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Boston Fed releases report, source code of digital currency prototype study

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Re: Boston Fed releases report, source code of digital currency prototype study

#171

Post by wizzwizz4 »

cgriswald wrote: post #108
wizzwizz4 wrote: post #32

Earlier quoted context omitted.

> Also fun fact - back when the US had private currencies, people WILLINGLY preferred to use them despite a gov currency existing. I'm not much of a historian, but are you referring to company stores? https://en.wikipedia.org/wiki/Company_store > Saint Peter don't you call me 'cause I can't go // I owe my soul to the company store — Johnny Cash, Sixteen Tons

That’s not a Johnny Cash song although he did release a cover of it: https://en.m.wikipedia.org/wiki/Sixteen_Tons

Drat. I knew I shouldn't've gone off memory. (Wikipedia says it's a Merle Travis song.)

Re: Boston Fed releases report, source code of digital currency prototype study

#172

Post by wizzwizz4 »

chromatin wrote: post #132
wizzwizz4 wrote: post #32

Earlier quoted context omitted.

> Also fun fact - back when the US had private currencies, people WILLINGLY preferred to use them despite a gov currency existing. I'm not much of a historian, but are you referring to company stores? https://en.wikipedia.org/wiki/Company_store > Saint Peter don't you call me 'cause I can't go // I owe my soul to the company store — Johnny Cash, Sixteen Tons

No, very different than company store (those "currencies" were referred to as "scrip") https://en.wikipedia.org/wiki/Company_scrip

That Wikipedia article seems to talk about company stores a lot, actually.

> […] even in [locations] that were not [poor], workers paid in scrip had little choice but to purchase goods at a company store, as exchange into currency, if even available, would exhaust some of the value via the exchange fee. With this economic monopoly, the employer could place large markups on goods, making workers dependent on the company, thus enforcing employee "loyalty".

Re: Boston Fed releases report, source code of digital currency prototype study

#173

Post by selfhoster11 »

wolverine876 wrote: post #145
triangleman wrote: post #66

Earlier quoted context omitted.

Reading Matt Levine's latest column on this CBDC was sort of mind blowing. With a truly centralized digital currency the Fed would basically monopolize all bank deposits (why store money in the bank at all when your digital wallet is perfectly safe) and destroy the entire banking sector. So they are forced to decentralize the currency to some extent, so that banks are the ones to actually issue the currency (after bo…

> why store money in the bank at all when your digital wallet is perfectly safe Because banks lend the money out, earn revenue from that, and thereby pay you interest. Banks aren't vaults; they are money circulation machines. Their business is finding the best investments, which creates efficiency in allocation of capital in the economy.

Banks in the UK pay out a maximum of 1% interest on even the best savings accounts (i. e. the return doesn't even keep pace with average person's PoV inflation). I am skeptical of this explanation for why we should let the banks hold our money. Or indeed remain alive as anything but a source of borrowing.

Re: Boston Fed releases report, source code of digital currency prototype study

#174

Post by wolverine876 »

whatshisface wrote: post #165
wolverine876 wrote: post #147

Earlier quoted context omitted.

> banks as the only "safe" place to park money You can park your money safely anyway, just buy a vault. There are even specialized bank accounts where they just store you money and don't lend it out. However, you won't earn any interest, and thus will lose opportunity cost and also lose value as cash inflates. Additionally, the money that banks lend is critical to the economy - which includes your job and the general…

Recently, and for the foreseeable future, interest rates are/will be so far below inflation that they truly do not matter. A mattress might be just as good as a bank for the next decade or so.

What is that based on?

Re: Boston Fed releases report, source code of digital currency prototype study

#175

Post by wolverine876 »

selfhoster11 wrote: post #173
wolverine876 wrote: post #145

Earlier quoted context omitted.

> why store money in the bank at all when your digital wallet is perfectly safe Because banks lend the money out, earn revenue from that, and thereby pay you interest. Banks aren't vaults; they are money circulation machines. Their business is finding the best investments, which creates efficiency in allocation of capital in the economy.

Banks in the UK pay out a maximum of 1% interest on even the best savings accounts (i. e. the return doesn't even keep pace with average person's PoV inflation). I am skeptical of this explanation for why we should let the banks hold our money. Or indeed remain alive as anything but a source of borrowing.

> Banks in the UK pay out a maximum of 1% interest on even the best savings accounts (i. e. the return doesn't even keep pace with average person's PoV inflation).

Interest paid on deposits is a free market (generally speaking); if that rate isn't worthwhile to people, they will start leaving and the bank will raise its rates.

> I am skeptical of this explanation for why we should let the banks hold our money.

You aren't 'letting' them and it's not a collective decision. You personally choose to give them your money. Put it elsewhere if you like.

> Or indeed remain alive as anything but a source of borrowing.

They can't lend money without deposits. The deposits are the money they lend.

Re: Boston Fed releases report, source code of digital currency prototype study

#176

Post by nabla9 »

nikanj wrote: post #162
nabla9 wrote: post #26

Central bank digital currency efforts seem interesting. 1. They make it possible to deliver helicopter money directly to the consumers. Now central banks can only work trough banks or financial markets. Digital currency where everyone has access to central bank money can correct the errors in current systems. 2. Currency would be anchored in real economy with sound monetary policy. Nobody in their right mind takes Bi…

Didn't we just recently mail everyone a check? Solid 19th century tech

The difference between fiscal and monetary policy.

Re: Boston Fed releases report, source code of digital currency prototype study

#177

Post by nabla9 »

anm89 wrote: post #137
nabla9 wrote: post #40

Earlier quoted context omitted.

Sound monetary policy according to Fed mandate and goals is low unemployment rate and average inflation rate 2 percent over medium length period. Many argue that helicopter money is better alternative to quantitative easing (buying bonds). Just give money to the people. Buying bonds is ineffective because bond holders don't consume. The velocity of money just drops and asset prices increase. (you may picture helicopt…

I dont think the term sound is used by many to imply that the fed is simply following its mandate. if so then the fed has been doing "unsound" monetary policy for most of the last 10 years. Sound is generally used specifically in a connotation of not debasing the currency. Also gotta strongly disagree that the concept of helicopter money has no connotation of amount. to each their own I guess.

> if so then the fed has been doing "unsound" monetary policy for most of the last 10 years.

Fed has to work within the tools it has. Especially when government is stuck and fiscal policy is almost never sound or enough. With the tools it has, it has done it right. The problem is that there is zero lower bound.

Re: Boston Fed releases report, source code of digital currency prototype study

#178

Post by woah »

DennisP wrote: post #60
beefman wrote: post #44

"In our design users interact with a central transaction processor using digital wallets storing cryptographic keys. ... Despite using ideas from blockchain technology, we found that a distributed ledger operating under the jurisdiction of different actors was not needed to achieve our goals. Specifically, a distributed ledger does not match the trust assumptions in Project Hamilton's approach, which assumes that the…

This doesn't sound all that different from the banking system we have now.

Less decentralized than the current system

Re: Boston Fed releases report, source code of digital currency prototype study

#179

Post by rmbyrro »

dghlsakjg wrote: post #111
djbusby wrote: post #83

Earlier quoted context omitted.

How does the Post remain private, since the Government runs that too?

With mail, the only information that is verifiable is the address that received the mail. The return address can be made up. Although the general area it is sent from is recorded in the form of zip code. The contents of the letter are also not known. So even if that info got out, there’s really not much information beyond the fact that mail was received, and we probably know who sent it. Thats a world of difference f…

There's a reason why the saying goes as "follow the money" and not "follow the mail". Think about why and you'll understand why CBDC is Orwellian worst nightmare.

Re: Boston Fed releases report, source code of digital currency prototype study

#180

Post by whatshisface »

wolverine876 wrote: post #174
whatshisface wrote: post #165

Earlier quoted context omitted.

Recently, and for the foreseeable future, interest rates are/will be so far below inflation that they truly do not matter. A mattress might be just as good as a bank for the next decade or so.

What is that based on?

It's been true for a very long time, and unless we see enormous amounts of growth, it will have to stay true. If you look at Fed plans to raise interest rates, you'll see that even in the highest estimates they're looking at fractions of a percent. Meanwhile, we're having months with 8% annualized inflation.
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