Will We be Force-Fed Fedbucks, or Will the Frogs Gladly Be Boiled Alive?

I was recently asked how on earth the Federal Reserve will get US citizens to convert to the purely digital currency the Fed has been talking about for a few years now. That’s a good question that I’ve dealt with a little in the past; and, since the Fed’s public rollout of its premier first step in that direction is scheduled for this July, now seems like a good time to recap all of that.

First, no one wants to say “central-bank digital currency” every time they distinguish between the Fed’s longtime champion of global commerce — the old fashioned “greenback” — and the Fed’s eventual colorless digital version intended to turn us into an entirely cashless society. Even “CBDC” is awkward. We need a nickname; so, I’m going with “Fedbucks” to refer to the Fed’s CBDC.

Second, I’m not one to believe the dollar is going to die and then have to be replaced with something else. I’ve heard that since Nixon ended the gold standard in the seventies, and I have never once believed it, and I have never so far been wrong in not believing it. In spite of some gross mismanagement along the way, the dollar has proven to be the strongest most resilient of all existing currencies. The Chinese yuan as an international contender is far back in the distant dust, so it would take it years to grow to be a serious threat. The ruble is the dust. The euro is far more problematic than the dollar, given its weaker alliance of states and the mismatched needs of those states. The British pound had its time in the sun, and has now retired comfortably.

The belief that the dollar is going to utterly collapse is a gold-bug fantasy, but that is not to say the indefatigable dollar will last forever. So, how will it pass on? My belief is that it will evolve into a purely electronic dollar and that it will probably merge, at some point, with other digital currencies into something that is no longer purely a US dollar, but more of an international partnership (bad as that will be, so I am not advocating it, but I don’t predict based on what I want). We won’t need a collapse of the dollar to get there, but we probably will need an economic collapse to push nation’s together in that kind of alliance.

So, the simplified answer as to how the Fed will get Fedbucks to replace greenbacks is that it will happen like bankruptcy — slowly at first and then all at once … when the right crisis hits. The dollar as the standing international currency, far broader in its basis of support than any previous global trade currency, will be at the center of efforts to create a global answer to a global economic crisis. The important thing to understand is that it does not have to happen all at once, and we can see from this summer’s rollout of the Fed’s newest innovations that it is not planned to roll out all at once.

Building Fedbucks is like boiling frogs

Maybe we should even call the new CBDC the “frog” since that would pay homage to its green history once it goes colorless. However, that might cause it to become confused with the now extinct French franc.

As an example of how slowly Fedbucks will come into being in the initial phases, let’s note that the Fed began talking openly about whether it even wanted a CBDC and what that would look like about three years ago and started soliciting public responses. It said it was going to hold town meetings to discuss its mere thoughts about a CBDC and to hear yours. I only saw one such meeting take place, but the Fed said it would hold them all over the nation. I have no reason to doubt that it did; I just didn’t track it; but it is still talking about what a CBDC should look like and whether one is even really needed, as you’ll see in a Fed speech below.

Last March, however, President Biden issued an edict for all branches of the Federal government to determine the positive and negative impacts of a Fed CBDC throughout their operations and to report back by November. From there, the government was to work out proposed legislation for early this year for congress. (While I have’t read about any clear legislation to create a US CBDC hit congress so far, please correct me if I missed the memo.)

In November, the Fed also tested its beta version of what it calls its “distributed ledger” with a hundred participating financial institutions. This system is supposed to make “immediate” digital transactions between customers, businesses and their banks possible through the Fed. In essence, the goal is that, as soon as a consumer, business or bank enters a transaction on its side of the ledger, it will be visible to the other selling party on the other side of the ledger for acceptance. So, click, click the deal is done, and the money has permanently changed hands and can immediately be spent again by the receiving party.

What we did see this year was the Fed announcing that it was moving beyond that beta testing to introduce its distributed ledger, branded as FedNow early this summer, which will happen in July (not June as I misstated in a previous article). You can learn all you want about how the system works in fairly easy language at that Fed site, but here is a summary explanation:

The FedNow Service is a new instant payment infrastructure developed by the Federal Reserve that allows financial institutions of every size across the U.S. to provide safe and efficient instant payment services.

Through financial institutions participating in the FedNow Service, businesses and individuals can send and receive instant payments in real time, around the clock, every day of the year. Financial institutions and their service providers can use the service to provide innovative instant payment services to customers, and recipients will have full access to funds immediately, allowing for greater financial flexibility when making time-sensitive payments.

The FedNow Service will be deployed in phases, with the initial launch taking place July 2023.

The Federal Reserve

The last line and the word “can” are key. The rollout has already been slow and methodical — from talk just between central bankers to town halls with citizens, to discussion on how to integrate with a Fed CBDC throughout government, to testing solely between a limited number of financial institutions, to the new FedNow system. NONE of that is yet a CBDC, and its use will be optional. Banks and other entities can plug into it if they want or just ignore it and run the old-fashioned way.

The Fed seems confident its new system, which will serve as the backbone for a CBDC will become popular by demand, and it doesn’t appear to care whether that system replaces the greenback as you’ll also see in the Fed speech below. The Fed seems more concerned that it has an instant digital system that will keep its money relevant for those who demand that level of efficiency so that its money keeps up with our digital times.

If the Fed has a conspiratorial scheme to push us to a cashless society, as is talked about in more democratic intonations in its many previous talks, that kind of forced Fed overthrow of the greenback (hard currency) is not yet showing through in the Fed’s actions, which continue to be slow and methodical and, for now anyway, will be purely optional. With or without a conspiracy to push us into Fedbucks, however, I think it is abundantly clear from many angles that we are moving that way, but I’ll let the Fed continue its own explanation for this change:

Almost no one would describe a check payment as fast. It might be quick for a payer to give a check to the payee, but the payee likely will not have access to the funds for a day or more. And while some might describe traditional card payments as fast, in the sense that the payer and payee can execute the payment in seconds, even these payment options don’t fit the evolving understanding of what a faster payment is. A “faster payment” is generally accepted to be “… a payment in which the transmission of the payment message and the availability of ‘final’ funds to the payee occur in real time or near-real time on or as near to a 24-hour and seven-day (24/7) basis as possible.”

To be classified as a faster payment, the payment option must 1) enable both payer and payee to see the transaction reflected in their respective account balances immediately and 2) provide funds that the payee can use right after the payer initiates the payment. And because of this, the payment is, by its nature, also irrevocable, meaning it cannot be reversed by the payer or the payer’s financial institution (FI) after it is sent.


In other words, the person selling something needs to know the money is immediately secure. Think of buying a car where the dealer will often accept only a cashiers check. Otherwise, you cannot take the car or days until your personal check clears both banks. The seller wants to KNOW the money is solid. This new system will be much faster, even for those fairly large transactions because it doesn’t even require you to make a trip to the bank to get that cashiers check, and the dealer doesn’t have to take a check to the bank either. It can spend that money immediately if it wants to.

You see, the Fed is interested in a flawless roll out because trust with Fed money is everything, even if the Fed is far from flawless in reality. So, its first step is to make sure the system works seamlessly for all parties and with high efficiency so that people love it. There will undoubtedly be bugs in the system, so a phased rollout is what we’ll see to keep those manageable and as invisible as possible.

FedNow is just the initial version of the ledger system that will clear transactions almost immediately. In fact, most of us won’t see anything this summer, except that our transaction made in all the ways we normally make them clear quickly. It will happen between stores and their banks and between those banks and other banks, as the following Fed video explains. (In other words, what begins in July will happen, at first, almost entirely behind the scenes as far as the average citizen consumer is concerned. Then, as the friendly sounding video notes at the very end, new phases (“features”) will be added in phases to work with industries and consumers, such as apps that make it all convenient to use:

It may be, at first, as Janet Yellen has said about other Fed events, “as boring as watching paint dry.” Only things were not as boring as she promised back then, but the Fed is hoping this will have a boring quality at first, too, and then grow in excitement as apps get developed that put it right in front of consumers. Before you even are aware of it, you’ll already have been surrounded in it for months like the proverbial boiling frog (even though the dumbest of frogs actually does jump out of the hot pot, but that is a story for another time).

You’ll get used to how almost instantaneously the transactions you make with your debit card or your iPhone Wallet, etc. appear on your online bank account. The old concept of “float” between the time you write a check and the time your account gets debited for a check will evaporate; but that may be all you see at first is speed. If you depend on float, you may hate that loss; but, if you like to be able to spend your paycheck immediately, you’ll like it, and you won’t have to worry about bank opening hours to get that check in the bank or for the electronic deposit to go from pending to cleared.

Even the banks do not have to accept the new system, as the video notes, or they can accept it only in part. This will give the Fed time to hear the objections and to work with resolving problems as the system spreads in use and before it moves to each new phase.

Here by popular demand!

The demand for digital payments is already met by current systems, but FedNow, as the initial component of Fedbucks will make the system far more efficient. It will be more broadly accepted than any particular credit card brand because it has the Fed’s brand behind it, like the dollar. Love or hate the dollar based on your feelings about the Fed, but we all use it everyday, and for general transactions very nearly all of us prefer using it most days over bartering with gold or silver that may require special assays to prove purity. We may prefer its plastic forms or other electronic forms over the actual greenback, but it is all still, foundationally, the Fed dollar.

Note in the video, however, how the banks will be able to create their own apps, using FedNow. So, new payment systems for the dollar will be developed. Think of the way airlines have created their own apps for buying tickets and integrated the boarding process with your iPhone to send boarding passed directly to it, likewise, concert ticketing agencies. You soon wind up, for better or worse, with the only option being the digital ticket on your phone or a cumbersome printout of that ticket you have to make yourself with a code that can be scanned at the airport or the concert.

Personally, I prefer a paper ticket mailed to me because I’m always concerned my cell battery will go dead just as I get to the airport, or that I won’t get an internet connection or SOMETHING will go wrong. So, I often wind up printing a version because I don’t trust the electronic version, but I am fully aware I am dating myself as part of an old-fashioned contingent, slow to move with the times. Most people never think twice about trusting the electronic version in their iWallet.

The point is, it didn’t take more than a couple of years from the times when all these handy apps came ticketing apps came out to the present when email and app are the only way you can get your ticket; and increasingly it is only via app or download to your phone’s wallet, even for the final boarding pass. I once had a choice; but now, I have none.

Similarly, banks and merchants and industries will all start creating their own “handy” apps because these apps, like your Alaska Airlines app, tend to lock you into a mindset of using that brand’s particular app for convenience or because you like how it works better. So, your bank will develop handy apps, too, and before long those apps will move from being handy as options for those who want them to the only pathway available. They become almost inescapable … over time … but it doesn’t take much a lot of time.

Think of how those self-serve check stands at the grocery store, which were promoted as being handy when lines were long and you had only a few things to buy, have practically become the only option available in some stores; and think of how in some restaurants you cannot even talk your waitress into processing your check as she insists you use the table kiosk. It always starts out as a “handy” option until it no longer is an “option” at all. This is where the heat of the frog water gets turned up to a boil and so does my blood. As my wife says anytime some grocery store person points her to that armada of self-check grocery check stands, “I don’t work here.”

Republican Fed Governor Michelle Bowman talked about the Fed’s slow methodology and even apparent ambivalence about going all the way to a CBDC in a speech less than a month ago without bothering to note that the approach she was describing was already being rolled out:

One possible way to design a CBDC could be to focus on providing a foundational layer on top of which banks and other eligible institutions could build their own technology. In such an intermediated model, banks and other eligible institutions would build technology on top of a CBDC that could be offered to retail consumers and others to provide products and services that may not be available today. It would be important to understand how such a layer would connect or interact with existing and new payments infrastructures. It is useful to consider what types of innovations this could encourage. Some of the research on the design and functionality of CBDCs contemplates things like increased programmability–allowing the efficient transfer of money through the use of so-called smart contracts–that could improve upon existing, regulated forms of money and payments.

You see: it is coming in layers. (And I’ll warn you that “programability” is the most dangerous word in that whole paragraph. Rather than lay all of that out again, I’ll refer you for those warnings to an excellent article I posted some time back on The Great Recession Blog with Dr. Pippa Malmgren’s permission: “PUMP“)

So, well before we get to the actual cashless society of Fedbucks, we’ll be using bank apps that integrate with the FedNow service. Eventually, we’ll find greenback options are less available. Already, some retailers will not accept greenbacks. Cash became dirty in the Covid era as I warned was happening back then. Those customers who were afraid of Covid started demanding cash-free options. Employees who didn’t want to handle cash started pushing for cashless options. Businesses, in some cases, switched over to not allowing cash at all, and some in more liberal areas have stayed that way.

Becoming cashless almost seemed to become a badge for their demographics. They were actually willing to turn away the business they lost from customers insisted on using cash for the sake of fitting in with their communities or due to their own personal politics or customer crisis fears. Customers argued back that their cash was legal tender and had to be accepted, but that is not quite accurately true. The legal-tender law says it has to be accepted “for payment of all debts.” If a transaction is immediate, so involves no debt, cash does not have to be accepted.

So, I predict we will increasingly see businesses less willing to do deal with cash as acceptance of all the apps being developed to integrate with FedNow becomes widespread. As population demographics change toward fewer of my generation and more millennials, there will be a lot less interest in cash. If necessary, you may even see the government vote to take the legal-tender notice off of greenbacks.

Some frogs jump out of the pot

There is always pushback. Acceptance is never a perfectly smooth road, and already we are seeing pushback. At least, two Republican presidential candidates are saying they’re oppose the Fed’s new CBDC. Some Republican members of congress are pushing back, too. The main reason for the pushback is that Fedbucks will ultimately not be cryptic like digital cryptocurrencies. You’ll lose your anonymity.

However, a handful of politicians is far from a majority. Many politicians want Fedbucks to make it impossible for you to weasel out of your taxes, especially those politicians who want a bigger IRS. The AOC types out there have grown in number. However, even among Republicans, there has been a major shift since the George W Bush era toward big government that is highly intrusive and allows no privacy. Think of the Patriot Act. Think of those big buildings planned and designed in the Bush II era to record every phone call and email and who knows how many other kind of internet actions you engage in … all protected, of course, by the FISA warrant system.

Now some of old types like me never trusted the FISA system, and during the Trump years we certainly saw how easily it gets circumvented. However, none of that stopped a majority in congress from approving this massive reduction of our anonymity on the internet, or from renewing it when it was ready to sunset. The pushback from Republicans amounted to almost zero because it was a Republican president who pushed to create it after 9/11 in the first place.

Since our constitutional rights to privacy were, to put it kindly, squeezed hard, you have seen no serious movement, even after the notable abuses in the Trump era, to abolish the Patriot Act or to stop collecting all that internet data because Republicans, it turns out are perfectly fine with big intrusive government … whenever they are the ones in power … just like Democrats … or when it is a matter of national security.

As I’ve said so many times, you only have your choice in the US of the Welfare Party or the Warfare Party. Both want big government built on mountains of debt. The only difference is what they want to buy with the debt. And, as we’ve seen during the Biden administration, Democrats these days are even as swilling to spend a fortune on the military industrial complex as Republicans always have been. (In truth, Dems by majority always were because the MIC makes sure it has enough of its own pocket politicians installed in either party to get the things passed that it wants passed. (I don’t think either Pillary or Biden ever saw a war they didn’t vote for.)

Republican Fed Governor Bowman also talked about this in her speech last month, so privacy problems are recognized but only as something that must be worked out and will be:

As we consider these potential opportunities for improvements and innovation, we must also note that the introduction of a CBDC could present significant risks, challenges, and tradeoffs. First, in my view safeguarding privacy is a top concern and is also often identified as a top concern of consumers and other stakeholders. As a baseline, we need to think about how to protect the privacy of consumers and businesses, while also establishing an appropriate level of transparency that would deter criminal activity.

We must ensure that consumer data privacy protections embedded in today’s payment systems continue and are extended into future systems. In thinking about the implications of CBDC and privacy, we must also consider the central role that money plays in our daily lives, and the risk that a CBDC would provide not only a window into, but potentially an impediment to, the freedom Americans enjoy in choosing how money and resources are used and invested. So, a central consideration must be how a potential U.S. CBDC could incorporate privacy considerations into its design, and what technology and policy options could support a robust privacy framework.

Yes, well telephones and internet also play a central role in our lives. So, you can be sure that, initially at least, the Fed will work out some privacy compromise similar to the FISA system (or incorporated into that system) so that the government can get full access to all financial transaction information in order to pursue those it deems criminals so long as it has a court warrant … only to capture criminals of course. Well, only until it’s not. Surely such a system would never be abused like the FISA system for electronic communications was abused even against President Donald Trump.

Well, of course, it will be; however, people continue to tolerate the FISA system after the abuses they already saw, so they will have no greater objection to something like that in case of all financial transactions being recorded in full detail. Why would we assume otherwise when we already see what people readily continue to accept. It only takes a majority.

It takes a plague of frogs

With the mention of the huge reduction of privacy that happened after the 9/11 crisis, we come to the next big way Fedbucks will become mandatory — CRISIS! We saw it after 9/11 where both sides of congress could hardly run fast enough toward the expansion of the president’s war powers and then to the creation of the Patriot Act that fully enabled spying on and recording the entire internet and all telephone communications all over the world every second of every day, even those of allied foreign dignitaries, much to their outrage.

We also saw how quickly the vast majority of citizens willingly yielded control over their own bodies to the government during the Covidcrisis. Look at what the MAJORITY of people gave up during that crisis, which some would say was a manufactured crisis, and even helped stuffed down the throats of those who did not give up:

  • Free speech, choosing widespread censorship, which was fully accepted by the MAJORITY of politicians in both parties. Even many Republican politicians approved all kinds of censorship and demanded social media enforce that censorship. Of all things, this is one of the creeds Americans hold most sacred, yet people readily tossed it aside and did their best to force others to do likewise. Under both Trump and Biden, the government sought to curb what could be said on Facebook and Twitter about Covid and the vaccines Trump boasted about fast-tracking.
  • Healthcare anonymity, agreeing to fully disclose their vaccine status wherever asked and rebelling against their fellow citizens who refused, and agreeing to be tested for Covid and to share the test results wherever required, whether for entrance to concerts, boarding of aircraft, entrance into the State of Hawaii, crossing the Canadian border, or just to enter a restaurant or entertainment event.
  • Digital IDs. Willingness on the part of many to carry a digital or paper ID, to where giving their vaccine status became customary.
  • Control over what they put into their own bodies. Told they would have to vaccinate in order to keep working, millions of Americans complied. (I refused, so I got fired, and NO doctor I talked to would approve my medical exemption, even though I actually have a chronic medical condition where large numbers of people with that condition reacted in an extremely negative way to the vaccine. It’s something I’m mostly better from now, but the reaction experienced by over 30% of those who have had the condition was a major setback in their underlying health condition. After years of getting better, I’m not risking going down that road again; however, I’d hold out anyway just on principle. Nevertheless, the majority of people would not and did not hold out, as President Biden did his utmost to turn this into the “pandemic of the unvaccinated” in order to turn peer pressure against the holdouts.)

Without trying to create an exhaustive list, I think enough is said there to show how quickly serious crises like 9/11 and the more questionable Covidcrisis will cause people to give up even there most basic freedoms at levels of acceptance out of fear, even one our most sacred American beliefs, which is something I never thought I’d see in my lifetime … until I did.

In terms of crises, do not think a financial crisis caused by a massive Fed failure will stand in the way either of adopting Fedbucks either. Rather, it will present a way. In every Fed-created financial crisis — whether by stupidity or design — I have failed almost entirely at convincing any more than a tiny handful of people the Fed should not be trusted with the solution. Nearly all of our lazy politicians turn immediately to the Fed for answers to avoid the hard work themselves or really solving the underlying problems, and nearly all citizens continue to trust the knowledge and experience of the Fed as being far superior to mine or to anyone’s who is speaking against them.

Since the Fed has never been blamed seriously enough to be stripped of its powers when it created a financial crisis or a recession and has only received more powers whenever asked to solve the problem it created, why would we think the next (or current) crisis would play out differently? I see no actual evidence the Fed will be lose ground during the present financial crisis even though it is SO clear it was created by the Fed.

The recent banking scandal went instantly to new forms of rescues or bailouts, and congress did nothing more than a little grandstanding, after which I’m sure all those who were called to testify went out and enjoyed a nice cocktail with the members of congress who remained quite cosy with them. During that mostly cordial inquisition into the negligence of the regulators, the regulators mostly got away with praising their own quick actions. So far, the inquiry has resulted in no indication that actions will be taken against the Fed even though this banking crisis was the most obviously Fed-caused crisis and Fed failure of regulation and oversight ever. It has never been more clear that the Fed created this crisis, saw the possibilities of it coming, and did nothing whatsoever to prevent it from happening. (See: “The Senate Inquisition Fried the Bank Regulators Over EASY” and “The Fed Never Sees it Coming! They Just Cause it!“)

Instead, a financial crisis ALWAYS becomes exactly the kind of thing that gives the Fed more powers as politicians turn toward the perceived experts who have a nearly perfect track record of never foreseeing any of the recessions they help create and who have always tightened until something major broke in a way that cost all of us.

Look at the present situation where the Fed orchestrated inflation with massive stimulus even as we were being told the economy was superheated. That inflation could so obviously be seen coming, but the Fed convinced all the entire mainstream media and most of the people it was “transitory,” and then they were still trusted with the solution when it proved not to be transitory, even as the solution crashes banks that the Fed made entirely dependent on continued low interest rates. The Fed was in the perfect position to know this exact stress was coming because people would clearly leave banks for better interest even as the Fed crashed the value of bank reserves, making it hard for banks to meet those runs; yet, we are right back to 2008-style rescues in the familiar rinse-and-repeat cycle I wrote about in my funny little book (advertised in the right sidebar), and the vast majority of people are still trusting the Fed!

Although people grumble about the bailouts, they never storm the Fed’s citadel to stop them. I haven’t even seen any protests over the massive bailouts of the second and third largest bank crashes in US history! In a financial crisis, people are afraid; they don’t know what to do; and they just want to feel they can trust Fed Almighty to rescue them. Just like they wanted to feel they could trust the government to save them after 9/11 with the Patriot Act and FISA guarantees of protection.

I’ve always said with respect to the move toward a cashless society, that it will actually require a major financial crisis to get the most of the holdouts to accept Fedbucks. Now the Fed has one that it can try to blame on the Cryptocrisis. While the Fed originally assured us the Cryptocrisis had no chance of contagion to US banks, we now clearly know that was never true. So, obviously, they know nothing about it, or their assurances are just lies.

The clear-cut choice people should see is that the Fed is either very stupid (due to wrong philosophies, not lack of brains) or deeply corrupt. Either way the Fed should not be trusted; but the majority of people never see it. The very first banks to enter into their own crises all had strong ties to world of cryptocurrencies. So, the Fed might use this crisis to say the public desire for digital currencies is abundantly clear, but so is the risk to federal banks that get deeply involved with them; therefore, a digital currency regulated by the Fed is the better answer to that demand. I will be a bit surprised if they don’t advance that argument further than they have so far; but they are cleaver and would rather have you believe you came to that conclusion on your own as you will believe it more solidly if you think it was your conclusion.

That, of course, demand argument for a Fed CBDC would be patently false because… 1) Many of the people involved in crypto are in it to speculate for huge gains, which you would never get off a well-managed digital currency that actually functions as money because money, above all else, should be as boring as Yellen’s paint. Boring is how you WANT monetary policy to look; i.e., good money needs to be extremely stable in value. 2) The Fed hasn’t even done a respectable of job of regulating its own banks, so how would it do any better than crypto has in regulating itself? 3) The present crisis had just as much to do with the Fed lowering the value of Treasuries that banks held in reserve as it had to do with cryptocurrencies blowing up last summer; therefore, the Fed should have seen these problems coming and managed them far better versus not managing them at all. 4) Fedbucks will likely offer no anonymity. Or they will, at first, in order to gain acceptance, but that anonymity will be stripped away over time by the government (probably secretly) because the government always wants to know … as much as it can know per Covid vaccine IDs, Patriot Act surveillance, but especially money trails. The government knows all about following the money.

Fedbucks do not in any way meet the demand for cryptocurrencies; but the Fed may use that argument made more acceptable by the current crisis, which originated in the crypto world as demand for exchange to Fed dollars when cryptos were crashing outstripped the ability of banks to meet that demand. So, the objections I just listed to Fedbucks replacing cryptos may not stop the Fed from benefiting in some sectors by people seeing Fedbucks as a digital solution to fill the need cryptos are perceived as filling for digital currency but with tight regulation, especially among lawmakers who will ultimately have to approve a Fed CBDC or a move toward being cashless versus concurrent with both CBDCs and cash existing alongside each other.

I’ve also said a global crisis will beg for a global answer so that, eventually, the Fed’s answer to digital currency will evolve into a global digital answer. If not during this global Everything-Bubble crisis, then during the rapid failure of all attempted answers to this crisis … as is likely, given how the Fed and feds never really solve any financial crisis, but just try to blow up the next bubble in their rinse-and-repeat cycles. After all, the whole CBDC movement at all central banks has stated many times that people are begging for a global digital system because increasingly they buy from the internet where stores or services may be provided from anywhere in the world, not simply from down the street or across town.

Most people are pollywogs

Most people are mere pollywogs, not frogs, when it comes to their understanding of money or finance, so they will never jump out of the pot because pollywogs can’t jump.

Not only do I have to remind myself that other people are, by vast majority, more willing than I am (or you are) to give up those practically sacred ideals like privacy and freedom of speech and right to assemble — as we saw during Covid — when they become seriously scared, I also have to remind myself that MOST people do not spend a single moment of the day thinking about the Fed or caring about the kind of money they use. They will go for Fedbucks as readily as they already did to checks then credit cards then debit cards and now to iWallets now to scanned palm prints at Whole Foods. They will do so far more readily than to cryptocurrencies because Fedbucks will have the Fed’s and the US government’s imprimatur and guarantee upon them.

People who read blogs like mine make up a very small part of the US populace. The average soccer mom or football dad isn’t going to be fretting about Fedbucks so long as they easily buy a hotdog at the field’s only venue. For millennials who grew up spending more time interacting with computers than with parents and for whom much of their social interaction with friends is via smartphones, the worn-out warnings of people like me are going to feel like the dingy backwaters of human consciousness. And millennials are the people who by sheer demographic change will increasingly be making the big decisions in government and finance and who are not too impressed with the world the Boomers and Doomers handed to them, nor do they seem to as deeply value things like privacy and freedom of speech.

Look at all the privacy we’ve already given up to smart televisions and smart phones and our computers as websites file their cookies to note our ID and to track our interests. There has been some strong political pushback, but my wife’s cell phone still spies on her enough that, if she talks about dog food to her sister when her phone is not even activated, the next thing she is seeing is endless dog-food ads. The microphones in smart TVs have been known to do the same. Most of us get overwhelmed by the scale of effort it would take to truly stop all of that, so we just put up with it for the benefits of technology.

If you want to catch a frog, offer flies

Another big factor I pointed out for the acceptance of Fedbucks would be Fedbribes. By that, I mean, the Fed has already argued that the creation of Fed bank accounts directly with citizens (filled with Fedbucks) would enable the Fed to put government stimulus money IMMEDIATELY into the accounts of all citizens.

Bowman even talked about this in her speech last month, so it, too, is being envisioned:

Another issue is whether the government should use new technologies, including a potential CBDC, to accomplish a variety of policy objectives beyond those directly related to the operating of an efficient and safe financial system. Imagine a scenario in which fiscal spending, in the form of government benefits or payments, could be transferred via CBDC and could include a limited timeframe in which they could be spent before expiring. Enabling this type of limit through a CBDC would stand in stark contrast to the flexibility and freedom embedded in physical currency or bank deposits and could serve to control or even harm consumers and businesses. There is also a risk that this type of control could lead to the politicization of the payments system and at its heart, how money is used. A CBDC that permitted this type of control not only has the potential to allow the government to limit certain types of private spending or limit access to banking accounts, it could also threaten the Federal Reserve’s independence.

Federal Reserve

Now, she said that clearly as a warning, but the very fact that she’s warning about it indicates how clear it is that many in the federal government might like to use it that way. What was mentioned there as a warning about how Fedbucks might be abused by the government can serve just as well to get people to sign up for Fedbucks! Easy peasy. Start by loading the accounts with free stimulus money like we got during Covid and make those accounts the only portal for getting the money. How many people are going to turn down free money?

The flip side of the warning is that most people, who give little thought to the Fed, will readily sign up for the Fedbucks the second the government says it will be giving $2,000 of free stimulus money to each citizen but it will no longer be issuing checks “due to the labor and cost involved and the cumbersome time it takes to issue hundreds of millions of checks when the need is immediate.” The money will only be available through “the government’s” new Fedbucks because, of course, the Fed and US money are practically synonymous — so much so that many people actually believe the Fed is a government agency, instead of an entity owned entirely by banks but run under a government charter that requires a certain number of government appointees to its board and committees.

It will be your option, of course, if you want the money or not so that your signup will be voluntary for now. Do you want the free money in a time when you are desperate because of the next crisis, perhaps the present banking crisis where the Fed was the sole architect? Then just establish a Fedbucks account, and the money will literally be at your fingertips the second you hit the final “submit” button on your computer. The fact that readers of this blog might be reluctant to take the bait doesn’t change the fact that millions will gladly take a little risk with the government for free government money. And it is not as if the government is going to start out by being invasive with those accounts.

Now, you might argue with your government, “It’s not fair to force me to get a Fedbucks account to get the stimulus money you are giving out to everyone,” but how far did that argument get people who stopped getting government-augmented unemployment benefits during the Covid crisis if they were terminated for having refused the the government’s vaccine?

I can tell you as one who was force-terminated it didn’t work for me in my state where the government’s attitude was, “If you want to put all the rest of us at risk for refusing our vaccine, then not getting the benefits, even though we are the ones forcing your unemployment IS YOUR PROBLEM! Get the vaccine, and you can go back to work, so we’re not continuing unemployment benefits until you do.”

They didn’t see themselves as keeping me from work. They saw me as keeping me from work by being stubborn about the vaccine. Agree with those situations or not, we already know from experience how the government will act with its stimulus money in a crisis in order to try to get compliance toward the behavior it wants, especially if it deems your behavior, whether rightly or wrongly, as being risky to others.

How many average Americans do you suppose turn down free money when it is that readily available, especially in a time of need? Later on, it will become “Do you want your social-security check? Your disability payment? Your veteran benefits? Your IRS refund???” What do you do if your employer, MegaCorp, decides it loves the new FedNow system because of all the easy instant payroll features its bank ultimately builds in so that, if you want to get paid, you’ll have to accept payment via FedNow?

(If I want to get paid for writing on Substack, I have to accept payment via Stripe, and Stripe will ultimately join FedNow and then the new Fedbucks when those get built into the FedNow processing system.)

Bowman, who served President George W. Bush as Director of Congressional and Intergovernmental Affairs at the Federal Emergency Management Agency (FEMA) in 2003, when the Department of Homeland Security was established, also raised the Cryptocrisis threat in her speech by speaking about the very kind of crypto that was supposed to be readily convertible and transferable to Fed dollars:

Some new private forms of money, often referred to as stablecoins, have emerged mainly to support trading in the crypto-asset ecosystem both as a means of payment and as a store of value. These stablecoins, which purport to have convertibility one-for-one with the dollar, have also been discussed as an alternative to traditional payments. However, stablecoins are less secure, less stable, and less regulated than traditional forms of money, and their structures and frameworks are opaque. To the extent stablecoins become widely used in day-to-day payments, these features could raise significant concerns. Of course, issuing a CBDC has been discussed as a potential alternative to stablecoins that could address some of these shortcomings.

See, they are already going there with the present crisis.

You may be the only frog in a pot with a lid on it

Finally, remember that universal acceptance is never needed anyway. That is also key. All that is needed, just as in the various situations described above, is enough general acceptance to establish a political and social majority, leaving the holdouts a minority the government can clamp down on by simply be shutting them out of participation so long as the ruling majority is willing to go along with that. We already saw how readily that happened during Covid and how many citizens pressured others even by acts of violence to cooperate with government mandates.

So, there will be holdouts for sure, but that doesn’t matter in terms of the system becoming the accepted standard. Besides, it will all happen slowly at first and then, when a majority is fully liking the system, all of a sudden. What that really means is slowly to bringing in the 90% willingly and merrily, keeping the water comfortable; then, with the full support of that majority, all of a sudden to put a lid on the final rebellious 10% against their will by force of isolation, peer pressure, and inability to participate in games, entertainments eating out, etc.

It starts this summer with the mere rollout the digital FedNow system that you will hardly see — just a nice pot of cool water that feels just about like the pond you are used to — but that will evolve into the backbone of universal Fedbucks down the road … a few years … or months … later.

China already has its CBDC in place and already did use it as part of its enforcement policy for Covid lockdowns. That may service the Eastern division of the new world order. Fedbucks or some hybrid with the EU is likely ultimately to service the West. How the two halves may integrate down the road is a path too perilous and chaotic, at least for me, to figure out at present; but we needn’t know all the details of the future to see the overarching trends that are clearly in play and how acceptance will be gained even in the face of tepid resistance.

As Bowman concluded,

The Federal Reserve’s work continues to explore an array of CBDC design choices and the challenging consideration of policy tradeoffs that this multitude of choices presents. It is imperative that each of these tradeoffs is carefully evaluated and thoroughly understood. Where opportunities for improvements may exist, we should ask whether a U.S. CBDC is the most efficient and effective means to make such improvements, or are there better alternatives, such as enhancements to current payment infrastructures?… With such significant potential opportunities, risks, and tradeoffs, it is essential that the Federal Reserve continue to thoroughly research and engage with stakeholders to further understand these issues….

The Federal Reserve has continued its independent research and technical experimentation on digital innovations, including digital assets and CBDC. Specific to CBDC, the Federal Reserve established a program of work that aims to (1) carry out policy analysis to provide perspectives on issues articulated in the Board’s January 2022 discussion paper; (2) conduct technology research and experimentation to inform potential CBDC designs; and (3) invest in engagement with the public, industry, academia, and the public sector to bring along stakeholders and obtain needed expertise….

With this in mind, our consideration of other potential innovations to money and payments, including a potential U.S. CBDC, must be viewed through the lens of whether and how the payment system would be improved beyond what instant payment services will achieve. We should ask “what current frictions exist or may emerge in the payment system that only a CBDC can solve, or that a CBDC can solve most efficiently?…”

This includes work with multilateral institutions such as the Bank for International Settlements, the G7, and the Financial Stability Board, as well as bilateral engagements with other central banks.

In other words, it may not even have to become a CBDC. FedNow may evolve to where it is fulfilling the same role until hard currency eventually just fades away. Clearly the Fed is in no rush, as it still talking in terms of experimentation, innovation and development and recognizes the most innovative ideas are likely to spring up from private enterprises seeing demand or ways of creating demand for new products. CBDC or not, step one is FedNow — the “instant payment service” mentioned — and then all of its various apps that private enterprises can design on their own to run on that broad platform.

From there, the Fed will observe whether that evolves on its own into a system that accomplishes all the Fed’s and feds’ objectives. In the end, does it matter if it is specifically a CBDC or a Fedbuck that runs as a compilation of integrated apps industrywide via the backbone FedNow — a sort Fed-run internet of money. In the end, the greenback just gets used less and less as people become so accustomed to all the apps until the Fed discontinues paper currency and all coinage because there are not enough holdouts remaining to prevent termination. Perhaps how much time that takes doesn’t even matter to the Fed.

Most importantly, look at the last line there. Bit by bit (a process of gradualism) they clearly envision something evolving to work, as they figure it out, with other global financial institutions and governments. It starts this summer with deployment of the technical framework of FedNow, running out of sight to most of us until the private apps start appearing for optional use … until the next crisis strips out some of the optionality in favor of security.

You will increasingly read articles about how FedNow helps the poor get their benefits faster, helps the children, balances inclusion by offering more options, etc. All the Fed’s usual parrots in the press will sell the message just as the mainstream media did for Dr. Fauci & Co. There will probably be efforts to censor “disinformation” on Musk’s Twitter Two. Remember Musk was an early owner of PayPal, and Facebook started developing Libra, so those platforms are interested in developing digital payment systems and will develop apps that somehow benefit by integrating with FedNow.

Wether we go to something called a CBDC or just FedNow may be almost meaningless. It depends on how far FedNow evolves. The current objections by banks that they may get bypassed by a CBDC will certainly be addressed. It’s all a work in progress, but the backbone for whatever system eventually evolves is “Coming to a Theater Near You This Summer!” It may be insidious so you cannot even see it, but it will be there!

What they are launching is not a full CBDC but the DNA for a whole new path of financial evolution (“innovation”) that can grow where the market and many intermediaries from merchants to banks wish to creatively take it. The biggest attraction will be the speed with which payments to you become spendable. They will pay, and it is your cash now. People will quickly become so used to it they will get edgy when things are not instantaneous. The ways in which this system will be used to control you probably have not even been invented yeet. They will also evolve over time as the government figures out how to make it work for its objectives of tax collection, security and social control, especially in crises just like it did with Twitter and Facebook, etc..

As Bryant Bank said when their opinion was sought by the Fed,

We see instant payments as the future of how payments will be processed. That’s not to say the other payment rails will go away, but a segment of businesses and consumers will choose instant payments over those other rails over time, and we wanted to be prepared for that migration….

Once our core service provider is certified to conduct instant payment transactions, we will complete our final setup. So far, our conversations with our core service provider could not have been better. They have been proactive; they have been planners; and they have been engaged with us and the Federal Reserve. I like to say that implementing instant payments is something that must be done as the plane is flying, and we can’t land it to start the first transactions until everything is built. The beauty is, we are in flight and can almost see the runway lights to begin landing….

I have been in the industry for a long time and always use ACH as an example because it was not fully effective until everyone participated. The FedNow Service is the same way; full industry participation will lead to the most effective instant payments capabilities. If you are not at least in the database as a participant, you will be limited in receiving some instant payments. This has major implications for use cases like payroll, which is something that is beneficial to process in seconds versus having to wait until end of day after it’s posted to your core.


This is all ultimately just the direction global society with all of its nearly instant options has already been moving for a long time, and the Fed says over 90% of the respondents to surveys they’ve done over the past two years say they want an “instant” payment system. Two-thirds of businesses even said they would consider switching financial-service providers (banks or whatever financial institutions they use) if instant payment systems were not available through their current financial institution.

The integration with FedNow is not as simple as it may sound. Banks are hiring consultants upon consultants to help them design and set up their own systems that will use FedNow at its core for their internal business efficiency and for their clients when clients want those services, making FedNow available in formats they believe their clients will like. It even includes hiring security consultants. However, many banks are already doing it, convinced their customers will be demanding instant processing, even for a fee, as it becomes better known, and they don’t want to lose market share because they were not ready while their competition was. So, it is largely being demand driven. (“If you build it, they will come.”)

Three months until the U.S. payments ecosystem changes forever.

If you haven’t read DOWNTIME: Why We Fail to Recover from Rinse and Repeat Recession Cycles, it’s an easy read and even kind of fun in a scowlly sort of way!