11–20 of 106 posts
This is interesting in the context of this recent article on Zerohedge: https://www.zerohedge.com/markets/loretta-mester-hints-fed-p... In short, three Fed officials (two former, and the current President/CEO of Fed Bank of Cleveland) are speculating on a product like this. Most interesting is the idea of directly sending cash payments to individual citizens using this product.
Commercial banking, together with the Intellectual Property system, is one of the greatest Rentier swindles of all time. We are literally renting the money we use, for extortionate prices [1]. "The dollar as a reserve currency transfers wealth from the rest of world to the USA One final way in which money works today that has a substantial effect on the workings of the global political economy is the use of the US do…
In exchange the United States act like the world's rent-a-cop, keeping shipping lanes open and getting rid of those who stand in the way of global commerce (sometimes violently). Inflation on the reserve currency is more or less a tax in exchange for these services. Who benefits the most? Pretty sure the answer isn't the common people of (insert any country name here, including the United States).
"sometimes violently" is a bit of an understatement.
With the use of our current system we are literally making the world uninhabitable for human existence. We are systemically destroying mother earth's carrying capacity through ecological destruction, not to mention the misery caused by Magical Voluntarism and labour rights abuses the world over.
I'm still finding ways to describe the issues with our economic system and it's apparatus, and the meaningful changes proposed by one of the projects I follow, in a way that acknowledges that in a way we are all victims to this current system (including neo-Imperialist USA), as today's money does not respect the law of requisite variety [1]. My above critique might sound anti-American, but America (together with other formal colonial powers in the Global North) is just the most powerful player in a game with outdated, harmful and inadequate economic models and governance systems. It's a painful era where we are using inadequate wealth acknowledgement systems, where the old Platform Capitalism paradigm is breaking down and showing it's flaws, and where the potentiality for Protocol Cooperativism is starting to emerge. Money is an information technology created by humans, operating a set of protocols. Tomorrow's world is governed by the practice of Commons-based peer production that is not subject to the contrived scarcity of today's value regime and system, where a neoliberal Intellectual Property system blocks innovation and monopolizes knowledge and information [2].
[1] http://eric.harris-braun.com/blog/2007/05/14/id-53, especially:
"When I’m talking with free-market business people my elevator pitch [for community currencies supported by the MetaCurrency Project's Holochain pattern] is about allowing the power of competition and the marketplace to work on the currency system itself. [...] When I’m talking with engineers and information-theory folks my elevator pitch is about Ashby’s Law of Requisite Variety and questions of the insufficient information carrying capacity of the monetary system to handle the control problems posed by the modern economy. When I’m talking with computer geeks my elevator pitch is about cc as a peer-to-peer distributed information system and about “pushing the intelligence to the edges” as in Reed’s Law."
[2] https://c4ss.org/content/52947 and https://www.resilience.org/stories/2017-08-03/book-day-corru...
Is there a place in the US, outside maybe some really rural areas, where a credit union isn't available that doesn't offer accounts to the general population? In my experience credit unions' checking accounts are free. (I realize that this proposal is something slightly different, but I wanted to preempt the inevitable "poor are unbanked because of fees" claims.)
The public will soon learn that public banking means your personal account is a policy instrument. Need to stimulate the economy? Just tell everyone that no accounts will be permitted to have a balance over $2k by Friday at midnight. Either spend the rest or lose it, up to you.
Or maybe you owe child support. Or maybe you haven't paid a parking ticket. Or maybe you attended a "riot". All of which may be "legal" reasons to deduct funds. Its all digital so you can't stop it. The possibilities are endless.
I suppose the upside is it will require a phone, so you'll get a free burner Android phone if you want one.
2. I worry that this might threaten the political independence of the Fed, which is something that I think is really important to maintain.
This is interesting in the context of this recent article on Zerohedge: https://www.zerohedge.com/markets/loretta-mester-hints-fed-p... In short, three Fed officials (two former, and the current President/CEO of Fed Bank of Cleveland) are speculating on a product like this. Most interesting is the idea of directly sending cash payments to individual citizens using this product.
I probably wouldn't consider Zerohedge a reliable source: https://en.wikipedia.org/wiki/Zero_Hedge
I disagree with some of the other claimed benefits. Central bank accounts holding monetary base would not offer interest, just like paper money, and will always offer negative real interest when considering inflation. The government pays interest when borrowing from the banking system, and you can certainly use your central bank account to buy these securities (just like banks do today) but then you are no longer holding the risk free monetary base, you have a security with some non-zero risk of sovereign default.
The stability of the system is also not a given. Commercial banks run the payment system as an ancillary to their main function, and that is to match un short term liquidity, that is temporary savings and surplus of people and firms, and redirect those resources to long term investments. This is a critical economic role and for the economy to work it will still need to be provided in some other fashion, for example by a credit market.
This already happens to a large degree, for example banks offer mortgages and package them into securities that are sold on markets. This whole MBS process was behind the financial melt-down in 2008, since these practices were less scrutinized than the direct loans and deposits of banks. In fact, both are the same process: monetary base increases in velocity and is multiplied in the form of interest bearing securities that represent investments in the productive economy. The stability of the whole financial system is predicated on the quality and diligence of these investments, and credit markets proved to be notoriously bad at discovering this.
One thing to note though, is that when a "bank run" happens in the "shadow banks" of the credit markets, the bad securities are wiped out but the goods ones quickly recover. So the central bank can ride a financial storm by blanket buying paper with fresh money and let the market discover the winners and losers. Bank runs are self-limiting because securities drop to a value where they become enticing to value investors. When commercial banks are involved though, you have massive contagion since bank runs are self-fueling, once a bank is in trouble every investors starts to request their money, even if the fundamentals of the loans made by that bank are sound in the long run.
Banks as private middlemen providing society with a payment system is an outdated and baroque system. Today, the whole payment system of an average nation can work over a single cluster of computers in the basement of the central bank, there is absolutely no reason not to provide this service for free to all citizens and businesses since it's a critical part of living in a society. The whole superstructure of banks,…
Is there a place in the US, outside maybe some really rural areas, where a credit union isn't available that doesn't offer accounts to the general population? In my experience credit unions' checking accounts are free. (I realize that this proposal is something slightly different, but I wanted to preempt the inevitable "poor are unbanked because of fees" claims.)
Don't know how many people are unbanked due to refusal by financial institutions to open an account for them, but ChexSystems exists to let banks know if their potential account holder has had banking issues in the past. At the lower end of the economic spectrum where margins for error are low, there likely is a non-insignificant number of people with bad banking histories who now find it difficult to open a bank acc…
I always thought this is what the target is for with the Libra cryptocurrency.
Commercial banking, together with the Intellectual Property system, is one of the greatest Rentier swindles of all time. We are literally renting the money we use, for extortionate prices [1]. "The dollar as a reserve currency transfers wealth from the rest of world to the USA One final way in which money works today that has a substantial effect on the workings of the global political economy is the use of the US do…
In exchange the United States act like the world's rent-a-cop, keeping shipping lanes open and getting rid of those who stand in the way of global commerce (sometimes violently). Inflation on the reserve currency is more or less a tax in exchange for these services. Who benefits the most? Pretty sure the answer isn't the common people of (insert any country name here, including the United States).
Usually a good law will end up expanding the number of people who are elite, but still give marginal benefit to the commoner.
For example, statutory jurisprudence as opposed to rule by nobility, let people who were only good at trading become part of the elite. Previously you had to also have a private army, in order to be elite.