Economist Paul Krugman questioned why Republican Florida governor Ron DeSantis opposes a central bank digital currency (CBDC) in a recent opinion editorial. Krugman suggested that DeSantis may be motivated by “general paranoia.” He speculated that DeSantis may be influenced by individuals who fear a digital currency could hinder “un-woke activities such as tax evasion and money laundering.”
Referring to CBDCs as ‘Woke’ Money, Krugman Attacks ‘Monetary Conspiracy Theory Types’
Economist Paul Krugman, who follows the Keynesian school of economics, wrote an opinion article criticizing Florida governor Ron DeSantis’s opposition to a central bank digital currency (CBDC). Krugman noted that the U.S. does not yet have a CBDC, but the Federal Reserve is exploring the idea. Krugman argued that if the Fed does create a CBDC, it is “highly unlikely that a state government would have the right to prohibit its use.” He also pointed out that the current financial system is already largely digital.
Krugman observed that some people do not have bank accounts or trust banks, and he finds it “bizarre” that people still use so much paper cash. He speculated that the “vast hoard of Benjamins out there is held by people who want to avoid banks’ reporting requirements in order to hide activities like tax evasion, illegal purchases of drugs and weapons, extortion and so on.” While Americans do keep a significant amount of cash “in their home safes,” Krugman believes this practice is “increasingly annoying in a digital era.”
The Nobel laureate Krugman suggested that bitcoin (BTC) attempted to achieve the goal of a cash-like digital currency, but he referenced the Federal Reserve’s 2022 analysis of cryptocurrencies. The Fed’s report stated that because crypto assets are volatile, they struggle with adoption and “make consumers vulnerable to loss, theft, and fraud.” Krugman argued that DeSantis’s opposition to CBDCs is not aimed at protecting the rights of Floridians, but rather, it would “protect the ability of criminals to evade taxes, launder money, buy and sell illegal drugs, and engage in extortion.”
Six days after Krugman’s opinion article was published, he recounted a story about a man who was in front of his wife in line at a coffee shop and was “ranting” about how CBDCs “are going to take away our freedom.” Krugman speculated that “DeSantis is probably tied in with a broader push by monetary conspiracy theory types. This has actually been a right-wing thing for a while, even if the theories keep getting crazier.”
What are your thoughts on the potential benefits and drawbacks of a central bank digital currency? Do you agree with Krugman or DeSantis? Share your thoughts about this subject in the comments section below.