Cyberattacks & Central Bank Digital Currencies: The Next Economic Shock
Agustin Carstens, Bank for International Settlements
The Federal Reserve recently rained on the stock market's parade and dampened heightened corporate expectations of imminent rate cuts, with Fed chairman Jerome Powell suggesting in no uncertain terms, that a March rate cut was off the table. With recent CPI numbers indicating a hotter-than-expected economy, all hopes of a Fed pivot have swiftly evaporated and what seemed imminent to investors only a month ago, now appears to be wishful thinking. This hawkish outlook comes just as the S&P 500 is hovering around record highs as investors settle on a 'goldilocks' sentiment - an economy that is neither hot nor cold. The dangers of locking into such a frame of mind are accurately described by veteran distressed assets investor, Howard Marks:
Something usually fails to operate as hoped, and the economy moves away from perfection. One important effect of goldilocks thinking is that it creates high expectations among investors and thus room for potential disappointment (and losses).
The disparity in stock market performance and actual fundamental economic data is only a telltale sign of a reality most people are already aware of - that the stock market is not an indicator of economic health. The erratic surges in major indexes such as the S&P 500 are not fueled primarily by any actual productivity or economic output, but by speculation on the part of institutional investors and a handful mega corporations who routinely capitalize on low interest environments to spur stock buyback binges which artificially inflate stock prices. Years-long loose monetary policy has endeared investors to a cheap money environment that has bred unrealistic expectations of perpetual rate cuts and Fed intervention any time market numbers begin to show signs of capsizing. It has also entrenched the notion that the Federal Reserve is a captive entity beholden to the diktats of larger market expectations and pressure from the government to incessantly keep markets afloat.
But contrary to widespread beliefs about the Fed's role and objectives, the Fed's decisions are not chained to market expectations nor do central banks exist purely to secure the fiscal interests of their respective nations. On the contrary, central banks are unabashedly private institutions which serve primarily as extensions of the global private money cobweb and are co-opted to oversee a program of progressive economic subversion driven by coordinated self-destructive monetary policies.
In effect, heads of the world's preeminent central banks are bought-and-paid-for figureheads who receive their marching orders from the same centers of power. As Carrol Quigley succinctly put it:
[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations..... It must not be felt that these heads of the world's chief central banks were themselves substantive powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down.
- Carrol Quigley, Tragedy and Hope
Having already dashed market expectations, if the Fed persists in its hawkish language - which is now more likely than previously anticipated in light of recent CPI data - it threatens not only to expose the recent stock market rally as a largely artificial construct more dependent on speculative ecstasy than on any actual economic derivatives, but also leaves the American economy hanging in the balance. The stock market is comparable to house built on sand, and like any house built on sand, the foundation is sure to falter in the day of testing - slowly but surely, and the reality will soon bite.
Recent CPI numbers are only a canary in the coal mine given the fact that the CPI formula has been doctored about half a dozen times since its inception to generate relatively favorable numbers by suppressing certain metrics which conceal the grim economic picture painted by the stroke of years-long ultra-loose monetary policy. In light of the foregoing, it is always safer to assume a higher CPI than reported in order to arrive at a more realistic figure. Consumer prices are up 3.1%, with the Bureau of Labor Statistics noting a 4.6% decrease in energy prices for the year ended January 2024. But this notable decline in energy prices was due in part to the Biden administration's release of petroleum from Strategic Petroleum Reserve onto the market - which currently sits at a 40-year low - and caused an artificial suppression in gasoline prices. As soon the as downward pressure on energy prices exerted by this tactic begins to wear out, energy prices will soar again. The Biden administration's recent and suspiciously-timed Rockefeller-led ban on LNG exports combined with possible supply chain bottlenecks from the Red Sea siege on shipping vessels and the potential of a protraction and spillover of the Israel-Hamas war into oil-producing neighboring territories make for a potent recipe for an energy disaster which would cause a veritable increase in energy prices worldwide.
This would be especially harrowing for the U.S. economy, given the severed trade ties which preclude America from Russia's vast and relatively cheap energy reserves. It would generate a scenario akin to that of the early 1970s which followed the Arab oil embargo. Only this time, it would coincide with runaway national debt and a U.S. dollar whose status as reserve currency is increasingly in doubt. How the Fed would maneuver this scenario remains unclear but if they persist, current dynamics beckon a looming financial whirlwind on the horizon.
Moreover, the recent spate of mass layoffs portend an even deeper economic fracture carelessly concealed by the thin veneer of mainstream analysts "healthy economy" rhetoric. Interestingly, the mass layoffs come at a time when the Biden administration and its army of mainstream analysts are unrelenting in their rosy orations of an ailing economy, citing the most recent jobs report as one indicator to justify their outlook. At its core, this dilemma narrates a tale of two economies - the real and the fantastical.
The bulk of "created" jobs are recoveries from the COVID-era jobs bloodbath. Companies, and tech companies in particular, took on more workers than normal to cope with the record tech-dependent environment created by stay-at-home mandates and consumers flush with excess cash. With these effects starting fizzle out and direct stimulus cash into consumer ceasing, the unemployment rate is likely to spike and offset any gains in the real jobs gain. The unexpectedly high jobs report in a hotter-than-expected economy makes rate cuts even more unlikely in the near term. While the Fed has signaled an end to rate hikes, if the Fed cuts rates substantially, inflation will persist. If the Fed hikes rates, markets will tank, economic growth will stall and a stagflationary environment could result. Taken together, these factors render the Fed's piecemeal attempts unlikely to make any substantive headway in the fight against inflation.
Even if rates are kept steady, which is the most likely scenario, the Fed will inevitably come face to face with a policy dilemma of its own making and with little room to finagle its way out, having kicked the cheap monetary policy can down the road for far too long. Therefore, the imminent question for central bankers is - how can they absolve themselves of any responsibility for the economic ticking time bomb they initiated while retaining some semblance of credibility in the public's eyes in order that they may be positioned to take charge of the emerging economy once the proverbial dust has settled? As it stands, an engineered crisis is their likeliest ticket out; a scapegoat to whom they can attribute all the blame for the economic dumpster fire likely to result from the self-defeating course of action they have hitherto pursued with their monetary policy. The only question is - what crisis?
Around 2021, a slew of banking executives suddenly began dialing up the rhetoric of a potential large-scale and contagious cyberattack on critical financial institutions. Such an attack could take the form of a data breach, a denial of service attack (DoS), outright financial theft or some other sophisticated cyber contrivance which ignites overnight bank runs on deposits and eventually sets in motion a cascade of socio-economic events which combine to trigger the next global financial crisis as key institutions become stymied by the reality of dwindling liquidity.
Cyberattacks are now the foremost risk to the global financial system, even more so than the lending and liquidity risks that led to the 2008 financial crisis, according to Federal Reserve chairman Jerome Powell.
The president of the European Central Bank (ECB), Christine Lagarde, sent out a warning: a well-organized cyber-attack on a major financial institution could trigger a liquidity crisis.
- Deloitte
Towards the end of 2021 and to little fanfare, an IMF-organized coalition of 10 countries quietly simulated a cyberattack on the global financial system in order to "war game" the potential aftermath of a cyberattack-induced worldwide liquidity meltdown, concluding that such a scenario would "paralyze the global financial system" and leave an array of decimated banks in its wake. This chorus of an imminent widescale cyberattack was exacerbated by the advent of COVID, which saw globalist outfits like the World Economic Forum jumping aboard the prognosticator bandwagon to declare that, "a far-reaching, catastrophic cyber event is likely in the next two years”. This is a rather blunt and eerily specific prediction; unless, of course, you write the script.
What is behind the sudden wave of cyberattack concerns that has permeated the ranks of the world’s preeminent financial institutions? It is the tendency of globalists to subliminally (and sometimes overtly) condition the public to engineered crises, so as to make their intervention more palatable to the masses once the actual crisis strikes. For internationalists, there are multiple "benefits" attached to a full-spectrum economic implosion via cyberattack. For one, a cyber-induced financial crisis would afford them them the benefit of attributing their policy "errors" to faceless perpetrators whom the public can never accurately pinpoint, effectively extricating central bankers and arming them with plausible deniability or accusations of complicity in the case of collapse.
Furthermore, such as scenario would almost invariably lead to further economic centralization as regional and community banks without ample liquid assets to offset bank runs would be left wanting and more susceptible to be devoured by their larger international counterpart, awash with enough liquidity in the form of liquid assets coupled with central bank intervention. Such financial behemoths as J.P. Morgan, Bank of America and their ilk are notorious for consolidating their standing atop the financial pecking order through a series of acquisitions during times of crisis. These crisis-induced takeovers are often portrayed in the mainstream financial media as "rescues", but they only lead to more centralization by hammering competition and leaving the public worse off, due to an ever-dwindling number of financial entities to choose from, which exerts an upward pressure on bank-related costs.
Keeping in step with the cyberattack narrative, FBI chief Christopher Wray recently chimed in on the crusade by intimating the possibility of a cyberattack by China on critical U.S. infrastructure as a form of unconventional warfare to destabilize American industry and society. Never mind HOW the FBI arrived at this conclusion, or WHY China might be interested in a cyberattack at this juncture in the geopolitical timeline - the show must go on. Deriving from this statement, in addition to the rapidly developing anti-China consensus among America's political class, it appears that China is being set up as a potential scapegoat for what may be a harrowing and far-reaching cyberattack. Other possible candidates for this honor would be such "rogue" states as North Korea, Russia or Iran, aka the 'axis of evil'. Either way, the damage would be done, and the stage set for the next and most cardinal phase of the international economic overhaul - digital currencies and a cashless economy.
Beyond the obvious consolidation of economic power into fewer hands, a cyberattack will create an environment ripe for the introduction of central bank digital currencies (CBDC). A concert of national central banks have been openly working in tandem to develop and field an interconnected CBDC network under the oversight of the Bank for International Settlements, also know as “the central bank for central banks” and is widely regarded as the apex tentacle of the global financial vampire squid. The introduction of CBDCs would supply internationalists unprecedented control to monitor, permit or restrict every minute transaction of every individual on a whim.
Until now, CBDCs have, by and large, been cloaked in ambiguity and their inner workings confined to the global central banking underbelly, but this may be about to change. With most national CBDC projects nearing completion and set to pilot in the 2024/25 season, the groundwork is in place and all the internationalists need is a crisis acute enough to serve as a pretext for railroading their pervasive digital economy into the mainstream economic scene.
Anyone who has followed CBDC development for any length of time is well aware of the inherent dangers posed by central bank-operated digital currencies vis-à-vis privacy and autonomy, among other factors. In short, rank and file members of society would be relegated into instantaneous economic slavery. This, in addition to people's acclimation to cash, means the majority of people would likely be reluctant, unwilling to procure their own economic serfdom and apt to mount resistance at any mention of a de facto digital currency. Such was the case with Nigeria, when a determined citizenry successfully (and encouragingly) protested against the central bank's CBDC program which conveniently coincided with an artificial contraction in paper money supply, perhaps as a way to boost the appeal of a cashless society. Most people are not as credulous as the globalists would have it, but a cyberattack would solve this resistance "problem" by "shocking" the populace into obedience.
The gravest outcome of a cyberattack would be a takedown of major wholesale payment processors which stifles cross-institutional payments by restricting the flow of money. Nations would be left starring down a massive liquidity black hole with mounting and sizeable losses likely continue until some stopgap measure can be put in place to provide temporary relief to payment chokepoints. The global economy would become fair game overnight, and this is the golden goose for a digital economy and a gateway to fast-tracking its ascent.
The next financial crisis might not come from a financial shock at all. The most likely culprit: a cyber attack that causes disruptions to financial services capabilities, especially payments systems around the world.
One nightmare scenario, [Jerome] Powell said, would be if hackers managed to shut down a major payment processor - hamstring the flow of money from one financial institution to another. That could shut down sectors or even broad swaths of the financial system.
A joint working paper co-authored by a J.P. Morgan managing director and published by the Brookings Institution envisions a scenario in which a hamstrung payment processor network resulting from an extreme cyberattack could be rescued by the use of temporary central bank accounts operated by digital token-based payment, i.e., digital currency.
A further possibility is an “emergency payment node” (EPN), which we envision as follows. An EPN would be a bank that remains dormant except during an operational crisis in the payment system. When activated, an EPN processes payments, as requested, within a prescribed wholesale payment network consisting of eligible banks and non-bank financial firms, such as primary dealers, money market funds, and government sponsored enterprises.
..we have mentioned the potential use of digital token-based payments (whether private or central bank) or emergency temporary central-bank accounts for non-banks such as money market funds that could become de-facto payment nodes.
Digital token-based currencies, whether publicly or privately issued, could eventually become an additional safe haven. This would enhance both the ability of depositors to instantly place their deposits in a safe place from which payments could be made.
That is to say, a digital currency would be introduced under the guise of a temporary relief measure with the intent to eventually make it fully operational and permanent. The objective would be to introduce CBDCs by use of incrementalism, until they morph into a widely-embraced form of legal tender for any and every financial transaction. While cyberattacks should generally dissuade people from an all-round digital economy, the scramble for financial security and the perceived lack of alternative financial mechanisms could goad much of the populace into CBDC adoption.
While economic collapse can unfold spontaneously, there are a number of variables which have to work together at precisely the right moment for a complete financial meltdown to occur. That is to say, it is more likely to occur by deliberately engineered means than through a series of organic missteps. An array of once-in-a-generation economic landmines have to denotate simultaneously, and the current global economic context is ripe for such an explosion. Even the general manager of the Bank for International Settlements is fully aware and open of this fact:
For the first time in decades, inflation and financial instability have emerged in tandem. High inflation and financial instability were no accident. They were the result of a long journey. Macroeconomic policy had approached the boundaries of what we refer to as the region of stability.
-Agustin Carstens, Bank for International Settlements
This crescendo of financial instability and inflationary pressures are not by mistake, but are part of a century-long program to usurp economic power and exercise absolute control over monetary activity on a micro-level. It may, or may not be used as the perfect storm to hurl the world into a digital economic nightmare as globalists pave the way for a world over which they exercise unprecedented control.
In June of 2023, the BIS gave a blunt and an austere-toned revelatory speech titled, “A time for resolve and realism“. In it, they give absolute clarity on what the endgame of the current economic labyrinth is intended to eventually yield:
The inflationary outbreak reinforced the imperative for central banks to preserve the public’s trust in money. Price stability is an essential. Another is to provide a form of money that keeps pace with technology and the needs of society.
…But in our vision, money takes a more advanced technological form. In addition to central bank deposits, there would be central bank digital currencies and digital commercial bank money. These forms of money would allow for new capabilities, including programmability and composability. To this end, we propose a new financial infrastructure - a unified ledger.
As previously stated, the BIS is the primal financial institution in terms of dictating global monetary policy. The world’s member central banks dance to its tune in lock-step, and they will willingly fall in line to pledge their allegiance to the emerging global economic colossus when the time comes. Such vague words as “programmability”, “composability” and “…needs of society” are meant to generate an innocent undertone to the digital economy frenzy, but these simply mean - more control for the ruling class and increasingly less financial autonomy for the common man. This is something they openly admit, and the monstrosity of this potential overreach cannot be overstated.
The Federal Reserve has been silently pursuing a digital dollar project of its own; and while its status is shrouded in mystery, recent reports indicate the Fed's continued pursuit of a digital dollar, aka FedCoin. Perhaps FedCoin is nearing completion, lying dormant and awaiting an opportune use case designed to acclimate the general populace to the reality progressively cashless economy. While a digital dollar would require congressional authorization to move forward, another byproduct of crises is their ability to fast-track processes which would otherwise take eons to conclude. An unprecedented cyberattack on pertinent financial entities could expedite or even override the congress authorization as a spellbound populations scrambles for safety and security. Only, this security would come at too great a cost and the peace at too heavy a compromise (see: 1 Thessalonians 5:3).
That the globalists are in dire need of an accelerant to achieve their 2030 agenda is barely a secret, and is something they have been openly vocal about, and judging by their own words, they intend to achieve this by hook or by crook.
At the global level, a once-in-a-generation commitment is needed to overhaul the international financial and economic system so that it responds to today's challenges, not those of the 1940s. It is essential that countries have the resources needed at scale to invest in both their immediate recovery and in long-term sustainable development outcomes, including climate action.
In the aftermath, there would inevitably be calls for further "international cooperation" pontificated by the usual suspects, but what they will fail to mention is that the inordinate obsession with globalization and "cooperation" is what exacerbated the problem in the first place by creating an economic order so interconnected it is increasingly prone to spillovers and financial domino effects. An economic-ward cyberattack would supply international bankers their much-needed "financial shock" and then some. The stage would be set for their next milestone - a new one world currency. Given the steady decline of the dollar on multiple fronts, this prospect might not be a long way off.
While digital currencies are not the “mark of the beast” per se, the ability they afford governments and globalists to enforce exclusionary economic measures against the non-compliant portion of society, will lay the foundation for the momentous time in the future when, “..no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name (Revelation 13:17).”