ALB
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It seems that the Old Testament has been guilty of anti-philistinism.
Money laundering is always going to be a problem with any international payments system. One way of doing it is for a person to carry cash, which is how the NUM transferred some of its money to Luxemburg during the Miners Strike to stop all its funds being “sequestrated” by the UK government.
Incidentally, I see that David Smith, Sunday Times Economics Editor, writing in today’s Times says of the Libra scheme that it is “a move that may not be as revolutionary as first appears”.
Joseph Stiglitz is a more or less mainstream pro-capitalist economist (rather than a leftwinger with an axe to grind) and he has a valid point when he says that there is no need for Facebook money in a national context since electronic payments within a country like the US are already simple and instantaneous. But the proposal is to introduce a similar system for international payments to replace cumbersome methods like Western Union which involve form filling and are not instantaneous. Migrant workers sending money to their country of origin would benefit from such a system irrespective of who organises it.
As to the two points he raised that you highlight, here’s what the Facebook “White Paper” says on them:
“Libra is fully backed by a reserve of real assets. A basket of bank deposits and short-term government securities will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value.”
In other words, no new money is created. It will be like local currencies here in the UK which have to keep the equivalent in pounds in a reserve to cover the total face value of the local currency notes they issue. This strengthen the case for the view that what is envisaged is a new international payments system rather than some world currency to compete with existing state ones.
“Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, pay dividends to investors who provided capital to jumpstart the ecosystem, and support further growth and adoption. The rules for allocating interest on the reserve will be set in advance and will be overseen by the Libra Association. Users of Libra do not receive a return from the reserve.”
This is clear/honest enough: Facebook and the other investing corporations which include Paypal, Visa and Mastercard which put up the capital to start the scheme (listed here) will get interest on the money used to back up the Libra but will not pay any interest to those who will contribute to this by using it. The business model is similar to that of a bank in that income will be from interest and fees, with profit being this less costs.
Stilgitz’s point about Facebook being able to “reap an arbitrage profit” on its reserves deposits is true but this is what banks (and not just banks but any organisation with money reserves) do now.
I’m coming to the conclusion that this is all a fuss about nothing.
Interesting but
- I don’t see why he says other states than the USA won’t be able to impose controls on Facebook money. After all, he himself points out that Facebook is banned in China. Also, the EU is planning measures against it and the other US tech giants.
- No extra money will be “created” (not even in the sense modern economics misuses it). People will only be transforming state money into Facebook money. This could cause problems for states with weak currencies but this would be one of the things they could at least try to regulate as they do now with Paypal, etc., as for instance by requiring banks to report such transactions and/or placing limits on the amount transferred.
The head of the Bank of International Settlements (the Switzerland-based central banks trade association), Augustin Carstens, had told the Financial Times that central banks may shortly have to issue their own digital currencies in response to the emergence of private digital currencies, specially Facebook’s Libra. This would suggest that what is being envisaged, by both Facebook and them, is a more efficient system for international payments.
Actually, the BBC one wasn’t as bad as I thought it was going to be. Pity, though, that they chose to interview a Trotskyist who didn’t know that for Marx “socialism” and “communism” meant the same, i.e. what she meant by “communism”.
I don’t think calling Corbyn and the Labour Party “Marxist” is going to work with the public in general (if only because most people don’t know much about Marx and those that do know this to be ridiculous) but it might with the audience aimed at, i.e. the membership of the Tory Party who are going to elect the new Prime Minister. For instance, the one who had a letter in last Friday’s Times who openly called Corbyn a “communist”. That’s what the mean but daren’t say it because if they did they’d really get pilloried.
There might even be a good side to this, with some people asking “who is this Karl Marx they keep talking about?”
Ed Conway, Sky News’s Economics Editor, raised something similar in the Times last week, though he doesn’t go for Ellen Brown’s idea of a “democratised central bank” instead. Unfortunately, the article is behind a pay wall but you can get some idea from the title:
https://www.thetimes.co.uk/article/facebook-currency-will-help-it-rule-the-world-5ttrsbm0k
Conway argued that, since they would have to pick up the pieces if the scheme goes wrong, national governments would normally move to squash it but, apparently, they are not and goes on to ask why the Bank of England is so relaxed about it. He answers:
“The first reason is that the existing system for transferring money internationally is rubbish. Moving cash from one country to another involves painful paperwork, high fees and long waits … The tech giants have spied an opportunity and the existing banks have only themselves to blame. The second reason is more disconcerting. Privately, the Bank doesn’t think libra is a currency after all. Instead it is something quite different: a jazzed-up payment mechanism rather than a genuine alternative to sterling or the dollar.”
Personally, I’m inclined to agree with the Bank. I don’t see states accepting an alternative currency they can’t control, but a more efficient efficient international payments system, why not? But we’ll see.
Just got round to listening to the 25-minute podcast interview with her on her book and you’re right it is based on Graeber and also on so-called “Modern Monetary Theory” (MMT). I see from her CV that he claims to be a “socialist”. That’s odd. But then Graeber claims to be an anarchist.
In fact, as a collection of all the myths about banking and money in one book, it may be worth reviewing. She should certainly be sent a copy of our pamphlet on banking.
While she’s is wrong about banks being able to, as she puts it in the interview, “rustle up money out of thin air”, the state can do this. She argues that it should to finance all sorts of useful public services. The trouble is that, while the state can issue more money-tokens, it has no control over their purchasing power. That is decided by the needs of the economy. If MMT were ever to be tried (just issuing money to finance government spending) the result would be massive inflation, i.e the tokens would come to be massively depreciated, disrupting the whole economy and defeating the original purpose of providing better public services.
A rather more recent article of his (already drawn to attention here but the link didn’t work):
https://uk.news.yahoo.com/love-island-urge-bare-public-163507018.html
To keep to the theme of the thread, Boorish Johnson is a bit of a one-man reality show. Good thing that Marxist analysis shows that it doesn’t matter who is PM as in the end it’s capitalism that’s in the driving seat.
I was just making the point that it wasn’t me but Steve who thought up “the evil of two lessers”. And also, in answer to questions about what do in the meantime, to describe this period as “the mean time”.
I see that that the article repeats that statement too, and also uses the term “centrist neoliberal” in relation to Joe Biden — which (see the thread on Trump) the “Marxist Humanist Initiative” say people should be prepared to vote for to keep Trump out.
Not as straightforward, then, as his rival for the support of leftish Democratic Party members, Elizabeth Warren, who, according to yesterday’s Times
“has said she is ‘capitalist to my bones,’ seeking to reform the system rather than tear it down.”
Can anyone cite chapter and verse for this damning admission?
Monk, priest, lay brother, that’s nothing. How about saint which, according to the main Christian sect, the Roman Catholic church, More now is? According to them, he must be in heaven able to speak to their god as he has persuaded it to intervene to work two or three miracles. All rubbish of course, but anyone know what they’re supposed to have been?
