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Fed Designs Digital Currency for Debt Inflation and End of Commercial Banks
Sept. 28, 2020 (EIRNS)—Cometh the hour, cometh the Fed helicopter. Cleveland Federal Reserve Bank President Loretta Mester gave a speech titled “Payments and the Pandemic” on Sept. 23 to the annual Chicago Payments Symposium—Federal Reserve Bank of Chicago, in which Mester was explicit that the Fed is in preparation for creating digital-currency bank accounts for individuals and businesses, and doing away with commercial banking. Mester was following up the Politico August interview of senior Fed economists Simon Potter and Sylvia Coronado who proposed that the Fed create “recession insurance bonds” and credit them digitally to the public in accounts at the Federal Reserve.
Mester said,
“The experience with pandemic emergency payments has brought forward an idea that was already gaining increased attention at central banks around the world, that is; central bank digital currency (CBDC)…. Legislation has proposed that each American have an account at the Fed in which digital dollars could be deposited, as liabilities of the Federal Reserve Banks, which could be used for emergency payments.” This currency would not be anonymous, like cash, but electronically registered to the account owner and traceable in every use to which it gets put. So like the “recession insurance bonds,”
it could also be withdrawn or “destroyed” by the Fed at intervals, for example if not spent. By this Big Brother form of “bank lending,” the Fed could make the entire commercial banking system obsolete, as its studies of CBDC have repeatedly shown, including, recently, the study by the Philadelphia Federal Reserve in July.
But its immediate purpose would be to create rapid inflation and thus reduce the incredible burden of debt ($80 trillion in the U.S. economy as a whole, plus derivatives contracts) which has exploded due to central bank policy since the 2008 collapse. This is what then-Bank of England Governor Mark Carney was talking about when he proposed a global central bank digital currency to replace the dollar, at the August 2019 Jackson Hole, Wyoming bankers’ conference.
Mester indicated some scope of the Fed preparations: “The Federal Reserve has been researching issues raised by central bank digital currency for some time. The Board of Governors has a technology lab that has been building and testing a range of distributed ledger platforms to understand their potential benefits and tradeoffs…. The Federal Reserve Bank of Boston is also engaged in a multiyear effort, working with the Massachusetts Institute of Technology, to experiment with technologies that could be used for a central bank digital currency. The Federal Reserve Bank of New York has established an innovation center, in partnership with the Bank for International Settlements, to identify and develop in-depth insights into critical trends and financial technology of relevance to central banks.”
And the Philadelphia Fed study referred to above, anticipated her remarks exactly. That study also found that following the disappearance of commercial banking, the Fed would use Wall Street investment banks to plan and make investments in the economy.
