The US should split it's money system into an exclusive store of value and exclusive medium of exchange. The CDBC can have a negative interest rate, this means you only accept them if you want to actually buy something with them.
Because money is both a store of value and a medium of exchange, the government and central bank must constantly add more money to keep money in circulation. As that money gets saved, it stops circulating and the government must add even more money into the economy. Do you see the problem? You need money that can be saved (doesn't circulate) and you need money that circulates. Because it is mixed up in one currency, you must always create more but at the same time there is never enough.
If CBDCs have a negative interest rate, they will stay in circulation and we won't have to mess around with a constantly increasing money supply.
Switzerland has this separation with the WIR bank. They chose to inflate the WIR instead of the CHF.
And what will be the exchange rate between them? Will it be fixed, or will it float?
Exchange rates are driven by supply, demand and interest rates (which drive supply and demand).
What's the point in being paid in USD2 if converting to USD1 in order to save results in your 5%/yr savings account become 0.5% or even -0.5% in USD2 terms? You need USD2 to spend.
This is manifesting now with fiat vs Bitcoin. Fiat has a negative real interest rate. Bitcoin is for saving, and has a floating rate for exchange.
We don’t need the control of a CBDC. Bitcoin cannot be inflated or controlled by a State. The hardest money is one that cannot manipulated at a whim by elected or unelected humans.
Because money is both a store of value and a medium of exchange, the government and central bank must constantly add more money to keep money in circulation. As that money gets saved, it stops circulating and the government must add even more money into the economy. Do you see the problem? You need money that can be saved (doesn't circulate) and you need money that circulates. Because it is mixed up in one currency, you must always create more but at the same time there is never enough.
If CBDCs have a negative interest rate, they will stay in circulation and we won't have to mess around with a constantly increasing money supply.
Switzerland has this separation with the WIR bank. They chose to inflate the WIR instead of the CHF.