Economist Peter St Onge raised concerns about a housing bill moving through Congress, arguing that a provision within the legislation could allow for the development of a central bank digital currency despite language presented as a ban.
“Republicans in Congress are pushing a central bank digital currency, once again disguised as a ban, so they can surveil and control every dollar you spend,” St Onge said.
He questioned the intent behind the proposal, adding, “Will it be the Republicans who make you eat the bugs?”
St Onge said the broader housing bill includes provisions addressing zoning regulations and mortgage rates but also contains additional elements he described as problematic.
“Republicans in Congress are currently pushing a housing bill that does some useful things to red tape zoning and mortgage rates while doing some shady things, this is Congress, remember,” he said.
He added that the legislation includes financial measures, stating, “Like letting banks print money they don’t have, and handing free money to people with bad credit, which didn’t work in 2008.”
St Onge said a key concern is a provision related to digital currency, explaining, “But hidden deep in the bowels is a little gem that effectively green lights a central bank digital currency, CBDC, so long as Wall Street gets a piece of the action.”
He described a central bank digital currency as a government-controlled financial system, stating, “So a CBDC is a kind of government run crypto token that would replace the dollar with a centralized database that lets bureaucrats see and report every dollar you spend, and lets them block anything they don’t like.”
St Onge added, “It’s a stable coin, but a government stable coin.”
He said current banking regulations already involve reporting requirements, noting, “Banks send the government transaction report to any time you move 10 grand and so called suspicious activity reports if you do anything weird.”
He argued that these practices raise constitutional concerns, stating, “Both in blatant violation of the Fourth Amendment requiring probable cause for government spying.”
St Onge said banks also have the ability to restrict access to funds, referencing past events, stating, “Remember the Canadian trucker protests that force banks to freeze protesters accounts using powers we also have thanks to the Patriot Act.”
He said a central bank digital currency would expand those capabilities, stating, “The difference is a CBDC does this to all of your dollars, not just your bank account.”
St Onge added, “There is no escape unless you’re paying the mortgage and groceries in gold or perhaps Bitcoin.”
He pointed to international developments, stating, “China, naturally, is the world leader in CBDCs.”
He said the system there allows for control over spending, adding, “It’s bragged about the fact it can freeze any spending.”
St Onge also said such systems could include additional mechanisms, stating, “It even allows negative interest rates, where your money literally loses a percent a month unless you spend it.”
He noted that other countries are exploring similar systems, stating, “Aside from China, another 71 countries are building CBDCs or running pilots.”
St Onge said the Federal Reserve had previously been exploring a pilot program, stating, “Now, the Federal Reserve was running a pilot, but Trump ended that with an executive order as soon as he took office.”
He said the housing bill could revive aspects of that effort, explaining, “Enter the housing bill, which already turned into a vehicle to cripple private stable coins.”
St Onge said the bill includes language that distinguishes between two types of digital currencies, stating, “The reason is there’s two kinds of CBDCs, a retail CBDC, where the Fed issues tokens to the public, meaning, you replace your bank with a bank account at the Fed and a wholesale CBDC, where the Fed issues tokens only to banks.”
He said the bill addresses only one of those forms, adding, “The housing bill only bans the retail CBDC. It allows wholesale.”
According to St Onge, that distinction could influence financial institutions’ positions, stating, “This is a problem because retail terrifies Wall Street.”
He added, “Wholesale, on the other hand, deals banks in they can keep placing you just with a new back door for the bureaucrats.”
St Onge said that could change industry support, stating, “That flips the enormous Wall Street lobbying machine from anti CBDC to pro CBDC.”
He also questioned assurances about privacy protections, stating, “Now, wholesale promoters promise it will never, ever be used for surveillance.”
St Onge added, “But once it’s built, they can flick a switch using any excuse.”
He referenced past government authorities, stating, “And going by the Patriot Act, they will be very creative about the excuses.”
St Onge cited polling data on public opinion, stating, “80% of the American public opposes the CBDC.”
He added, “Once they understand it, it’s closer to 95% that’s across party, Republicans, Democrats, everything in between.”
St Onge concluded by arguing that lawmakers may continue pursuing such measures despite opposition, stating, “But given the dollars and control at stake, Democrats and Republicans will keep trying to sneak in the back door no matter what voters think.”
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