Facebook’s Cryptocurrency: Libra

[BevoJoe]

Augustin Carstens, head of the Bank of International Settlements

Damn! This dude looks well fed. I don’t trust fat bankers.

 

[Driver 8]

It's getting real now

U.S. Committee on Financial Services letter to Zuck, Sandberg and David Marcus (Libra CEO)

"We write to request that Facebook and its partners immediately agree to a moratorium on any movement forward on Libra ... It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival US monetary policy and the dollar...

I hope they don't intend to write a letter to the Bitcoin CEO but they're probably dumb enough to do it

Also: page one of the letter is dated July 2 and page two is dated July 3

 

[Driver 8]

Head of European Central Bank is worried about crypto shaking the system. I think the world's central banks and investment banks have done enough system shaking already, thank you very much

New ECB Boss Christine Lagarde Made A Serious Bitcoin Warning

Christine Lagarde, who has just been nominated to replace Mario Draghi as president of the European Central Bank (ECB), warned that cryptocurrencies are "shaking the system"—something that could signal a change in the ECB's approach to bitcoin and crypto and potentially spur adoption.

"I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever ... that is clearly shaking the system," the 63-year-old Lagarde told CNBC in April.

"We don’t want to shake the system so much that we would lose the stability that is needed," she added.

Those comments earlier this year follow an interview with Lagarde in 2017 where she warned the power of cryptocurrencies and the underlying blockchain technology should not be dismissed.

 

[Monahorns]

Central bankers talking about stability is rich. Those asses have been gaming the system for a long time.

Fractional reserve, quantitative easing, negative interest rates. They all steal wealth from people. But, oh my god, another currency may make things unstable. Ridiculous.

 

[Monahorns]

It turns out Libra is probably a subtle ploy to stabilize the US and EU central banks by using government bonds as the assets the currency is based on.

However, in reality this will contribute to the current monetary instability the central banking systems are experiencing. Plus it takes money from poor people. Great job Zucker!

Who Will Benefit More from Libra: The Unbanked, or Wall Street? | Pascal Hügli

 

[Driver 8]

And in today's news





Fed Chairman Jerome Powell: bitcoin "alternative to gold" and "store of value"

"You could see a return to an era in the US where we had many different currencies"

 

[Monahorns]

Trump is very ignorant on currency and trade as seen by his tweets and tariffs.

Bitcoin is volatile because it being used as an investment asset. What you are seeing in the Bitcoin volatility is actually dollar volatility or lack of faith in it. That is like calling gold unstable when its price (in $s) changes abruptly. However, if you track what an ounce of gold will buy over history it is pretty damn stable.

I hope Powell is right that someday soon there will be multiple currencies being used.

 

[ShAArk92]

tariffs bad

because why?

Tariffs (and duty) are what is supposed to fully fund our Federal Govt. NOT every possible tax upon the citizenry.

 

[Dionysus]

Interesting seeing bitcoin mentioned in the same day by POTUS and the Fed.

I wonder what happens if/when a central bank somewhere takes a BTC position, even just as a hedge. Game on.

 

[Monahorns]

Tariffs bad? Only if you don't like taxes. I don't.

Trump uses tariffs to punish other countries by taxing the working class of the US into the ground. Sounds bad to me.

 

[Driver 8]

"Unfortunately, Wells Fargo does not allow transactions involving cryptocurrency."

Oh you thought that was your money in our bank? Haha sorry, no

 

[Driver 8]

Next: "Unfortunately, [US bank] does not allow the purchase of cannabis stocks"

Then: [US bank] does not allow the purchase of [the other thing we or the government doesn't like]"

 

[nashhorn]

Driver 8, try to buy CBD with a credit card.

 

[Driver 8]

Congress has drafted a bill called "Keep Big Tech Out Of Finance" which would prevent large tech companies from becoming finance companies and launching digital assets.



A bit from the link

A BILL
To prohibit large platform utilities from being a financial institution or being affiliated with a person that is a financial institution, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the "Keep Big Tech Out Of Finance Act"
SEC. 2. PROHIBITION RELATED TO LARGE PLATFORM UTILITIES.
(a) IN GENERAL — A large platform utility may not be, and may not be affiliated with any person that is, a financial institution.
(b) PROHIBITION RELATED TO CRYPTOCURRENCIES
(1) IN GENERAL—A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function, as defined by the Board of Governors of the Federal Reserve System.

Smells like fear

 

[ShAArk92]

Tariffs bad? Only if you don't like taxes. I don't.

then don't buy the import. easy.

What's become terribly obvious to anyone paying attention ... foreign manufacturers are subsidizing the products with either "slave wage" labor, or outright paying companies from taxing their people.

Clearly that means competition is a farce.

Tariffs can be abused, but if they are metered to be the equivalent/only slightly more than the subsidy from a foreign government ... THEN ... we have a fair market AND funds for the Fed. Win WIN!

 

[Monahorns]

then don't buy the import. easy.

Yes. That means buy a product from somebody less efficient than you would have if you had more freedom.

What's become terribly obvious to anyone paying attention ... foreign manufacturers are subsidizing the products with either "slave wage" labor, or outright paying companies from taxing their people.

Clearly that means competition is a farce.

I agree and disagree. Foreign governments subsidizing products is definitely unfair. They are hurting honest competition. And at the same time hurting their own countries currency in the process.

However, what we consider slave labor or a sweat shop is just allowing people to work for a wage they find acceptable. To us it is bad because we are already rich and our economy has improved past that stage. But it is honest competition. Starving people take low wages to work in a factory because they are less hungry. Then they start to build savings. In a generation or two workers won't work in those conditions or for the same wages because their economy has developed. It is the story of capitalism. The gradual building of wealth, even at the lower end of the scale.

Tariffs can be abused, but if they are metered to be the equivalent/only slightly more than the subsidy from a foreign government ... THEN ... we have a fair market AND funds for the Fed. Win WIN!

I get what you are saying. But that assumes we know how much a product is subsidized. We don't. If we knew how much a product was subsidized and then added a tariff to precisely counteract that subsidy. I would be for it. That would be a message to a foreign government that we are wise to their cheating and it wouldn't help them anyway. I would have to have more evidence to believe that is happening. That is specially true of how I feel about Trump's 25% tariffs. Those are huge tariffs. Then China retaliates by adding tariffs to US goods. So overall the effect is big negative. Ask soy farmers in the US.

 

[ShAArk92]

That means buy a product from somebody less efficient than you would have if you had more freedom.

Not necessarily ... precisely because of that to which you responded later in my same post ...

what we consider slave labor or a sweat shop is just allowing people to work for a wage they find acceptable.

that's unbelievable.

A country which has the big central government in charge of everything dictates the wages. Do you seriously think those people making Nike shoes for the equivalent of $1/day ...in our valuation conversion, not our estimation of how much is a "livable wage" ... wouldn't accept a greater salary? And even if they don't know better ... WE DO. And that's the point.

If we knew how much a product was subsidized and then added a tariff to precisely counteract that subsidy

We DO know that subsidy level. It's met with our own Dpt of Ag subsidizing our own farmers. This is why farmers are paid by our government to destroy their crops almost every year, or even paid to have the land lay fallow (which is a proper farming technique, but the govt's being involved only convolutes the process)

Ask soy farmers in the US.

I don't have to ask ... I am aware. As I mentioned above, getting a check from the government is a subsidy and it's improper. The level of the check indicates there is knowledge of the level of foreign govt subsidy.

I'm familiar with this phenomenon in two sectors; farming and commercial aviation.

Not even Boeing can effectively compete with an entire Continent; see their woeful decisions to cut corners to meet Airbus --- who produces an inferior product, but because it's subsidized by the EU, they're CHEAP. What does corporate management like? CHEAP.

So ... you could say the failure to apply a proper tariff on Airbus Industrie products drove our only remaining commercial aircraft producer to make some bad decisions.

Tariffs, applied properly, are just.

What I find interesting is that they were a staple of the democrat platform (as protectionism, not market leveling) ... until Trump began using them. Now he's got the Pelosis sounding like McConnels ... WHO ELSE can DO THAT???

 

[Driver 8]

 

[iatrogenic]

Bitcoin is volatile because it being used as an investment asset.

Going to require a better explanation for that statement.

What you are seeing in the Bitcoin volatility is actually dollar volatility or lack of faith in it.

Exactly. Lack of faith in an electronic number with no backing, huge volatility, questionable security, and a strange heritage. It seems that its supporters only believe it is an alternative to the current system and therefore it is good. It is certainly an alternative.

 

[Driver 8]

questionable security

Going to require a better explanation for that statement

 

[iatrogenic]

Going to require a better explanation for that statement

Just Google cryptocurrency fraud and enjoy.

Cryptocurrency thefts, scams, and fraud top $1.2 billion in Q1 2019

 

[Driver 8]

Just Google cryptocurrency fraud and enjoy.

I'm not talking about "cryptocurrency" I'm talking about bitcoin specifically - there is a very important difference there, and a great deal of that has to do with the security of the bitcoin network protocol vs other "crypto" projects (aka shitcoins)

The bitcoin network & blockchain have been in operation for 10+ years (Jan 2009). A successful hack to steal bitcoins could yield the attacker billions, yet the number of times the bitcoin blockchain has been hacked or compromised to date: zero

The "thefts, scams and fraud" you link to have nothing to do with the bitcoin network, they have to do with individuals and online exchanges with weak security practices or dealing in insecure shitcoin protocols

It’s not that hard to learn about this stuff if you want to but that assumes you are interested in understanding before criticizing

 

[iatrogenic]

Even if I agree that the network can’t be hacked, and I have zero faith that it is true, bitcoin still suffers from numerous deficiencies as a currency. If you bought in, I hope your investment works out for you, but don’t bet the farm.

 

[Monahorns]

that's unbelievable.

A country which has the big central government in charge of everything dictates the wages. Do you seriously think those people making Nike shoes for the equivalent of $1/day ...in our valuation conversion, not our estimation of how much is a "livable wage" ... wouldn't accept a greater salary? And even if they don't know better ... WE DO. And that's the point.

Then you don't believe history. Central governments don't dictate low wages, preexisting poverty does. Governments usually hold wages higher than natural which causes unemployment.

Of course they would accept more. Would you not accept more at your job? But the supply and demand of labor in those countries determines what they are paid.

Like I said, the factory workers choose to work their because it is better than the alternative. It is livable in their society, otherwise they would be homeless and then dead. But by all means buy shoes from whatever company you wish. That is your choice. But it you don't buy shoes from these factories with poor people their financial status will never improve.

We DO know that subsidy level. It's met with our own Dpt of Ag subsidizing our own farmers. This is why farmers are paid by our government to destroy their crops almost every year, or even paid to have the land lay fallow (which is a proper farming technique, but the govt's being involved only convolutes the process)

Please show me a document that shows that we know what other countries subsidize. I would be interested. I know I work in an industry where we suspect China is subsidizing but we don't know and if we did we wouldn't know by how much. The farm subsidies are based on other country's subsidies. In fact, sugar import taxes are a subsidy to US sugar mfrs, but we know that other sugar producing countries don't subsidize. Their climate and soil is better for sugar production than in the US, so they are more efficient.

Not even Boeing can effectively compete with an entire Continent; see their woeful decisions to cut corners to meet Airbus --- who produces an inferior product, but because it's subsidized by the EU, they're CHEAP. What does corporate management like? CHEAP.

Did not know Airbus is subsidized by French government. Not surprising since France is one of the worst governments in terms of economic intervention. That being said the US military gets a worse product from Boeing than they would have from Airbus. I have insider knowledge. I know that Airbus offered a better product at a lower price than Boeing. But because of Washington State politicians the US military pays Boeing more for a worse product. I say get the better product for less money. Or at least make Boeing offer some technological advantage to get your business.

 

[Monahorns]

Going to require a better explanation for that statement.

My understanding is that you have to pay capital gains tax on Bitcoin holdings. That makes using it for currency more difficult. Currencies aren't typically managed like that. If you have Euros you don't have to pay capital gains if the value of the Euro gains compared to the $. This is treating a currency more like an asset.

Exactly. Lack of faith in an electronic number with no backing, huge volatility, questionable security, and a strange heritage. It seems that its supporters only believe it is an alternative to the current system and therefore it is good. It is certainly an alternative.

The dollar has no backing either. That is what fiat currency is. However bitcoin left as a currency is more stable because the supply of them is limited. You can only mine them so fast. That aspect of them was created to mirror commodity money like gold or silver.

 

[iatrogenic]

The dollar does have backing, and it is backing from the strongest economy, legal structure, and military in the world. It is that stability that provides the backing.

A limited supply of bitcoin does not make it more stable. Just the opposite in fact. If you put an upper limit on any commodity a group of people want to use for currency, the price goes up. The people trading bitcoin could have just as easily said they were trading piles of dogsh-t from Rex the dog, who has a unique DNA. Once that dog dies however, there will be no more Rex dogsh-t so the supply is naturally capped (i.e. illiquid).

If everyone can't have a bitcoin its usefulness devalues as a currency even if the value of the "commodity" continues to increase. Think Furbee dolls, or art work by the masters. Both of those are nice to own if you follow the greater fool theory, but they are not very good as a currency.

I'm guessing the founder knew that in the short run, limiting the supply would increase the value, and the he/she would keep "x" amount of bitcoin and then sell out to the first available sucker ("pump and dump"). The "scam" depended on finding enough fools to buy an electronic projection on a screen. Of course the founder and his buddies "mined" the first bitcoins, which is no different than Rex the dog's owner keeping the dogshit from Rex' first dumps. Ultimately, you own a bunch of dogsh-t.

 

[Monahorns]

The dollar does have backing, and it is backing from the strongest economy, legal structure, and military in the world. It is that stability that provides the backing.

It is fiat, so it is backed by air. The main thing giving the $ stability today is that the US has persuaded the world to trade oil using US$. That loosely ties the $ to a commodity, but not like have a real commodity standard. Also, other countries are preparing to exit using the "Petro-dollar". So that bit of stability could go away.

A limited supply of bitcoin does not make it more stable. Just the opposite in fact. If you put an upper limit on any commodity a group of people want to use for currency, the price goes up. The people trading bitcoin could have just as easily said they were trading piles of dogsh-t from Rex the dog, who has a unique DNA. Once that dog dies however, there will be no more Rex dogsh-t so the supply is naturally capped (i.e. illiquid).

It does actually. It adds stability in a way that consumers need, i.e. that the purchasing power doesn't go down. If my $ buys more each proceeding year, I like that and every other consumer does to. There is an economic principle that any amount of currency is sufficient to purchase the goods on the market.

If everyone can't have a bitcoin its usefulness devalues as a currency even if the value of the "commodity" continues to increase. Think Furbee dolls, or art work by the masters. Both of those are nice to own if you follow the greater fool theory, but they are not very good as a currency.

I agree with you that bitcoin so far isn't as widely usable as needed to be a real option as a currency.

I'm guessing the founder knew that in the short run, limiting the supply would increase the value, and the he/she would keep "x" amount of bitcoin and then sell out to the first available sucker ("pump and dump"). The "scam" depended on finding enough fools to buy an electronic projection on a screen. Of course the founder and his buddies "mined" the first bitcoins, which is no different than Rex the dog's owner keeping the dogshit from Rex' first dumps. Ultimately, you own a bunch of dogsh-t.

Maybe, but I doubt it. It worked out that way, but he was following the fundamental principles of strong, stable currency in his design.

 

[Dionysus]

A few related things I spotted in the Twitter feed today.

Iran launching a cryptocurrency
According to a Central Bank of Iran official, a national cryptocurrency would make the use of Iranian banks’ frozen resources easier. In June, the CBI Chief announced that due to the weakening Iranian rial against the U.S. dollar, it would be establishing a ‘secondary currency market.’ While he didn’t specifically come out and say that Iran was developing its own cryptocurrency, in hindsight, it is now clear that ‘secondary economy’ in his announcement was referring to a national cryptocurrency.

Iran to Launch Gold-Pegged National Cryptocurrency - BeInCrypto

Libra CEO David Marcus to testify before Congress tomorrow (7/16)
The Libra Association, which will manage the Reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena. It will work with the Federal Reserve and other central banks to make sure Libra does not compete with sovereign currencies or interfere with monetary policy. Monetary policy is properly the province of central banks.

His prepared testimony (PDF):

https://www.banking.senate.gov/imo/media/doc/Marcus Testimony 7-16-19.pdf

Crypto Rogues
Efforts are underway around the world to build new systems for transferring value that work outside of conventional banking infrastructure. The Bitcoin software code enables users to send non-copyable digital assets, known as cryptocurrency or digital currency, to another person without an intermediary, removing the role of the traditional banking sector. The transaction history is stored on an immutable, distributed ledger known as a blockchain, with software code that typically is openly sourced and free. Blockchain is gaining popularity in the U.S., with cryptocurrency startups growing and some large financial institutions piloting elements of the innovative software to increase payment efficiencies. While cryptocurrencies and blockchain technology may benefit millions of consumers by reducing the role of intermediaries and increasing transparency, U.S. adversaries see this development as an opportunity to reduce Washington’s ability to impose economic sanctions, which depend on intermediaries like traditional banks to monitor compliance.

FDD | Crypto Rogues

 

[ShAArk92]

Did not know Airbus is subsidized by French government.

not just the French ... although they are the biggest ... the entire EU subsidizes airbus.

Airbus training philosophy has infected US Carrier training (they were looking for an excuse anyway) Boeing in the last 10 years has NOT been the Boeing which helped form commercial aviation ... and our strategic bomber and tanker fleets.

But they are STILL better than Airbus.

IDK about your "insider knowledge" and won't take issue with it ... but from a maintenance standpoint and operational capability standpoint (not to mention the training of pilots) ... airbus is FAR inferior. As I said, the ONLY reason US Carriers have these things is the subsidy makes them cheap to purchase.

Shoot ... Jet Blue was given a sweetheart deal of "comp'd" maintenance on all their fleet for 10 years. Reckon you could make a business fly with a deal like that ... on the backs of EU taxpayers.

 

[ShAArk92]

trading piles of dogsh-t from Rex the dog,

well, that currency's shelflife is limited anyway.