Central Bank Digital Currency...are we racing to Dystopia?

[mmr007]

By all accounts the crypto currency in use around the world is driving governments towards adopting a central bank issued digital currency that will supposedly allow the "best" features of traditional money along with crypto. The Fed here in the US is strongly hinting its a when and not an if that we transition to full digital currency. I cannot pretend to fully understand all the plusses and minuses of our monetary policy but I am worried about this for several reasons that can become true or likely will come to pass including-

The Fed can stimulate growth by putting an expiration date on currency forcing spending. Your desire to save for a rainy day will be outweighed by a need to have an injection of spending. Similarly it can retard spending by preventing purchases on certain goods or by certain persons because unlike now, it has no direct control over individual spending.

Corporations may have even more control. Right now I use a dollar bill or my debit card anywhere I want. I see centralized control of spending somehow helping, say, Bezos after his army of lawyers and lobbyists get laws written to manipulate digidollars.

I have seen nothing written that states that this eventual transition will do anything but allow greater control (both for good and evil) by the powers that be and has no real value to consumers in a world where corporate monopolies are already our masters. Who knows...maybe global warming will mean those of us remaining will be trading seashells and beads for goods and services.

 

[wheresthefbomb]

considering the primary function of crypto is to expedite the exchange of human suffering for material goods and services, it's hard to imagine this being a good thing. if you want to go down the rabbit hole, take a look at how closely tied the "person" behind bitcoin is with epstein. that says everything a person needs to know about what it's for. libertarians buying acid and shrooms on silk road was just the PR face.

that said, it's also hard to imagine something more befitting the nightmare of late capitalism we already exist in.

 

[nightflameauto]

considering the primary function of crypto is to expedite the exchange of human suffering for material goods and services, it's hard to imagine this being a good thing. if you want to go down the rabbit hole, take a look at how closely tied the "person" behind bitcoin is with epstein. that says everything a person needs to know about what it's for. libertarians buying acid and shrooms on silk road was just the PR face.

that said, it's also hard to imagine something more befitting the nightmare of late capitalism we already exist in.

I'd like to know where you got that introductory definition of crypto. Far as I can tell it was mostly made to circumvent government, which, in its own way, is trying to circumvent human suffering. I mean, let's face it, our governments today are built almost wholly on human suffering. Certainly in America that's true.

FYI - nobody actually knows the real "person" behind Bitcoin. There's people CLAIMING to be him, but no proof. The fact somebody tied up with Epstein is continually bleating, "BUT I AM TOO SATOSHI! I JUST LOST ALL MY COIN!" isn't shocking. A lot of his circle are morally bankrupt liars.

That aside, I'll just toss out the one positive that can come from all money going non-physical, purely digital. When we finally get a large level EM event, as is bound to happen eventually, washing over the Earth, we can watch everything we've ever worked for crumble into dust all at once, rather than piecemeal.

I'm all for it.

 

[KnightBrolaire]

The whole goddamn point of decentralizing cryptocurrency was to allow the end users to have more control over their money, without fear of what is happening in Turkey right now, or what happened in Greece.

The worst part about this is that the blockchain and digital currencies will make it even easier for the govt or corporations to track what you buy (and easier for them to stop you from buying things as well). If people thought having google and social media selling in depth data profiles was bad, wait til they can sell your entire blockchain purchase history.

The only possible benefit I see is cutting the cost of producing physical currency.

 

[Adieu]

USA *already* uses a fully digital and virtual currency.

It is widely known as $ or USD.

The quantity of dollar cash in the USA is painfully tiny and the dollar isn't backed by anything else.

How much cash vs. digital USD money do you own? My ration is about 1:500. I'm sure most people are about the same.

 

[Drew]

By all accounts the crypto currency in use around the world is driving governments towards adopting a central bank issued digital currency that will supposedly allow the "best" features of traditional money along with crypto.

I'm not sure if I agree with this - the Fed is doing the exploratory committee thing, sure, but that's a far cry short of the Fed being forced to abandon the USD (which they have been extremely clear is not the case) in favor of some sort of federally-backed crypto. The whole concept doesn't compute, while we're at it, because the point of the blockchain is the currency doesn;t need to be back ed by anything.

The Fed can stimulate growth by putting an expiration date on currency forcing spending. Your desire to save for a rainy day will be outweighed by a need to have an injection of spending.

That exists now. It's called inflation. Currently it's a wee bit too high, but even in normal circumstances, at 2% a year, if you don't either spend or in vest in something (which is another way of saying loan your money to corporation s or the government in return for either interest or a share of future earnings) then you lose the ability to spend over time.

Similarly it can retard spending by preventing purchases on certain goods or by certain persons because unlike now, it has no direct control over individual spending.

This also already exists.

https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information

...and look at fdederal money laundering laws, specifically related to money from the proceeds of drug sales, which are now partially legal in, what, a third of states?

Corporations may have even more control. Right now I use a dollar bill or my debit card anywhere I want. I see centralized control of spending somehow helping, say, Bezos after his army of lawyers and lobbyists get laws written to manipulate digidollars.

We already have centralized global payment processing, via SWIFT:

The payments process explained | Swift

How does the payments process work? And how can common sources of friction be addressed to support straight-through processing?

www.swift.com

...and for small everyday purchases payment perocessing has been outsourced to corporations for a long time now, your credit card companies and banks, or "shadow finance" companies like Paypal or Google Payments or Apple Pay or whatever. Most corproations would oppose the Fed taking this over, on smaller scales, because this is the sole reason for some companies even existing.

Not sure what to say here, just that I don't think the Federal Reserve will ditch the dollar anytime soon, and I think you're severely underestimating the amount of oversight on global or personal transaction processing that already exists. Remember, this is the reason that bitcoin advocates LIKE crypto, it allows them to transact outside of this system.

 

[mmr007]

I'm not sure if I agree with this - the Fed is doing the exploratory committee thing, sure, but that's a far cry short of the Fed being forced to abandon the USD (which they have been extremely clear is not the case) in favor of some sort of federally-backed crypto. The whole concept doesn't compute, while we're at it, because the point of the blockchain is the currency doesn;t need to be back ed by anything.


That exists now. It's called inflation. Currently it's a wee bit too high, but even in normal circumstances, at 2% a year, if you don't either spend or in vest in something (which is another way of saying loan your money to corporation s or the government in return for either interest or a share of future earnings) then you lose the ability to spend over time.


This also already exists.

https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information

...and look at fdederal money laundering laws, specifically related to money from the proceeds of drug sales, which are now partially legal in, what, a third of states?


We already have centralized global payment processing, via SWIFT:

The payments process explained | Swift

How does the payments process work? And how can common sources of friction be addressed to support straight-through processing?

www.swift.com

...and for small everyday purchases payment perocessing has been outsourced to corporations for a long time now, your credit card companies and banks, or "shadow finance" companies like Paypal or Google Payments or Apple Pay or whatever. Most corproations would oppose the Fed taking this over, on smaller scales, because this is the sole reason for some companies even existing.

Not sure what to say here, just that I don't think the Federal Reserve will ditch the dollar anytime soon, and I think you're severely underestimating the amount of oversight on global or personal transaction processing that already exists. Remember, this is the reason that bitcoin advocates LIKE crypto, it allows them to transact outside of this system.

No, no, no and no. There is a difference in how bitcoin sees itself and how governments see digital currency. Wholesale and retail digital currency are very different (both suck ass though but for different reasons)

With all due respect it seems you are confusing the difference between influencing spending and compulsory spending. Only in a total collapse of a nation's currency would a scenario like you discussed happen with regards to inflation. No my $1 doesn't purchase today what it did back in 1992 but that is a far cry from a mandatory "use it or lose it" Disney dollars requirement which means, say you earn $2,000 every two weeks, how you spend or save your money is entirely up to you and if you stuff it under your mattress for 20 years and find that was not a wise investment and your money hasn't "grown" with inflation well....duh. But we are talking about out of that say, $2,000 every two weeks having to, actually being required to, spend $400 of that 4$,000 within 90 days or it evaporates instantaneously. Compulsory spending through high negative short term interest rates or just outright expiration date. Or, forced austerity if that is the required control mechanism.

Governments would be able to use digital currency like government issued food stamps. You spend on what we say, where we say, when we say, end of story.

The Fed is only exploring crypto at this stage only but it seems inevitable since every single country on earth seems to be moving towards it thus forcing our hand. Blockbuster Video can't survive in a world where every competitor has on demand streaming. It will happen even if somewhat reluctantly.

There is a big difference between being a government entity, NGO or individual that cannot engage in legal banking in the US or with US entities because it is deemed a criminal enterprise or otherwise lands on a sanctioned list and again, as I stated above, large corporations gaining favor to block spending with smaller competitors will be a thing.

Sorry but I have seen nothing in the last 40 years that has caused me to believe that we are moving away from physical asset ownership and every aspect of our lives won't soon be under control. The examples you provided are examples of existing rules, but they aren't totalitarian. Currently central banks can influence the velocity of money. They don't control it. Soon they will.

 

[Drew]

No, no, no and no. There is a difference in how bitcoin sees itself and how governments see digital currency. Wholesale and retail digital currency are very different (both suck ass though but for different reasons)

With all due respect it seems you are confusing the difference between influencing spending and compulsory spending. Only in a total collapse of a nation's currency would a scenario like you discussed happen with regards to inflation. No my $1 doesn't purchase today what it did back in 1992 but that is a far cry from a mandatory "use it or lose it" Disney dollars requirement which means, say you earn $2,000 every two weeks, how you spend or save your money is entirely up to you and if you stuff it under your mattress for 20 years and find that was not a wise investment and your money hasn't "grown" with inflation well....duh. But we are talking about out of that say, $2,000 every two weeks having to, actually being required to, spend $400 of that 4$,000 within 90 days or it evaporates instantaneously. Compulsory spending through high negative short term interest rates or just outright expiration date. Or, forced austerity if that is the required control mechanism.

Governments would be able to use digital currency like government issued food stamps. You spend on what we say, where we say, when we say, end of story.

The Fed is only exploring crypto at this stage only but it seems inevitable since every single country on earth seems to be moving towards it thus forcing our hand. Blockbuster Video can't survive in a world where every competitor has on demand streaming. It will happen even if somewhat reluctantly.

There is a big difference between being a government entity, NGO or individual that cannot engage in legal banking in the US or with US entities because it is deemed a criminal enterprise or otherwise lands on a sanctioned list and again, as I stated above, large corporations gaining favor to block spending with smaller competitors will be a thing.

Sorry but I have seen nothing in the last 40 years that has caused me to believe that we are moving away from physical asset ownership and every aspect of our lives won't soon be under control. The examples you provided are examples of existing rules, but they aren't totalitarian. Currently central banks can influence the velocity of money. They don't control it. Soon they will.

I'm sorry, but there's a 0% chance of everything you're afraid of happening, actually happening.

If nothing else because the "saving" you're referring to losing the ability to do, is a two-sided process. You and I see it as saving money for retirement, or the down payment on a house, or just a rainy day fund. Your bank uses the money in your savings account as collateral to underwrite loans against. Those stocks, bonds, or ETFs in your investment portfolio are funds that corporations are using to finance corporate investment. Having money just go up in smoke if it isn't spent in two weeks would, and I don't know how to say this clearly enough, have an absolutely massive destabilizing effect on our whole financial system, the same one that the very government and corporations you're afraid of also depends on.

Beyond that, no one would have any incentive to take self-destruction payments as currency in exchange for goods, if it was a ticking time bomb. It makes no sense.

It'd probably make a great plotline for a dystopian novel, though, currency that self-destructs forcing humanity to depend on regular transfer payments from a central bank, kinda like that Justin Timberlake movie where everyone is treating time as currency, but it would take a huge suspension of disbelief.

 

[mmr007]

What sense does that make? No one has any incentive to accept a federal $7.25 minimum wage and yet here we are. You take what capitalism is willing to shove up our collective asses. No citizen is going to ask for an expiring currency, it is feared that it will be forced upon us, again to provide a central bank complete control over the velocity of money. An expiring wage payment is already in existence in some totalitarian countries like China. And we are one election cycle and one more supreme court ruling from joining them. If you think a dystopian monetary future has a zero percent chance of happening I must insist that you haven't been paying attention. For all our sake's I truly hope you are right and I am full of shit. Nothing would make me happier.

 

[Xaios]

It'd probably make a great plotline for a dystopian novel, though, currency that self-destructs forcing humanity to depend on regular transfer payments from a central bank, kinda like that Justin Timberlake movie where everyone is treating time as currency, but it would take a huge suspension of disbelief.

Heh, there is actually an example of self-destructing currency in dystopian sci-fi fiction, albeit a very silly one. In Warhammer 40K lore, orks use their own teeth as currency. Their teeth grow back, so they can never effectively have their purchasing power seized, and the removed and circulating teeth decay over time. It basically ensures that money can't be hoarded by the top and will always trickle up. Goddamn enlightened orks.

 

[Drew]

What sense does that make? No one has any incentive to accept a federal $7.25 minimum wage and yet here we are. You take what capitalism is willing to shove up our collective asses. No citizen is going to ask for an expiring currency, it is feared that it will be forced upon us, again to provide a central bank complete control over the velocity of money. An expiring wage payment is already in existence in some totalitarian countries like China. And we are one election cycle and one more supreme court ruling from joining them. If you think a dystopian monetary future has a zero percent chance of happening I must insist that you haven't been paying attention. For all our sake's I truly hope you are right and I am full of shit. Nothing would make me happier.

Stop looking at it from your perspective. If you think of this as some sort of master and slave thing, then you're thinking about it as a slave. Think about it as a master.

How could a company ever raise capital for investment if that capital had a finite lifespan short enough to force people to spend against their will? If you wanted to build a new airplane, the Boeing 787 was launched in 2003 but didn't enter service until 2011. Can you really plan an 8 year capital investment priject when all you capital goes poof in two weeks? If you're selling cars to consumers, how do you approve a customer for a five year car loan when all of their existing capital will go up in smoke in two weeks? Could you even run a credit card company, providing credit to customers on a revolving basis, where you provide payment at the point of sale and then are repaid in anywhere from 30 days to a couple years, when capital has a lifespan of two weeks? What does debt even mean in that world, when debt outlasts currency?

What makes you think companies would want that world? Cash is king. If cash becomes temporary, monetary transfer as we know it breaks down. And the people who have the most to lose from that aren't guys like you or me, it's corporations with annual cashflow in the hundreds of billions of dollar range.

IF you're worried about wealth as we know it being destroyed, you and I are not the ones with the most to lose here.

 

[mmr007]

I'm sorry but there is such a lack of imagination in some of these arguments. How can you approve someone for a car loan today when they could lose their entire job the next day? It's a risk but credit history and income verification minimizes that risk. The same would apply. Direct loan would be contingent on overall economic health and a history of expiring monetary value. For example, if the central bank sees that monetary manipulation is likely you may only get approved for a $40,000 car instead of a $45,000 car due to economic indicators.

Why would companies do this? Because they already do shit that shows they don't give a fuck about the health of the overall economy, they care about market share and stock dividends for share holders. A companies stock price could plummet, even if they are making billions a quarter, if they did not prove that they did grow or will grow for the last or next quarter. It's about getting every last penny. I am not thinking like a slave. I am thinking like a person who is aware that REMOVING VARIABLES from economic growth or contraction as deemed necessary is advantages to everyone other than the people like those who post on this board.

Exxon and Amazon will never have to worry about monetary manipulation like you and I will face. Like I said, these aren't MY opinions or prognostications, I just agree that they are a grave concern and I hope I am wrong.

 

[tedtan]

I am thinking like a person who is aware that REMOVING VARIABLES from economic growth or contraction as deemed necessary is advantages to everyone other than the people like those who post on this board.

Such as?

 

[mmr007]

Such as?

please to clarify the elaboration you seek please....

 

[tedtan]

please to clarify the elaboration you seek please....

General info surrounding the quote, such as:

Who deems it necessary to remove these particular variables from economic growth or contraction?
Which variables may be deemed necessary to be removed?
Who benefits from removing these variables?
In what way do they benefit from removing these variables?
Who are the people like those who post on this board?
Why can’t we, too, benefit from removing these variables if others can?
Etc.

 

[mmr007]

The people who post on this board are not the Elon Musks or Jeff Bezos' of the world. I don't know anyone on this forum but I have a feeling none are powerful enough to have lobbyists.
The variables are simply the aspects of monetary policy that the Fed can use to influence money, spending, investing and saving but right now can't outright control it....such as our runaway inflation currently in the US (maybe runaway is too strong a word), but you can influence spending but you can't control it. A centralized digital currency can be controlled. Just like you can't take food stamps into a liquor store (I mean you can take them with you and keep them safe in your pocket but you can't spend them).

Who benefits depends on what is being done but since we already live in a country that allows companies to buy out other companies and raid their pension funds you can't tell me you can't foresee a scenario where to increase growth and spending fiscal policy will be maximum ceilings on account balances and expiring funds that must be spent within a desired timeframe or lost. This is not my idea. I didn't come up with this but nobody seems to be talking about it as a possible threat because right now it seems too unreal.

You and I won't have the ability to individually affect monetary policy and remove variables. Right now the central bank can dictate the price of money but the borrower can still exercise their own judgement if the cost is still low enough to resist changing spending habits. But with digital currency tied to a central bank, even if you are willing to absorb that extra cost, the central bank may decide for you....for the greater good....the greater good....the greater good...

 

[tedtan]

So when the billionaires, and presumably large businesses, get their hands on the money, does it continue to expire after a certain amount of time or do they have an exception to this aspect of the new digital currency?

Also, while we may not be billionaires, there are some pretty smart people here, so if a variable is changed to benefit a billionaire, is there a reason that we couldn’t come up with an angle that would take advantage of the new state of the variable? There is typically a way to game the system, after all; do the billionaires have a special code or similar means to unlock the digital currency for them alone?

 

[Drew]

I'm sorry but there is such a lack of imagination in some of these arguments. How can you approve someone for a car loan today when they could lose their entire job the next day? It's a risk but credit history and income verification minimizes that risk.

Ok, I made it exactly this far.

158.7 million Americans have jobs as of August of this year. Weekly, about 200-220k Amwericans have been losing their jobs and claiming unemployment for the last several months. Call that 0.21 million a week, or 0.03 million a day. 99.98% of Americans will not "lose their entire job" tomorrow. You're saying that's basically the same as 100% of Americans will have all their wealth evaporate every two weeks.

I hope I don't have to tell you how crazy that sounds.

 

[mmr007]

We're talking past each other and when I read your comments it is soooo clear that you don't understand what I am saying because your responses are non-sensical. I will accept the blame for not explaining myself properly and I will move on.

 

[vilk]

No, no, no and no. There is a difference in how bitcoin sees itself and how governments see digital currency. Wholesale and retail digital currency are very different (both suck ass though but for different reasons)

With all due respect it seems you are confusing the difference between influencing spending and compulsory spending. Only in a total collapse of a nation's currency would a scenario like you discussed happen with regards to inflation. No my $1 doesn't purchase today what it did back in 1992 but that is a far cry from a mandatory "use it or lose it" Disney dollars requirement which means, say you earn $2,000 every two weeks, how you spend or save your money is entirely up to you and if you stuff it under your mattress for 20 years and find that was not a wise investment and your money hasn't "grown" with inflation well....duh. But we are talking about out of that say, $2,000 every two weeks having to, actually being required to, spend $400 of that 4$,000 within 90 days or it evaporates instantaneously. Compulsory spending through high negative short term interest rates or just outright expiration date. Or, forced austerity if that is the required control mechanism.

Governments would be able to use digital currency like government issued food stamps. You spend on what we say, where we say, when we say, end of story.

The Fed is only exploring crypto at this stage only but it seems inevitable since every single country on earth seems to be moving towards it thus forcing our hand. Blockbuster Video can't survive in a world where every competitor has on demand streaming. It will happen even if somewhat reluctantly.

There is a big difference between being a government entity, NGO or individual that cannot engage in legal banking in the US or with US entities because it is deemed a criminal enterprise or otherwise lands on a sanctioned list and again, as I stated above, large corporations gaining favor to block spending with smaller competitors will be a thing.

Sorry but I have seen nothing in the last 40 years that has caused me to believe that we are moving away from physical asset ownership and every aspect of our lives won't soon be under control. The examples you provided are examples of existing rules, but they aren't totalitarian. Currently central banks can influence the velocity of money. They don't control it. Soon they will.