Central bank digital currencies aren’t going to fix the mess central banks have made of their non-digital currencies. From Tom Luongo at tomluongo.me:
One of the things that converted me to the Austrian way of thinking about the economy was the concept of money with an expiration date. Early articles at Lewrockwell.com and Mises.org covering hyperinflations of various forms and kinds horrified me when banknotes and government scrip reached the point of forcing people to spend money versus having it lose its ‘legal tender’ status.
Money that ‘expired’ like points on your credit card was simply a horrifying idea.
Martin Armstrong makes the point all the time that the main reason why the U.S. dollar is the world’s reserve currency is because it is the only modern government-issued currency that hasn’t been defaulted on in over two hundred years.
In fact, it was the consolidation of the Colonial government debt held over from the Revolutionary War which ultimately doomed the government under the Articles of Confederation giving rise to the current U.S. constitution and its monopoly power to issue dollars.
That power gave the Constitution its power as an international player, telling the world the new government honored its debts. The inability of the ECB today to control the debt issuance of the euro-zone states is that currency zone’s fatal flaw and why any move towards consolidation of that power is the goal of all EU fiscal and EU monetary policy.
Absent that the EU is doomed to the same fate as the Articles of Confederation.
Fast forward to today with the world awaiting the birth of the first Central Bank Digital Currency (CBDC), the Digital Yuan from China, and we see the concept of expiration being embedded directly into what looks like the next monetary system planned for us.
We’ve come full circle, folks.