The news yesterday that Silicon Valley Bank failed has sent shivers throughout the financial community. This is the second-largest bank failure in U.S. history. Trading of their stock was halted after the price plummeted from $266 to $39 a share. The FDIC also suspended the bank’s operations, preventing depositors from withdrawing their money.
The market is rightful to be apprehensive of what may lie ahead. The 2007-2008 financial crisis caused 465 banks to permanently close. These included Washington Mutual Bank, which was America’s largest savings and loan association. Other notable financial institutions that didn’t survive the crisis were investment banks Lehman Brothers and Bear Stearns.
America has experienced an even worse banking crisis in the past. During the 1920s, an average of 70 banks failed each year. But 744 banks failed during the first 10 months of the Great Depression. A total of 9,000 banks failed during the 1930s. These failures greatly contributed to the breadth, depth, and length of the economic downturn.
The Biden Administration’s Diabolical Plans for Banking
Unfortunately, the Biden Administration has plans that will be far more detrimental to our financial future than another depression or recession. On March 9, 2022, President Biden issued an executive order to numerous government agencies to study and report on the development of digital assets. On September 16, 2022, the Biden Administration released its first report, which is an overall framework for the development of digital assets. This framework will guide the efforts of the rest of the government.
The executive order also instructed the Federal Reserve, U.S. Treasury, and Attorney General to produce a legislative proposal for a new digital dollar. The executive order states that the administration places the highest urgency on doing this.
The digital dollar, more broadly known as a Central Bank Digital Currency (CBDC) will be a digital currency that will be issued by the Federal Reserve, rather than a private bank. A CBDC would give the government unprecedented control over our financial lives, including enabling the government to snoop on every financial transaction we make.
Today, only 26% of financial transactions in the U.S. are made with cash. So, the overwhelming number of financial transactions are traceable. When you use your credit card, debit card, or checkbook, your bank or credit card company knows about it. They don’t know all the details of the purchase, but they know that you transacted with a particular seller. And they generally know what types of things the seller provides, e.g., gasoline, groceries, appliances, etc. The implementation of a CDBC will eliminate cash, thereby eliminating the last legal method of conducting anonymous financial transactions.
Unfortunately, the Biden Administration has far more insidious plans underway. Biden’s first appointee to oversee the banking system was Saule Omarova. She is a radical who was born and educated in the Soviet Union. Her goal is to eliminate private banks and provide everyone with a bank account directly with the Federal Reserve. This would be far more ominous than simply eliminating anonymous financial transactions. With the government’s computers in the middle of every financial transaction, they will be able to control what you buy, how much you buy, and from whom you buy.
Imagine going to the gas station and swiping your government debit card at the pump and being declined because you already bought your allotment of gasoline for the month. Or going to a restaurant d the waiter declining to serve you steak because you already ate your monthly quota of beef. Or being unable to buy from a seller that has “mistakenly” been restricted from conducting business. These examples and more would be possible with a CBDC and bank accounts controlled by the Federal Reserve.
Fortunately, Ms. Omarova was forced to withdraw her nomination amid a backlash from Congressional leaders and the financial community. However, another large banking crisis would be exactly what the administration needs to pursue its plans.
A Digital Currency Doesn’t Have to be Bad, But It Will Be
I have worked in the technology industry for 30 years, so I always point out that technology itself is not good or bad. It depends on how the technology is used. In the case of digital currencies, it will be determined by who issues them and how they are regulated.
In 1976, Nobel Laureate Economist Friedrich Hayek wrote a book titled “The Denationalization of Money”, which described how a system of privately issued competing currencies would result in better monetary stability than the national currencies issued by central banks.
Given that the internet and mobile technologies didn’t exist when the book was published, most people found the idea implausible. But today’s information technologies could easily support a system of privately issued competing currencies. Anyone who has used their debit card to pay for goods and services in another currency while traveling internationally is already familiar with how such a system would work.
There is also a technology known as digital cash. Digital cash works just like paper cash, but it uses anonymous and untraceable tokens, instead of pieces of paper. You can withdraw digital cash from your bank account and store it in a digital wallet on your mobile phone. Then you can use it to purchase anything anonymously, just like cash. And yes, if you lose your digital wallet, you will also lose the digital cash stored in it.
Unfortunately, the idea that governments would voluntarily give up their control over money is fanciful unless we can make big changes to our political environment.
How Can the Biden Administration Be Stopped?
The first step is to throw Joe Biden out of office during the next election. As long as he is in office, his destructive plans will continue.
Long term, we must repeal the Federal Reserve Act of 1913. The politicians promised that the creation of the Federal Reserve would smooth out the boom-and-bust cycles that characterized 19th-century America. They promised no more recessions and no more depressions. But it didn’t work.
A few years after the Federal Reserve was created, America faced a steep depression in 1920. Ten years later, we were in the worst depression in American history. There have been 17 recessions since the Great Depression. One was the inflationary recession of the Carter era. The “experts” had always assured us that an inflationary recession was impossible. They were wrong. At this point, it should be obvious that the Federal Reserve has failed miserably in its mission to eliminate financial downturns.
The Federal Reserve has also slowly destroyed the value of our money. A person would need $30 today to buy what one dollar could buy when the Federal Reserve was created in 1913. In other words, today’s dollar is worth a little over 3 cents compared to a dollar in 1913.
What would replace the Federal Reserve? Maybe a new gold standard. Or how about Friedrich Hayek’s idea of privately issued competing currencies, which would completely remove the government from any involvement in our money and financial transactions, except to enforce laws against fraud?
America may be heading into very bad territory, both short and long-term. In the short term, another banking crisis and potential recession loom large. Long-term, a CBDC, and monopolization of banking by the Federal Reserve threaten our liberty like never before. It falls on patriots like us to stop it. Because if we don’t, no one else will.
The Blankenburg Report
Eric is a husband, father of four, technology guy, U.S. Air Force veteran, and left coast refugee. He is a lifelong conservative and “disgruntled” Republican, who has sought ways to help the GOP live up to its values. When Eric is not working or spending time with his family, he likes to write about a variety of current issues. Eric is a regular writer for Liberty First Grassroots (LFG).