When the clamor reaches Paul Krugman’s wife, you know it’s serious. The launch of a digital dollar remains years away, if it happens at all, but the populist “pre-lash” against it is already gaining steam, with everyone from Florida Gov. Ron DeSantis to Robert Kennedy Jr. piling on in recent days. Proponents argue the initiative is a much-needed modernization of the monetary system, while opponents paint it as an authoritarian nightmare that will become a tool of social control. One sign that the issue has broken through: Krugman, a New York Times columnist and icon of the center-left establishment, revealed on Twitter Thursday that his wife, economist Robin Wells, recently got an earful from a stranger at a coffee shop about the dangers of central bank digital currencies. The reservations of various organized factions — crypto firms, banks, Hill Republicans — were already complicating efforts to design a digital dollar. The spike in populist opposition to the project only adds another political obstacle. And the broad range of figures involved suggests that anti-establishment pushback on Washington’s plans for the future of the dollar will be difficult to contain. The anti-CBDC outpouring traces back to last month’s announcement by the Federal Reserve that its FedNOW system for instant payments would go live in July. FedNow is separate from the digital dollar, but both involve high-tech updates to the monetary system, making them similar enough in their broad contours that commentators seized on the former to air their grievances about the latter. In some cases, the complaints conflated the two, prompting the Fed to release a statement disclaiming any overlap between the payment service and a CBDC, which would entail a more thorough overhaul of the dollar. DeSantis seized on the statement to continue an anti-CBDC campaign that also saw him propose a bill to ban CBDCs from his state last month: “This wolf comes as a wolf,” he wrote. The hubbub is notable for the extent that it has brought Silicon Valley libertarians into a common cause with more traditional anti-establishment elements on both the right and left. “Central bank digital currencies are the beginning of the end,” Rep. Thomas Massie, a Kentucky Republican,tweeted yesterday. Last Monday, Kennedy slammed CBDCs in a mini-essay on Twitter that cites pro-crypto entrepreneurs Balaji Srinivasan and Nic Carter. The post came four days after Kennedy — often branded a left-wing conspiracy theorist for his views on vaccines and 2004 presidential election-rigging claims — filed to run for president in a long-shot Democratic primary bid. Kennedy’s essay was endorsed by former President Donald Trump’s former National Security Adviser, Mike Flynn, often branded a right-wing conspiracy theorist for his embrace of ideas like the fantastical Qanon theory that claims opposition to Trump’s presidency was orchestrated by a cabal of Satanic pedophiles. That evening, Tucker Carlson devoted a segment to the alleged dangers of CBDCs that featured former Democratic congresswoman Tulsi Gabbard, who has fallen out with the Democratic Party and drifted towards the populist right over issues like her radical critiques of U.S. foreign policy. It’s easy to look at this firestorm and dismiss it, as some already have, as a bunch of wackos and opportunists seizing on a dry technocratic exercise to fan public paranoia. Another way to look at it is this: A cross-partisan coalition that includes a leading GOP presidential candidate, the nation’s former top military intelligence official, a scion of the country’s most famous political dynasty, a charismatic former congresswoman, the country’s most-watched political pundit, and a clutch of influential tech moguls are all converging on the same issue. While much of the outcry has been hyperbolic and factually incorrect, whether and how to implement a U.S. CBDC is far from a settled matter. The advent of government-controlled digital currencies has in fact raised widely acknowledged privacy concerns about a system with the potential to dramatically increase government visibility into monetary transactions. And the fear that a Western democracy could use control of the monetary system to quell domestic political opposition is not exactly delusional: Last year in Canada, Prime Minister Justin Trudeau’s government froze the bank accounts of some demonstrators who blockaded the streets of Ottawa to protest the country’s strict anti-Covid measures. Regardless of the merits of the pre-lash, the outcry shows how seamlessly the issue fits into the existing grab-bag of populist causes — DeSantis recently connected it to ESG investing and the “woke mob.” That makes it politically potent. Not so long ago, campaigns against the power of the Fed were limited to Ron Paul and a small number of acolytes. But the rise of cryptocurrencies and a general surge in anti-establishment sentiment have threatened to revive the sorts of disputes about the structure of the monetary system that have pitted populist movements against power centers throughout American history. If the past month’s pre-lash is any indication, the politics of American money in the digital era is looking less like “Brave New World” and more like “Back to the Future.”
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