Home Trends Anthony Pompliano: The digital euro is worthless. Bitcoin is not.

Anthony Pompliano: The digital euro is worthless. Bitcoin is not.

by smart

i want to talk about the european central bank uh the europeans they got a lot of crazy stuff going on over there and in the eurozone there’s 19 countries in the eurozone that all go into uh this european uh central bank that kind of governs them they’ve got this multinational currency the euro and frankly it seems like every day in the united states we read something about uh the folks in europe doing crazy stuff whether it’s government policies or monetary policy but this morning they announced that they’re going to now officially move into digital currencies they are going to start working on what they call a digital euro and so in order to understand the digital euro we got to go back in history a little bit and understand where we’re coming from so every single asset in the world used to be physical we used to have physical currencies we have physical stock certificates we used to have physical deeds to your house physical mortgages etc in the 70s and 80s and into the 90s we began to move from physical form so literally physical paper currency etc to electronic q-sips electronic q-sips are just a long string of letters and numbers that sit inside of centralized databases and they basically get moved around between centralized databases right but usually those centralized databases are merely keeping track of the numbers for physical uh assets so you got analog assets or physical assets then we moved to this electronic q-sip system when you look at your bank account today that’s where electronic q-sip money sits right if you go and you say hey i got a bank of america account or whatever and you say oh i got 100 on my account that’s electronic q sip money what they’re talking about is creating a digital version that digital version would look much more like a bitcoin or other type of crypto asset right where there would be a ledger that all of it is tracked on that would have a token component to it now the problem with this is that when they talk about the digital euro they always like to ride the coattails of true crypto uh currency like bitcoin right they always want to present it as if it’s going to be decentralized or that there’s going to be some advantages to it it’s important for everyone to understand every currency in the world is going to be digital we are going to have a digital dollar they’re obviously now going to talk about this digital euro there’ll be a digital one digital yen etc there will be private currencies things like facebook’s dm etc and then you’re gonna have kind of decentralized currency like bitcoin now the fiat currencies today that are an electronic qcip format that simply get digitized there’s no change to the monetary policy right they’re still going to create trillions of dollars they’re still going to devalue the currency they’re still going to manipulate interest rates et cetera they’re just changing the technology form factor and when they change that technology form factor they’re presenting it as if it is some great positive so there’s a quote that christine lagarde the head of the ecb had where she said our work aims to ensure that the digital age citizens and firms continue to have access to the safest form of money central bank money i don’t know what definition of safest she is using but if we evaluate fiat currency in the possible ways that you could define safe it fails every single check right so first safe being oh it sticks as a store of value the euro has lost value compared to other assets over the last 12 months right it has been a fool’s game to simply hold cash and therefore the euro fails the safety test in terms of the ability to protect purchasing power if you’re worried about maybe censorship resistance the euro fails that test of safety because they censor people all the time and sometimes it’s for things simply they don’t like you and therefore you can’t actually make transactions because they put you on a list somewhere uh or they cause problems for your business etc they freeze your assets all that type of stuff so it fails any sort of store value test it also fails the censorship resistance test then the last idea of safety that i could think they could be talking about here is that they’re talking about it from a government surveillance standpoint right is you’re safe from your own government being able to see it with physical dollars or or cash or physical euros you are safe right there’s a level of pseudonymity to it or anonymity whether you can use physical cash and it’s very very hard for them to track but as we know in the united states 92 percent of the money supply is an electronic q-sip form it’s not in physical uh cash or coins and so it’s actually a very small percent of minority percent of the money supply comes in this physical form and so as they move to this digital format what we’re gonna find is there’s some problems that pop up right and when those problems pop up i think that they’re going to just kind of wash over them right if you think about the number one problem here is when they create this digital euro they’re simply going to have full surveillance capabilities they’re going to be able to say we have a digital currency that’s centralized they control it and when they control that currency they now can say you know what john i don’t think that you should be allowed to go spend money at the club or you know what john i don’t think that you should be allowed to go spend money at the supermarket you laugh because i said john you’re laughing because i said club right you can’t spend money at the supermarket john you can’t spend money on uber right you ha in china for example where there’s a more authoritarian government oh you haven’t walked enough today therefore you can’t get a taxi or an uber right what happens when we have this full government surveillance capability it’s scary as hell that they’re now going to have the ability to do this yeah i mean i don’t know about john over here but clubs are that that’s a no from you right yeah that’s bars restaurants everything uber a digital currency created by a central bank is a hard pass for me hey come on more surveillance less privacy uh they can manipulate money even further really right you can do you’re just saying personalized monetary policy uh they can tell you where and when to spend it everything right it just opens up pandora’s box of like what you can and can’t do people people are not ready for the personalized monetary policy that to me is is where uh you’re gonna see uh kind of the wealthy get up in arms over this right so the whole idea of a personalized monetary policy is right now the federal reserve in the united states they basically have monetary policy they implement that monetary policy on u.s dollars regardless of who you are if you’re wealthy or not if you’re in the united states or anywhere else you basically are subject to that monetary policy right they make kind of one monetary policy that fits everybody a personalized monetary policy basically means that they could actually uh expose john to a lower level of inflation and maybe a higher interest rate than me who they give a higher level of inflation and a lower interest rate too right why they do this how they determine who gets what that’s all up for debate but now with these digital currencies what they literally would be able to do is create personalized monetary policy everything else in your life is personalized literally your google search results are personalized your music is personalized uh if you go and you do anything on amazon it’s personalized the ads are personalized everything in your life is personalized if you think that once they have the capability they’re not going to personalize monetary policy i got a whole bunch of other tricks that i could tell you about the second thing that they’re going to do we saw china just run an experiment with this is basically this exploration of money so we have a version of it in the united states but the way that it works is they basically say okay we’re going to give you uh some currency and this currency is specifically given to you for a certain period of time and you can only spend it on certain goods and so in the united states ebt cards are kind of a comparison or at least something that’s tangentially related where they basically allow you to have the ebt card they give you the money you have to spend it on food but there are certain rules and regulations around what type of food it can’t be prepared food all this different stuff and there’s an expiration to it in china the experiment they ran was basically taking that idea but expanding on it and saying what if they had given us the stimulus checks and you couldn’t save it or you couldn’t invest it they said hey we’re gonna give you 1200 but you got to go spend it and you have two weeks if you don’t spend it in two weeks it expires right that would be a way for them to manipulate the market or drive velocity of money in the market but they don’t have the technology to do that today as somebody like the ecb gets a digital euro this is absolutely on the table they’ve got this guy who’s the head of the bis uh the bank of international settlement you’ve ever seen like the really big dude uh he you know he just this is true he weighs like 400 pounds uh and he basically keeps saying all these crazy stuff like they’ll have full control they’ll know everything that’s going on and it’s almost like he’s like a meme at this point like he knows that he’s doing uh saying like this crazy stuff but that’s what they ultimately want like the central bank thinks that they have the ultimate power and that they should have full control and by creating this digital euro that’s exactly what they’re going to get right yeah what are you doing i was looking at the picture of them [Music] you’re right two of the biggest points i think he made were security and surveillance right so it decreases security increases surveillance which is awful for the person do we think young people like your friends and stuff do they worry about that stuff i don’t think so no because they just want money they take their 1200 and run yeah but they can’t run now right if all of a sudden now the government has the ability to tell them hey you i’m gonna hand you 1200 but you could only spend it in local businesses in your city and you can’t spend it on food alcohol uh or uh clubs can’t go to the sporting event yeah like they just they just say you have to spend it on local stuff they might care then they would gary they would care a lot then right it’s kind of like in some weird way probably the equivalent for a young person is if you walk into a place and you want to use apple pay they don’t accept apple pay right it’s like a nuisance so you just get another form of payment you pay with a different form but imagine if literally they said you cannot spend that money here because the government won’t let you do it i think that’s a huge problem right yeah i i think the the security is a huge problem so once once we took our money went digital we actually basically let the banks the government they can go in and they can just take if you owe the irs money they’re just going to take it out of your account that’s that’s how it goes the the uh the other piece of this is uh that they have full transparency so today if let’s say for example um you know person a gets in trouble with the government the government said you know what we want to see what personnel is doing financially they have to go to the court system they have to say hey we’d like a subpoena to freeze these assets and be able to get uh you know a statement from a bank right and then we can do our investigation do all this stuff there’s a check and balance there in terms of their ability to actually get it what what i fear and we don’t know yet right that there’s no exact plan laid out yet so we don’t know all the details but what i fear is if there’s a centralized ledger that they have access to they’re going to know exactly how much money is in your bank account they’re going to know exactly what you’re doing with it what you’re spending on it and they’re also going to know the flow of funds who are you financially interacting with as well and so while that may sound like uh you know if you’re a statist and you like government power that may sound like a dream to you to the everyday citizen that’s worried about freedom and privacy that’s an absolute nightmare and so i think that we’ve got to be very very careful now you want to know my favorite part about this entire thing oh here’s the chart actually let’s talk about this for a second uh here’s a chart that’s got all the different countries and what their activity around central bank digital currencies are so yellow is plans to issue a cbdc uh pink is actively exploring it and then blue is conducting true research or experiments right and so if you look at this chart you start to see hey there’s a bunch of countries that don’t have it but they tend to be the smaller less developed nations that don’t have any kind of movement yet and my guess is that if we look at this chart in you know i don’t know five years definitely ten years the entire thing is covered in every single government central bank is doing something right granada already issued a digital card what are they doing they issued with was it saint kids nevis they all use the same central bank and they already issued a digital currency for their citizens i mean that’s wild that they’ve already done it no one really knows about it if i want a digital us dollar i’ll use my credit card like what but here’s the part that scares me out of all of this honestly is that uh they’re just use a bunch of big terms like they’re literally talking about the digital uh euro as if uh the um the cryptocurrencies are bad they were like oh those cryptocurrencies they’re not safe they’re not private like uh they use too much energy like they’re saying all this stuff and they’re like wait a minute you guys are literally taking the same argument and then all you’re going to do is you’re going to create a currency that you expect us to use and you have full control and surveillance over it yeah they’re taking away all the good parts of crypto should we go back to a full cash economy where they can’t see anything i mean there’s some people who only use cash right yeah specific reasons the reason why i asked that question obviously we can’t go back to a full cash economy is there’s trade-offs right there is some gain of efficiency by using electronic q said dollars today rate versus cash so people are willing to gain convenience and give up a little bit of privacy right it’s the to the extremist that is privacy centric and doesn’t want to give up any convenience and will go and do super difficult things to keep their privacy that’s asinine but to the person who only cares about convenience to have any level of privacy uh over having full uh convenience that’s astonishing but the truth in between


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Anthony Pompliano: The digital euro is worthless. Bitcoin is not.
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