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

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

#161
For some reason this reminds me of Uber.

Over the centuries we have built up a very elaborate currency system. It complex with elaborate protections yet is simple for your average person to use.

It's also very expensive for what it does. Today money is represented by a few bytes on a disk. Transferring it takes a few smallish IP packets and minimal CPU cycles. Ergo, the cost of doing these things should be fractions of a cent. Yet if I buy something using paywave, it costs someone about 1% of the transaction. If I by something over the internet it's more than 1%. If I transfer $1K overseas it costs $20 or something. With costs like that its ripe for disruption.

This system is firmly cemented into our society with lots of law, and this inflow of those huge quantities of cash has created a legion of formidable vested interests who will defend it to the death (most because if it disappears they will too).

This is what Uber was up against in the taxi industry, albeit this is at much larger scale. Uber got around it by just ignoring the law, and in the process bankrupting the species those laws protected - the taxi licence holders. It caused enormous pain for them, and they were most innocent bystanders.

It's going to take a special kind of hubris to take that on, and a enormously talented person to pull it off. Zuckerberg may be that person. I can't say I like his chances, but given he's seen WeChat's success in China I don't doubt his motivation.

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

#162

Earlier quoted context omitted.

This presents no conflict with a healthy and free society.

Sure, if it is correctly regulated to have no more leverage on our lives than a fancy marketing strategy. If not then I see a lot of problems with handing even more power from democratically elected governments to the corporate black box.

And if it is incorrectly regulated?

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

#163

Earlier quoted context omitted.

> the main effect will be on the market price of Libra, right? National central banks in the modern era have two functions: manage the money supply and make sure that the economy is running well. It's true that Libra would be the only direct impact, but then you have people who have debts in dollars and revenues in Libra, and if they can't pay back their dollar debts then their lenders are now short of dollars and ca…

Thanks. I'm skeptical that this management of the economy on net makes it go smoother -- I can't understand what they're doing even as well as they do without far more study, but I can e.g. notice that respected economists were seriously starting to think the "great moderation" had been achieved by the years just before 2008. (Not just hindsight bias, since I was reading them at the time.) But yeah, that point of vie…

Love or hate what the Fed is currently doing, it's a known quantity that has managed to avoid a serious run on the dollar since the '80s. Libra at this point is a proposal that has yet to be anywhere remotely close to battle-tested. Better the devil you know than the devil you don't.

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

#164

My main concern about libra is that, by being strongly tied to real currencies, libra issuers (not just facebook, all of them) have effectively assumed the role of unsanctioned mints, with the ability to damage the stability of each currency because libra is not tied to the international exchange system: if you pay facebook, or anyone else, $10 and they convert that into libra, now they have $10 that they will absolu…

> now they have $10 that they will absolutely put back into circulation to make additional money on, _and_ $10 worth of libra have been created

This sounds dangerous and wrong, but the same thing happens if you buy a gift card or deposit cash into a checking account.

Now you have an Amazon gift card or bank debit card for $100 _and_ Amazon or your bank has $100 that they'll put back into circulation.

It's just how money works, it's nothing new with Libra.

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