 So, my topic is also on central bank digital currencies, which is fitting since the theme of the whole conference is the end of the dollar era. So you'll notice that there's something about the central bank digital currencies that is a particular threat to the dollar and to our way of life. And so I think it's good that we're focusing on it. My talk will be a little bit different, even though I also have a quote from Eswar Prasad. My talk will focus on the perspective of a central bank digital currency as a replacement to physical cash, so looking at sort of a longer term view of a central bank digital currency replacing the use of physical cash as a part of this larger context of the state's war on cash. But first I want to thank Dan Johnson and Randy Laskowitz for sponsoring this talk. These sorts of events where like-minded people can get together and discuss theory and history and strategy and threats to liberty are really important and it's thanks to supporters of the Mises Institute that we can do this sort of thing. So speaking of the war on cash, in July of this year, Terin Compton tried to withdraw $3,500 from her bank in Australia for the purpose of home renovations. The bank wouldn't let her saying that they no longer keep any cash. She was told to use the ATM, but even the ATM put up a fight due to card reader errors and it turned into this big viral video on social media. In December of last year, the Nigerian central bank reduced weekly cash withdrawal limits to the equivalent of $225 per week or $45 per day. They raised it to a little over a thousand a few weeks later after a bunch of public outcry. And the stated rationale was to discourage counterfeiting and to make it harder to make ransom payments to kidnappers. And to encourage more people to use the banking system. Another little news story, in July, Hong Kong banks had security guards posted at all doors with riot gear, batons, shields. Were they expecting vandals? Armed protesters? Terrorists? No, just depositors. The depositors who had to wait four to five hours and endure intense questioning even after making appointments ahead of time. So stories of people being hassled by their banks abound on social media and it happens both here and around the world. The banks ask prime questions and make their customers jump through hoops just to withdraw their own money. They always couch their interrogations in terms of protecting the customers from fraud. But if they were really that concerned, don't you think there would be like some sort of questionnaire that you'd have to fill out every time you buy something online or swipe your debit card? These events are only the most recent manifestations of the global war on cash, which has been going on for a long time. Joseph Solerno has written about this extensively, documenting the various ways governments have vilified and banned and prohibited and discouraged the use of cash. In an article called The International War on Cash on the Mises Wire, Solerno says this, the ostensible reason given by our rulers for suppressing cash is to keep society safe from terrorists, tax evaders, money launderers, drug cartels and sundry other villains real or imagined. But the actual aim of the recent flood of laws rendering cash transactions less convenient or limiting or even prohibiting them is to force the public at large to make payments through the financial system in order to prop up the unstable fractional reserve banks and more importantly to expand the ability of governments to spy on and keep track of their citizens' most private financial dealings. Governments used to love paper money because it was much easier to inflate, especially as a replacement for the international gold standard. Gold is costly to mine and to mint, but paper is cheap. They eventually had to impose bank holidays, outlaw gold and reneg on the Bretton Woods system because economic reality kept catching up with them. Now even paper cash is too much of a constraint. Exiting the fractional reserve banking system with pieces of paper threatens the stability of the whole system, which is credit on top of credit on top of credit. They may point to terrorism, kidnapping, climate change, financial inclusion, illegal counterfeiting and money laundering, but what they really want is to protect themselves and the system that enriches them. And in this context, we can see why they're arguing for a central bank digital currency. A digital dollar offers everything that they need. It is costless to make, perfectly trackable, totally programmable, and always connected to the financial system. The government's long war against the economic fact of scarcity will be won with the mathematical power of infinity or so they think. A CBDC offers two connected but fundamentally distinct victories for the central bank and the state. One is related to monetary policy and the other is related to privacy. Privacy seems to be the most common concern among those who hate the idea of a CBDC, but don't worry, the Federal Reserve is here to protect us. They had this FAQ on their website about the pros and cons of a central bank digital currency. One of the cues is, would a CBDC protect my privacy, and here's their answer. Any CBDC would need to strike an appropriate balance between safeguarding the privacy rights of consumers and affording the transparency necessary to deter criminal activity. Protecting consumer privacy is critical, and they continue. Financial institutions in the United States are subject to robust rules that are designed to combat money laundering and the financing of terrorism. A CBDC would need to be designed to comply with those rules. If I may translate the FedSpeak into English, the answer is no, a CBDC would not protect your privacy. You are guilty until proven innocent, and recent trends show that they are moving in this direction even without a CBDC. The IRS just recently cracked down on PayPal and Venmo, forcing them to report accounts that have transactions over $600, and in a lesser known bit of news, the Supreme Court ruled in May of this year that the IRS does not even need to notify you if they're snooping around in your bank accounts looking for delinquent taxes, even if they do not suspect you of being delinquent. If you just have friends or family that they suspect are delinquent on taxes, then they will not notify you while they're snooping around your own bank accounts. It's very scary. Banks themselves seem eager to rat out their own customers. Bank of America handed over information to the FBI who did not even ask for this information about transactions that happened in Washington, D.C. on January 6, including if the people had ever purchased a firearm. So just being in the wrong city on the wrong day gets you reported to the FBI. And they wonder why there is a remnant of unbanked households in the U.S. What's funny is that they use this unbanked population as a reason for implementing a CBDC. They say that it will help financial inclusion. In my view, anybody who has decided to exit the banking system due to the way it currently operates is not going to voluntarily sign up for a CBDC. So a CBDC will not protect your privacy. No matter what the Fed says about striking an appropriate balance, we should understand that appropriate balance for them means we will collect all the information we can about all of your transactions. At a recent World Economic Forum event in China, Eswar Prasad, who was cited by Dr. Godfried, talked about the potential weaponization of CBDCs. And he said this, if you think about the benefits of digital money, there are huge potential gains. It's not just about digital forms of physical currency. You can have programmability, units of central bank currency with expiry dates. You could have a potentially better, or some people might say darker world, I would be in that camp, where the government decides that units of a central bank money can be used to purchase some things, but not other things that it deems less desirable. And this programmability is what I want to focus on in the rest of my talk. The programmability solves three problems for the central bank in the state. It solves the bank run problem, the impossibility or former impossibility of negative interest rates, and could have implications for the Federal Reserve's current losses. So it's easy to see how a CBDC would make traditional bank runs impossible. If physical cash is totally replaced by an intermediated CBDC, then there's no way to remove cash from the banking system. The threat of bank rents has always been a thorn in the side of our central banking system, and it continues to be a problem for them today. Just this year, we saw major bank failures because depositors, understandably, lost confidence in their banks. The Fed, the FDIC, and the Treasury swooped in an unprecedented way to ensure deposits, even ones that were above the FDIC maximum. The Fed's balance sheet spiked again as it injected more of its own liabilities into the system. The crisis, which was the banking system's own creation, became the foundation for more intervention. And this, by the way, is a great summary of the history of money banking and central banking. They create a crisis with their own interventions and then use the crisis as an excuse for grabbing new powers and implementing new permanent interventions. One type of intervention that they have not been able to implement yet is the imposition of negative nominal interest rates. Central banks around the world have long desired a way to do this. They think that the way out of recessions is to boost spending, and there's no better way to do that than to punish people for holding onto money. So what would you do if the money in your bank account was subject to a 5% tax, like the end of the week or the end of the month, just for sitting there? Obviously, you would rush to withdraw it in the form of cash to avoid such a penalty, but they can't impose a negative interest rate on physical cash, though some mainstream economists have come up with some very impractical ways of doing that. One that was very intriguing was this idea for the Treasury to announce that all dollars with serial number ending in a randomly selected digit would not be legal tender at a specified date in the future. It's like, wow. But such impractical thought experiments can become a reality with the CBDC. A CBDC can easily be programmed, as war said, to have units that expire after a certain amount of time or be taxed in tranches, such that any amount held over a certain limit is subject to higher penalties. And if cash is replaced by a digital dollar that cannot be withdrawn from the banking system, then the only way to avoid this penalty is to just play along with what they want you to do, which is to spend. Negative interest rates would also help the Fed solve one of their more recent problems. As Alex Pollock has written about, the Fed is now costing the Treasury about $100 billion a year. They have accumulated on their balance sheet many long dated low interest rate assets, but their liabilities are much more expensive due to their interest rate hikes. On the asset side, they have a bunch of treasuries and mortgage backed securities that are paying very low interest rates. And on the liability side, they have bank reserves for which they're paying 5.4% and reverse repos, which cost them about 5.3% and paper currency, paper, which costs them zero. I don't think it's a stretch to think about the political ramifications of Fed losses and what it could mean for a CBDC. In the past, Congress has mainly turned a blind eye to the Fed, but now that the Fed's actions are clearly costing the taxpayer and contributing to budget deficits, the fiscal and the monetary are more blurred than they have ever been. The Fed, which is a creature of Congress, has always been able to keep some separation in the name of independence. Of course, anybody who has read Rothbard knows that this is a farce. You know that Fed independence does not mean that it conducts monetary policies scientifically and apolitically. You know that the Fed serves the state and finances everything that it wants to do. This, by the way, is no secret conspiracy. You can look on the Fed's website and it will tell you how one of its acquired purposes over the years is to finance war spending, for example. But consider a Congress that is hostile to the Fed, even if it is just for the cameras. Imagine the reputational hit that the Fed would take if more people knew about the accounting tricks it has employed to hide the fact that it is a $100 billion drain on the taxpayers. This is easy to see, unlike the hidden delayed and complex effects of its usual MO. My guess is that if and when the Fed is put into this position, they're going to be looking at a CBDC as a silver bullet. The CBDC would be a Fed liability, but one with the ability to provide the Fed with a positive rate of return by charging a negative interest rate. Not only that, but they could find creative ways to diminish or stop paying interest on reserve balances if they have complete control over everybody's money. Really, the possibilities are endless, but no matter what, a CBDC would give the Fed many options to turn their red ink back into the lucrative seniorage for the state it once was. When it comes to a CBDC, there really is a lot of guesswork. We won't know what it will look like or what the full effects will be until or if one is implemented. That's why so much of the technocratic chatter about a CBDC is a complex web of pros and cons and ifs and thens and elses. We mustn't lose sight of our principles when we read all this. They will talk about costs and benefits. They will say things like striking an appropriate balance between privacy and crime prevention. They will acknowledge some risks, but only to placate the people who are on the fence about a CBDC. They will always find a way to tip the cost benefit scales in favor of the state and its money printing. I want to read a short passage from Murray Rothbard's Four New Liberty, which I've been reading through in a book club through the Mises Institute. I found this passage particularly relevant to so many issues today, including the prospect of a CBDC. And when I read it, keep in mind the Fed's rhetoric about a CBDC, which in my view is just pump priming for its inevitable implementation in a future crisis. Think about their utilitarian arguments based on convenience and alleged financial stability and removing the drawbacks of cash. Rothbard says this, there were two critically important changes in the philosophy and ideology of classical liberalism, which both exemplified and contributed to its decay as a vital, progressive, and radical force in the Western world. The first and most important occurring in the early to mid 19th century was the abandonment of the philosophy of natural rights and its replacement by technocratic utilitarianism. Instead of liberty grounded on the imperative morality of each individual's right to person and property, that is instead of liberty being sought primarily on the basis of right and justice, utilitarianism preferred liberty as generally the best way to achieve a vaguely defined general welfare or common good. There were two grave consequences of this shift from natural rights to utilitarianism. First, the purity of the goal, the consistency of the principle, was inevitably shattered. For whereas the natural rights libertarian seeking morality and justice cleaves militantly to pure principle, the utilitarian only values liberty as an ad hoc expedient. And since expediency can and does shift with the wind, it will become easy for the utilitarian and his cool calculus of cost and benefit to plump for statism in ad hoc case after case, and thus to give principle away. And in the end Rothbard said that utilitarians found it ever easier to slide further and further into statism. This tells me that while there is a time and a place to get into the weeds, showing the immense threat of a CBDC in terms of what it would mean for taxpayers, depositors, and anyone who uses the dollar, ultimately we should reject it and the whole idea of central banking on principle. It's enough to say that programmable money means programmable citizens and sound money means free people. Thank you.