The CAT is out of the bag now. Two keys exist in gradually requiring all of us to use only a government mandated and controlled Central Bank Digital Currency. The first is a method of distributing “money” to the populace, with controls in place as to how and on what it is spent. The second is detailed government knowledge of where all current non-CBDC exists. Both are now in place, only awaiting forced acceptance by the population followed by coordination and finally coalescence.
The first is EBT, or electronic benefits transfer. Since 2004 various levels of government, starting federally and leaking down into the states and even local governments, have been issuing various benefits to certain disadvantaged subsets of the people. These may include food, clothing, housing expenses, health insurance, and even daycare. Although originally legislated by our elected representatives, some of these provisions for the “general welfare” have been modified or expanded by our administrative state under the “Chevron Deference”. As these benefits, now seen as irrevocable entitlements by the subject populations, have expanded by type and increased in expenditure of wealth confiscated from the current and future generations, so has the population ever-more dependent on these redistributions. Government did, indeed, act somewhat rationally when realizing that simple cash payments were fungible and could be and were diverted by the payees to non-intended purposes that the payees personally, in an example of a true free market, valued more. EBT cards simultaneously arrived as a rational way of reducing the costs of socializing the redistribution of wealth. A complex system of “spending fences” evolved, with reports to the issuing government from private vendors on exactly what the “money” was being spent on, with penalties for giving/accepting payment for “illicit” goods or services. Nonetheless a modest black market of trading EBT card values for cash at a discount still continues.
Since money, not voting, is at risk, we can foresee a requirement to provide legitimate ID when using such cards in the near future. And an administrative state attempt to gradually expand the utility of the EBT mechanism. By some measures, almost 50% of the U.S. population receives some type of government distribution, and more is always on the way. Instead of “forgiving” student debt in complex fashion involving many different governmental and private agencies, wouldn’t it be easier and cheaper to simply issue an EBT card to debt-grizzled former students with payout limited to the appropriate entities? Either way, current and future taxpayers would, through legal confiscation and inflation, be paying their bill. Wouldn’t it be easier to receive your yearly tax refund (really an interest free loan to the government) immediately via an EBT card rather than wait for the check or direct deposit? Perhaps you might prefer to receive your Social Security benefits by EBT to further minimize government expenditures entailed in mailing out checks or even the minimal expense of direct deposit in your private bank account. Nothing lost in USPS, a reduction in bank costs, and a person’s individual profile of available entitlements could be readily transferred via “card loading” at banks, post offices, and even libraries.
Or even better, since the account and its assets exist not really on the card but actually in the central “bank” of the level of government issuing the card, the “balance” could be adjusted electronically each time the card is used, with the private or government facility paying a small fee back for the privilege of being a transactional beneficiary—similar to the current use of credit cards and the kickbacks in some states by hospitals to Medicaid. A side benefit viewed as crucial to the government would be the mushrooming knowledge of exactly where, when, how, what, and by who, even demographically and individually, the entitlements or other income are spent. Near real-time granular information would be available for better understanding of and intervening in the economy. AI could be enlisted via a government “investment” for the general welfare and “control” of governmental spending, to analyze and prognosticate this massive data on a minute-by minute basis. The private market has done this with various algorithmic investment methods in our stock markets and commodities exchanges. Overlook the market meltdown, still not understood, engendered by these methods years ago. The government will do better. The government is here to help you. A technocrat’s dream.
With gradual conversion from fiat currency to fully digital exchange enabled by mandated use of EBT cards to “follow” public/private spending, the next step must be central government identification of all outstanding wealth. Real assets are or can be easily known through tax records. Liquid assets must be corralled. That can be like herding cats. and now our government intends to do just that.
As detailed by William P. Barr in the April 16, 2024, issue of the Wall Street Journal, the Security and Exchange Commission, without any Congressionally approved authority, has begun a new database of all private liquid asset possession and trading, called CAT, the Consolidated Audit Trail. The SEC will require all trading entities, even private investors, to report in real time every securities transaction including the investor’s private identification information. This information, obtained at greatly increased cost to the free market, is not meant merely to enable detection of illicit trading. The information will be broadly available to more than twenty other regulatory bodies, whose record of violating privacy and misusing the data is probably no better than that of the IRS. Or the FBI.
Once all such transactions are available to the digestive behemoth, the circle can be closed. Income, ownership, and broad expenditures will be available from the IRS. Detailed daily routine transactions of each individual in the United States (even the undocumented) are fully registered once EBT use becomes universal. All information regarding attempts at truly investing in and maintaining private wealth and the private economy will become fully “public” property via CAT. The resultant relational database will allow not only surveillance of every individual’s economic activity, but gradually increasing control of each individual’s economic activity, to “manage” the economy on an ever more granular, generally beneficial, and equitable manner. No frank nationalization of private assets will be needed. Full tracking and eventual full control of all transactions will be socialized. Targeting aspects of our economy for “enhancement” will not require grants, loans, or legislative fiat. Our administrative state will be able to do so in real time. Perhaps guided by a Deeper State, AI. CBDC? Only a drop in the bucket compared to what may come.