The fantastic 1953 Western film Shane offers some timeless wisdom…
In the movie, the titular Shane – played by the great Alan Ladd – shows off some of his fast, accurate shooting in front of the son of Marian (played by Jean Arthur).
Marian sought to build a tranquil life for her son and herself. And she didn’t want guns to be part of it.
That’s when Shane drops this pearl of wisdom…
A gun is a tool, Marian; no better or no worse than any other tool: an axe, a shovel, or anything. A gun is as good or as bad as the man using it. Remember that.
Here’s why I’m sharing this quote from one of my favorite movies…
In the coming months, we believe the Biden administration may announce a new dollar regime: a CBDC version of the U.S. dollar.
If you’re not familiar with the term CBDC, it’s short for central bank digital currency.
It’s being marketed as the next evolution of money. And as the name implies, it’s totally digital, with no paper currency to trade.
Most currencies today are already digital ledger entries in bank accounts and not backed by cash. The most recent money supply data indicates that only about 11% of total dollars are physical, hold-in-your-wallet cash.
But a CBDC goes a step further. It completely removes the ability to use physical cash.
That would mean an end to cash transactions… such as your neighborhood garage sale. We’d have to start using payment apps instead.
Proponents of a new dollar regime will say it’s for your own good… That it’ll speed up settlement times… and preserve the dollar’s status as the world’s reserve currency.
But to paraphrase Shane, “A CBDC is as good or as bad as the man using it.”
In today’s essay, I’ll tell you why all the positives of a CBDC regime don’t outweigh the potential to lose your financial freedom.
If you have any cash in the bank, you’ll want to read it closely…
A Carrot and a Stick
According to the think tank Atlantic Council, 114 countries are exploring or have already created digital currencies. Their collective economies represent more than 95% of the world’s gross domestic product (GDP).
In other words, the entire world is getting behind CBDCs.
China, India, Nigeria, and the Bahamas have already rolled out digital currencies. Others, like Sweden and Japan, are preparing for possible rollouts in the coming months.
These governments believe a digital currency will be an upgrade over traditional forms of money because it would flow more easily around the world through digital wallets… and bypass the messy web of commercial banks and money-transfer businesses, which take days to clear and charge relatively high fees.
For example, governments can use them to instantly deposit stimulus checks or universal basic income payments into citizens’ accounts.
And to get people to switch over, there may be some one-time incentive… say, turning every $1 in your bank into $1.50 in CBDC bucks.
That’s the carrot.
Of course, a CBDC would also give the government the unprecedented power to track and control how you spend your money.
That’s the stick.
In February 2022, dozens of truckers shut down several border crossings between the United States and Canada to protest COVID-19 vaccine requirements.
Even without a CBDC, the Canadian government was able to track down citizens who donated to the truckers.
Hundreds of supporters had their bank accounts frozen – all for sending truckers just a few (Canadian) bucks, in most cases less than $50.
And in 2013, the government of Cyprus “bailed-in” people with large bank accounts to shore up its banking system.
Basically, the government confiscated money from wealthier customers’ accounts to shore up the banking system it had failed to protect in the first place.
Remember, neither Canada nor Cyprus had CBDCs at the time.
But their governments still were able to freeze accounts and “bail-in” account holders without them. So imagine what they could do with them.
In a world where a bureaucrat can cut off access to your own hard-earned money on a whim… Would you be more likely – or less likely – to speak out against the government?
In the United States, the Federal Reserve could issue a CBDC. And right now, it’s researching the idea.
In a June 2022 speech, Fed Chairman Jerome Powell stated:
The Federal Reserve is examining whether a U.S. central bank digital currency (CBDC) would improve on an already safe and efficient domestic payments system. As the Fed’s white paper on this topic notes, a U.S. CBDC could also potentially help maintain the dollar’s international standing.
As Daily editor Teeka Tiwari wrote last month, we believe the United States will have no choice but to roll out a CBDC to prevent the dollar from losing its status as the world’s reserve currency.
It’s clear that a digital dollar poses a threat to your economic freedom. And it’s likely too late to stop a rollout.
Fortunately, there are ways to opt out of a digital dollar regime… and even profit from it.
Two Ways to Opt Out of the Digital Dollar Regime
If you want to move some of your money out of the coming digital dollar regime, we recommend owning some bitcoin and physical gold.
Bitcoin is a digital payments system. But its decentralized protocol and deflationary issuance schedule makes it the opposite of a centralized digital currency.
If you self-custody your bitcoin, no one can confiscate it. You don’t need permission to transact with it. There’s no counter-party risk.
No one can inflate it away through excessive money printing. And the bitcoin code doesn’t allow any bail-ins… or bailouts. It’s a tool of financial freedom.
Gold is the analog backup to bitcoin.
Owning physical gold gives you an asset outside the currency system – as well as a long-term inflation hedge against the potential devaluation of a CBDC over time.
Gold is a bit more unwieldy to own than bitcoin. The transaction costs can be a bit high. But if you buy and hold it as a backup rather than trade it, you’ll do fine.
Plus, owning some gold should hedge the volatility of holding bitcoin.
If you’re a small investor, consider starting with a $200–400 allocation to bitcoin. And for larger investors, $500–1,000.
For gold, we recommend you put no more than 5% of your investable wealth in physical metal.
Even a small allocation to bitcoin and gold can potentially protect you from the worst aspects of a CBDC.
But there’s also ways make money from this trend, too…
Teeka recently put together a new playbook to show you how to protect yourself – and potentially profit – from the “Biden Shock” outside of gold and bitcoin.
The playbook includes:
Step-by-step instructions to securely buy and store your bitcoin.
The name of a company set to profit from the digital dollar trend.
The name of a crypto project also set to profit from this trend.
And a secret way to 10x your money on gold.
All you have to do is click here to learn more.
Look, we don’t know how a CBDC will play out. Like Shane said, it will only be “as good or as bad as the man using it.”
What we do know is that the CBDC trend is here to stay.
Eleven countries already use them, and over 100 more are developing them. And eventually, the U.S. will roll out a CBDC, too.
I don’t know about you… But just to be on the safe side, I want to keep some of my wealth out of any new currency regime.
Not only will it protect me from potential government overreach… You could potentially profit from this trend as well.
I recommend putting a portion of any profits back into bitcoin and physical gold just to stay on the safe side.
Analyst, Palm Beach Daily