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Your Money and Your Life (Edward Snowden) (edwardsnowden.substack.com)
141 points by stanislavb 17 days ago | hide | past | favorite | 34 comments

>> money—the conceptual unit of account that we represent with the generally physical, tangible objects we call currency—has been chiefly embodied in the form of coins struck from precious metals

No. This is a gross mischaracterization of past peoples. Money was in coin form but money also existed as promissory notes, land deeds, titles, contracts and countless other non-tangible forms. People in the past measure their wealth not by the coins in their pockets but by their net worth, intangibles included. Most wealth was in the form of non-coin assets. Banks of the past did not keep everyone's money in a big pile. When they made a loan they could, like today, create new money out of thin air. To say that there was some sort of hard limit on total money in a system does a disservice to the sophisticated banking practices of the past.

> Money was in coin form but money also existed as promissory notes, land deeds, titles, contracts and countless other non-tangible forms

You are confusing money with wealth.

From Wikipedia

> Money is a commodity accepted by general consent as a medium of economic exchange.

Money is not land or a loan. It's a unit to enable the exchange of these lands or loans. That's the problem with money: It is worth something when it actually should be worth nothing.

This is mentioned a bit later in the same paragraph.

>> Tired of carrying around weighty bags of dinar and denarii, post-third-century merchants, particularly post-third-century traveling merchants, created more symbolic forms of currency, and so created commercial banking—the populist version of royal treasuries—whose most important early instruments were institutional promissory notes, which didn’t have their own intrinsic value but were backed by a commodity

>> but were backed by a commodity

But they weren't. The bank didn't hold a pile of gold coins to match every promissory note. The note was backed by the reputation of the bank, just like today.

Indeed, before coins (c. 8th century BCE) money was nothing but promissory notes. Coins were invented at that time, at least 3000 years after money, to simplify military logistics.

It's a simplification for sure, but not an oversimplification for the purposes of the article. It isn't a misleading premise off which the rest of the article hinges.

I think the purpose of this sentence is to demonstrate how everyday people view money, outdated maybe, simplified sure, but that's how we treat it and that's the sales pitch.

> It’s Waller’s opinion, as well as my own, that the United States does not need to develop its own CBDC. Yet while Waller believes that the US doesn’t need a CBDC because of its already robust commercial banking sector, I believe that the US doesn’t need a CBDC despite the banks, whose activities are, to my mind, almost all better and more equitably accomplished these days by the robust, diverse, and sustainable ecosystem of non-State cryptocurrencies (translation: regular crypto).

I suppose it shouldn't be super surprising for one who's life has been in such a state of upheaval, but I think he really discounts the value that people put on stability - of which "regular crypto" really hasn't proven yet.

You have to define "stability"; it is a vague word.

If you're talking about price stability, this is an illusion. The appearance of price stability of any currency is created by 1) it's use as unit of account, and 2) high liquidity, usually caused by a state governing a large population decreeing its use as legal tender.

No currencies are stable in price, because the crux is what you're pricing them in. If you price dollars in oil as unit of account, the dollar becomes as volatile as oil appears to be when the reverse is the case, as it usually is. All currency prices are free floating. And really, commodities like oil (and salt, and plenty of others) are more stable currencies, because their production and consumption remain mostly constant, so the supply can be more easily predicted, multiple entities can produce it so there's no monopoly that can control supply entirely.

If you're talking about some other type of stability, such as infrastructural stability, bitcoin has been running for a decade with no formal governing body, and in principle is so stable that any Tom dick and harry can spin up a cryptocurrency network with minimal effort and it just works. That's pretty damn stable.

I'm not sure I follow

" I believe that the US doesn’t need a CBDC despite the banks, whose activities are, to my mind, almost all better and more equitably accomplished these days by the robust, diverse, and sustainable ecosystem of non-State cryptocurrencies (translation: regular crypto). "

Is he saying that the cryptocurrency ecosystem currently provides loans, insurance, compliance with laws, anti money-laundering mechanisms on the same level as the existing infrastructure? Let's say I need a loan to build a house, where do I go in the world of cryptocurrency? What exactly does that even have to do with cryptocurrency itself? Banks provides services, they can do it in bitcoin, they can do it with dollars, the mechanism of the currency has nothing to do with it.

I'm honestly not sure after reading that article that Snowden really understands what the purpose of a bank or financial service providers is. they're not just intermediaries in a technical sense, they're institutions that pool and manage risk. yes you can automate the technical transfer of a loan, but a loan always has two human sides, and the creditor will always be an institution because it makes sense to professionalize the management of value.

One of the annoying things about humans is they are profoundly evidence based. In the case of the currency collapse, the average punter isn't going to be persuaded that it is possible until they've seen it. Just like how COVID caught a lot of people by surprise, people who apparently hadn't realised that pandemics are still possible and actually quite high risk.

There is just too much fear of things that don't exist and not enough fear of genuine honest-to-goodness authoritarianism. The more power accrues to governments to make everyone's decisions, the more the mistakes are going to hurt. Eventually, one is going to be so bad it does a lot of damage. Given the failure of the response to the GFC and attempts to maintain liberties through the coronavirus crisis, I really don't see this fight ending well. Technology has enabled authoritarian policies too effectively.

> One of the annoying things about humans is they are profoundly evidence based.

I wish. Unfortunately, humans have insufficient time and energy to be able to be completely evidence based, so at best, humans have to evaluate based on heuristics and Bayesian statistics. And at that, I cannot help but feel we are quite lacking.

Yes, sadly many humans are not evidence-based and simply believe what they are told without asking for actual evidence.

If every dollar is tracked so that the bank guard can be forced to give back a tip; wouldn't that tracking enable the tip giver who gained it illicitly to be tracked, too?

The promise that these surveillance capabilities will be used fairly is something neither Snowden or I or anyone else who has witnessed how the government works will buy; but it's part of the sales pitch and in arguing against it we have to acknowledge our own prejudice there.

A totally trackable government currency might well have uses, especially if the power of the government backing it went into things like ensuring transparency, honesty, etc. I certainly believe that no government will do any such thing; but they'll all sell their systems under that banner.

I’m very surprised by the quality of the writing. It’s both very informative on a quite difficult topic, has humor, and lets you get a good broad understanding of the three « camps » that the different options favors.

I believe an unmentioned benefit of CBDC’s to the issuing nation is that they will allow for a form of economical imperialism.

Provided a nations populace has access to the internet and smartphones once the national currency shows signs of hyper inflation (like Lebanon at the moment) they can effectively switch to a more stable alternative hence strengthening the hegemony of the nation issuing the CBDC.

Seriously scary stuff! Not news to me, but I hope enough read this message. The war for freedom is lost if this is accepted.

Let's assume cryptocurrencies we're stable for a second. Wouldn't banks still have a place? How would loans be provided in the realm of cryptocurrencies? Would it look more like peer to peer loans? Or would a similar bank like entity be needed?

I'm not well-versed on this topic so forgive me if the answer is obvious.

"Stable" price wise is not possible, with any currency not based on a hard, tangible commodity, fundamentally.

That aside, what something like bitcoin does is decrease the barrier to entry as a provider of financial services to only requiring the capital needed to do so. There is still room for banks, lenders, and the broad range of financial services and instruments that exist now (and plenty that don't), but access to this market is no longer protected by bureaucracy for Tue benefit of entrenched interests. And sure, some of the services we think we need from them are just rent seeking and those services might go away, the glaringly obvious being that contracting someone to securely store your assets is now optional.

Algorithmic stable coin DAI is quite stable. And you can take loans against it through various defi platforms.

The pace of crypto defi innovation has been astounding. I'm literally taking bank cash and putting it into stable coins and getting 8%+ interest without breaking a sweat.

The German inflation that he posts pictures of was intentional, because they wanted to cheat the French out of the crazy reparations for WWI.

How could it? The reparation debts werent denominated in deutschemarks.

The Treaty of Versailles imposed a huge debt on Germany that could be paid only in gold or foreign currency. With its gold depleted, the German government attempted to buy foreign currency with German currency,[9] equivalent to selling German currency in exchange for payment in foreign currency, but the resulting increase in the supply of German marks on the market caused the German mark to fall rapidly in value, which greatly increased the number of marks needed to buy more foreign currency.


It certainly ruined the Weimar economy. Not really seeing how that cheats the French?


If my memory serves, they were denominated in weight of gold.

> These upstart crypto-competitors

> in comparison to crypto.

I'm somewhat saddened to see Snowden adopt the highly questionable practice of shortening the term "cryptocurrency" to "crypto".

It's a gripe of mine also because it creates ambiguity, but it is common parlance and usually clear in context.

Why is it highly questionable? It's pretty common to shorten long words or phrases.

Because "crypto" is already "cryptography". It's annoying to use the same abbreviation for two different domains that are closely related.

Crypto isn't short for anything. It derives from the Greek kryptós (meaning hidden), and acts like an adjective in words like cryptography, cryptology, and cryptanalysis.

People absolutely use crypto as a shortened form of cryptography and cryptocurrency.

It is not an adjective it is a prefix, which is part of a word.

Words can mean more then one thing so it can be a shortened form of a word and a word all on its own, but I've never seen crypto used as a complete word.

I don't see why where it is derived from is relevant.

Pretty sure I've heard "crypto" used a few thousand times as shorthand for "cryptography". And now also for "cryptocurrency".

Basically, government crypto bad, regular crypto good

Does Snowden own crypto? That would be an important disclosure

No, actually, that's not a summary of the article. The article details the fundamental differences between the different proposed digital currency schemes.

I would think the more important disclosure is if he didn't hold any.

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