On the one hand, the freedom and rights lot are screaming blue murder about collection of personal information and censorship of spending choices by central government. I maintain that these are already possible with electronic cards issued by private banks/visa etc.
On the other hand, central bank physical cash is the only money that penetrates the barrier between the reserve currency that is used for almost all central bank to commercial bank transactions, and credit currency that is used for almost all (~97%) commercial bank to non-financial business and household customer transactions. Physical 'vault' cash forms a part (albeit small) of commercial bank reserves and is also usable for transactions between banks & non-financials. It would be fair to say then that CBDC would also penetrate this barrier.
It's only recently I've realised the implications of this near-firewall between the reserves system and the credit system and the implication that it has for common MMT/Post-Keynesian assumptions, such as that the Treasury can create money at the central bank and spend it directly into the economy. Were CBDC to become a reality, this would become possible, and only then would it be possible to use new Fiat currency to slowly unwind the crazy levels of private debt that exist now without causing permanent recession by debt-deflation.
Since private debt is the asset that gives oligarchic power to the banking sector, they have no intention of allowing it to be diminished in such a calm & pragmatic manner, preferring the precarity and chaos we have come to know along with 'extend and pretend', the vain hope of the public that we can get economies back on track.
IMO this is the reason for both the assault on physical cash over the years, and now the assault on the concept of CBDC, which I believe has been subtly orchestrated by banking interests through misguided libertarian activists. Any thoughts?
Hi Kevin, thanks for your comments and insights. I don't have enough time right now to give you a good response, but if you're interested I wrote two pieces on CBDC
Excellent explainer, thank you Brett! When I went to London last year I was surprised by the extent of cashlessness there. I guess my country (NZ) is still comparatively 'cashful'. For instance, trying to get into Highgate to see Karl Marx, the gate lady wouldn't accept my money (a £20 note). Then she felt sorry for me & said she'd let me in for exact change— it was a tenner, which would make old Karl turn in his grave if you ask me! So then I had to approach strangers & ask them 'got change for a 20, guvnah?' which fair took them aback.
Conversely every once in a while in London I would encounter a situation that was cash-only, like the stamps & postcards market in a carpark underneath Charing Cross. I was like... why not both?? (Cash & cardability, I mean.)
The funny thing was— speaking of graves— people had left coins on Marx's grave, tuppences on William Blake's old stone, & up in York Museum I saw coins left on top of a Roman triple-goddess statue. We need cash for votive offerings or the Dead & the Gods will be angry with us! Maybe put that in your next video...
Hi Rosie, thanks for the story - yes, I've been meaning to do a piece on cash and ritual for a while. I'd love to go deeper into the history of wishing wells, for example
I did a piece a while back called the War on Informality (https://www.asomo.co/p/the-war-on-informality), which was about the creeping corporatisation of London, but the association between cash and the informal economy
I used to live in a small town where electricity outages were frequent. If they went on long enough (which would be several times a year) everything shut down because the mobile network ceased to function. The longest this lasted was 27 hours - which was manageable for most people, plus being a small town there were options like opening up a tab at the local store as you were known to the shopkeeper. However, it highlighted that if there was a major event like a bushfire or flooding where systems could be down for much longer, especially if a larger centre was affected, things would be a lot worse. That experience taught me always to have cash. (It also taught me to keep a physical list of important phone numbers, but that's another topic.
Thanks for sharing Marianne. One of the most telling things I've seen in recent years was the Swedish government encouraging its citizens to keep some cash in reserve in case of tensions with Russia (e.g. cyberattacks on the digital infrastructure) - this is after the Swedish government spent years trying to encourage the digitization of everything, and allowing the cash system to collapse
Another experience i had last year while living in the city was my card not working when doing grocery shopping. I know i had funds, but couldn't access them. Because I always carry cash it wasn't a problem. That evening news bulletin reported that my bank had a major network outage that lasted several hours, and had affected customers. It highlighted that even without severe weather events or the risk of sabotage due to political tensions, our systems can fail. Even if only for a few hours this could have significant impacts on some people.
Any thoughts on CBDC- 'digital cash'?
On the one hand, the freedom and rights lot are screaming blue murder about collection of personal information and censorship of spending choices by central government. I maintain that these are already possible with electronic cards issued by private banks/visa etc.
On the other hand, central bank physical cash is the only money that penetrates the barrier between the reserve currency that is used for almost all central bank to commercial bank transactions, and credit currency that is used for almost all (~97%) commercial bank to non-financial business and household customer transactions. Physical 'vault' cash forms a part (albeit small) of commercial bank reserves and is also usable for transactions between banks & non-financials. It would be fair to say then that CBDC would also penetrate this barrier.
It's only recently I've realised the implications of this near-firewall between the reserves system and the credit system and the implication that it has for common MMT/Post-Keynesian assumptions, such as that the Treasury can create money at the central bank and spend it directly into the economy. Were CBDC to become a reality, this would become possible, and only then would it be possible to use new Fiat currency to slowly unwind the crazy levels of private debt that exist now without causing permanent recession by debt-deflation.
Since private debt is the asset that gives oligarchic power to the banking sector, they have no intention of allowing it to be diminished in such a calm & pragmatic manner, preferring the precarity and chaos we have come to know along with 'extend and pretend', the vain hope of the public that we can get economies back on track.
IMO this is the reason for both the assault on physical cash over the years, and now the assault on the concept of CBDC, which I believe has been subtly orchestrated by banking interests through misguided libertarian activists. Any thoughts?
Hi Kevin, thanks for your comments and insights. I don't have enough time right now to give you a good response, but if you're interested I wrote two pieces on CBDC
- 1) Zen and the Art of CBDC Analysis (Part 1) https://www.asomo.co/p/cbdc-analysis
- 2) Zen and the Art of CBDC Analysis (Part 2) https://www.asomo.co/p/cbdc-analysis-part-2
Excellent explainer, thank you Brett! When I went to London last year I was surprised by the extent of cashlessness there. I guess my country (NZ) is still comparatively 'cashful'. For instance, trying to get into Highgate to see Karl Marx, the gate lady wouldn't accept my money (a £20 note). Then she felt sorry for me & said she'd let me in for exact change— it was a tenner, which would make old Karl turn in his grave if you ask me! So then I had to approach strangers & ask them 'got change for a 20, guvnah?' which fair took them aback.
Conversely every once in a while in London I would encounter a situation that was cash-only, like the stamps & postcards market in a carpark underneath Charing Cross. I was like... why not both?? (Cash & cardability, I mean.)
The funny thing was— speaking of graves— people had left coins on Marx's grave, tuppences on William Blake's old stone, & up in York Museum I saw coins left on top of a Roman triple-goddess statue. We need cash for votive offerings or the Dead & the Gods will be angry with us! Maybe put that in your next video...
Hi Rosie, thanks for the story - yes, I've been meaning to do a piece on cash and ritual for a while. I'd love to go deeper into the history of wishing wells, for example
I did a piece a while back called the War on Informality (https://www.asomo.co/p/the-war-on-informality), which was about the creeping corporatisation of London, but the association between cash and the informal economy
Very interesting topic!
Great video!
Thanks PJ
I used to live in a small town where electricity outages were frequent. If they went on long enough (which would be several times a year) everything shut down because the mobile network ceased to function. The longest this lasted was 27 hours - which was manageable for most people, plus being a small town there were options like opening up a tab at the local store as you were known to the shopkeeper. However, it highlighted that if there was a major event like a bushfire or flooding where systems could be down for much longer, especially if a larger centre was affected, things would be a lot worse. That experience taught me always to have cash. (It also taught me to keep a physical list of important phone numbers, but that's another topic.
Thanks for sharing Marianne. One of the most telling things I've seen in recent years was the Swedish government encouraging its citizens to keep some cash in reserve in case of tensions with Russia (e.g. cyberattacks on the digital infrastructure) - this is after the Swedish government spent years trying to encourage the digitization of everything, and allowing the cash system to collapse
Another experience i had last year while living in the city was my card not working when doing grocery shopping. I know i had funds, but couldn't access them. Because I always carry cash it wasn't a problem. That evening news bulletin reported that my bank had a major network outage that lasted several hours, and had affected customers. It highlighted that even without severe weather events or the risk of sabotage due to political tensions, our systems can fail. Even if only for a few hours this could have significant impacts on some people.
Excellent. Thank you. This explains the infrastructure that I was only able to intuit before, in my rambling here:
https://open.substack.com/pub/kermito/p/flotsam-jetsam-3-the-simulation-isnt-digital
Thanks Kermit, will check it out
This is great! Thanks for taking the time to make the video.
Glad you like it Wes
No video plays. Is this for paid subscribers only? I really can't afford all the subscription fees.
No it's free. I'm not sure why it's not playing for you. You can find it here too if it doesn't work https://youtu.be/K1q5EsRYhNI?si=O2qiGG2nTchGuf-f