Fed. Reserve Chairman Jerome Powell Looks Toward Digital US Dollar
Updated: Aug 17
Well, well, well, well, ..... well. I think the only people who are shocked by this are the old-school (or just old) investors who think we'll be going back to the Gold Standard. Why go back to the 1950s when we can reinvent ourselves by the 2050s? And it turns out the Federal Reserve agrees! Let me see if I can explain the problem in just one paragraph:
Until 1971, the US dollar bill was essentially just a contract stating you could trade this piece of paper (fun fact: it's actually cotton) for a certain amount of gold. This was called The Gold Standard. After 1971, the US dollar bill became legal tender, which doesn't mean anything at all. I guess technically it means it's accepted in trade, which is true all over the world. The US dollar bill is the only currency that's accepted anywhere in the world. Anyway, since 1971 the US dollar has lost over 95% of its value. It's safe to say that this system is no longer working, if it ever did. So now, we need to either re-adopt the Gold Standard (ok, boomer) OR we could try something new.
The Federal Reserve (the US government-run/central bank) announced today that they are looking to collaborate with private sector companies and research tanks to develop a digital US dollar; a new cryptocurrency that would be backed by the US government and held by its central bank. This digital dollar would be the value driver for the tangible dollar, meaning that if the digital dollar goes up in value, then the tangible dollar goes up in value, and vice versa. The interesting part about the report is that the Fed stated they only wanted to supplement the tangible US dollar, not replace it. I'd expect that by the end of my lifetime in 40-50 years or so, that the US dollar will be entirely digital.
This is an important step forward in our economic advancement. Mexico and China each have their own digital versions of their own currency. It's mainly used to stabilize the currency and prevent unpredictable fluctuations in value.
One of the largest and most criticized aspects of cryptocurrencies is that they aren't backed or supported by any authorities. Well, the largest monetary authority in the whole fuckin' world just said they would like to operate one, instead of relying on a relatively useless commodity like gold.