
Facebook’s Libra must be stopped - hhs
https://www.project-syndicate.org/commentary/facebook-libra-must-be-stopped-by-katharina-pistor-2019-06
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gfodor
Be careful: Facebook's best weapon in these situations (as has been done wrt
"we don't sell your data") is for people to create arguments in the zeitguest
that are easily debunked. They are relying upon off-the-cuff hot takes to
emerge which they can shoot down effectively so by the time a real analysis of
what they're doing can result in a cogent, irrefutable argument, the skeptics
have already been "debunked" and they can move forward.

The absolute worst thing you can do when Facebook announces initiative X is,
that afternoon, write a one-sided think piece based upon surface-level
understanding and emotional appeal that does not methodically include counter-
arguments pre-emptively to their inevitable response. With regards to Libra,
this article fails completely to address the governance structure and the
other fail safes involved to prevent the outcome the author mentioned. This
does _not mean_ that insolvency is not an issue, but it does mean that this
kind of analysis will be weaponized by Facebook to deflect from more serious
analysis that will be forthcoming after experts digest the whitepaper, plan,
etc.

~~~
JMTQp8lwXL
It's already known that people advocating for one position will write poorly-
defendable opposition pieces to specifically weaken their opponent's position.
Forums for debate usually ban that behavior and encourage notifying moderators
when it occurs, but at internet scale, I don't know if there's anything you
can do about it.

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illumin8
The whole premise of this article is that Libra will be financially insolvent
and will need to be bailed out.

This makes a pretty huge leap from "Facebook = bad" to the Libra foundation
not having sufficient controls on their treasury and becoming insolvent
because they didn't actually back every Libra coin with real currency.

Say what you will about Facebook, I'm certainly not a big fan of their track
record on privacy, but they're doing this right. They're setting up an
independent foundation with representation from 100 companies, and every one
of them has an equal vote. The Foundation will be regulated by swiss banking
law, which is one of the most strict in the world, so I would be highly
skeptical of any claims that they will be "insolvent" any time soon.

~~~
JMTQp8lwXL
The definition of cryptocurrency includes the language "operating
independently of a central bank". These ~100 stakeholders sound somewhat
analogous to federal reserve branches. It's a pseudo central bank. The U.S.
should be raising huge red flags about Libra. If financial transactions in US
dollars decline, and Libra increases, it reduces the United States' ability to
conduct effective monetary policy. But, if Libra can't exist in a stable
manner, as all other cryptocurrencies have failed to do, perhaps the problem
will resolve itself, and the dominate nature of the U.S. Dollar will continue.

If you live in the United States, you don't want Libra to succeed. You don't
want your paycheck in Libra, you don't want mortgage payments in Libra. You
want a central bank that has some capacity of providing stability to our
economy.

~~~
bin0
This is doubly true because zuck bucks will undermine the position of the
Dollar as the world's reserve currency. Facebook is giving yen, euro, etc. a
say in the value of the coin.

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civicsquid
I have no financial background so forgive me if this is an ignorant question,
but is there a way to treat runs that would expose insolvency (despite
sufficient and careful financial planning) like DDoS attacks that would expose
an exhaustion of resources?

I'm not saying Libra is good or bad. What I am interested in is how the
article seems to focus on how a global currency could not stand up to a
considerable proportion of users converting their holdings to a standard fiat
currency. I just wonder if the technological aspect of the currency could help
mitigate this in a similar way to how enterprises try to limit the impact of
DDoS attacks on their systems.

Again, I know nothing about finance. There may be a really good reason why
this is not a good analogy that I just lack the understanding of. But I am
certainly curious to learn if that's the case.

~~~
gus_massa
One "solution" we tried here in Argentina in 2001 is the Corralito [koraˈlito]
[https://en.wikipedia.org/wiki/Corralito](https://en.wikipedia.org/wiki/Corralito)
: Each day you can only extract a small amount of cash from the bank, but you
can still transfer the money to another person/sucker using debit or credit
cards or checks. [Note: It didn't end well.]

The equivalent to cryptocurrencies is that you can only convert a small amount
per day to hard money. With cryptocurrencies it is more difficult to enforce
the restrictions "per person", but we had a few trick IRL here too.

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drtillberg
The worst part isn't that the currency has no state backing, it's that the
currency incorporates the default risk of such a large basket of sovereign
currencies and bonds. Illiquidity in any one component of the basket could
endanger the liquidity of the entire basket.[1] Although it's hard to say
that's definitely worse than the possibility of braniacs in Washington voting
during the next downturn to bail out Mark Zuckerberg.

[1] [https://www.investopedia.com/articles/economics/09/money-
mar...](https://www.investopedia.com/articles/economics/09/money-market-
reserve-fund-meltdown.asp)

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buboard
But now the cat is out of the bag. What if russia or china launch a similar
payments system that bypasses banks? No no, facebook's libra must go through.

~~~
no1youknowz
Russia did, it's called Mir [0]. Its initially in Russia, but expect it to be
rolled out across the one belt, one road system.

We are going to be moving in a bi-polar moment very soon. Where in the west,
we'll have VISA, SWIFT, etc. In the east you have Russia/China and OBOR
countries all using a different payment systems not owned by the US.

[0]: [https://www.reuters.com/article/us-russia-cards/mir-card-
pay...](https://www.reuters.com/article/us-russia-cards/mir-card-payment-
system-looks-beyond-russia-idUSKCN1RV0KZ)

~~~
Grue3
>expect it to be rolled out across the one belt, one road system

That's silly, China has plenty of homegrown payment systems, why would it ever
need Mir? Nor does it need Russia for its silk road thing.

~~~
no1youknowz
I don't have the time nor inclination to do a deep dive. At the D-Day
celebrations who were together? Putin and Xi [0].

Even back in 2018 [1], China was worker for closer ties to Russia. I could
probably find more videos discussing closer relations, but I'm gonna leave it
here.

What you probably don't seem to realise or what to know. Russia and China are
becoming ever so intertwined on various issues:

1) All border issues settled.

2) Military cooperation and investment into weapons.

3) Integration Payment systems. When Russians travel they use Mir. When China
Travel they use UnionPay.

4) Investment from China into Russia.

5) Sharing of technology from both Russia and China to each other and working
on the same projects. This is a HUGE one. Both Russia and China sharing
technology to improve their economies and AI is a big one.

6) De-dollarizing from their respective economies and trading in Rubles and
Yuan. Meaning that the US/EU cannot sanction them and they can trade with
Turkey and Iran.

7) Organising the OBOR initiative to trade with those currencies, again
circumventing US sanctions.

8) Russia, China, Turkey, Iran, Germany, OBOR makes for a compelling case
where both Russia and China share trade and both sit atop a large chunk of the
world. Away from US influence.

[0]: [https://youtu.be/gdl1Rp6u09Y?t=151](https://youtu.be/gdl1Rp6u09Y?t=151)

[1]:
[https://www.youtube.com/watch?v=5V0_bKa4jng](https://www.youtube.com/watch?v=5V0_bKa4jng)

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IAmEveryone
Libra is the worst of all worlds: all the supposed risks of “fiat” currencies
the crypto-libertarians complain about, a cartel of VISA and other payment
companies to earn from it, plus an added layer of centralization with the
reigns in the hands of Facebook, the world’s least trustworthy company since
East India Co.

I have no idea why it should succeed. But it probably will because somehow the
US still hasn’t figured out how to easily pay back your friend the $10 they
gave you the other day.

~~~
ghettoimp
> "Facebook, the world’s least trustworthy company since East India Co"

We've got big oil ruining the environment, big pharma extorting folks on
prescriptions, big defense's insane government contracts, big telecom working
with the NSA, credit reporting agencies vacuuming up our info and getting
hacked, wells fargo's account fraud and redlining, and HBO with that game of
thrones ending...

With all of that, we're really going with _facebook_ for least trustworthy? :)

~~~
dontbenebby
If nothing else, I think Amazon or Google is more of a contender for East
India Co 2.0, given their diverse product offerings :)

Facebook is not diversified (hence their frantic pivot to "crypto"). Amazon
has a wide array of offerings. And Google is often painted as "just an
advertising company" but Gsuite and Google Cloud are two independent revenue
streams that don't rely on ads.

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dangbang2
WhatsApp is the defacto "the phone" in many countries. They will simply add
Libra payments into it, copying WeChat but on global scale.

Re: the author of the silly article, on of the reasons of the downfall of the
West is that women were given (still fortunately limited) decision power about
money.

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braythwayt
_on (sic) of the reasons of the downfall of the West is that women were given
(still fortunately limited) decision power about money._

I missed where the OP discusses the downfall of the West (past tense) and/or
the role of women being “given” economic power.

Did the author say this? If not, are you claiming this?

I don’t want to rush to condemnation, please clarify what this statement is
doing in your comment.

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GreeniFi
What could possibly go wrong?

¯\\_(ツ)_/¯

Hehe.

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geraldbauer
Great article. I've added the opinion piece / commentary to the Awesome Libra
page / collection [1] to cover both sides (that is, for and against). [1]:
[https://github.com/openblockchains/awesome-
libra#articles](https://github.com/openblockchains/awesome-libra#articles)

