Millennials and Gen Z have grown up watching politicians saddle them with economic hardships and make a mockery of their right to privacy. Now, the Biden administration wants to double down and rob young Americans of their economic privacy.
Alongside the $3.5 trillion reconciliation bill is a provision that would force banks to report the transaction details of all accounts with over $600 to the IRS. But the thought of government agents breathing down one’s neck is vexing for young people, who already account for a sizable portion of the $1.7 trillion in student loan debt and have an unemployment rate twice that of older Americans. Whether it’s investing in cryptocurrency, buying a firearm, or giving to charity, this measure will only dissuade young Americans from making financial decisions that best serve their interests and values.
Like any monopoly, the government has a vested interest in shutting out competition, including currencies that compete with the ever-devaluing dollar. Biden’s recent announcements of a national cryptocurrency enforcement team and consideration of increased regulations on digital currency are clear signals that this administration is no friend to the crypto market, where more and more young people are putting their money. On top of Uncle Sam taking a big chunk of their crypto profits through capital gains taxes, the threat of the IRS monitoring each time a young person invests in a currency frowned upon by DC will increase buyer hesitancy, creating yet another barrier to getting out of debt and securing financial stability.
Speaking of items frowned upon by DC, it’s not difficult to imagine how increased IRS scrutiny into young people’s bank accounts will deter them from buying firearms. Over the last several years, state and local governments have started violating gun owners’ privacy in unprecedented ways with Emergency Risk Protection Orders (otherwise known as “red flag” laws), which are currently on the books in 19 states and Washington, D.C. The Biden administration supports expanding these laws, even as police have used them to kick down young Americans’ doors and—in the case of Maryland resident Duncan Lemp—kill them in their sleep.
A blow to the young philanthropic spirit would be another piece of collateral damage of the IRS provision. A recent study showed only one-third of young Americans give to charity, due to high costs of living and unfavorable markets. Whereas the IRS can easily weaponize itself against ideological enemies—as seen with the IRS’ admitting to targeting at least 40 conservative groups in the early 2010s—economic barriers combined with the stripping of donor privacy will discourage young people from investing in the change they want to see in the world.
Millennials and Gen Z came of age as the surveillance state came into existence, starting with the passage of the Patriot Act in 2001. Now, the government’s oft-spoken mantra “if you’ve got nothing to hide, you’ve got nothing to fear” is coming for young Americans’ bank accounts. But neither the IRS snooping on their Venmo transactions nor demanding 37 percent of your Dogecoin gains will solve the problems that America faces.
This economic tyranny will only continue to build the case for young people that the government is working against their interests, not for them.
Sean Themea serves as chief of staff for Young Americans for Liberty (YAL). A recovering progressive, Sean has appeared on Fox Business, Newsmax, The First TV, and OAN.
This article was originally published on FEE.org. Read the original article.
Millions of Americans have bought into forms of digital, decentralized money known as cryptocurrency, valuing its privacy and independence from government meddling. Naturally, politicians in Washington want to rain on the parade and shut down the newfangled currencies— like Bitcoin and Ethereum—that are beyond their control.
One of the biggest opponents of cryptocurrency in Washington is Congressman Brad Sherman, a California Democrat who has in the past called for cryptos to be banned. At a Wednesday hearing for the House Committee on Financial Services, Sherman harshly criticized cryptocurrency and renewed his calls for its prohibition.
“Cryptocurrency is something you can bet on, but if people want to have the animal spirits to take risks, I’d prefer them to invest in equity markets to support the building of American companies, or the California lottery, to support the schools in my state,” Sherman said. “Cryptocurrencies are highly volatile, so if one person makes a million dollars… and nine lose $100,000, Coinbase makes money, the millionaire goes on TV and says how wonderful it is, and nine others do not retire in dignity.”
The congressman also claimed that “evading the know-your-customer-rule is the one thing cryptocurrencies have as an advantage to the US dollar.”
“Cryptocurrencies have the political support of the ‘patriotic’ anarchists who are rooting for tax evasion,” Sherman concluded. “I hope we shut it down.” (Emphasis added).
The California congressman gets so much wrong here that it’s difficult to know where to begin.
For one, Sherman seems to think that his personal views on how to invest money should be superimposed on all Americans. Simply put, the congressman and his Washington pals think they know better, and little people like you or me are too foolish to make these decisions for ourselves. This is not only arrogant but incorrect.
You and I have infinitely more knowledge and familiarity with our own financial situation—acceptable levels of risk, investment goals, etc.—than detached politicians and bureaucrats could ever have. It logically follows that we will make better decisions for ourselves than if a top-down, one-size-fits-all approach is crammed down on us from Washington.
(I mean, the congressman is telling people they should put their money in the California lottery, and the odds for the “Grand Prize” are about 1 in 41.4 million. We’re supposed to trust his financial advice?)
Moreover, Sherman’s rhetoric about a select few cryptocurrency winners getting rich off the backs of losers is a classic example of the “zero-sum fallacy.” It’s economically untrue that wealth gains must necessarily come from someone else’s losses. Indeed, when transactions are voluntary, they must inherently serve both parties’ interests. (If they didn’t, the parties wouldn’t agree to it!) So, the picture the congressman paints of cryptocurrency as exploitation is by no stretch of the imagination the reality. People can gain value without others always having to lose.
Sherman also misstates the differences between cryptocurrency and the US dollar. He overlooks the key difference: cryptocurrencies like Bitcoin are beyond central control, and their price cannot be inflated by a central authority. However, the US dollar can be inflated by the Federal Reserve when it prints new money. (In fact, that’s exactly what’s happening right now).
Why does someone with such dubious and ill-informed views on cryptocurrency want to superimpose his judgment on the entire country via government bans? Well, it’s no doubt due in part to the natural arrogance that plagues humans (especially those who become politicians).
But there’s also a more cynical, yet simple answer: Some of Congressman Sherman’s biggest donors are big banks and mainstream financial institutions, the same interests threatened by the rise of cryptocurrency.
According to OpenSecrets.org, the following financial companies rank among Congressman Sherman’s biggest donors to his 2020 Campaign Committee:
Capital Group Companies: $18,400
Blackstone Group: $16,800
BlackRock Inc: $11,250
American Bankers Association: $10,000
Capital One Financial: $10,000
Charles Schwab Corp: $10,000
Credit Union National Association: $10,000
Discover Financial Services: $10,000
Deloitte LLP: $10,000
This offers some insight into why Sherman persists in seeking to ban cryptocurrency. Sure, such a restriction would deprive his constituents of the freedom to make their own investment decisions and shield their finances from stealth taxation via inflation. But it would serve the interests of Sherman’s biggest donors—and it seems like that’s what really matters to the congressman.
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There are two basic types of progressives. One type’s primary objectives are to reduce social power imbalances and help lift up the least advantaged in society. The other type simply wants to control political power hierarchies to engineer society.
In making a progressive case for cryptocurrency, then, it’s important to appeal to the former type. Some progressives who claim to stand for the poor unwittingly support the hierarchies that cause poverty. One such hierarchy is the big one behind the US dollar.
Redistribution: From Poor to Rich
The dollar is not just a piece of paper. It symbolizes a system. And that system benefits the wealthy by design. The Federal Reserve—the Bank of Banks that controls the money supply—actually has the power to tax, in a way. But that taxation power is wholly undemocratic, unaccountable, and falls disproportionately upon the poor.
As Austrian economists define it, inflation is the practice of printing money out of thin air, which robs the people of their purchasing power. True progressives shouldn’t tolerate the practice because it ends up harming hard-working people, especially the poor.
Source: FRED/Wikipedia
Inflation amounts to a kind of perverse redistribution from poor to rich, because the redistribution works in service of the central banks and their friends in the financial sector. Obviously, inflation works to the advantage of governments, too, not to mention favor seekers who depend on debt spending.
“The Fed-driven economy relies on the creation of trillions of dollars — literally out of thin air — that are used to purchase bonds and push money into a pandemic-ravaged economy that has long been dependent on free cash and is only growing more addicted.”
The problem is that most of these resources stay at the top of the income distribution. Whether in large corporations or in banks, the wealthiest eat first and leave very few scraps. Today much of the inflation shows up as asset prices such as stocks. Otherwise, it shows up in higher prices for food and building materials.
“We are seeing very substantial inflation,” said Warren Buffett recently. Of course, such inflation originates in the central bank’s response to exorbitant federal spending.
This bizarre reality creates cognitive dissonance for some progressives who think the government can do no wrong. But whether we’re talking about missile makers, mega-corporations, or millionaires drawing Medicare from the public trough, there are very few angels writing all those checks in red ink.
Over time, inflation robs the working poor of their meager savings, as day by day every dollar buys less. It’s no wonder, then, that many poor people turn to the very same banks that benefit from inflationary policies. Most end up deep in debt. Thus, when progressives say that capitalism is a system that exploits the poor to benefit the rich, they are right—at least when “capitalism” is defined as a system with central banking at its heart.
But if we’re all locked in the dollar’s matrix, how is a true progressive to make change?
One way is to adopt cryptocurrencies. Now, I don’t mean any particular cryptocurrency. Some progressives don’t like bitcoin, for example, because its security protocols make high energy demands. Other cryptocurrencies will emerge that make fewer such demands but preserve the security of decentralization.
Now, we’ve all witnessed token traders salivating in speculative greed. This has put some progressives off of cryptocurrencies to the point that it’s hard for them to view these innovations as any sort of saving grace. But when we consider that most cryptocurrencies gain purchasing power over time, we will come to see that—despite speculation—they are an escape from a system that is robbing them.
Since we’re still in the early days of popular adoption, price volatility is an unfortunate byproduct of crypto. In time, though, the volatility is likely to settle down. Some cryptocurrencies, known as “stablecoins” are designed to be, well, stable. (We can also imagine cryptocurrency Index Funds with their own more stable tokens, sort of like a mutual fund, which is less volatile than a single stock.) People will start to understand their cryptocurrency both as an appreciating asset and as money, especially when more and more vendors accept cryptocurrency.
But wait. Can lower-income populations really afford to get into crypto?
Cryptocurrencies vs. Convenience Stores
First, we should define our terms. It’s not perfect, but “low-income” is generally a group of people who can scrape up some disposable income if they’re disciplined. Let’s use Pew Research’s definition, which is anything below two-thirds of the median household income.
Now, anyone who studies poverty knows that it’s expensive to be low-income in America. For example, lower-income folks tend to pay higher overdraft fees, ATM withdrawal fees, and interest rates than the rest of us for various reasons. For better or worse, low-income folks frequently also shop at convenience stores to satisfy many of their wants and needs. Convenience stores charge more on average for so many of the things people buy, whether it’s coffee and doughnuts, cigarettes and vapes, or candy and Monster soda. And it’s not a stretch to think that many low-income people spend $4.00 per day on average for stuff that brings them short-term pleasure, but that they probably don’t need.
What if a low-income person could forgo enough convenient-store junk to adopt some crypto? Let’s say $100 per month.
Now, some might argue that it’s the essence of ‘privilege’ to suggest that lower-income people buy cryptocurrencies. Indeed, at the moment, you more or less have to have a bank account to do so. (And that’s a fair point.) Yet we can’t make perfect the enemy of the good, particularly when we know that people in much poorer countries, such as Venezuela and Lebanon, find a way—especially as people in these poorer countries are experiencing hyperinflation.
So let’s go back to the idea of foregoing $100 per month in convenience-store spending and present a set of options to low-income people.
What would happen if someone adopted $100 per month of a cryptocurrency with a 3 percent increase in purchasing power over 10 years (as opposed to a 3 percent decrease caused by inflation) and saved it? How much would their crypto be worth after 10 years? You can do the math, but the short answer is this: it’s a lot.
Progressives concerned about poverty alleviation—think Sen. Elizabeth Warren or Rep. Alexandria Ocasio-Cortez—should give cryptos a closer look. One of the most effective ways to help low-income people and challenge predatory hierarchies is not to agitate for more debt spending by governments, but instead to create a popular movement in cryptocurrency adoption by the least advantaged.
At the very least, some would be able to form a nest egg that is not really possible in the predatory environments after 2008, in which the taxpayers bailed out the banks and the people continue to live on dollars worth less and less each year.
But that’s not all. Cryptocurrencies have the potential to improve the lot of low-income groups by:
Providing a means of cheaper remittances between hard-working poor people in rich countries to their friends and family in poor countries.
Allowing people to bypass intermediaries who might privilege another group over them.
Providing direct, equal access to gaining capital and assets
Providing direct, equal access to trustful systems and global markets.
Providing direct, equal access to legitimating, auditable properties such as identity, provenance, and consensus systems, such as voting.
Cryptocurrencies are still in their infancy, but they have the power to reduce power imbalances and help lift up the least advantaged in society. Indeed, given how many beneficial properties they have, and how they can function as a hedge against inflation alone, the case for cryptocurrencies makes itself.
Max Borders is author of The Social Singularity. He is also the founder and Executive Director of Social Evolution—a non-profit organization dedicated to liberating humanity through innovation. Max is also co-founder of the Voice & Exit event and former editor at the Foundation for Economic Education (FEE). Max is a futurist, a theorist, a published author and an entrepreneur.
This article was originally published on FEE.org. Read the original article.
