If you’re worried about CBDCs, do thi s now

Saturday, 12 August 2023 — South Melbourne

[6 min read]

Dear Reader,

Many years ago, my wife and I found ourselves stuck at a petrol station in the middle of the Nullarbor Desert. It was straight out of a movie. There were two Swedish backpackers in a Wicked van, whom some truckies had taken under their wing, an English petrol station attendee trying to renew his working holiday visa by working in a remote region for 90s days, and a lot of sand.

We were all stuck for the same reason. The phone network had failed, the internet had stopped working with it, and the payment processing system was down. Only those with sufficient cash could purchase fuel and continue their journey through the desert.

No doubt the truckers had plenty of cash with them. But the Swedish backpackers and my wife and I didn’t.

The English petrol station attendee, happy to have others sharing the politically persecuted fate of a working holiday visa holder nearing the end of their first year, helpfully told us that, ‘The last time this happened, it took two weeks to fix.’

We could pay for fuel with our last $20 note and either choose to risk the journey across the rest of the desert or go back the way we came. Either way, the real problem was that the subsequent petrol station may face the same issue…we’d just get stuck on the edge of the desert instead of in the middle of it.

In the end, my wife remembered that my father in-law had left us his Aussie currency before flying back home to Japan and we did indeed have enough cash after all. It was just carefully hidden somewhere amongst our entire earthly belongings packed in the car.

A few minutes later, we filled up and waved goodbye to the sullen Englishman. I still wonder what happened to those Swedish backpackers…

Anyway, the point is that, when all else failed, cash was still good as gold. Well, almost…

Today, I want to convince you that putting up with the inconvenience of using, or at least having, cash is actually the most important thing you can do in your financial life today. Maybe even in your political life. Yes, more important than voting.

I’m the first to admit that this inconvenience is a pain in the neck. I almost never use cash. And yet, every time I see ‘cash only’ or ‘cash preferred’ signs at the markets, I feel a flush of relief.

You see, the only thing which really keeps governments at bay is their ability to enforce their stupid ideas. That’s why they need things like wars, pandemics, and climate crises to impose them.

There’s no question what politicians and civil servants will do when given the opportunity — all the meddling they can come up with. The real question is what stops them.

When John James Cowperthwaite was asked how poor countries should turn around their economies, he recommended abolishing the office of national statistics. Why? Because, given such information, policymakers simply cannot help themselves but to meddle. And when they meddle, it turns into a disaster.

By refusing to collect such statistics, Cowperthwaite managed to engineer an economic success story we call Hong Kong…

The point being that governments must be stopped somehow if they are to be kept at bay at all. Taking away their information is a good option.

But I suspect cash is our most powerful weapon in doing so today. For a simple reason. It offers an escape hatch.

If you can escape a government policy, then it won’t work. And most won’t even be tried without a reasonable level of compliance.

But escape hatch from what?

From how governments are attempting to gather such a vast array of information that Cowperthwaite would’ve churned up his grave. And also an escape hatch from how governments are planning to control our behaviour in the future. A method so powerful and absolute that it offers complete control of you.

I’m talking about CBDCs, of course. Central Bank Digital Currencies would allow central banks to monitor every single transaction on your account because they would hold all the information. CBDCs are also programmable, making it possible to impose economic policies on your ability to use money at all.

It’s worth noting that those monitoring these CBDCs will not be elected politicians who can be held democratically accountable. They’ll be central bankers — mad academics with ideas so dangerous that they were kept in ivory towers to protect the rest of us, only escaping occasionally to engineer things like the Cultural Revolution, Holodomor, and hyperinflation.

But let’s not get too dystopian.

Here’s the thing about CBDCs. People jaywalk all the time. CBDCs are the equivalent of having the pavement jump up and kick you in the shins if you even try to. It won’t be enforcement, it’ll be control.

Cash offers the escape from CBDCs because it is the precise opposite. It doesn’t create a record of spending that can be monitored. It can’t be programmed to control your spending. It can’t be frozen.

Even the de-banked, like Nigel Farage in the UK, can still use cash easily. Imagine what would’ve happened to the tens of thousands of people who would’ve been de-banked if they didn’t have cash to resort to?

But my real point is that governments can’t use CBDCs against us until they get rid of cash first. Because their stupid policies simply won’t work if people can just evade them by using cash. And so, governments won’t bother imposing those policies in the first place. If we can keep cash, we won’t see so many of the plans floated by politicians and academics today.

It'd be easy to enforce 15-minute cities using CBDCs. You just wouldn’t be able to spend your money outside of your ‘cell’, as they call them in the UK. But with cash…

It’d be easy to ban gas stoves using CBDCs. The transaction simply wouldn't work. But with cash…

You get the idea.

Australia is, once again, getting a reputation for itself when it comes to cash. After excelling ourselves in the lockdown fest, to international acclaim, we are now leading the crackdown on cash in news reports around the world too.

In Germany and Japan, two societies familiar with governments that are given too much power, have remarkably high cash use, despite their otherwise technologically advanced economies. Privacy is their key concern.

I think it’s time to fight back, as Nigel Farage did in the UK when he was de-banked. If we can keep cash, we can evade so much else the government has planned for you.

Regards,

Nickolai Hubble,
Editor, The Daily Reckoning Australia Weekend

PS: My colleague Brian Chu is of the same mindset when it comes to protecting our wealth from government control, only, as a gold bug, he sees it prudent to store some of his wealth in gold. Interestingly, he found that central banks bought more gold last year than at any time in the last 50 years. And according to Brian, it’s not a random occurrence. It’s part of a serious shift in the global monetary system, one that could have big implications for investors, particularly here in Australia. More on this next week…

Dear Reader,

Despite climate alarmist claims, renewable energy sources are on the rise.

Solar power is efficient and can make a valuable contribution to reducing CO2 and CH4 emissions. It is useful in remote locations and for powering single buildings or complexes where the photovoltaic system with batteries is in close proximity to the facility.

Yet, when used at scale, solar power is an inefficient contributor to the power grid. Solar has a use-it-or-lose-it dynamic that is unavailing in darkness or bad weather. When the solar field is producing electricity, it may not match the grid’s needs at the time.

Huge amounts of land are needed to build large-scale fields. Batteries are a solution to unreliability, but they create their own problems in terms of expense, maintenance, and space. Also, the manufacture and disposal of batteries with poisonous chemicals and metals creates environmental problems at odds with the problems it is intended to solve.

Solar has its place, but the contribution is marginal. It cannot replace carbon-based fuels.

Wind turbines are less efficient than solar panels and are not practical in terms of a robust replacement for oil and gas. Wind turbines are capable of generating significant amounts of energy without CO2 and CH4 emissions in their operation.

Of course, this ignores the enormous amount of carbon-based energy used in the manufacture, transportation, and installation of turbines. Wind turbines are an efficient substitute or alternative to photovoltaic systems in terms of the amount of space utilised relative to electrical output.

Despite that efficiency, wind turbines are subject to the same problems as solar panel systems. They produce power on an intermittent basis. For solar power, that means when the sun is shining. For wind power, that means when the wind is blowing. While engineers will search for optimal locations, it’s the case that the wind doesn’t always blow, even in the windiest corridors.

This leaves wind power in the use-it-or-lose-it category also. Wind power can feed the grid, but it cannot be relied upon by the grid operators. Power cannot be stored without expensive batteries, which are impractical on a large scale.

Electric vehicles, or EVs, are not an efficient solution to carbon emissions either for two reasons. The first is that the EVs need to be charged with electricity from the grid, which is still powered by oil, natural gas, and coal.

In fact, China has the largest potential market for EVs, and more than 50% of China’s domestic energy comes from coal-fired plants. China is building new coal-fired plants at a rate of two per week. The supposedly clean EV is just a battery-powered intermediary for coal-generated electricity.

The other problem is the same issue we have encountered with solar power and wind turbines — batteries. Unless you are feeding the grid on an intermittent and unreliable basis, wind and solar depend on batteries.

If neither renewable sources such as wind and solar nor the EV is a complete answer to the issue of carbon emissions, why do global elites insist on a radical overhaul of the existing energy system? What accounts for the climate hysteria of the political and media elites despite the lack of scientific evidence for human-caused global warming?

Some of those repeating outrageous claims are doing just that — repeating things they’ve heard from other media or political leaders without independent inquiry or investigation.

Unfortunately, the public relies on media elites and political leaders for their information. As decades roll by and scare stories are discredited time and again, public scepticism will rise, and the alarmists will lose credibility.

The danger is that alarmists may pass legislation, limit choices, and impose costs in the name of climate change before the public catches on to the scam. At that point, the economic damage becomes semipermanent even if alarmism fades.

Regards,

Jim Rickards,
Strategist, The Daily Reckoning Australia