4 ms·

Is the money we currently use not just an integer in a database somewhere? When a government or whomever chooses to "print" more money, do they actually print i

by mimsee 5y ago

Is the money we currently use not just an integer in a database somewhere? When a government or whomever chooses to "print" more money, do they actually print it or just allow banks to insert a new row with N amount? I'm trying to grasp the reasons on why governments would like to introduce a "more digital currency than today" but not necessarily a cryptocurrency as that would cede control and how all that relates to the digitalness of money.

reedjosh 5y ago
Today dollars are held and transacted through a number of systems/banks. As such, the government doesn't have a central place to monitor and or interrupt its subject's transactions. This and the removal of cash is the primary power play of a CBDC. As for the creation of dollars today, it's kind of like flipping bits in a computer, but through a network of banks that get their fountain of debt backings from the Federal Reserve (or insert particular Fiat's bank here) as a central bank. So the bit flipping happens at the top and is distributed to member banks at very low interest rates. I personally think the government should let people pick what they think is money for themselves. Of course they won't as the dollar and other fiat systems are their primary means of control.
- kayamon 5y ago
  Is there a good reason why the new money doesn't just get sent by mail to every individual citizen equally, rather than being handed out only to large banks?
  - reedjosh 5y ago
    Well, I don't think there's even a good reason for the system to begin with, but generally I think the reasoning posited is something like: Debt is issued to those that are believed can pay it back. Giant low interest loans are given to the member banks and they due diligence on smaller banks. The whole thing is a tree of larger institutions lending to smaller ones, and eventually the money makes it to markets that interact with actual customers -- mortgages and credit lines. In this way debt is limited to those that are expected to largely pay it back. Over time, more and more of the dollars in the system are owed to someone else. Our dollars literally come into existence as debt. This is the true source of inflation, but some make arguments about velocity of money and whatnot. The defaulting of debts and subsequent vacuum where debt based dollars used to be is also the actual cause of the so call 'business cycle'.
jpadkins 5y ago
money is a (the best?) system of control. 10% ($6 trillion) of US dollars is physical cash or coins(1). Government authorities cannot exert control of this money supply unless they have physical control of the person / property (seized assets, found all the hidden caches). Cash is used when tracking & tracing is undesirable like contraband or political corruption(2). So if those in power / government wishes to have total control of a population, then they need 100% of money to be in centralized databases. In that scenario, if someone does something illegal or not favorable to those in power (i.e. whistleblowing), then they can be completely shut out of the economy even if they evade arrest. 1) https://www.ngpf.org/blog/uncategorized/question-percentage-money-supply-physical-coins-currency/ https://www.ngpf.org/blog/uncategorized/question-percentage-... 2) page 22 https://cybercemetery.unt.edu/archive/sigir/20131001080029/http:/www.sigir.mil/files/learningfromiraq/Report_-_March_2013.pdf https://cybercemetery.unt.edu/archive/sigir/20131001080029/h...
incomingpain 5y ago
>Is the money we currently use not just an integer in a database somewhere? No. There is about $6 trillion usd that is paper or coin. Perfectly anonymous, decentralized and no way for the government to track or otherwise do anything about. About $15 trillion usd exists as an integer in a database. If you watched Canada recently. The government is absolutely capable of seizing those integers. Canadian gov even successfully went after bitcoin wallets at exchanges. >When a government or whomever chooses to "print" more money, do they actually print it or just allow banks to insert a new row with N amount? Yes to both in a way. during covid, the US government printed about $2 trillion in new cash, coins and paper. However that's not even a huge deal. It's the over $10 trillion of new money as integers. How this happens is a bit complicated. >I'm trying to grasp the reasons on why governments would like to introduce a "more digital currency than today" but not necessarily a cryptocurrency as that would cede control and how all that relates to the digitalness of money. Yes, this is the important factor. Why indeed. When the government receives revenues, they can spend it. If they spend more or less how much they receive. great, everything is good. sometimes predictions are poor and they spent more than they received. You issue debt in form of bonds. This can only go so far, people will only buy so much of that debt until your credit rating drops or a situation where there just isnt anyone buying. Greece in a nutshell there. The major limit is how much you can tax in this system. Greece had very high taxes and were pushing businesses out of their country. While also not providing reasonable goods and services relative to that tax level. Nobody likes increasing taxes especially when you're not getting your moneys worth. Politicians also dont like to balance the budget. This is an important balance. To maximise the amount of government revenues, often countries need to reduce taxes and bring business back. In order to tax them, otherwise you get none. China and their wonderful 10% flat tax in their capitalist zones have attracted countless businesses. More importantly, you only pay taxes on profits you earn. A business that isn't profitable after deducting their costs, pays no taxes. Everything is in balance. So what does Greece wish they could have done? They wish they didnt have the euro and could print money. This is an inflation tax. But an inflation tax doesn't just tax profits. It taxes everyone who is holding anything that is inflationary. Bonds with yields below inflation, retirees are largely speaking paying the inflation tax. People trying to save up for a downpayment on something. They pay the inflation tax. The people who hold the currency or will receive the currency later at a set amount like bonds are paying the inflation tax. Flipside, if you're amazon, you just locked in loads of debt at rates well below inflation. You are profitting from high inflation, but you dont pay taxes on that profit. So why is a digital currency so important to countries like Venezuela? They created the Petromoneda. Because their primary currency is worthless, cant print enough of it to give it to anyone for anything. The government was forced to print so much money. But more importantly what did they do with the petro? They printed more money. https://cointelegraph.com/news/venezuela-to-fund-housing-for-homeless-with-national-cryptocurrency-petro https://cointelegraph.com/news/venezuela-to-fund-housing-for... BUT it's brilliant. Only foreigners cant buy them and only citizens can sell it. They are literally printing money at the expense of foreigners. They figured out how to make themselves a reserve currency to have foreigners pay their taxes for them. Amazing! Flipside, why are so many highly indebt countries looking to ban crypto? https://www.euronews.com/next/2021/11/23/india-is-planning-to-tighten-crypto-regulation-to-deter-trading-in-a-new-clampdown-sources https://www.euronews.com/next/2021/11/23/india-is-planning-t... So why are they so opposed? Countries end up losing this inflation tax and ability to print money. If everyone in canada switched to crypto and dropped the CAD. On payday you convert all your money into crypto and you pay at every store with crypto. The significantly reduced number of people holding the currency would be harmed even more by inflation. They would be pressured to jump ship or end up paying for all the government deficit spending in disproportionately more painful degrees. And we know what happens next when the country loses their ability to print money like Greece. The government has to balance the budget, you have to give a reason for businesses to operate in your country. No wonder politicians are so hostile toward crypto. Imagine being forced to balance the budget because you cant print money anymore. Want to implement a new government service? You'll need to increase taxes. How's that going to work for your re-electability?

by mimsee 5y ago

reedjosh 5y ago

Today dollars are held and transacted through a number of systems/banks. As such, the government doesn't have a central place to monitor and or interrupt its subject's transactions. This and the removal of cash is the primary power play of a CBDC. As for the creation of dollars today, it's kind of like flipping bits in a computer, but through a network of banks that get their fountain of debt backings from the Federal Reserve (or insert particular Fiat's bank here) as a central bank. So the bit flipping happens at the top and is distributed to member banks at very low interest rates. I personally think the government should let people pick what they think is money for themselves. Of course they won't as the dollar and other fiat systems are their primary means of control.

kayamon 5y ago
Is there a good reason why the new money doesn't just get sent by mail to every individual citizen equally, rather than being handed out only to large banks?
- reedjosh 5y ago
  Well, I don't think there's even a good reason for the system to begin with, but generally I think the reasoning posited is something like: Debt is issued to those that are believed can pay it back. Giant low interest loans are given to the member banks and they due diligence on smaller banks. The whole thing is a tree of larger institutions lending to smaller ones, and eventually the money makes it to markets that interact with actual customers -- mortgages and credit lines. In this way debt is limited to those that are expected to largely pay it back. Over time, more and more of the dollars in the system are owed to someone else. Our dollars literally come into existence as debt. This is the true source of inflation, but some make arguments about velocity of money and whatnot. The defaulting of debts and subsequent vacuum where debt based dollars used to be is also the actual cause of the so call 'business cycle'.

jpadkins 5y ago

money is a (the best?) system of control. 10% ($6 trillion) of US dollars is physical cash or coins(1). Government authorities cannot exert control of this money supply unless they have physical control of the person / property (seized assets, found all the hidden caches). Cash is used when tracking & tracing is undesirable like contraband or political corruption(2). So if those in power / government wishes to have total control of a population, then they need 100% of money to be in centralized databases. In that scenario, if someone does something illegal or not favorable to those in power (i.e. whistleblowing), then they can be completely shut out of the economy even if they evade arrest. 1) https://www.ngpf.org/blog/uncategorized/question-percentage-money-supply-physical-coins-currency/ https://www.ngpf.org/blog/uncategorized/question-percentage-... 2) page 22 https://cybercemetery.unt.edu/archive/sigir/20131001080029/http:/www.sigir.mil/files/learningfromiraq/Report_-_March_2013.pdf https://cybercemetery.unt.edu/archive/sigir/20131001080029/h...

incomingpain 5y ago

>Is the money we currently use not just an integer in a database somewhere? No. There is about $6 trillion usd that is paper or coin. Perfectly anonymous, decentralized and no way for the government to track or otherwise do anything about. About $15 trillion usd exists as an integer in a database. If you watched Canada recently. The government is absolutely capable of seizing those integers. Canadian gov even successfully went after bitcoin wallets at exchanges. >When a government or whomever chooses to "print" more money, do they actually print it or just allow banks to insert a new row with N amount? Yes to both in a way. during covid, the US government printed about $2 trillion in new cash, coins and paper. However that's not even a huge deal. It's the over $10 trillion of new money as integers. How this happens is a bit complicated. >I'm trying to grasp the reasons on why governments would like to introduce a "more digital currency than today" but not necessarily a cryptocurrency as that would cede control and how all that relates to the digitalness of money. Yes, this is the important factor. Why indeed. When the government receives revenues, they can spend it. If they spend more or less how much they receive. great, everything is good. sometimes predictions are poor and they spent more than they received. You issue debt in form of bonds. This can only go so far, people will only buy so much of that debt until your credit rating drops or a situation where there just isnt anyone buying. Greece in a nutshell there. The major limit is how much you can tax in this system. Greece had very high taxes and were pushing businesses out of their country. While also not providing reasonable goods and services relative to that tax level. Nobody likes increasing taxes especially when you're not getting your moneys worth. Politicians also dont like to balance the budget. This is an important balance. To maximise the amount of government revenues, often countries need to reduce taxes and bring business back. In order to tax them, otherwise you get none. China and their wonderful 10% flat tax in their capitalist zones have attracted countless businesses. More importantly, you only pay taxes on profits you earn. A business that isn't profitable after deducting their costs, pays no taxes. Everything is in balance. So what does Greece wish they could have done? They wish they didnt have the euro and could print money. This is an inflation tax. But an inflation tax doesn't just tax profits. It taxes everyone who is holding anything that is inflationary. Bonds with yields below inflation, retirees are largely speaking paying the inflation tax. People trying to save up for a downpayment on something. They pay the inflation tax. The people who hold the currency or will receive the currency later at a set amount like bonds are paying the inflation tax. Flipside, if you're amazon, you just locked in loads of debt at rates well below inflation. You are profitting from high inflation, but you dont pay taxes on that profit. So why is a digital currency so important to countries like Venezuela? They created the Petromoneda. Because their primary currency is worthless, cant print enough of it to give it to anyone for anything. The government was forced to print so much money. But more importantly what did they do with the petro? They printed more money. https://cointelegraph.com/news/venezuela-to-fund-housing-for-homeless-with-national-cryptocurrency-petro https://cointelegraph.com/news/venezuela-to-fund-housing-for... BUT it's brilliant. Only foreigners cant buy them and only citizens can sell it. They are literally printing money at the expense of foreigners. They figured out how to make themselves a reserve currency to have foreigners pay their taxes for them. Amazing! Flipside, why are so many highly indebt countries looking to ban crypto? https://www.euronews.com/next/2021/11/23/india-is-planning-to-tighten-crypto-regulation-to-deter-trading-in-a-new-clampdown-sources https://www.euronews.com/next/2021/11/23/india-is-planning-t... So why are they so opposed? Countries end up losing this inflation tax and ability to print money. If everyone in canada switched to crypto and dropped the CAD. On payday you convert all your money into crypto and you pay at every store with crypto. The significantly reduced number of people holding the currency would be harmed even more by inflation. They would be pressured to jump ship or end up paying for all the government deficit spending in disproportionately more painful degrees. And we know what happens next when the country loses their ability to print money like Greece. The government has to balance the budget, you have to give a reason for businesses to operate in your country. No wonder politicians are so hostile toward crypto. Imagine being forced to balance the budget because you cant print money anymore. Want to implement a new government service? You'll need to increase taxes. How's that going to work for your re-electability?