The U.S. is considering whether to adopt a digital version of its currency

[Lightwreather]

12 minutes ago, SlidewaysZ said:

Heck we never should have gotten off the gold standard.

That statement brings a lot of history nerds and economists a lot of pain.

Why?

The whole point of paper currencies was so that the supply of gold and other commodities would not cripple an economy as it did in the long ago.

Maybe try looking into a bit of history?:

 

[leadeater]

3 minutes ago, J-from-Nucleon said:

The whole point of paper currencies was so that the supply of gold and other commodities would not cripple an economy as it did in the long ago.

Yea but we have AAA rated sub prime loans to replace it lol

[Needfuldoer]

14 minutes ago, leadeater said:

Yea but we have AAA rated sub prime loans to replace it lol

Because more mortgages means more mortgage-backed securities to invest in! It prints money forever! What could possibly go wrong!

 

/s

[poochyena]

1 hour ago, SlidewaysZ said:

Heck we never should have gotten off the gold standard.

I will literally never understand you types. Just look at the economies in MMOs, they certainly aren't backed by anything physical and real, and they are just as stable as any real world currency.

[Quackers101]

23 hours ago, J-from-Nucleon said:

So, if I'm understanding this right, basically what this does is just shift responsibility of exisiting infrastructure to be directly under the US government?

So, apart from fees and some other formalities virtually nothing would change? Well, that would certainly make it easier for adoption.

US government + banks + crooks. big short final

Get your own rating agency, for a small loan.

https://youtu.be/mwdo17GT6sg?t=134

 

also NFT some jenga used in a tower based on the lovely debt

 

[Brooksie359]

6 hours ago, leadeater said:

Suspect this is much more important in the US where credit score actually means something at all. Here it's irrelevant so nobody knows or uses it, it exists in background by financial institutions however there are many things they are legally not allowed to discriminate on based on credit score so it's purpose is extremely small here. 

 

All bank loans for home mortgages have to be means tested to ensure it's affordability along with maximum allowed loan to value ratio and maximum loan to income ratio. Basically no matter how bad your credit score is if you pass the means test then the bank must offer you the loan. To further protect the banks and also consumers from predatory or unfair lending terms first home buyers are entitled to a government secured Welcome Home Loan facilitated through the banks so there is no risk to the bank and allows a minimum 10% deposit instead of 20%, or 40% if it's an investment property purchase. As the name suggest you are only entitled to this loan once and you must reside in this property.

 

Not that what is being proposed here will change any of this situation in the US though, hearing about the whole credit score thing to me is weird because of how not a thing it is here 

 

I owned a house before a Credit Card, in fact I still don't have a bank issued Credit Card at all and never have. I technically do have a Credit Card though, it's a store card that is a Visa and in the background it's just a finance company, any case I need these to purchase on the interest free terms periods etc.

Yeah unfortunately we do have the credit system in the US which imo is very predatory in nature and definitely discriminatory. I didn't have a credit card for a long time too until I wanted to get a car. Got a credit card and tried to build credit but didn't get a huge amount of credit and ended up with a pretty high interest rate. That being said if I hadn't had the credit card at all to build at least some I wouldn't have been able to get the car loan. Now I almost exclusively use my credit card to buy things that I would buy anyways and pay off in full every month. Now my credit is very high and I could probably have gotten a much cheaper loan. 

[Brooksie359]

3 hours ago, SlidewaysZ said:

What's wrong with some of you guys? Getting rid of physical cash is the dumbest thing ever. Heck we never should have gotten off the gold standard. Do you just love handing the government all your information? Cash is one of the last anonymous things in an ever digital privacy stealing world.

Other than the gold standard being completely unnecessary it is also impractical. Also I doubt this would get rid of paper currency. It would just be another option. 

[leadeater]

5 minutes ago, Brooksie359 said:

Other than the gold standard being completely unnecessary it is also impractical. Also I doubt this would get rid of paper currency. It would just be another option. 

Question, what happens if gold suddenly loses value. I don't think it's a very safe assumption that gold's value is stable over the long term which is critically important factor for backing an entire currency.

 

Something happened, gold devalues and is now worth 1/10th it used to be, just another economic crash all over again.

[Lightwreather]

10 minutes ago, leadeater said:

Something happened

Maybe we should get elon to tweet about gold, then make him sell it off just to see what will happen....

/s

[leadeater]

2 minutes ago, J-from-Nucleon said:

Maybe we should get elon to tweet about gold, then make him sell it off just to see what will happen....

/s

"New Tesla Gold based Lithium Ion battery technology"

*Gold price skyrockets*

"J/k It was Silver not Gold"

*Gold price tanks*

"J/k it was all just a joke to prove a point"

[IPD]

Oh great.  Another vector for N.Korean superdollars to take over.

[steelo]

One word...control.

[Brooksie359]

12 hours ago, leadeater said:

Question, what happens if gold suddenly loses value. I don't think it's a very safe assumption that gold's value is stable over the long term which is critically important factor for backing an entire currency.

 

Something happened, gold devalues and is now worth 1/10th it used to be, just another economic crash all over again.

I had always thought about that as well but part of me wonders if the currency would still hold its value as it does now simply because its legal tender. I mean while it would be backed by gold it still would be tied to loans and other forms of debt due to it being legal tender. 

[leadeater]

3 hours ago, Brooksie359 said:

I had always thought about that as well but part of me wonders if the currency would still hold its value as it does now simply because its legal tender. I mean while it would be backed by gold it still would be tied to loans and other forms of debt due to it being legal tender. 

True, I was think more around if the currency was solely backed by gold but like you say you can technically ignore such a gold price drop, at least in the short to medium term anyway.

[mr moose]

16 hours ago, Brooksie359 said:

Yeah unfortunately we do have the credit system in the US which imo is very predatory in nature and definitely discriminatory. I didn't have a credit card for a long time too until I wanted to get a car. Got a credit card and tried to build credit but didn't get a huge amount of credit and ended up with a pretty high interest rate. That being said if I hadn't had the credit card at all to build at least some I wouldn't have been able to get the car loan. Now I almost exclusively use my credit card to buy things that I would buy anyways and pay off in full every month. Now my credit is very high and I could probably have gotten a much cheaper loan. 

That's a shit system,  In Australia we had the opposite problem, which might not be better but from what I read it feels better to me who does not have any credit at all.

 

After the GFC and few other hiccups we had a royal commission into the banking sector.  Basically the take home discovery was that banks were handing out loans way to easily and laws were tightened to make them more responsible in making sure customers can actually afford to service the loans.   End result - a couple of the ceo's and directors got in trouble for shit everyone has already forgotten about (dodgy embezzling etc) and now less people can get a loan.

 

 

14 minutes ago, leadeater said:

True, I was think more around if the currency was solely backed by gold but like you say you can technically ignore such a gold price drop, at least in the short to medium term anyway.

 

Even though it seems to double, then halve then grow then shrink, up until economies started dropping it as the standard it's value never seemed to go low enough that it had any major effect on economies.   Watching old black and white films discussing it can be very comical by today's standards.   Much like the old advertisements and "educational" videos on capitalism. They would dare make those same arguments today.

 

 

For those interested, the only reason we no longer have the gold standard is because economies basically out grew the total value of hoardable gold.   I think the consensus referred to often after the great depression was that gold no longer stabilized economies, but hamstrung them by not permitting governments to invest in economies (putting money into capital works or building hospitals etc).  I guess however, like all similar things, there is going to be many takes on what they did and why, most of it driven by a desire to blame someone for something.   It seems fiat currencies seem to get thrown around a lot as a blanket "old gubmnet bad mmmkay" argument more than a genuine reflection on any actual issues they might have.

 

 

[Vishera]

Not only there is too much USD in circulation and the Americans keep printing money,now they come up with new digital currency?!

That will make the inflation way worse than it is now.

[Kisai]

On 2/7/2022 at 5:41 PM, poochyena said:

uhh, if you want the item you buy to be shipped to you there is..

Sure, you can do that with digital goods I guess, but I think the vast majority of purchases are still physical.

Again, there is nothing stopping two people from completing a transaction, then someone shipping an "entirely unrelated" product a day after the digital transaction claimed to be in Texas happens.

 

Less everyone forgets why Amazon didn't pay sales taxes until as recent as 2017.

https://en.wikipedia.org/wiki/Amazon_tax#US_legislation

Quote

The practice of not collecting sales tax on purchases due to lack of a physical presence ended in 2018. On April 17, 2018, The United States Supreme Court heard the case of South Dakota v. Wayfair, Inc., and issued its decision on June 21, 2018. A five-justice majority overturned Quill Corp. v. North Dakota, ruling that the physical presence rule decided in Quill was "unsound and incorrect" in the current age of Internet services.

 

What keeps people honest is the ability to associate a financial transaction with a purchase. When you're basically trading "cash", that connection doesn't exist, and thus "under the table" transactions regularly occur, especially with people who don't want to be visible to the government (eg organized crime.)

 

One of the biggest reasons to get rid of physical cash, is to completely castrate organized crime. Once you have no way of laundering cash, organized crime has to resort to things like casino chips or gift cards. BTW, if you've ever been to a casino, you're technically not permitted to leave the casino with their chips, nor bring in any chips, because casino chips are basically untraceable money usable in only one casino. Casinos were literately created to launder money.

 

[Brooksie359]

57 minutes ago, mr moose said:

That's a shit system,  In Australia we had the opposite problem, which might not be better but from what I read it feels better to me who does not have any credit at all.

 

After the GFC and few other hiccups we had a royal commission into the banking sector.  Basically the take home discovery was that banks were handing out loans way to easily and laws were tightened to make them more responsible in making sure customers can actually afford to service the loans.   End result - a couple of the ceo's and directors got in trouble for shit everyone has already forgotten about (dodgy embezzling etc) and now less people can get a loan.

 

 

 

Even though it seems to double, then halve then grow then shrink, up until economies started dropping it as the standard it's value never seemed to go low enough that it had any major effect on economies.   Watching old black and white films discussing it can be very comical by today's standards.   Much like the old advertisements and "educational" videos on capitalism. They would dare make those same arguments today.

 

 

For those interested, the only reason we no longer have the gold standard is because economies basically out grew the total value of hoardable gold.   I think the consensus referred to often after the great depression was that gold no longer stabilized economies, but hamstrung them by not permitting governments to invest in economies (putting money into capital works or building hospitals etc).  I guess however, like all similar things, there is going to be many takes on what they did and why, most of it driven by a desire to blame someone for something.   It seems fiat currencies seem to get thrown around a lot as a blanket "old gubmnet bad mmmkay" argument more than a genuine reflection on any actual issues they might have.

 

 

Oh we definitely had an issue with people getting loans that they shouldn't have. Unfortunately it resulted in the huge housing market bubble bursting and the economy tanking. After that most of the people responsible wiped their hands on a small few to take the fall while the rest of them got away scott free. 

[poochyena]

5 hours ago, Kisai said:

Again, there is nothing stopping two people from completing a transaction, then someone shipping an "entirely unrelated" product a day after the digital transaction claimed to be in Texas happens.

There would then be nothing stopping me from performing a charge back on my credit card, getting my money back, since the order never shipped to the texas address that was provided. It would work between friends, but not large scale.

[Kisai]

5 hours ago, poochyena said:

There would then be nothing stopping me from performing a charge back on my credit card, getting my money back, since the order never shipped to the texas address that was provided. It would work between friends, but not large scale.

Again. What do you think digital currency is for?

 

The thing is, if digital currency works in a peer-2-peer mode, it means that the same problem we have with under-the-table payments, hiring illegal workers, money laundering, and so forth still exist. Yet if you require a centralized payment system to do every payment, like how existing debit cards work, the government tracks every last penny, and every unreported tax.

 

But then we're back to the problem of cannabis and porn/sex-things having to remain off the books because laws are not on the same page or sane in every state.

 

Most people who don't give a care, don't care what the taxman sees them buying, they only care that it's not more of a pain in the ass. Think about when you try to buy things off Steam or Epic, and have to fill out a bunch of contact information ENTIRELY because of the billing address of the card. It would be so much less of a pain if you could just tap some stupid card to the monitor, and it's done.

 

[poochyena]

1 hour ago, Kisai said:

Again. What do you think digital currency is for?

Its for purchasing things

1 hour ago, Kisai said:

But then we're back to the problem of cannabis and porn/sex-things having to remain off the books because laws are not on the same page or sane in every state.

Thats a problem with laws, nothing to do with digital currency

 

[Unclescar]

On 2/7/2022 at 9:35 PM, poochyena said:

uhhh, how does any of that relate to the topic, exactly?

I was responding with a point about privacy to a question about downsides to the government (which has a long list of terrible behavior without being held accountable) having total control over the medium by which we exchange goods for survival. People who are not concerned about privacy are welcome to share their info, but they do not get to dictate that everyone else shares their info too.

[poochyena]

21 minutes ago, Unclescar said:

I was responding with a point about privacy to a question about downsides to the government (which has a long list of terrible behavior without being held accountable) having total control over the medium by which we exchange goods for survival. People who are not concerned about privacy are welcome to share their info, but they do not get to dictate that everyone else shares their info too.

Why not? There is absolutely no downside to it.

[Kisai]

57 minutes ago, poochyena said:

Why not? There is absolutely no downside to it.

Because not everything that is "illegal" is "immoral"

 

Think about birth control services. Most people don't want that information to be known for a variety of reasons. 

 

Cash affords people privacy at the risk of being ripped off. Digital cash can quite literately create situations where an underground economy exists entirely because of living in the boonies or in a state or city run by idiots, so services that are legal in states or cities with higher quality of life aren't available, and the services end up being provided ad-hoc.

 

Like it's always a double-edged sword to move to an all-digital currency/payment system. On the plus side, every transaction is logged and tracked, making it hard to create fraudulent activity, and the taxman gets their cut. On the negative side, people are people and will seek to minimize their exposure to taxes by doing things like having forwarding addresses in tax-free jurisdictions, or businesses incorporated there. Remember "the panama papers" was and still is a thing precisely because of this.

 

 

[mr moose]

22 hours ago, Brooksie359 said:

Oh we definitely had an issue with people getting loans that they shouldn't have. Unfortunately it resulted in the huge housing market bubble bursting and the economy tanking. After that most of the people responsible wiped their hands on a small few to take the fall while the rest of them got away scott free. 

We need an "agree but angry" button that indicates we agree with the post but dislike what it means.