Editor’s Note: In recent weeks, Bill has outlined the potential upsides to bitcoin. And regular readers know that Jeff Brown, Bill’s top technology analyst, is very bullish on the crypto space. But today, we offer a very different opinion.
E.B. Tucker is the editor of Casey Research’s Strategic Investor. Today, E.B. shares an excerpt from his new book, Surviving Fedcoin, and details why he believes governments will come together to ban cryptos.
It’s very different from what you’ve heard from other editors in these pages. But cryptocurrencies are still a new, emerging asset with an uncertain future. Because of that, it’s healthy – and reasonable – to consider all possible outcomes.
So many things in life are inevitable.
But are they imminent?
What you’re about to read is a dangerous scenario that I believe is on the horizon. And while I may not be able to predict whether this scenario will happen in a month, two months, or two years… I am absolutely convinced it will happen.
What’s going on?
Cryptocurrencies, as I’m sure you’ve noticed, have now gone mainstream…
In late 2017, bitcoin briefly almost topped $20,000 (per coin!)… and as much as $800 billion went into “cryptos.”
Since then, more and more governments around the world have moved to regulate (and even ban) cryptos…
They have simply gotten too big to ignore.
Remember: Every dollar invested in a cryptocurrency is a dollar that doesn’t benefit a money-hungry government.
That’s why countries are banding together to STOP cryptos.
Major credit card companies have already banned cryptos from being bought on their cards…
Advertisers on some of the world’s largest websites – including Google and Facebook – are now prevented from including any mention of bitcoin or cryptocurrencies…
And several high-ranking officials and intellectuals have warned of the dangers of private cryptocurrencies.
What all these global elites agree on, however, is that the only cryptocurrencies that should be allowed to survive are the ones backed by governments.
According to a study by Cambridge University, a full 80% of countries surveyed were either researching or actively developing their own cryptocurrencies.
Venezuela has already raised almost $1 billion for its oil-backed cryptocurrency, the “petro”…
And the Marshall Islands also announced their own state crypto.
This is just the beginning…
Here in America, there’s been serious talk about issuing a state-backed crypto called the “Fedcoin.”
The government, you see, is in real trouble…
Our national debt has now topped $21 trillion…
And interest rates are starting to creep up, which means it will soon cost BILLIONS more to service our debt.
(As then-candidate Donald Trump said back in 2016, “What happens if that interest rate goes up 2, 3, 4 points? We don’t have a country.”)
That’s a big reason why the government has been cracking down on cash purchases… and why this will likely accelerate in the future.
The government can’t afford to let any cash purchase go untaxed.
Each year, the “underground economy” costs the IRS $450–$500 billion in lost taxes.
With physical cash on the way out… and a new state crypto like Fedcoin on the way in… all of our savings would essentially be “trapped.”
That way, the government would greatly minimize how much it loses in unreported taxes each year…
On top of that, it would be very easy to implement a nasty, new tax, too – like the wealth tax in France, where 1–2% of your net worth gets taxed each year, regardless of whether you have income or not…
Or like the “savings” taxes in many countries around the world.
(These are the bizarre, so-called “negative” interest rates. This is when you pay the bank for lending it your money.)
Central planners like having these negative interest rates as an option because they say it’s one sure way to “stimulate” the economy when times get tough… They figure that people would rather use their money on stuff like new cars and houses than see it taxed away in a bank.
Fedcoin lets you do this.
An “Added Policy Tool”
Fedcoin, of course, would be nothing more than a type of “bitcoin” issued by the Federal Reserve.
To understand how this works, let’s have a little refresher on bitcoin…
Bitcoin surfaced back in 2009.
The idea behind this digital-only currency was to have a new type of money that was safe, had a limited supply (to prevent massive inflation), and was outside government control.
The currency flourished…
From a price of less than $0.01 per coin, it rose to over $1,000 per coin back in 2013, and now trades for around $8,000 per coin.
So what does bitcoin have to do with the Federal Reserve?
Simply this: The technology behind bitcoin – something called the “blockchain” – can be used to create other digital currencies. That means the Fed could issue its own type of bitcoin – hence the name “Fedcoin.”
If this sounds far-fetched, consider this… Back in 2014, François R. Velde, senior economist at the Chicago Fed, said that the blockchain was an “elegant solution to the problem of creating a digital currency.”
And David Andolfatto, vice president at the St. Louis Fed, actually proposed “Fedcoin” (mentioning that exact name) in 2015. He’s spoken publicly about this multiple times, and says that Fedcoin could give the central bank an “added (policy) tool.”
Just imagine the benefits of having a digital-only currency… How can you have a bank run if you can’t withdraw physical money? That’s exactly the point. You can’t! With a digital-only currency, you…
Can’t have bank runs.
Can easily implement negative interest rates if you want to (how will people withdraw their cash?).
Make it easier for the government to tax people at will.
That’s why we believe it’s an absolute lock that we’ll have some kind of “Fedcoin”-like currency in America very soon…
Consider that over 40 million Americans are on food stamps. Our Social Security program is practically bankrupt. And everybody knows about our out-of-control debt problem.
In fact, David Walker, former comptroller general of the United States from 1998 to 2008, says that taxes need to DOUBLE… Otherwise, the country will go bankrupt.
America is in dire straits. Right now, as we said, the government loses an estimated $450–$500 billion each year in lost tax revenue because of the “underground” (cash) economy.
So you can see where this is heading… By getting rid of cash and introducing a cashless currency, the government could dramatically increase its tax revenue.
This idea of a “cashless” economy is gaining more and more traction. That’s why former Secretary of the Treasury Larry Summers has said that it’s time to kill the $100 bill. And several countries around the world have already started outlawing higher-denomination bills. (For example, the European Union recently banned €500 banknotes.)
We believe it’s the right of every American to purchase what they choose in total privacy. Not everybody who uses cash is a criminal.
But limiting cash is only part of the equation. Some of the features we could see with a new monetary system like Fedcoin are incredibly Orwellian in nature…
Imagine a world where everything you buy (or can’t buy) is controlled by a single card… a world where any government bureaucrat can instantly look at your entire history of purchases on a single record.
Thanks to blockchain technology, that’s exactly what’s at stake with Fedcoin. If this sounds crazy, just take a look at some of the government controls we’re currently subject to…
With FATCA (the Foreign Account Tax Compliance Act), Americans now need to report all their non-U.S. financial accounts to the Financial Crimes Enforcement Network (FinCEN).
Banks must now send a “currency transaction report” to FinCEN for any withdrawal that exceeds $10,000.
Even if you withdraw less than $10,000, if the bank thinks you’re doing so to avoid reporting, you could be found guilty of “structuring.”
There’s also civil forfeitures: Today, even if you are not charged with any wrongdoing, law enforcement officials can “legally” seize your assets. In 2014 alone, federal agents seized more than $5 billion – an amount greater than what was lost in every single burglary in America that year.
And that’s to say nothing of other regulations like FBAR (Foreign Bank Account Reports), PFIC (passive foreign investment companies), and “know your customer” rules… along with things like “cigarette” and “soda” taxes for anything the state deems dangerous to your health.
I mean, just think about this: There’s already a federal law that says food stamp recipients can’t use their benefits to buy liquor, cigarettes, or any non-food items.
Now, we’re not in favor of the welfare program. But the point is, with Fedcoin, you could control everything very easily since, unlike cash, it’s a “programmable” currency. (Fedcoin would likely be administered as a type of debit card… or perhaps as an app on your smartphone… But behind it all, it would run like a big computer program.)
What would this look like?
Well, imagine if 17-year-old “Johnny Junior” tries to buy liquor. His purchase would automatically be denied. No need to look at a driver’s license. Or if “Fred Foodstamp” tries to go to the strip club using his government-issued EBT card – sorry, no dice.
What if, all of a sudden, the president decides a certain type of gun shouldn’t be purchased by certain people… or maybe all guns? Well, again, once you get rid of cash and use a perfectly trackable digital currency, it becomes very easy. No costly gun registry needed.
Remember, the government already controls what types of things you can and can’t buy – think drugs, medication, and online gambling… They control where you can buy things – for decades, Americans couldn’t travel to Cuba…
And they also control when you can buy things – just think of the legal drinking age. Now, I don’t think anyone wants to see a 10-year-old drinking booze… and we’re not here to make a political statement…
But we do believe that for liberty-loving Americans – and those who want to safeguard their savings – certain steps need to be taken in anticipation of what seems like a mere eventuality: a type of digital-only currency.
That’s why we wrote this book – to help you make sure that you are able to protect everything you’ve worked hard for… to purchase the things you want in privacy… and also, to come out ahead.
And even if Fedcoin turns out to be years away, or if by some miracle, we never see it… by following the steps in our new book, you’ll be no worse for wear.
In fact, you’ll be in a much better position to face any oncoming crisis – like another stock market crash – than 99% of Americans out there.
Editor, Strategic Investor
P.S. You need to position yourself today for if – and when – Fedcoin becomes a reality. And our new 125-page book, Surviving Fedcoin, is the best way to get started. It’s packed with specific ways to prepare for – and profit from – this in the years ahead.
Here’s why you can’t delay: On July 21, 2018, a secret meeting will take place that could change America forever.
Leaders from the top 20 countries are meeting to discuss an important change to the money we use…
If you’ve got savings in American dollars, you could face a new tax.
If you’ve got money invested, some popular investments could be deemed worthless.
To see exactly what’s going on – and learn how to claim your copy of Surviving Fedcoin today – click here.