American Union > Uncategorized > Everyone’s talking about a digital US dollar. Here’s what they’re missing
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A digital US dollar could be used to address poverty and income inequality. (Image: Kurtis Garbutt, CC 2.0 )

Digital currencies are everywhere these days. If it’s not Bitcoin, Ethereum, or one of the other 12,000 cryptocurrencies, it’s the increased talk about state-sponsored central bank digital currencies, or CBDC. More than two dozen countries have launched digital currency pilot projects in recent years. The US is now actively studying the benefits of a digital dollar. The US Senate has held hearings on it. Academics and technologists are paving the way to make a digital dollar a reality.

But there’s something missing from most of these discussions. Everyone agrees this is a historic opportunity to remake the US dollar and modernize our payment system. Few recognize that this moment can be used to address poverty and income inequality. By assigning those new digital dollars to all Americans in the form of a $1,300 universal basic income (UBI) deposited monthly to a US Treasury account, the US could revolutionize its economy and its democracy at the same time.

Before diving into the specifics of the American Union’s proposal for UBI (American Union Jobs Program), the creation of digital Treasury Dollar Bills, and the establishment of Treasury accounts for every American, let’s take a few steps back to discuss why this is an idea whose time has come.

What is a digital dollar?

Think of digital dollars as a kind of hybrid currency: part cash, part credit, part crypto. Digital dollars would be identical to cash in value and transferability for goods, services, or paper currency. They’re different from regular dollar bills because, well, they’re digital, so they can be used for online transactions, money transfers, peer-to-peer payments, and remittances.

The US has the infrastructure to enact a digital currency through TreasuryDirect accounts. (Image:

Digital dollars have also been compared to credit cards or apps like Venmo, Apple Pay, Google Pay, and Zelle. Fundamentally, they would function the same way, by swiping a card, inserting a chip, or through a digital wallet app on a smartphone or connected device. Unlike these systems, the digital dollar would be public. Currently, all credit cards and payment apps are private. Customers have to enter into agreements with private, for-profit institutions to use public dollars. Those agreements typically involve minimum balances, transaction fees, overdraft fees, and credit card interest rates that can be above 20 percent. The digital currency plan proposed by the American Union ensures zero-interest Treasury Dollar Bills and no minimum account balance for Treasury accounts. They would be available to everyone. Accounts and funds could be accessed online, as well as through Post Offices, or connected to an existing bank account.

Some have compared a digital dollar to cryptocurrencies, like Bitcoin, Ethereum, or stablecoins (crypto tied to stable assets, like the US dollar or a particular mutual fund). Both exist purely in the digital realm and promise greater financial inclusion. Unlike crypto, a digital dollar, backed by the full faith and credit of the United States, would be fundamentally more stable, less volatile, and more fungible than any cryptocurrency in existence. Each digital token would function as legal tender, exchangeable for one Federal Reserve note. The supply of digital Treasury Dollar Bills would be carefully regulated by the Treasury and Federal Reserve to meet the needs of the American Jobs Program (UBI).

Benefits of a digital US currency

There are three key reasons for a digital US currency commonly cited by advocates. It’s more inclusive, more efficient, and less expensive than the current system.

Inclusivity is at the core of the American Union’s comprehensive proposal for a digital dollar that is tied to UBI, digital Treasury accounts, and public banking access. While most people take for granted their ability to open a bank account or get a credit card, there are some 33 million Americans who are locked out of the system. According to the Federal Deposit Insurance Corporation, 7.1 million Americans were unbanked in 2019. Three times that many were underbanked. A $1,300 UBI deposited monthly into individual Treasury accounts would bring these people into the banking system, without facing penalties like fees or interest payments. The use of money is an essential public utility and people should not have to pay a private interest to use public dollars. A well-designed digital currency would also ensure user privacy.

Think of a digital currency as a hybrid: part cash, part credit, and part crypto. (Image: rupixen/Pixabay)

Transactions processed with digital currency are faster than other methods of account settlement. Checks drawn on deposits can take two days to clear and slow payment processing often drives people to predatory payday lenders. Long processing times also create cashflow stress for small businesses and independent contractors. Digital wallets containing Treasury Dollar Bills could move money instantaneously, debiting one account and crediting another with a keystroke. This movement would be vertical — from the Treasury to the account holder or the account holder to the Treasury. It would also be horizontal — in peer-to-peer or other commercial transactions. This system would enable the federal government to more efficiently enact fiscal policy, like transferring stimulus checks and tax credits to citizens, as well as monetary policy, by increasing or decreasing interest rates to expand or contract the money supply. It would also accelerate payment processing among producers and distributors to help minimize supply chain bottlenecks. All credits would be received immediately and able to be spent immediately.

A digital currency could also eliminate transaction or processing fees, making it a less expensive alternative for merchants and consumers. Traditional credit card transactions involve at least three parties, the card issuer, the card network, and the payments processor. Each time a card gets swiped, those parties get paid. Digital payments would virtually eliminate the need for multiple parties by directly and securely moving credits and debits from one digital wallet or account to another. The cost of the processing infrastructure would be public and publicly funded, as described in the Blueprint for a Better America.

Economists have compared the rise of cryptocurrencies to Wildcat Banking in the 19th century. (Image: sergeitokmakov/Pixabay)

One additional benefit of a national digital currency would be to address the proliferation of privately created liabilities in the form of cryptocurrencies. The US has encountered this type of problem repeatedly in its past, with unregulated entities creating speculative currencies. Many economists have compared the rise of cryptocurrencies to Wildcat Banking (the Free Banking Era), when state-chartered banks created largely worthless currency, and the start of the Civil War prompted runs on specie (gold and silver), widespread bank failures, and a sharp decline in the amount of money in circulation. These problems were resolved with the creation of the “Greenback” system under President Abraham Lincoln. The creation of a federally regulated, stable, universally redeemable digital US currency could crowd out wildcat cryptocurrencies, or pave the way for “digital Greenbacks.”

The American Union, Treasury Dollar Bill, and UBI

The American Union’s proposal to distribute newly created digital assets to all Americans is closer to becoming a reality than many people might think. Already, the Treasury makes digital accounts available to all US citizens with bank accounts through TreasuryDirect. Anyone with an internet connection or smart device can already access these accounts 24/7 to buy or sell all principal classes of Treasury security: Treasury bills, notes, bonds, and the Treasury Inflation-Protected Securities (TIPS).

Every US citizen would receive a digital UBI of $1,300 each month. (Image: US Bureau of Engraving and Printing,

The American Union Jobs Program, outlined in the Blueprint for a Better America, would build on those accounts. With a minor legislative change, the current mandate could be expanded to bring the unbanked population into the system. The accounts would be updated with a digital wallet feature to allow transfers to and from the Treasury, as well as peer-to-peer transactions. The plan would permit the creation of a new security, a digital Treasury Dollar Bill. This special class of asset would be issued to every American and added to their digital wallet (or transferred to an existing bank account). Each month, every American adult would receive $1,300 in digital assets and children would receive $433. Unlike the trillions of dollars in speculative cryptocurrencies circulating today, Treasury Dollar Bills would be immediately redeemable for goods, services, or cash, and valued at one Federal Reserve note (i.e. $1). The influx of this new asset would help stimulate economic growth, both on the supply and demand side, without jeopardizing federal control over monetary policy.

The benefits of a universal basic income on the individual and society as a whole have been discussed at length by the American Union and other advocates. The program is also supported by two-thirds of Americans, including an overwhelming majority of the younger generations. The way to get there is through the creation of a digital dollar, for the explicit purpose of paying a monthly UBI. Rather than only having value in the virtual world, Treasury Dollar Bills create value through their circulation. Rather than contributing to inflation, digital dollars would help accelerate production by allowing instantaneous, interest-free movement of capital.

As interest grows around the idea of a US digital currency, it’s important to keep one question at the forefront: how will it promote the general welfare? This can’t be another scheme where private financial institutions benefit from public dollars. We’re at a turning point in American economic history. The benefits established on the credit of the American people must accrue to the American people.

Author: admin