Jeffrey Tucker: Why the Moral Panic Over the Libra?

Bitcoin was invented eleven years ago this month with the release of the famous white paper by Satoshi Nakamoto. The little crypto that could has rocked the world financial order, not only because of its high performing price  – with no shortage of volatility – but because its underlying technology has been copied by legacy institutions to create a much better and more secure user experience.

In this time, regulators have found the cryptos to be an annoyance. In the United States, in general, given the radical nature of the project to create a non-government money for the digital age, the response has been surprisingly calm. The regulators hectored but didn’t ban it. They investigated but they mostly didn’t resort to outright violence to stop it.

When Facebook proposed the Libra, however, moral panic swept Washington. Bitcoin is for geeks. Let them have their fun. No normal person understands this stuff anyway. But Facebook? It’s powerful, global, compelling, and easy for everyone to use. A Facebook-style crypto currency? That could be deadly not because it would be bad for consumers but because it would be bad for government!

How can you have a national monetary policy when everyone is using a new global currency that is valued according to the market and not the Fed? How can the money monopoly survive under these conditions? What could it possibly mean for government to give up its control?

Mark Zuckerberg, in Congressional testimony, kept warning that the US is falling behind China in payment innovation. It’s true. The trouble is that if you care mainly about power and control, this is an irrelevant fact.  Falling behind is just fine so long as the legacy system is kept on life support, according to this view.

In general, Zuckerberg spoke with passion and conviction but with far too much acquiescence to the regulatory mob attack. No matter what he promises, they will never get on board. Washington can slow it down but can’t stop what’s coming: currency will be privatized.

I explained more in my appearance on Money Talks.

Jeffrey A. Tucker is Editorial Director for the American Institute for Economic Research. He is the author of many thousands of articles in the scholarly and popular press and eight books in 5 languages, most recently The Market Loves You. He is also the editor of The Best of Mises. He speaks widely on topics of economics, technology, social philosophy, and culture.

This op-ed was first published by the AIER.

This entry was posted in Cryptoeconomics, Guest Post. Bookmark the permalink.

14 Responses to Jeffrey Tucker: Why the Moral Panic Over the Libra?

  1. Diogenes

    Why the moral panic ???
    From a financial PoV no panic, but what is happening while we are not looking at the man behind curtain ?

    Analysis Facebook’s proposed digital currency Libra, and its accompanying digital wallet Calibra, should be scrutinized not only by financial regulators – as lawmakers in the US and Europe have already started to do – but by national entities concerned with law, public safety and defense.
    The reason for that, argue Valerie Khan, VP of the Digital Equity Association, and Geoffrey Goodell, senior research associate at University College London’s Centre for Blockchain Technologies, is that Facebook is interested not in finance but identity.
    Their opinion paper, “Libra: Is It Really About Money?”, answers the question posed by its title with the assertion that Facebook’s ulterior motive is to become the world’s digital identity provider.
    Pointing to the classic 1993 New Yorker cartoon captioned, “On the internet, no one knows you’re a dog,” the two authors contend that being able to accurately identity people online would have enormous financial consequences and would be particularly interesting to an advertising company like Facebook.
    Facebook has positioned Libra as solely a financial endeavor, but the project has implications in every aspect of civil and social life where reputation matters, the academics argue. Digital identity currently tends to be fragmented, distributed across different websites and embodied by separate sets of login names, HTTP cookies, and tokens.
    Advertising and data companies like Facebook strive to unite these identities to track people across websites by correlating different data, though such efforts can be undermined by technological countermeasures and actions taken in the pursuit of privacy. Libra, or more specifically Calibra – the wallet tied to the individual – represents a way for Facebook to dissolve public and private boundaries to create “transparent citizens.”
    “Allowing Facebook to become a crucial player in digital identity for the financial sector will enable it to tighten the knot on the ‘transparent citizen’ (Reidenberg, 2015) by accessing a strong bastion of meaningful data,” they write. “It will also allow everyone else to purchase the means to manipulate Facebook users, perhaps in pursuit of their respective advertising ideas – some harmless, some of corrupting influence.”
    Such transparency – seeing everything – challenges democratic institutions and norms, argued Joel Reidenberg, a Fordham University law professor, in his 2015 paper, “The Transparent Citizen.” China’s social credit system and its role as a political control mechanism offers an example of how such transparency can be exploited.
    Khan and Goodell note that there’s no expectation Libra transactions would be private – blockchain transactions are public, after all – and to appease regulators and lawmakers, Facebook can be expected make its platform a robust surveillance system.
    They point to Facebook’s 2010 acquisition of a Friendster patent, which cover
    s giving creditors access to social media profiles to assess loans, as a sign of where the company is headed.

    https://www.theregister.co.uk/2019/08/22/facebook_libra_cryptocurrency/ My bolding

  2. Crossie

    No matter what he promises, they will never get on board. Washington can slow it down but can’t stop what’s coming: currency will be privatized.

    You mean the idiots who have handed over their personal lives to Zuckerberg may also give him their money? Why not? There’s one born every minute.

  3. Iampeter

    In general, Zuckerberg spoke with passion and conviction but with far too much acquiescence to the regulatory mob attack.

    Yea and what did you expect? No one in the mainstream is standing up for the morality of business and money. Least of all the anarchists at FEE. Certainly not conservatives who are basically socialists with more Jesus.

    Zuckerberg is doing the best he can with absolutely everyone against him.

  4. Washington can slow it down but can’t stop what’s coming: currency will be privatized.

    Wasn’t that tried in the Colonies with tobacco plants (leaves?) used as currency?
    How’d that work out?
    The power to create currency was already privatised in the US with the establishment of the Fed.
    I’ll need convincing that this new form of privatization will be better.

  5. Chris M

    Lizard man thought he would get away with it by using a ghey name. But nothing escapes the intellect of Maxine Waters!

  6. Bad Samaritan

    So there will now be shopping vouchers called Libras which can be redeemed at any participating business? You buy them with the local currency and then use them later….like we used to do with Traveller’s Cheques? Or even a “loadable” cash card?

    I can see how this is a big innovation, cause I still remember getting Grace Brothers in-store “money” for Christmas and it really was fun as a kid to have my own real dough to spend at a big department store. Once we all go crypto I’ll be nine years old all over again. Goody!

    Can crypto fans tell us a bit more about where this infantalizing of the population goes next? Sinc?

  7. Entropy

    Imagine if Tucker and iamPeter ever got together. It would be like You’ve Got Mail, although they would be the Parker Posey and Greg Kinnear characters
    “I just can’t help myself”

    Chris M
    #3193665, posted on October 25, 2019 at 7:25 pm
    Lizard man thought he would get away with it by using a ghey name. But nothing escapes the intellect of Maxine Waters!

    The Zuck’s mistake was not providing enough Danegeld to the democrat/republican swamp.

    Why the moral panic ???
    From a financial PoV no panic, but what is happening while we are not looking at the man behind curtain ?

    Quite so

    You mean the idiots who have handed over their personal lives to Zuckerberg may also give him their money? Why not? There’s one born every minute.

    Double quite so.

  8. Libra is shit because of FaceBook and Zuckerberg.

    BTC, LTC and ETH are doing just fine.

  9. Some odd comments:

    Wasn’t that tried in the Colonies with tobacco plants (leaves?) used as currency?
    How’d that work out?
    The power to create currency was already privatised in the US with the establishment of the Fed.
    I’ll need convincing that this new form of privatization will be better.

    Tobacco was money because of the high value, portability and scarcity of metal coins.

    I’d say it worked out well. Their colonial legislature legitmised a market solution to a society wide problem. It lasted over 100 years.

    The Fed is not privatised and it is inconceivable why this conspiracy nonsense is repeated.

    Money has already been reprivatised with BTC. The liberty dollar (hard-asset backed) was effectively banned by the government for no reason other than spitefulness.

    Trusting the government to protect the integrity of the monetary system is like trusting a pimp to ensure a young woman’s virtue.

  10. Bad Samaritan
    #3193865, posted on October 26, 2019 at 6:07 am

    So there will now be shopping vouchers called Libras which can be redeemed at any participating business? You buy them with the local currency and then use them later….like we used to do with Traveller’s Cheques? Or even a “loadable” cash card?

    I can see how this is a big innovation, cause I still remember getting Grace Brothers in-store “money” for Christmas and it really was fun as a kid to have my own real dough to spend at a big department store. Once we all go crypto I’ll be nine years old all over again. Goody!

    Can crypto fans tell us a bit more about where this infantalizing of the population goes next? Sinc?

    Libra doesn’t hold a candle to true cryptocurrencies.

    Before various governments tried to put them out of business last year, crypto was becoming normal. You had the rise of cards/exchanges like TenX and CoinJar as well as payment providers like Satoshi’s Living Room. We had reached a point where it was possible to transact entirely in crypto and still partake in all small and large transactions in life.

    Libra will be worse than infantilisation. It will be like 1984.

    The solution is simple. Get off FaceBook. He hates you.

  11. Tel

    This is not moral panic.

    Washington is stomping round the yard grunting and snarling a bit … in case anyone might not be paying them sufficient attention. The Sugar Mountain guy is pretending to be shocked, but he knows exactly how much he owes to the protection racket and he will happily hand over all the transaction and identity details … same way as it all get handed over right now.

    The taxes will get paid, of that you can be confident.

  12. Mother Lode

    Does government get its cut of crypto currency transactions?

    That is the real concern for them.

    Anything that leads to a loss of control of what they see as theirs is a serious criminal activity.

  13. Judge Dredd

    Jeffrey Tucker – the clown tie wearing globohomo never-Trumper.

Comments are closed.