51–60 of 149 posts
Buy gold.
If CBDC issuance coincides with banning physical cash, what makes you think that they won't enforce capital controls on alternative currencies?
The question is, will you live long enough to see the end of the ban. If you have children it may very well be worth it.
The mandate of the European Central Bank is to maintain price stability. Raoul Pal says "They can give, for example, restaurant owners a direct payments for stimulus whilst at the same time, charging negative interest rates on larger savers". But I don't see how this fits in the mandate of the ECB. Raoul Pal says "(if they get the powers by the Governments, which will come)". But that's a prediction, nothing more, an…
> The experience with pandemic emergency payments has brought forward an idea that was already gaining increased attention at central banks around the world, that is, central bank digital currency (CBDC). Legislation has proposed that each American have an account at the Fed in which digital dollars could be deposited, as liabilities of the Federal Reserve Banks, which could be used for emergency payments https://www…
Are these proposed central bank “digital currencies” anything more than a centralised or federalised database of who-owns-how-many? And if so, how does that differ from what we have now? That is, in a European country, I have an account with my bank, and my bank has an account with the central bank (or the two interact in some other way). My understanding of the current system is limited, I merely know some large por…
In general, there are benefits and drawbacks:
- efficiency: well, despite having a fast transaction time the machinery behind banking system is old and in-efficient, scary even to think how it’s still working. Cross-border is another major friction.
- flexible monetary policies and tools: e.g. directly depositing relief money into the accounts of people in crisis times, or negative interest rates.
- financial inclusion: not everywhere people are banked and part of socioeconomic circle to receive benefits, e.g. African countries or small portion of modern world, where banking is privileged. In theory, one does not need a whole banking backend to store coins, as seen by crypto world.
- innovation backstop: the new currency could act as a settlement layer for the known stability model of money in a country to create new tools (asset chains, etc) or automate them at much lower cost.
Of course, it comes with a risk (from CB’s perspective) of disintermediation of banking system, technological challenges, privacy concerns, etc.
Are these proposed central bank “digital currencies” anything more than a centralised or federalised database of who-owns-how-many? And if so, how does that differ from what we have now? That is, in a European country, I have an account with my bank, and my bank has an account with the central bank (or the two interact in some other way). My understanding of the current system is limited, I merely know some large por…
Well, the current system as you describe is a two-level system with your bank in between; a CBDC allows you to "have an account" directly with the central bank directly and make/receive payments without needing a retail bank intermediary. It also enables central banks to achieve policy goals that they could not earlier - for example, in the last big crisis all the quantitative easing did not result in as much actual…
It may come across as snark, but I happen to believe this quote of Bill Hicks truly captures most of my thoughts on the subject. “Rock stars against drugs – that's what we want, isn't it? Government-approved rock-n-roll? Woo! We're partying now!” The entire reason for crypto is the already ridiculous level of control exerted over various gatekeepers. How do I know? I am part of the system.
Can you elaborate on the "ridiculous level of control over various gate-keepers"?
Are these proposed central bank “digital currencies” anything more than a centralised or federalised database of who-owns-how-many? And if so, how does that differ from what we have now? That is, in a European country, I have an account with my bank, and my bank has an account with the central bank (or the two interact in some other way). My understanding of the current system is limited, I merely know some large por…
1) One important difference is counterparty risk: the balance of your bank account is not really backed by anything, it is only a liability of the bank. If the bank goes bust then you are left with nothing (except for any amounts covered by government deposit guarantee schemes). This would not be an issue for an account at the ECB because they can't go bust.
On the other hand, the ECB has already said that they would put limits in place to avoid bank runs where everybody converts their commercial bank deposits into digital euro.
2) Another difference would be that moving deposits between different banks requires clearing and settlement between those banks, which slows everything down. Digital euros could in principle be transferred directly.
On the other hand, the ECB has mentioned that digital euro transactions might still be handled by banks, and that there might still be some form of settlement.
3) A digital euro account might give you direct exposure to the ECB policy interest rates. (Unfortunately the deposit interest rate is currently negative.)
Earlier quoted context omitted.
Well, the current system as you describe is a two-level system with your bank in between; a CBDC allows you to "have an account" directly with the central bank directly and make/receive payments without needing a retail bank intermediary. It also enables central banks to achieve policy goals that they could not earlier - for example, in the last big crisis all the quantitative easing did not result in as much actual…
I think if we want to argue that central banks will soon be pushing for CBDCs to let people have accounts directly with the central bank we need to argue why they at the same time are opposing* narrow banks, which to me seems to be a different technical tool achieving an equivalent goal? * At least the Fed seems to be: https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...
In theory, CBDCs could be just a back end representation of the existing financial system for more efficient settlement though, which would be a different technical tool to achieve the Fed's current goal. That looks considerably more likely to happen than removing financial intermediaries from the picture.
Earlier quoted context omitted.
Well, the current system as you describe is a two-level system with your bank in between; a CBDC allows you to "have an account" directly with the central bank directly and make/receive payments without needing a retail bank intermediary. It also enables central banks to achieve policy goals that they could not earlier - for example, in the last big crisis all the quantitative easing did not result in as much actual…
I read somewhere that in the US some banks took the QE money and put it back into their accounts with the Fed where it collected interest. Rather than lend it out, they essentially got paid just to hold it. There’s an economic argument saying that it made them safer, etc. but it doesn’t sound quite right to me.
2) I do give a crap to the extent that they will be used to hand out free shit (BNI, MMT and similar nonsense), so I'm going to minimize the use of any fiat and instead buy gold, silver and unregulated crypto
All this will do is make fiat collapse sooner.
It may come across as snark, but I happen to believe this quote of Bill Hicks truly captures most of my thoughts on the subject. “Rock stars against drugs – that's what we want, isn't it? Government-approved rock-n-roll? Woo! We're partying now!” The entire reason for crypto is the already ridiculous level of control exerted over various gatekeepers. How do I know? I am part of the system.
> The entire reason for crypto is the already ridiculous level of control exerted over various gatekeepers. How do I know? I am part of the system. Can you elaborate on the "ridiculous level of control over various gate-keepers"?
Or maybe foreign money transfers?