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Just Say No to Central Bank Digital Currencies (theupheaval.substack.com)
390 points by mortenjorck 3 months ago | hide | past | favorite | 374 comments



Some predictions:

- The government's not going to have an official true cryptocurrency where anyone with a computer and an Internet connection can just generate a private key and anonymously send / receive coins.

- The system won't allow an address to send / receive coins without approval from a government key, and that approval will only be given if the government's gotten a name / SSN / real-life identity to associate with that address.

- The system will provide a function where a government-controlled key can freeze any address's ability to send or receive funds.

- The government's going to say "But we need to take a stand against terrorists / Russian oligarchs / drug kingpins" and then it ends up being used against successively lower and lower degrees of criminals, such as money launderers / tax dodgers / deadbeat dads / unpaid parking tickets, and eventually ends up targeting ordinary citizens.


Crypto != digital. A digital currency can be a database at The Fed.

I feel like too many people confuse the two, but it's fundamentally different, in every meaningful way.


Swiss BIS (Bank of International Settlements, the central bank for all central banks, including US and UK) Director Carstens on CBDCs at an IMF meeting in 2020, https://www.youtube.com/watch?v=mVmKN4DSu3g&t=1451s

> With cash, we don't know who is using the 100 dollar bill today ... a key difference with CBDC is that the central bank will have absolute control on the rules and regulations that determine the expression of that central bank liability .. also we will have the technology to enforce that ... if an advanced economy issues a CBDC, and someone in a 3rd country wants to use it, it will require the consent of the central bank of the residence of that person, therefore the degree of control will be far bigger.

June 2021 in the UK, https://www.msn.com/en-gb/money/other/bank-of-england-tells-...

> Tom Mutton, a director at the Bank of England, said during a conference on Monday that programming could become a key feature of any future central bank digital currency ... what happens if one of the participants in a transaction puts a restriction on [future use of the money]? ... Sir Jon Cunliffe, a deputy Governor at the Bank, said digital currencies could be programmed for commercial or social purposes ... “You could think of giving your children pocket money, but programming the money so that it couldn’t be used for sweets. There is a whole range of things that money could do, programmable money, which we cannot do with the current technology.”


> if an advanced economy issues a CBDC, and someone in a 3rd country wants to use it, it will require the consent of the central bank of the residence of that person

This is so terrible.

There are countries who try really hard to control the USD exchange rate of their own currency. In practice, it means anyone getting paid in USD has their money confiscated and forcibly exchanged for their own nearly worthless local currency at absolutely terrible rates.

I've seen people posting about it here on HN: they claimed the government was pocketing about 50% of their earnings through this process and that bitcoin is a better proposition.

https://news.ycombinator.com/item?id=30141563

These CBDCs would empower governments to do so much worse.


(Disclaimer: not an expert, I read patio11 and Money Stuff when I'm pooping and that's about it)

This is, by and large, how it currently works today. Not that often do actual pallets of cash get moved from one bank to another; a lot more often, some centralized bank has a big ol' ledger, where various banks move money from one column to another. One of those centralized banks is The Fed, that's how the US was able to freeze so much of Russia's money; there is a bank account at The Fed, and that account is where Russia keeps its US dollars (or the bank that Russia works with keeps its dollars, some of which are Russian, or the bank that the bank that Russia works with... you get the idea).

The biggest difference between a CBDC is that there wouldn't need to be a printed dollar to back that ledger, so instead of rare pallets-of-cash movements, it would be entirely digital. Printing money would be an UPDATE statement rather than through a printing press.


It'll be interesting to see how quickly it gets bought in. The experience over the years with the political flow of things like the surveillance state or financial repression, etc, is that when these systems for controlling people are bought in they are effective enough at hiding what they do, so they never really generate the outrage they deserve. It seems like it will be a routine thing for presidential candidates to be accused of corruption and investigated by the spooks during campaigns for example. It doesn't seem important enough to people that it would bridge the partisan debate.

CBDCs will probably happen in a similar way. Cheap and easy to implement. No room to make noise about the abuses because the people targeted won't have the money to defend themselves, let alone speak out in an unfavourable media environment being paid/given incentives/on board with the plan to Think of The Children. A lot like the how surveillance ended up the abuses are fairly quiet so people aren't really sure what specifically they need to fight.


>programming the money so that it couldn’t be used for sweets

That's stretching the concept 'money' a bit, is it still money if it's non-fungible? What on earth happens if the money is paid to someone? Can you 'launder' the restriction away by swapping money with a friend? Does the restriction remain indefinitely, making it completely non-fungible?


These are good questions to be asking, and they are all theoretical possibilities. Some people see this as an opportunity for improvement, others find it deeply concerning. Central banks do not necessarily need to abide by the old definition of money.


> Swiss BIS

It's weird to call it swiss BIS, the place where international institutions are headquartered is not usually relevant :) We don't say Swiss FIFA, or Swiss WHO.


The explanation of a digital currency, when you get past the paranoia about an increase in tracking you[1], sounds exactly like a "narrow bank". But the Fed has always been against those, because they think customer banks will be too poorly capitalized if everyone uses a government bank directly. That seems like the best reason we wouldn't get one.

A good reason to have them would be that it'd be really easy for the government to pay you, for instance if we had a UBI or one of those things everyone on here loves. Right now they're surprisingly bad at it. A lot of government agencies have to pay people with prepaid debit cards, and there's people who never got their stimulus checks still.

[1] mainly unjustified because they're already tracking you in regular bank accounts so it can't even be any worse…


> mainly unjustified because they're already tracking you in regular bank accounts so it can't even be any worse…

That's one way to look at it. Another way is to see that tracking will be backed up by efficient enforcement and control. That's more than a step further, that's something that completely re-organizes society.

You could argue that something like that is necessary in the 21st century, but besides the paranoia there's concern about who controls a system like that.


> A good reason to have them would be that it'd be really easy for the government to pay you, for instance if we had a UBI or one of those things everyone on here loves. Right now they're surprisingly bad at it. A lot of government agencies have to pay people with prepaid debit cards, and there's people who never got their stimulus checks still.

That seems like a good reason to not have them. Sending people checks is profoundly simple 17th century technology. Putting people who can't even master that in charge of securing against stealing an arbitrarily large amount of money over the internet is like that xkcd about voting software:

https://xkcd.com/2030/

Just no.


The issue isn't the inability to send checks. Many Americans can't get bank accounts to deposit checks into.


That's literally an American problem. Here in the UK, it's extremely easy to set up a bank account even if you don't earn very much, or if you recently declared bankruptcy. If America wanted to help the unbanked, they have every opportunity to do so.


There are plenty of ways for the unbanked to get an account. From online banks with $0 deposit requirements, to local banks with $25minimums. While there certainly are literacy or accessibility issues, the number one cause of not having a bank account, according to FDIC surveys is not trusting banks.


The first time I tried to get a bank account as a mostly broke college student, I walked into a branch of the bank that had an agreement with my university to supply ATMs on campus. I said I wanted an account. They did everything in their power to not give me an account. Eventually, they rejected me because I had a NYS non-driver's ID card instead of a license. "We've had problems with these," they said. This bank branch was in downtown Manhattan, where roughly no one drives.

A few years after I managed to get them to give me an account, I overdrafted my checking account by a few dollars and they disabled my ATM card. After my next deposit cleared, I went back to that bank branch to get my card reinstated. They did not want to do it. The manager eventually said he could help me if I "promised I wouldn't do it again". I asked for my account to be closed instead, and I will always remember how pleased the guy seemed to be losing me as a customer.

It is not easy for everyone to get and maintain a bank account.


If you don't mind me asking - why?


I just looked like someone who was not worth their time. I never did have more than $100 in the account, and dealing with me might have cost them more than they made on me since I didn't pay any fees except for the one time I overdrafted.


It's literally illegal in my country to be unbanked. The government wants to know exactly where your money comes from and where it goes to.


Inability to send you a check is a sign of privacy. It means they don't know your address or bank account number.


I still think (hope!) the real reason central banks (and governments) want a digital currency is that they're not sure completely replacing cash-infrastructure with one or more privately-owned, possibly foreign-owned, alternatives is such a great idea.


> The explanation of a digital currency, when you get past the paranoia about an increase in tracking you[1], sounds exactly like a "narrow bank". But the Fed has always been against those, because they think customer banks will be too poorly capitalized if everyone uses a government bank directly.

This sounds uncomfortably similar to the "reason" the IRS can't do our own taxes for us and send us the bill.


Sort of, but TurboTax actually lobbies for that. A lot of large banks don't even want you as a customer in the first place, but the government makes them do it.

Also, everyone here is arguing "the government shouldn't know about my finances", and I feel like "the government should do my taxes for me" conflicts with that?


Why is that paranoia? If you are OK with tracking, please put a live video feed into you washroom. You have nothing to hide there, do you?


Since I don't have any lawyers on hand, I'm not qualified to design a private system so I don't feel like making one up[1]. But since I remember how bank transfers work right now (hint: they go through the government), I can say people claiming they have some right now are wrong.

[1] for instance, I don't remember the legal status of mailing cash through USPS, but pretty sure it's different privacy-wise even though it's "the government"


Why is it not put your transaction history into a database that the government can subpoena if they want to know what you've been buying, which all of us have already been doing if you're not conducting transactions in cash? I have a lot of facts about myself I'd like to keep mostly hidden, but are not hidden from law enforcement officers who can get a warrant.


Why do you want to watch me take a dump so bad?


I have no doubt someone somewhere on the internet would pay money for such footage. Maybe it'll be a business rival seeking to publicly humiliate you.


Exactly this. We already have digital currencies. They are called US Dollar and Euro. They exist as numbers in bank accounts, transfers are safe and very efficient.


That's not what they're working on though. No one is dumb enough to try to make a central (and traditional) database/system for digital money. They could do it, and if they do it eventually will get hacked. They will use blockchain technology because of the security benefits (encryption, redundancy, validation). The part they're removing is the decentralized aspect.


> No one is dumb enough to try to make a central (and traditional) database/system for digital money.

Uhm, isn't that what literally every bank in the world is nowadays?...


Okay, I may have went too far there. I didn't properly think that through, but I still think it's a bad idea to not use a blockchain for a new currency.


What do you think the Federal Reserve Bank does? Every bank in the US has an account with the Federal Reserve. The Fed maintains a central database of the transactions between those accounts.

The only difference between a blockchain and a traditional database is that a blockchain has an inherit audit trail due to the use of crypto algorithms and digital signatures. A traditional database can have similarly immutable record keeping with digital signatures as well.


> such as money launderers / tax dodgers / deadbeat dads / unpaid parking tickets, and eventually ends up targeting ordinary citizens.

we already got a tease in Canada of what is to come.


He said "ordinary citizens". The "occupiers" gave up their rights by holding an illegal protest. Canada has done nothing wrong to ordinary citizens.


>The "occupiers" gave up their rights by holding an illegal protest.

The same can be said for any kind of protest once deemed by governments illegal, that gave you your current rights, from child labor laws to environmental regulations...

Also in what part of a democratic playbook is it written that if you "illegaly protest" you "give up your rights" to everything, including your financial assets, and by government fiat nonetheless. Because in 20th century plus western democracies at least, this is an unprecedented step.


One just has to consider how they would feel if the shoe was on the other foot.

For instance, ~25 people died during the US protests in summer 2020. Not many, but probably more than in the convoy protests. If the US Government had gone ahead and frozen the assets of the people involved, how would one feel?


Gave up their rights by "illegally" protesting, huh? So basically if you protest the government, and that government says your protest is illegal, you lose your rights. I don't see that being such a healthy path for a free society.


A free society is not one where a few hundred idiots get to take a road trip to the capital and demand they form government. It is not the one where you are free to break any law you choose as long as you label it "protest"


This principle and precedent only seems digestible since the majority is on the side of it. In practice, one can imagine the SAME principle and practice being applied against us and in nefarious ways. It is indeed a slippery slope.


Banks in Canada are authorized to freeze ordinary citizens' accounts if they believe those citizens are associated with a protest, and the citizens have no recourse.


Well, business in the South were also authorized to not serve colored folks not that far ago.

It didn't make it right, just legal.


Freedom of association is dead.


A protest isnt a protest unless its illegal and disruptive, that is the point. You are protesting as last resort against laws that need disruption.


CBDCs have zero intrinsic link to crypto. They are digital in the same way your credit card is digital which is to say they use servers that run on a computer which access a database.

You could implement a block chain somewhere in there but it's not really clear what a central bank would gain from that. They have central in the name. They aren't interested in decentralizing


> The government's going to say "But we need to take a stand against terrorists / Russian oligarchs / drug kingpins" and then it ends up being used against successively lower and lower degrees of criminals, such as money launderers / tax dodgers / deadbeat dads / unpaid parking tickets, and eventually ends up targeting ordinary citizens.

Yes, absolutely. Unless bitcoin wins, I have no doubt whatsoever that this is what's going to happen.


Even if Bitcoin "wins", the government can go "you have two months to convert your BTC to FedCoin, after which BTC is illegal".

If we let the government do whatever, no technological moat is going to stop them.


I'm going to say something crazy.

How about we just stop electing people who are going to use power against their own citizens? If you think that's impossible, then how about we change the system such that it is.

That seems much more constructive than erecting barriers for ourselves because we can't control the beast we've constructed.


> How about we just stop electing people who are going to use power against their own citizens?

Well sure, but for that you've got quite a road. Elections were precisely designed to extract power from the citizens into the hands of the few. If you truly want freedom and equality then you need to build power from the bottom up and never let anyone "represent" an entire population... because noone ever can represent millions of people faithfully.

I mean, you could take the 500 brightest and nicest people on Earth and put them in a parliament and you would still get widespread injustice and misery. We need to abolish the Nation States and empower people and communities to organize (anarchism).


The state suggests that people cannot play nicely en masse without violent control, but doesn’t actually back this assertion up with anything. Maybe I’m a conspiratorial nutcase, but my relationship with the state consistently feels like interacting with the world’s biggest protection racket.


Some authors clearly analyzed/described many facets of this: Leopold Kohr (the breakdown of nations), Mancur Olson, James C. Scott (Zomia), Jacques Ellul...


I too believe that the path in which we progress towards peace and prosperity involves dissolving the Nation State and creating mechanisms that empowers the peaceful, good faith people, and prevents the Nation State from coming back.


> How about we just stop electing people who are going to use power against their own citizens?

You have too much faith in humanity.

> If you think that's impossible, then how about we change the system such that it is.

Because that's impossible too?

It's like buttered butter. The system is made of humans.


>How about we just stop electing people who are going to use power against their own citizens? If you think that's impossible, then how about we change the system such that it is.

How would that go? Who would ask you or me how to run the system? And who we should alternatively elect, given that the elections system is a rigged game with a couple of mostly-agreeing between them horses alternating in power in most countries?


> If you think that's impossible, then how about we change the system such that it is.

Who is "we"? The people who can change the system are those in elected offices of power. Your suggestion means convincing them to change it so that most of them will not get reelected and will lose all power. That can never happen, human nature.


> Your suggestion means convincing them to change it so that most of them will not get reelected and will lose all power. That can never happen, human nature.

That can happen, and has happened throughout history. It tends to be a bloody ordeal though.


There are other ways of changing a system than working within it or resorting to violence.

A parallel society is such a way.

https://youtu.be/wJr7awWGWAo


A long time back I had see the video. Not the best points in the video, a little like how to make a million bucks. The concept is sound but the execution is hard. Most independent thinkers cannot even conceive of a parallel society. For the few that do, the numbers are really tiny, to the point that bumping into each other is near impossible. Either that, or they are so off radar that it's impossible to find them.


you really drank that democratic kool aid. unless you have more money or bigger guns you don't get to decide anything.

furthermore the internet has show really why democracy doesn't work at scale. it's so easy to manipulate the unwashed masses.

you think if fox made up a smear campaign on you, there wouldn't be hoards of people at your door with pitchforks the next day.


>How about we just stop electing people who are going to use power against their own citizens? If you think that's impossible, then how about we change the system such that it is.

Neither of it is possible the average Joe/Jill buys into all the bs sprouted by the powers.


As the others have said, the electorate wants power used against fellow members of the electorate.


If it also does my taxes automatically, sign me up.


Aren’t taxes already done automatically. My taxes here in Norway have been filled out by the government for as long as I can remember (I am 44). All I got to do is look over what they have filled out and correct it if I think anything is wrong. If no it is automatically delivered.

Dealing with taxes takes like 5 minutes each year. It is all electronic. Just like you can sign anything electronically using encryption keys for any nationally reckognized ID system in Norway. I just electronically signed papers to start a company. 15 minute process online.


>All I got to do is look over what they have filled out and correct it if I think anything is wrong.

Its pretty much the same in the USA if you just have income from a standard job. You send them your W2 form with the last year's salary and make sure everything is right. If you're self-employed, earned income some other way (capital gains, etc), or live in a state with additional state income tax, you have to fill out some more forms.

Then it gets a bit complicated calculating deductions. Which means you have to put in some effort if you want to lower your effective tax rate. There's deductions for everything under the sun since the tax code is very complex. You get some money back if you paid interest on student loans, have kids, bought a house, spend money on office supplies, gave to charity, etc. Some people spend a few hundred on a tax advisor to do it for them and still come out ahead. Many people simply don't bother and let the money go. The IRS only comes after you if you underpay, not overpay.


Are taxes in the US that painful? In the UK I do my tax return every year and it takes me all of about 30 minutes and I only need a few browser tabs open in front of me (typically just my broker and HMRC)


That's unusual, majority of people in the UK have simple taxes and don't need to fill in any forms.

The US is deliberatly difficult because

1) Companies make a fortune selling "solutions" to this, thus spend a lot of money ensuring it continues

2) Americans don't like taxes, so by making it more obvious the government is taking your tax money, and making it painful in the process, to fund their military, it helps cement that idea there's should be a small state

The US takes 27% of the GDP in tax, the UK 33%, although personal taxes for normal people tend to be about the same, its just that the US pretty much requires an accountant, or at least some expensive proprietary software, and hours of your time.


For that 33% (+6%) you also get universal healthcare (which isn't accounted for in the 27% Americans are paying), so those numbers aren't apples to apples.

That would be another thing that would be great for the GAO (U.S. Government Accountability Office (U.S. GAO)) to produce reports about.

Where are (my / your) Tax dollars going? How does that compare to other countries, in absolute, per person, GDP and other metrics, etc?


>Where are (my / your) Tax dollars going?

They do report that.

https://datalab.usaspending.gov/americas-finance-guide/spend...


I hadn't heart of them before:

https://datalab.usaspending.gov/about/

""Who We Are

This site was created by the Office of the Chief Data Officer at the Bureau of the Fiscal Service (Fiscal Service), which is part of the Department of the Treasury. Fiscal Service is responsible for managing public debt, central payment systems, and government accounting. Our team is comprised of data analysts, developers, and UX designers who are passionate about putting trusted data in the hands of the people.""

So that site is created by the disbursement arm of the bureaucracy, which explains the overly generic output bins as well as no metric for adjusting based on taxes paid in by an individual, nor for area of the country. I was rather hoping for something with an order of magnitude or two of greater depth that dynamically adjusted the context of graphical representation based on what mattered to the viewer.


> For that 33% (+6%) you also get universal healthcare

I don't think taxes goes to healthcare (either in France or the UK). I think that's paid up for with your social security contribution?


It's all taxes, and it all goes to the same pot, there's no hypothecation, the NHS budget is not related to the money brought in from NI contributions, and National Insurance is included in the tax revenue along with VAT, Fuel Duty, CGT, Stamp Duty, Income Tax, etc

NI is about 19% of tax revenue, Income Tax 27%, VAT 18%, local taxes (council tax and business rates) about 10%.

It doesn't include other receipts, things like profits from state owned business.

Total government revenue (about 10% higher than total taxation) does not cover total government expenditure, hence a deficit, and some branches of economics considers revenue and expenditure separate in a system which controls its own currency.

Either way, the US spends more on government healthcare (per head of total population) then the UK, the decision not to have universal healthcare isn't a funding one


I stand to be corrected. But deficit should also be included (it's to be paid by future generations or being paid by currency debasement).


Americans chose great army instead of healthcare.


The United States spends more money per capita in healthcare than any country in the world, and 2-3x as much as most European welfare states. There are a lot of problems with the system, but "not enough money funneling into it" is not one of them.

https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...


The US government still spends more on healthcare as a total amount per person (about $1.4T, or $3,880 per person, just for medicare+medicaid), compared with the UK (about $3,300 per person)

The US as a whole in 2019 spent 16% of its GDP on Health, 4% on Military

The UK meanwhile spent 10% on Health and 3% on Military


Have you been to a doctors office in the US? There are more administrators filling out insurance papers than doctors. US spends money on healthcare administration, not on healthcare. The same dollar in the US buys ten times less insulin than a dollar in Canada.


Soon you will learn what happens when Americans don’t choose a great army.


Well this "great army" doesn't seem to have stopped Putin invading Ukraine

Caused a few wars though


I suggest listening to Peter Zeihan. Americans have stopped caring about the world order, this is the consequence of that.


They even chose "socialized medicine for the Army" to further drive the point home.


The process is pretty easy if you're on W2 and can't beat the standard deduction. No software is required to fill out the form.


In France, it went all the way to where I don’t do any tax filing; the government does it for me, and sends me a PDF itemizing their tax, and automatically debiting it from my account.

There is no CBDC needed for that.

(In fact, all the article’s fears about payment prevention and free speech restriction are all possible without CBDC, and already in place in some segments that gained popular support, which minorities and SW have been complaining about across the decades.)


> Are taxes in the US that painful?

For most people, no. However, as you make your way up the income bracket or acquire investments or property it gets more and more complicated.

…and if you mess it up the IRS will be sure to tell you what you’ve done wrong and what you actually owed.


Yeah it sucks pretty bad. Like my wife’s company does RSU transactions every like month and we need to adjust the cost basis for each one for some reason. This is a Fortune 50 company.


Thank you citizen!

(check username)


Agreed. The only reason why government want CBDCs is convenience. They can already seize whatever bank account they like, it doesn't give them any more powers. It's just easier than having 50 different systems to have one unified system.


Nah they will want you to be scared of the panopticon surveillance and the threat of punishment for getting your taxes wrong.


> such as money launderers / tax dodgers / deadbeat dads / unpaid parking tickets, and eventually ends up targeting ordinary citizens.

I mean... I'd say that at least two of these are ordinary citizens, probably actually three of them...


Actually, once they have that power, they can freeze your money because you are a nerd, what are you going to do?

https://www.bitchute.com/video/QXU4fgltvHyN/


> The government [is] not going to have [it] where anyone [...] can just anonymously send / receive coins

You mean, like you can with cash?

I understand being skeptical of the government, but we already have "electronic" money in the form of Credit cards, where everything you speculate about is already possible by BOTH the government AND private banks.

Government enforcement against people committing all kinds of crimes is uneven and unfair, but I doubt the Federal Government is interested in mobilizing against parking ticket offenders, unless their crimes somehow relate them with Al Capone. If the Federal Government believes you have ill-gotten money in your possession, you can have that money seized right now; no need for fancy digital or crypto stuff.

The Feds have taken on ransomware gangs and others in the crypto realm already -- doing "bad things" that are illegal with crypto is still illegal, without the need to have fancy escrow/approval/gov't stuff in there.


Eventually? That's is the actual plan, the only plan. Control of ordinary citizens.

The rest are just pro-forma excuses. If they were serious about money laundering, why are the banks only fined 10-15% of profits they make from laundering cartel money, and literally no key decision makers go to jail? And you still think they care about money laundering? lmao.

It's not about money laundering, never was. It's just to CONTROL you, and absolutely nothing else.

Here is right from the horse's mouth: General Manager of the Bank of International Settlements: “We don’t know who’s using a $100 bill today and we don’t know who’s using a 1,000 peso bill today. The key difference with the CBDC is the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that… and that makes a huge difference.”

absolute control on the rules and regulations that will determine the use

absolute control on the rules

absolute control


CBDCs do not even aim to be cryptocurrencies. In fact there's very little connection between the two, unless you only care about similarities in UX and not what's 'under the hood'.


> only be given if the government's gotten a name / SSN / real-life identity to associate with that address

A.K.A. biometric vaccine passport


With all these things there's degrees of freedom. Yeah, if you don't support your government for shit, and always value the taxes you pay them at exactly 0, don't volunteer for anything for it, lie to get out of jury duty, film the police when they're in the right, well in time you get the government you deserve.

Although I see your point about targeting ordinary citizens, so the thing about that is the real criminals are scary, nowadays because they are getting into America at such alarming rates they have tons of ways of getting to the people that get to them, while the ordinary citizens will never retaliate for cracking down on them, so the natural thing to do, the cowardly thing but at any rate, is to crack down on ordinary citizens.

Similar to recording police or criminals with your phone. People do it to police all the time, because it's safer at least in California, whereas violent criminals will retaliate criminally, so recording them to their face takes courage.


I don’t really get the author’s argument. A lot of it seems very “slippery slope” to me.

The government already can (and does) restrict what people can and cannot buy. The idea of limiting spending on certain things (like gas) is interesting, but that isn’t exactly a new thing. The government could already just straight up ban the sale of anything, this would just give them more nuance to their policy.

Other things mentioned, like automatic taxes and preventing money laundering, seem… good?

The more extreme authoritarian uses cases like financial “imprisonment” are certainly bad, but similarly can already basically be done. Look up what happens to those few people each year that are accidentally declared dead and can’t open lines of credit etc. The government can already ruin your life with the press of a button.

I’m not sure I support CBDCs, but these seem like weak arguments. There are definitely benefits to taking away power from existing financial institutions.


I'm not in the Crypto camp, but - I think the argument here is that there's a lot of things that a government can do on paper that it can't actually do in practice. Banning goods is an obvious one - drugs still find their way around in the economy. A lot of regulations play this way, too - rules on what can and can't be done tend to attenuate with distance from cities (ask anyone in a rural area what they think of gun laws - and then ask them what they've actually got in their gun safe). Whether or not you think this is good effectively depends on how much trust you have in the current laws to have gotten it all right, but bear in mind homosexuality was against the law in all parts of this country until the 60s and some up into the 2000s, and weed only started becoming decriminalized for recreational use in 2012.

I think the core argument is that there's currently a difference between the government's powers on paper and its powers in reality, that widespread government-controlled digital currencies have the potential to substantially close that gap, and that that is a Bad thing because progress in society often relies on and grows in that gap. The counterargument that tax dodging, money laundering, and all other kinds of ill also happen in that gap is true, but that's the cost for keeping our options open.


Governments already have all that power with existing non-cash money. You can't really use cash for buying things online, but still drugs get sold online


That's not a good argument to make it even easier. I'm not saying an argument doesn't exist, just the fact that they have the power in a more limited form is not a good excuse to give them the power at a click of a button across the entire economy.


Well said


A central bank digital currency would allow the central bank to take your money. Right now, a government agency would need to ask your bank to take your money. That bank will have lawyers and they'll ask questions. You can guarantee Jamie Dimon at Chase doesn't just say "oh, well ok then, sure". He'll want to see the relevant documentation, have his people inspect it, and push back if he doesn't like it.


> Right now, a government agency would need to ask a bank to take your money.

And those questions will generally be “How much do you want to take? And how do you want us to give it to you?”

Oh, they’ll probably make sure the correct paperwork is filled out and procedure is followed, but substantive, as opposed to procedural, due process isn't something banks are or want to be guarantors of.


We can agree to disagree. I don't buy for one second that any of the large US banks does that. Especially Chase. Jamie Dimon doesn't hide his... extreme frustration (/hatred?) of government entities.


I'm sure he performatively complains about regulation because he's a wealthy CEO who doesn't want to pay taxes, but at the end of the day, he has no financial interest in "protecting the little guy," because he's not a little guy and neither are any of his cronies.


He has plenty of financial interest. Chase has 100's of billions in core deposits from little guys. They pay about 0 on them. They lend them at 3-4%. If people started to think Chase was a place where their deposits weren't safe, it wouldn't be pretty for Chase. Even the thought that maybe just maybe they aren't safe is enough.

Banks are in a precarious situation re deposits.


You seem to have a very naive view of how the financial system works. It's not like there are a lot of options for small depositors, it's one of the set of too big to fail banks. And they can get all the free money they want from the Fed. If you are someone with millions of dollars of annual deal flow through Chase, yeah, Dimon will go to bat for you, but if you are some retail depositor, as long as they verify it's the government, they'll do whatever they want. (And they don't even really care about verifying anything under normal circumstances, which is why identity thievery is so easy.)


> It's not like there are a lot of options for small depositors, it's one of the set of too big to fail banks

You might be outside the US? In the US there are literally 1000s of options. And the idea that banks get all the "free money" they want from the Fed...

I don't think you should be suggesting anyone is naive with those two statements.


No, he is literally correct. The fed interest rate has hovered around 0% for ages. That's free money.


The fed funds rate was 2% just a few years ago, it was 5% in the mid 00's and was rarely below 5% before that for decades.

Also, it needs to be paid back. On top of that, they are in a competitive market where mortgage rates are very low, corporate lending rates are very low. So it's not a simple game of "free money in, high interest money out". Anyone who thinks finance is some easy game hasn't played the game.


> If people started to think Chase was a place where their deposits weren't safe, it wouldn't be pretty for Chase.

But when all banks get hit equally by regulation, consumers would have nowhere else to go. The banks might superficially complain, but they have no financial interest in opposing surveillance.


You are conflating three issues at this point - taxes, regulations, and a government entity illegally taking people's money.


There is only one underlying issue — the fact that institutions cooperate with each other and shut out the public. Only a strong culture of democracy and government accountability can actually protect the public. Without that, it doesn't matter whether the banks are private or state-owned; they control our money all the same.


Moreover, they lose a customer by doing that. Multiply that out and they lose lots of customers. Why would it be in their interest unless legislated to do so?


That's only true for regular joe sixpack tax slaves, whose rights are quite illusory, as you correctly observe.

However, banks spend billions of dollars defending large clients, going even as far as happily paying multi-billion fines to keep laundering money for the cartels.


Right, so it would be even worse if the government held your funds from the start.


In addition, if the CBDC replaces cash, there might not be a way to avoid the central bank taking your money. This is how they could implement negative interest rates, which could be used to prop up asset values.


Or they could use negative interest rates to reduce the supply of money as the richest members in society no longer have guaranteed automatic accumulation of their wealth.


The richest members of society already don't leave a large portion of their wealth sitting around as cash. Cash would be even more avoided if there were a realistic prospect of negative interest rates.


Wait, Elon doesn't have his $150 bill in his checking account at BofA??


> Right now, a government agency would need to ask your bank to take your money

A government agency seizing your money rather than asking a bank to do so would often be an improvement over what we have in the US today: Banks routinely freeze peoples accounts with zero due process and little recourse, through the implicit (but not legally recognized) coercion of the impossible maze of bank regulation.

When your assets are frozen directly by the government you're more likely to get access to some amount of due process-- though not always (see: civil forfeiture).

In any case, since banks absolutely never stand up against the government to protect ordinary customers (drug cartels will billion dollar scale accounts are another matter...) it's hard to imagine a CBDC being worse in this particular respect.


The only safeguard against state institutions taking your things is strong laws preventing them from doing so. This is a fact independent of what kind of currency is used.


> central bank digital currency would allow the central bank to take your money

Can’t it be architected such that this isn’t possible without certain controls?


That's not the point though.. if you read any of the papers by any of the central banks or the WEF or the related think tanks they want the control.


A government voluntarily placing limits on its power?


Typically banks just give government what they want, no questions asked. The ability to do business is far more important than a few angry customers


This implies that a central bank digital currency (assuming this is the United States) would have these capabilities.

Maybe this is naive, but I would think that this digital currency would be designed to preserve people's rights in the same ways that current money does.


In what ways is current money designed to preserve people's rights?


A central bank also has lawyers who ask questions?

Sometimes it feels like some people imagine government working like this: Biden calls up Powell and says “Let’s take all the money from our political enemy N.N today” to which Powell replies “Yeah LOL awesome, my minions are pushing the button now”


Sure - you are right. But one more layer of lawyers asking questions on such a request is, imo, extremely valuable. Especially when the extra lawyers are being paid by a private entity who is more answerable to shareholders and customers than the central bank (or whoever asks them).


This is an interesting sub-thread. My question is "why do you and parent commentators think that these decisions, both on payer/payee sides, won't be fully automated AI - with no human in the loop?"


In that case just like in current you can sue the government. And if that route is not open due to corruption or whatever it is essentially same... If truly totalitarian government decides to do something "illegal" you really don't have much way to fix it in either scenario.


Well, it kind of does work that way, just with more signatures.


I'm pretty sure any government that wants to will take your regular bitcoin too. Just put you in jail til you hand it over. If you make any transaction it'll be easy for them to see your wallet.


You've just changed the cost of doing so from near costless (a DB update) to very expensive to do at scale. (Jail, police staffing, court staffing, prisoner care and feeding, potential violence and injury, paying staff to find targets, manually, etc) That alone is worth a lot.


Scale doesn't mean you need to process the entire target population. A carefully selected subset of targets with visibility tailored for demonstration purpose can be very persuasive for the rest of the people to fall in line. Of course that also comes with the risk of resistance and riots.


> (Jail, police staffing, court staffing, prisoner care and feeding, potential violence and injury, paying staff to find targets, manually, etc) That alone is worth a lot.

Uh, you do realize that to politicians, enforcement looks alot like a jobs program?


As if the United States has ever had any qualms about wasting money on the justice system. Remember the war on drugs?


I am not comfortable giving government more power to control the economy. The government was never meant to have the power over the economy they currently do. We are over 100 years in to the reign of the Fed and I see very little good that has come from it.


Can you expand on that for a bit? I look at the history of governments and I see less direct control of the economy throughout history.

For large chunks of history governments owned most of the economic output of their constituents in the form of slavery.

Even in the supposed free market heyday of the late 1800s USA the government controlled most of the productive land either outright or via land grants & treaties, they controlled right of ways for the major tech innovations like the telegram & railroads and they enforced labor rights at the end of a bayonet.

Monetary policy seems like a softer power than the previous regime to me. What am I missing?


Whether what you are saying is true or not - on face value it appears that when the founding fathers in the US were laying the groundwork for the new government, it was envisaged that the role the federal government had would be smaller than it is now. Whether that is good or bad is a different argument, but it seems on face value to be a given it wasn't intended by those folks.

The example given re the Fed - I don't believe there was any suggestion by the founding fathers of a central bank. Banks used to issue their own money.


Alexander Hamilton, famously wanted and got a central bank exactly for the purpose of issuing money. There’s a musical about it.

George Washington suppressed a rebellion that started at least in part because the federal government was interfering with the use of whiskey as a medium of exchange.

I’m fairly receptive to the Jeffersonian view that these were not good ideas for the federal government but claiming the founding fathers didn’t view them as federal powers just isn’t true.


That wasn't a central bank anything like a central bank acts today. It was more a "national bank". It wasn't lender of last resort. It didn't regulate other banks. Banks didn't have an account there. It didn't play a part in settling payments like the fed does now.

You can read a little about that bank here:

https://en.wikipedia.org/wiki/First_Bank_of_the_United_State...

By comparison, modern central banks like the Fed are very interwoven into the banking system and financial system and have a lot of power. They settle interbank payments. They set interest rates for short term lending between them. They regulate banks. They supervise banks. They do all kinds of buying and selling of securities. There isn't anything to my knowledge to suggest Hamilton was imagining something like the Fed.


What Hamilton got was of course a watered down version of what he wanted precisely because of the Jeffersonian objections.

He had argued even during the revolutionary war that there was a need for a Bank Of England equivalent in the States. The Bank of England also didn’t look exactly like a central bank does today but was an explicit instrument of governmental monetary policy.

Hamilton and his supporters believed the federal government would fail without a similar institution so it’s just not correct to say that the founders didn’t envision a central bank. It was a contentious issue then like slavery was.

If the central bank uses different technologies and processes now that’s to be expected. But even the original bank had as part of its central mission the management of federal monetary policy. Dealing with revolutionary war scrip and resolving a fiat currency were stated aims. The founders didn’t envision that the Department of State would send an ambassador to the UN either but it’s a natural extension of the duties of that department they did establish.

Any appeal to the founders implies allowing for reasonable differences between the world of then and now or it’s a pointless appeal. And the founders certainly did envision a governmental central bank that enacted monetary policy. It was a central argument of the day.


It's seems you know a lot more history than I do :)

In all seriousness though - is there somewhere you can point to which shows the debate around a central bank that suggests they wanted the central bank to: clear interbank payments, set short term rates between banks (and themselves), act as a lender of last resort, regulate and supervise other banks? I've never seen anything that suggested anyone wanted to do any of those five things. I've only seen the arguments for functions which one would consider a national bank.



> I don't believe there was any suggestion by the founding fathers of a central bank. Banks used to issue their own money.

Where did you get that belief?


There are two parts there - which one? Banks certainly did issue their own money. And there wasn't a central bank - at least not as a central bank is defined today.


I clipped the quote incorrectly, but the part about the founders. Considering they established a national bank in the first two years, it seems like they did want a central bank.


Gotcha - please see the discussion above. At least to my knowledge, there was never a discussion of a central bank like the Fed. The national bank proposal (and function) was just that - a national bank. It was the bank the government used, and they also acted as a commercial bank in some manner and did a few other things. They didn't do many/any of the things the Fed does.


I'm not sure what the fed does that a giant national bank doesn't, at least if you're looking at an old school bank like the Bank of teh US. They lend to other banks! They print money! They buy assets!


The big obvious ones: regulate and supervise other banks, settle interbank payments, explicitly act as a lender of last resort to stabilize the financial system as required.

There are also other practical differences - for example, having a set, specific target for short term rates (the first bank of US didn't have a target rate, even if they did loosely have some ability to sort of influence rates).


The power given to the US government is extremely limited. As far as the economy is concerned the US government is given the power to coin money(gold and silver), regulate interstate commerce and trade with foreign nations. That is it. Regulate in this context means to keep regular as in keep interstate trade moving.

There is no power to set prices of labor, give subsidies, dictate safety regulations, print money, maximize employment or maintain stable prices that is given to federal government.

Through monetary policy the federal government has breached the limits of its granted power. Physical force can be resisted. How do we resist the economic yardstick of the dollar being changed to benefit those in power?

This became more ranty than I had hoped. The bottom line is monetary policy of adjusting monetary supply to maintain prices and employment is just the other side of the price fixing coin. It's the same logic behind the reasoning and similar detrimental outcomes for the majority.


The only explicit thing about gold and silver is that states can't make anything but them tender, but the feds can through coinage powers (not metal specific): "coin money and regulate the value."

Also, the UN Charter is supreme law of the land according to article VI of the US Constitution, so check some of those other claims through there too.


> This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

The UN Charter is law only insofar as it does not run contrary to the US Constitution.


No, you are reading that wrong. State laws and the constitution don't withstand against federal treaties.


State laws do not supersede federal treaties, but the federal government does not have the authority to enter into a treaty which would violate the Constitution.

Insofar as the UN Charter does not violate the constitution, you are correct that it is supreme to state laws and state constitutions, but it cannot by definition run contrary to the Constitution as the federal government would not have been able to enter into it.

> Thus, a properly/legally concluded U.S. treaty overrules any STATE law and any STATE Constitution, but a properly/legally framed U.S. treaty does not, may not, can not, and is forbidden to overrule the U.S. Constitution or abrogate the Sovereignty of the United States. If it does, it is not bona fide. It is a usurpation. It is not "under the Authority of the United States" to make such a treaty.

https://jpands.org/hacienda/article4.html


Plain reading, if that statement means it overrides state laws, then it also means it overrides the constitution. It was treated like that in the first few years and then courts came up with a bunch of creative interpretations not to.


I've decided you're right. I typically advocate for the plain reading, and the plain does state that.

Unfortunately this means I now must advocate for the overthrow of the US government, or at least the exitship of the UN Charter and all other treaties which expand power beyond those enumerated in Artice 1 Section 8.

Edit: Actually I'm still not sure. Article 6 says, "This Constitution, and the laws of the United States which shall be made in the pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the Supreme law of the land;..."

Congress is not authorized to enter into a treaty which would violate the constitution, so how could they enter into a treaty with the "authority of the United States" if they are not authorized to do that?


Why do you have to work for money while they can create it? That seems to be a fundamental thing nobody can adequately answer - let alone control issues.


The short answer is that is the way they made it. They being people in power corrupted by greed and megalomania.

Originally only gold and silver were money. You could trade for money or dig it out of the ground. If you brought your gold to a government mint it would be made into coins of known purity and weight. Government coins were a trusted unit for trade. However, gold money limits what a government can spend due to a natural physical limit on supply. The primary benefit of gold money is nobody can conjure 100,000 tonnes ($6.43T) out of thin air for their own benefit. That puts the government on more equal footing with the people.


It's much more likely that money started out from debt/obligation systems. Coins for immediate payment stayed pretty uncommon except between parties that didn't trust each other for a pretty long time. With fiat money the government acts as a trusted third party.

Early taxes like the tithe were also not money-based.


It also limits how large an economy can grow and how fast it can do so - so the oligarchs more easily remain oligarchs.


Because money for a person is different from money for a government. "Creating money" generally means increasing the ability for banks to give out loans, which spurs economic activity like starting a new business etc


The purpose of money is to trick farmers into producing food for everyone else so nobody starves. Any system where that happens is working acceptably. The inflationary fiat system is better at it than the gold standard - you'll recall there was a great depression and people were unhappy about it.

The luxury space communism idea where everyone just gets infinite money unfortunately has no evidence it'd work, because the farmers wouldn't believe you. The earlier systems, historical communism and feudalism, worked without money because you'd just have the farmers killed if they complained, but obviously that was problematic.


"The luxury space communism idea" usually has an expressed or implied removal of scarcity as an issue. If there's unlimited supply of goods and services, then there is no need for money.

On the other hand, most sci-fi of this nature also has semi-military structures and the military is the ultimate form of communism.


Yes, my issues are:

1. your idea probably isn't post-scarcity, you've just forgotten that the goods/services you want to automate have inputs themselves that still cost something.

2. if robots are smart enough to produce everything for us, they're probably human-level intelligent, could be customers instead of producers themselves, and so you've actually rediscovered slavery.


Central banks are powerless institutions, don't believe the propaganda. Rich people still run the show.


Government is what creates the economy. You earn money so you can spend it again, but you could achieve this also without money. What you cannot do without money is paying your taxes, which you are forced to with ultimately the threat of violence of throwing you into jail or worse.


People create the economy. The government is supposed enforce the agreed upon property rights that the economy is built on. The government was once funded by tariffs on import and export essentially a tax on the success of the nation. Since the income tax was imposed the government has taken a shortcut to the wealth of the people. This saps wealth from the populous that slows and diminishes the wealth and growth of the nation as a whole. It also changes the incentives of the government.

You are correct that with an income tax the government is incentivized to have as many people working as it can so it can squeeze some blood from us. It is an abusive and destructive incentive and the only way to require it is by force. The original way had much better incentives for government behaviours that are beneficial to the people and ultimately the nation.


Government being about enforcement of property rights is a libertarian property-extremist pipe-dream. Governments used to be the only way for large groups of people to work toward a common goal, before private companies were allowed to form.

I fully agree that income tax is a drag on actual performers, and would much prefer property taxes.


The US government exists solely to deal with international matters and to protect state and individual rights. The powers given to the government by the states are pursuant to those needs.

That is not libertarian extremism. That is historical fact.

If the states thought their way of life was secure from violence perpetrated by other states or nations none of them would have ratified the Constitution. A central government was seen as a necessary evil to prevent foreign invasion. Even then it took considerable effort to convince states a central government was necessary.


Okay, so how about this:

Government, as in social regulation, like manners, rules both implicit and explicit emerge in any count of humans greater than one. Thus it can be conferred that government is an endemic quality of humans. This can be, and has granted the conception of property and property rights in various forms. It needs no funding, nor formal institution, only public assent. Markets form naturally without the state: barter, debt, and spontaneous exchange (think of ideas, techniques) occur independently and ultimately have very little to do with property rights.

Then there's the "state" (frankly a disingenuous term) which holds a monopoly on violence. With that monopoly they can enforce property concepts of a wide variety. The state maintains power with assent from a power plurality. Of course with that very same power the state government can control a much wider gamut of human interaction. For example they can mandate education at the threat of either jailing a parent for charges of neglect, or assuming the child as the liability of the state government. They can also fund and direct the curriculum taught in schools.

Graeber, in his book Debt speaks on the emergence of money (which itself can emerge independently) this is typified by accepting only one medium to reconcile taxes, specie, which itself is state government issued. The logical consequence of this is that the specie would be necessary to everyone within the authority of the state, and so it assumes the nature of universality. Of course with the position of authority the state government assumes they can mint and debase currency. He also argues that this system was put into action to simplify military campaigns. The predominating mode of exchange previously being debt between trusted parties, otherwise neighbors. Remuneration from a strange soldier who could abscond or die is a risky proposition.

But we can have one without the other. The state itself is predicated on a virulent, and thus, circular fiction, and we've actually got very little in the way of a true impression of precisely how it emerged. One common interpretation is mutual defense. In the fashion of a circular argument it self-amplifies. A neighbor becomes a state, upregulates a military, and so the reasonable course of action is to tit-for-tat and form a state government, upregulating a military. And so forth. Likewise the same can be said of capitalism and acquisitive behavior in general, which are favored by the state and business which also form another amplifying system.

>Governments used to be the only way for large groups of people to work toward a common goal, before private companies were allowed to form.

All the above considered, yes, but only the loosest sense of government, which can be dictated by family, culture, religion, or even business, which itself can operate without a formalized state government.


Most people here have a good software engineering job that pays a good $$ amount that they can use to buy regular crap. Most people here do not care about the economy or the effects the government has on economy. Most people here also "oppose" tyranny but would rather have convenience with authoritarianism than freedom with costs.

> The government was never meant to have the power over the economy they currently do.

Indeed. The government should never give tax breaks to specific industries. Most people here will think it's a good idea to promote green energy through tax breaks or government investments. But that's the literal definition of a controlled economy (aka communism) except it's done with some extra steps.

In a free economy, the government should be funded solely to serve the necessities that can't be served by private companies. The tax rate should be the same for all industries. Industries should pay for their "externalities" (ie: pollution), however.

It's helpless but it took me a decade to figure out that there are no dictatorships/authoritarianism: There are only people who submit.


Excise taxes were supposed to be the policy lever of the federal government.

That got corrupted with the 16th ammendment, which really jumpstarted the downfall of the US.


How do you propose industries pay for externalities with flat tax rates and no government intervention, if you are opposed to both?


> lot of it seems very “slippery slope” to me.

Most phenomenons are in the slippery slope category. Very rarely you see binary and immediate transformations in societies.

The point raised is much increased power over your money and your utter lack of alternatives in the future. Seems like a logical conclusion of where we are headed.


For example, think about how many of the pandemic restrictions would have been called "slippery slope" in February 2020. Curfews? Closed businesses? Mask mandates? Silently-installed location-tracking apps? Vaccine mandates? Vaccine passports? Involuntary quarantine camps?


All of which were actually expressed in legislation already or passed by elected government and accepted by courts as valid consitutionally.

All of which have been used in the past, and, just like in the past, are being relaxed after they are no longer required.


Great points!

>Korematsu v. United States, 323 U.S. 214 (1944), was a landmark decision by the Supreme Court of the United States to uphold the exclusion of Japanese Americans from the West Coast Military Area during World War II. The decision has been widely criticized,[1] with some scholars describing it as "an odious and discredited artifact of popular bigotry"[2] and as "a stain on American jurisprudence".[3] Chief Justice John Roberts explicitly repudiated the Korematsu decision in his majority opinion in the 2018 case of Trump v. Hawaii.[4] The case is often cited as one of the worst Supreme Court decisions of all time.

https://en.wikipedia.org/wiki/Korematsu_v._United_States


Agreed.

Let us also acknowledge that the government violated the 5th ammendment when force closing businesses, and I hope the nation gets sued into bankruptcy for that gross violation.


You start with:

> I don’t really get the author’s argument. A lot of it seems very “slippery slope” to me.

Ok, so what? There is a reason people use that analogy. It is a real thing that happens. You go on to describe it in action yourself:

> The more extreme authoritarian uses cases like financial “imprisonment” are certainly bad, but similarly can already basically be done.

This is nihilism in its worst form. No one is saying they are breaking virgin ground here. Cash is one of the last bastions of financial privacy. One can spend it without a name being attached. That is valuable for many legitimate things. A CBDC eliminates that completely and we slide yet closer to authoritarianism.

Why build a tool no one needs and can be used for oppression?


Exactly. "They can already do that" is a strange argument used here, and it's the same argument often used as to why some new product/business doesn't matter, or isn't interesting.

If you make X easier to do, it will get done more. It's close to 100% certain.


If I have physical cash in my pocket, I can go just about anywhere in the world and spend it however I please. You give that freedom up with a CBDC. I much prefer a world where every criminal has the freedom that cash affords to a world where a handful of criminals control all the cash.


Where did you see that they are trying to ban cash? Genuinely haven’t heard about this.


It's all over. Just google "war on cash." Here's one from Steve Forbes himself, not your typical Forbes blogspam https://www.forbes.com/sites/steveforbes/2016/03/01/the-grea...

The tldr is that cashless a) can be perfectly surveilled b) enables negative interest rates

Curious, where do you typically get your economic news? Based on your answer I can provide a couple other places to round out your intake.


A one year expiration date is good enough to implement negative interest rates on cash. Once a bill is invalid you can exchange it for a fee to get a valid one. If the expiry date is a replaceable sticker then it may be possible to have shorter durations but one year is good enough.


Expiration dates are absolutely a part of the cashless/CBDC vision, and have been written about before by the Fed, the IMF, etc.

Expiring cash isn't enough though, because most money is in electronic form on bank balance sheets. Hence digital currency.


I also recommend to the commentor they check out Civil Asset Forfeiture laws.


I think you’re missing the point that with “paper” currency you still have choice. You can choose to buy things based on your own volition, whether genuinely bad for you like meth maybe, or simply just Russian vodka; because Oceana has always been at war with Eurasia and the populace has lost their mind over hate week … but you still happen to like Russian vodka.


Paper currency would still exist. CBDC is strictly a replacement for digital money


It's phased 1. The goal is to get CBDC in place then place limits on cash purchases (see France, etc.), then incentivize merchants to only do business in CBDC.

Like a boa slowly suffocating the populace.


There are already a few automatic taxes - inflation, payroll tax, GST/VAT. This will just embolden more aggressive theft.


The sibling comment says it more in depth, succinctly:

You don't own your own money.

This is somewhat true in practice with credit, checking accounts - only large entities are allowed to even make purchases such as cars, houses anymore (practically - check or cash is a not often practiced option).

When I have possessions, I can say they are either under my power or entrusted to someone else - any good finance advice is to diversify as much as possible. If all money pratically becomes some virtual 'fake' money, that's not possible - I don't have possessions at that point, I'm a literal slave of the state - given some basic pittance which is dictated how and what I must spend it on.

A lot of people end up paying for similar things, cost of living, subscriptions - to some extent we are slaves to society already, but we aren't required to be. If I sacrifice something unnecessary, I can trade for something else. Being given what amounts to fancy foodstamps is just not the same thing - without a lot unpaid social work I cannot turn those foodstamps into a car, or save up for my son's college, pay for a class at a local Uni, or support doctor's without borders through equipment donations.

Only one person gets to decide that in the painted picture - the govt. If viewed as another sort of interest-less bond, maybe they can make a certain type of sense, but only in the same way I might put 20 bucks on a nintendo or xbox account.

The "innovations" don't sound that great in practice, and mostly sound limiting.


> A lot of it seems very “slippery slope” to me.

Anything that extrapolates the past to extract patterns and make predictions about the future is a form of "slippery slope": science, statistics, forensics, political science, etc.


Yeah, I mean tow trucks exist, and the government can tow your car if you park illegally.

No one argues that our cars aren't safe anymore.


They want control of your car as well.

https://www.fox10phoenix.com/news/infrastructure-bill-signed...

>The cameras would monitor eye gaze to check for impairments. Another option is sensors that would determine how much alcohol is in a person's sweat... "The drunk or otherwise impaired driver will get in their car, and it either won't start or won't move"


>There are definitely benefits to taking away power from existing financial institutions.

Sounds like you are against CBDC entirely then, as banks are still centrally controlled, and handing banking to a single entity seems almost like abolishing banking as such, and only allowing one(1) bank: the government.


"slippery slope" is supposed to be a fallacy, I call it "seeing past patterns and extrapolating". Every problem we have as a society came about because of slippery slopes. They began from a relatively benign start and progressed organically as entropy, incompetence, and greed pushed it forward to a state that was dangerous or uncontrollable (e.g. politics, environment, criminal justice, etc).

The key difference in the author's argument and your counter-examples are that things like "being declared dead" doesn't benefit anyone (unless you were any enemy). Take a look at imminent domain, drug seisures, and for-profit prisons if you want to see how "virtuous and obviously needed power" go on to be used when inevitably someone corrupt or incompetent comes to power.

Once you create a lever for the government, it will at the very least go into the playbook of "possible tools to be used for control" (or more popularly, to 'help' people). Kind of how OSHA was the excuse to force all employers to require vaccines. Whether or not you agree with vaccines, can you see that the government thinking went:

1. We have an outcome we want, that is obviously good 2. Stupid citizens aren't complying with the Executive Order 3. How can we make them comply using something we have, and excuse it as "within the legal limits"? 4. Ah! OSHA exists and has broad powers, maybe we can say that we will fine anyone who doesn't have all workers vaccinated $150K per worker per month!

That literally happened a couple months ago, so not sure how many more examples you need before "slippery slope" of "people spending 10s of millions to acquire a powerful office want power" is confirmed.


It’s ultimately a question of whether it is moral to use violence on non-violent people.


The argument is (1) that a CBDC would give the government a lot more power and (2) that we need structural protections to prevent government abuses rather than merely government policies, so (3) we need to not have a CBDC.

You seem to disagree with premise (1), but you give only very weak reasons to reject it. Biden's executive order strongly supports premise (1), as do the Chinese CBDC policies mentioned in the article as well as the other arguments it gives.

Sometimes people disagree with premise (2) on, for example, naive Rousseauian grounds: the government merely represents the will of the sovereign people and therefore cannot do anything harmful to that people. After 232 years of the most heinous atrocities being committed in the name of the Will of the People it's amazing that some people still believe this. Checks and balances, which is to say, limits on state power, have been essential protections against changes of government policy since states have existed; totalitarian states have never been happy ones.


It was amusing until this part:

> There’s a message from the Fed: “You have already spent more than the $400 maximum weekly limit on fossil fuels specified in the FedWallet User Agreement. Your remaining account balance cannot be used to purchase non-renewable energy resources.

At that point, the conspiracy-theory vibe stopped seeming ironic. If the government wanted to phase out gas-usage, wouldn't they just raise gas-tax? Having cheap gas, but a sudden limit leaving motorists stranded, just seems a little too wacky, even for a thoughtless comedic argument.


No conspiracy theory, it's all what governments - of the free-world (sic) - will be able to do. Well, it turns out they can already do many of those things, albeit not that easily: freezing assets of CBs (Russia), freezing assets and properties of protesters (Canada) ... But this is going to make things much easier for them. Instead of freezing assets (and in the case of Central Bank spending a lot of time to patch any loop hole), they will just simply press the delete button - broke a "rule", money gone.

Tracking who spend for what, where and when is the holy grail of our great democracies.

One shall not become indifferent to the upending trend of freedoms of these last 2 years


It is very common to impose rationing instead of taxation.

CAFE standards don't tax cars by fuel consumption; they ration fuel consumption. California electric bills are a mix, complicated by the quasi-governmental status of PG&E, but you can get a small ration of electricity at a high price, but anything beyond your ration comes at an extremely high price. During the late 70s energy crisis, US rationing measures limited how much fuel you could put in your car or truck not per week but per gas-station visit, resulting in truckers having to fill up their tanks only halfway at each fuel stop. California's new measure, when it goes into effect, will not tax gasoline generators; it will just prohibit selling new ones, and it's built on a regulatory framework that rations pollution rather than taxing it. Fuel rationing is also historically extremely common in wartime.

As Wes points out, one political reason for this is that rationing is felt to be less unjust than Pigovian taxation because the burden falls equally on everyone rather than disproportionately on the poor. Often this is only true in theory, as the trucker example demonstrates.

There is every reason to expect that making rationing rather than taxation easier will further increase its use as a tool of social policy.


CAFE isn't fuel-rationing.

It's a miles-per-gallon efficiency standard. And non-compliance is punished with fees -- fees that're apparently so small that some luxury-brands seem to prefer to just pay them than comply.

Leaving drivers stranded at a gas-pump, unallowed to use their own cash to buy gas, would be an entirely different thing.


My comment was unclear; I didn't mean to say it was fuel rationing. I meant to say it was fuel-inefficiency rationing. (Unfortunately, "fuel consumption" is more easily interpreted in the way I didn't intend; I meant "fuel consumption per kilometer", a concept for which I will use "lpkm" below.) Each car is allowed to consume up to a certain lpkm, averaged over the manufacturer's offerings. It's true that a strict rationing scheme would simply stop sales rather than merely levying a fine, and that being stranded on the way to work is a worse outcome than either one.

There are two key aspects of the CAFE that are more ration-like than Pigovian-tax-like:

1. The fine is zero for manufacturers whose "fleets" are more efficient than the standard requires, so it provides no incentive to reduce lpkm below the quota.

2. The quota is averaged across all the manufacturer's vehicles, so it is in a sense a per-vehicle lpkm quota that the manufacturer can choose to redirect from some vehicles to others, so a luxury car maker can evade the "tax" by merging with an economy subcompact car maker.

There's a third aspect, though, that cuts in the opposite direction. CAFE is calculated on reciprocal lpkm, so I think adding excess lpkm to an already-inefficient "fleet" costs less than adding the same excess lpkm to one that's just violating the quota. So a car maker that greatly exceeds the quota can reduce the "tax" by splitting a division that roughly meets the quota out into a separate company.

I might be miscalculating that result though.


I'm not getting the relevance.

For example, gas-stations already ration gas: they won't sell you more than so much at a time (because the pumps only go so fast). And gas-stations ration how many vehicles they'll fill (because they only have so many pumps). And they won't sell more than so much gas at a time in the event of a rush (because the gas-station only has so much available between refuels). And your car rations how much gas you're able buy at once (because the tank is only so large).

But.. I feel like that's just a framing we can push onto about anything; we're basically just looking for things to apply the word "ration" to.


Communication can be difficult. I'm sorry I wasn't able to communicate with you. I agree with your evident opinion that the things you enumerate are not rationing.


I think what OP means is that CAFE rations the rate of consumption rather than absolute quantity.


You could also ration food and other goods this way. Only X lbs of meat can be purchased per month. Only X Liters of soda. Only X rounds of ammunition.

And based on recent events in Canada, they'll definitely use: "We see you donated to a cause we don't approve of. Your account has been frozen pending review."


Yeah, there have been some quiet yet serious proposals about personal carbon rationing in recent years. People on the farther left are uncomfortable with carbon taxes or tradable credits because of inequality.


Tradable credits will happen no matter what.

Let's say we impose a $100/week gas limit via CBDC. Immediately I would list ads on CL to trade my $100 credits for $200.

Gov can't stop it. Rationing just breeds further market inefficiencies.


In this scenario, gov could easily penalize or ration conversions to cash, limiting this escape hatch. They wouldn't go that way immediately because outrage, but it'd get increasingly doable and tempting as people get used to CBDC. (Lots of precedent for this pattern.) I've already read one economist's proposal to tax cash withdrawals in order to support negative interest rates, a couple years ago.


Agreed. It would be a cat & mouse game.

Instead of cash trades, the gas-consumer could buy me a $200 Amazon gift card, etc. with their CBDC. There are always ways around restrictions, especially when people that aren't deterred by illegality and jail time like me exist. It would be an arms race.


You can use damn carbon taxes to pay out a carbon ubi that democratized pollution rights.

For some reason everyone wants an autocratic economy.


or the HN comment I read that said something along the lines of "if you buy a ferrari and it's not electric, you should be arrested"


How is it much different than someone's SNAP card being shut off? We already limit the amount and type of food that the poor can purchase with their Fedbuxx. Fuel seems like a logical next step.


or "We have detected you are spreading disinformation about anti-depressants and we suspect you have purchased illegal psilocybin mushrooms. Your credit score has been negatively impacted, and you are required to purchase FDA approved anti-depressants. We are trying to help you."


There's a pretty big difference between the introduction of a CBDC (essentially just a government bank account + debit card) and the deprecation of cash such that the CBDC is the ONLY way you can transact.

And it's not like these totalitarian measures couldn't be implemented already by legislating banks into complying with them, assuming we get rid of cash somehow. There's no difference between "FedWallet has declined your transaction" and "Citigroup has declined your transaction (in compliance with US law)." The article spends a lot of time pretending banks don't exist: "[T]here would be no more tax evasion, either, since we have a complete record of every transaction made by everyone" -- banks already keep track of all the transactions that take place.

A CBDC alone is neither necessary nor sufficient for implementing the kinds of restrictions the author of this article is worried about. Meanwhile, it actually does have a shot at providing financial services to people with bad credit or in precarious situations. So the article strikes me as kind of hysterical.


> There's no difference between "FedWallet has declined your transaction" and "Citigroup has declined your transaction (in compliance with US law)."

There is a big difference. If FedWallet declines your transaction, you could sue under any of a number of fundamental constitutional rights that have been violated.

If Citigroup decline your transaction, you have fewer recourses as they can hide behind being a private bussiness. If government regulations require or encourage Citigroup to decline your transactions, you still have fewer recoures, as the government can hide Citigroup.

If the government makes an implicit threat to private corporations, like "deal with X yourself, or we will pass regulations to force you to", you have even less recourse.

In effect, the government can significantly weaken judicial oversight by outsourcing policy to private corporations.

This becomes less relevent in a system where judicial oversight has eroded. But, as you say, once you are at that point, nothing is stopping the government anyway.


Banks only keep track of transactions they are involved in. Cash transactions are peer to peer, private, and anonymous.

The US government has been effectively phasing out cash through inflation since 1969, as they haven't issued any notes larger than $100 since then. You need roughly 780 2022 dollars to equal 100 1969 dollars. Even a $500 note does not get us back to parity on buying power.


1. What benefit can a government bank card can possibly provide, as opposed to private banking in a country with a modern banking system?

2. No, you cannot implement the draconian measures via legislative push on domestic banks, unless you are willing to cut off ALL foreign banks and ALL foreign business vistors and ALL tourists, and cut off ALL foreign payment systems.

Government CBDC is superfluous in a country with modern banking. It's only intention is to control you, it provides no other benefit. Simply because they aren't phasing out cash at the same time as introducing the CBDC, to make the connection obvious to you personally does not mean they cannot phase out cash as the next step. In fact, cash has been essentially phased out for all practical purposes, it's already been stigmatized to such a point that even legally earned cash is confiscated routinely in legally-sanctioned robberies, aka "civil forfeiture". Some stores even have signs "we don't take cash". It's history.

What more do you want? Government officials telling you under oath on prime time TV daily at 8pm every day of the week, in case you forget, "yes, we are doing this to control you more, and specifically, personally you, yes you - bccdee"

?


A government bank could presumably provide financial services such as low-fee bank accounts and loans to people with bad credit scores. I dunno, I'm not really well-informed about the advantages. But the criticisms given in the article are pretty bad.

> unless you are willing to cut off ALL foreign banks

Foreign banks are still subject to financial legislation. I can't just transmit my money into and out of a Spanish bank account in order to launder it. If foreign banks didn't comply with US law, they'd get in legal trouble and have assets seized, same as always.

> does not mean they cannot phase out cash as the next step

Weird argument. If your problem is the phasing out of cash, criticize that. Except you can't, because nobody has proposed it and nobody wants to do it.

Besides, unless you agree that banks can be regulated as easily as a CBDC can, then you have nothing to worry about unless all private banks are also closed, which will never happen in our society.


You have no substantiative rights without freedom to transact, and that is why cash is so important.

CBDC is just another authoritarian intrusion on freedoms, and anyone who supports that is complicit in destruction of fundamental, inalienable rights. If you just want to control others - then you could just say so, it's ok to be an authoritarian.

>A government bank could presumably provide financial services such as low-fee bank accounts and loans to people with bad credit scores.

Several countries already do that with a mandate for banks to bank everyone. The US banking system, including its regulation, is actually a decrepit legacy mothball of ancient cruft, significantly behind the rest of the world. It's just buoyed by the USD reserve status, and riding it into the ground.

>I can't just transmit my money into and out of a Spanish bank account in order to launder it.

Happens all the time. How do you think this happens, people move suitcases of cash? Banks launder money and get caught all the time, fined, and then immediately go back to laundering again.

>If foreign banks didn't comply with US law, they'd get in legal trouble and have assets seized, same as always.

like laundering money for the cartels, and getting away with a slap on the wrist, and then keep on doing it again, fined again for 10% of profits, launder again? This sort of legal trouble? or like single purpose banks in China, created with literally the singular purpose of routing around the US sanctions on Iran, that needed years of diplomatic pressure to close (and then re-open under a different name)?

The US isn't want it used to be. In the recent UA-RU situations, even some NATO countries refused to implement the US sanctions. Some Asian "allies" also refused outright, and some even went as far as to openly become a conduit for circumventing sanctions on Russia? the US a fading empire on decline that no longer has the weight it used to.

>Weird argument. If your problem is the phasing out of cash, criticize that. Except you can't, because nobody has proposed it and nobody wants to do it.

Why is the argument weird?

Limiting cash usage has been a de-facto official policy around the entire world for a couple of decades now, and intensified quite a bit recently:

1. Discussions in EU and UK on a total ban of cash so that negative rates can be implemented."Nobody proposed it"

2. SG, UK, EU, CA, JP phased out large denomination banknotes over last 2-3 decades. "Nobody wants to do it"

3. Many EU countries BAN payments in cash for transactions above trifling amounts, like 1000 EUR. "Nobody wants to do it"

4. US discourages cash usage via punitive regulations that have no other real objective than minimizing it's usage, I guess terrorists buy sandwiches with $20 bills, so we now have to watch out very carefully for such abhorrent acts of terror. Or switch to a card-only system, your choice. Such freedom, amazing, I already feel free just typing this. Oops, card declined, whats with your silly rights and all.

In case you need more than actual bans to believe cash crackdown isn't "nobody wants to do it, nobody has proposed it", what would you need, a personal call from Biden? Would the lowly Harvard Kennedy School of Government suffice? https://www.hks.harvard.edu/sites/default/files/centers/mrcb...

CBDC is just North Korea, but for the naive in the West.


>> I can't just transmit my money into and out of a Spanish bank account in order to launder it.

> Happens all the time. How do you think this happens

No it doesn't? I'm sorry, are you really saying that you believe that people commonly launder money by simply transferring it abroad and back? No, it gets laundered through businesses where transactions can be falsified, or through dealings in loosely-regulated assets like art. You have no idea what you're talking about!

> Why is the argument weird?

Because it's a non-sequitur. "Simply because cash isn't being phased out as part of a CBDC doesn't mean it couldn't be phased out later." These are unrelated policies. There's no connection here. Just because cash isn't being phased out as part of municipal road maintenance doesn't mean it couldn't be phased out later either. This is not a valid argument.

As far as your enumerated arguments:

(1) Discussions by whom? I haven't heard any serious proposals with any substantial support. Just idle speculation from bloggers.

(2) Phasing out large banknotes is not the same as banning cash. You can just use multiple smaller notes.

(3) Large cash transactions already have to be reported for tax purchases. I don't think it makes sense to ban them, but it's not as if the flow of large amounts of money hasn't always been regulated. That said, which countries exactly ban 1000 Euro cash purchases? Just because some tiny Slavic country is doing it, doesn't mean it's realistically going to happen in the rest of the world.

(4) Exactly who is going to stop you from buying a sandwich with a $20 bill? This is hysteria.

(5) Some random UK think tank proposing that large cash purchases be restricted isn't the same as a proposal that cash be banned, and think tanks propose stupid ideas all the time.

Then again, I did say "nobody wants to ban cash" — maybe I should rephrase my argument less hyperbolically: There is no substantial support for the abolition of cash in the United States. Cash is not going anywhere.

> CBDC is just North Korea, but for the naive in the West.

Again, what does a CBDC have to do with cash abolition? Nothing. They're independent proposals. Besides, a CBDC can't do anything a bank can't already do. CBDCs are just a boogeyman for you to fearmonger about.


> There's a pretty big difference between the introduction of a CBDC (essentially just a government bank account + debit card) and the deprecation of cash such that the CBDC is the ONLY way you can transact.

It seems perfectly obvious to me that the main intent of a CBDC is to deprecate cash. This allows infinite stimulus through arbitrarily negative interest rates, which could prevent the stock and real estate markets from ever crashing.


Correct. Also consider Civil Asset Forfeiture. The government has already made it infinitely risky to carry in excess of $5k cash on your person.

TSA gets kickbacks from DHS for tipping them off when you carry large amounts of cash via carryon.


> assuming we get rid of cash somehow.

Cash is finite. Just stop printing it. And tell the populace they have until XXX to convert their cash to fedcoin. After that date, financial institutions will no longer accept it. India and lots of countries do this when they want to introduce anew currency (devaluing)

> banks already keep track of all the transactions that take place.

Not cash transactions. And they don’t do things like calculate your reputation score based on who you are transacting with (casinos? Liquor stores? Pot stores? Stripper clubs?)


  So naturally many fees are collected along the way for such services.

  Moreover, in such a centralized system there is no longer any need for middlemen like banks or credit card companies.

  Some planning documents for CBDCs discuss still including private banks in a “public-private partnership” system. But that’s only because customers love banks so much and because banks would love to keep charging fees
LOL. Indeed, the existing banking system HATES the very idea of consumer central bank money. They would much rather be the choke point, uh, intermediary.

When the CB issues new money, it has to go through the banks. That was fine when communications were slow - the CB dumps money in the bank's CB account, and then the bank distribute it to end users via loans (or more likely 'invest' it to pump up asset prices).

Now that communications are instant, there does not appear to be any need for banks, end-users could interact directly with the CB.

The totalitarian FUD is of course overblown. For a start, CBDC does not mean the end of cash, just the end of the necessity of commercial banks. And in any case, govt is much more accountable than private companies; For example, banks can, and do, cut off classes of users at their sole discretion, whereas govt would be forced to serve all legal actors.


The Canadian government just mandated the freezing of bank accounts for protestors associated with the freedom convoy. Let’s not pretend like the government can’t decide to reclassify what it thinks is legal based on what coloured shirt it’s wearing.


So as govt has the power to seize bank accounts anyway, CBDC would not make any difference at all in this case, it's a question of govt accountability.

The article seems to conflate CBDC with a totally cashless society, which yes, we should probably think through a bit more carefully.


While it could be seen as a conflation in theory, in practice it almost certainly is. The purpose of a CBDC is complete government control over the monetary system, cash cannot remain in existence if this goal is achieved. Many advanced economies have been practically cashless for years, and the friction from phone payments via PCI networks to phone payments with a CBDC app is very little.

The loss of physical cash to the un & underbanked in the US will probably be the reason that a CBDC will not be adopted any time soon, highlighted as a risk in the recent paper. However in all states, CBDC is an inevitability, just as it is inevitable that cryptocurrencies like Bitcoin are used day-to-day as an alternative to the state CBDC.


> So as govt has the power to seize bank accounts anyway, CBDC would not make any difference at all in this case, it's a question of govt accountability.

So because it’s possible we should consent to a system that makes it programmatic and infinitely scalable across the whole population?

You don’t seem to get the implications of government-controlled programmable money.

https://bfsi.economictimes.indiatimes.com/amp/news/policy/di...


It does matter. See things like Operation Choke Point and how much easier that becomes with federal centralization.


This really gets me. These "protestors" were given MULTIPLE warnings over many days to leave the area as this was no longer a simple protest, but had become an occupation of the downtown core. The "protestors" ignored the warnings and thought they were all above the law. The government had every right to do what it did with these people.

I'm 100% for a peaceful protest, but these people went WELL beyond that.


I wonder how MLK Jr. would have fared if America had a CBDC in the 1960s. MLK was arrested a total of 29 times--given multiple "warnings" as you say--and I doubt he would have been as successful in his goals if the government had an effortless ability to suspend his and his supporters ability to transact instead of having to send in violent thugs and dogs. Every protest is an occupation, a riot, if it's on the "wrong" side.


Even if the protestors were engaged in mass murder, that would still not authorise the government to freeze their accounts. It would just mean the government had a good case against them in court.


>Let’s not pretend like the government can’t decide to reclassify what it thinks is legal based on what coloured shirt it’s wearing.

Well it can't given that the rule of law exists in Canada. But if you're telling me that central bank money makes it possible to shut the funding of groups down who stage illegal protests that cause untold economic damage because they don't understand how vaccines work in my book that's the best argument for CBDCs yet.

I'm not exactly sure why I'm supposed to freak out about the fact that the government can declare things illegal. Like, yeah that's it's job, digital currencies aside.


That's not actually how money creation works. Governments never dump new money into banks, and banks don't have any ability to 'distribute' it or lend it out. Quantitive easing was an asset swap (bonds for reserves) that was meant to increase the ability of banks to lend, but it didn't really work in theory and nor in practice, so didn't do anything except for pushing up asset prices because they had reserves and wanted to convert that back into something that gave them more return, so buying up financial assets. It didn't do what it was meant to because generally the banks were never liquidity constrained, lending was more demand constrained.

In general the Government puts new money into the economy by spending, and removes money from the economy by taxation. But most of the money in the economy is created through bank lending (with a corresponding creation of private debt).


Yes, I was using a figure of speech. There is no reason CB can't create the loans directly, rather than necessarily going through commercial banks. It was not realistic before, without instant communications.


> Now that communications are instant, there does not appear to be any need for banks, end-users could interact directly with the CB.

Banks provide a distributed, face to face, customer service workforce. They do some sort of banking work like loans and what not, as well. IMHO, rather than replace banks with a government bank, the right path is to reduce transfer friction (which is happening anyway) and regulate towards mandatory zero cost accounts; zero cost accounts are already there in the marketplace, although with some hoop jumping and not so available if you've got a negative ChexSystems credit report.


Money exists because of debt. Until you can lend money to regular people who often wont pay back you can't replace banks.


Clearly people mostly do pay it back, or it would not be a very profitable business, which it definitely is.

There's no reason CB can't issue loans directly, rather than indirectly through the banks. Perhaps more realistic is a debt market where private enterprise take on loan risk for commission or interest of some kind, but the power to create fractional-reserve money is not a requirement for that.


> a debt market where private enterprise take on loan risk for commission or interest of some kind

Surely this is what banks do right now.

> the power to create fractional-reserve money is not a requirement for that.

If you take a loan from a CB say, then deposit it somewhere, then that money is loaned out again, surely that is fractional banking?

If you really disallow someone who takes a loan from being lent out again. How do you increase the money supply? Say population grows 5% and economic growth means 10% higher GDP - how do you increase money supply to match?


Private lenders would simply guarantee the loan, which would be issue by the CB, creating new money.


> Private lenders would simply guarantee the loan, which would be issue by the CB, creating new money.

That's just fractional reserve banking but with extra steps. Since the private lender is guaranteeing the loan, they have to have an asset for that guarantee.


If a central bank starts giving out loans it is called a state bank. It is no different from a regular bank and there can be many different state banks in a country.


After watching similar ideas surfacing from the World Economic Forum/Davos, I take this article very seriously. I am just guessing here, but it seems probable that such automated totalitarian style control would become stable and enduring if a large majority of people were happy with it. Isn't that the way China operates? (I don't know, it has been years since I was in China.)

Who gets the resources to be happy? The wealthy and people with valued skills, for sure. But additionally most people would have to get a 'good enough' deal for the system to be stable.


Happiness requires extremely minimal resources.


The apparent durability and stability of China is entirely dependent on American democracy and capitalism. China would be a third world country but for some greed and corruption within American politics starting in the 90"s.

Boomers will not be well regarded in the history books.


Something I think a lot of people are forgetting is that NOT EVERYONE HAS A BANK ACCOUNT! Nor does everyone trust banks, wish to make a bank account, have the necessary cognitive ability to make a bank account, etc. By making cash completely digital, you are getting rid of the unbanked. Which isn't a small amount of people - approximately 1 out of every 20 people in America do not have a bank account. That's literally tens of millions of people who would not be able to FUNCTION should we have a digital dollar.

So who would be giving out these bank accounts? The government? Banks? Can banks say that if you don't have an address, or if you don't have 40 bucks to your name, or any other list of conditions, then you cannot have a bank account?

The fact that people are not even thinking about this blatant problem shows exactly how much care is given to those who have no bank account, and what the true intention is. The intention of a digital dollar is to make banks necessary to live. The intention of a digital dollar is to make it literally impossible to function without a bank account, and that's a huge problem.


If everyone gets a CB bank account then they will have a bank account.

For example, Australia has a banked population of 100%, as in, everyone needing one has a bank account. It's required for receiving government benefits.


Everybody must be part of the system. How else can we control them?


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