The Return Of Private Money: American Dream Meets European Nightmare

By Thomas Kolbe

EU Europe and the USA are drifting further apart. In the shadow of the Ukraine war and Brussels censorship policies, a political hiatus is opening up even at the monetary policy level.

Monetary policy is often treated as a stepchild in the media. Except during sovereign debt crises, when central banks step in as rescuers, politics and media mostly focus only on interest rate decisions. These are stylized as media highlights to help politics anchor inflation expectations and influence market activity. 

In short: this remains a superficial view that does not do justice to the complexity of monetary policy.

It is regrettable—and perhaps no coincidence—that monetary policy is dealt with so hastily. Money is the central good in economics. Its value development, dilution, and manipulation by political actors is a hot potato that remains largely untempered. Yet, since US banks withdrew from the London LIBOR contract and the national reference rate (SOFR) was introduced, monetary policy has evolved into a geopolitical key issue deserving serious discussion.

Behind the Media Curtain 

Behind the artificially generated monetary background noise about interest rates and inflation control, a strategic drift is taking place that will redefine the economic future. EU Europe and the USA are taking separate monetary policy paths.

Media censorship, climate socialism, and now the debate over the digital euro—one might say, Brussels and the ECB bankers spare no effort to turn the EU into a closed fortress of power.

With the digital euro, they would take a major step towards consolidating this power. It is programmable, fully transparent money on a centralized blockchain that would transform money into a morally and politically charged commodity. Climate targets, individual CO2 consumption, meat consumption, and travel activities—the coupling of individual behavior to the emissions-based control complex seems tangible. And sanctioning citizens and companies in cases of dissident behavior could become routine bureaucratic work.

Following the line of reasoning of ECB President Christine Lagarde, it is clear what awaits Europeans: algorithmic surveillance of economic activity and moralistic control of individual behavior.

Is Money a Public Good? 

For Lagarde, money is a public good. Naturally, under the control of the state or state-like surrogates such as the ECB. The digital euro project is to start small, with limited wallets managed by the ECB, marketed ironically by the muted commercial banks that would become obsolete in case of full conversion—a strange understanding of banking revealed here.

A digital euro is supposed to offer new choices, complement cash, and promote inclusion, according to Lagarde. But here again, one of those political slogans is revealed: “Inclusion” remains a hollow phrase without substantive content. In reality, the ECB aims to secure control over central capital flows and, in the next eurozone debt crisis, to prevent capital flight to avoid collapse and drying up of financial flows. Everything else is whitewashing written for the disinterested reader of the business section.

Europe is heading inexorably towards centralism. The question remains: Will the monetary coup succeed, or will the eurozone collapse first? The legal framework is supposed to be in place by early 2026 before rollout begins. 

Realistically, a start is expected earliest in 2028, perhaps only in 2029. There is hope that such large projects usually fail due to bureaucratic inertia. So let’s stay optimistic.

Return of Private Money 

Meanwhile, across the Atlantic, an astonishing turnaround is taking place. The monetary policy direction of President Trump’s administration aims at the partial reactivation of the private money system. The legal framework currently being set up (GENIUS Act) gives commercial banks the possibility to issue their own stablecoins, i.e., digital dollars, thereby expanding the booming market currently dominated by Tether. Worldwide, over 500 million people already use this new form of money—a movement that seems unstoppable, regardless of how Europeans view it.

Every dollar stablecoin is backed by an equivalent amount of short-term US Treasury bonds as well as gold or Bitcoin, giving the US Treasury a convincing argument to actively participate in the spread of this technology—American government debt is literally being sold to the private sector.

This development recalls the time before the Federal Reserve was founded. Back then, the role of the central bank slowly changed from a “lender of last resort” for commercial banks to a money printer financing government debt—combined with asset manipulation. Step by step, the USA could return to the 19th-century free banking era, when private credit houses issued their own banknotes backed by gold or silver. The solvency of the institutions was overseen by clearinghouses—not a politically influenced central bank.

Misjudgments led to bankruptcies; there were no bailouts—credit volume was limited according to market-based risk assessments.

It could play out roughly as follows: Treasury-backed parallel currencies, private clearing networks, and competition between state and private money define the practical monetary framework—it would be the end of the market-distorting central bank guarantees for risk takers.

American Dream Meets European Nightmare 

Free banking in the USA was one of the pillars of the industrial age that initiated an unprecedented economic boom. Private banks created money responsibly and directed scarce capital specifically to innovative projects. Competition among different banknotes promoted discipline and trust—those who lost trust were out of the race. Without a central bank and government bailouts, risk was a real currency that curbed over-indebtedness and fueled economic dynamism.

Is this what the Trump administration is aiming for? A return to the quintessential American spirit of absolutely free markets, which naturally also bring situations of higher volatility?

Meanwhile, Europeans seem to have chosen the opposite path, seeking to suppress volatility by centralizing essential political powers. Whether they succeed in introducing the digital control euro while their major competitor across the Atlantic embraces the principle of freedom and personal responsibility remains to be seen. The ongoing capital flight from the EU to the USA is in any case a telling sign.

* * * 

About the author: Thomas Kolbe, a German graduate economist, has worked for over 25 years as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.