WEBVTT - Mark Chats with Sam Callahan of Swan Bitcoin 0:00:00.080 --> 0:00:02.599 Hello, and welcome to another episode of The Mark Moss Show, 0:00:02.600 --> 0:00:05.920 where we talk about the decentralized revolution, talking about the 0:00:05.920 --> 0:00:07.520 way the world's changing, of course as we look at 0:00:07.560 --> 0:00:11.159 it through the lens of politics, finance, and technology, and 0:00:11.200 --> 0:00:13.319 of course it's technology that changes the world more than 0:00:13.360 --> 0:00:15.920 anything else, the way that we work and organize and communicate, 0:00:15.960 --> 0:00:18.279 and of course the technology that's changing the world right 0:00:18.320 --> 0:00:21.759 now is bitcoin and the decentralized technology that it has. Now, 0:00:21.800 --> 0:00:23.000 you know that I try to bring to you some 0:00:23.160 --> 0:00:25.640 education so you can understand the world a little bit differently, 0:00:25.680 --> 0:00:28.560 and some breaking news. And today I have a special 0:00:28.600 --> 0:00:30.560 guest so you can hear from somebody other than myself, 0:00:31.200 --> 0:00:33.919 and we are coming to you from Jackson Hole, Wyoming, 0:00:33.960 --> 0:00:36.720 where we are at Bitcoin ski Week, which is pretty amazing. 0:00:36.760 --> 0:00:40.479 We're getting to score some epic powder and have some 0:00:40.520 --> 0:00:43.360 amazing conversations and I grab someone to talk to you 0:00:43.360 --> 0:00:45.000 about this as well. So Sam, thanks for taking the 0:00:45.040 --> 0:00:46.840 time to come sit down with me. Yeah. Thanks Mark. 0:00:47.600 --> 0:00:50.040 So Sam, you know you have I mean, you do 0:00:50.080 --> 0:00:53.960 amazing research at Swan Swan Bitcoin for everybody that's listening, 0:00:55.360 --> 0:00:58.160 and I guess you're doing research on just macro topics 0:00:58.160 --> 0:01:00.000 But one of them where you've really kind of been 0:01:00.280 --> 0:01:04.200 digging in deep is in the banking world, right, so BIS, 0:01:04.280 --> 0:01:07.720 Bank of International Settlements, IMAF, etc. And I know one 0:01:07.760 --> 0:01:09.679 of the areas you've been digging into is central bank 0:01:09.720 --> 0:01:15.400 digital currencies quite a bit correct, Yeah, yeah, Now, first off, 0:01:15.440 --> 0:01:18.960 I would say, do you think that CBDs CBDCs are 0:01:18.959 --> 0:01:21.560 getting a lot of hype? Are they getting too much 0:01:21.680 --> 0:01:26.600 hype or not enough hype? I would say, I'd say 0:01:26.760 --> 0:01:29.520 the plausibility that one happens in the United States, it 0:01:29.560 --> 0:01:33.000 is probably getting too much hype. I think globally, maybe 0:01:33.000 --> 0:01:35.160 they're not getting as much hype. So I think there's 0:01:35.160 --> 0:01:37.520 a big difference between the developments that are happening in 0:01:37.560 --> 0:01:40.959 the United States versus globally. And if you look at 0:01:41.400 --> 0:01:43.680 a couple of surveys from the Bank of International Settlements, 0:01:43.840 --> 0:01:47.279 so for instance, twenty nineteen, around twenty percent of central 0:01:47.280 --> 0:01:50.080 bank surveyed said that they were likely to issue a 0:01:50.120 --> 0:01:53.480 retail CBDC, and fast forward to today that numbers up 0:01:53.520 --> 0:01:57.600 to sixty percent. So it's accelerating globally. But you know, 0:01:57.640 --> 0:02:00.160 in the United States, I think there's a lot of 0:02:00.200 --> 0:02:02.440 fear around the central bank digital currency. But there's a 0:02:02.440 --> 0:02:06.040 ton of hurdles that would need to be leaped over 0:02:06.160 --> 0:02:08.240 in order to issue one in the United States, and 0:02:08.240 --> 0:02:10.679 there's a lot of pushback right now, and that's encouraging 0:02:10.720 --> 0:02:13.839 to see. So frame up for US a central bank 0:02:13.880 --> 0:02:16.919 digital currency, because first off, I think most people already 0:02:16.960 --> 0:02:18.679 understand this, haven't thought through this, but I think it's 0:02:18.680 --> 0:02:22.760 something like eighty percent of dollars transactions are digital anyway. Yeah, 0:02:22.800 --> 0:02:25.280 I don't want them to ban cash, but the truth is, 0:02:25.320 --> 0:02:27.440 if I admit it, I don't really use cash. I 0:02:27.520 --> 0:02:30.400 use debit cards and credit cards and wire transfers and ah. Right, 0:02:31.040 --> 0:02:34.839 and so the majority of transactions are already digital. So 0:02:35.600 --> 0:02:38.080 we have digital dollars kind of, right, So what's the 0:02:38.080 --> 0:02:41.280 big deal with a CBDC. So there's a difference between 0:02:41.320 --> 0:02:44.400 the digital dollars that we have today and a retail CBDC, 0:02:44.960 --> 0:02:47.880 And there's three main differences in my mind. One is 0:02:47.919 --> 0:02:50.880 that a CBDC would be programmable, so you could have 0:02:51.280 --> 0:02:55.360 smart contract functionality that would execute on specific conditions so 0:02:55.400 --> 0:02:57.880 that you could do anything. You could say, hey, we 0:02:57.960 --> 0:03:01.480 want this certain cohort pup the population to not be 0:03:01.560 --> 0:03:03.840 able to buy this at a certain time, like and 0:03:03.880 --> 0:03:06.640 so you'd have this granular level of control that is 0:03:06.680 --> 0:03:09.520 not capable with the current digital dollars. The other difference 0:03:09.560 --> 0:03:12.639 is that ninety five percent of digital dollars today are 0:03:12.680 --> 0:03:16.720 privately issued. They're issued by commercial banks, okay, and so, 0:03:16.880 --> 0:03:18.960 or they're on like PayPal or something like that, and 0:03:19.040 --> 0:03:22.120 so they have default risk and liquidity risk that that 0:03:22.200 --> 0:03:25.720 company could go under, like Papal could under, like PayPal 0:03:25.720 --> 0:03:27.680 could go under, right, and or the bank or the bank, 0:03:27.840 --> 0:03:30.160 just like in the global financial crisis, a lot of 0:03:30.160 --> 0:03:33.760 people savings. They realize that those digital dollars are at risk. 0:03:34.480 --> 0:03:37.480 They have those risks. A central bank digital currency would 0:03:37.480 --> 0:03:39.680 be different. It would be a liability of the central 0:03:39.680 --> 0:03:42.640 bank itself, and so technically it would be a safer 0:03:42.760 --> 0:03:47.120 form of digital dollars because the central bank itself can't 0:03:47.120 --> 0:03:49.960 really default technically because it has access to a quote 0:03:50.040 --> 0:03:53.760 unquote money printer even though they don't technically print money, 0:03:54.080 --> 0:03:55.600 they would be able to work with the Treasury or 0:03:55.640 --> 0:03:58.360 something happen and flood the market with liquidity, and so 0:03:58.440 --> 0:04:02.840 they wouldn't have that risk. Better. I think it's it's 0:04:03.000 --> 0:04:05.520 that's their argument for why it's better. That's why they 0:04:05.520 --> 0:04:09.200 say they want to do that. And so it's kind 0:04:09.200 --> 0:04:11.080 of like a tough question because there's so many other 0:04:11.200 --> 0:04:15.360 risks to essential bank digital currency around privacy, around surveillance. 0:04:15.640 --> 0:04:19.080 Like I don't think the risk the risk outweigh the benefits, 0:04:19.160 --> 0:04:22.720 is what I'm saying. Yeah, And so I can't think 0:04:22.760 --> 0:04:24.080 of the third one off the top of my head 0:04:24.160 --> 0:04:27.640 right now. But those are the two big differences. Oh 0:04:27.680 --> 0:04:30.520 that The third one is it could be a transmission 0:04:30.720 --> 0:04:33.840 channel for monetary policy and fiscal policy, and you'd be 0:04:33.880 --> 0:04:37.120 able to tax every single transaction that people make. So 0:04:37.240 --> 0:04:39.000 right now, take a piece off the top tape, a 0:04:39.040 --> 0:04:41.440 piece off the top of every single transaction. So let's 0:04:41.480 --> 0:04:44.279 just say hypothetically that cash would disappear, and it cash 0:04:44.440 --> 0:04:48.320 is declining rapidly over the last say ten years. And 0:04:48.360 --> 0:04:50.680 so if cash is gone, even if I gave you 0:04:50.680 --> 0:04:53.279 a quote unquote twenty dollars just because you know, we 0:04:53.320 --> 0:04:55.240 made a bet on a sports game or something, they 0:04:55.240 --> 0:04:58.240 would technically be able to tax that transaction so it 0:04:58.279 --> 0:05:00.920 could bring more revenue to the state. And so that's 0:05:01.040 --> 0:05:03.719 those three main differences between central bank digital currencies and 0:05:03.720 --> 0:05:07.760 private and private dollars. Today, digital dollars is the transmission 0:05:07.800 --> 0:05:12.320 channel for monetary, physical, and tax policy. It's programmable as 0:05:12.320 --> 0:05:15.840 well as it doesn't have default in liquidity risk, you know, 0:05:15.960 --> 0:05:20.479 on the taxing transactions piece right now, like we've seen 0:05:20.520 --> 0:05:24.000 the growth of venmo or PayPal, right, so venmo, like 0:05:24.320 --> 0:05:27.279 I can venmo you directly. It goes from my venmo 0:05:27.360 --> 0:05:28.919 to my credit card, credit card to my bank, my 0:05:28.960 --> 0:05:30.640 bank to your bank, your bank to your credit card, 0:05:30.680 --> 0:05:33.120 your to your venmo. Right, there's whatever, four to six 0:05:33.200 --> 0:05:35.000 people in the middle of that, and each one of 0:05:35.040 --> 0:05:40.400 them taxes. Yeah, the transaction. Right. So if the government 0:05:40.480 --> 0:05:42.760 were to the government to fed whatever we want to 0:05:42.760 --> 0:05:45.960 call that, were to provide the CBDC channel, they're technically 0:05:46.520 --> 0:05:49.719 all of those in one so the venmo, the credit card, 0:05:49.760 --> 0:05:52.760 the bank, whatever, And if they took the same amount 0:05:52.800 --> 0:05:54.800 of fee that was already being charged there, that could 0:05:54.839 --> 0:05:57.360 be like the tax or the transaction feed let's call it. 0:05:58.320 --> 0:06:00.520 That might be one way to look at it directly 0:06:00.600 --> 0:06:01.920 to the state, and then that would be a big 0:06:01.920 --> 0:06:04.400 revenue generator for the state, right and it wouldn't be 0:06:04.400 --> 0:06:06.200 any more than we'd be paying right now in venmo. 0:06:06.480 --> 0:06:09.640 So yeah, let's essentially yeah, and so technically it would 0:06:09.680 --> 0:06:11.720 be safer too, right, because of that most risk that 0:06:11.760 --> 0:06:15.280 it doesn't have that I explained, and this is why banks, 0:06:15.360 --> 0:06:18.360 the banking industry, and companies like PayPal are so worried 0:06:18.360 --> 0:06:21.000 about essential bank digital currency being issued because it would 0:06:21.000 --> 0:06:25.360 disintermediate them. It would technically be a better option, safer option, 0:06:25.560 --> 0:06:27.400 and the thought would be that a lot of funds 0:06:27.400 --> 0:06:30.719 would flow out of their you know, their companies into 0:06:30.960 --> 0:06:34.280 the central bank digital currency. So if if we stay 0:06:34.320 --> 0:06:37.360 with some of the problems, first of all, actually, before 0:06:37.360 --> 0:06:39.200 we go into the problems, let me ask another question 0:06:41.560 --> 0:06:45.480 from a from a global macroeconomic standpoint, Like, the governments 0:06:45.480 --> 0:06:47.919 of the world are going broke. The FEDS fighting inflation, 0:06:47.960 --> 0:06:51.599 they're losing and their fight against inflation, the government US government, 0:06:51.600 --> 0:06:53.680 the treasury is going broke. All the governments of the 0:06:53.720 --> 0:06:56.440 world are basically going broke. And so a lot of 0:06:56.480 --> 0:06:58.760 people think that the CBDC is the way that they 0:06:58.839 --> 0:07:01.799 solve that. So like, hey, they're at the fiscal cliff, 0:07:01.839 --> 0:07:02.960 and so what they're gonna do is they're going to 0:07:03.000 --> 0:07:04.800 create this event and they're gonna switch out and put 0:07:04.800 --> 0:07:06.640 everybody onto a CBDC, and that's how they're going to 0:07:06.720 --> 0:07:09.479 fix the problem. I don't see how that fixes the 0:07:09.520 --> 0:07:11.960 problem though. I don't think it fixes the problem at all. 0:07:12.360 --> 0:07:14.520 I think it would be the exact same problem in 0:07:14.600 --> 0:07:18.760 a new shiny wrapper that has embedded surveillance. I mean, 0:07:18.800 --> 0:07:21.480 it would be the exact same system. And they're looking 0:07:21.480 --> 0:07:23.600 at if you look at the design, they're leading designs, 0:07:23.600 --> 0:07:25.800 it's all out in the open. They write these research papers. 0:07:26.440 --> 0:07:30.560 They are recreating the current system. It's an intermediated central 0:07:30.560 --> 0:07:34.240 bank digital currency design. It's the same monetary system with 0:07:34.320 --> 0:07:37.880 all the same problems, just with increased control and surveillance. 0:07:37.880 --> 0:07:40.560 I mean it really is. So it wouldn't solve any problems. 0:07:40.280 --> 0:07:44.240 So the problems that got us here are one, they 0:07:44.320 --> 0:07:47.400 print too much money. I mean that that's ultimately if 0:07:47.440 --> 0:07:49.320 we want to boil it down, right yea, and so 0:07:50.120 --> 0:07:52.080 and then you said the transmission problems, and I don't 0:07:52.080 --> 0:07:54.200 know exactly what you're talking about. Potentially, like let's say 0:07:54.360 --> 0:07:56.400 during the COVID of pandemic, they had a problem getting 0:07:56.480 --> 0:08:00.480 money out into this little inefficient inefficient, right, So if 0:08:00.520 --> 0:08:03.600 this makes it more efficient, that means they can put 0:08:03.720 --> 0:08:06.600 even more money into the system. Yeah, yeah, exactly. And 0:08:07.520 --> 0:08:10.400 there's critics of CBDCs and one of them as this 0:08:10.480 --> 0:08:13.800 advisor for the Chicago Fed, and he wrote a comment 0:08:14.160 --> 0:08:17.520 in response to the Federal Reserves white paper on CBDCs, 0:08:18.040 --> 0:08:20.960 and he said that this will actually expand the balance 0:08:20.960 --> 0:08:23.640 sheet because they'll have to issue CBDCs, and if their 0:08:23.680 --> 0:08:27.520 liabilities on the Federal Reserve balance sheet, this could expand 0:08:27.560 --> 0:08:29.640 the balance sheet even more at a time where they're 0:08:29.640 --> 0:08:32.400 trying to regain credibility and reduce their balance sheet. So 0:08:32.520 --> 0:08:35.400 to actually it would do the opposite. It would actually 0:08:35.400 --> 0:08:37.920 just they would print more money. And they're thinking about 0:08:37.960 --> 0:08:40.680 how do we get banks to go along with this, 0:08:41.120 --> 0:08:44.160 and one of their proposed solutions to that problem is, oh, 0:08:44.200 --> 0:08:46.520 we'll just pay him. We'll give them more scentible print 0:08:46.600 --> 0:08:48.679 money and pay the banks so that they won't go 0:08:48.720 --> 0:08:52.000 out of business. And so they have all these problems 0:08:52.040 --> 0:08:54.040 of issue in a CBDCs, and a lot of their 0:08:54.040 --> 0:08:57.640 solutions to those problems are to print more money, which is, 0:08:57.840 --> 0:09:00.520 like you said, the root cause. Yeah, if you're just 0:09:00.559 --> 0:09:02.400 tuning in, you are listening to the Mark Mo Show, 0:09:02.440 --> 0:09:05.719 we're talking about the decentralized Revolution. I'm sitting down with 0:09:05.760 --> 0:09:09.600 Sam from Swan Bitcoin. We're talking about CBDC Central Bank 0:09:09.600 --> 0:09:14.240 digital currencies. We're gonna dig more into the problems, maybe 0:09:14.280 --> 0:09:16.800 non existing solutions, and then we're gonna talk about the 0:09:16.840 --> 0:09:19.079 reality of what a risk we have potentially in the 0:09:19.160 --> 0:09:21.760 United States and other countries. There's some big news that 0:09:21.800 --> 0:09:24.160 broke this week about another country launching one. We're gonna 0:09:24.160 --> 0:09:26.240 talk about that. We're back with all that and more 0:09:26.240 --> 0:09:28.640 in a minute. Don't go away, we're gonna be right back. 0:09:29.559 --> 0:09:31.080 All right, welcome back. If you're just tune in, you 0:09:31.080 --> 0:09:33.040 were listening to the Mark mo Show. We're talking about 0:09:33.080 --> 0:09:35.920 the decentralized Revolution, and I'm in the studio with Sam 0:09:36.040 --> 0:09:40.120 Callahan from Swan Bitcoin. He's the what the macro analyst, 0:09:40.160 --> 0:09:44.280 thereat lead analyst, lead analysts. Yeah, anyway, he spends a 0:09:44.320 --> 0:09:46.200 lot of time researching these topics. Let's just let's just 0:09:46.240 --> 0:09:49.560 say that, right, and too much time. Right, that's his job. 0:09:49.559 --> 0:09:51.920 He can get paid to research these things. And specifically, 0:09:51.920 --> 0:09:53.959 you've been really been digging into banking. So we're talking 0:09:53.960 --> 0:09:55.880 about central bank digital currencies. Now back to that, we 0:09:55.880 --> 0:09:58.160 were talking about how they don't really solve any of 0:09:58.160 --> 0:10:00.760 the problem. So when people think, oh, well they're gonna 0:10:00.840 --> 0:10:03.160 they're gonna crash the markets and switches to a CBDC. 0:10:03.320 --> 0:10:07.040 It's like that doesn't really do anything. I guess you 0:10:07.080 --> 0:10:09.199 could maybe look at like when gold used to be 0:10:09.280 --> 0:10:12.400 money pre nineteen thirty three, and then they switched everybody 0:10:12.400 --> 0:10:16.560 to a fiat money and then they devalued it, so 0:10:17.080 --> 0:10:20.360 everyone basically still had the same dollars, they just bought less. 0:10:20.880 --> 0:10:23.200 So I suppose they could say, through some sort of 0:10:23.200 --> 0:10:28.320 liquidity event, like the banks are broke, FDIC is going 0:10:28.360 --> 0:10:29.760 to step in and give you money, but instead they 0:10:29.800 --> 0:10:33.040 give you a new CBDC money and now steve value 0:10:33.040 --> 0:10:35.720 because now they don't see FDIC doesn't have enough money. 0:10:35.720 --> 0:10:39.120 Obviously they are like a nine percent ratio or something 0:10:39.120 --> 0:10:40.679 something like that, something like that, so they have to 0:10:40.679 --> 0:10:42.520 print away more money. So they're gonna give you your money, 0:10:42.559 --> 0:10:45.320 here's your money, here's your hundred thousand back, but it 0:10:45.360 --> 0:10:47.640 only buys you forty thousand worth of goods or something 0:10:47.679 --> 0:10:50.040 like that. Well, they'll I think what they'll do is 0:10:50.080 --> 0:10:53.160 if they do go along with this retail CBDC and 0:10:53.240 --> 0:10:58.080 issue it, they'll attach some kind of incentive stimulus, right UBI, 0:10:58.679 --> 0:11:00.560 And that's to try to get people to use it. 0:11:00.640 --> 0:11:02.520 And this is what other essential banks around the world 0:11:02.559 --> 0:11:07.559 have done, so China did, that's Nigeria, Bahamas. They all 0:11:07.600 --> 0:11:11.000 have these these random incentives. It's like, you know, it's 0:11:11.000 --> 0:11:13.040 like somebody in a van trying to give candy to 0:11:13.080 --> 0:11:14.920 a kid, like, don't worry, it's safe. You know, here 0:11:14.960 --> 0:11:17.920 you go, and people might fall for that. But the 0:11:17.920 --> 0:11:20.800 adoption rates of other central bank digital currency have been 0:11:20.840 --> 0:11:24.640 extremely low, extremely disappointing because people don't want them. And 0:11:24.760 --> 0:11:26.959 you look at the proponents of them, and they have 0:11:27.040 --> 0:11:29.480 a lot of arguments why is CBDC would be good. 0:11:29.920 --> 0:11:33.040 One of them is financial inclusion, promote financial inclusion. One 0:11:33.080 --> 0:11:35.959 of them is more efficient payments. One of them is 0:11:36.000 --> 0:11:40.040 it'll actually improve financial stability. Those are the three main ones, 0:11:40.160 --> 0:11:42.080 and when you look into the data, it actually does 0:11:42.160 --> 0:11:44.320 none of those things and actually worsens all three of 0:11:44.360 --> 0:11:47.720 those things. All right, So once you dig into the data, 0:11:47.840 --> 0:11:50.080 dig into the facts, you realize that this is just 0:11:50.120 --> 0:11:53.000 a bad idea, Like if we look past the surveillance 0:11:53.040 --> 0:11:55.679 and the nineteen eighty four kind of style, what this 0:11:55.760 --> 0:11:59.360 would enable, it doesn't actually do any of the things 0:11:59.360 --> 0:12:02.560 that they think perceived benefits. So it's really just all risk. 0:12:02.760 --> 0:12:04.200 It's all risk to do this, and it takes a 0:12:04.200 --> 0:12:06.280 ton of time and resources to try to research it 0:12:06.360 --> 0:12:08.560 and build it, and it's a huge waste of time. 0:12:08.679 --> 0:12:11.720 And that's why I pushed back against them. A huge 0:12:11.720 --> 0:12:17.319 waste of time, resources, energy, money, all those things. There's 0:12:17.320 --> 0:12:22.120 no perceived benefit from the greater good. There's perceived benefit 0:12:22.160 --> 0:12:26.960 from authoritarian standpoint. Yes, let's talk more about sort of 0:12:27.000 --> 0:12:31.440 this idea that they're hoping to increase, which would be 0:12:31.559 --> 0:12:34.600 greater inclusion. So I think it was in like twenty 0:12:34.640 --> 0:12:36.960 sixteen there was like two billion adults in the world 0:12:37.040 --> 0:12:39.000 that had no access to banking. I think that numbers 0:12:39.000 --> 0:12:42.160 come down to billion and a half or something like that. 0:12:42.920 --> 0:12:44.839 But people all around the world, and if we take 0:12:44.880 --> 0:12:48.560 off our well, I guess it's a good question. When 0:12:48.559 --> 0:12:51.240 we talk about bitcoin and really global macro, we think 0:12:51.240 --> 0:12:53.720 about it from a global standpoint, not a very US standpoint. 0:12:54.120 --> 0:12:56.440 And so if I think about this banking problem of 0:12:56.520 --> 0:12:58.680 being people under banked, it's a global problem, and most 0:12:58.679 --> 0:13:00.480 of those probably billion and a half people around the 0:13:00.520 --> 0:13:03.200 world don't have access to banking and typically don't have 0:13:03.280 --> 0:13:05.679 permission to join banking. So if you're a fifteen year 0:13:05.720 --> 0:13:07.240 old kid from I ran like you can't get a 0:13:07.240 --> 0:13:12.880 bank account, right, but these are maybe more not global issues, 0:13:12.920 --> 0:13:17.080 they're more local issues. So I saw this week Australia's 0:13:17.120 --> 0:13:19.560 Central Bank is set to launch a live pilot of 0:13:19.679 --> 0:13:22.240 a central bank digital currency in the coming months, According 0:13:22.280 --> 0:13:24.880 to a Jane statement from the Reserve Bank of Australia, 0:13:25.120 --> 0:13:27.520 a research project to explore potential use cases in economic 0:13:27.559 --> 0:13:30.880 benefits of a central bank digital currency CBDC in Australia. 0:13:30.960 --> 0:13:33.680 So while we may see countries like Australia going with it, 0:13:33.800 --> 0:13:35.959 or you said earlier you think like the ECB might 0:13:35.960 --> 0:13:38.360 be next, maybe in the US we don't have it. 0:13:38.360 --> 0:13:40.480 So this isn't really as much of a global phenomenon. 0:13:40.520 --> 0:13:43.719 It's more of like a local Well yeah, I give 0:13:43.720 --> 0:13:47.480 it an extremely low probability of a retail CBDC in 0:13:47.520 --> 0:13:50.760 the United States for a lot of reasons. One is 0:13:50.800 --> 0:13:53.400 just where the land of the free, and this is 0:13:53.520 --> 0:13:56.800 like really a not anti freedom technology, is how I 0:13:56.800 --> 0:14:00.640 would call it. It leads to censorship, leads to surveillance, 0:14:01.320 --> 0:14:05.440 infringes on the rights and liberties of individuals, and it's 0:14:05.440 --> 0:14:07.720 really against American values and you're seeing a lot of 0:14:07.720 --> 0:14:10.800 pushback in Congress and then the Federal Reserve actually can't 0:14:10.840 --> 0:14:14.520 legally issue currency, so there would have to be new 0:14:14.600 --> 0:14:18.280 legislation passed to approve of CBDC. And I just think 0:14:18.320 --> 0:14:20.040 there's a ton of pushback. If you look at the 0:14:20.040 --> 0:14:23.440 public comments in response to the Fed's white paper. I 0:14:23.480 --> 0:14:25.720 looked through every single one of them, and seventy three 0:14:25.720 --> 0:14:29.800 percent of those comments I deemed negative there against CBDCs. 0:14:29.800 --> 0:14:31.920 And I was really lenient in terms of what I 0:14:31.920 --> 0:14:35.320 considered positive comments. So seventy three percent of those comments 0:14:35.320 --> 0:14:37.960 were negative. The American people do not want this thing. 0:14:38.960 --> 0:14:43.080 And then there's there's other reasons why in America it 0:14:43.160 --> 0:14:46.720 just doesn't make sense, the financial inclusion. The FDIC did 0:14:46.720 --> 0:14:49.320 a study on American households. Four point five percent of 0:14:49.360 --> 0:14:52.600 American households still remain the bank today, and the reasons 0:14:53.200 --> 0:14:58.000 in the survey from the FBIC were number one, high 0:14:58.040 --> 0:15:02.280 minimal cost to open a bank account, number two, privacy concerns, 0:15:03.160 --> 0:15:06.120 Number three they don't trust banks, and number four was 0:15:06.200 --> 0:15:10.320 high unpredictable fees. Now, essential bank digital currency would do 0:15:10.440 --> 0:15:13.120 none of those things. They wouldn't improve any of those things. 0:15:13.160 --> 0:15:16.440 They would actually worsen them, because like let's take fees 0:15:16.480 --> 0:15:21.040 and let's take high minimal costs to open up bank account. 0:15:21.040 --> 0:15:24.960 Those two reasons it would cost money for commercial banks 0:15:25.160 --> 0:15:28.440 to implement a CBDC system. It would take compliance costs 0:15:28.480 --> 0:15:31.360 with a MLK by C, it would take operational costs 0:15:31.600 --> 0:15:33.800 to build out the technology in the system to be 0:15:33.840 --> 0:15:36.680 interoperable with a cbd system, to create a digital wallet, 0:15:36.760 --> 0:15:40.360 to maintain the wallets, those all they would all cost 0:15:40.440 --> 0:15:43.320 money for these banks to do, and so the logical 0:15:43.360 --> 0:15:45.840 conclusion is that they will pass on those costs in 0:15:45.960 --> 0:15:50.040 the form of higher fees for their users, for their consumers, 0:15:50.320 --> 0:15:52.800 and so it would actually lead to higher fees and 0:15:52.840 --> 0:15:56.040 it would actually lead to higher expenses and costs for consumers, 0:15:56.080 --> 0:15:58.000 which are the reasons they're in bank in the first place. 0:15:58.320 --> 0:16:01.640 And specifically, it would hurt small community banks. And small 0:16:01.680 --> 0:16:05.880 community banks are absolutely critical for serving underserved communities in 0:16:05.920 --> 0:16:11.000 America in terms of critical financial services. They make up 0:16:11.040 --> 0:16:14.800 fifteen percent of total loans, but they make up thirty 0:16:14.840 --> 0:16:17.480 one percent of loans to small businesses and thirty four 0:16:17.560 --> 0:16:20.480 percent of loans to farmers. Wow. Right, So this is 0:16:20.840 --> 0:16:23.240 they would have a really hard time implementing a CDC 0:16:23.720 --> 0:16:26.600 CBDC system compared to larger banks because they don't have 0:16:26.600 --> 0:16:29.880 the profit margins, they don't have the technical capabilities, and 0:16:29.960 --> 0:16:32.960 so they would be forced to close. And this is 0:16:33.000 --> 0:16:36.000 the continuation of a trend of bank consolidation over the 0:16:36.080 --> 0:16:39.800 last twenty years. Right, So, like that's why it would 0:16:39.880 --> 0:16:43.400 really worsen financial inclusion, even though they say it's going 0:16:43.440 --> 0:16:45.920 to promote it. It would cause these small and community 0:16:45.960 --> 0:16:50.120 banks to close up shop worse, like causing more financial 0:16:50.480 --> 0:16:53.840 it would cause financial exclusion. And so that's why I'm 0:16:53.840 --> 0:16:55.760 pretty passionate about this because I just think it's such 0:16:55.760 --> 0:16:58.240 a bad idea. It's such a bad idea. There's like 0:16:58.280 --> 0:17:00.800 no no positives in like all. But to your point 0:17:00.840 --> 0:17:04.520 about the consolidation of banks, you know, for a lot 0:17:04.560 --> 0:17:05.880 of people who haven't spent a lot of time thinking 0:17:05.880 --> 0:17:08.960 about this, the consolidation or the centralization of all these 0:17:09.040 --> 0:17:13.520 decision making capabilities is a big problem. So central bank, 0:17:13.600 --> 0:17:18.520 I'm sorry, commercial or community banks know about their local community. Yeah, so, like, hey, 0:17:18.560 --> 0:17:21.320 I want to start avocado stand well in California, Like, 0:17:21.320 --> 0:17:23.040 that's probably pretty good business. If I want to do 0:17:23.040 --> 0:17:25.840 in Wyoming, it's probably not. And that's that local bank 0:17:25.920 --> 0:17:29.160 should know the difference of my local climate, economy things 0:17:29.160 --> 0:17:32.040 like that and should be making those decisions on a 0:17:32.080 --> 0:17:34.960 local basis. And so as you start to consolidate those 0:17:35.000 --> 0:17:37.200 movements up and so now it's just one central bank, 0:17:37.280 --> 0:17:39.400 the FED going to tell me whether I should start 0:17:39.440 --> 0:17:42.000 avocado stand or not, like they don't have the information 0:17:42.040 --> 0:17:43.960 to do that. And so next thing, you know, small 0:17:44.000 --> 0:17:46.760 businesses suffer and it goes to big banks. If you're 0:17:46.760 --> 0:17:48.760 just tuning in, you're listening to the Markmas Show, we're 0:17:48.800 --> 0:17:51.679 talking about the decentralized revolution, of course each and every week. 0:17:51.720 --> 0:17:53.639 But I'm down sitting down with Sam Callahan. We are 0:17:53.640 --> 0:17:57.520 talking about central bank digital currencies. We're gonna talk about banking. 0:17:57.560 --> 0:17:59.679 I want to talk about some other risks in banking 0:17:59.720 --> 0:18:02.159 as well, and then we'll speculate a little bit about 0:18:02.520 --> 0:18:04.440 some of the probabilities of some of these things happening. 0:18:04.760 --> 0:18:07.560 So we had lots to cover some very important stuff, 0:18:07.560 --> 0:18:09.359 some stuff he's super passionate about, and you should be 0:18:09.359 --> 0:18:11.560 passionate about as well, because this is going to affect 0:18:11.600 --> 0:18:13.119 you if you're not educated it. We'll be back with 0:18:13.119 --> 0:18:14.720 all that and more in a minute. Don't go away, 0:18:15.320 --> 0:18:16.679 all right, welcome back. If you just tune in, you 0:18:16.720 --> 0:18:19.080 are listening to the Mark Moss Show, sitting down with 0:18:19.119 --> 0:18:23.160 Sam Calhan. We are talking about central bank digital currencies. 0:18:23.200 --> 0:18:25.920 He's the lead analyst over at swan Bitcoin. They put 0:18:25.920 --> 0:18:29.040 out amazing research. Go check them out. Swan Bitcoin easy 0:18:29.080 --> 0:18:31.320 place to get your bitcoin dollar cost average into bitcoin 0:18:31.359 --> 0:18:34.919 as well, So check that out. But Sam, so we 0:18:34.960 --> 0:18:36.920 were talking about, you know, all these things, and before 0:18:36.960 --> 0:18:39.000 the breakoff, was talking about this. You were talking about 0:18:39.040 --> 0:18:41.240 the consolidation of the banking and I was kind of 0:18:41.240 --> 0:18:43.600 adding on and how that if we take the decision 0:18:43.640 --> 0:18:47.359 making away, this decentralized decision making from local banks that 0:18:47.400 --> 0:18:51.040 have local knowledge and try to consolidate to a federal system, 0:18:51.080 --> 0:18:54.000 that's going to be very bad for local businesses. And 0:18:54.080 --> 0:18:57.760 really it would consolidate all businesses where big businesses, big 0:18:57.880 --> 0:19:00.880 national based businesses might get the funding and local don't. Yeah, 0:19:00.960 --> 0:19:04.439 and when you have consolidation of the banking industry, you 0:19:04.480 --> 0:19:07.240 have decreased competition, right, So like when you have only 0:19:07.280 --> 0:19:11.000 four megabanks, which there's a chart after the global financial 0:19:11.080 --> 0:19:13.880 crisis where it just shows the consolidation into basically four 0:19:13.960 --> 0:19:17.720 or five megabanks in America, right or basically globally. And 0:19:17.840 --> 0:19:21.720 when there's decreased competition, you can have exorbitant fees. They 0:19:21.760 --> 0:19:23.480 can get away with that. They have this thing called 0:19:23.560 --> 0:19:26.080 junk fees, and it's a huge problem. It's the fourth reason, 0:19:26.600 --> 0:19:29.760 top reason why people remain unbanked is high, unpredictable fees. 0:19:30.119 --> 0:19:32.679 And I think that's a result of the consolidation. And 0:19:32.720 --> 0:19:35.720 so if CBDCs will make it harder for these small 0:19:35.800 --> 0:19:39.320 community banks to stay in business, it'll lead to higher 0:19:39.320 --> 0:19:42.760 fees because there's less competition in the banking industry. Now 0:19:42.760 --> 0:19:44.240 I want to talk about some of the risks for 0:19:44.240 --> 0:19:45.840 a minute, because you touched on it, but you didn't 0:19:45.840 --> 0:19:47.960 really get expand on them. So like we saw like 0:19:48.080 --> 0:19:53.160 MasterCard is piloting a program to track your carbon score, right, 0:19:54.240 --> 0:19:57.600 so that's a problem. So like potentially with this ESG 0:19:57.840 --> 0:19:59.880 and all these carbon the metrics that are coming out, 0:20:00.000 --> 0:20:02.160