Like many governments around the world, the Biden administration seems determined to limit Americans’ monetary freedom by taxing it away, and by manipulating and controlling how they store and spend their money. Here are a few examples of how this is happening.
Let’s start with the most obvious, which is the loss in purchasing power Americans have experience over the past two years. Inflation is a hidden tax levied on Americans. Inflation is a regressive tax, in that it hurts the working and middle classes the most. The government’s official Consumer Price Index data indicate that the U.S. dollar has lost 14 percent of its value since 2020. Yet anyone who has bought groceries, filled up their gas tank, or paid their electrical bill knows full well that this number grossly underestimates the true rise in the basic costs that comprise everyday life for most Americans. Using the same calculator back to 2000, the loss of purchasing power is 43 percent. Because there is a limit to how much taxes can be raised, inflation becomes an alternative means to an end.
Then there is the push to eliminate cash as a form of payment, given new wind during the pandemic panic. The reasons usually given for a cashless society are to reduce crime, to reduce the costs and effort of printing currency and coins, and, especially during 2020, to eliminate use of a possible carrier of contagious germs.
But who benefits from the shift to a cashless society? Not the individuals who would like to use it. Financial institutions greatly benefit from the billions of dollars made every year on credit card and payment transaction fees. Government agencies certainly also benefit, as the tax authorities, intelligence agencies, and other three letter entities are able to fully surveil digital transactions, not just for tax compliance but, more ominously, for political compliance. The greatest danger here is that total surveillance of all financial transactions provides governments with enormous persuasive power over its citizens. Social credit scores are the next step. Thinking of spending on opposition political parties or perhaps buying a firearm? Only if you’re allowed to, and then at great risk to yourself.
Gun owners and Second Amendment advocates gathered at the Ohio State House to protest against red flag laws proposed by Ohio Gov. Mike DeWine and national politicians in the wake of a wave of mass shootings throughout the United States. Matthew Hatcher/Getty Images
The right for individuals to bear arms is protected under the Second Amendment, but that hasn’t stopped the financial industry, under pressure from government, from hindering anyone who tries to exercise it. Leading payment processors such as PayPal, Stripe, and Square won’t serve legal vendors of firearms, ammunition, or even accessories like holsters. While credit card companies like Visa, Mastercard, and American Express allow firearms transactions, in late 2022 they moved them into a new merchant category code, making such transactions specifically identifiable. This reduces the privacy of law-abiding citizens and places customers under a penumbra of suspicion.
The ironically misnamed American Rescue Plan Act of 2021 requires that payment services like Venmo, PayPal, and others issue tax forms to individuals who make over $600 of transactions on their platform (the previous threshold was $20,000). This change is expected to be implemented in 2023. At the same time, the U.S. Treasury proposed to require banks to report data to the government on any bank account with more than $600 in annual transactions, and provide a separate report on physical cash transactions. The Biden administration backed away from this plan after stiff pushback from conservative leaders, privacy advocates, and the banking industry itself.
Do you think your money is safe in your bank account? Multiple laws allow the government to seize your assets through the process of civil forfeiture even if you haven’t been charged, let alone convicted, of a crime. We saw how this worked in Canada during the truckers’ peaceful protests over vaccine mandates when the government simply issued a decree authorizing it. If your bank fails, new laws created following the global financial crisis of 2008–09 allow the bank to turn your savings and other deposits into securities to shore up the bank’s capital. The Internal Revenue Service can tap funds in your bank account if the agency claims you owe taxes, even if the IRS made an error or you’re in a dispute process. And banks have canceled accounts of individuals and entities who pose “reputational risk” by, for example, supporting conservative candidates, speaking out on election integrity, or challenging the prevailing COVID-19 narrative.
Many Americans want an alternative to both the banking system and the inflation that reduces the value of their savings. Cryptocurrencies like Bitcoin and Ethereum proport to provide an option. Because their supply is strictly limited, they are not at risk of the monetary inflation that has weakened the purchasing power of the dollar. They require no bank to intermediate transactions between individuals or businesses. By being decentralized, they limit the power that governments have over their issuance and use.
Representations of cryptocurrencies Bitcoin, Ethereum, DogeCoin, Ripple and Litecoin in a file photo. Dado Ruvic/Reuters
Cryptocurrencies, therefore, represent a perceived threat to governments’ objectives, and that explains why governments are now going after the crypto industry with a vengeance. For example, in the United States in 2023, multiple government agencies, including the Securities and Exchange Commission (SEC), the Department of Justice, the Department of the Treasury, and the Federal Reserve are using the scandal of the FTX fraud to launch a coordinated assault on other crypto exchanges, crypto-focused banks, and related service providers. This is bad for consumers and investors alike.
On Jan. 27, 2023, the Federal Reserve formally warned member banks that holding, investing, or transacting in cryptocurrencies, stablecoins, or other digital assets are not permissible activities. While not explicitly banning such activity, the message was sufficiently strong to not only chill but absolutely freeze out banks from engaging in crypto-related activities. On the same day, the Fed denied the application of a crypto bank applying to become a member of the Federal Reserve System, arguing that crypto poses “significant safety and soundness risks,” the bogeyman phrased used by bank regulators the world over when they don’t like or don’t understand something new.
At the same time, the SEC is contemplating outlawing cryptocurrency staking for U.S.-based retail customers. Staking is an essential process which “support[s] the blockchain by validating new transactions and adding new blocks.” Holders of crypto assets earn rewards on their staked tokens (in the form of additional tokens). This regulatory move would deprive most U.S. individuals of crypto access and opportunity in favor of big institutions. The action would not only unfairly target small individual cryptocurrency holders but also would stifle development of the crypto industry in the United States, pushing it further offshore and outside of the U.S. regulatory nexus, which was one of the issues with FTX to begin with. Without congressional authority or proper legislation, the SEC is targeting crypto through “regulation by enforcement.”
The actions of the SEC, the Fed, and other government agencies are hurting the very investors, depositors, and customers they are there to protect. But never mind, because the overriding objective of all these measures—from the elimination of cash, porous access to bank accounts, and the eradication of crypto—is to force Americans to keep their investible wealth close enough that it is never out of sight or reach of government’s surveilling eyes and grasping hands.
As I discussed in a recent article for The Epoch Times, the goal of the coordinated effort to kill the crypto industry is to pave the way toward the development of a central bank-issued digital currency that would be controlled by the issuing government. This will make it even easier for governments to surveil and seize assets of citizens with objectional views or dissenting voices challenging the regime. This is a danger we must resist.
