Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal • Hacker News Board

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#81

Post by logfromblammo » Wed, Jul 10, 2019, 9:54 PM UTC

johnrgrace wrote: post #21

traek wrote: post #8

Earlier quoted context omitted.

This is how every bank works.

Except banking is highly regulated and the money not held in reserves is invested with oversight on how much risk is taken (that oversight fails sometimes but generally works). If a tech company can jump in and function as a bank without oversight that is going to hurt banks. History has shown us that unregulated banks, and regulated banks that push the limits or evade regulations fail and cause damage to the entire…

Every time someone says "banking is highly regulated", a banking executive does not go to prison for breaking a banking regulation in a way that has quietly cost consumers hundreds of thousands of dollars in aggregate.

I have no interest in protecting banks from businesses that act just like banks, and then get punished for doing those things, only because they are not legally considered banks. The last time banks pushed the limits, failed, and caused damage to the entire economic system, it was 2007-2009, and no one was ever held individually responsible for it. I haven't forgotten or forgiven.

So yes, please. Hurt banks. Protecting them just turns them into privileged asses. The "tight regulations" function mainly as their cartel membership rules.

Split tally sticks worked as privately-issued financial instruments for centuries, before banking lobbied to have them outlawed. Banking works better (for the banker) when there are no lawful alternatives to the bank's notes. A cryptographic equivalent to a split tally stick is very acceptable from a historic perspective.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#82

Post by buboard » Wed, Jul 10, 2019, 9:55 PM UTC

damnyou wrote: post #41

buboard wrote: post #20

Earlier quoted context omitted.

Thats the beauty of decentralization. You can't really blame one person for bitcoin's value today, you have to blame everyone who participates in it (Really, who would the congress question, and what could that person do? take down bitcoin?). While Libra is centralized so single point of failure

There are no decentralized cryptocurrencies. Like all other so-called "decentralized" coins, Bitcoin rewards economies of scale. That means that it tends towards centralization. Though of course Bitcoin has its own unique problems, like being deflationary (which is evil).

> There are no decentralized cryptocurrencies.

Extraordinary claims require extraordinary evidence

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#83

Post by damnyou » Wed, Jul 10, 2019, 9:57 PM UTC

buboard wrote: post #82

damnyou wrote: post #41

Earlier quoted context omitted.

There are no decentralized cryptocurrencies. Like all other so-called "decentralized" coins, Bitcoin rewards economies of scale. That means that it tends towards centralization. Though of course Bitcoin has its own unique problems, like being deflationary (which is evil).

> There are no decentralized cryptocurrencies. Extraordinary claims require extraordinary evidence

Thank you for recognizing that calling a cryptocurrency decentralized is an extraordinary claim.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#84

Post by buboard » Wed, Jul 10, 2019, 9:58 PM UTC

damnyou wrote: post #83

buboard wrote: post #82

Earlier quoted context omitted.

> There are no decentralized cryptocurrencies. Extraordinary claims require extraordinary evidence

Thank you for recognizing that calling a cryptocurrency decentralized is an extraordinary claim.

you are welcome, but that would be the "ordinary" claim

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#85

Post by nostrademons » Wed, Jul 10, 2019, 9:59 PM UTC

samstave wrote: post #79

nostrademons wrote: post #44

Earlier quoted context omitted.

I don't personally, but there are cryptocurrencies that have made some really big strides there: Monero and ZCash. I've heard that a lot of dark-web business is actually switching over from Bitcoin to Monero, so it's getting some real adoption. One of the interesting things about the cryptocurrency space is that it's challenging one of our fundamental assumptions about economics, namely that currency is a winner-take…

What are the primary dark-web businesses? * porn? * child porn? * drugs? What else?

It's not exactly a corner of the web I frequent, so your guess is as good as mine. The ones I've heard of include drugs, armaments, zero-day security exploits, data breaches, and identity theft. Child porn and human trafficking are probably on there somewhere too. Porn (between consenting adults) isn't a dark-web industry, at least in the West: you can put a credit card into any number of adult businesses online and get your fill of any sexual fetish imaginable without breaking any laws.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#86

Post by greenshackle2 » Wed, Jul 10, 2019, 10:02 PM UTC

drexlspivey wrote: post #67

TheRealPomax wrote: post #14

Earlier quoted context omitted.

Yes, and banks are bound by incredibly tight laws, including laws around not being allowed to recirculate all the money you get as part of an exchange operation. If all the Libra association members are willing to be bound by the same laws, then cool: but do you trust Vodafone, or Facebook, or Andreessen Horowitz, to not try to bend the rules so they can make more money?

Banks follow fractional reserve so they have to keep 10-20% of the deposits in cash. Libra and most stablecoins keep 100% reserves so it's even stricter. Libra claims that every coin is backed by fiat currency so investing the deposits is not how they plan to make money off of this.

Where did you see that claim? I see a different claim on their website:

""" How will the reserve be invested? Users of Libra do not receive a return from the reserve. The reserve will be invested in low-risk assets that will yield interest over time. The revenue from this interest will first go to support the operating expenses of the association — to fund investments in the growth and development of the ecosystem, grants to nonprofit and multilateral organizations, engineering research, etc. Once that is covered, part of the remaining returns will go to pay dividends to early investors in the Libra Investment Token for their initial contributions. Because the assets in the reserve are low risk and low yield, returns for early investors will only materialize if the network is successful and the reserve grows substantially in size. """

https://libra.org/en-US/about-currency-reserve/#the_reserve

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#87

Post by tyre » Wed, Jul 10, 2019, 10:13 PM UTC

iooi wrote: post #72

tyre wrote: post #54

Earlier quoted context omitted.

> The actual minting of money has not been a major factor in managing the money supply in a long time. Very much not true. Quantitative easing, the process of minting money to inject liquidity into the economy, was a core tenet of the Obama administration’s* response to the Great Recession. Literally trillions of dollars created to purchase bonds and mortgage backed securities to prop up the economy. Edit: It was dur…

> Very much not true. > was a core tenet of the Obama administration’s response Quantitative easing is a monetary policy, not fiscal policy. A central bank dictates monetary policy. An administration dictates fiscal policy. Would recommend you read this: https://en.wikipedia.org/wiki/Quantitative_easing

Yes you’re right, I should have said the Fed.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#88

Post by conanbatt » Wed, Jul 10, 2019, 10:16 PM UTC

WheelsAtLarge wrote: post #62

Interesting that Powell does not address the power that FB gets by having its own currency. Having billions of users gives it the power to create its own economy and by extension its own government. If you give it enough time FB will be able to set its own monetary policy and rules. It won't happen today or tomorrow but give it time and it will.

Its an independent currency: if it changes rules in a way users dont accept it would stop being used.

Lets not confound the capacity to build a token with the capacity to levy taxes. The latter is the scary one. The former is just playing with casino chips and airline miles.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#89

Post by gridlockd » Wed, Jul 10, 2019, 10:18 PM UTC

benj111 wrote: post #45

gridlockd wrote: post #28

Earlier quoted context omitted.

The original 10$ aren't "gone", they're held in reserve in the form of bank deposits and government bonds. If you hold Libra, you supposedly have a claim against those. This is unlike a fractional-reserve bank, which can turn those most of those $10 into loans of any sort and still pretend it's cash that's available at any time.

You know a bond is a loan? Why is a Libra loan to the government different to a fractional reserve loan of any sort?

A government bond issued in the countries own currency has no risk of default and is highly liquid. An ordinary loan such as a mortgage has poor liquidity and a high risk of default in case of turmoil.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#90

Post by objektif » Wed, Jul 10, 2019, 10:20 PM UTC

conanbatt wrote: post #88

WheelsAtLarge wrote: post #62

Interesting that Powell does not address the power that FB gets by having its own currency. Having billions of users gives it the power to create its own economy and by extension its own government. If you give it enough time FB will be able to set its own monetary policy and rules. It won't happen today or tomorrow but give it time and it will.

Its an independent currency: if it changes rules in a way users dont accept it would stop being used. Lets not confound the capacity to build a token with the capacity to levy taxes. The latter is the scary one. The former is just playing with casino chips and airline miles.

Yeah it would but what abkut the value of the currency when they change the rules?