Does the United States really want or need a cashless currency?

June 20, 2023

Forbes Advisor reported earlier this month that the federal government is exploring creating a digital currency for the country, a central bank digital currency, or CBDC. Treasury Secretary Janet Yellen has promoted the idea by saying that digital dollars could help lower transaction costs and support faster payments in the country.

The Club for Growth referenced a recent poll by the Cato Institute that said that only 28% of Americans were aware of CBDCs, or the digital currency idea.

“The U.S. is a latecomer to the CBDC party,” Forbes reported. “China’s digital yuan pilot program is being used to pay salaries today, while the Bahamas’ Sand Dollar is legal tender in the Caribbean nation. Australia, Thailand, Brazil, India, South Korea and Russia are running or preparing to launch CBDC projects.”

Last year, Reuters reported that the Federal Reserve of New York announced that big banks and the New York Fed are testing digital dollars in a 12-week pilot program. Some of those participating are: Citigroup, HSBC, Mastercard, and Wells Fargo.

Forbes explained how digital currency would work: “In nearly every country, the vast majority of money is held in the form of electronic bank records. People can withdraw money from such computerized accounts as physical cash. What differentiates a digital currency is that it only exists as an electronic record, unavailable as coins or banknotes.”

The advantages are being trumpeted. CBDCs are quick and easy. Digital dollars give us a cashless society, and you have no loose change lying around or bills in your wallet. 

However, while Yellen and others might like this idea, not everyone thinks digital money is great. Some think that CBDCs give the government too much control over how people spend their money, like what kinds of things they are buying, and from whom.

The government could exercise total control over our lives by controlling our money. And, ultimately, close our bank accounts whenever and for what ever reason it wants to. No doubt that last part will be denied. But the option will still exist.

An example of this occurred in Canada. During the pandemic Canadian truckers were told to be double vaccinated or they couldn’t work. Those that didn’t comply found the government had closed their bank accounts.

The Forbes article dealt with things that worry opponents of digital currency. One concern is the potential for the power of central banks to increase, particularly on such things as credit allocation. They could also restrict savings and spending, implement negative interest rates, and establish automatic tax collection.

And, it would allow government to keep an eye on our financial transactions, and control who has access to the currency. On that note, any American who uses a debit card can already have their payments tracked, said Adam Jordan, director of investments for Paul R. Ried Financial Group. “The concern about privacy is a real one, but only if a government went so far as to try to eliminate physical currencies,” he said. “The government already has the ability to track all our digital electronic payments.”

And, Forbes reported that the Biden administration has said if the U.S. goes with a CBDC, it should “expand equitable access to the financial system, preserve the role of physical cash, and only collect data that is strictly necessary.” Well, it sounds good.

More than 100 countries are looking at using CBDCs, and Forbes said that they represent more than 95 percent of global GDP. The Bahamas issued the Sand Dollar in 2020. DCash was rolled out in the Eastern Caribbean in late 2020. Nigeria followed about a year later, becoming the first African country to implement a CBDC, called the eNaira. And, China has been involved with digital currency since 2020. The article added that some U.S. central banks already have versions of digital currencies.

“The digital dollar is one of the greatest threats to your financial freedom and privacy,” the Club for Growth said. “It gives the government complete control over your bank account. And that power, especially in the wrong hands, will be a nightmare for the American people.”

The Club then cited examples of how the information the government has could be used against us. If you use to much carbon in a month, your transactions might be limited. Or, if you voice the wrong political opinion, your bank account could be frozen. Support your favorite charity, and if it’s not on the approved list, your credit access could be denied.

Our government already exercises an enormous degree of control over us. Much of this control is the product of bureaucracy, which creates rules that serve the bureaucracy’s desires for power, but have not been approved by Congress. And Congress has allowed this to continue. These rules really serve to restrict much of the freedoms that we once had.

Our nation was established on the concept of federalism, which has a federal government, but leaves much power in the hands of the states. That system is being euthanized, little by little. Implementing a system of digital currency controlled by the federal government has great negative potential. That system will need strong safeguards. Maybe we should just leave things as they are.

Fueling America: U.S. not capable of being battery powered

June 13, 2023

The U.S. government has many policies, rules and other things in place that work against people’s interests. In the haste to do away with fossil fuel use, we have made it more difficult to acquire coal, oil and natural gas, things that people need. And even when we have those fuels, it has been made more difficult and more expensive to transport them. Pipeline transport is much more economical than transporting oil and natural gas by truck and train. But President Joe Biden’s halting of the Keystone XL Pipeline interfered with that.

Even Biden knows that we can’t do without fossil fuels. As he said during the State of the Union address last February, “We’re going to need oil for at least another decade.” The Congressional audience erupted in laughter, and he corrected himself, adding, “And beyond that, we’re going to need it.” 

Because of Biden’s actions the U.S.  now has to buy oil from other countries, usually dirtier and more polluting than our oil, which is the cleanest in the world. 

In 2021, the Energy Information Administration reported that about 51 percent of the world’s oil comes from five countries. The U.S. led the group, producing 14.5 percent of the 51 percent, followed by Russia at 13.1 percent, Saudi Arabia at 12.1 percent, and Canada and Iraq that together total about 11 percent.

In 2022 U.S. oil production was below the 2019 record levels. That may reflect a trend in domestic oil production.

The terribly optimistic idea of an electric vehicle replacement of vehicles that burn gasoline and diesel fuel any time in the next three decades or so is a pipe dream. 

The vehicles in use in the U.S. are mostly made here, and they use fuels we can make here. But the desire is to replace them with vehicles that use batteries, and a great deal of the materials to make the batteries come from other countries.

As reported by U.S. News, most electric cars use lithium-ion batteries. “These types of batteries require several chemical components, including lithium, manganese, cobalt, graphite, steel and nickel, and they require a lot of these materials. By a lot, we mean about 17 pounds of lithium carbonate, 44 pounds of manganese, 30 pounds of cobalt and a whopping 77 pounds of nickel!”

Here's where some of the components for batteries come from. According to SAE International, 100 percent of natural graphite comes from China, Mexico, Canada and India; 37 percent of copper comes from Chile, Canada and Mexico; 50 percent of nickel comes from Canada, Norway, Finland, and Russia; 100 percent of Manganese comes from Gabon, South Africa, Australia and Georgia; 50 percent of lithium comes from Argentina, Chile, China and Russia; 100 percent of rare earths come from China, Estonia, Japan and Malaysia; and 83 percent of zinc comes from Canada, Mexico, Peru and Spain. 

We are dependent on other countries for much of these components.

U.S. mining of basically anything useful as a fuel or in making materials for electric vehicles, like nickel, copper and cobalt, is blocked or made more difficult by government rules. And we buy lots of these materials, and other things, from China, our greatest adversary.

So, while we will need fossil fuels for a long time, and while the materials for making EV batteries largely come from other countries, the climate change faction still preaches our destruction if we don’t change how we do many things.

Not everyone agrees with that unavoidable catastrophe being the future of the world if we don’t stop using fossil fuels.

One of those people is an early member and former president of Greenpeace. Formed in Canada in 1971, Greenpeace exists “to expose global environmental problems and promote solutions that are essential to a green and peaceful future,” according to its website.

A former president of Greenpeace, Dr. Patrick Moore, served as Greenpeace Canada President for nine years and as a Director of Greenpeace International for six years. Among his many credits, Moore has a Ph.D. in Ecology from the Institute of Resource Ecology at the University of British Columbia.

He is no longer affiliated with Greenpeace, and his current position on Earth’s environment is at odds with the organization, and that has earned him its harsh criticism.

Speaking on a video from 2015, Moore said the following: “There is no definitive scientific proof … that carbon dioxide is responsible for any of the slight warming of the global climate that has occurred during the last 300 years.

“But there is a certainty beyond a reasonable doubt that CO2 is the building block for all life on Earth, and that without its presence in the global atmosphere … this would be a dead planet.”

Moore is not the only scientist who disbelieves the idea that CO2 will someday destroy humanity. And the accuracy of previous predictions of environmental catastrophe is stunningly poor. 

Not burning fossil fuels is certainly a worthy goal. And it is a goal that will eventually be reached as the natural development of alternative energy proceeds.

These manic efforts to force these not-yet-capable energy sources into use is expensive, and works against the needs and desires of the people.

Two arguments made against DeSantis are incorrect

June 6, 2023

The 2024 Presidential Election is still 17 months away, and campaigning for the nominations is already heating up. The Republican list is growing, featuring these declared candidates and others likely to declare: Former President Donald Trump, former United Nations Ambassador and former South Carolina Governor Nikki Haley, entrepreneur Vivek Ramaswamy, South Carolina Senator Tim Scott, Florida Governor Ron DeSantis, former Arkansas Governor Asa Hutchinson, former Vice President Mike Pence, former New Jersey Governor Chris Christie, and political commentator Larry Elder.

Democrats, on the other hand, have only three interested parties, so far: President Joe Biden, environmental attorney Robert F. Kennedy Jr., lecturer and author and 2020 presidential candidate Marianne Williamson.

Biden and Trump lead their respective parties at this point, and only one other Republican candidate, DeSantis, has seen much support. That has Trump firing shots across the bow, starting as DeSantis was traveling the country before he declared himself officially a candidate.

Trump, whose aggressive nature has cost him votes in the past, is focusing on DeSantis because he’s the only threat at this point. Trump has noted recently that you have to go after number two, and he is doing just that.

In addition to his penchant for name-calling, Trump has criticized Ron “DeSanctimonious” on two things recently. On both counts there is a problem with the criticism.

A political ad produced by Make America Great Again, Inc., has the narrator saying “We Can’t Afford Ron DeSalesTax,” with the tune of “Old MacDonald Had A Farm” in the background. It accuses DeSantis of having voted to raise taxes when he supported a 23 percent sales tax measure while serving in the House of Representatives a few years back.

That is true, as far as that brief statement goes. In fact, DeSantis co-sponsored the Fair Tax Act in 2013, 2015, and 2017. However, there is a good bit more important information about the Act than the Trump ad tells us.

In addition to a sales tax with a high rate, the Act would replace federal income, estate, payroll and gift taxes. So instead of paying a tax on every dollar you earn and those other categories, you pay only on things you buy that are subject to the tax. That is very different than simply voting for a 23 percent sales tax, on top of the others, as the ad implies.

"In Congress, the governor supported the concept of a Fair Tax, a plan to lower the overall tax burden on an individual by replacing all federal taxes — including income tax — with a lower tax. The plan also sought to end the IRS which, at the time, was being weaponized by the Obama administration. To describe only part of the plan in an attack is dishonest," said Bryan Griffin, the DeSantis political team press secretary.

DeSantis is still a critic of the IRS, saying it has become "a corrupt organization" and would "chuck it out the window" for a single-rate taxation system. He said that he has supported all of the single-rate proposals, and believes a fair tax or a flat tax system replacing the current system would be a big step forward, and something more favorable to average folks.

The second thing Trump misrepresented is DeSantis talking about two terms in the White House. “I’ve been watching ‘DeSanctus’ go out and say ‘I’ve got eight years. It’s going to be eight years,'” Trump said. “If he’s saying it’s going to take eight years for things to change, then you don’t want him as your president,” he added. “I can turn quickly. Reduce inflation, lower interest rates and heal the economy. This will take six months,” he said in a radio interview.

But DeSantis was not saying it would take him eight years just to do those things. He was saying that he could hold the presidency for eight years, as opposed to only four years that Trump could serve. That would give his policies more time to mature and become the new normal. DeSantis’ point was quite different than what Trump implied.

DeSantis’ idea for a new tax system based on the new sales tax and eliminating the IRS, would simplify the tax situation, reduce the taxes paid by millions of Americans, reduce the federal budget and help the government live within its means, and also reduce the heavy hand that government agencies often wield over those they serve. And a system with a fair tax or flat tax would also provide benefits to taxpayers.

It seems likely that Trump would also like the ideas DeSantis has for taxation. He did, after all, cut taxes substantially while he was President.

Trump and DeSantis will likely be going at each other throughout the campaign. Hopefully, the focus will become what each candidate is for, rather than what and who they are against. 

Annual budget deficits must end, and the debt must be reduced

May 30, 2023

The National Debt is a monstrous cloud hanging over the United States. It is money owed that is not being repaid, but growing each year.

As of May 25, the National Debt stood at $31,800,000,000,000 ($31.8 trillion). That is a number so huge that it is difficult to understand.

The U.S. Census Bureau tells us that as of July 1, 2022 there were 333,287,557 U.S. citizens. That means that for each citizen — man, woman and child — there is about $94.00 of debt, and about $430.00 per person 18 years-old and older.

Having a National Debt is not new. Its history is a fascinating thing to study.

There was a National Debt when President George Washington, took office in 1789. It was slightly more than $71 million. And, it increased by 11 million during his term that ended in 1797. 

Most of our presidents have seen the Debt increase during their terms in office, although 12 had a decrease in the Debt when they left office: Thomas Jefferson in 1809; James Monroe in 1825; John Adams in 1829; Andrew Jackson in 1837; Millard Fillmore in 1853; Franklin Pierce in 1857; Andrew Johnson in 1869; Ulysses S. Grant in 1877; Rutherford B Hayes in 1881; Chester Arthur in 1885; Grover Cleveland in 1889; Benjamin Harrison in 1893; Warren Harding in 1923; and Calvin Coolidge in 1929. 

Two presidents saw no change. James Garfield was assassinated during his first term after only 200 days in office. And after only 31 days in office, William Henry Harrison died.

It has been more than 90 years since the Debt was lowered under Coolidge. The reduction was $5.4 trillion for a total Debt of $16.9 trillion, slightly more than half of today’s Debt.

Since then, every president — 16 of them — has seen an increase during their time in office.

While things that a president does can affect the Debt, sometimes things beyond his control cause an increase. Factors like wars, recessions and national crises can affect the Debt. A recent crisis was the Covid pandemic. Another was the 9-11 attacks on the Twin Towers and the Pentagon that led to spending that was not planned.

Also, because the U.S. fiscal year begins in October and ends the following September, and presidents take office on January 21, during most of a president’s first year in office, he is at the mercy of his predecessor’s budget.

The Debt Ceiling is the limit on borrowing that can be done, and Congress has control of it. It is part of a law (Title 31 USC, section 3101) that sets a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury. 

When the debt ceiling is reached, as it often is, these days, the President and Congress must work toward an agreement on raising it. If they succeed, the government can borrow more money to meet its obligations. If not, a government shutdown occurs until an agreement is reached. The latter option is not really a viable one.

For the last nine decades the National Debt has continued to rise.  The smallest increases since Coolidge’s lowering of the Debt in 1929 are from three consecutive presidents who served from 1981 to 2001: Ronald Reagan at $1.86 trillion; George H.W. Bush at $1.55 trillion; and Bill Clinton at $1.4 trillion.

Since Clinton’s tenure, the next three presidents have seen larger increases: George W. Bush at $6.1 trillion; Barack Obama at $8.3 trillion, and Donald Trump at $8.2 trillion. Joseph Biden has seen the Debt increase by $2.5 trillion in his two-plus years in office.

In December of 2022, interest on the National Debt — which at that time was $31.4 trillion — was $210 billion, roughly 15 percent of total government spending for the year, according to Visual Capitalist online.

“The current revenue of the federal government is approximately $4.6 trillion while spending exceeds $6.0 trillion,” Forbes online reported in April. “Thus, the current budget deficit is over $1.4 trillion. It’s clear that members of Congress are spending like drunken sailors and like the Titanic, the U.S. is on a collision course with a financial iceberg.” 

The article goes on to say that high interest rates make this situation worse for the government to meet its financial obligations. Meanwhile, politicians seeking reelection prefer to keep spending.

The Republican-led House of Representatives passed a measure to raise the Debt Ceiling, but also to make significant spending cuts. Speaker Kevin McCarthy, R-CA, and President Joe Biden have been meeting trying to reach an agreement.

Hopefully, by the time this column is published, an agreement will have been reached.

At some point, elected members of Congress and the President of the United States must recognize that this unconscionable spending must stop, and the country must trim down, and develop a budget that pays current obligations and begins to pay down this humongous debt.

Our country was designed to be small, efficient, and non-intrusive. A government that protects the freedoms of its people, would not intrude on their good lives, and would not grow into the gargantuan monstrosity it has become. That is what the government needs to again become.