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Orwellian Dystopia Could Be Here Sooner Than You Think. The Fed Has A Tricky Decision.
Bogus Bank Deposit Growth Exposed
Here is what we will be getting into today:
CBDCs Have Feeling Of Orwellian Dystopia
The Fed Rate Hikes Dilemma
Deposit Inflow Headlines Are Bogus
Let's Dive In!
1. The Orwellian Dystopia of Central Bank Digital Currencies
Central Bank Digital Currencies (CBDCs) have been a topic of discussion in alternative media circles for years, but are now gaining more attention in mainstream media. CBDCs are a currency framework similar to blockchain-based products like Bitcoin, but directly controlled by central bankers.
The Orwellian nature of CBDCs cannot be overstated. In a cashless society, everything people buy or sell or work for in their life would be recorded, and this lack of anonymity could be used to stifle freedoms in the future. For example, governments could use purchase history to determine if someone has contributed more carbon pollution than most people by eating red meat often, and cut off their health coverage.
Products and services people use can be tracked to create a psychological profile on them, which could then become a factor in determining their social credit score. Economic access is the greatest oppressive tool, and with CBDCs in place and no physical cash in existence, savings will never be truly theirs and they will never be able to hold their purchasing power in their hands. The means of exchange would be bottlenecked by the banks, and governments would have the option to freeze people's ability to transact.
Central bankers are moving at breakneck speed to develop and introduce digital currencies. The Bank for International Settlements (BIS) is at the forefront of the movement towards the adoption of CBDCs and has been funding a vast array of projects to test and refine CBDC technology. As of 2023, they estimate that at least 81 central banks around the world are in the midst of introducing digital currency systems.
Project Icebreaker is a foreign exchange clearing house for retail CBDCs, enabling the currencies to be traded from country to country quickly and efficiently. With CBDCs in place, people will most likely be completely dependent on a system similar to the Icebreaker Hub to move digital money. Part of the process of the exchange method used by the Icebreaker Hub includes the exploitation of a bridge currency to fill gaps in exchange rates and liquidity. This could lead to economic tyranny, as a one-world currency would be based around the Special Drawing Rights basket system used by the International Monetary Fund to broker currency transfers between national governments.
Recession Risk Is On The Rise
Former Treasury Secretary Lawrence Summers has warned that the probability of the United States entering a recession has increased due to tightening credit conditions. Despite a robust economy in the first quarter of 2023, Summers discounted the report, stating that it only reflected the nature of the economy from that period. He believes that the data is now less relevant due to the prospects of a credit tightening.
The collapse of Silicon Valley Bank (SVB) in March triggered a banking crisis, which has raised concerns about access to credit. Business activity is indicating a slowdown, adding to worries of recession. Bankruptcy filings have spiked across major industries, and venture capital funding for start-ups declined by 55 percent in the first quarter of 2023 compared to the same period a year ago. The upcoming Fed meeting to decide interest rates is scheduled for May 30, and Summers believes that the Fed has difficult decisions ahead of it with very much two-sided risk.
Upcoming Fed Meeting
Federal Reserve officials are divided over whether to proceed with another interest rate increase amid differing opinions on the potential impact of the recent banking turmoil. Austan Goolsbee, President of the Chicago Fed, has called for caution and patience in setting monetary policy, citing uncertainty over how much regional banks may pull back on lending following the implosion of Silicon Valley Bank and Signature Bank last month. Goolsbee added that policymakers should gather further data and be careful about raising rates too aggressively until they see how much work the headwinds are doing for them in getting down inflation.
Meanwhile, John Williams, President of the New York Fed, said that another quarter-point interest rate increase was a reasonable starting point for the next policy meeting. Susan Collins, President of the Boston Fed, said she currently anticipates some modest additional policy tightening, and then holding through the end of this year.
Policymakers will need to decide at their meeting in early May on whether to ratify projections published last month, which indicate that most officials support one more quarter-point rate rise this year, with the federal funds rate expected to peak at 5 to 5.25 per cent. There are no cuts forecast until 2024. The severity of the economic impact of the recent banking turmoil is driving the debate. Jay Powell, the Fed Chair, said last month that the string of bank failures could potentially be the equivalent of a rate hike or perhaps more than that.
Largest Commercial Banks Are Not GROWING Deposits
Despite headlines suggesting that the largest banks have been inundated with new depositors, the data shows that these large commercial banks have actually been losing deposits for most of the past 12 months, shedding over $700 billion in deposits between April 2022 and March 2023.
During the same time period, domestically-chartered commercial banks in the US have collectively incurred deposit losses amounting to $970 billion. The largest 25 banks account for 72% of the plunge in deposits over the past year. While there was a small blip in inflows of deposits to the largest US commercial banks between March 8 and March 15, this was quickly reversed.
For more in depth analysis of these topics, check out these articles:
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