Category Archives: Treasury

Is the Federal Reserve About to Remake the U.S. Dollar? Going Crypto

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Seems so…

Politico: The Federal Reserve is taking what may be the first significant step toward launching its own virtual currency, a move that could shake up banks, give millions of low-income Americans access to the financial system and fortify the dollar’s status as the world’s reserve currency.

The idea of creating a fully digital version of the U.S. dollar, which was unthinkable just a few years ago, has gained bipartisan interest from lawmakers as diverse as Sens. Elizabeth Warren (D-Mass.) and John Kennedy (R-La.) because of its potential benefits for consumers who don’t have bank accounts. But it’s also sparking strong pushback from those with the most to lose: banks.

“The United States should not implement a [central bank digital currency] simply because we can or because others are doing so,” the American Bankers Association said in a statement to lawmakers this week. The benefits “are theoretical, difficult to measure, and may be elusive,” while the negative consequences “could be severe,” the group wrote.

The explosive rise of private cryptocurrencies in recent years motivated the Fed to start considering a digital dollar to be used alongside the traditional paper currency. The biggest driver of concern was a Facebook-led effort, launched in 2019, to build a global payments network using crypto technology. Though that effort is now much narrower, it demonstrated how the private sector could, in theory, create a massive currency system outside government control.

Now, central banks around the world have begun exploring the idea of issuing their own digital currencies — a fiat version of a cryptocurrency that would operate more like physical cash — that would have some of the same technological benefits as other cryptocurrencies.

That could provide unwelcome competition for banks by giving depositors another safe place to put their money. A person or a business could keep their digital dollars in a virtual “wallet” and then transfer them directly to someone else without needing to use a bank account. Even if the wallet were operated by a bank, the firm wouldn’t be able to lend out the cash. But unlike other crypto assets like Bitcoin or Ether, it would be directly backed and controlled by the central bank, allowing the monetary authorities to use it, like any other form of the dollar, in its policies to guide interest rates.

The Federal Reserve Bank of Boston and the Massachusetts Institute of Technology’s Digital Currency Initiative are aiming next month to publish the first stage of their work to determine whether a Fed virtual currency would work on a practical level — an open-source license for the most basic piece of infrastructure around creating and moving digital dollars.

But it will likely be up to Congress to ultimately decide whether the central bank should formally pursue such a project, as Fed Chair Jerome Powell has acknowledged. Lawmakers on both sides of the aisle are intrigued, particularly as they eye China’s efforts to build its own central bank digital currency, as well as the global rise of cryptocurrencies, both of which could diminish the dollar’s influence.

Sen. Elizabeth Warren speaks.

Sen. Elizabeth Warren speaks.
Sen. Elizabeth Warren, D-Mass., speaks during a Senate Finance Committee hearing on the IRS budget request on Capitol Hill in Washington, Tuesday, June 8, 2021. (Evelyn Hockstein/Pool via AP) | Evelyn Hockstein/AP Photo

Democrats have especially been skeptical about crypto assets because there are fewer consumer protections and the currencies can be used for illicit activity. There are also environmental concerns posed by the sheer amount of electricity used to unlock new units of digital currencies like Bitcoin.

Warren suggested the Fed project could resolve some of those concerns.

“Legitimate digital public money could help drive out bogus digital private money, while improving financial inclusion, efficiency, and the safety of our financial system — if that digital public money is well-designed and efficiently executed,” she said at a hearing on Wednesday, which she convened as chair of the Senate Banking Committee’s economic policy subcommittee.

Other senators highlighted the potential for central bank digital wallets to be used to deliver government aid more directly to people who don’t have bank accounts. A digital dollar could also be designed to have more high-tech benefits of some cryptocurrencies, like facilitating “smart contracts” where a transaction is completed once certain conditions are met.

Neha Narula, who’s leading the effort at MIT to work with the Boston Fed on a central bank digital currency, called the project “a once-in-a-century opportunity to redesign the dollar” in a way that supports innovation much like the internet did.

Still, there are a slew of unanswered policy questions around how a digital dollar would be designed, such as how people would get access to the money, or how much information the government would be able to see about individual transactions. The decision is also tied to a far more controversial policy supported by Democrats like Warren and Senate Banking Chair Sherrod Brown to give regular Americans accounts at the Fed.

“What problem is a central bank digital currency trying to solve? In other words, do we need one? It’s not clear to me yet that we do,” Sen. Pat Toomey (R-Pa.) said. “In my view, turning the Fed into a retail bank is a terrible idea.”

And, “the fact that China is creating a digital currency does not mean it’s inevitable that the yuan would displace the U.S. dollar as the world’s reserve currency,” he said.

Jerome Powell

Jerome Powell
WASHINGTON, DC – MAY 01: Federal Reserve Board Chairman Jerome Powell speaks during a news conference on May 1, 2019 in Washington, DC. Powell said the Fed will not raise interest rates this quarter and no rate hikes are likely anytime soon. (Photo by Mark Wilson/Getty Images) | Mark Wilson/Getty Images

For their part, banks fear a Fed-issued digital currency could make it easier for customers to pull out large amounts of deposits and convert them to digital dollars during a crisis — the virtual equivalent of a bank run — putting financial stress on their institutions and making less money available to provide credit for people, businesses and markets.

It could also potentially deprive them of customers, something the lenders say would interfere with lawmakers’ vision of increased financial inclusion.

“While it is true that deposit accounts are often the first step towards inclusion, the benefits of a long-term banking relationship go well beyond a deposit account,” the ABA said in its statement. “The same is not true of a [central bank digital currency] account with the Federal Reserve, which would not grow into a lending or investing relationship.”

The Bank Policy Institute, which represents large banks, has also argued that many of the benefits of a digital dollar are “mutually exclusive (because they are predicated on different program designs) or effectively non-existent (because the program design that produces them comes with costs that are for other reasons unbearable).”

“The decision on whether to adopt a central bank digital currency in the United States is appropriately a long way off,” BPI President and CEO Greg Baer said. “There are also complex and serious costs that will need to be considered.”

But many lawmakers think it’s worth the effort to look into it.

“The Federal Reserve should continue to explore a digital [currency]; nearly every other country is doing that,” Sen. Bill Hagerty (R-Tenn.) said at the hearing, citing the risk for the U.S. to lose its ability to deploy economic sanctions as effectively with decreased usage of the dollar.

Half of Pandemic Money Stolen, Just $400 Billion

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At least 30% of unemployment claims are fraudulent. 70% of the money has left our shores…oh don’t worry…the Biden administration has set aside $2 billion to stop this. What?

Beware of increased unemployment fraud due to identity theft

Axios:

Criminals may have stolen as much as half of the unemployment benefits the U.S. has been pumping out over the past year, some experts say.

Why it matters: Unemployment fraud during the pandemic could easily reach $400 billion, according to some estimates, and the bulk of the money likely ended in the hands of foreign crime syndicates — making this not just theft, but a matter of national security.

Catch up quick: When the pandemic hit, states weren’t prepared for the unprecedented wave of unemployment claims they were about to face.

  • They all knew fraud was inevitable, but decided getting the money out to people who desperately needed it was more important than laboriously making sure all of them were genuine.

By the numbers: Blake Hall, CEO of ID.me, a service that tries to prevent this kind of fraud, tells Axios that America has lost more than $400 billion to fraudulent claims. As much as 50% of all unemployment monies might have been stolen, he says.

  • Haywood Talcove, the CEO of LexisNexis Risk Solutions, estimates that at least 70% of the money stolen by impostors ultimately left the country, much of it ending up in the hands of criminal syndicates in China, Nigeria, Russia and elsewhere.
  • “These groups are definitely backed by the state,” Talcove tells Axios.
  • Much of the rest of the money was stolen by street gangs domestically, who have made up a greater share of the fraudsters in recent months.

What they’re saying: “Widespread fraud at the state level in pandemic unemployment insurance during the previous Administration is one of the most serious challenges we inherited,” said White House economist Gene Sperling.

  • “President Biden has been clear that this type of activity from criminal syndicates is despicable and unacceptable. It is why we passed $2 billion for UI modernizations in the American Rescue Plan, instituted a Department of Justice Anti-Fraud Task Force and an all-of-government Identity Theft and Public Benefits Initiative.”

How it works: Scammers often steal personal information and use it to impersonate claimants. Other groups trick individuals into voluntarily handing over their personal information.

  • “Mules” — low-level criminals — are given debit cards and asked to withdraw money from ATMs. That money then gets transferred abroad, often via bitcoin.

The big picture: Before the pandemic, unemployment claims were relatively rare, and generally lasted for such short amounts of time that international criminal syndicates didn’t view them as a lucrative target.

  • After unemployment insurance became the primary vehicle by which the U.S. government tried to keep the economy afloat, however, all that changed.
  • Unemployment became where the big money was — and was also being run by bureaucrats who weren’t as quick to crack down on criminals as private companies normally are.
  • Unemployment fraud is now offered on the dark web on a software-as-a-service basis, much like ransomware. States without fraud-detection services are naturally targeted the most.

The bottom line: Many states are now getting more sophisticated about preventing this kind of fraud. But it’s far too late.

*** What Is Unemployment Insurance Fraud? | does

Consequences should also be on the states and we don’t spend anything more in unemployment until at least 50% is recovered…..billions of dollars likely ending up in the hands of foreign crime syndicates based in China, Russia and other countries, experts say.

“Fraud is being perpetrated by domestic and foreign actors,” Blake Hall, CEO and founder of ID.ME, told FOX Business. “We are successfully disrupting attempted fraud from international organized crime rings, including Russia, China, Nigeria and Ghana, as well as U.S. street gangs.”

Haywood Talcove, the CEO of LexisNexis Risk Solution, suggested the bulk of the money – about $250 billion – went to international criminal groups, most of which are backed by the state. The money is essentially being used as their slush fund for “nefarious purposes,” such as terrorism, illegal drugs and child trafficking, Talcove said.

The criminals have been able to access the money by stealing personal information and using it to impersonate claimants or buying it on the dark web. The groups also use an army of internet thieves to submit fraudulent claims. States, which administer the aid, may be prepared to combat fraud from individuals who are trying double-dip or cash in on benefits they don’t need, but not international criminals using the dark web to exploit the system.

Operation Choke Point 2.0 is Emerging

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I was just thinking about this old Obama administration program this week as it is a web tag it used years ago. Additionally, there was a time that Congressman Darryl Issa came to Clearwater to speak, an event I attended and he spoke on this disgusting program among other topics.

Well, Kelsy Bolar is on the case and a big hat tip to her for the alarm she is sounding. Let’s keep in mind the moves that Bank of America made in partnership with the FBI to report their own customers’ banking records for that they asserted went to Washington DC to begin a revolution at the Capitol on January 6. You can imagine that this program is quite the top in the halls of Congress by progressives.

Operation Choke Point: The Government's Covert War on ...

Here goes:

Amongst the record-breaking number of executive actions taken by President Joe Biden was one related to a little-known, frightening Obama-era program called Operation Choke Point. The program, dubbed so under former Attorney General Eric Holder, uses the power of the federal government to target legal yet leftist-disfavored businesses. These include gun sellers, pawnshops, and short-term money lenders.

The Trump administration did its best to end this blatantly unconstitutional program that sought to discriminate against legal industries. In 2017, the Justice Department declared the program “formally over.” At the end of Trump’s term, the Office of the Comptroller of the Currency established the Fair Access rule to solidify its culmination.

Operation Choke Point... DOJ Cuts Businesses From Banks

But on Jan. 28, the Office of the Comptroller of the Currency under President Biden announced it would pause the Trump-era rule intended to prevent another Operation Choke Point from happening again.

The Backstory of Operation Choke Point

The Trump administration rule appeared innocuous enough, instructing banks to “conduct risk assessments of individual customers, rather than make broad-based decisions affecting whole categories or classes of customers when providing access to services, capital, and credit.”

Under Operation Choke Point, federal regulators instructed banks to do the opposite — to openly discriminate against entire industries the Obama administration found objectionable. Weaponizing the power of banking regulators at the Federal Deposit Insurance Corp. and the Office of Comptroller of the Currency, the Obama administration realized it could block entire industries from the banking system that it didn’t like. This made it difficult — if not impossible — for politically unfavored businesses such as gun sellers and short-term lenders to operate.

Essentially, by using the power of federal banking regulators to intimidate banks from providing their services to these industries, the administration choked off their access to the financial system, leaving them paying more for essential banking services, or unable to use a bank at all.

The Obama administration claimed the program was intended to root out fraud by cutting off “high risk” industries from the banking system. But the administration didn’t make any differentiation between legal and illegal “high risk” industries, intentionally grouping lawful industries such as firearms sellers with patently illegal activities like Ponzi and credit-card schemes.

Different agencies within the Obama administration denied wrongdoing in various ways. At least one bank, however, admitted to choking off three legal enterprises at the government’s behest. Dozens of business owners — many of them gun sellers and short-term lenders — said their bank accounts and access to credit card processing platforms were suddenly stymied or shut down with no explanation and no opportunity for recourse.

Given its stained reputation, we shouldn’t expect the Biden administration to bring back Operation Choke Point under the same shameless name. But the return of the larger strategy behind Operation Choke Point appears here to stay.

Whereas seven years ago the idea of using the powers of the federal government to choke certain Americans from public life was controversial enough for the Obama administration to deny wrongdoing, in today’s era of social justice and cancel culture, it’s applauded.

Build Your Own Banks

Within corporate America, an employee was run out of Boeing over an article he published 33 years beforehand arguing women shouldn’t serve in combat (a position many Americans hold today). In the media, a Jewish, pro-Israel, pro-choice, bisexual writer was choked from The New York Times for not being leftist enough.

In Hollywood, a conservative actress was choked from Disney for expressing politically incorrect views on her private social media account. In the beauty blogging world, a conservative blogger was ousted from her role as a Sephora representative.

For all intents and purposes, Operation Choke Point is happening every day on a massive scale. Yet instead of “just” choking off access to capital and banking services, we’re witnessing a stranglehold on information, speech, and the broader marketplace of ideas. Concerningly, the government is now playing an active role.

As exemplified by Parler and the recent Twitter purge, Big Tech is choking conservatives off their social media platforms while Democrats cheer it on. In an attempt to choke conservatives out of entire industries of employment, critical race theory training and pledges are being forced on schools, government workplaces, and the armed forces.

This Dynamic Is Now Worse

Signs of Operation Choke Point’s formal resurrection are symbolic of the larger attempt by government actors to choke politically disfavored industries and individuals from the mainstream. While cancel culture has led to a politicized economy, the federal government’s arbitrarily targeting of individuals, groups, and entire companies will increase the politicization of the country, where the only acceptable views are from those in power.

Operating in the dark corners of the federal bureaucracy, Operation Choke Point bypasses public input and the legislative process, leaving politically unpopular individuals and businesses to fend for themselves. If the Biden administration’s rule reversal is any sign, the next four years won’t be about unifying the country to “Build Back Better.”

After being choked from essential services in the economy, conservatives and right-of-center businesses will have no choice but to Build Your Own — if that’s even still tolerated or allowed. Build your own banks, build your own credit card processing companies, build your own web hosting platforms, build your own social media platforms, build your own companies, build your own media, build your own schools, and build your own country — because you’re choked from “ours.”

Of course, all this will do nothing to further the causes of bipartisanship, unity, and healing President Biden claims to desire. Capitalizing on the trend of cancel culture, a return of Operation Choke Point would devastate an already damaged country. By abusing the powers of federal regulators, Operation Choke Point 2.0 would solidify what most right-of-center Americans already know: Instead of unity, Democrats want you choked from everyday life.

Three years ago, former President Obama infamously claimed his administration “didn’t have a scandal that embarrassed us.” While it’s tempting to point to Operation Choke Point to refute this, perhaps Obama was right. With Biden sitting by Obama’s side, the Obama administration wasn’t the least bit embarrassed about using its powers to choke legal businesses from existence. Indeed, it was the entire goal and they appear poised to do it again.

WHO Reports other Possible Diseased Animals and Covid

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Per the WSJ in part: World Health Organization investigators are honing their search for animals that could have spread the new coronavirus to humans, identifying two—ferret badgers and rabbits—that can carry the virus and were sold at a Chinese market where many early cases emerged.

Members of a WHO team probing the pandemic’s origins say further investigation is needed into suppliers of those and other animals at the market, some of which came from a region of China near its Southeast Asian borders where the closest known relatives of the virus have been found in bats.

Team members say they have yet to establish all the creatures sold, legally or illegally, live or dead, at the market in the Chinese city of Wuhan that was tied to the first known cluster of cases in December 2019.

China’s National Health Commission and foreign ministry declined to comment.

The WHO team is juggling multiple competing hypotheses and still isn’t sure if the virus first jumped from animals to humans at the market or if it was circulating elsewhere first.

***

Has anyone asked what wildlife China exports to the United States? Hello investigative journalists, where are you? What would Customs and Border Patrol have to report on this matter? They do the inspections or should when not chasing illegal migrants coming across our Southern border or working with ICE to track down criminal aliens.

Looking a little deeper:

Wild products are regarded as superior to farm-raised, and the legal market simply makes it easier to launder poached animal products.

During a recent EIA investigation in China, undercover agents spoke with three different ivory traders who all said that at least 90 percent of what they trade legally is poached, said Thornton. A common method of feeding illegal products into the market is reusing and counterfeiting government-issued permits. Meanwhile, about 96 African elephants are killed each day for their ivory, a rate that could wipe them out within a decade.

China is the largest market for illegal wildlife products – and the market continues to grow. “Wildlife species that are bred in captivity for commercial purposes make some products widely available, which drives up consumer demand and increases poaching in the wild,” said Sharon Guynup, an environmental journalist and Wilson Center public policy fellow.

Reducing Demand, Stopping Trade

To reduce consumer demand in China, the non-profit International Fund for Animal Welfare (IFAW) has run several innovative outreach campaigns, said Grace Ge Gabriel, the regional director of IFAW’s Asia chapter.

In one campaign, Chinese pop stars, athletes, TV celebrities, and CEOs denounced buying wildlife products in a series of public service announcements and ads that were posted on billboards, buses, in airports, and other public places. Another initiative targeted the belief that ivory comes from elephant teeth and the extraction didn’t kill them. An IFAW survey found that in 2007, 70 percent of Chinese people didn’t know that elephants died for the ivory trade. Three years into a campaign to change this misconception, they found that of the 44 percent of people who had bought ivory in the past year, only seven percent said they would do so again.

More detail here.

Humm, it is quite the business it seems.  China Animal Exports to United States in 2018 was more than $2 million.

In 2018, the top partner countries to which China Exports Animal include Hong Kong, China, Japan, United States, Korea among others. Details here.

One must also ask what other countries trade animals with China that also partner with the United States that put health of humans at risk?

Last April, Fox News at least touched on the matter.

pangolin

China is offering tax incentives to wild animal exports despite banning their sale and consumption within the country amid fears that the practice was responsible for the global COVID-19 pandemic, according to a Sunday report.

SMALL-TOOTHED FERRET-BADGER LIFE EXPECTANCY

Although no consensus has been reached on the virus’ origins, multiple studies have pointed to so-called “wet markets” in the southeastern Chinese city of Wuhan, where wild animals were bought and sold for consumption.

COVID-19 is one of a “family” of coronaviruses commonly found in bats. It is suspected to have passed through a mammal, perhaps pangolins – the most-trafficked animal on the planet – before jumping to humans.

At these wet markets, live, wild-caught animals, farm-raised wild species and livestock frequently intermingle in unsanitary conditions that are highly stressful for the animals – circumstances that are ripe for infection and spillover.

In February, China’s government banned the sale and consumption of wild animals, saying that its “potential risk to public health has aroused wide public concern.”

But within a few weeks, the country’s Ministry of Finance and tax authority announced it would offer tax incentives to the export of wild animal products, The Wall Street Journal reported, citing government records.

Cuba Re-designated as State Sponsor of Terror

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President Obama removed Cuba from the designation and it is expected early into the Biden administration, this action will again be reversed.

The United States has once again designated Cuba as a State Sponsor of Terrorism, accusing it of granting safe haven to terrorists and also providing support for acts of “international terrorism”. The move by the Trump administration comes days before President-elect Joe Biden’s inauguration, who would have liked to start where he and Obama left the US-Cuba relations in 2016. Former President Barack Obama had delisted Cuba as a State Sponsor of Terrorism in 2015, seeking normalisation of ties with the Communist State.

State Department officials say the decision is not politically motivated and argue Cuba has not met the standards to remain off the list during the Trump administration.

American Enterprise Institute research fellow Ryan Berg affirmed the basis of the Trump administration’s decision.Cuba sees Obama terror promise as healing of historic wound

“Cuba has provided unequivocal support to terrorist and insurgent groups throughout Latin America for many decades, such as Colombia’s ELN and the FARC, to name just a few,” Berg told the Washington Free Beacon. “Today, it also continues to support the consolidated dictatorship of Nicolás Maduro in Venezuela, aiding and abetting what the Office of the United Nations High Commissioner for Human Rights has declared to be ‘crimes against humanity.'”

Havana has also played a role in helping China expand its influence in the Caribbean. In November, Cuba followed the lead of China in echoing far-left talking points regarding race relations in America at the United Nations, and China covered for Cuba on its record of harboring terrorism. China, meanwhile, has reportedly expanded its surveillance capabilities in the Caribbean, using telecommunications networks to spy on American mobile phones in the region.

The move could affect President-elect Joe Biden’s approach to reengaging with the communist country, a policy out of the Obama administration’s playbook. Biden’s transition team for the Department of Defense included Frank Mora, an Obama administration holdover who advocated lifting sanctions on Havana.

Berg said the Cuba policy favored by Mora and Biden would probably require a reversal of the decision to return Cuba to the list of state sponsors of terrorism.

“A diplomatic opening with a country designated as a ‘state sponsor of terror’ is a difficult lift,” Berg said. “Therefore, one of the first steps to any Cuba opening would likely require a reversal of this decision.” source