To most of us, there is entirely too much news to pay attention to, making deciphering what news is actually meaningful in our day-to-day lives very difficult. Also, there’s the frequent challenge of things that will most definitely affect us not being covered at all.
It’s my opinion that this has been the case with payment system FedNow. In the next few paragraphs, I’ll try to explain what the new system is and how it can impact the lives of farmers, and the lives of everyday consumers. Full disclosure: This is a bit of an opinion piece.
What is FedNow?
In short, it’s a new payment processing system that is owned and operated by the Federal Reserve, which is a government entity.
Up until now, the overwhelming majority of payments were processed via an ACH system, or across credit card networks. ACH stands for Automated Clearing House, which is owned and operated by NACHA, which is an acronym for National Automated Clearing House Association. NACHA is a self-regulating organization. Financial institutions are members of NACHA, and the service is therefore not owned by the government. Every automatic withdrawal from every checking account in the country goes across the ACH network.
FedNow seeks to change all of that. The purported purpose of this program is to provide a faster and more secure means by which to move money through the economy. Personally, I find this to be a solution to a problem that doesn’t exist. At this point, banks and credit unions can choose to utilize FedNow — or choose not to. It remains to be seen if that will remain a voluntary choice.
Additionally, as part of the rollout, the Fed and the White House are in the process of “examining” the possibility of a rollout of a Central Bank Digital Currency (CBDC). This is exactly what is sounds like, which is a digital token currency that’s issued/created by the government, and it seems that it would be a huge step toward a truly cashless society and the capability of the government to have intimate knowledge of every transaction that takes place and the power to not process it.
There’s another country uses a CBDC: They call themselves “China.” The mandatory use of government-owned payment processing systems was a major component of their ability to enforce COVID-related lockdowns.
What does this mean for farmers (and everyone else)?
It means many, many things. First, the Fed’s current company line is that it’s all the name of enhanced service to the economy, and they also say they’re in the very early stages of exploring a CBDC. If they move through exploratory stages into implementation stages, the financial system as we know it would be completely changed.
At this point, we do enjoy a degree of privacy related to our financial transactions. In order for the government to gain detailed access to how we spend money, they must have legal standing to do so. In the event that every payment was processed across a federally owned network, that privacy would go away. By this logic, it would an easy step for the government to enforce trade-related restrictions on businesses and consumers.
For farmers, this would mean government knowledge of all farm inputs, all farm revenues, and major tax consequences related to any filings that aren’t 100 percent accurate. Furthermore, it could mean that the government would have the capability of locking certain participants out of the economy by refusing to process a transaction that the government finds to be in supposed violation of some rule or law. It could also severely restrict the way your banking partners operate.
Did you buy too much diesel fuel this year? Did some component of your fertilizer come from a country on the naughty list? Did you receive a payment at a farmers’ market that didn’t make it into your total income on Schedule F of your tax return? Did you gift a member of your family money? Now they know. All of it. Did you attempt to thwart the gleaning of this information by withdrawing cash? They already knew that and have for years.
What now about FedNow?
I understand that this article may sound a bit alarmist. Do your own research, form your own opinion, and decide if you are favor of a fundamental shift of the world financial system in the general direction of total government control.
I genuinely believe that every assertion made in this piece should be subject to scrutiny, but more importantly I believe that we have the right to question our government and hold them to account. As I said, a large portion of this is in the early stages. I would encourage each of you who has concerns to voice them not only to your government officials at all levels, but also to the national agriculture and banking lobbies. Call your local and state Farm Bureau office, this is exactly what they’re for.
And in the meantime, keep doing your best to feed the planet while also staying apprised of the endless barrage of news you don’t need in order to find the news you do need.
Katie Ogden owns and operates Wildcatter Wealth Management LLC in Laramie, Wyoming. She’s a 2007 graduate of the University of Wyoming with a bachelor’s degree in Agriculture Business and has been working in financial services to help ranch and farm families ensure a prosperous future ever since.