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What does "disruption" look like in the banking space? Banks want the perception of immovable, confidence, reliable, resilience, etc. It's what gives them the c
by bArray 2y ago
What does "disruption" look like in the banking space? Banks want the perception of immovable, confidence, reliable, resilience, etc. It's what gives them the credibility to move big money. They don't want to "move fast and break things". Some may think about digital currencies.
My warning is this: Be careful what you wish for. If we were to switch to a full digital currency, there are significant concerns that money could be allocated like a voucher, where it could be sent and only spent in a certain way. Suddenly the government decides those receiving some kind of social care allowance must spend different parts in different ways, i.e. a minimum of 50% MUST be spent on rent (an extremely enticing proposition in a recession). Perhaps there is a tax for not spending enough, or on the correct thing. Perhaps there is a micro-tax for moving it around. Maybe the micro-tax is dependant on your social credit score. The slippery slope goes on.
The only thing currently stopping this is that you can withdraw your entire wage each month and spend it however you want, without such a tax. The government or banks cannot be certain of precisely how you spend your money when using cash. The very moment cash is gone, such implements can be created and there is nothing you can do about it.
Maybe I am behind the times, but I don't like the sound of "disruption" in the banking industry. That last time I saw "disruption" was in 2008, and many people lost their homes.
- dr-detroit 2y ago[dead]
- jncfhnb 2y agoThe other thing stopping it is the law and the fact that the US dollar is the global reserve currency and that would be a pretty great way to ruin that
- JumpCrisscross 2y ago> that would be a pretty great way to ruin that Not really. It would be similar to tax rules—not really applicable to non-American depositors.
- jncfhnb 2y agoIt _could_ be like that. But we’re very deep down slippery slope hypotheticals by this point.
- JumpCrisscross 2y ago> we’re very deep down slippery slope hypotheticals by this point Not really. We're talking about how the U.S. government treats local deposits at American banks. That's not really relevant to the dollar's international role.
- danielmarkbruce 2y agoA digital dollar is not down some rabbit hole of hypotheticals. The fed (amongst others) debate/study it. Published this a couple years ago: https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf https://www.federalreserve.gov/publications/files/money-and-...
- jncfhnb 2y agoWe’re not talking about a digital dollar so much as a government mandated spending program for all citizens or perhaps retail account owning individuals.
- wussboy 2y agoI'm not worried about the government doing these things, I'm worried about corporations colluding to do these things.
- Galatians4_16 2y agoThat's basically the same thing.
- thatfrenchguy 2y agoI mean, the government in the US already loves dictating what poor people can spend their money on when they get assistance. Look at WIC for example, even in progressive California, they literally force you to buy only white eggs: https://docs.wic.ca.gov/Content/Documents/ShoppingGuide-EN-ADA-4.19%20rev%205.19%20FINAL.pdf https://docs.wic.ca.gov/Content/Documents/ShoppingGuide-EN-A... . You also can’t buy any cheese with taste, because you are poor and you don’t deserve good food. Think of the cost of that stupid bureaucracy.
- gosub100 2y agoYou can't buy luxury food because people will turn around and sell it. Beggars can't be choosers.
- Kiro 2y agoCash is already practically gone in a lot of countries. I don't know anyone who uses it and don't even know how the bills look nowadays. Must have been at least 10 years since I even touched physical cash.
- buu700 2y agoI rarely touch physical cash, but when I do I feel like I need to wash my hands.
- radlad 2y agoTo the detriment of many. See https://news.ycombinator.com/item?id=42696204 https://news.ycombinator.com/item?id=42696204
- EduardoBautista 2y agoMy main issue with cash is that I hate receiving coins. If it weren't for coins, I would try to do occasional transactions in cash, just to support something that is truly anonymous.
- danielmarkbruce 2y agoBut the option is there. It matters.
- phil21 2y agoIt only remains if people who have choices actually prioritize using cash. I get strange looks from folks now since I try to use cash whenever possible to do so. If I’m the only one taking the effort to do this, everyone will eventually lose this option. It’s incredibly frustrating to watch people actively work to not understand this point. All so they can make 2% in credit card points, pretend they are at some materially increased risk of crime, and the convenience argument. None of which are very compelling compared to “a third party now mediates what spending you are allowed to partake in”. Works until it doesn’t.
- delusional 2y agoWhy would "the government" do that? I hate it when people talk about "the government" doing something. The real mechanics you'd see in your example is that the business elite would begin astroturfing support from the American public, with some nonsense about helping the poor better control their finances. Nobody would believe it, and progressives would be against it. In reality it will be driven by the commercial desire to FORCE people to purchase coca cola or whatever.
- Galatians4_16 2y agoYou can think of it in terms of political parties, if it helps. "The Democrats would never do that" then Republicans pass the bill, and the Democrats protest, but run with it and don't abolish it when back in power… Swap parties as required for your flavour of government.
- dghlsakjg 2y agoThe government already does this. SNAP, colloquially foodstamps, can only be used on certain forms of food. Frozen goods are fine, but cannot be prepared hot, even if there is not a charge or it is the exact same food product. So my local corner grocery is allowed to sell anyone frozen food, whether they pay with SNAP or cash. But they also have a microwave that anyone can use to heat up purchased food, except for SNAP buyers. It is interpreted as unlawful for a SNAP recipient to use that microwave to heat up their subsidized food at the place that they bought it, so there is a government policy, enforced at the point of sale, severely restricting the use of SNAP.
- bear141 2y agoRequiring people who get government money for food to not use it on prepared food is a good thing I would think. Technicalities like the one you presented do seem ridiculous on their own however.
- dghlsakjg 2y agoIf you're so poor that you can't afford food, what are the chances that you have access, time, and ability to turn ingredients into meals every time you need to eat. I'm totally fine with a person on SNAP using it to get a hot or prepared meal if that's what they need. We have already decided to allocate the resource to them for the purpose of buying food, why does it matter if they spend it on a premade sandwich instead of a frozen burrito.
- kbolino 2y agoThese incentives already exist. The tax code has been manipulated to encourage or discourage behavior since at least WW2. A digital currency makes a lot of these incentives easier to create and easier to enforce, but they wouldn't be new.
- danielmarkbruce 2y agoIt's a huge difference. Incentives are one thing, being able to force or take money directly is a whole different level. Right now you need someone in the government administration + a court + a bank to do anything like this. With a digital dollar, you lose the last two.
- kbolino 2y agoThe Federal Reserve is a bank. And we already have a relevant historical example to examine, postal savings accounts. I'm not aware of any special power that the executive branch had to bypass the judicial branch where those accounts were concerned, versus privately held accounts. Plus, the Post Office was directly answerable to the President then, while the Federal Reserve has never directly answered to the President. This is an unfounded fear and doesn't reflect anything intrinsic to a (central bank-administered) digital currency.
- danielmarkbruce 2y agoNot for consumers and non-bank businesses it isn't. You don't have an account at the fed. You have an account at plain old commercial bank. Someone at the plain old commercial bank can freeze your money, right now. You'll have to sue, go to court, win, just to get access to your money. If the fed becomes the place you have an account, they can do what the commercial bank currently can do. The difference is incentives - why do it? Commercial banks have no incentive, and in fact have the incentive to push back when asked. As for the president - sure - generally speaking the fed is independent. But they have significant regulatory and supervisory roles all by themselves, and are part of the administration of the government even if they aren't "part of the administration" as the term is usually used in the US.
- 6510 2y agoIt might be bad but it isn't self evident. There are several contexts where it would be useful to have. To keep it generic, people can be forced to do all kinds of things. A lot of people cant manage their money. Putting the exact amount in a rent account would be better and cheaper than being put under some kind of supervision. Rationing everything might seem like a terrible idea right now but the good times might end any moment. There is also the some what sinister angle where adding new game mechanics to an old rather boring game could make gameplay more interesting. Favoring a flat playing field would require we ignore how much money some people really have. (and how they got it) For some reason it is normal for vouchers to expire. We might want you to buy vegetables but if you chose not to you don't have to. There is no need for anyone to grow vegetable rich.