Comment by tjpnz
3 years ago
I don't understand why FedNow and CBDC are such a big issue in the US. FedNow looks quite attractive from a fees perspective, especially when compared to PayPal and alike. Part of me wonders if the middlemen who stand to lose out might be trying to muddy the waters. It wouldn't be the first time.
> I don't understand why ~FedNow and CBDC~ BIG BROTHER are such a big issue in the US.
Fixed this for you.
I don't really want a gigantic federal agency having insight into every financial transaction I make. Hard, fucking, pass.
Are you under the impression that ACH, the thing FedNow is replacing, is free from government influence?
This is what's bizarre to me about the FedNow hysteria. It's not a government system replacing a private market system. It's a government system replacing an older, worse government system. It's like having a panic attack because the Federal Reserve is updating their PCs to from Windows XP to Windows 10.
Because Nacha (and ACH) is explicitly not a government system
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Ignoring the fact that FedNow doesn't change much in this regard...
I'm torn on this. Visa, MasterCard, Venmo (aka PayPal), etc. all know about large subsets of my transactions, and they go and sell my personal data to other companies in sleazy ways to cover their costs.
Is that better or worse than the government knowing all this stuff? Sure, the government can also legally use force against me and deprive me of my freedom and possessions, and might pervert my transaction history into justifying doing bad things to me. But that's a risk, not a certainty. Private companies selling my data and using it in nefarious ways is a certainty.
We can stop private companies from selling that data if we wanted to. Once the federal government has direct control of our financial transactions, how do we limit what they can do with that power?
The point of keeping the government out of the banking business would be to keep the door cracked for the chance to improve it later. That door slams shut once the federal government has the insights into every transaction, and more importantly the ability to deny ones they don't want us to do. We also Wil have much less control over the creation of a social credit score, theoretically the government would have everything it needs to make that happen with control over our transactions.
Can’t the government just buy this data from them, anyway?
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don't forget SARs to FinCEN and other AML requirements
the government already knows.
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Just wondering, but how is this different from our current system where judges can approve search warrants and companies have to comply?
Are you think they won’t need search warrants?
Cash isn't recordable in the same way. I don't provide my id with the transaction when making cash purchases.
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This is the difference between the government needing a search warrant and having to come to your house, and them needing a search warrant but a law enforcement officer already living in your house. Sure, they still "need a warrant", but that doesn't make the situation acceptable.
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Seems to me people is failing to understand what CBDCs will bring, especially even more “bad money” and economic slavery caused by “incentives” to spend.
But the list goes on..
Please explain to me what FedNow changes compared to the current ACH system in regards to government recording of transactions? Please explain to me how FedNow prevents cash transactions from occurring, or otherwise justify your statement “every financial transaction I make”?
> I don't really want a gigantic federal agency having insight into every financial transaction I make. Hard, fucking, pass.
If that's the case, I have bad news for you about the banking system of literally every developed country.
Ever heard of cash?
I can buy an icecream anywhere in the world without anybody tracking me. Even with the "wrong" political opinion (even if I would be a trucker in Canada during certain protests).
I cannot do that with CBDC.
No. CBDC (aka: the ultimate totalitarian's dream) is not the same as the current banking system, despite the current banking system also being very horrible for privacy.
* All of the above assuming that cash will be banned and CBDC will be mandatory for everybody.
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You know they already do right? If you pay or get paid by direct deposit or check those all run through the fed.
Because there are many Americans who are small gov and against excessive taxation. A CBDC is "too far" for a lot of people who believe that.
Imagine being paid in a ‘programmable’ currency that your employer (or government) decides cannot be spent on alcohol, meat, or fossil fuels.
Meanwhile, wealthier people get paid in ‘unrestricted’ currency.
That already exists today, food stamps/SNAP/EBT for low income and dollars for everyone else
I'd just as soon give everyone dollars via UBI
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I view this type of thinking as the conspiratorially minded's version of "trying to solve social problems with technical solutions".
If there were political motive and will to implement such a system, it could be done without a CBDC and certainly without modernization of ACH (heh).
Conversely, if there's not political motive and will, then the presence of a CBDC doesn't change that fact.
I mean if we're talking that level of societal breakdown they would just use the system we already have for tracking semi-restricted purchases which is scanning and reporting your government ID.
Then you can enforce meat and fossil fuel rations with no way to buy yourself around it.
Payment processors like VISA can already block payments that they don't like. Even if they are completely legal.
A CBDC does not necessarily need to be implemented with that capability.
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Why would they want to do that? How would either your employer or the fed have the grounds to justify doing that?
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You are already starting to pigeonhole people with your stereotype. I'm as liberal as they come and I find the thought of a CBDC to be an unimaginable Orwellian nightmare. A boot stamping on the face of civil liberties and privacy forever.
Maybe if our democracy wasn't broken this wouldn't be an issue. The government is supposed to be ran by us, but it's been taken over by bureaucrat cosmopolitans & multi-national corps who have a distinct will to power.
The same thing happens when a town decides to string fiber on their utility poles and sell transit. All sorts of reasons why that's a terrible thing. Same for importing drugs from other countries. And on and on.
The ISP duopoly/monopoly is worse from a consumer perspective and functionally equivalent from a civil rights perspective. To think otherwise is naive.
In fact, the private sector solution is perhaps even worse from a civil rights perspective.
Consider a prosecutor in Jurisdiction A hell-bent on violating the civil rights of a citizen in Jurisdiction B, and suppose Jurisdiction B is sympathetic to this citizen. This isn't even hypothetical in the USA. Abortion, immigration, civil disobedience, etc. In the corporate duopoly setup, Jurisdiction A can compel the ISP to comply -- either by physically entering the property of the ISP and taking data by force, or by threatening market access. In the muni ISP case, Jurisdiction B says "shove it".
And that's before noting that corporations such as modern ISPs are -- like governments -- also large bureaucracies endowed with incredible power that are de facto impossible to opt out of. Except at least in representative government you have some sort of voice, however small, which isn't dependent on amassing vast sums of cash.
> a town decides to string fiber on their utility poles and sell transit
I dream of the day my municipality does this. The idea of buying service from whoever I want rather than be forced to use Comcast... -swoon-
> The same thing happens when a town decides to string fiber on their utility poles and sell transit. All sorts of reasons why that's a terrible thing.
Why is it horrible?
FedNow isn't a big issue.
CBDC really isn't a big issue either, because it almost certainly won't happen. Americans are very unlikely to want a system like that.
Americans didn't want a central bank, but look at where we are.
https://www.cambridge.org/core/journals/perspectives-on-poli...
The "central bank" americans fought hard against in the first place didn't have the same function as the modern central bank started last century.
Many of the arguments revolve around concerns that the government will gain too much control, power, and personal information. It the government directly controls financial transactions they know every transaction we make, and more importantly can deny transactions they don't like.
Arguably the US government effectively has these powers today, but beingtthat they don't directly own our banks there is a level of red tape they have to go through. As long as they are technically separate there is also the opportunity for us to change the laws and strip them of that access, once combined we give up that possibility.
The US was originally design with a very strong distrust of our own federal government. For the last 80 years we've completely flipped the script and given more and more power to a massive federal government, but the undertone of distrust is still around for quite a few Americans.
Two points of context:
* the Biden administration is planning to monitor smaller denomination transactions (in an inflationary environment!)
* IRS resources historically and presently target low-income, low-wealth households/individuals for audits
https://www.cnbc.com/select/irs-600-reporting-rule-delayed/
https://www.cbsnews.com/news/irs-audit-eitc-five-times-as-li...
IRS auditing targeting has been at the explicit behest of Republican controlled Congresses. That is, they were told to stop/reduce targetting high net worth individuals, or face even further cuts to their budget.
What benefit would targeting low wealth individuals have to the IRS? I worked on a state tax system briefly at Accenture and they offered the product for a percentage of reclaimed taxes. They started with high debts with good credit scores. Since they had skin in the game (which it could be argued the IRS doesn’t), they wanted to maximize the unpaid taxes they collected.
Because wealthier people have more complicated returns and are much more likely to litigate, resulting in more time commitment.
For high net wealth audits, you could have potentially dozens of people working on it for years so there is a possibility that a judge / jury rules in your favor.
They are going after low effort people, but making it up by volume.
Because it's easy to mess up claiming the EITC and only low income people can claim it. Also, there's a lot more (relatively) low income people than high income people.
This also depends if by "audits" you include every kind of correction letter the IRS sends you.
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> What benefit would targeting low wealth individuals have to the IRS?
Wrong question. The correct question is:
What benefit would the IRS targetting low wealth individuals have to high wealth individuals?
> What benefit would targeting low wealth individuals have to the IRS?
I'll shorten the explanation even further: many more easy/no contest wins.
Tax collectors have traditionally extracted from low wealth individuals to enrich wealthy individuals.
I'll let you figure out why.
> IRS resources historically and presently target low-income, low-wealth households/individuals for audits
If we could actually increase their funding substantially, this would be less true, but it's difficult and expensive to go after wealthy individuals.
Supposedly, it's because of more centralized surveillance and control.
https://medium.com/beyondmoney/the-good-bad-and-ugly-of-cbdc...
https://medium.com/illumination/how-the-central-banks-digita...