Go Digital or Go Away!

Headlines are full of comments regarding the “shocking” announcement by Rob Kaplan, President of the Federal Reserve Bank of Dallas, that the Fed is “actively looking at and debating” issuance and implementation of a digital U.S. currency. He announced that the digital asset being considered wouldn’t be “dollar-backed,” rather it would indeed be a cryptocurrency version of the U.S. dollar. Shocking, I imagine, if you’ve been living under a rock for a number of months. Not to mention the fact that Kaplan’s announcement came on the heels of former CFTC Chairman, Christopher Giancarlo’s Wall Street Journal opinion editorial article, calling for the U.S. to wake up and create its own digital currency, or risk losing its position as the world’s premier global reserve currency.

Due to increasing sanctions, saber-rattling, and a growing displeasure with U.S. stewardship of the premier global reserve currency, a number of countries are eagerly working on state-sponsored and backed digital currencies that could be used to replace some of today’s major fiat currencies. If another country, like China for example, were able to successfully initiate and deploy a digital currency that could be easily and globally adopted, it would undoubtedly threaten the U.S. dollar’s status on a global scale. A majority of Americans are not old enough to realize the tremendous advantages we enjoy today, due to the luxury of having the dollar serve as the world’s premier global reserve currency. It currently constitutes nearly 2/3 of foreign central bank exchange reserves, while providing the U.S. government the enviable ability to issue huge amounts of dollar denominated debt at low rates, with comfort in knowing that there will always be a willing buyer available.

Increased speed has become a requirement in nearly every facet of human existence today, especially in business. The days of waiting days for a check to clear are numbered and Facebook’s announced plans to launch a digital currency called Libra is peaking excitement and desire. Our “comfort in knowing” could come to a rapid end if we allow another country to fill the void created by our ignorance to the rapidly growing digital currency demand. Another country assuming the helm with a global digital currency would reduce or remove the Fed’s control over our own monetary policy. A drop in demand for U.S. treasuries would result in higher interest rates, which in turn would drive up the national debt even more quickly.

There’s plenty of Orwellian reasons to be concerned about a digital national currency, but we’ve put ourselves into this position and have no one else to blame. Cash as we know it today, will most probably become a thing of the past and in rather short order. Once again, all of this economic turmoil begs for the safety and security of the one, true, universal currency – GOLD, as well as silver and other physical precious metals. Today’s still low prices are just another bonus for those who take action now. Call the experts at American Bullion for assistance at (800) 653-GOLD (4653).