It doesn't take much effort to see that digital currency (aka cryptocurrency) is everywhere. Even our grandparents are now investing in it. Its popularity has led President Joe Biden and his comrades to consider creating the Federal Reserve’s own digital currency.
An executive order signed by Biden on Wednesday directs the Federal Reserve to investigate the possibility of creating a central US digital currency. According to the White House factsheet on the order, “The increase in digital assets creates an opportunity for America to strengthen its leadership in the global finance system and at the technological frontier but also has substantial implications to consumer protection, financial stability and climate risk.”
The document also explains that cryptocurrencies are becoming more popular around the world, and the US must eventually join the fray if it wants its global financial-market relevance to continue to be relevant as well as maintain its leadership role in the financial sector.
That is undoubtedly true. America must understand and participate in the changes that are occurring in the financial world. America is moving away from centralized financial systems and banks to become more digitally peer-to-peer. If America wants to be successful and survive, she will need to learn how to adapt.
However, Biden's suggestion is not simply that America become involved in crypto, pushing us further into the “financial frontier”; rather, it is also that the government is enabled to control the market for its own benefits.
This is why an understanding of digital currency is so important.
Bitcoin was the first cryptocurrency of its kind. It was created in response to 2008's financial crash. The Federal Reserve and federal government were responsible for every banking transaction, leading to the financial crash.
Digital currency is a way to turn the whole process upside down. It is not a bank transaction. Instead, transactions are peer-to-peer and bypass the central bank. This is, obviously, a serious threat to not only the existence of central banks but also the federal government.
Investopedia stated in November that Bitcoin “has the potential to destabilize a banking system where a central authority makes decisions that impact the economic fortunes in entire countries.”
Biden cannot allow his administration to lose that much power and wealth. They are, therefore, exploring ways to get involved in making their digital currency “centralized,” which would allow the feds to maintain control over America's finances as well as what is currently a free market.
The goal they are trying to achieve is an oxymoron, to put it mildly. The tale of the golden goose is essentially about a man who owns a goose and plans to make a meal out of her. The goose begins laying golden eggs just as he is about to fulfill his plans, so the man keeps the goose around for a while. The man finally decides to have his cake and eat it, too. He kills the goose and then opens it up to see if he can find those golden eggs. He doesn't see what he is searching for and is left with a dead goose.
Biden is also trying to centralize what is, by definition, a decentralized goose. He'll likely end up destroying not only her golden eggs but the entire system as well.
Because no one central bank controls it, cryptocurrency is popular and works well. Biden is trying to change that. This means it is not about making the dollar digital. It's all about more power.