Digital Money Across Borders: Macro-Financial Implications • Hacker News Board

Re: Digital Money Across Borders: Macro-Financial Implications

#51

Post by anm89 » Fri, Oct 23, 2020, 3:50 PM UTC

JumpCrisscross wrote: post #29

mikro2nd wrote: post #8

I find it interesting that the paper focusses on Central Bank Digital Currencies and Global Stablecoins, but pretends not to see/prefers not to deal with the elephant in the room - Bitcoin. If anything is a candidate for a potential Reserve Currency, BTC is it, imho. Deep in the footnotes comes the contorted logic," According to the IMF Treatment of Crypto Assets in Macroeconomic Statistics, crypto assets such as Bit…

> Why the aversion? Students of central banking are familiar with central banking in the era of gold and why it was almost universally a disaster. (Most of Bagehot [1] concerns itself with bank runs.) This paper’s audience is familiar with that history. Talking about Bitcoin would be like addressing why machine language wasn’t used in a CS paper. [1] https://en.m.wikipedia.org/wiki/Lombard_Street:_A_Descriptio...

Yes the system that lasted for thousands of years, which was fine until politicians turned the system into a polítical utility making promises they knew they could never keep, and which was replaced by another system that is falling apart after 50 years.

If a gold standard was a disaster, I don't know what our current system is.

Re: Digital Money Across Borders: Macro-Financial Implications

#52

Post by anm89 » Fri, Oct 23, 2020, 3:52 PM UTC

x87678r wrote: post #32

mikro2nd wrote: post #8

I find it interesting that the paper focusses on Central Bank Digital Currencies and Global Stablecoins, but pretends not to see/prefers not to deal with the elephant in the room - Bitcoin. If anything is a candidate for a potential Reserve Currency, BTC is it, imho. Deep in the footnotes comes the contorted logic," According to the IMF Treatment of Crypto Assets in Macroeconomic Statistics, crypto assets such as Bit…

The USA is super strict on making sure every transaction they can control gets monitored and tracked. Any financial firm that touches dollars must comply or they'll get fined literally billions. There is no way BTC will be allowed to go mainstream unless the US regulators can track every user on the blockchain.

Our "exorbitant privelege" is not going to last forever. When the imf called. For a new Bretton woods moment last week, ending that system is what they were talking about.

Re: Digital Money Across Borders: Macro-Financial Implications

#53

Post by anm89 » Fri, Oct 23, 2020, 3:58 PM UTC

All of the people talking about bitcoin here are misunderstanding how central banks are using the term digital currencies

The CBDCs themselves have 0 to do with crypto. They are no more digital than your bank account in 1985 was and not using any technology newer than that. They are just normal dollars held directly by citizens at thhe central bank which is useful as a monetary policy tool.

Sure you can tokenize something to create a stable coin but that still had none of the interesting properties of a Blockchain. It just makes itt marginally easier to interact with that ecosystem.

Re: Digital Money Across Borders: Macro-Financial Implications

#54

Post by javert » Fri, Oct 23, 2020, 4:08 PM UTC

biolurker1 wrote: post #42

javert wrote: post #39

Earlier quoted context omitted.

Obviously, if you are a user of the currency and don't want it to be inflated by the central bank, there's at least one thing in bitcoin's favor, as it has a fixed maximum supply. You can argue that's a bad thing if you want, but just ignoring that it exists doesn't make much sense.

I wrote the same message before seeing yours :)

I see, happy to have someone who agrees with me. I don't know why so many people ignore the fixed supply issue with bitcoin, it seems like the "elephant in the room."

Re: Digital Money Across Borders: Macro-Financial Implications

#55

Post by janoside » Fri, Oct 23, 2020, 4:18 PM UTC

seibelj wrote: post #44

janoside wrote: post #40

Earlier quoted context omitted.

The "market" is always active and always looking to select the best of everything, including money. Bitcoin isn't be-all/end-all magical money - but it is a massive, order-of-magnitude improvement on history's greatest "hard money" (gold). The markets of the world are slowly coming to understand the value of this "best reserve asset and best collateral asset ever seen" (Raoul Pal). A new digital, internet-native asse…

This is the history of all revolutionary technologies. At first it seems like a useless toy, then the establishment laughs at and denigrates it, then it's fought aggressively, then it takes over. I would say we are almost past the "fought aggressively" stage, at least for Bitcoin, and into the "taking over" stage as smart institutional money begins to get exposure. It's very interesting that a large contingent of sma…

I appreciate your perspective. I feel like I'm taking crazy pills these days on HN concerning BTC. This idea (early rejection, re-justification) is a helpful heuristic for understanding some of it at least.

Re: Digital Money Across Borders: Macro-Financial Implications

#56

Post by janoside » Fri, Oct 23, 2020, 4:28 PM UTC

raverbashing wrote: post #50

janoside wrote: post #40

Earlier quoted context omitted.

The "market" is always active and always looking to select the best of everything, including money. Bitcoin isn't be-all/end-all magical money - but it is a massive, order-of-magnitude improvement on history's greatest "hard money" (gold). The markets of the world are slowly coming to understand the value of this "best reserve asset and best collateral asset ever seen" (Raoul Pal). A new digital, internet-native asse…

What you're saying applies to crypto-currencies in general, but not necessarily to Bitcoin, which has some thorny issues. Yes, maybe the popularity of BTC will overcome the issues, but I doubt.

No, it doesn't. Money, perhaps more than anything else in human society, exhibits network effects that incline it toward winner-takes-all dynamics. Every money implicitly competes against every other money.

I recommend taking a look at something like https://bitcointreasuries.org/

And don't just glance at it - try asking some probing questions, like "What does this mean?" and "What might I be missing concerning the underlying dynamic at play?"

You can also try reading The Bitcoin Standard for a good analysis of the dynamics and history of competition between different forms of money - the central thesis being: History has shown that you can't protect yourself from someone else holding money that's harder (better) than yours. Bitcoin is better money than anything else we have or have ever had.

Re: Digital Money Across Borders: Macro-Financial Implications

#57

Post by JumpCrisscross » Fri, Oct 23, 2020, 4:36 PM UTC

baybal2 wrote: post #37

JumpCrisscross wrote: post #29

Earlier quoted context omitted.

> Why the aversion? Students of central banking are familiar with central banking in the era of gold and why it was almost universally a disaster. (Most of Bagehot [1] concerns itself with bank runs.) This paper’s audience is familiar with that history. Talking about Bitcoin would be like addressing why machine language wasn’t used in a CS paper. [1] https://en.m.wikipedia.org/wiki/Lombard_Street:_A_Descriptio...

I doubt if anything made changed since the era of gold, just sizes of economies went up dramatically, more common people are banked, and there are more option to do bank run against. Gold [ https://goldprice.org/charts/history/gold_6_month_o_usd_x.pn... ] is of course one of them, but costs of many other liquid commodities have shot up counterintuitively this time as well. There is nothing "magical" that has happened…

> There is nothing "magical" that has happened to banks when they switched to fiat money

Of course there is. Deposit guarantees are enabled. That and the central bank’s credible power to influence money supply and borrowing costs as well as act as an unconstrained lender of last resort.

There is a lot of scholarship, originally from the turn of the last century but perennially refreshed, on the inherent failure modes of fixed-supply money systems amidst a growing, industrialising or industrialised economy.

Fixed-supply assets are good. Fixed-supply currencies cease, quickly, to be currencies.

Re: Digital Money Across Borders: Macro-Financial Implications

#58

Post by gruez » Fri, Oct 23, 2020, 5:04 PM UTC

mantap wrote: post #15

janandonly wrote: post #3

We already have a digital Euro/Dollar/Yen, just look at the banking app on your phone or the transactions you do with a bank or credit card. But I'm very scared to see what those digital wallets for CBDC will turn into. If central banks get control over money flows they can do horrible stuff: * set a maximum limit on the amount of money you are allowed to have/save in your CBDC wallet. * give you an x amount of money…

All of these could be circumvented though. For instance, you are given X and have to spend it by the end of the month. So you sell your X to someone who does want to spend money and they give you something in return (e.g. cryptocurrency) that you can save. Or you just buy some object such as gold jewellery that has a measurable value. This kind of direct interference with money never works. People just find ways arou…

>So you sell your X to someone who does want to spend money and they give you something in return (e.g. cryptocurrency) that you can save. Or you just buy some object such as gold jewellery that has a measurable value.

presumably if they're going through that much effort to implement this, they'll prevent this from happening. eg. https://en.wikipedia.org/wiki/Executive_Order_6102

Re: Digital Money Across Borders: Macro-Financial Implications

#59

Post by dogman144 » Fri, Oct 23, 2020, 5:06 PM UTC

mikro2nd wrote: post #8

I find it interesting that the paper focusses on Central Bank Digital Currencies and Global Stablecoins, but pretends not to see/prefers not to deal with the elephant in the room - Bitcoin. If anything is a candidate for a potential Reserve Currency, BTC is it, imho. Deep in the footnotes comes the contorted logic," According to the IMF Treatment of Crypto Assets in Macroeconomic Statistics, crypto assets such as Bit…

Yeah that's sort of silly. The implications of a non-BTC-based standard with the intent of enabling cross-border more effectively is: - IMFcoin, UNCoin(and the conspiracies around global banking cartel actually take flight because yeah actually that would be nuts) - EUcoin, USAcoin, ChCoin (imagine the geopolitics...)

A digital currency that directly fits the digital use-case being described by these papers written by central banks, that is in turn ignored by these papers, is sort of like talking about WW2 without mentioning Germany's role.

I can definitely understand the aversion given the implications of a non-CB controlled digicoin, but just ignoring its existence really blows a hole in the intellectual rigor of these whitepapers.

Ultimately, the network adoption will play out as it plays out. We don't have USAweb and RUSweb (maybe moving toward that, but different topic), we have the decentralized, multi-party, ICANN/IETF/private sector/public sector-led The Internet. When you track how the Internet came to be, and how it's actually controlled now, it starts to look a lot like the Bitcoin network's growth plan at the moment. What will be will be. Once it gets analyzed as a network protocol with digital native payments, vs. a digital currency on the regular internet, the blind spots in BTC criticism start to show.

Re: Digital Money Across Borders: Macro-Financial Implications

#60

Post by dogman144 » Fri, Oct 23, 2020, 5:09 PM UTC

jononor wrote: post #10

mikro2nd wrote: post #8

I find it interesting that the paper focusses on Central Bank Digital Currencies and Global Stablecoins, but pretends not to see/prefers not to deal with the elephant in the room - Bitcoin. If anything is a candidate for a potential Reserve Currency, BTC is it, imho. Deep in the footnotes comes the contorted logic," According to the IMF Treatment of Crypto Assets in Macroeconomic Statistics, crypto assets such as Bit…

What do you mean by "Bitcoin showing no greater volatility than any of the world's fiat currencies"? I pulled up BTC/USD and EUR/USD https://www.xe.com/currencycharts/?from=XBT&to=USD&view=2Y https://www.xe.com/currencycharts/?from=EUR&to=USD&view=2Y In the last 1 year, I see BTC low of 5000 and high of 12000, a 40% difference. And EUR at 1.06 to 1.20, about 12% difference. The year before was worse for BTC and bette…

You have to approach it with a pretty wide angle lens, but the better analogy IMHO is comparing BTC to other early day currencies.

Have you looked at USD vol in the 1800's? Reichsmark vol? From that angle, vol of "proper currencies" in their early adoption days tend to start looking a lot like BTC vol. At a minimum, BTC today to USD today isn't an apples:apples take at all.

In my mind, this starts to damage vol = bad BTC arguments in terms of analyzing BTC's adoption. potential.