It was terribly dangerous to let your thoughts wander when you were in any public place or within range of a telescreen. The smallest thing could give you away.

– George Orwell, 1984

In his famed book 1984, Orwell wrote about a dystopian world where every aspect of life was scrutinized and controlled.

Orwell may have known about central banks.

But never in his wildest dreams would he have imagined the rise of digital currencies and generative artificial intelligence (AI)…

And what they could bring.

Today, governments, companies, and financial systems are inching closer toward the ability to monitor and influence your every move.

Natural language processing (NLP) AI could even scrutinize your moves before you make them.

It could do that by examining your messages and emails to determine how you think in order to predict how you will think.

What would Orwell say about Big Brother monitoring the way you spend your hard-earned paycheck?

Or a central bank telling you the right and wrong places to spend, donate, and invest?

Since my first internship at IBM’s tech incubator in the 1980s, I’ve analyzed how computers have evolved to process more data with more AI-type forecasting.

What was in development then is what we know as machine learning (ML) today.

By using data, machine learning, and AI algorithms, big businesses are unlocking new ways to make their operations more efficient.

And while that can be a good thing for their profits, in some cases it can be bad for privacy.

Every financial transaction you make, webpage you click, social media post you like, and place you visit are all part of your data footprint.

It is largely known that companies like Google, Facebook, and Apple save, sell, and use your data.

Big Tech platforms make hundreds of billions of dollars in revenue off of their user’s data.

But they are only the first wave.

Now, governments and financial institutions are stepping into the arena. That’s why central banks are worth your urgent attention.

The Federal Reserve is likely the next Big Brother.

Let me explain.

FedNow, CBDCs, and What’s Next

Last summer, the Fed launched its FedNow payment system aimed at streamlining financial transactions.

And while FedNow isn’t a CBDC, it does set the groundwork for one.

That’s because its technology gives the central bank the ability to monitor every financial transaction made along with any data associated with that transaction.

That’s step one toward a programmable or digital currency. Step two is taking that data and saving it in a blockchain.

Step three would be adding AI analysis to that blockchain to predict what future transactions could look like.

For you, this means the Fed could know every financial move you make – and will make.

You see, FedNow is a payroll and payment processing system.

The system allows the Fed to transact with companies and banks. Over 400 organizations are already involved.

You’ll recognize some of the companies they’ve started to partner with – like Visa, JPMorgan Chase, U.S. Bank, and BNY Mellon. (View the full list here.)

With faster and more efficient transfers of funds, more institutions will follow. As more banks and companies adopt the FedNow system, the list will grow.

Once you are a part of that platform (or your bank is), your relationship with your money changes. Your financial data, security, privacy, and control are at risk.

CBDCs: Not If, but When

To be clear, CBDCs aren’t all launching tomorrow. And a CBDC from the Fed is something it has denied so far.

But other central banks are accelerating in that direction.

Over 131 countries are in some stage of exploring CBDCs. Those countries represent 98% of global GDP. And more than half of them are in advanced or pilot stages of development.

Small nations like Anguilla and the Bahamas have launched a rudimentary digital currency. Nations like Kazakhstan, China, Australia, and South Africa have launched pilot programs.

Meanwhile, major global economic powerhouses like India and Brazil are set to potentially launch a CBDC as soon as this year.

These launches will serve as real test cases for Fed officials to assess as they move closer to potentially deploying a CBDC.

Technology is moving faster than anyone thought possible.

Yes, AI is a big trend we’ve been detailing for you. In my Distortion Report advisory, we’ve even shown subscribers ways to profit.

But I see an emerging AI threat on the horizon.

I’ll have more to say on that on Monday, so stay tuned…



Nomi Prins
Editor, Inside Wall Street with Nomi Prins