MONEY MATTERS - Does sticking one’s head in the sand help solve problems?

Written by Drummond Pike

Central Bank Digital Currency & the GOP

One of the surprising elements of Zohran Mamdani’s political rise has been the rapid reaction to his self-identification as a “democratic socialist,” the same moniker adopted by another New York City progressive, AOC as she is called. Our dearly unbeloved President has gone even further, terming the mayor-elect a “communist”, yet again giving evidence of his limited intellectual acumen. Communists believe the state (deep or otherwise) should own the means of production and mete out its benefits to all in some yet-to-be-achieved perfect society. Democratic socialists, according to conventional definitions have a far narrower view that we should democratize the workplace, empower workers, and insist that enterprises benefit their communities. My new favorite AI search tool, Perplexity, says this about democratic socialism:

Key characteristics include:

• Public or collective ownership of major industries and resources, with limits on private accumulation.

• Government regulation of the economy to ensure social welfare and reduce inequity.

• Extensive publicly financed assistance programs and protections for workers.

• Commitment to political pluralism, human rights, and participatory democracy at all levels.

In essence, democratic socialism advocates a peaceful, democratic transition from capitalism toward a fairer, socially-owned economy underpinned by democratic governance and respect for individual rights.

So, to watch the White House throw around a1950s era political invective “communist” you have to wonder what exactly bothers them so much about someone who advocates for the protection of workers and social welfare programs. McCarthyism in the 50’s so overused and misused the term, I’m surprised it still has an impact, but that’s a different story.

This story starts with the unstated, but very long-term GOP strategy to use government to help the private sector make money. Plain and simple. If the government does something that someone can copy, pirate, or exploit for profit, let’s de-regulate, legislate, and advocate to make that so. Take AccuWeather, the private company founded in the 60’s that takes government generated weather data from NOAA, massages it, gives it fancy graphics, and then presents it – for a fee – as its own. You see it everywhere, especially on the Internet. But back in Trump 1.0, they tried to get the Republican dominated Congress to prevent NOAA from giving its data and forecasts directly to the public, in other words reserving the “last mile” to for-profit companies. Project 2025 went even further by advocating to turn all weather research, monitoring, and science over to the private sector, thus eliminating any governmental role in providing essential information for farming, air travel, flood control, and insurance industries. Intriguingly, this was a bridge too far for even AccuWeather that apparently prefers getting its raw data for free.

Another example is the morbidly profitable “Medicare Advantage” insurance initiated with key GOP support in late Clinton and then Bush II administrations. Intended to bring innovation and competition to Medicare, these policies now outnumber traditional Medicare and blanket the advertising markets during the annual enrollment period. But rather than requiring a baseline equal to Medicare, the insurance companies are roundly criticized. Limited networks, pre-authorizations, large out-of-pocket expenses, claims denials, increased costs to taxpayers, worse functional outcomes, and the like plague the field. But “free dental” sure sounds like a cool thing, no? To crib from Robert Heinlein, TANSTAFL (there is no such thing as a free lunch).

Here’s another looming example of the GOP preference for exploitive private sector alternatives. While I’d love to get lost in the bizarre story of the Trump family’s use of crypto to make literally billions of dollars while in office – something the Emoluments Clause was intended to prevent – that only would describe abject corruption. This other issue better gets to the GOP approach to government – how do we use government to enable profits in the private sector. The Intercept (11/17/25) published a fascinating story about how the Trump administration is seeking to ban even research into a central bank digital currency. It’s always alarming when someone wants to ban research into something. It’s got to be something so dangerous we can’t even talk about it. Or….it might be something already sitting pretty with the for-profit sector and they don’t want to have the government compete by providing a similar service. So, what in the hell is a “central bank digital currency” (CBDC)?

The Intercept poses this question: Imagine a future where use of paper money diminishes or disappears. Will every monetary transaction between people or businesses involve a private sector intermediary making money on deal? And this: “Why can’t the actual backer of the dollar – the US Government – create a way to send money itself? Academics have been exploring this question for years, asking why the federal government can’t back its own digital currency to facilitate transfers between people.” A CBDC would work “…by letting the government take a small step from backing physical currency to backing its digital equivalent.” (11/17/2025 Intercept article by Matt Sledge)

Four countries have launched CBDC’s: Bahamas, Nigeria, Jamaica, and Zimbabwe, none of them known as financial centers of the global economy. Essentially, a CBDC is an alternative to cash that allows fee-free transactions just as paying with greenbacks does. Most young people are familiar with Venmo and its clones where they can pay one another through the app. Or maybe you’ve heard about M-PESA in Kenya and a few other African countries that lets you use your phone to hold cash and make payments. But these systems all charge fees. US banks invented Zelle to facilitate cash payments, and of course PayPal is huge. The fees vary, but they are all there. If you use credit card connected Venmo to send money, it’s 3%. PayPal charges 49 cents per transaction plus 3-3.5% for business transactions, and higher fees for international, instant transfers, and some merchant services. (No wonder Elon has so much money!) All these companies should be fearful of a potentially free alternative should the central banking world begin to seriously look at CBDC systems. And here is where it gets interesting. Who is considering CBDC’s?

Already, large-scale pilot programs have been launched in China, India, the EU, UK, Sweden and South Korea. This is potentially serious business and could be a major disruptor of global dependence on the US dollar in international commerce (which may explain China’s interest). So, how’s the GOP responding? According to Sledge, our brilliant Republican House leaders are trying to take Trump’s Executive Order from January banning any work on CBDC ideas and turn it into a statutory prohibition that cements private sector payment systems as free from any potential governmental alternative. He goes on to describe the current effort buried in the Defense Budget Bill that seeks to ban a US version of a CBDC which seems hardly a matter of defense policy. Instead, conservatives rattle the cage with fears of intrusion into personal privacy.

Somehow, they overlook the success of Bitcoin and other cyber currencies in protecting the anonymity of customers and owners through block-chain technology. Instead, they decry this idea as a step toward “state control” of our lives by monitoring one’s financial activities, often posing China’s interest as another means of surveilling its population. Another communist plot, no doubt, so let’s ban even research into what might be involved and how it might work. And in the meantime, Big Finance and Big Tech collect their filthy lucre on every purchase of a cup of coffee.

Some have called our current economic paradigm “crony capitalism” of the sort mostly associated with authoritarian governments. Business interests vie for the blessing of those in power to ensure their business success. As we watch the billionaires toady up to Trump, give millions to his promised gilded ballroom from bended knees, it’s hard to argue the alternative. But a lot of what MAGA has done can be undone or constrained. But letting the financial transactions business monopolize fee-based systems in the absence of reasonable government alternatives such as CBDC’s is remarkably stupid, especially when the world is moving in the opposite direction.

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