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France and Germany Agree to Block Facebook's Libra

reuters.com

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Re: France and Germany Agree to Block Facebook's Libra

#631

Post by rohan_shah »

There is a relatively low understanding among the public of how money is created and how the economy expands in today's modern economy after 1971 Gold standard deviation.

If some part of the monetary system is taken over by something that is not money, it is almost impossible to be able to control the amount of money in circulation or inflation or the need for new government money will be uncalculatable.

I can not comprehend any country allowing this unless it has got some extremely high tech mechanism to control the amount of money that goes into crypto/libra.

Re: France and Germany Agree to Block Facebook's Libra

#632

Post by insulanus »

smsm42 wrote: post #550
WhoBeI wrote: post #522

Earlier quoted context omitted.

I was hoping this would happen. It will probably become a EU thing now. The idea of a privately controlled currency needs to die quickly. Never been a fan of crypto currency in general but Bitcoin, and the like, are accepted because they are not centralized. Your Bitcoin won't change in value or disappear because your country and another get in a fight.

There are lots of privately controlled currencies. Miles, points, certificates, game gold, etc. - they are all private currencies. Most of them aren't legal tender, but neither are cryptocurrencies. The only difference between facebook-coin and miles is that Facebook promises to encourage dealing in their coin and airline would frown on that. Not much difference otherwise. You have some tokens that you can exchange f…

> Facebook promises to encourage dealing in their coin and airline would frown on that. Not much difference otherwise.

Not much difference except it is controlled by one of the most powerful, and richest companies on the planet, with the most data on everyone, ever compiled. That if you are a member, knows you likes, dislikes, politics, sexual preferences, entire social network, where you live, when you get home, where you go, whether or not your like your friends. That has a bigger market cap than the annual GDP of small countries, that competes in local marketplaces, could easily take on and possibly wipe out craigslist, ebay, and more, and could conceivably beat entire national currencies in capitalization, reserves, convenience, and ease of use, thus supplanting the currency of entire small nations.

Yeah, pretty much the same thing as airline miles.

Re: France and Germany Agree to Block Facebook's Libra

#633

Post by insulanus »

kortilla wrote: post #387
gjulianm wrote: post #383

Earlier quoted context omitted.

Let's be honest, if Libra takes hold as Facebook wants it to, given the power Facebook already has over communications, ads and social networks, it very well could affect the capability of states to exert their own monetary policy. Not a single one of the examples you made had such a real possibility of being as big as Libra could be.

It won’t. Germany already doesn’t have control of the monetary policy for the currency it uses (the Euro). Monetary policy != taxation.

If the EU goes tits up, Germany will be using marks again before the month is out. The EU could never have been started if member states had to give full control of monetary policy to the EU Council.

Re: France and Germany Agree to Block Facebook's Libra

#634

Post by chucky »

throwaway744678 wrote: post #548
jeena wrote: post #363

Earlier quoted context omitted.

Not in Sweden anymore, most of the lunch places in Gothenburg where I live don't allow payment by cache anymore. If you have money but not digital, you will go hungry nowadays.

Is that even allowed? I don't know the specific law here, but in my country (France) a shop can not legally refuse to be paid in the legal currency (in cash). It can refuse credit card or checks, though.

How I wish it was this way in Sweden. Unfortunately it's not - there is no requirement to accept any specific kind of payment and it's by now rare to see anyone pay with cash.

Re: France and Germany Agree to Block Facebook's Libra

#635

Post by insulanus »

AdrianB1 wrote: post #410
glitchc wrote: post #341

Earlier quoted context omitted.

The primary purview of the state is geography (borders) and taxation (monetary policy). Allowing foreign money to be the primary medium of exchange directly challenges monetary policy.

See Montenegro, the country that has no own currency, but uses Euro: they have no particular problems because of this.

Montenegro has a population of about 600K. Its annual GDP is $12 billion.

There are also small countries that are pegged to the US dollar.

When you are a small-potatoes nation-state, and have a non-diversified or small economy, it is a great idea to use a larger, better established, currency.

* It's more stable * Trade is easier * More than 3 banks accept your currency!

The incentives of the nations controlling the euro are well known to Montenegro, and they trust that those countries will keep the euro stable.

Libra is a whole different ball of wax. It's not just a currency. When you use it, you are tied to Facebook's terms of services, Facebook's desires, and Facebook's fate. Your individual citizens could be locked out of the economy for reasons that have nothing to do with your nation's laws.

If Google and Apple wouldn't agree to use Facebook-dollars for all their transactions, I don't see why a company would agree to.

Re: France and Germany Agree to Block Facebook's Libra

#636

Post by insulanus »

espadrine wrote: post #334
tannhaeuser wrote: post #268

Earlier quoted context omitted.

> not familiar with the specific mindsets and the history of this decision I think Monsieur Macron has put this onto the agenda when Libra was announced. I'm not disagreeing with the decision and have similar concerns as you, but I'm still uncertain whether the state should even have the ability to block these and other things in general. Most of all, I miss a British voice here (as, sadly, not very much longer an EU…

> I'm still uncertain whether the state should even have the ability to block these My reading of ECB publications makes me believe that they don’t want to block these. Ultimately, governments are mandated to protect the wealth of their electorate. A system in which they have no recourse, even indirectly, against volatility (the preservation of wealth) and stability (the preservation of payment services) is one that…

That's a good point. Besides the potential dangers of allowing a tech company (one with no ties to your country) to run the money supply, there is also the understanding that you (as a smaller country) are inviting even more U.S. monetary policy into your country.

People may decide against that.

Re: France and Germany Agree to Block Facebook's Libra

#637

Post by insulanus »

bko wrote: post #374
the-dude wrote: post #323

Earlier quoted context omitted.

From a history perspective : the hyperinflation leading up to the 3rd Reich.

Which is one reason why capital controls are so destructive. Allowing denizens to keep their savings in whatever form they so choose is a human right. Libra will afford people the option to invest in and use a token that is backed 1 for 1 to a basket of global currencies and government bonds at a low cost.

> Libra will afford people the option to invest in and use a token that is backed 1 for 1 to a basket of global currencies and government bonds at a low cost.

That part sounds good to me - tying together the international money and trade system has reduced the threat of war.

But that argument doesn't imply the need for a foreign (or domestic) corporation to administrate your currency.

Re: France and Germany Agree to Block Facebook's Libra

#638

Post by insulanus »

wyattpeak wrote: post #616
throwaway744678 wrote: post #547

Earlier quoted context omitted.

That, my friend, is very close to a Godwin point. Let's be careful here.

The original comment is about German attitudes towards the accumulation of power, which are a direct product of their experiences with Nazism. Germans don't want uncontrolled groups accumulating power precisely because it could lead to a situation like Nazi Germany. Once Godwin's law became a meme it outlived its usefulness. Yes, people tend to hyperbolically compare things to the Nazis. But the Nazis were a real thi…

I hereby nominate posts discussing actual deeds of actual Nazis to be exempt from Godwin's law.

Re: France and Germany Agree to Block Facebook's Libra

#639

Post by insulanus »

bko wrote: post #366
jayd16 wrote: post #346

Earlier quoted context omitted.

Then create a bank. But that's not what this is. They want to make a bank that prints its own currency and skips the paperwork needed for current monetary exchange. It's just as OP has said.

Banks don't follow full reserve banking. They follow fractional reserve banking. When you put 1 Euro in the bank, they have discretion as to how to invest this amount and only need to keep a fraction of your money in reserves. With a bank I'm also stuck being exposed to the currency of my account. And European banks often have fees or minimum balances. Libra offers benefits to banks and is safer. [edit] The idea of a…

> > > It’s a “narrow banking” model that would back its deposits with 100 percent reserves, located at what is deemed by nearly everyone as the safest of safe locations —the U.S. central bank

Let's say I'm a country, say, not the U.S. Could you see me having a problem with having my currency backed by a U.S. corporation, who's reserves are held in the U.S. central bank?

Re: France and Germany Agree to Block Facebook's Libra

#640

Post by insulanus »

bko wrote: post #391
jayd16 wrote: post #375

Earlier quoted context omitted.

How is Libra a full reserve bank if investment is how they make their money? It doesn't sound any different at all except there's no regulations and no government backing (such as FDIC guarantees).

Full reserve: > By fully backing each coin with a set of stable and liquid assets (described later) and by working with a competitive group of exchanges and other liquidity providers, users can have confidence that they will be able to sell any Libra coin at or close to the value of the reserve at any time. [0] They'll fund expenses from the return of the investments. > How will the reserve be invested? Users of Libr…

> 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. [0]

If I were a country's finance minister, this single paragraph would be enough to get me to say "no".

This currency generates returns, which we don't see, and we don't control the allocation of. basically, it's slowly bleeding money out of the countries that use it, though accumulation of capital and capital investing.

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