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Libra VS XRP


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12 hours ago, Wandering_Dog said:

In an xrp system, credit is backed by xrp, its the gold in a gold standard system. And Ripple profits by having created it from nothing.

Yes, however XRP isn't backed itself - and at some point Ripple will free itself from the escrow. I don't have a problem with Ripple profiting from their holdings in the meantime and my concerns with Libra were not meant as a socialist critique of the arrangement. Moi? Socialiste?

12 hours ago, Wandering_Dog said:
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As for the bigger picture, nation states which otherwise need a currency to define their statehood and who would otherwise decide monetary policy are being asked to relinquish that essential source of revenue

This I don't follow, Libra does not require a state to relinquish power over taxation. Or am I missing something? 

I realise I probably shouldn't have used the word "revenue" here. I mean that one of the defining features of sovereign nation-states under international law is that they also have monetary sovereignty. This allows central banks to take (and game? ;)) positions in the forex and other markets and they can profit significantly. The Libra plans undercut that.

12 hours ago, Wandering_Dog said:
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and stabilising influence to an unregulated handful of privately owned corporations.

This is an interesting statement, because the same applies to xrp, or any standard, does it not? 

If you are saying that #xrpthestandard will result in an unregulated handful of privately owned corporations who control monetary policy, then no. Isn't the point here that the Libra Foundation will effectively have many of the powers of a central bank? Actually, they're going many levels better because they also regulate the associated marketplace, the fee structure and contracting models/laws. They control monetary and fiscal policy of the system as well as dispute resolution and enforcement. That's not a resilient system. We've already been there before in history and saw what happens.

That aside, surely no one thinks Ripple is attempting or even planning such a level of overreach?

12 hours ago, Wandering_Dog said:

I'm a bit unsure of the world financial order being peaceful, but I don't fully understand the handmaiden statement regarding firms rather than households.

I think one of my problems in crypto (an involvement which extends far beyond this forum) is that I don't have the hatred towards CBs that many others do. I lived through the horrible 70s and 80s with a politicised CB, pegged AUD, huge tariff walls and interest rates over 20% (!!!). Once Keating/Hawke released the Reserve Bank of Australia from government influence we saw the positive role an independent central bank can have in cushioning financial shocks, stabilising inflation and growing GDP. Their response to the GFC was exemplary.

My comment regarding handmaidens was probably triggered by my partner watching Handmaid's Tale in the background. That said, the analogy is still apt: the good works of cryptocurrency (open source, permission-less, censorship resistance) have rapidly been weaponised and perverted into the polar opposite of these aims resulting in a privatisation of control the likes of which we've never seen.

I suspect the story won't end there (fortunately). Allowing trading of Libra on exchanges (also part of the plan) or atomic swaps could provide the necessary elasticity and destabilisation required.

12 hours ago, Wandering_Dog said:

I don't think anyone can come out and say "we're planning on setting global monetary policy" because you will be destroyed by sovereigns. So, this is a non-statement, just said for the sake of saying it, devoid of any meaning, considering they are releasing a bloody currency over which they have control! 

Of course not. However neither Libra nor FB hid their intentions very well judging by the reaction in the press today.

@Wandering_DogI do have one lingering question about your presentation of the factual scenario: you make repeated references to Libra relying on CB rails and currencies such as this:

12 hours ago, Wandering_Dog said:

The reserve will have to borrow from the receiving central bank to cover those central bank deposit outflows.

Isn't the point that Libra is working towards a self-contained system of trade and finance which leaves the CBs impotent and irrelevant?

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21 hours ago, Wandering_Dog said:

Ripple is already rich, they can always just go home and retire, so they may not even care :crazy:.

This is the most bizarre statement I’ve seen in a while. 

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22 hours ago, Wandering_Dog said:

@jcdenton

From the FT article:

I'm not sure I'm following the author's statement here. When a bank deposit of a customer is used to purchase Libra, the bank destroy's that liability, the customer destroys the bank deposit asset, the central bank transfers the reserve deposit from the customer's bank to the Libra participant bank's account, but this reserve deposit is then immediately destroyed and the central bank gives the Libra bank participant a bond. So, the bank and reserve deposits are removed from the system, which I'm hoping is how he's using the language "gobble up".

But he's talking about FX liquidity and float, which I'm not following. As the payment would be from domestic to Libra to foreign. If there is a net outflow from Country A to Country B, then we are talking about the destruction of reserve deposits in Country A, and the creation of reserve deposits in Country B. When a recipient of Libra in Country B converts libra, the process is reversed in the new currency, so the Libra bank participant creates a bank deposit then destroys it and transfers a reserve deposit (will borrow at the overnight rate) to the destination bank who creates a bank deposit for the end recipient. This is exactly how the system performs now, except it eliminates correspondent banking (or rather it replaces it with "Libra banking", but as any bank can join the network with a pay-in, borrowing from the CB, it means any bank can be a correspondent bank). 

 

This is a false statement. The number of reserves in the system is determined by each central bank. The quantity of gov bonds in the system is determined by the same gov. If a system wants to hold more safe assets, the gov just issues those assets. This is what QE is, you need reserves, here you go. You want bonds, here you go. The gov has total control over the composition, and can meet demand at any time, at any interest rate it wants. 

 

This guy is going to have to demonstrate the phenomenon he's describing, because it sounds like he's operating within a theoretical framework that doesn't reflect reality. 

 

Here's he introducing an argument based on a constraint that is self-imposed. This is a classic tactic of Neoclassicals: no you aren't allowed to spend! Oh now look, we don't have enough German bunds, so obviously we can't implement narrow banks! This is a load of ********.  

 

Ok, I've read the whole piece, it's hate mail from the FT, which has a sizable dependence on the neoclassical order never changing. 

What if they backed Libra to gold?

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48 minutes ago, Tinyaccount said:

This is the most bizarre statement I’ve seen in a while. 

Yes and crazy-brave too!

Given the mountain of evidence to the contrary, I have to assume someone as thoughtful as @Wandering_Dog meant for it to be a cheeky jab. 200+ customers = 200+ negotiations and contracts. I've been there with the banks - that's a shed-ton of work.

That said, one has to assume self-interest plays a role in the game theory at work here. In that case, what does absolute self interest look like if not obtaining (still extraordinary) profits in return for negligible expended effort?

Furthermore, isn't that also reflective of what most HODLers of any cryptocurrency expect by way of ROI? We buy, sit and wait.

Sheesh, this FUD is addictive! :crazy:

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7 minutes ago, Pablo said:

I have to assume someone as thoughtful as @Wandering_Dog meant for it to be a cheeky jab.

Yeah I nearly put a sentence to that effect in there.  He is no fool so he can’t realky think that...

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2 hours ago, Tinyaccount said:

Yeah I nearly put a sentence to that effect in there.  He is no fool so he can’t realky think that...

Or it is 5-7 fools.... put together to seem like one non-fool....

I like that bet!

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4 hours ago, Tinyaccount said:

This is the most bizarre statement I’ve seen in a while. 

Cheeky jab is accurate. Better would be to say Ripple already won, they can still win even bigger, but if they quit now no one can say they lost. 

That they have made so much from so little while contributing technically nothing to humanity regarding capital (output capacity) accumulation is spectacular. If XRP goes nowhere it will still go in the history books. This is of course not unique to Ripple, all of these coins are producing huge amounts of wealth transfers without any effect on output or productivity  thus far. So in that respect one who studies capitalism knows not wether to laugh or cry at the "success" or "failure" these things.

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7 hours ago, Pablo said:

Yes, however XRP isn't backed itself - and at some point Ripple will free itself from the escrow. I don't have a problem with Ripple profiting from their holdings in the meantime and my concerns with Libra were not meant as a socialist critique of the arrangement. Moi? Socialiste?

 

I don't think you made a reference to state ownership of the means of production, or of the financial system. Keep in mind money creation has been privatised today, so again I'm not following here exactly. :d_book:

7 hours ago, Pablo said:

 

I realise I probably shouldn't have used the word "revenue" here. I mean that one of the defining features of sovereign nation-states under international law is that they also have monetary sovereignty. This allows central banks to take (and game? ;)) positions in the forex and other markets and they can profit significantly. The Libra plans undercut that.

I think people misunderstand the accounting relationship between central banks, banks, and everyone else. A CB isn't interested in profit, because it has full control of its ledger. Perhaps subordinate CB's within the hierarchy of global financial assets do, because they must settle in the liabilities of other CBs. However, in the case of the US, profit, or equity, is of no interest to the Fed. 

What does matter are the actual means of production of goods and services people need or want.

 

7 hours ago, Pablo said:

If you are saying that #xrpthestandard will result in an unregulated handful of privately owned corporations who control monetary policy, then no.

 

Well, to be fair, validators in the UNL are corporations, similar to Libra, and together they do control "monetary policy", or the prohibition thereof, on the xrpl.

7 hours ago, Pablo said:

Isn't the point here that the Libra Foundation will effectively have many of the powers of a central bank?

No, they will not have the powers of a CB. A better comparison would be a fund, which issues liabilities against its assets. 

A CB can create its own assets, and it's liabilities are the domestic means of settlement. Libra cannot create its own assets, it instead requires private money creators (banks) and central banks to create those assets.

 

7 hours ago, Pablo said:

Actually, they're going many levels better because they also regulate the associated marketplace, the fee structure and contracting models/laws. They control monetary and fiscal policy of the system as well as dispute resolution and enforcement. That's not a resilient system. 

This is not correct. It's your burden of proof to demonstrate how the Libra reserve could achieve such things. The FB platform is regulated by the US gov. That the US gov has had a hands off approach is a choice, and does not mean FB is unregulated. Furthermore, the fund has no monetary power because it depends on inputs from money creators to affect the supply of Libra, it cannot do so itself. Depending on the reserve fraction, there may be no potential for spending from the reserve at all (100%), in any meaningful capacity.

 

7 hours ago, Pablo said:

That aside, surely no one thinks Ripple is attempting or even planning such a level of overreach?

A global fixed supply settlement currency, over which it monopolizes supply? Come on. 

 

7 hours ago, Pablo said:

I think one of my problems in crypto (an involvement which extends far beyond this forum) is that I don't have the hatred towards CBs that many others do. I lived through the horrible 70s and 80s with a politicised CB, pegged AUD, huge tariff walls and interest rates over 20% (!!!). Once Keating/Hawke released the Reserve Bank of Australia from government influence we saw the positive role an independent central bank can have in cushioning financial shocks, stabilising inflation and growing GDP. Their response to the GFC was exemplary.

Well, we'll certainly see when the Aussie housing bubble pops. You may feel differently about your CB's behavior in recent history. Regardless, CBs are required to survive a single cycle.

 

7 hours ago, Pablo said:

My comment regarding handmaidens was probably triggered by my partner watching Handmaid's Tale in the background. That said, the analogy is still apt: the good works of cryptocurrency (open source, permission-less, censorship resistance) have rapidly been weaponised and perverted into the polar opposite of these aims resulting in a privatisation of control the likes of which we've never seen.

I suspect the story won't end there (fortunately). Allowing trading of Libra on exchanges (also part of the plan) or atomic swaps could provide the necessary elasticity and destabilisation required.

The elasticity, the ability to create more or less, is performed by banks and central banks, not Libra validators. Moving an existing supply around between people using exchanges doesn't create elasticity, it has the opposite effect, it increases the quantity of debt contracts and the demand for funds at particular times, which increases the fragility of the system. 

 

7 hours ago, Pablo said:

@Wandering_DogI do have one lingering question about your presentation of the factual scenario: you make repeated references to Libra relying on CB rails and currencies such as this:

Isn't the point that Libra is working towards a self-contained system of trade and finance which leaves the CBs impotent and irrelevant?

Libra can only exist if CBs exist (can create reserve deposits) and private banks are issuing loans (creating bank deposits). You cannot have Libra without CBs, because Libra = the sum of the reserve deposits in its accounts at the CBs. 

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4 hours ago, Wandering_Dog said:

This is of course not unique to Ripple, all of these coins are producing huge amounts of wealth transfers without any effect on output or productivity  thus far. So in that respect one who studies capitalism knows not wether to laugh or cry at the "success" or "failure" these things.

Agree. Until the internet of value delivers on its promise through things like XRapid being taken up on a global scale nothing achieved so far can be said to have delivered. Same too for the internet as it stands (e.g. Facebook as the beacon of high achievement) is an IOU to productivity rather than anything material it can actually lay claim to. This is, of course, an assessment Relative to history’s other actually successful technological step changes, like the telegraph. 

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5 hours ago, Wandering_Dog said:

Cheeky jab is accurate. Better would be to say Ripple already won, they can still win even bigger, but if they quit now no one can say they lost. 

That they have made so much from so little while contributing technically nothing to humanity regarding capital (output capacity) accumulation is spectacular. If XRP goes nowhere it will still go in the history books. This is of course not unique to Ripple, all of these coins are producing huge amounts of wealth transfers without any effect on output or productivity  thus far. So in that respect one who studies capitalism knows not wether to laugh or cry at the "success" or "failure" these things.

You don't seem to know a thing about capitalism. Capitalists are rarely content, especially in the case of Ripple where they've barely begun anything. If they quit now, everyone would say they lost because they failed to accomplish their goals. Not one of their investors put money into that company with the idea that they'd be content with them fading away with their current progress and XRP hovering just above 40 cents.

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