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> “no private entity can claim monetary power, which is inherent to the sovereignty of nations” What a bizarre statement. Providing for security is also inhere

by aazaa 7y ago

> “no private entity can claim monetary power, which is inherent to the sovereignty of nations” What a bizarre statement. Providing for security is also inherent to sovereignty of nations, but private security firms flourish. It's also odd in the context of Germany in particular where a private currency has been used for many years: https://en.wikipedia.org/wiki/Chiemgauer https://en.wikipedia.org/wiki/Chiemgauer I suspect there's a lot more behind this statement than meets the eye: Inflation, and the ability of the state to force it upon its citizenry by forbidding the use private money - has come to be viewed as inherent to the sovereignty of nations. The world's governments are now entering a new phase in which none can afford to hold the more valuable currency due to the damage caused to export business. Net importers like the US have been holdouts, but even it too will have to bow to reality. This conflict means that, no matter how well intentioned, policy makers will be feel compelled to devalue their own currencies. It's a race to the bottom, but without a bottom. Alternatives, especially private alternatives readily available to citizens, will increasingly be viewed as the enemy.

speps 7y ago
Your German example is a bit silly to use here given that its exchange rate is 1:1 with euros. There are other regional currencies in other countries, they don't usually operate independently from the country's own currency though.
- aazaa 7y ago
  How so? The Libra proposal kept its value constant with respect to a basket of currencies.
  - kazen44 7y ago
    because the german example is tied to the currency used by germany (and the eurozone as a whole).
  - pjc50 7y ago
    Not quite the same kind of inflation hedge as "free floating" limited-issue cryptocurrencies then? (This is one of the things that confuses me about Libra's target market; if you believe the cryptocurrency marketing about privacy and permissionlessness and inflation-hedging, then Libra is terrible at those things. If you don't, and you're in Europe, you just use SEPA.)
  - raverbashing 7y ago
    You can only keep the value of something "constant" (or pegged to something) if it's not non-freely negotiable and you can tightly control it.
- joes_hk 7y ago
  Also on the "money" you can read "Vereinsinterner Regio-Gutschein" which means that in a legal sense this is a voucher not a currency.
  - detaro 7y ago
    Presumably, Facebook calling Libra "the Libra voucher system" wouldn't quite fix it though.
    - lima 7y ago
      Yes - you have to be a member of the Chiemgauer e.V. association in order to use or accept the vouchers, which is why it's called "vereinsintern", i.e. "internal to the association". It's not a general-purpose currency.
      - Dylan16807 7y ago
        Have to? What happens if a random business accepts them for payment, and uses them for purchases at other accepting businesses?
        majewsky 7y ago
        IANAL, but the association giving out the vouchers would probably sue for fraud, since the merchant acts like a member of the association even though they are not.
        Dylan16807 7y ago
        That is a very very strange thing to consider fraud! Imagine applying the same logic to someone that will trade their wares for baseball cards.
pjc50 7y ago
Germany has zero interest in devaluation; in fact they've been accused of being far too strict in Euro monetary policy, with the 0-2% inflation target.
- aazaa 7y ago
  Germany has profited immensely from the use of the euro in foreign trade. Had it kept the Deutschmark, German exports would be by some esteems 25% more expensive than they are now, given the strong fiscal position of the country. Germany is in a unique position of being able to jawbone about devaluation and monetary policy while reaping the rewards of spendthrift member states.
  - bitL 7y ago
    Germany's upper class benefited both from Euro and keeping salaries of their employees low.
    - WanderPanda 7y ago
      that!
  - WanderPanda 7y ago
    When you replace "Germany" with the german state or its tax revenue I would agree. Having a low value / devaluing currency goes to the disadvantage of people getting their salary in that currency.
    - dnautics 7y ago
      it's also great for people running businesses which exist to nominally try to protect wage earners of that currency from inflation, e.g. pension funds, investment firms, CEOs.
- rsync 7y ago
  "Germany has zero interest in devaluation; in fact they've been accused of being far too strict in Euro monetary policy, with the 0-2% inflation target." Germany has, and has had, an immense interest in keeping their currency artificially devalued and they have achieved this by entering into a fixed exchange currency union with countries like Italy and Portugal and Spain. The PIIGS currency is, relatively, overvalued in comparison to the German currency because they have the same value. So a first glance at German policy which is in place to protect their fragile banking system which is overexposed to PIIGS debtors looks to be currency strengthening - and perhaps it would be if they had their own currency. However the broad impact of German policy (their policy to be in a monetary union with PIIGS) is tremendously weakening of their currency, relative to the other members of the Euro group.
aphextron 7y ago
>Providing for security is also inherent to sovereignty of nations, but private security firms flourish. They exist entirely at the behest of their respective nation states' laws and regulations, and are completely subordinate to all official law enforcement and military forces. It's a flawed analogy. This would be tantamount to a private military company asserting their right to conduct foreign wars in the name of a subset of citizens.
- pjc50 7y ago
  > a private military company asserting their right to conduct foreign wars in the name of a subset of citizens. https://en.wikipedia.org/wiki/Academi https://en.wikipedia.org/wiki/Academi (formerly known as Blackwater)?
  - tomatotomato37 7y ago
    There is a reason that company isn't based in Europe.
  - parsimo2010 7y ago
    Pretty much everything Academi/Xe/Blackwater ever did was at the behest of the US government. GP was talking about a scenario such as Apple hiring Academi to destroy Samsung's factories. So far we have private companies providing security/defensive services, but we have yet to see private companies providing mercenary/offensive services without the explicit involvement of a government.
    - isostatic 7y ago
      > but we have yet to see private companies providing mercenary/offensive services without the explicit involvement of a government. https://en.wikipedia.org/wiki/East_India_Company https://en.wikipedia.org/wiki/East_India_Company
      - parsimo2010 7y ago
        https://en.wikipedia.org/wiki/East_India_Company#Regulating_Acts_of_Parliament https://en.wikipedia.org/wiki/East_India_Company#Regulating_... The British empire was explicitly on board with the East India Company, and passed laws clarifying what they were allowed to do.
lutoma 7y ago
> It's also odd in the context of Germany in particular where a private currency has been used for many years: That‘s a single, mostly dead non-profit project in a tiny area, not accepted by most stores even in that area and 99% of Germans have never heard of it. Hardly comparable to Libra.
justinzollars 7y ago
We need more financial freedom in the west. Facebook is right to allow its users the ability to protect their assets with Libra - backed by a basket of currencies. I'm very excited about this idea; of course Governments are not going to be comfortable with something they can not control. Whey they go to the printing press to pay for their deficits I certainly want the ability to protect my assets with a stronger currency.
- olivierduval 7y ago
  Not sure to be more comfortable to rely more on the interests of a private US company that has already been proven un-ethical several times than to trust an elected (so revokable) governement ;-) But in Europe, we have more trust in our own governement and less in corporation than in the US, where it seem to be the opposite
  - justinzollars 7y ago
    I would rephrase this to say, in America we have less trust in government and more trust in the individual. The distinction is this: No one is forcing anyone to use Libra its your choice. : )
    - jacquesm 7y ago
      > I would rephrase this to say, in America we have less trust in government and more trust in the individual. I've seen that said many times in fora (fortunately not so often on HN), but the only people that seem to subscribe to it are the preppers and the gun fanatics, usually using some kind of reference to words that have not been updated in a couple of centuries. It's about as useful as wanting to back to the glory days of England. Americans trust their government on average just about as much as people of other countries trust theirs, with a notable exception made for the Swiss. > The distinction is this: No one is forcing anyone to use Libra its your choice. : ) And it is the choice of the democratically chosen governments of France and Germany to decide to so something about it, and I'm fully in agreement with that. The last we need is for the Zuckerbergs to have the power to start dictating monetary policy, the amount of power he has today is already way more than he should have. Note that neither Germany nor France has decided to 'block bitcoin', or outlaw it (which they could do, but it remains to be seen how much effect that would have). And we are not forced to use that either.
dontbenebby 7y ago
>What a bizarre statement. Providing for security is also inherent to sovereignty of nations, but private security firms flourish. Private security firms are also not ideal.
- mythrwy 7y ago
  From some perspectives.
- clarkmoody 7y ago
  The alternative is that all matters of security become political. We've seen plenty of examples where politically controlled security forces have done terrible things to significant portions of the citizenry they are presumably there to "protect & serve."
  - ClumsyPilot 7y ago
    And, without politics and law, who are private security firms accountable to? The highest bidder?
charles_f 7y ago
> Alternatives, especially private alternatives readily available to citizens, will increasingly be viewed as the enemy. Trust is the central component of the monetary system, you must trust the notes and systems used to exchange money. Creating a framework that brings this trust has been a central component since the invention of money[0], thru issuing that money and having the king or whatever passed as authority sign the coins. This is why issuing forged money has also always been such as an important crime - because that was forging the signature of the king/queen/emperor/minister of treasury. So it's not that surprising to see that guaranteeing that trust and trying to prevent the issuance of alternative currencies is a role that governments attributed themselves in that framework. One question is whether it actually is their role to say "you should not trust anyone else's signature" - aka your enemy reference The more important one to me is, accepting this is now a thing, whether they should instead regulate what issuing organizations need to provide as guarantees under that signature. I personally think so, because I don't trust FB one bit, and I'd love them to be bound to a set of rules [0] Sapiens- https://www.goodreads.com/book/show/23692271-sapiens https://www.goodreads.com/book/show/23692271-sapiens?
kerng 7y ago
The example with the German money is flawed, I read a bit of German and these are vouchers! It has written something like "club internal voucher" on it!
auslander 7y ago
> What a bizarre statement. Perfectly correct statement.
balfirevic 7y ago
> “no private entity can claim monetary power, which is inherent to the sovereignty of nations” Also, what the hell is that supposed to mean? If something is inherent to something else, it doesn't mean it's exclusive to it. Maybe something got lost in translation, but if not - they don't even know how to say whatever it is that they want to say.
- buildzr 7y ago
  Yeah, very confusing statement - would they use this same logic to ban Bitcoin or other cryptocurrencies as against their soverignty? Do they treat gold similarly?
  - mrb 7y ago
    «Yeah, very confusing statement - would they use this same logic to ban Bitcoin or other cryptocurrencies?» No, and that's the great point everyone is missing. Paraphrasing their logic: "it is inherent to the sovereignty of nations that no private entity can claim monetary power". In other words, they don't want private entities to control monetary power, but they tolerate this power being in the hands of "public" entities, such as the peer-to-peer/decentralized nature of many cryptocurrencies like Bitcoin. This we-will-block-Libra attitude combined with we-will-torelate-Bitcoin-and-others is a big sign of approval for these cryptocurrencies.
    - r00fus 7y ago
      ??? How do you conflate their stance against Libra with support for Bitcoin. Bitcoin has no Facebook-sized entity the French and German governments can control/admonish. Neither did any entity related to Bitcoin go out and stake any ground like Facebook did.
      - Erlich_Bachman 7y ago
        > Bitcoin has no Facebook-sized entity That is exactly the point. That would be a threat as they see it (just from reading the statement even). That's why bitcoin which is not a private entity, is not seen as a threat at this time.
roenxi 7y ago
There is a quibble to be made although in the main I'm quietly nodding and agreeing. > none can afford to hold the more valuable currency due to the damage caused to export business. So it is said, but there are more effective ways to prop up an export business. Eg, direct subsidies for strategically important sectors. Lowering currency value does help exporters, but it helps them by basically giving free goods and services to foreigners at the expense of someone else. The US lowering their currency doesn't result in a better deal for the US nation. It results in more goods and services leaving the country than is honestly justified for the amount of imports. Resources are misallocated away from US consumers to foreign consumers. Economically speaking, that is an own-goal. The US debt-to-gdp is on a wartime footing [0]. Devaluing the currency favours debtors. A link between those two facts is more plausible than governments really believe giving goods & services away to foreigners is a path to prosperity. There is a broad economic philosophy that has taken root that debt funded consumption is to be encouraged and monetary policy is a key tool for that viewpoint. [0] https://tradingeconomics.com/united-states/government-debt-to-gdp https://tradingeconomics.com/united-states/government-debt-t...
azr79 7y ago
> but private security firms flourish. not in EU they don't also firms like Securitas mostly provide security services to enterprises, and gouvernements sites, not to citizens. bad comparison example
- atemerev 7y ago
  Should I give you the list of EU private military companies? It is even more fun as the UK is still part of the EU, and the British have practically invented the concept, and still prevail on the market.
benj111 7y ago
"Providing for security is also inherent to sovereignty of nations, but private security firms flourish" Security for a nation state is different to a security guard standing in a shop. Also I'm quite sure that nation states reserve the right to claim a monopoly on certain parts of the security industry. The monetary/security power is in being able to claim that monopoly, as your currency example shows, the nation state can allow certain behaviours, that doesn't mean it has to allow everything.
trophycase 7y ago
"What a bizarre statement" "Inflation, and the ability of the state to force it upon its citizenry by forbidding the use private money - has come to be viewed as inherent to the sovereignty of nations" So it isn't a bizarre statment then since you're pretty much agreeing with it. Maybe you only think it's bizarre because you don't like that nations accept that they have and want this power?
onetimemanytime 7y ago
>>Providing for security is also inherent to sovereignty of nations, but private security firms flourish. Try creating a private army and see. The state giveth and the state taketh
sorokod 7y ago
What a bizarre statement. Providing for security is also inherent to sovereignty of nations, but private security firms flourish. Not in France or Germany. Just because US privataises it's military doesn't mean that this is universally accepted as a good idea.
- avocado4 7y ago
  France/Germany is not Soviet Union. Defence industry is alive and well, and it's not a bad thing if regulated properly.
- germanier 7y ago
  There are companies like Asgaard GSG providing basically that service (on a smaller scale and without public backing though).
  - sorokod 7y ago
    Note that Asgaard is not operating on behalf of the German government. The service it provides is completely different to politically expedient way of projecting military power by the state.
    - atemerev 7y ago
      So is Academi. Their primary mission is protecting corporate interests in unstable countries / war zones. Asgaard used to do the same (I am not sure if they still exist).
      - sorokod 7y ago
        Academi a.k.a. Blackwater of "Nisour Square massacre" [1] ? Same company whose founder is pitching "to deploy a private army to help topple Venezuela’s socialist president, Nicolas Maduro" [2] ? Same company that is now a member of the Constellis Group[3] ? Pardon me for not taking the corporate rebranding shenanigans too seriously. [1] https://en.wikipedia.org/wiki/Nisour_Square_massacre https://en.wikipedia.org/wiki/Nisour_Square_massacre [2] https://www.reuters.com/article/us-venezuela-politics-erikprince-exclusi-idUSKCN1S608F https://www.reuters.com/article/us-venezuela-politics-erikpr... [3] https://constellis.com/sectors/government https://constellis.com/sectors/government
wolco 7y ago
But high currency allows huge discounts on purchases. If there is a race to the bottom those with high currency will own the world and can finance it through debt.
dragonwriter 7y ago
> Providing for security is also inherent to sovereignty of nations No, it's not: providing security is a goal, several powers inherent to sovereignty might be applied toward that goal (conscription power, warmaking power, the power to impose punishment, and various other incidents of the monopoly on legitimate violence; even the monetary power is applied to that end), but the goal is distinct from the inherent powers of sovereignty.
johnnycab 7y ago
This clip from Mr. Robot S02e11 regarding eCoin, substituted with Libra in this case, maps suprisingly well to the hypothetical narrative on the shifting nature of skewed monetary power. https://www.youtube.com/watch?v=1ee-cHbCI0s https://www.youtube.com/watch?v=1ee-cHbCI0s
- webninja 7y ago
  So good. Thanks for sharing
- evross 7y ago
  "Be my guest, regulate the sh1t out of it. I'll give you side-doors, back-doors, trackers, whatever you want. Just don't shut it down." Intense scene. Good decision by Germany/France on this one. This is the kind of thing has to be stopped soon because once it starts being popular it becomes more of a corporate power-capture pandemic.
xadhominemx 7y ago
>policy makers will be feel compelled to devalue their own currencies Inflation right now is very low in all developed economies
Swizec 7y ago
There’s a big difference between a local currency in a small region, or even a distributed crypto like bitcoin, and someone like Facebook. When Facebook starts pushing in a direction towards being an independent state-like power, you have to remember they have a “population” of 2.1 billion (daily active isers) Facebook if it were a country would literally be bigger than China. Their political power is fast approaching that of a nation state, they can already impact elections, have shitloads of money, etc. When they do anything that smells even remotely like moving towards sovereignty, yeah you bet countries are gonna take notice.
- AstralStorm 7y ago
  Facebook has a population of 0. People do not actually live on a land owned by them.
  - Swizec 7y ago
    Perhaps not physically, but having influence over 2 billion minds grants a lot of power should you want to use it. All political action starts with an idea.
timwaagh 7y ago
You are exactly right. Private currencies will be seen as the enemy, because they are a threat for exactly these reasons. Mall-level security is one thing, systemic monetary power quite another. A Europe which relies on private currency is a continent without controlled inflation, meaning you can just sit on your holdings and do nothing with your money (meaning actually doing nothing, not investing, not giving it to a bank for them to invest. nothing) and yet stay rich. the decrease in investment would mean it gets harder to fund any kind of business. Economic problems would be very hard to fix without the ability to pump money into the system. Also with competing currencies there is potential for chaos. One currency with a lot of savings might just fall over the next day. governments would be asked to convert tax money to prop them up. the euro is good enough for now. maybe it can in the future be modernized with blockchain like technology to get the benefits of currency technology without incurring systemic risk. i dont think there is much choice for europe but to ban these things eventually. especially since facebook is a foreigh company.
narrator 7y ago
> “no private entity can claim monetary power, which is inherent to the sovereignty of nations” From a legal perspective, there are three things that create monetary power. 1. The money created by the monetary power can be used to settle tax liabilities. Currently no currency except Federal Reserve Notes can be used to settle U.S tax liabilities. 2. The money created by the monetary power is not subject to capital gains tax when it is transferred. Currently, everything that pretends to be money is actually considered property and thus subject to capital gains tax on every single transaction. The tax is measured in its value in money. 3. The monetary power has the power to destroy money's value. In United States v. Kahre, a guy in Nevada was paying people in gold coins that were issued by the U.S government and circulated in daily commerce in the 1900s as legal tender. He used the face value of the coins stamped on them to report and pay his income taxes. The IRS said to him that those coins aren't money any more, even though they were at some point. A 15 year criminal conviction resulted. By virtue of the taxing authority of governments, only the government has a right to monetary power. In fact, without tax authorities, the monetary power wouldn't exist.
totalZero 7y ago
"Providing for security is also inherent to sovereignty of nations, but private security firms flourish." I'm sorry but you are drawing a false equivalence. Security may be inherent to sovereignty, but you would have to argue that a MONOPOLY on security is inherent to sovereignty, in order for your argument to apply to currency.
K0SM0S 7y ago
Let's get real for a minute: France and Germany do not want Facebook, of all businesses, to monitor most private monetary transactions. Yesterday a social network, then a press/media entity, now a "central" bank with no traditional jurisdiction but its own private virtuality? It's preposterous, particularly considering the track record of this company. The statement you quoted is just typical gov/political PR, common rhetoric. However, it's everything but a bizzare statement, fundamentally. Ask yourself: how does the USA treat the US Dollar, would they be willing to just let it wane or die, be "invaded" by a foreign and private currency, as if it were not "inherent to its sovereignty"? Would the Fed be OK to just vanish and let the BCE or some private Asian conglomerate run the monetary show from San Francisco to Berlin passing by tokyo in terms of monetary policy? You in fact support the opposite view, inflation has indeed become many a government's tool. Come on. This comment was either disingenuous or wildly uneducated about macroeconomics and political theory, either way totally fails to account for/relate to the European political/philosophical framework. Your world view is absurdly narrow, hyper-centered on the peculiar American case: few countries have privatized their citizens' State hence sovereignty to such an unfettered extent.
- smsm42 7y ago
  > how does the USA treat the US Dollar, would they be willing to just let it wane or die, be "invaded" by a foreign and private currency This can only happen one of two ways: a. US government declares that currency legal tender. They won't do it ever. b. all of US citizens voluntarily agree to accept this currency instead of dollars, only using dollars when they must (e.g. when paying taxes) but otherwise avoiding it like plague. This has been a common occurrence in places with unstable national currency - e.g. exUSSR countries in 90s-2000s, and many others. At that point, the US dollar would be effectively dead anyway as currency, and the only way to recover it would be stabilize it back and make it preferable means of trade. The only way for other currency to push out US dollar is for US citizens and the whole world to become convinced this currency is better for them - safer, more stable, more convenient, more trustworthy - than the US dollar. If anybody can ever do that, it's not Facebook. So there's nothing to worry about. > wildly uneducated about macroeconomics and political theory What exactly in macroeconomics or political theory suggests that any private coin - of which literally thousands already exist - pose any threat whatsoever to the existence of national currencies? They, of course, pose tax-avoidance, money-laundering, etc. risk - and if particular state's central bank goes completely bonkers and ruins their own currency with their monetary policies - as it happened in Zimbabwe, Venezuela and many countries before that - then the national currency can vane and die. But that happened many times before Facebook even existed and will undoubtedly happen again. Libra has zero to do with it, and nothing you just described comes even close to explaining bizarre and non-sensical action of European government. It's mostly looking as "this new thing is confusing to me so I ban it just in case". Funny thing it's not even new, it's just pure ignorance.
lispm 7y ago
> It's also odd in the context of Germany It isn't. Only the Bundesbank / ECB is allowed to provide a currency in for Germany. https://de.wikipedia.org/wiki/Währungsmonopol https://de.wikipedia.org/wiki/Währungsmonopol The Chiemgauer is a regional voucher system - more comparable to regional loyalty programs or frequent-flyer programs.
- Tomte 7y ago
  Those regional currencies have popped up several times, the Chiemgauer is just the only(?) long-living one. Official stance IIRC is: illegal, but so small and irrelevant by volume that it's best to ignore it and let people have a little fun and community engagement.
brianpgordon 7y ago
> This conflict means that, no matter how well intentioned, policy makers will be feel compelled to devalue their own currencies. It's a race to the bottom, but without a bottom. Alternatives, especially private alternatives readily available to citizens, will increasingly be viewed as the enemy. The ability to devalue their currency is an essential tool that central banks wield to battle financial crises. Keynes pointed out that workers don't want to take a pay cut (and employers don't want to offer a pay cut, because they fear causing resentment), so nominal wages are "sticky." When they need to fall to reach price equilibrium, the economy tends to experience mass unemployment instead. It would be very difficult to convince all workers universally to accept a pay cut. The alternative is to devalue the currency so everyone is affected through the currency rather than by trying to propagate policy changes throughout the private sector. Also, countries can have huge problems when they take on debts in a hard currency which they can't devalue. This is how you get runaway hyperinflation. Their revenues are in the local currency, but their debts are in (usually) USD. If they run low on foreign currency reserves, they can be forced to sell huge amounts of the local currency on the forex market in order to acquire sufficient USD to pay their debts. I can see why France and Germany wouldn't be eager to see yet another USD rise to prominence and leave them disadvantaged in debt financing. Another talking point which comes up all of the time is the tension introduced when different regions (like Germany and Greece) are forced to use the same currency, even though normally economic forces would cause the weaker region's currency to move against the stronger one's. Devaluation would be fantastic for Greece but it's hobbled by crushingly expensive exports since it's in the Euro monetary union.
- deleted 7y ago
  [deleted]
SomeOldThrow 7y ago
Chiemgauer is run by a non-profit and is a regional currency designed specifically to avoid international interests removing money from the area. My home us county has some terrible incarnation of them. Calling it private (implying for profit, in my mind) or at all comparable to Libra requires some flexible thinking when it very different from the Chiemgauer in every sense EXCEPT being run by a non government entity. Also these bills literally say on the bill what currency they’re pegged to every time I’ve seen them. There aren’t enough in circulation for basic transactions otherwise.
littlestymaar 7y ago
> Inflation, […] has come to be viewed as inherent to the sovereignty of nations This comment, talking about Germany, the one of the country that has had such a fear of inflation for almost a century, is highly ironic.
- ClumsyPilot 7y ago
  Referring to a 'century', interesting. What about Hitler's monetary policy, or the Soviet puppet government of GDR?
  - littlestymaar 7y ago
    The hyperinflation crisis of the Weimar republic was 96 years ago. Then it affected the German monetary policy until 1933, and after 1945. So yes, 84 years count as «almost a century»
    - ClumsyPilot 7y ago
      I am pointing out that everyone has heard about hyperinflation crisis, and many people in this thread are pointing fingers and writing about it as if it a series of contiguous policies followed as a logical consequences. That's not a fair statement because there were several violent changes of government, with different monetary policies. And many gaps in your (and mine) understanding in how these regimes manages economy. Can you, or anyone else here, really comment on monetary policy of nazi germany without looking stuff up? That's why I think, that, to claim it's not fair to reference things that happened "100 years" ago in germany. In US, which does not have such background, that would be more reasonable.

by aazaa 7y ago

speps 7y ago

Your German example is a bit silly to use here given that its exchange rate is 1:1 with euros. There are other regional currencies in other countries, they don't usually operate independently from the country's own currency though.

aazaa 7y ago
How so? The Libra proposal kept its value constant with respect to a basket of currencies.
- kazen44 7y ago
  because the german example is tied to the currency used by germany (and the eurozone as a whole).
- pjc50 7y ago
  Not quite the same kind of inflation hedge as "free floating" limited-issue cryptocurrencies then? (This is one of the things that confuses me about Libra's target market; if you believe the cryptocurrency marketing about privacy and permissionlessness and inflation-hedging, then Libra is terrible at those things. If you don't, and you're in Europe, you just use SEPA.)
- raverbashing 7y ago
  You can only keep the value of something "constant" (or pegged to something) if it's not non-freely negotiable and you can tightly control it.
joes_hk 7y ago
Also on the "money" you can read "Vereinsinterner Regio-Gutschein" which means that in a legal sense this is a voucher not a currency.
- detaro 7y ago
  Presumably, Facebook calling Libra "the Libra voucher system" wouldn't quite fix it though.
  - lima 7y ago
    Yes - you have to be a member of the Chiemgauer e.V. association in order to use or accept the vouchers, which is why it's called "vereinsintern", i.e. "internal to the association". It's not a general-purpose currency.
    - Dylan16807 7y ago
      Have to? What happens if a random business accepts them for payment, and uses them for purchases at other accepting businesses?
      - majewsky 7y ago
        IANAL, but the association giving out the vouchers would probably sue for fraud, since the merchant acts like a member of the association even though they are not.
        Dylan16807 7y ago
        That is a very very strange thing to consider fraud! Imagine applying the same logic to someone that will trade their wares for baseball cards.

pjc50 7y ago

Germany has zero interest in devaluation; in fact they've been accused of being far too strict in Euro monetary policy, with the 0-2% inflation target.

aazaa 7y ago
Germany has profited immensely from the use of the euro in foreign trade. Had it kept the Deutschmark, German exports would be by some esteems 25% more expensive than they are now, given the strong fiscal position of the country. Germany is in a unique position of being able to jawbone about devaluation and monetary policy while reaping the rewards of spendthrift member states.
- bitL 7y ago
  Germany's upper class benefited both from Euro and keeping salaries of their employees low.
  - WanderPanda 7y ago
    that!
- WanderPanda 7y ago
  When you replace "Germany" with the german state or its tax revenue I would agree. Having a low value / devaluing currency goes to the disadvantage of people getting their salary in that currency.
  - dnautics 7y ago
    it's also great for people running businesses which exist to nominally try to protect wage earners of that currency from inflation, e.g. pension funds, investment firms, CEOs.
rsync 7y ago
"Germany has zero interest in devaluation; in fact they've been accused of being far too strict in Euro monetary policy, with the 0-2% inflation target." Germany has, and has had, an immense interest in keeping their currency artificially devalued and they have achieved this by entering into a fixed exchange currency union with countries like Italy and Portugal and Spain. The PIIGS currency is, relatively, overvalued in comparison to the German currency because they have the same value. So a first glance at German policy which is in place to protect their fragile banking system which is overexposed to PIIGS debtors looks to be currency strengthening - and perhaps it would be if they had their own currency. However the broad impact of German policy (their policy to be in a monetary union with PIIGS) is tremendously weakening of their currency, relative to the other members of the Euro group.

aphextron 7y ago

>Providing for security is also inherent to sovereignty of nations, but private security firms flourish. They exist entirely at the behest of their respective nation states' laws and regulations, and are completely subordinate to all official law enforcement and military forces. It's a flawed analogy. This would be tantamount to a private military company asserting their right to conduct foreign wars in the name of a subset of citizens.

pjc50 7y ago
> a private military company asserting their right to conduct foreign wars in the name of a subset of citizens. https://en.wikipedia.org/wiki/Academi https://en.wikipedia.org/wiki/Academi (formerly known as Blackwater)?
- tomatotomato37 7y ago
  There is a reason that company isn't based in Europe.
- parsimo2010 7y ago
  Pretty much everything Academi/Xe/Blackwater ever did was at the behest of the US government. GP was talking about a scenario such as Apple hiring Academi to destroy Samsung's factories. So far we have private companies providing security/defensive services, but we have yet to see private companies providing mercenary/offensive services without the explicit involvement of a government.
  - isostatic 7y ago
    > but we have yet to see private companies providing mercenary/offensive services without the explicit involvement of a government. https://en.wikipedia.org/wiki/East_India_Company https://en.wikipedia.org/wiki/East_India_Company
    - parsimo2010 7y ago
      https://en.wikipedia.org/wiki/East_India_Company#Regulating_Acts_of_Parliament https://en.wikipedia.org/wiki/East_India_Company#Regulating_... The British empire was explicitly on board with the East India Company, and passed laws clarifying what they were allowed to do.

lutoma 7y ago

> It's also odd in the context of Germany in particular where a private currency has been used for many years: That‘s a single, mostly dead non-profit project in a tiny area, not accepted by most stores even in that area and 99% of Germans have never heard of it. Hardly comparable to Libra.

justinzollars 7y ago

We need more financial freedom in the west. Facebook is right to allow its users the ability to protect their assets with Libra - backed by a basket of currencies. I'm very excited about this idea; of course Governments are not going to be comfortable with something they can not control. Whey they go to the printing press to pay for their deficits I certainly want the ability to protect my assets with a stronger currency.

olivierduval 7y ago
Not sure to be more comfortable to rely more on the interests of a private US company that has already been proven un-ethical several times than to trust an elected (so revokable) governement ;-) But in Europe, we have more trust in our own governement and less in corporation than in the US, where it seem to be the opposite
- justinzollars 7y ago
  I would rephrase this to say, in America we have less trust in government and more trust in the individual. The distinction is this: No one is forcing anyone to use Libra its your choice. : )
  - jacquesm 7y ago
    > I would rephrase this to say, in America we have less trust in government and more trust in the individual. I've seen that said many times in fora (fortunately not so often on HN), but the only people that seem to subscribe to it are the preppers and the gun fanatics, usually using some kind of reference to words that have not been updated in a couple of centuries. It's about as useful as wanting to back to the glory days of England. Americans trust their government on average just about as much as people of other countries trust theirs, with a notable exception made for the Swiss. > The distinction is this: No one is forcing anyone to use Libra its your choice. : ) And it is the choice of the democratically chosen governments of France and Germany to decide to so something about it, and I'm fully in agreement with that. The last we need is for the Zuckerbergs to have the power to start dictating monetary policy, the amount of power he has today is already way more than he should have. Note that neither Germany nor France has decided to 'block bitcoin', or outlaw it (which they could do, but it remains to be seen how much effect that would have). And we are not forced to use that either.

dontbenebby 7y ago

>What a bizarre statement. Providing for security is also inherent to sovereignty of nations, but private security firms flourish. Private security firms are also not ideal.

mythrwy 7y ago
From some perspectives.
clarkmoody 7y ago
The alternative is that all matters of security become political. We've seen plenty of examples where politically controlled security forces have done terrible things to significant portions of the citizenry they are presumably there to "protect & serve."
- ClumsyPilot 7y ago
  And, without politics and law, who are private security firms accountable to? The highest bidder?

charles_f 7y ago

> Alternatives, especially private alternatives readily available to citizens, will increasingly be viewed as the enemy. Trust is the central component of the monetary system, you must trust the notes and systems used to exchange money. Creating a framework that brings this trust has been a central component since the invention of money[0], thru issuing that money and having the king or whatever passed as authority sign the coins. This is why issuing forged money has also always been such as an important crime - because that was forging the signature of the king/queen/emperor/minister of treasury. So it's not that surprising to see that guaranteeing that trust and trying to prevent the issuance of alternative currencies is a role that governments attributed themselves in that framework. One question is whether it actually is their role to say "you should not trust anyone else's signature" - aka your enemy reference The more important one to me is, accepting this is now a thing, whether they should instead regulate what issuing organizations need to provide as guarantees under that signature. I personally think so, because I don't trust FB one bit, and I'd love them to be bound to a set of rules [0] Sapiens- https://www.goodreads.com/book/show/23692271-sapiens https://www.goodreads.com/book/show/23692271-sapiens?

kerng 7y ago

The example with the German money is flawed, I read a bit of German and these are vouchers! It has written something like "club internal voucher" on it!

auslander 7y ago

> What a bizarre statement. Perfectly correct statement.

balfirevic 7y ago

> “no private entity can claim monetary power, which is inherent to the sovereignty of nations” Also, what the hell is that supposed to mean? If something is inherent to something else, it doesn't mean it's exclusive to it. Maybe something got lost in translation, but if not - they don't even know how to say whatever it is that they want to say.

buildzr 7y ago
Yeah, very confusing statement - would they use this same logic to ban Bitcoin or other cryptocurrencies as against their soverignty? Do they treat gold similarly?
- mrb 7y ago
  «Yeah, very confusing statement - would they use this same logic to ban Bitcoin or other cryptocurrencies?» No, and that's the great point everyone is missing. Paraphrasing their logic: "it is inherent to the sovereignty of nations that no private entity can claim monetary power". In other words, they don't want private entities to control monetary power, but they tolerate this power being in the hands of "public" entities, such as the peer-to-peer/decentralized nature of many cryptocurrencies like Bitcoin. This we-will-block-Libra attitude combined with we-will-torelate-Bitcoin-and-others is a big sign of approval for these cryptocurrencies.
  - r00fus 7y ago
    ??? How do you conflate their stance against Libra with support for Bitcoin. Bitcoin has no Facebook-sized entity the French and German governments can control/admonish. Neither did any entity related to Bitcoin go out and stake any ground like Facebook did.
    - Erlich_Bachman 7y ago
      > Bitcoin has no Facebook-sized entity That is exactly the point. That would be a threat as they see it (just from reading the statement even). That's why bitcoin which is not a private entity, is not seen as a threat at this time.

roenxi 7y ago

There is a quibble to be made although in the main I'm quietly nodding and agreeing. > none can afford to hold the more valuable currency due to the damage caused to export business. So it is said, but there are more effective ways to prop up an export business. Eg, direct subsidies for strategically important sectors. Lowering currency value does help exporters, but it helps them by basically giving free goods and services to foreigners at the expense of someone else. The US lowering their currency doesn't result in a better deal for the US nation. It results in more goods and services leaving the country than is honestly justified for the amount of imports. Resources are misallocated away from US consumers to foreign consumers. Economically speaking, that is an own-goal. The US debt-to-gdp is on a wartime footing [0]. Devaluing the currency favours debtors. A link between those two facts is more plausible than governments really believe giving goods & services away to foreigners is a path to prosperity. There is a broad economic philosophy that has taken root that debt funded consumption is to be encouraged and monetary policy is a key tool for that viewpoint. [0] https://tradingeconomics.com/united-states/government-debt-to-gdp https://tradingeconomics.com/united-states/government-debt-t...

azr79 7y ago

> but private security firms flourish. not in EU they don't also firms like Securitas mostly provide security services to enterprises, and gouvernements sites, not to citizens. bad comparison example

atemerev 7y ago
Should I give you the list of EU private military companies? It is even more fun as the UK is still part of the EU, and the British have practically invented the concept, and still prevail on the market.

benj111 7y ago

"Providing for security is also inherent to sovereignty of nations, but private security firms flourish" Security for a nation state is different to a security guard standing in a shop. Also I'm quite sure that nation states reserve the right to claim a monopoly on certain parts of the security industry. The monetary/security power is in being able to claim that monopoly, as your currency example shows, the nation state can allow certain behaviours, that doesn't mean it has to allow everything.

trophycase 7y ago

"What a bizarre statement" "Inflation, and the ability of the state to force it upon its citizenry by forbidding the use private money - has come to be viewed as inherent to the sovereignty of nations" So it isn't a bizarre statment then since you're pretty much agreeing with it. Maybe you only think it's bizarre because you don't like that nations accept that they have and want this power?

onetimemanytime 7y ago

>>Providing for security is also inherent to sovereignty of nations, but private security firms flourish. Try creating a private army and see. The state giveth and the state taketh

sorokod 7y ago

What a bizarre statement. Providing for security is also inherent to sovereignty of nations, but private security firms flourish. Not in France or Germany. Just because US privataises it's military doesn't mean that this is universally accepted as a good idea.

avocado4 7y ago
France/Germany is not Soviet Union. Defence industry is alive and well, and it's not a bad thing if regulated properly.
germanier 7y ago
There are companies like Asgaard GSG providing basically that service (on a smaller scale and without public backing though).
- sorokod 7y ago
  Note that Asgaard is not operating on behalf of the German government. The service it provides is completely different to politically expedient way of projecting military power by the state.
  - atemerev 7y ago
    So is Academi. Their primary mission is protecting corporate interests in unstable countries / war zones. Asgaard used to do the same (I am not sure if they still exist).
    - sorokod 7y ago
      Academi a.k.a. Blackwater of "Nisour Square massacre" [1] ? Same company whose founder is pitching "to deploy a private army to help topple Venezuela’s socialist president, Nicolas Maduro" [2] ? Same company that is now a member of the Constellis Group[3] ? Pardon me for not taking the corporate rebranding shenanigans too seriously. [1] https://en.wikipedia.org/wiki/Nisour_Square_massacre https://en.wikipedia.org/wiki/Nisour_Square_massacre [2] https://www.reuters.com/article/us-venezuela-politics-erikprince-exclusi-idUSKCN1S608F https://www.reuters.com/article/us-venezuela-politics-erikpr... [3] https://constellis.com/sectors/government https://constellis.com/sectors/government

wolco 7y ago

But high currency allows huge discounts on purchases. If there is a race to the bottom those with high currency will own the world and can finance it through debt.

dragonwriter 7y ago

> Providing for security is also inherent to sovereignty of nations No, it's not: providing security is a goal, several powers inherent to sovereignty might be applied toward that goal (conscription power, warmaking power, the power to impose punishment, and various other incidents of the monopoly on legitimate violence; even the monetary power is applied to that end), but the goal is distinct from the inherent powers of sovereignty.

johnnycab 7y ago

This clip from Mr. Robot S02e11 regarding eCoin, substituted with Libra in this case, maps suprisingly well to the hypothetical narrative on the shifting nature of skewed monetary power. https://www.youtube.com/watch?v=1ee-cHbCI0s https://www.youtube.com/watch?v=1ee-cHbCI0s

webninja 7y ago
So good. Thanks for sharing
evross 7y ago
"Be my guest, regulate the sh1t out of it. I'll give you side-doors, back-doors, trackers, whatever you want. Just don't shut it down." Intense scene. Good decision by Germany/France on this one. This is the kind of thing has to be stopped soon because once it starts being popular it becomes more of a corporate power-capture pandemic.

xadhominemx 7y ago

>policy makers will be feel compelled to devalue their own currencies Inflation right now is very low in all developed economies

Swizec 7y ago

There’s a big difference between a local currency in a small region, or even a distributed crypto like bitcoin, and someone like Facebook. When Facebook starts pushing in a direction towards being an independent state-like power, you have to remember they have a “population” of 2.1 billion (daily active isers) Facebook if it were a country would literally be bigger than China. Their political power is fast approaching that of a nation state, they can already impact elections, have shitloads of money, etc. When they do anything that smells even remotely like moving towards sovereignty, yeah you bet countries are gonna take notice.

AstralStorm 7y ago
Facebook has a population of 0. People do not actually live on a land owned by them.
- Swizec 7y ago
  Perhaps not physically, but having influence over 2 billion minds grants a lot of power should you want to use it. All political action starts with an idea.

timwaagh 7y ago

You are exactly right. Private currencies will be seen as the enemy, because they are a threat for exactly these reasons. Mall-level security is one thing, systemic monetary power quite another. A Europe which relies on private currency is a continent without controlled inflation, meaning you can just sit on your holdings and do nothing with your money (meaning actually doing nothing, not investing, not giving it to a bank for them to invest. nothing) and yet stay rich. the decrease in investment would mean it gets harder to fund any kind of business. Economic problems would be very hard to fix without the ability to pump money into the system. Also with competing currencies there is potential for chaos. One currency with a lot of savings might just fall over the next day. governments would be asked to convert tax money to prop them up. the euro is good enough for now. maybe it can in the future be modernized with blockchain like technology to get the benefits of currency technology without incurring systemic risk. i dont think there is much choice for europe but to ban these things eventually. especially since facebook is a foreigh company.

narrator 7y ago

> “no private entity can claim monetary power, which is inherent to the sovereignty of nations” From a legal perspective, there are three things that create monetary power. 1. The money created by the monetary power can be used to settle tax liabilities. Currently no currency except Federal Reserve Notes can be used to settle U.S tax liabilities. 2. The money created by the monetary power is not subject to capital gains tax when it is transferred. Currently, everything that pretends to be money is actually considered property and thus subject to capital gains tax on every single transaction. The tax is measured in its value in money. 3. The monetary power has the power to destroy money's value. In United States v. Kahre, a guy in Nevada was paying people in gold coins that were issued by the U.S government and circulated in daily commerce in the 1900s as legal tender. He used the face value of the coins stamped on them to report and pay his income taxes. The IRS said to him that those coins aren't money any more, even though they were at some point. A 15 year criminal conviction resulted. By virtue of the taxing authority of governments, only the government has a right to monetary power. In fact, without tax authorities, the monetary power wouldn't exist.

totalZero 7y ago

"Providing for security is also inherent to sovereignty of nations, but private security firms flourish." I'm sorry but you are drawing a false equivalence. Security may be inherent to sovereignty, but you would have to argue that a MONOPOLY on security is inherent to sovereignty, in order for your argument to apply to currency.

K0SM0S 7y ago

Let's get real for a minute: France and Germany do not want Facebook, of all businesses, to monitor most private monetary transactions. Yesterday a social network, then a press/media entity, now a "central" bank with no traditional jurisdiction but its own private virtuality? It's preposterous, particularly considering the track record of this company. The statement you quoted is just typical gov/political PR, common rhetoric. However, it's everything but a bizzare statement, fundamentally. Ask yourself: how does the USA treat the US Dollar, would they be willing to just let it wane or die, be "invaded" by a foreign and private currency, as if it were not "inherent to its sovereignty"? Would the Fed be OK to just vanish and let the BCE or some private Asian conglomerate run the monetary show from San Francisco to Berlin passing by tokyo in terms of monetary policy? You in fact support the opposite view, inflation has indeed become many a government's tool. Come on. This comment was either disingenuous or wildly uneducated about macroeconomics and political theory, either way totally fails to account for/relate to the European political/philosophical framework. Your world view is absurdly narrow, hyper-centered on the peculiar American case: few countries have privatized their citizens' State hence sovereignty to such an unfettered extent.

smsm42 7y ago
> how does the USA treat the US Dollar, would they be willing to just let it wane or die, be "invaded" by a foreign and private currency This can only happen one of two ways: a. US government declares that currency legal tender. They won't do it ever. b. all of US citizens voluntarily agree to accept this currency instead of dollars, only using dollars when they must (e.g. when paying taxes) but otherwise avoiding it like plague. This has been a common occurrence in places with unstable national currency - e.g. exUSSR countries in 90s-2000s, and many others. At that point, the US dollar would be effectively dead anyway as currency, and the only way to recover it would be stabilize it back and make it preferable means of trade. The only way for other currency to push out US dollar is for US citizens and the whole world to become convinced this currency is better for them - safer, more stable, more convenient, more trustworthy - than the US dollar. If anybody can ever do that, it's not Facebook. So there's nothing to worry about. > wildly uneducated about macroeconomics and political theory What exactly in macroeconomics or political theory suggests that any private coin - of which literally thousands already exist - pose any threat whatsoever to the existence of national currencies? They, of course, pose tax-avoidance, money-laundering, etc. risk - and if particular state's central bank goes completely bonkers and ruins their own currency with their monetary policies - as it happened in Zimbabwe, Venezuela and many countries before that - then the national currency can vane and die. But that happened many times before Facebook even existed and will undoubtedly happen again. Libra has zero to do with it, and nothing you just described comes even close to explaining bizarre and non-sensical action of European government. It's mostly looking as "this new thing is confusing to me so I ban it just in case". Funny thing it's not even new, it's just pure ignorance.

lispm 7y ago

> It's also odd in the context of Germany It isn't. Only the Bundesbank / ECB is allowed to provide a currency in for Germany. https://de.wikipedia.org/wiki/Währungsmonopol https://de.wikipedia.org/wiki/Währungsmonopol The Chiemgauer is a regional voucher system - more comparable to regional loyalty programs or frequent-flyer programs.

Tomte 7y ago
Those regional currencies have popped up several times, the Chiemgauer is just the only(?) long-living one. Official stance IIRC is: illegal, but so small and irrelevant by volume that it's best to ignore it and let people have a little fun and community engagement.

brianpgordon 7y ago

> This conflict means that, no matter how well intentioned, policy makers will be feel compelled to devalue their own currencies. It's a race to the bottom, but without a bottom. Alternatives, especially private alternatives readily available to citizens, will increasingly be viewed as the enemy. The ability to devalue their currency is an essential tool that central banks wield to battle financial crises. Keynes pointed out that workers don't want to take a pay cut (and employers don't want to offer a pay cut, because they fear causing resentment), so nominal wages are "sticky." When they need to fall to reach price equilibrium, the economy tends to experience mass unemployment instead. It would be very difficult to convince all workers universally to accept a pay cut. The alternative is to devalue the currency so everyone is affected through the currency rather than by trying to propagate policy changes throughout the private sector. Also, countries can have huge problems when they take on debts in a hard currency which they can't devalue. This is how you get runaway hyperinflation. Their revenues are in the local currency, but their debts are in (usually) USD. If they run low on foreign currency reserves, they can be forced to sell huge amounts of the local currency on the forex market in order to acquire sufficient USD to pay their debts. I can see why France and Germany wouldn't be eager to see yet another USD rise to prominence and leave them disadvantaged in debt financing. Another talking point which comes up all of the time is the tension introduced when different regions (like Germany and Greece) are forced to use the same currency, even though normally economic forces would cause the weaker region's currency to move against the stronger one's. Devaluation would be fantastic for Greece but it's hobbled by crushingly expensive exports since it's in the Euro monetary union.

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SomeOldThrow 7y ago

Chiemgauer is run by a non-profit and is a regional currency designed specifically to avoid international interests removing money from the area. My home us county has some terrible incarnation of them. Calling it private (implying for profit, in my mind) or at all comparable to Libra requires some flexible thinking when it very different from the Chiemgauer in every sense EXCEPT being run by a non government entity. Also these bills literally say on the bill what currency they’re pegged to every time I’ve seen them. There aren’t enough in circulation for basic transactions otherwise.

littlestymaar 7y ago

> Inflation, […] has come to be viewed as inherent to the sovereignty of nations This comment, talking about Germany, the one of the country that has had such a fear of inflation for almost a century, is highly ironic.

ClumsyPilot 7y ago
Referring to a 'century', interesting. What about Hitler's monetary policy, or the Soviet puppet government of GDR?
- littlestymaar 7y ago
  The hyperinflation crisis of the Weimar republic was 96 years ago. Then it affected the German monetary policy until 1933, and after 1945. So yes, 84 years count as «almost a century»
  - ClumsyPilot 7y ago
    I am pointing out that everyone has heard about hyperinflation crisis, and many people in this thread are pointing fingers and writing about it as if it a series of contiguous policies followed as a logical consequences. That's not a fair statement because there were several violent changes of government, with different monetary policies. And many gaps in your (and mine) understanding in how these regimes manages economy. Can you, or anyone else here, really comment on monetary policy of nazi germany without looking stuff up? That's why I think, that, to claim it's not fair to reference things that happened "100 years" ago in germany. In US, which does not have such background, that would be more reasonable.