This is obviously the first part of a major push to force us to use Central Bank Digital Currencies. Now that they are banning cash, we will be controlled like never before. This is the beginning of the end of freedom.
Assets are zero sum - if i sell you my car, i no longer have that asset. Money is not zero sum. It is created and destroyed as loans are made and repaid. Which kinda frazzles people’s minds when they hear it. I know it certainly did mine when i first learned.
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
I don't think this is true. Every transaction, even the ones that take place in the rows of a bank's database and not with physical money, involve an amount added to some account and an identical amount subtracted from another account. Even loans don't create money: the issuing bank have the amount subtracted from its reserves the exact moment the loan is made available to you.
The only method to create money would be writing a check with no date on it, which is illegal in many countries.
[1] The Bank of England: Money creation in the modern economy https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...
Imagine the whole world has 1,000,000 dollars right now. This is made up of all cash.
You have 100,000 of those dollars. You decide to buy a car for $10,000 from a friend. You go look at the car, like it, and agree to buy it. You sign the necessary paperwork and you tell your friend that you will bring him the 10,000 cash tomorrow. You drive home.
You just created 10,000 out of thin air. The world right now has 1,010,000 of money. It is made up of all that cash, and the debt you owe your friend. The debt you owe your friend is an asset. If it was drawn up more formally, it can be used to buy things, similarly to how the greenbacks in your pocket buy thing.
Now you might be thinking that this money does not exist because of the offsetting liability. You are right that in a ledger it nets out to zero. However, “money” is not the net balance. Money is the cash, and unpaid loans side of the ledger.
Every dollar that exists was “loaned out” into existence by the government, banks, companies, and people. It will be destroyed the moment it gets paid back.
Don’t confuse money with net balances or with pieces of paper with green ink on them. Those are the things that we colloquially think of as money. But when you dig to really understand money, you eventually get to the fact that it’s all stacks of debt.
Until you repay the debt to your friend, you can spend the 10,000, because you hold it in your pocket. But your friend can also spend the debt you own him, for example, by asking another person to get a loan on that loan.
So yeah, "free money"! Until one creditor somewhere in that long chain asks the debitor to pay up their debt...
Not even the old system (fractional reserve) referred to in the fed link above works that way. The new system deletes what was left of fractional reserve policy.
The point the GP is trying to make is that they want to further restrict the usage of cash in economic transactions, & that CBDCs further help in that regard. There's a difference between:
"3% of money is available as paper cash"
and
"Paper cash is banned under all circumstances"
Money is zero sum because almost all money is created through debt. Sum up all money and debt and you get roughly zero excluding central bank money and cash.
Money being backed by debt makes sense because it solves the "acceptance problem", that is, how do you make sure the money you have can actually buy things?
Of course that means there is no limit to how much money there is in the system.
I’d need to exchange other tangible assets (raw materials) and labour to produce the next car, I can’t just make a car, a tangible asset, by declaring a new one exists.
I’m creating more value than the raw materials worth when i assemble them into a car - maybe the idea of value creation is what you’re digging at here and I’m misunderstanding?
In either case it’s zero sum. I have some form of asset or I don’t. The value of an asset is not the price of its raw materials, it’s whatever i can convince someone it’s worth. But valuation is nothing to do with the zero sum notion of transferring ownership of assets.
>> Money is zero sum … excluding central bank money and cash
That’s a contradiction. It’s either zero sum or it’s not.
But besides that it’s missing what zero sum means. The bank issuing a loan has provided you with value in the form of the loan funds but it hasn’t exchanged any tangible asset to provide you that money. It just created an asset from thin air (your loan is its new intangible asset). They can sell your loan to a pension fund but they they won’t own that asset anymore. You won’t have to repay 2 creditors if they sell your loan.
There’s a complication when you spend your loan with a merchant banked by another bank. Your bank will now have to transfer reserves at the central bank from their account to the merchant’s bank’s account at the central bank. If they don’t have enough reserves to cover this transfer, the central bank will create reserves and lend them it at the base rate.
>> Money being backed by debt
It’s not backed by anything, it’s just a promise
>> Of course that means there is no limit to how much money there is in the system
In theory true but in practice people will stop accepting your money if you hyperinflate it
For some definitions of money. Definitely not true of M0.
>> If I make a painting
That’s just a regular asset, once it’s sold you’ll need to paint a new one.
I can assure you I didn't have to issue manual licenses or make manual copies for the millions of downloads that my open source software had this year. When someone downloaded it, no one found it missing from their project.
> once it’s sold you’ll need to paint a new one
Hence is not zero-sum, I can keep making them and the amount of assets keep increasing (non-zero sum). Zero-sum means that "whatever is gained by one side is lost by the other." By creating a new painting nothing is lost.
You did - if it was open source, you issued a copyleft licence that uses the system of copyright to disclaim your rights. It’s a licence.
Maybe you didn’t specify a licence, depending on your jurisdiction then perhaps the work is classed public domain automatically or more likely you’ve created a situation where technically your users are breaching your copyright.
>> I can keep making them
Sure, you can exchange some assets (paint, a canvas) and your labour to make a new asset (a painting).
>> By creating a new painting nothing is lost.
You’ll no longer have the paint or the canvas, you’ll have a painting. Zero sum.
I mean I didn't manually make each license, it's COPIED without nothing being removed from me. I can copy it once or a million times, nothing is removed and value is added, hence non-zero sum.
> You’ll no longer have the paint or the canvas, you’ll have a painting. Zero sum.
No, it's not the same, a painting has more value than the paint and canvas; hence not-zero sum. It's ridiculous to claim zero sum, that'd imply we cannot advance as a species and would still be dealing with pebbles.
Manually or automatically issuing is insignificant. Your work was automatically copyrighted when you wrote it, if you did nothing else - such as agreeing to exchange those rights for a salary from an employer, or declaring the software as licenced under specific terms, or performing the necessary actions in your jurisdiction to enter the works into the public domain, if you did none of these, then it’s yours to claim as an asset if you want.
>> nothing is removed and value is added
No asset was removed - ownership of the copyright of the software still remains unchanged when people copied your open source software.
However, no new asset was created. They derived value from your software hopefully but they didn’t gain a new asset.
What if you licenced it under a really permissive licence like apache? It’s still the same story. someone else can create their own asset by changing your apache licenced software and distributing it as theirs. They’re in breach of that particular licence if they try to redistribute completely unchanged work under a different licence.
>> a painting has more value than the paint and canvas
You’re conflating valuation with accounting. The value of an asset is a different and often subjective concern, from the accounting of ownership of it.
A painting has more value than it’s raw materials (hopefully!), but that tells us nothing about how to account for ownership of the asset.
If i have a case of beers that i bought for $50 and i take it to the beach and sell it for $100 to a group of thirsty friends, the valuation changed but the chain of custody of the asset was zero sum all through.
Same with farmers. How many farmers living in this modern age are walking around with 10k in their back pockets? In the vast majority of cases, I would argue that people just use their bank account for such large payments these days.
Yup, and now they are _forced_ to. Its a single point of failure. One which the government conveniently has control over.
I'm surprised the HN crowd isn't grasping this more clearly. Backups are important.
Taking in large amounts of cash is ripe for robbery. It's also why a lot of places don't accept $100's after a certain time and etc because it gets really risky for the employees.
The one incident I can think of didn't end well.
You can have more than one bank account.
People locked out of their accounts. For protesting!
Blocking emergency services is a very, very weird thing. Loads of protests do so. Parades do so.
That said, the problem isn't "was it a protest or not", the problem is judicial oversight was suspended, by employing what used to be called The War Measures Act.
Yes, only some of the powers were used. Yet those powers were used to bypass all legal and constitutional protections, and snoop into bank accounts, and freeze bank accounts, again... all without judicial oversight.
None of these people had been charged. To this day, most of those who had their bank accounts snooped in, and frozen (and later thawed), were never charged with a crime.
This is not possible in Canada, legally, without using one of the most powerful laws at our disposal. And regardless of the protest length, or type, it wasn't an emergency.
Blockades at the borders, and in Alberta were cleared without issue, before the act was declared.
Lastly, compared to protests in some other democratic countries? It was nothing. Meaningless. Tiny. Trivial.
But again, most importantly -- agree or not, like or not, even if you hated those truckers, having the government declare an emergency, for something that was not? Then having that government use those powers to bypass the judicial branch?
Insane. Wrong. Horrifying.
Such laws should absolutely not be used to punish your political rivals!
Which is it?
As a child I would always remember my grandfather carrying (at least in the house) large rolls of bills.
Unfortunately when you don't move with the times, it ultimately catches up with you and forces your hand eventually. No matter how hard you try.
A phone has cost over $1k for years. Think of the present rate of inflation. $10k is nothing, particularly a decade from now. Then think of two decades from now and this silly law still on the books.
You're simply prolonging the death with no benefit of doing so other than to pat yourself on the back.
You can’t even buy a car in cash here any more.
The only large exception I am aware of is dispensaries because banks don’t want potential drug money laundering charges.
And the problem with good governments (and fair elections and other properties of decent democracies) is that they can accidentally let bad actors in (populism is one helluva drug for the masses), and bad actors may attempt to undermine the institutions, turning democracies into kleptocracies and dictatorships if they succeed.
Then all those safeguards in the name of all that's good become perfect tools for abuse in the name of all the control over whoever dares to oppose the established order.
I'm pretty sure Europeans have heard of Hitler and Stalin and their ilk.
The last time I saw someone use that much cash it was to buy a house in Amsterdam in the mid 80's, and even then it was frowned upon by the notary and the recipient. The notary made them deposit it into their bank account first and probably had to report the deal as 'unusual'.
How much time is wasted in these transactions just counting and verifying the money?
Also what if lots of people decided to transact like this. It’s not like the banks have paper to back all your deposits, they’d need time to go physically print paper if it became that popular a medium.
US dollars say explicitly "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE", it would be ridiculous to say 'under $10000'.
Once the government has control what's to stop them doing like China has proposed, and make your virtual currency have velocity, meaning if you spend it today, it's worth $1, next week .9, and next month .5?
Isn't this literally what inflation is?
If you for a candy bar in cash all three happen at the same time. When you buy something and pay later, or pay up front and get something later, it’s easier to see the different components. When you buy stocks via a broker, it’s even more apparent.
Etc.
Perfect example. I wouldn't do that, no, but I wouldn't want it to be illegal.
It's the same reason I want a right to privacy; you could argue that most people who want to hide something from the state want it because they're doing something illegal, but I still find it valuable that I can do things without being tracked. It's the same as the right to go outside without any form of ID; most people who aren't up to anything illegal could make sure to always bring valid ID at all times, but I value the freedom to not be forced by the state to bring something. It's the same reason I would oppose a law that you must wear a GPS tracking device on you at all times; most people do it willingly with their phone and watch these days, and the only people the law would really affect would be criminals, but I value the freedom to go somewhere without being tracked.
I currently make all payments electronically, but I value the freedom to be able to transfer money without leaving traces of the transaction, even though I don't currently exercise that freedom. Because the state doesn't have any business micro-managing individuals' behaviour like that.
This feels like the question of Blackstone’s ratio: “It is better that ten guilty persons escape than that one innocent suffer.” I’m not an absolutist about these things, but I take Blackstone’s side of this (very difficult) question.
(Not that it's always fair but that's a different argument.)
Don't worry, the water around us that's heating up is for our own good and not at all to cook us.
But much more importantly, inflation means 10K is less and less every year.
You probably shouldn't finance a vehicle you can afford with current interest rates, and you may not want to give your debit card to a secondhand dealer for processing.
While I do have fond memories of paying less than $10k for a beater, those days may not be coming back. In 10 years, high-end phones and computers could easily fall outside that limit too.
I don't know anybody in real life who accesses their money via a phone. They can do it via a computer, but most people I know don't have laptops.
Most people I know over 70 have internet banking on their phones. Every adult I know under that age does.
Where do you live where this is incredibly rare?
I don't know anybody that doesn't. And that includes 80+ year olds... mobile gear is how people interact with the internet around here and the internet is how people interact with their banks.
I think it's going over most people's heads that buying and selling cars on Craigslist isn't like buying a car from a dealer. I could potentially use bankers drafts but many sellers know this is a commonly forged document and the risk isn't acceptable to them. Almost every single company/bank digital payment service is reversible or able to be cancelled (I naively was not aware of this until I was a part of the early bitcoin-otc community and got to witness the myriad of scams people ran once the other medium wasn't actually reversible).
Good thing about cars and houses is that you can pay some amount officially and then pay more money under the table.
Even limiting things to strictly “financial freedom” - while more germane to the cashless question and also happen to stick the US above all of Europe save Switzerland - are highly questionable due to the inclusion of weird subjective metrics like “labor regulations = less freedom”
There are very few remaining instances in the region where people still pay large sums in cash. Transaction costs are so low (and mostly nonexistent) that cash remains in use either in very specialised circumstances or as part of “grey economy” activities.
A common tactic of centralized control is to "boil the frog," so to speak. Start with a control that seems to most people to be lax enough to be "not that big a deal," and then later -- maybe years -- tighten the control once enough people are acclimated to the existence of the control in the first place.
If the government were to come along and say, "If you are female and are purchasing travel tickets between a state where abortion is illegal to a state where abortion is legal, we want to know about it, so we're requiring that you use a traceable method of payment," then the problem may become more obvious to you.
If instead the government says, "We're requiring that you use a traceable method of payment," but doesn't disclose a specific reason why, and later decides to use it to determine when females travel to states where abortion is legal, that's not as obvious a problem. At first.
In this case, it could be, "We're requiring that you use a form of payment that we can easily monitor when engaging in transactions over $X." After about 5 years or so of people getting used to that, they can move the threshold to something like $(X/2). Then after a few more years, make it mandatory for anything over $50 or $20.
So we may want to not tolerate the activity at all, on principle. RMS' The Right to Read* is in orbit around the general theme, I think. https://www.gnu.org/philosophy/right-to-read.en.html
* hysterically, Bing prominently provides results about locking down documents when I search it for "rms right to read"
That's a big claim. Can you put a guarantee on it? Seems like when your only option is to use a tightly regulated system that has opinions on how much you can spend, every time you do you are granted permission. Some day they may say no. What is your recourse when they do?
You're on the happy path, and wondering why anyone would complain when the path is so happy. The problem is what happens when that breaks down, and when that happens you definitely want to be able to use cash.
Dear people who come up every time with their own version of "if you have nothing to hide you have nothing to fear", break your bubble sometimes, talk to your work colleague from outside of America (or "the west"), ask them what it's like to live in a country where you cannot trust your own government. What it's like to live in a post-communist country, what it's like to live in a country with central planning.
Are you sure about that?
https://www.zerohedge.com/political/gun-shops-and-customers-...
We had instances where a government blocked bank accounts of protesters, in democracies and autocracies alike. This is unacceptable. No government in the world should be able to restrict what people can do with their own money. And with this EU-wide limit, we are one step closer to nothing else orwellian authoritarianism.
It's not just "grey economy" how you call it. It's part of an essential freedom that has been taken away from the people.
You're talking as if introducing a nationwide speed limit is equivalent to banning cars. The regulation of a given operation is not akin to outright banning it and to assert that is hyperbole.
Remember earlier this year when people in Lebanon had to hold bank managers at gun point to try and withdraw money from their own accounts as the economy collapsed?
The "CaSH hAZ nO PuRpOSe eXCePt fOR cRImE" people in this comment section have massive blind spots. I'm not surprised politicians are taking advantage of it.