Western Standard - The Danielle Smith Show： Central Bank Digital Currency

00:00:00.000 Thank you.

00:00:30.000 well greetings friends and welcome to another edition of the danielle smith show i am danielle

00:00:38.800 smith and thank you so much for tuning in you know i've noticed that there is a real difference

00:00:43.760 between doing podcasting on this forum versus doing podcasting without video first of all i

00:00:51.200 have to get my hair and makeup done and i already know that someone's going to complain that there's

00:00:54.960 no makeup department. I can already see I'm not done enough eye makeup today. But more importantly,

00:01:01.180 I want to be able to walk through my newsletters on Monday because I met a wonderful lady when I

00:01:07.160 was doing the Sean Newman's present show in Lloydminster a couple of weeks ago. And she said

00:01:12.920 that she didn't normally have time to read through it all in one go. But while she was doing her

00:01:19.020 gardening or housework, she would prefer for me to be able to read off what I had written. I'm not

00:01:24.780 going to read it word for word, but I think I will walk you through what I do on Sundays in case you

00:01:30.220 haven't signed up for it. Danielle at Danielle Smith. Oh, sorry. No, that's my Gmail. Danielle

00:01:34.880 Smith dot CA. And then you can just go into the, uh, into the signup section and you can sign up

00:01:40.980 for my newsletter and you'll get that on a weekly basis as well. But what I often like to do is

00:01:46.540 just start off with an email that I received and Amanda, bless her heart. She's been writing to me

00:01:52.440 for some time. She sent me an email that I thought was one that the reason I wanted to share it is

00:02:00.020 that a few of you have said the same thing to me, is that you think that talking about things like

00:02:06.840 cryptocurrency is too inaccessible, too hard for people to understand, and we should just shut up

00:02:12.340 about it. And in fact, one of the things that she said is that she had a friend who's noticed that

00:02:17.860 Pierre Polyev was talking about this. And she said, let me see if I can read this to you here.

00:02:23.120 She said she thanked me for the primers that I did last week and said I was just chatting with

00:02:27.360 a friend who said that Polyev needs to tone it down on that cryptocurrency because he is losing

00:02:33.940 people like her because it's not well understood. So let me say a couple of things. One of the things

00:02:39.920 I've noticed about conservatives, and we do this all the time, is that we seem to approach a political

00:02:46.780 candidate with the idea that I need to agree with them 100% on all things. And if I find the one

00:02:54.460 thing that I disagree with them on, then I'm going to reject their candidacy altogether.

00:03:00.240 They've lost me. If you're not 100% in alignment, then you don't have my support. We seem to want

00:03:05.500 to look for reasons not to support somebody. And this is important because I've noticed that on

00:03:11.340 the left, they do the opposite. If you're a progressive candidate, you say, well, I may hate

00:03:17.000 99% of the things you stand for, but I found that one thing we can agree on. Therefore, because we

00:03:23.260 can agree on that one thing, I'm going to vote for you. This is the reason why their strategic

00:03:28.040 voting always works and why the conservative movement always busts apart. We always try to

00:03:34.060 find our differences in the conservative movement where they put a lot of water in their wine in

00:03:38.960 progressive movement and so as a result they always win so nobody should say that they're

00:03:43.840 losing support for pierre because they don't understand this issue very well he's talking

00:03:48.320 about it it's alienating to you and therefore you're going to look for another candidate to me

00:03:53.680 sorry it just doesn't make sense so uh the other thing that i'd say is that one of the things that

00:03:59.440 is probably confusing for people is that pierre has said very clearly that he is opposed to

00:04:06.160 central bank digital currencies but he's in favor of cryptocurrency and for people who didn't watch

00:04:13.120 my shows last week that is going to sound like greek to them but but i want to i wanted to tell

00:04:18.560 you the state that the world is in for him to be making these kinds of statements because one of

00:04:25.120 the the things that we need to be aware of is that we are on the cusp of what time magazine said is

00:04:31.600 the biggest change to the money way how we use money biggest change to money since the end of

00:04:39.920 the gold standard and we can't we can't stop this from happening this is i guess the the part about

00:04:45.120 it is that it would be lovely if we could all just freeze the moment in time that was our favorite

00:04:52.000 moment in time i wrote in my newsletter this weekend my my favorite moment in time probably

00:04:58.160 was somewhere around 2005 because i got all the benefit of all the great technologies we had i

00:05:04.720 had my blackberry and i was pleased with that i think i had my blackberry in 2005 it was the

00:05:09.200 very first phone that i got i preferred the blackberry format with the digital with raised

00:05:14.480 keyboard so i could i could live in a world pre-iphone i could live in a world pre-technology

00:05:20.400 getting really creepy uh i know some of you might even go back a little bit further my husband for

00:05:24.800 instance he's a train guy and he'd probably go back to an era where we're still doing passenger

00:05:29.200 train traffic in canada so somewhere around the 1950s he also likes men who were he likes the

00:05:35.600 style of men wearing hats i think that's sort of the mad men era so we could freeze the moment in

00:05:41.440 time that was the time that we wish we could stay and i'm sure we could all choose a different era

00:05:46.560 but time keeps on marching along and part of what i've noticed about technology is that with it

00:05:51.920 marching along the way it has been that it's moving faster and faster and it's becoming a

00:05:57.040 bit disorienting for us to keep up and it's becoming a little bit creepy so i think we just

00:06:02.080 need to to be prepared to walk through some of these creepy issues because it's gonna have a

00:06:06.240 huge impact on us and it's already well underway which is why what i maybe didn't explain to you

00:06:11.600 last week and so i wanted to give you sort of the state of where we are at because the americans have

00:06:16.880 i think with their most recent moves the first one when they use the uh their power to exclude

00:06:24.400 iran from the international payment system called swift and now more recently excluding russia from

00:06:30.960 the international payment system called swift it's it's accelerated this change away from the

00:06:36.800 the us currency and what's going to take its place i've been trying to figure that out

00:06:41.040 now i think we've got a pretty good look at what that's going that's going to look like but but i

00:06:45.120 I wanted to start off by showing you this overlay, why people are so afraid of digital

00:06:51.840 currencies. When I was on the air before, I talked to you quite a bit about China's social

00:06:57.580 credit system. And I thought that this image gave a pretty good idea of how it works. I

00:07:03.140 think we all have an idea of how credit scores work, because with credit scores, I get mine

00:07:09.740 each week from BorrowWell. It tells me, I think it's out of 900, but this one is out

00:07:14.100 of 1,000. China's social credit system expands the idea of a standard credit check to all aspects of

00:07:22.820 life. Each citizen is assigned 1,000 points, constantly monitored to judge their behavior

00:07:29.180 and rated accordingly. So you can see on the left-hand side that you get certain rewards.

00:07:37.580 If you are helping the poor, for instance, that raises your score. If you're praising the

00:07:43.060 government, on social media, that raises your score. If you're engaging in charity work or

00:07:47.620 donating blood, those are the ways in which your score will go up. Your score will go down.

00:07:54.540 Punishments if you spread rumors on the internet, if you have insincere apologies for crimes

00:08:01.080 committed, if you're cheating in online games, so they monitor that too. And if you're not visiting

00:08:05.880 your aging parents regularly, isn't that something? So you've got, Laura, if you can move that China

00:08:11.960 social credit score off the screen for a second so i can just see the the um the fast right oh

00:08:18.600 hold on let me try this one more time oh yeah i can't seem to get rid of it and doing it at the

00:08:23.160 same time no if you move those uh those words off the screen so i can just show people what

00:08:27.800 the reward thank you just a little technical thing so the rewards you'd have include fast tracking

00:08:34.120 a work promotion so if your score is higher then you will get promoted at work you'll get

00:08:39.080 priority status for your children's school admissions if you want to get into a particular

00:08:44.040 type of school if you you'll get easier access to bank loans and consumer credit and you will

00:08:49.560 get tax breaks so they've linked your behavior to your credit score and those are the ways in

00:08:55.960 which you benefit now on the punishment side you'd be excluded from booking flights or train tickets

00:09:01.640 you'd be ineligible for certain jobs you'd be restricted access to public services

00:09:07.560 and you'd have public shaming on tv and social media so that is the world that they've moved

00:09:13.240 into in in china at least they're they're pioneering it and so there is no question

00:09:19.160 that people are are terrified of what a of what the chinese social credit score applied to

00:09:25.320 to our jurisdiction might look like now the reason i wanted to to start there is that you need to

00:09:31.000 know how far along china is in this concept there was an article in time magazine last year that

00:09:37.560 it was about August where they talked about how advanced some of the jurisdictions around the

00:09:43.440 world are in developing a central bank digital currency. In China, it's called the renminbi.

00:09:52.480 They followed the Bahamas by about six months. The Bahamas was the first to roll out a digital

00:09:57.420 currency. China followed six months later, and they showcased it during the Beijing Olympics.

00:10:04.500 they wanted it to be in place so when it was first written about last august there's something

00:10:09.300 around 20 million users by january of this year there were already 260 million users and there

00:10:16.180 were billions of dollars worth of transactions which is interesting isn't it because even though

00:10:22.020 they have the means to do digital payment with other types of programs there's private

00:10:26.740 programs you can use called alipay and wechat those are the most common ones in fact so common

00:10:30.980 in china that 96 of people already use a digital payment system and it's it's a lot more advanced

00:10:36.900 than ours as well the time magazine article goes through this story about somebody taking their

00:10:42.980 phone and having a qr code and they just have to flash their qr code and they can buy things at

00:10:48.100 the convenience store pay for their commuter rail tickets or they can buy lunch at the cafeteria

00:10:56.100 just by flashing their qr code so china has already moved to that step now you've got the

00:11:02.740 digital currency from the central bank coming in this rem minbi and remarkably 260 million people

00:11:09.860 already within the space of a year have adopted it so it sounds to me like and this is what i

00:11:15.940 suspect would happen in canada as well is that if we switched over to a central bank digital currency

00:11:22.500 you and made it voluntary people would adopt it as well it's just uh we are rule following people

00:11:28.560 and so it and we've observed that over the last two years that if government says hey do this

00:11:34.320 it's good then it's going to be good so i i suspect the reason i suspect this is happening

00:11:38.740 is there's just so many advantages to governments in trying to adopt a system like this and let me

00:11:46.020 walk through with you some of those advantages so the the biggest advantage that they that they

00:11:52.740 would have and let me try to to deal with the positives first so that you're not completely

00:11:57.560 freaked out moment i'll tell you one more thing that will make you completely freaked out

00:12:00.920 the world economic forum yes those guys they um did a paper back in november of 2021 talking about

00:12:09.520 digital currencies actually it was 233 page document pretty serious and it has a whole

00:12:16.380 range of people who are experts in the field talking about the advantages of it so when you

00:12:21.760 have uh all of the the largest bankers and the largest countries collaborating and talking about

00:12:31.780 how to make this occur it feels to me like we're just heading in this direction so you've got a

00:12:37.420 couple of pioneers, and here's a couple of things that they have discovered would be the advantage

00:12:41.840 to it. So number one, if we want to look at the positives, as I said, one of the main things that

00:12:49.820 you can do is that you could, and I've actually heard our government talking about this as well

00:12:56.540 in Alberta, is figuring out a way to instantly transfer homes and property. We've got a real

00:13:02.040 problem at land titles where it takes 60 days once a sale of a home has been complete to get

00:13:08.600 it registered at land titles if you have this instantaneous mate way of transferring a token

00:13:16.200 so i sell my house to you it transfers over to you instantaneously and there's a record of it that's

00:13:22.760 public it's audited there's no middleman that's one of the advantages that they talk about being

00:13:27.640 able to use these kinds of digital currencies you can also use a fractional share of any assets so

00:13:35.080 instead of having to own like a full bit vacation property you could have a token that gives you

00:13:41.240 access to a portion of it so it's a way of making a timeshare and other collectibles more accessible

00:13:48.040 things like if you want to own some people own their wealth in art or in um in wine you could

00:13:56.040 own a fractional portion of those types of collectibles that would be another thing that

00:14:02.040 you could do with this kind of tokenization and digital and digital uh currency uh it would you

00:14:08.920 could do ease more easily cross-border transactions in the financial industry i mean right now you have

00:14:14.760 all these limitations about how much money you're able to transfer cross-border i think it's only

00:14:19.480 ten thousand dollars if you have the ability to track it from one currency or one jurisdiction to

00:14:25.720 another and uh and have that verify and be able to verify that and audit it it can make those

00:14:32.520 transactions occur more quickly it will make the swift banking system obsolete because why would

00:14:39.320 you need to use the swift banking system and have your transactions mediated or by the american

00:14:46.120 currency which happens with a lot of contracts around the world particularly oil and gas when

00:14:50.920 you can do this instant validation and the instant conversion so that's another thing makes the swift

00:14:56.040 banking system obsolete which i think why um china and russia and the other countries in the in the

00:15:02.680 so-called bricks partnership are interested in it uh and also i mean here's another positive

00:15:07.720 is that we have 1.7 billion people in the world who currently don't have access to bank accounts

00:15:13.080 this would allow them to have essentially a bank account on their phone and they would be able to

00:15:18.360 have currency on their phone so it it enfranchises 1.7 billion people in the world to make it easier

00:15:23.080 for them to pay so those those are some of the reasons if we're going to be generous about why

00:15:27.560 government wants to do it but of course there's a dark side to um to the approach with the central

00:15:33.320 bank digital currency in particular so when the chinese first implemented it they did it as a

00:15:39.080 pilot project and one of their missions at the time was to get people spending money because the

00:15:46.680 authorities wanted to drive consumption because they were suffering the same problem everybody

00:15:50.680 else was that we saw a decline in consumer spending so when they first implemented it

00:15:57.480 they put an expiration date on the dollars because they wanted to make sure people went out and spent

00:16:02.760 them so when have you ever heard of a central bank being able to do that they also have the ability

00:16:08.840 because you can have that program into the currency you can customize the currency so it

00:16:15.240 can be spent on some things and not others so the examples they gave in the in the article

00:16:20.840 is that if they were trying to stimulate the hospitality industry in a certain area they'd

00:16:25.400 allow the coins to be used for eating out but not used for other things um the other example as well

00:16:33.720 and this is where i think the biggest concern is we've already seen how the social credit score

00:16:37.640 would work is that it would it could immediately allow for the government to fine the citizens

00:16:45.480 for behaviors deemed undesirable so imagine just as a for instance

00:16:52.120 you end up getting pulled over because you are speeding or you've run a stop sign you could have

00:16:59.320 your account automatically debited for that infraction that's the other part the government's

00:17:05.480 kind of like uh and then of course the ones that were most concerned about is the dissidents and

00:17:10.600 activists could see their wallets emptied or taken offline and that is i i don't know the extent to

00:17:18.040 which that is currently happening in china like uh anything with china you never know when you're

00:17:25.400 reading about them if they're uh being on the up and up uh so i don't know if that's occurring but

00:17:30.840 that's the fear that people have so this is the reason why pierre paulia was taking a pretty

00:17:36.360 strong position he said he'd look into making seeing if there's a way to make it illegal

00:17:40.840 i have a suspicion that because we're not going to see an election until 2025 that's three years

00:17:47.720 from now i have a suspicion that they are going to be well along the pathway of having adopted this

00:17:54.360 in fact the the articles seem to suggest that there's some sense of urgency that maybe a fifth

00:17:59.800 of the world central banks, and you can believe that the Western world is going to be at the

00:18:04.920 forefront on this, could be on a central bank digital currency within the next three years.

00:18:11.080 So I would fully expect that Canada would be one of them. And so what does that going to

00:18:18.220 potentially mean? And the other thing I wanted to just point out, because as you know, I think

00:18:23.000 people are mixing up the two things in their minds. The type of central bank digital currency

00:18:28.320 I described, and all of the powers it gives to government are very different than what Bitcoin

00:18:35.200 is. And there was an article in the National Telegraph, I linked to it in my newsletter,

00:18:40.820 that I think describes this really well. And I want to read this to you so that you can think

00:18:44.820 about the two types of digitization in a different way. There's a real difference between, I'm going

00:18:51.780 to use these terms now too, a central bank digital currency versus a cryptocurrency like Bitcoin.

00:18:57.040 And what the National Telegraph says to describe this is Bitcoin as a currency, it functions almost like an anti-central bank digital coin in a lot of ways.

00:19:09.080 So if one is, think of it as poison, the other is the antidote, where central bank currencies are completely controlled by a central authority.

00:19:17.840 Bitcoin is 100% decentralized.

00:19:20.440 No one controls the system.

00:19:21.460 central bank currencies have built-in controls so that they can be uh uh they can be they can

00:19:28.480 discriminate on people against people based on age or sex or wealth or race or whatever categories

00:19:34.080 the government wanted bitcoin on the other hand has no built-in control so this kind of discrimination

00:19:39.920 is impossible central bank currency transactions can be tracked that's what you guys are worried

00:19:44.800 about and trap but in bitcoin the transactions can be done peer-to-peer and they're on uh they're

00:19:50.580 untraceable central bank currencies continue to be the potential for windfall for bankers who as

00:19:56.020 we've seen love to print money and drive up inflation but bitcoin is a deflationary asset

00:20:01.160 and can be mined uh the amount that can be mined decreases over time it less and less every four

00:20:07.820 years so so bitcoin this is the reason why i know and again i know this is uh hard to wrap for people

00:20:14.360 to wrap their head around but if this is going to be the biggest change in money that we have seen

00:20:20.180 in 50 years, I think we need to be aware of what the options are and the impact it's going to have

00:20:26.180 on us. Because not having the American dollar as the central point of currency is going to change

00:20:34.740 how our geopolitics work. At the moment, and this goes back to the deal that was made in the 1970s

00:20:43.420 when we had the energy crisis, is the world agreed that we would sell oil and gas and it would be

00:20:48.640 denominated in the American dollar. So we've essentially had what is called a petrodollar.

00:20:54.280 This is part of the, I think, some of the vision that we've seen in Canada as well over the last

00:21:00.920 number of decades is that any time oil and gas spikes, it also causes the value of our dollar

00:21:07.700 to spike. And when our dollar spikes, it impacts our friends in Eastern Canada who have to buy

00:21:15.080 more imports because they're a manufacturing base. So if we're going to be switching to a

00:21:20.520 different type of system, what is it going to be based on? Now, we already have a bit of an idea,

00:21:26.580 but when we look at what is happening in Russia. So there's an article on the website called

00:21:34.480 Algora, and they're a bit of a publishing clearinghouse. They seem a bit on the lefty

00:21:41.420 and i was trying to look at them because i've never heard of them before they wrote a really

00:21:45.420 good article that was posted on my locals page and i wanted to to tell you how things are developing

00:21:51.260 in russia and with the alliance of brazil russia india china and south africa the brics partners

00:21:57.900 so that you can see what the counteraction is going to to be so according to them what what

00:22:04.060 russia did and initially is that they convinced their partners um after getting after russia got

00:22:10.460 excluded from the swift system they we i think we all heard that they initially said that they

00:22:16.220 are going to sell their products uh denominated in rubles backed by gold but what happened is

00:22:22.140 they convinced their bricks partners to stop trading in dollars and to eventually create

00:22:27.580 a common virtual currency for their exchanges until they proceed with this the currency uh

00:22:34.140 until then they're going to proceed in gold but the currency is going to be based so think this

00:22:38.540 through how do you get five different countries with five different economic levels of strength

00:22:46.380 five different populations five different bases of support five five different uh uh trading

00:22:53.100 profiles how do you get them to operate with a single currency that's a real challenge right

00:22:57.900 so here's the way they're going to do it is the currency is going to be based on a basket of

00:23:02.300 bricks currencies weighted according to the gdp of each member state and based on a basket of

00:23:07.900 commodities on the stock exchange and so their commentary is that the system should be much more

00:23:13.260 stable than the current one so we've already got bahamas moving to a digital currency you've got

00:23:19.180 china moving to a central bank digital currency now you've got russia who because of the actions

00:23:24.060 in the last couple of months they're brought it on themselves but this is their reaction to being

00:23:28.700 excluded from the banking system they said fine we're going to create our own system

00:23:32.860 so think about about that when you look at the biggest population basis in the world they don't

00:23:37.740 have the biggest economies yet because they're still emerging economies in a lot of ways

00:23:41.660 but you've got if you've got china and india and russia brazil and south africa all collaborating

00:23:50.860 on this currency brazil presumably as the largest nation within south america that would bring many

00:23:56.700 of their trading partners into the orbit of this new currency and south africa with the strongest

00:24:03.420 economy in africa that would bring their trading partners into the orbit of this partnership and

00:24:09.740 then also our the asian countries as well so we're looking at a world potentially where 90

00:24:17.100 of the world population falls under one currency so what are we going to do in response it just

00:24:23.180 seems obvious to me that uh the pathway we would follow was would be that each of our countries

00:24:29.820 Canada, Europe, the UK, Australia, the United States, and any other partners who want to join

00:24:37.180 us would also set up their own individual central bank currencies. And then they would

00:24:41.900 do the same thing that the BRICS partners are, which they would collaborate on developing a

00:24:47.820 central currency that could very easily be transmitted between the two, the nations within

00:24:53.420 the partnership and then presumably if globalization is going to continue our trading block and their

00:25:01.100 trading block we'd have sort of two international currencies competing with each other and two

00:25:05.740 international currencies that would be interchanged so that i think is the way the

00:25:11.100 the direction the world's going and it's going to be happening very very quickly because as we've

00:25:15.100 seen we have been racing with the money printing machine in all jurisdictions and we're seeing the

00:25:21.820 huge impact of that so in just in this past march inflation was 6.7 that is the highest level of

00:25:31.900 inflation that we have seen in 30 years now those of you will be old enough to remember what happened

00:25:37.980 last time around so in the 1970s there what occurred is that as inflation went up interest

00:25:46.300 rates kept going up and up i remember my dad maxing out with i think it was something ridiculous

00:25:52.700 like a 21 mortgage rate and so that if for those of you who've lived through that that seems to me

00:26:01.260 one of the pathways that we could go down is that the government will just continue to uh to try to

00:26:07.660 raise rates to arrest the increase in inflation i mean i don't know what our inflation rate this is

00:26:13.100 is this year but if it's already 6.7 in one month then presumably we're looking at yearly rate of

00:26:20.220 an annualized rate of 15 or higher i'm not entirely sure but but this is why we're in a

00:26:26.860 bit of a bind most people because we've had stable currency now for so long they want cash but if you

00:26:34.940 hold cash outside of any kind of interest bearing vehicle for uh for a longer than a year or two or

00:26:42.540 more in this environment it's going to be worth less and less inflation is just going to eat into

00:26:46.540 the value of it and so people are going to be drawn especially if there's a central new central bank

00:26:52.620 digital currency that is endorsed by the government of canada people are going to be drawn to that

00:26:56.780 so i think that's the environment that we find ourselves in but we still have this real problem

00:27:01.740 of what are we going to do about inflation and government debt what are we going to do about

00:27:06.220 private debt there was a really good article and that was written by lynn alden um who has

00:27:14.220 who's got an economic background quite uh quite clearly and and she wrote about the concept of a

00:27:20.220 debt jubilee that's what i was often wondering when you heard the term great reset i wondered

00:27:26.540 are they talking about resetting the the situation we find ourselves in with excessive debt

00:27:34.620 maybe because that used to be very common so lynn goes through alton goes through and looks

00:27:39.580 at the history of debt jubilees and the the way they began was about 4 000 years ago they began

00:27:47.260 because farmers would go through and they would borrow to get all of their inputs and then harvest

00:27:54.060 would take place and if it was a terrible harvest they would not be able to pay their lenders and

00:28:00.300 their lenders would come along and back in the day put them into debt servitude literally so they

00:28:05.340 would go into slavery or the property would be seized and if you allowed if the rulers of the

00:28:10.540 day allowed this to continue for too long you'd end up with all the money in the hands of the bankers

00:28:15.260 and they would have a they would have slaves working the land for them and that's unstable

00:28:19.980 for society, you'd end up with popular uprisings. And we've seen more than a few beheadings over

00:28:24.980 the years. So politicians and leaders get very nervous when they start seeing too much income

00:28:30.000 inequality, too much imbalance. But this is where we're heading. I mean, as bad as we have public

00:28:36.420 debt and it's horrendous, we also have a terrible private debt problem too. And so what are they

00:28:42.000 going to do to solve that? Because if we're all heavily indebted, we're in a world of inflation,

00:28:47.140 the traditional model has been to just increase interest rates you increase interest rates and

00:28:53.080 you're potentially driving people into a point where they're going to go into bankruptcy they're

00:28:58.760 not going to be able to pay their bills this is this is the the nature of the problem that i think

00:29:03.840 the leaders are grappling with on how to resolve it so why can't we just do a debt jubilee now

00:29:09.420 it's a very complicated way to you know as much as it's difficult to describe the new money system

00:29:16.440 that we want to move to, or they want to move to, it's pretty difficult to describe how our

00:29:22.140 current money system works. Because I think most of us have a conception that somewhere in a bank,

00:29:27.260 there's gold bars, and they have a certain amount of currency related to those gold bars. And then

00:29:33.060 they hold back a certain amount of money so that if you come and take your deposit out, you're going

00:29:37.560 to be able to have the money there. And that's not quite how it works. So Alden has this,

00:29:44.000 she talks about it being a circular system that we find ourselves in. It's an Ouroboros. Have

00:29:51.620 you seen that with the snake eating its own tail? That's how she describes our current money system.

00:29:59.120 Central banks, our commercial banks, store their cash at the central bank, which are assets for

00:30:05.580 the commercial bank and liabilities for the central bank. And then what happens is the central bank

00:30:12.740 holds government debt as its primary collateral, and government debt is backed by the government's

00:30:20.240 ability to tax its citizens. So in practice, by having a central bank create new bank reserves,

00:30:27.340 you just buy the government debt when it's needed. Because everything is interconnected this way,

00:30:32.660 essentially our value of our currency and our bank deposits are based on how much money the

00:30:36.260 government borrows. I know, weird. And you can't remove one part of the system, otherwise it

00:30:41.960 collapses at all. So how do you solve this problem? So she's got a couple of interesting

00:30:46.460 thoughts. None of them are good for you and me. One thing that she says they can do is that they

00:30:52.660 could take a certain portion of government debt and convert it to a bond with a hundred year

00:30:58.360 zero coupon rate. So basically allow themselves to borrow for a hundred years at zero rate of

00:31:05.100 interest. And then that would allow the interest rates to rise again. So wouldn't you like that

00:31:08.980 deal? Being able to borrow for 100 years at zero interest? Sorry, not available to you, just

00:31:13.520 available to government. Because the interest rates are going to have to go up to a more

00:31:19.000 reasonable level. I've been thinking about this for some time, because if you look at the long-term

00:31:23.940 mortgage rates that some of the folks who were buying homes in the 50s and 60s used to have,

00:31:29.560 I was talking to a friend last night who said that his dad had essentially a perpetual mortgage,

00:31:34.880 longest period of time as he wanted at 6.4%. So keep that number in mind, because that is probably

00:31:42.120 the interest rate, the long-term interest rate that's normal. When it comes down really a lot

00:31:47.460 lower than that, it's because governments are manipulating the rates to make you borrow more.

00:31:51.860 And then it succeeds so well, puts so much gas on the fire, that then they overcompensate by

00:31:57.140 going on the other side and raising rates to such a high level, so that it causes bankruptcy. So

00:32:02.860 that's the seesaw that we find ourselves in. So one way to solve it, they give themselves a long

00:32:08.800 term rate at 0% interest so that it's still officially on their books, but then they allow

00:32:14.460 for rates to go up. So you and I end up having to pay more. The second thing she said they could do

00:32:18.860 is continue to hold rates low. And this may be one of the things that they would have to do

00:32:23.940 and let inflation rates burn the debt away. I think this was part of what happened in the 1940s,

00:32:29.720 goes back and says and so you continue to keep the low rates so that you don't end up defaulting on

00:32:34.920 your host mortgage but then when you go out and try to buy food and energy and anything related

00:32:40.200 to that your purchasing power is eroded so you're not able to do you're not able to buy as many

00:32:45.880 things uh the third thing you can do i don't i don't say this because i want to see this happen

00:32:52.040 but we have seen it happen which is what happened in cyprus in 2013 when they got into a banking

00:32:57.560 crisis, what they did is they did what is called a bank bail-in. And I remember we've actually

00:33:03.180 changed the legislation in Alberta or in Canada to allow this too. Essentially, if you had $100,000

00:33:08.620 sitting in cash in the bank account, they would just take about 10% of it and then issue you

00:33:15.380 share certificates for the bank. They called it a bail-in in order to get enough actual cash flow

00:33:20.440 in the bank as well so that they didn't end up with bailing. So I've been wondering though,

00:33:25.040 if the switch to a central bank digital currency is a fourth pathway for government to generate

00:33:31.680 more revenue a few years ago elizabeth may talked about a financial transactions tax and the

00:33:38.560 democrats in the u.s have been talking about it too they started talking about it just in the

00:33:44.080 transfer of stocks and bonds and other financial assets for a couple reasons on the assumption

00:33:49.360 that those who are trading in those types of of um of investments have a higher level of income it

00:33:55.600 would it would tax the rich which you know is is part of that milieu but they also said ostensibly

00:34:02.000 it was to stop the day trading that was occurring and to slow down some of those transactions

00:34:07.200 but but what if what if the uh real reason why the central banks want to have a digital currency

00:34:15.280 is because then they could start charging the kind of financial transaction fees

00:34:20.480 that the banks are charging directly like every time you do an e-transfer how much do you pay

00:34:24.320 buck 50 right um unless you've got a good plan that has that included but if you even look at

00:34:30.320 the cryptocurrencies they've got a 0.5 transaction rate when you sell one between another if you look

00:34:36.320 at visa mastercard you don't see it but the merchant loses up to 3.4 on every transaction

00:34:43.680 that takes place so what if that's what's going on here i did a little bit of a calculation

00:34:49.040 because initially they they thought that just by charging this 0.2 rate on financial transactions

00:34:57.440 on stocks and bond sales they figured in america they'd be able to generate 77 billion dollars over

00:35:02.800 10 years uh or sorry 777 billion dollars over 10 years since we're about 10 of the population

00:35:09.600 we could assume that canada would be able to generate 77 billion dollars over 10 years but

00:35:15.280 if you broaden this concept out so that every single transaction that was in canadian currency

00:35:21.840 carried some kind of hidden financial transaction service fee that went to government then you would

00:35:29.760 be able to generate a huge amount of money we've got 1.7 trillion dollars of gdp so 1.7 trillion

00:35:35.280 dollars of transactions there's a little bit of a fee that is factored in there at call it 0.5

00:35:42.240 that would generate about eight and a half billion dollars per year if it went as high as the visa

00:35:46.160 transaction fee of 3.4 now you're talking 58 billion dollars per year is real money uh so i

00:35:52.720 think that this might be at the heart of of what of what we're turning to is that we're making this

00:35:59.600 shift from being a world economy based on oil and gas transactions and our dollar value hinged to

00:36:09.360 that. That was a shift again from the previous world where the world transactions were based

00:36:14.840 on a hinge value of gold. This new world that we're entering into is a world economy based on

00:36:21.520 digital currency, digital cash flows, digital transactions, which are, when you think about it,

00:36:27.860 the highest value that we have in our economy right now. Look at how much our tech companies

00:36:32.880 have escalated in value. Look at what is going to happen in future with companies like Amazon

00:36:37.860 and Elon Musk's company and various other digital companies. I think what has happened is that

00:36:44.060 the powers that be, not only do we have a debt problem that needs to be solved for the public

00:36:49.340 debt, private debt problem that needs to be solved, an inflation problem that needs to be

00:36:53.760 solved, a currency problem that needs to be solved, a geopolitical problem that needs to be solved.

00:36:57.340 and also the increasingly surveillance system monitoring of citizens' behavior that government

00:37:05.540 wants to do, this central bank digital currency offers a solution for all of that. So I just

00:37:13.560 want to lay that out. I'm not going to keep on talking about this. I know I told you that last

00:37:17.920 week, but I needed you to understand how far along all of these measures currently are,

00:37:24.480 because you can't now I don't think there's a there's a bit of a freight train coming

00:37:29.000 and as a result of these changes that are are occurring all around us we have to figure out

00:37:34.980 how we're going to respond so this is the reason why politicians like Pierre Polyev is talking

00:37:41.120 about an alternative to what we're seeing happening in in China and what we're seeing

00:37:46.480 the World Economic Forum pushing and what we're seeing our own central bankers doing some analysis

00:37:52.320 this on, is that they want to move to a controlled central bank currency. The only way you'll be able

00:37:58.640 to keep your digital transactions private is through a different decentralized currency means

00:38:04.960 that's not controlled by a central bank. And as for how globalization works in this new world,

00:38:12.720 I mean, some people think that we're now in an era where globalization's at an end, where all of the

00:38:18.800 countries and the western alliance are going to trade with each other and all the countries

00:38:23.360 in the the bricks alliance are going to trade with each other so we've we're on the cusp of some

00:38:28.320 really major changes and i just wanted to make sure that you had all of the facts and figures

00:38:33.760 at your disposal so that you can do your own research on it please do that if you want to

00:38:37.920 check out my newsletter i do post them in the archives online you can go to daniellesmith.ca

00:38:43.520 to check it out i have all the links to the things that i talked about i was a little bit nervous

00:38:47.360 us showing any links today because they're a little bit tricky on social media. They get a

00:38:53.900 bit stingy about what you're allowed to show and whatnot. So I'm still trying to figure those rules

00:38:57.600 out. But thanks so much for tuning in today and we'll do this again on Wednesday. Talk soon.

Western Standard - April 26, 2022

The Danielle Smith Show： Central Bank Digital Currency

Episode Stats

Summary

Transcript