Governor of the Bank of England, was formerly the Governor of the Bank of…

Canada

In Canada the central bank has already launched an initiative called Project Jasper. On 15 June last year the Bank of Canada revealed in a private presentation in Calgary reported by the Financial Times that it was working with the country’s biggest banks to develop a digital version of the Canadian Dollar[vi]. It is examining how to put a government-backed currency on Blockchain.

According to material seen by the Financial Times, the initiative would involve issuing, transferring and settling central bank assets on a distributed ledger via a cryptocurrency called CAD-Coin. It is being carried out in conjunction with several of Canada’s biggest banks, including Royal Bank of Canada (TSE:RY), CIBC (TSE:CM) and Toronto-Dominion Bank (TSE:TS), as well as Payments Canada. It is using intellectual property developed by R3, a New York consortium of more than 50 of the world’s biggest banks.

Under Project Jasper, participants would pledge cash collateral into a special pool, which the central bank would convert to CAD-Coin. That would be then used as a medium of exchange but the central bank would retain the ability to destroy redeemed CAD-Coins if it wished.

China

In November last year it was reported that the People’s Bank of China was researching its own “sovereign digital currency”[vii]. China’s central bank banned Bitcoin in 2013, saying that Bitcoin was not a real currency and could not become legal tender. But Zhou Xiaochuan, the Governor of the PBOC for the past 14 years, has expressed interest in the idea of a sovereign digital currency – that is one that is entirely controlled by the Chinese authorities. He announced that the development of a prototype digital currency was already underway.

A state-controlled digital currency will probably be a welcome new tool of social control for the Chinese authorities.

Steven Zhang, a senior economist at Morgan Stanley Huaxin Security, said a digital currency “could help to curb illicit capital flows, tax evasion and also combat money-laundering”. A state-controlled digital currency will probably be a welcome new tool of social control for the Chinese authorities.

Britain

In a speech in November 2015 the Bank of England’s Chief Economist Andrew Haldane admitted that there were limits to quantitative easing[viii]. One solution would be for the Bank of England to issue a state-backed digital currency based on Bitcoin technology. The digital currency could be subjected to negative interest rates while Mr Haldane suggested that paper money might even be banned entirely.

It is impossible to levy negative rates on cash (unless you charge people for carrying cash in their pocket – which is impracticable) and if negative interest rates are levied on conventional bank deposits people tend to withdraw their deposits – i.e. go into cash. With digital currency, there is nothing the owners of that currency can do to avoid the negative interest.

No doubt the BoE would like to call the new digital currency Britcoin – but that name is already owned by the peer-to-peer digital currency payments system.

Why do the Illuminati hate cash so much?

Doug Casey thinks that the US$100 bill will be withdrawn soon, just as the €500 note has been withdrawn by the ECB in Europe. In many countries if you try to withdraw cash from your bank account of more than about average monthly earnings, your name is entered in a register. Nor can you deposit more than about £1,000 in cash in this country without attracting attention under the Anti-Money Laundering (AML) regulations. In several European countries such as Spain it is actually illegal to carry more than about €3,000 on your person. Why?

Firstly, because, if they abolish cash, they eliminate the risk that, come another financial crisis, there could ever be a “bank-run” of the kind that happened with Northern Rock in September 2007.


Secondly, they know that in a zero-interest rate world, people enjoy greater marginal utility (as the economists say) by keeping their money under their beds in cash. But they can’t allow that to happen.

The reason that they give is that a cash economy is in fact a black economy: it facilitates tax-evasion, the drugs trade, prostitution, people-trafficking, terrorism and the rest. But that’s not the real reason. The real reason is that the more currency that exists in the form of cash, the less power they have over the money supply by manipulating interest rates.

(And by the way, the idea that if you abolish cash the drug barons will all be out of business is facile. They will develop their own surrogate paper currencies which they control. The internecine violence in countries like Mexico will only intensify.)

Reasons to be fearful

In the world of state-monopoly digital currencies you will have to pay the state for the privilege of having money – and there will be no escape by going into cash. They have already said they will impose negative interest rates, potentially at any level required to deliver their inflation target – currently two percent in the case of the Bank of England. (They will actually achieve that target this year, but that is unlikely to be perpetuated.) As global deflation kicks in (as I have predicted) so negative interest rates will only get more punitive. No doubt they will call negative interest rates a wealth tax – even though they will be levied on the poor as well.

Further, they will know everything about you that it is possible to know. Just as Facebook now knows with whom you hang out, your political affiliations, your sexual orientation, your tastes, hobbies, passions and fears, they will be able to read you like an open book…

Their supporters will say: You have nothing to fear if you obey the law – the system will be regulated! But what would happen if the Illuminati, having gained control of the global monetary and economic system, having reduced democratic institutions to irrelevance, then decide, in the age of AI, that they must have the power to decree laws…?

Ordinary people – and investors – need to wake up

Those central bankers are so persuasive, so clever, so in command of the analysis, that the poor politicians (who seem to be informed only by conventional media) are totally in awe of them…

I am not a conspiracy theorist (except to the extent that I am an economist trained in the school of JM Keynes with a healthy distrust of “the establishment”). But already I suspect that these momentous decisions are made at Davos, Bilderberg, Jackson Hole and in the various secret conclaves of the Illuminati – and not in Congress or in Parliament.

It’s time to wake up to what is afoot.

[i] See: http://www.ibtimes.co.uk/federal-reserve-chair-janet-yellen-meets-blockchain-experts-washington-dc-1563970

[ii] Video available at: http://www.caseyresearch.com/cs/project-fedcoin-short-presentation

[iii] See: http://america.aljazeera.com/articles/2014/5/20/russia-china-bankdeal.html

[iv] See: https://www.swift.com/

[v] See: https://ftalphaville.ft.com/2014/09/11/1967942/boe-on-the-potential-of-the-blockchain/

[vi] See: https://www.ft.com/content/1117c780-3397-11e6-bda0-04585c31b153

[vii] See: http://www.scmp.com/news/china/economy/article/2046888/chinas-central-bank-steps-efforts-create-digital-currency

[viii] See: http://www.coindesk.com/bank-of-england-economist-digital-currency/