A prudent man foresees evil and hides himself, but the simple pass on and are punished.
- Proverbs 22:3
For most of us, few things are more boring than central banks and monetary policy. Those who run our monetary system know this and are more than happy to make sure this situation persists, for it very much works to their advantage.
Take, for example, Friday’s announcement of a digital dollar by Jay Powell, the Chairman of the Federal Reserve Jay Powell. According to Powell, a U.S. digital dollar, “could…potentially help maintain the dollar’s international standing.”
All this sounds innocent enough. Even downright boring. But there’s a lot going on here that is far more profound than a quick glance may suggest, and it’s worth taking a little time to unpack it. In short, Powell is proposing a new form of the US dollar he’s calling, “A U.S. CBDC (central bank digital currency).
So, who is Jay Powell? As mentioned earlier, he’s the Chairman of the Federal Reserve, the central bank of the United States. This is an extraordinarily powerful position. Some people argue that it’s the second most powerful position in America, following only that of the President.
The Chairman of the Federal Reserve heads up an institution that essentially runs the entire US financial system via its control over the US dollar. Set up in 1913, the Federal Reserve System is in charge of the issuance of the dollar, controlling how many dollars – i.e. currency units – are in existence. And since the US dollar is not merely the currency of the United States, but functions as the world’s reserve currency, one could argue that the Federal Reserve System (hereafter “the Fed”), though its ability to issue dollars, oversees the financial system of the entire world.
Lux Lucet 