Facebook Co-founder Chris Hughes Says Libra Will Empower Corporations and Weaken Developing Countries, Urges Global Regulators To Act Now (ft.com) 97
In May, Facebook co-founder Chris Hughes shocked many when he expressed grave concerns about Facebook's CEO, its business and its impact on the world. He went as far as suggesting that Facebook should be broken up. Two months later, Hughes has another interesting remark to share. He has warned that Facebook's new planned digital currency Libra would shift monetary power to corporate giants. [Editor's note: the link may be paywalled; alternative source.] In an op-ed he wrote today: If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies, which also include Visa, Uber, and Vodafone. If global regulators don't act now, it could very soon be too late. I've been a cryptocurrency sceptic, believing that the instability and regulatory challenges are just too sizeable. But Libra is different because it is a "stablecoin", with a value pegged to a basket of currencies and other assets. Anyone, whether they use Facebook or not, can buy in with a local currency and cash back out at any time. Vital decisions about Libra's administration, security and underlying assets will be made by the Switzerland-based Libra Association -- essentially Facebook and its largely corporate partners. To avoid complaints that setting up this coin would give a single company dangerous powers, Facebook has smartly limited itself to a single vote on the commission.
That doesn't make the prospect of Libra's success any less frightening. This currency would insert a powerful new corporate layer of monetary control between central banks and individuals. Inevitably, these companies will put their private interests -- profits and influence -- ahead of public ones. [...] The Libra Association's goals specifically say that ability will encourage "decentralised forms of governance." In other words, Libra will disrupt and weaken nation states by enabling people to move out of unstable local currencies and into a currency denominated in dollars and euros and managed by corporations. The Libra Association promises to choose stable currencies and assets unlikely to suffer inflationary crises. The sponsors are right that a liquid, stable currency would be attractive to many in emerging markets. So attractive, in fact, that if enough people trade out of their local currencies, they could threaten the ability of emerging market governments to control their monetary supply, the local means of exchange, and, in some cases, their ability to impose capital controls.
That doesn't make the prospect of Libra's success any less frightening. This currency would insert a powerful new corporate layer of monetary control between central banks and individuals. Inevitably, these companies will put their private interests -- profits and influence -- ahead of public ones. [...] The Libra Association's goals specifically say that ability will encourage "decentralised forms of governance." In other words, Libra will disrupt and weaken nation states by enabling people to move out of unstable local currencies and into a currency denominated in dollars and euros and managed by corporations. The Libra Association promises to choose stable currencies and assets unlikely to suffer inflationary crises. The sponsors are right that a liquid, stable currency would be attractive to many in emerging markets. So attractive, in fact, that if enough people trade out of their local currencies, they could threaten the ability of emerging market governments to control their monetary supply, the local means of exchange, and, in some cases, their ability to impose capital controls.
Ecoin (Score:1)
This is just the e-coin from Mr. Robot
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bit of column a, bit of column b.
(But i'm willing to bet he's still got 'fuck you' money, and then some to spare -- and he's spot on in his assessments.)
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I'm still HODLing all my Flooz! I use my cuecat scanner to check the market value each day, one of these days, vrooom, Alice, Lambos on the Mooooooon!
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Would you take beanie babies for your flooz?
Yes exactly. it's e-coin (Score:5, Interesting)
But lets examine what it means along some aspects.
In the US we, probably very smartly, severed the central bank (the fed) from the government's direct control of policy. It was also, very smartly, given a narrow and fairly intretable mandate: "full" employment and "moderate" inflation. These are often but not always conflicting goals, so this gives the fed lattitude, but it also requires any descision be defensible along those lines. And since both of those are good lines, it's only a question of quibbling over optimality and foresight not poor aims.
And you can't do that if the currency is fixed. hence no gold standard.
It's also why the government doesn't allow competing central banks or currencies it doesn't control. And to help the dollar out compete every other currency, the dollar is the only one required to be accepted for all debts pubic and private by law.
TO see what that means realize that, purely Theoretically, the US government could declare the cash value of $1's worth of Libra tohave an exchange rate of 1 cent. They don't need to do any exchanges or sell Libra at firesale prices to enforce that. THey just say that any legal disputes denomiated in Libra can be paid off at 1 penny US currency on a 1$ face value of Libra. And that will be the end it, if the US govt decided the ensuing economic meltdown and financial chaos was worth the point it wanted to enforce. No one could sue it for "taking value" since there isn't any currency but the US dollar in the US.
Of course, there are tangible stores of wealth. Gold. So in launching their currency the Libra folks can say it's not different than gold. People can own it if they like. Gove't should not be able to have a say.
But the gov't might dispute that assertion since the liquidity and grandfathered status of gold is arguably different than a new intentional currency. It's similar to the logic that "locked boxes" in games are just the same as roulette-- Gambling. But investing in stocks is not gambling. Most people can tell the difference and one is highly regulatable and the other is not.
Is it different than bearer-bonds, or Amazon gift cards? or Flooz or Beanz? Are these exchangeable liquid currency too? Amazon is actually free to mint amazon gift cards if it wants then drive up prices to compensate. So it's it's own monetary system. Indeed Airline miles work just that way--- the airlines can deflate them by raising the number required for a flight, or expiring them. But I think the gov't would step in if amazon gift card or Southwest Airline miles became the de facto currency.
Other countries use the central banks to manipulate the exchange rate into other currencies too or place limits on the amount of exchange. Yet another function for a central bank.
Andf many governemnt, the US included, also restrict how much cash can cross a border.
All of those functions whether governmental or central bank are important to local control of an economy. In some countries the dictators will abuse these privledges. Which is why Zimbabwe uses the US dollar. But for the most part these are valuable tools to keep economies stable-- lives depend on that.
this takes takes that away
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Uh huh... And who appoints the chair and other members of the board?
Hint: It's not Martha Stewart
Blow me, Facebook (Score:2)
That's all I really had to say.
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I really hope this is the majority opinion.
Because I don't want to see this become as mainstream as Facebook account usage.
A bit like the Euro (Score:5, Interesting)
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However, it is more a "problem of one global currency" than a "problem of currency controlled by corporations".
It's even worse, it is a single, global currency that is controlled by one corporation.
It would be interesting to find out what guarantees of stability or "pegging" to existing currencies Libra offers.
The "pegging" will be done by Mark Zuckerberg to the remaining 7.7 billion of us.
Remember, we're the "Dumb fucks." in Mark's world. All of us.
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Euro-zone brings the economic controls related to financial health with it, that some of the members have constant difficulties to uphold. If this currency is tied to the currencies of multiple economic areas and even other unmentionable "assets" it gets some of those guarantees behind it. Eventually creditors would probably like to give credit only in Libras in the less developed world that this currency is about to target first. I wonder if this pushes, say the whole Sub-Saharan Africa to create their own
Existing regulations will apply (Score:5, Interesting)
Libra appears to be, from a practical standpoint, a security you purchase against other currencies and assets. i.e. it has real value from other assets. There's no shortage laws governing those, making Libra very little more than smoke and mirrors.
Then again the mega corps have gotten away with ignoring laws in the past. Uber, Lyft and the entire gig economy openly flaunt labor laws and are allowed to do it. So who knows, maybe we'll let Facebook do the same. There's been a 50+ year campaign to make people distrust Government, Unions, and any other institution where they organize to demand change and improved living and working conditions, and that campaign definitely worked.
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You can't buy a banana without a lot of middlemen and contracts. and you can't have that, practically, without liquid fungible money and a set of contract law to enforce that and the meaning of it's value.
So you'd starve in the cold and dark if there wasn't a reliable fungible currency.
You preference for libertarianism but only for yourself. Other people would be impacted by your version of it, so it's not really libertarian is it? kind of like vaccination and your right to mingle in pubic are not separabl
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It sounds pretty good to me. (Score:4, Insightful)
So what's the drawback?
I seem to be hearing that people will be able to opt in to using stable currency that isn't in the process of being ruined by their own disastrous governments. This is bad how?
Re:It sounds pretty good to me. (Score:5, Insightful)
"So what's the drawback?"
Well, it's run by facebook. As if that wasn't enough to send you screaming?
"I seem to be hearing that people will be able to opt in to using stable currency that isn't in the process of being ruined by their own disastrous governments"
a) And what makes you think it will be especially stable?
b) At least its in the hand of "their own" disasterous governments; which they ostensibly have some theoretical control over vs a corporation they have no control over whatsoever?
That also seems to be embracing an obvious fallacy... gee the government isn't running the police and fire department as efficiently and effectively as we'd like... I know, lets hand over the responsibility to comcast or facebook instead.
Couldn't you just buy a 49% stake in Facebook? (Score:2)
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Until said corporation bans you for some stupid comment
or bans you because an AI or dollar hour 'agent' couldn't be arsed to do their job and just clicked the ban button
Or any other thing that fucks with you and you have no recourse because, corporation beholden to no-one.
Nobody cares about the 1 guy/gal down the road who got fucked over by this, and that could quite easily be you.
This is why regulation is *required* on things like this, with other things like Gov't ombudsman for complaints, etc/
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Facebook would know all of the purchases. Facebook could revoke any of the currency, and they would know who has which digital sequences, so they could take away your money for sharing a republican talking point.
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Depending on which level you mean or where you want to draw the line, developing countries are China, Thailand, Malaysia, Myanmar, Vietnam, African countries obvisously, too; Indonesia etc.
However: all those countries already have alternative payment systems based on either phone carriers or chatting apps, like WeChat or TrueMoney.
The new FB currency might be a good thing in US ... perhaps even Europe, but I doubt it will fly, the rest of the world has no need for it.
biggest bullseye ever (Score:4, Interesting)
Hype... (Score:2, Interesting)
I am filing this under hype. It won't amount to anything, and if it does, it will be the form of a tax acoidance scheme for Faceberg.
A billion dollars and some envy later... (Score:2)
...a clown finds its moral compass.
If so serious, give the IPO money back.
Its like after robbing a bank, one of the thieves rats on his co-conspirators because of his conscience...but keeps his stash of the take. Enough of that moral preening getting an applause line in this country. You hate global warming Mr. Trillionaire? Park the Gulfstream then, dumbass. Same thing here. I so hate entitled saccharine sanctimony from the rich.
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No. Its like after robbing a bank, one of the thieves points out they are using the money to finance a terrorist organisation. His complicity in the first crime doesn't make the warning any less true. Or as they say; play the ball, not the man.
This guy is already rich (Score:3)
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Your whole argument seems to hinge on the belief that government is bad, although its incoherent enough that I'm actually not sure. But...what do you propose we replace government with?
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This is how slavery works (Score:3)
I don't say that flippantly. This is actually literally how a lot of slavery works in the world. Oftentimes in poor countries, lenders will give very favorable low-interest loans to poor people in exchange for work. Then the lender will pay the poor person in their local currency that is highly susceptible to high inflation and tie the payback to a stable foreign currency, like US dollars or euros. In this way the poor person is never able to pay back the debt because their pay gets flushed out through and inflation.
If this Libra system as it's described takes off I can absolutely foresee this being used to enslave people. I honestly can't see any other purpose for this monetary system to exist.
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And the Dollar and Euro don't do this?
Corporations today have a natural incentive to expand the world's middle class. In the past they did not. The markets represented by the developed nations were enough to satisfy them.
Big governments have no such incentive. Their incentive is to exploit the labor and resources of the developing nations to keep the relative economic positions the same - to maintain power.
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You are looking at it from the microcosm of a developed nation. Naturally, the middle class in developed nations suffers during the expansion. But, the worldwide middle class has been exploding at an unprecedented rate due to the corporate push over the last decade especially.
Today, over half of the worlds 7+ billion people are on the internet and corporations are now looking at the possibility of sales to billions of people. The US and European markets alone don't cut it.
Isn't this just an index fund? (Score:1)
It's just an ETF index fund...it's already subject to SEC regulations.
government sellout? (Score:3)
So big countries will lose their ability to stifle the developing world to maintain cheap products through depressed labor sources and reduced contention for raw materials. Yeh, that sounds pretty bad. Not.
The problem here is that the corporate world has an interest in spreading the middle class lifestyle as far and wide as possible. Big governments currently in monetary control (falsely IMO) believe they have an opposing interest of limiting and controlling development. Big governments and older establishment organizations are going to naturally oppose this. Interesting he takes this side.
Yeh, it's Facebook. But, bad actors can come up with positive developments even if ultimately selfish in their motivation.
Now, if there was just some way to virtualize actual trade in the same way and universally bypass government import/export controls on all sides...
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It sounds like you went to the Bannon school of economics. Nothing you said is reflected in reality.
1) When developing countries manufacture cheap goods to export it expands their economy, often exponentially. Japan, Korea, China, and Singapore all used that strategy to become the developed countries they are (obviously China is still in the process of this transition, but it is a massive country).
2) The people who run the corporate world are not particularly concerned with long term gains. This is the prob
Now we know what the hit pieces were all about (Score:1)
No (Score:2, Insightful)
"can buy in with a local currency and cash back out at any time"
Oh you poor deluded fool.
'Your transaction could not be processed at this time'
'Sorry, you've exceeded the permitted transfer limit'
'We have suspended your account due to fraud concerns. Please supply a copy of your identity documents, a recent utility bill, and three photographs of yourself holding them'
'Due to market instability, withdrawals are temporarily suspended'
'We have detected business activity. Your balance has been automatically deb
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You can run into the same sort of issues trying to turn decentralized crypto back into fiat.
yup, the government needs to shut em down (Score:2)
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Comment removed (Score:3)
Duh.. (Score:2)