by David Haggith, Gold Seek:
Central Bank Digital Currencies (CBDCs) are big in today’s news now that the Fed has gone live with its digital processing system as I covered extensively in this week’s “Deeper Dive,” most of which was made available to all Daily Doom readers for free because of the topic’s great importance. While the Fed’s introduction is small, and its system barely past prototype stage, it marks the beginning of a US transition to a global digital currency as numerous articles listed in today’s Daily Doom headlines and in that article make clear.
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Digital money’s Manchurian candidate
New in today’s headlines on the subject is a story that makes China’s CBDC, the first one introduced in a test consumer rollout over a year ago, the prime example of how the “convenient” apps I talked about in that “Deeper Dive” will quickly bring broad consumer acceptance and demand for CBDCs. China issued the following announcement for the broadening use of its CBDC within its initial pilot-program zone:
A collaboration between the China Merchants Bank and the Civil Aviation Administration of China led to the introduction of a digital yuan platform, which aims to facilitate transactions for travelers in the aviation network, according to a local media report.
The newly introduced platform reportedly enables companies and entrepreneurs to utilize the digital yuan for convenient payment of business air tickets. Additionally, passengers will have the opportunity to use the CBDC to access new services via the platform.
Entrepreneurs are where the apps come in.
To envision what this means, let me describe my own reluctant change this year to using apps to buy airline tickets. For years, I have done all booking online via Expedia. This year, however, I used two different apps. One was Alegiant’s app for its flights. The other was Alaska’s app. Both, downloaded to my iPhone, made the process easier than Expedia and offered more flight options, and instantly dropped my digital QR-code tickets into my iPhone’s wallet.
Now, I hate digital tickets, and I hate using the iPhone wallet. However, almost no one, including airlines will send you paper tickets for anything anymore. I like the secure feeling of holding the physical ticket in my pocket, but digital is all you have available now. (A physical ticket won’t disappear at the concert gate or plane loading gate if I have no cell or internet connection or if my battery dies.) Smoothly and conveniently, those two apps immediately stored the tickets in two places — my iWallet and the app, itself, so if I lost one somehow, the other had it; and both tickets were instant to access for me and my wife on each phone and did not require an internet connection to access the ticket as, say, a ticket stored as an email might.
Anyway, my options are increasingly limited. It’s digital or nothing in many cases, and the apps were easier even than Expedia. I tried Expedia first, but couldn’t find any flights where the cost was not totally out of reason or the departure/arrival times as horrible as possible. Maybe the airlines are “incentivizing” (to use a word I hate but that seems appropriate when talking about things I hate like digital financial applications) use of their apps by reserving their cheapest flights for sale on their own app only. I don’t know, but that is where I found both the best travel times and the best prices by far. Hundreds of dollar saved and several hours travel time.
I guess that is how they hook you. Today we read about China doing exactly that with its CBDC apps.
According to the report, the People’s Bank of China — the country’s central bank — has been actively encouraging the use of the digital yuan in China’s transportation network….
Railway networks, light rail connections, and metro systems in the CBDC’s pilot zone have also been upgraded to facilitate seamless digital yuan payments independent of power or network connections. Furthermore, bus routes within the zone now also facilitate digital yuan payments. Also, earlier this year, several highway toll booths within the pilot zone started accepting the digital yuan as a payment method.
The city of Shenzhen disclosed that nearly 36 million digital yuan wallets have been opened by its residents, with over seven million new wallets created since the start of 2023. This ongoing expansion of the CBDC pilot program across diverse sectors reflects China’s determination to transform its economy by promoting the widespread adoption of the digital yuan.
And, so, step-by-step the digital yuan spreads as China’s CBDC, and so eventually will the Fed’s digital dollar, which has begun with a limited pilot rollout of the kind of transaction platform necessary to make a Fed CBDC function. And many of these, if not all, as that “Deeper Dive” pointed out, will work with an IMF-created platform that will assure they operate in a globally seamless way.
The fires of inflation are spread by labor seeking protection from inflation
In other news headlines of critical importance, we get to see today exactly how a tight labor market adds heat to inflation. The US is suddenly seeing more labor-union strikes than it has since the 1970’s. The driver now, as back then, is high inflation. Coupled with a tight labor market that has finally given labor a sense of having some leverage and power, unions are striking or threatening to strike like they haven’t done in half a century.
That is where inflation becomes its own vicious tornado of a circle: Inflation presses workers to strike to make up for how badly suffocated they feel from inflation. They get higher wages, so companies raise prices more to cover the cost, which causes inflation to rise more; and, so the cycle, then, repeats.
This is exactly what the Fed MOST wanted to avoid. The labor market did not slacken in time for it to avoid that, and the effect is likely to be compounded because it is already being reported that the UPS strike alone, if it happens, could create shortages on a scale similar to what were saw peak-pandemic.
