- 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.
I feel like too many people confuse the two, but it's fundamentally different, in every meaningful way.
> 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.”
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.
These CBDCs would empower governments to do so much worse.
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.
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.
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?
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.
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.
 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.
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:
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.
This sounds uncomfortably similar to the "reason" the IRS can't do our own taxes for us and send us the bill.
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?
 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"
Uhm, isn't that what literally every bank in the world is nowadays?...
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.
we already got a tease in Canada of what is to come.
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.
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?
It didn't make it right, just legal.
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
Yes, absolutely. Unless bitcoin wins, I have no doubt whatsoever that this is what's going to happen.
If we let the government do whatever, no technological moat is going to stop them.
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.
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).
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 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?
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.
That can happen, and has happened throughout history. It tends to be a bloody ordeal though.
A parallel society is such a way.
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.
Neither of it is possible the average Joe/Jill buys into all the bs sprouted by the powers.
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.
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.
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.
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?
They do report that.
""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.
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?
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
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
Caused a few wars though
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.)
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.
I mean... I'd say that at least two of these are ordinary citizens, probably actually three of them...
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.
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
A.K.A. biometric vaccine passport
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.
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 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.
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.
Banks are in a precarious situation re deposits.
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.
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.
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.
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.
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.
Can’t it be architected such that this isn’t possible without certain controls?
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.
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”
Uh, you do realize that to politicians, enforcement looks alot like a jobs program?
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?
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.
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.
You can read a little about that bank here:
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.
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.
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.
Where did you get that belief?
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).
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.
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.
The UN Charter is law only insofar as it does not run contrary to the US 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.
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?
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.
Early taxes like the tithe were also not money-based.
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.
On the other hand, most sci-fi of this nature also has semi-military structures and the military is the ultimate form of communism.
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.
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.
I fully agree that income tax is a drag on actual performers, and would much prefer property taxes.
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.
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.
> 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.
That got corrupted with the 16th ammendment, which really jumpstarted the downfall of the US.
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.
All of which have been used in the past, and, just like in the past, are being relaxed after they are no longer required.
>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, with some scholars describing it as "an odious and discredited artifact of popular bigotry" and as "a stain on American jurisprudence". Chief Justice John Roberts explicitly repudiated the Korematsu decision in his majority opinion in the 2018 case of Trump v. Hawaii. The case is often cited as one of the worst Supreme Court decisions of all time.
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.
> 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?
If you make X easier to do, it will get done more. It's close to 100% certain.
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.
Expiring cash isn't enough though, because most money is in electronic form on bank balance sheets. Hence digital currency.
Like a boa slowly suffocating the populace.
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.
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.
No one argues that our cars aren't safe anymore.
>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"
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.
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.
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.
> 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.
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
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.
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.
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.
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.
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."
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.
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.
For some reason everyone wants an autocratic economy.
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 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.
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.
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"
> 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.
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.
> 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.
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.
TSA gets kickbacks from DHS for tipping them off when you carry large amounts of cash via carryon.
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
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 article seems to conflate CBDC with a totally cashless society, which yes, we should probably think through a bit more carefully.
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 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.
I'm 100% for a peaceful protest, but these people went WELL beyond that.
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.
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).
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.
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.
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?
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.
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.
Boomers will not be well regarded in the history books.
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.
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.