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Its not nonsense at all! Bank accounts are private money, and their contents is magic'd out of nowhere through fractional reserve banking. They do not serve th

Its not nonsense at all! Bank accounts are private money, and their contents is magic'd out of nowhere through fractional reserve banking. They do not serve the purposes of a central bank digital currency. Interest rates are set by the banks, based on Fed rates. What is being proposed is a direct to consumer pseudo-crypto dollar, think USDC/USDT but issued by the Fed. This will likely happen in the next 5 years. Several other nations have progressed on this path now, including China. It does not compete with private money in banks. This would give the Fed direct ability to implement negative interest rates, literally taking the dollars out of your pocket. I would add that CBDC are dystopia through technology -- complete visibility of all transactions and demurrage / negative interest rates. I would recommend swapping as much fiat currency for Bitcoin as you are comfortable. Using private cryptocurrencies such as XMR and ZEC allow one to mask the transaction graph and amounts also.

jsmith45 5y ago
Such a system would very much compete with deposits in banks, given that savings account interest rates are already effectively zero. So why would a person give their money to a bank instead of keeping it in their DigitalDollars wallet? They would have no reason to do so, unless keeping their money as DigitalDollars was somehow worse. If keeping money as DigitalDollars is worse, then nobody would want to have them except possibly briefly for transactions, making it more of a payment network than a currency, and pretty ineffective as a monetary policy tool. Plus I have zero confidence that the Fed would be able to competently implement such a system to get the benefits they want. they would end up with a system that is somehow slower, less reliable, more fraud prone and more expensive than paying with a debit card.
perl4ever 5y ago
>their contents is magic'd out of nowhere through fractional reserve banking Could you ELI5 what is the connection between fractional reserve banking and creating money? Does the following mean that all banks can create infinity money out of zero deposits? "As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions." https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm Also, a direct to consumer crypto dollar sounds exactly like giving individuals accounts at the Fed, the same type of account banks currently have. Except more crypto-ey. Why, if the Fed has refused to let people bank with it directly, would they change their mind? Someone actually thought recently of opening a bank that would literally stash all deposits at the Fed, and the Fed didn't like that, presumably because they feel it would undermine the regular banks.
- landemva 5y ago
  Accounts at the Fed will not be a crypto like bitcoin, etc. It will be a one party ledger fully controlled by the Fed. One mistake or court order and you are cancelled and done.
  - perl4ever 5y ago
    I agree that it will be controlled by them, whether or not it uses cryptographic algorithms. But also, I'm saying in either case, it amounts to the account that each bank is required to have at the Fed, and the Fed apparently has refused in the past to go down the road of bypassing existing banks by opening this up to other entities or people. You can view that cynically as regulatory capture, as a sinister banking cabal controlling everything, or as a prudently conservative outlook if you think the banking system serves a purpose, or might serve a purpose a la Chesterton's fence. But no matter what the motivation, the question I have is why would they want to change their minds now?
    - landemva 5y ago
      While it can be studied now, I suspect Congress will need the 1913 enabling law (which gave authority to private contracting company known as 'federal reserve') authority to directly hold consumer funds. It's not necessary as it can be done with existing consumer banking. Their idea is to remove bearer money - cash and coin. And then make barter more cumbersome.
supertrope 5y ago
While US dollars do inflate year after year, you can lose your Bitcoin in very common scams. Exchange exit scams, malware, typing the wrong wallet address or amount, pump and dump shitcoins, etc. Or just sleeping through a 25% overnight crash that happens on some days. Or computer hardware failure.

jsmith45 5y ago

Such a system would very much compete with deposits in banks, given that savings account interest rates are already effectively zero. So why would a person give their money to a bank instead of keeping it in their DigitalDollars wallet? They would have no reason to do so, unless keeping their money as DigitalDollars was somehow worse. If keeping money as DigitalDollars is worse, then nobody would want to have them except possibly briefly for transactions, making it more of a payment network than a currency, and pretty ineffective as a monetary policy tool. Plus I have zero confidence that the Fed would be able to competently implement such a system to get the benefits they want. they would end up with a system that is somehow slower, less reliable, more fraud prone and more expensive than paying with a debit card.

perl4ever 5y ago

>their contents is magic'd out of nowhere through fractional reserve banking Could you ELI5 what is the connection between fractional reserve banking and creating money? Does the following mean that all banks can create infinity money out of zero deposits? "As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions." https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm Also, a direct to consumer crypto dollar sounds exactly like giving individuals accounts at the Fed, the same type of account banks currently have. Except more crypto-ey. Why, if the Fed has refused to let people bank with it directly, would they change their mind? Someone actually thought recently of opening a bank that would literally stash all deposits at the Fed, and the Fed didn't like that, presumably because they feel it would undermine the regular banks.

landemva 5y ago
Accounts at the Fed will not be a crypto like bitcoin, etc. It will be a one party ledger fully controlled by the Fed. One mistake or court order and you are cancelled and done.
- perl4ever 5y ago
  I agree that it will be controlled by them, whether or not it uses cryptographic algorithms. But also, I'm saying in either case, it amounts to the account that each bank is required to have at the Fed, and the Fed apparently has refused in the past to go down the road of bypassing existing banks by opening this up to other entities or people. You can view that cynically as regulatory capture, as a sinister banking cabal controlling everything, or as a prudently conservative outlook if you think the banking system serves a purpose, or might serve a purpose a la Chesterton's fence. But no matter what the motivation, the question I have is why would they want to change their minds now?
  - landemva 5y ago
    While it can be studied now, I suspect Congress will need the 1913 enabling law (which gave authority to private contracting company known as 'federal reserve') authority to directly hold consumer funds. It's not necessary as it can be done with existing consumer banking. Their idea is to remove bearer money - cash and coin. And then make barter more cumbersome.

supertrope 5y ago

While US dollars do inflate year after year, you can lose your Bitcoin in very common scams. Exchange exit scams, malware, typing the wrong wallet address or amount, pump and dump shitcoins, etc. Or just sleeping through a 25% overnight crash that happens on some days. Or computer hardware failure.