I'm working on posts related to COVID and our mayor, and on redistricting, but it takes time to post something that's got something in it that everyone hasn't already heard.
So when I read a Tweet by Edward Snowden - "On banking, bitcoin, and the future of money: a response to a governor of the Federal Reserve, Christopher J. Waller" - and then read the Substack article it was linked to, I knew I had something I could share while I continued working on (at least thinking about) my own posts.
So, who is Waller? Snowden tells us:
"Waller, an economist and a last-minute Trump appointee to the Fed, will serve his term until January 2030."
Waller was talking about whether the US government should create its own cryptocurrency in response to Bitcoin and other such currencies. Snowden points out that China and a few other nations have already done this. China, because it's a great way to keep track of how individuals are moving money around. And government controlled cryptocurrency's biggest problem for Snowden, if I understand him, is the surveillance aspect of cryptocurrency.
I'm impressed with how well Snowden writes. He gets so much content into relatively few well chosen and organized words. And he's really smart. With a wicked understated sense of humor. I don't understand everything he says, but with the endorsements of heroes like Daniel Ellsberg, I think what Snowden writes is worth paying attention to. And his writing is just fun to read, even on a highly technical subject I don't know that much about. But computers and surveillance are two subjects that Snowden is an expert on.
There's even a history of money
For thousands of years priors to the advent of CBDCs, money—the conceptual unit of account that we represent with the generally physical, tangible objects we call currency—has been chiefly embodied in the form of coins struck from precious metals. The adjective “precious”—referring to the fundamental limit on availability established by what a massive pain in the ass it was to find and dig up the intrinsically scarce commodity out of the ground—was important, because, well, everyone cheats: the buyer in the marketplace shaves down his metal coin and saves up the scraps, the seller in the marketplace weighs the metal coin on dishonest scales, and the minter of the coin, who is usually the regent, or the State, dilutes the preciosity of the coin’s metal with lesser materials, to say nothing of other methods.
At the very least, this is an early warning for me (well others might say rather late) to pay more attention to cryptocurrency and what it might mean for the future of money. And the ability of governments to monitor how people spend their money.
So I'm strongly recommending the article. Here's the link again. Meanwhile, here are some quotes from the article.
“Intermediation,” and its opposite “disintermediation,” constitute the heart of the matter, and it’s notable how reliant Waller’s speech is on these terms, whose origins can be found not in capitalist policy but, ironically, in Marxist critique. What they mean is: who or what stands between your money and your intentions for it.
This “crypto”—whose very technology was primarily created in order to correct the centralization that now threatens it—was, generally is, and should be constitutionally unconcerned with who possesses it and uses it for what. To traditional banks, however, not to mention to states with sovereign currencies, this is unacceptable: These upstart crypto-competitors represent an epochal disruption, promising the possibility of storing and moving verifiable value independent of State approval, and so placing their users beyond the reach of Rome. Opposition to such free trade is all-too-often concealed beneath a veneer of paternalistic concern, with the State claiming that in the absence of its own loving intermediation, the market will inevitably devolve into unlawful gambling dens and fleshpots rife with tax fraud, drug deals, and gun-running.
Traditional financial services, of course, being the very face and definition of “intermediation”—services that seek to extract for themselves a piece of our every exchange.
I think about how credit cards and Amazon make money simply by getting a percent of everything we buy, adding their own tax to everything consumers buy or businesses sell.
I risk few readers by asserting that the commercial banking sector is not, as Waller avers, the solution, but is in fact the problem—a parasitic and utterly inefficient industry that has preyed upon its customers with an impunity backstopped by regular bail-outs from the Fed, thanks to the dubious fiction that it is “too big too fail.”
Ultimately, Snowden says he agrees with Waller's conclusion that the US should not create its own crypto currency, but for a different reason.
"And yet I admit that I still find his remarks compelling—chiefly because I reject his rationale, but concur with his conclusions.
It’s Waller’s opinion, as well as my own, that the United States does not need to develop its own CBDC. Yet while Waller believes that the US doesn’t need a CBDC because of its already robust commercial banking sector, I believe that the US doesn’t need a CBDC despite the banks, whose activities are, to my mind, almost all better and more equitably accomplished these days by the robust, diverse, and sustainable ecosystem of non-State cryptocurrencies (translation: regular crypto). "
One key point that hasn't gotten into this post yet is surveillance
I think I'm pushing the ethical limits on the amount I can quote from someone. Really, this is only fraction of what he wrote and I'm hoping that through his quotes I can entice you to click the link to his article. Consider this post a trailer for his article.
