Chris’ note: The cash in your wallet is going away. And a new digital-only dollar is coming. That was the message in Monday’s dispatch from colleague and former hedge fund manager Teeka Tiwari.
This new type of money is called a central bank digital currency (“CBDC”). Hundreds of countries around the world are exploring making the switch. And America is one of them.
In fact, as you’ll learn below from Teeka analyst Andrew Packer, President Biden could announce a U.S. dollar CBDC as soon as next month. And it will be a disaster for your financial freedom.
Luckily, there are two ways to opt out of this new regime…
The 1953 Western movie Shane offers some timeless wisdom…
Shane is a mysterious gunfighter who shows up in isolated valley in the Wyoming Territory in 1889.
A drifter, he gets a job on a local homestead.
And in one of the most iconic scenes from the movie, he shows off his gunslinging skills to the homesteader’s wife, Marian, and her young son.
That’s when Shane drops this pearl of wisdom…
A gun is a tool, Marian. It’s no better or worse than any other tool – an axe, a shovel, or anything. A gun is as good or as bad as the man using it. Remember that.
Why does this matter?
As we’ve been showing Palm Beach Research readers, the Biden administration is set to announce a new dollar regime.
It will replace the cash in your wallet with a central bank digital currency (“CBDC”).
It’s a new type of digital-only dollar that the Fed issues and controls.
Central bankers are pushing CBDCs as the next evolution of money. And as the name implies, it’s totally digital, with no paper currency to trade.
That would mean an end to cash transactions… such as your neighborhood garage sale. We’d have to start using a Fed-approved payment app.
Proponents of a new dollar regime will say it’s for your own good… that it will speed up payments… get rid of fiddly cash… and preserve the dollar’s status as the world’s reserve currency.
But to paraphrase Shane, “A CBDC is as good or as bad as the man using it.”
Today, I’ll show you why all the positives of a CBDC regime don’t outweigh the potential to lose your financial freedom.
If you have any cash in the bank, you’ll want to read it closely…
CBDCs Are Going Global
According to the Atlantic Council think tank, 114 countries are exploring or have already created digital currencies.
Their economies represent more than 95% of the world’s gross domestic product (GDP).
In other words, the entire world is getting behind CBDCs.
China, India, Nigeria, and the Bahamas have already rolled out digital currencies. Sweden and Japan are preparing for possible rollouts in the coming months.
Governments in these countries say CBDCs will be upgrades over today’s money system because they flow more easily around the world through digital wallets.
This allows them to bypass commercial banks and money-transfer businesses, which take days to clear payments and charge fat fees.
For example, governments can use them to instantly deposit stimulus checks or Universal Basic Income payments into digital wallets.
And to get people to switch over, there may be some kind of one-time incentive. The Fed could turn every $1 in your bank into $1.50 in CBDC bucks.
That’s the carrot. But there’s also a stick…
Trojan Horse
CBDCs give central banks and governments unprecedented power to track and control how you spend your money.
In February 2022, a convoy of truckers shut down border crossings between the U.S. and Canada to protest COVID-19 vaccine requirements.
Even without a CBDC, the Canadian government was able to track down citizens who donated to the truckers and freeze their bank accounts.
All for sending truckers small sums – in most cases less than $50.
And in 2013, regulators in Cyprus “bailed-in” folks with large bank accounts to shore up the country’s banking system.
They confiscated money from wealthier customers’ accounts to shore up the banking system it had failed to protect in the first place.
Canada and Cyprus didn’t have CBDCs at the time. But officials there still were able to freeze accounts and “bail-in” account holders. Imagine what they could do with them.
In a world where bureaucrats can cut off access to your savings, would you be more or less likely to speak out against the government?
The Fed already has explored the technology needed to roll out a U.S. dollar CBDC. An announcement could come as soon as July 26. That’s when the Fed will complete a new digital payment system called FedNow.
The Fed will deploy the service in phases, with the initial launch taking place in July.
This could be the Trojan horse for a digital-only U.S. dollar. And folks who aren’t prepared will be shocked.
Luckily, there are ways to opt out of a digital dollar regime… and even profit from its rollout.
How to Protect Your Wealth
If you want to opt out of the digital-only dollar regime, consider buying bitcoin and physical gold.
Bitcoin is a digital payments system. But unlike a CBDC, which hands even more power to central banks, bitcoin is decentralized.
And if you self-custody your bitcoin using a digital wallet, no one can confiscate it. You don’t need permission to transact with it.
And it doesn’t matter how many banks go bust… your bitcoins are still your bitcoins.
Also, no one can inflate away the value of your bitcoins through excessive money printing. The issuance of new bitcoins is governed by code and tapers off over time.
Bitcoin doesn’t allow any bail-ins… or bailouts. It’s a tool of financial freedom.
Gold is the analog version of this kind of system.
It sits outside government-run currency systems. And because it’s expensive to mine… and limited in supply… it’s also a great way to hedge against dollar devaluation.
Gold is a more unwieldy to own than bitcoin. The transaction costs can be higher.
But if you buy and hold it as a backup rather than trade it, you don’t have to worry too much about these drawbacks. Plus, owning some gold should hedge against bitcoin’s famous volatility.
And there’s another step you can take…
Colleague Teeka Tiwari has put together a new playbook to show you how to protect yourself and profit.
It includes…
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Teeka’s top stock recommendation to for the digital-dollar age
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His favorite ”Biden Shock” crypto play
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A way to 10x your money on gold
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A step-by-step guide to buying and storing your bitcoin
Good investing,
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Andrew Packer
Analyst, Palm Beach Letter