A central bank digital currency would allow the central bank to take your money. Right now, a government agency would need to ask your bank to take your money. That bank will have lawyers and they'll ask questions. You can guarantee Jamie Dimon at Chase doesn't just say "oh, well ok then, sure". He'll want to see the relevant documentation, have his people inspect it, and push back if he doesn't like it.
> Right now, a government agency would need to ask a bank to take your money.
And those questions will generally be “How much do you want to take? And how do you want us to give it to you?”
Oh, they’ll probably make sure the correct paperwork is filled out and procedure is followed, but substantive, as opposed to procedural, due process isn't something banks are or want to be guarantors of.
We can agree to disagree. I don't buy for one second that any of the large US banks does that. Especially Chase. Jamie Dimon doesn't hide his... extreme frustration (/hatred?) of government entities.
I'm sure he performatively complains about regulation because he's a wealthy CEO who doesn't want to pay taxes, but at the end of the day, he has no financial interest in "protecting the little guy," because he's not a little guy and neither are any of his cronies.
He has plenty of financial interest. Chase has 100's of billions in core deposits from little guys. They pay about 0 on them. They lend them at 3-4%. If people started to think Chase was a place where their deposits weren't safe, it wouldn't be pretty for Chase. Even the thought that maybe just maybe they aren't safe is enough.
You seem to have a very naive view of how the financial system works. It's not like there are a lot of options for small depositors, it's one of the set of too big to fail banks. And they can get all the free money they want from the Fed. If you are someone with millions of dollars of annual deal flow through Chase, yeah, Dimon will go to bat for you, but if you are some retail depositor, as long as they verify it's the government, they'll do whatever they want. (And they don't even really care about verifying anything under normal circumstances, which is why identity thievery is so easy.)
> It's not like there are a lot of options for small depositors, it's one of the set of too big to fail banks
You might be outside the US? In the US there are literally 1000s of options. And the idea that banks get all the "free money" they want from the Fed...
I don't think you should be suggesting anyone is naive with those two statements.
The fed funds rate was 2% just a few years ago, it was 5% in the mid 00's and was rarely below 5% before that for decades.
Also, it needs to be paid back. On top of that, they are in a competitive market where mortgage rates are very low, corporate lending rates are very low. So it's not a simple game of "free money in, high interest money out". Anyone who thinks finance is some easy game hasn't played the game.
> If people started to think Chase was a place where their deposits weren't safe, it wouldn't be pretty for Chase.
But when all banks get hit equally by regulation, consumers would have nowhere else to go. The banks might superficially complain, but they have no financial interest in opposing surveillance.
There is only one underlying issue — the fact that institutions cooperate with each other and shut out the public. Only a strong culture of democracy and government accountability can actually protect the public. Without that, it doesn't matter whether the banks are private or state-owned; they control our money all the same.
Moreover, they lose a customer by doing that. Multiply that out and they lose lots of customers. Why would it be in their interest unless legislated to do so?
That's only true for regular joe sixpack tax slaves, whose rights are quite illusory, as you correctly observe.
However, banks spend billions of dollars defending large clients, going even as far as happily paying multi-billion fines to keep laundering money for the cartels.
In addition, if the CBDC replaces cash, there might not be a way to avoid the central bank taking your money. This is how they could implement negative interest rates, which could be used to prop up asset values.
Or they could use negative interest rates to reduce the supply of money as the richest members in society no longer have guaranteed automatic accumulation of their wealth.
The richest members of society already don't leave a large portion of their wealth sitting around as cash. Cash would be even more avoided if there were a realistic prospect of negative interest rates.
> Right now, a government agency would need to ask your bank to take your money
A government agency seizing your money rather than asking a bank to do so would often be an improvement over what we have in the US today: Banks routinely freeze peoples accounts with zero due process and little recourse, through the implicit (but not legally recognized) coercion of the impossible maze of bank regulation.
When your assets are frozen directly by the government you're more likely to get access to some amount of due process-- though not always (see: civil forfeiture).
In any case, since banks absolutely never stand up against the government to protect ordinary customers (drug cartels will billion dollar scale accounts are another matter...) it's hard to imagine a CBDC being worse in this particular respect.
The only safeguard against state institutions taking your things is strong laws preventing them from doing so. This is a fact independent of what kind of currency is used.
This implies that a central bank digital currency (assuming this is the United States) would have these capabilities.
Maybe this is naive, but I would think that this digital currency would be designed to preserve people's rights in the same ways that current money does.
A central bank also has lawyers who ask questions?
Sometimes it feels like some people imagine government working like this: Biden calls up Powell and says “Let’s take all the money from our political enemy N.N today” to which Powell replies “Yeah LOL awesome, my minions are pushing the button now”
Sure - you are right. But one more layer of lawyers asking questions on such a request is, imo, extremely valuable. Especially when the extra lawyers are being paid by a private entity who is more answerable to shareholders and customers than the central bank (or whoever asks them).
This is an interesting sub-thread. My question is "why do you and parent commentators think that these decisions, both on payer/payee sides, won't be fully automated AI - with no human in the loop?"
In that case just like in current you can sue the government. And if that route is not open due to corruption or whatever it is essentially same... If truly totalitarian government decides to do something "illegal" you really don't have much way to fix it in either scenario.
I'm pretty sure any government that wants to will take your regular bitcoin too. Just put you in jail til you hand it over. If you make any transaction it'll be easy for them to see your wallet.
You've just changed the cost of doing so from near costless (a DB update) to very expensive to do at scale. (Jail, police staffing, court staffing, prisoner care and feeding, potential violence and injury, paying staff to find targets, manually, etc) That alone is worth a lot.
Scale doesn't mean you need to process the entire target population. A carefully selected subset of targets with visibility tailored for demonstration purpose can be very persuasive for the rest of the people to fall in line. Of course that also comes with the risk of resistance and riots.
> (Jail, police staffing, court staffing, prisoner care and feeding, potential violence and injury, paying staff to find targets, manually, etc) That alone is worth a lot.
Uh, you do realize that to politicians, enforcement looks alot like a jobs program?
