There are three things with which one can control a community, a nation, a state, or the whole planet: (i) ideology, (ii) information and (iii) money. They are interwoven and inextricable. Ideology forms a cast of mind that enables to make money or prevents from making it. Consider the medieval prohibition that was binding on Christians only but not on Jews to renounce interest or – as it was called – usury. Some could accumulate profit, others could not, depending on the ideology they clung to. Information is also a prerequisite for making money: the one who knows more and earlier what is going to happen on the market wins the day. Both ideology – especially its spread and enforcement by law – and access to or exclusiveness of information require money. Lots of money. No wonder then that money was always in high demand and man has since time immemorial looked for ways of multiplying it at no or low cost.
When gold meant money, rulers employed alchemists to turn ordinary metals into this precious one. When money took the form of paper, then bank(st)ers devised fractional reserve banking: i.e. they came with the idea of multiplying money without having to resort to costly and complicated methods of turning one metal into another. All they had to do was to convince the users of money that the slips of paper or ledger records stood for genuine value. At present the time came for digital money i.e. electronic impulses and electronic ledgers.
Whichever is the manner in which money is created, the one who has the power to create it, calls the tune. “I do not care who rules a country, so long as I create that country’s money,” are the words attributed to one of the Rothschilds. A banker keeps the ledger in which it is stated how much his clients have or owe to other clients or banks, and the same banker creates the money and appropriates some of it as his own remuneration. He is the real landlord! He occupies a position that many others would like to take over. One financier may cause another financier’s collapse, taking him out of the financial market or taking over his assets. If that is too costly or not possible, one may come up with an idea of creating a competing kind of money. Modern technology, as said above, enables money creation without using paper or ink or watermarks or whatever, without having vaults in which to store the financial tokens, without having to run a chain of small bank buildings or automatic teller machines to make money physically available to anyone. Modern technology makes it possible to create money and distribute it without those financial trappings. Modern technology enabled the creation of crypto money or cryptocurrency.
Up to now the best known has been bitcoin. Supposedly independent of any government, supposedly decentralized, created, distributed and exchanged in accordance with a specific algorithm, which is supposed to prevent fraud and inflation. Bitcoin has gained quite some traction. Notice the many websites that accept it in financial settlements. Bitcoin has blazed the trail. Its development must have been closely watched by entrepreneurs, financiers and governments. It has been tried and tested, and its downsides have been exposed. One of them is the sorry fact that bitcoin’s value fluctuates significantly over short periods. The other one is that in order to make it a real global means of exchange, it would have to be recognised by a large number of market entities. That drawbacks would have to be rectified if someone else came up with an idea of a new cryptocurrency.
On June 18, 2019 Mark Zuckerberg announced the launch in 2020 of yet another digital currency, one might say the Facebook counterpart of bitcoin, which is to be known as Libra.1)A simple global currency and financial infrastructure that empowers billions of people, Welcome to Libra.[Libra by the way is the Latin name for the British currency, the pound (hence the abbreviation £), the unit of weight (hence the abbreviation lb) and the zodiac sign whose English translation is the Scales.] Libra’s creators say they are introducing this currency because they want to make financial settlements around the globe as easy as sending text messages. Why should this new digital currency be preferred to bitcoin? For three reasons, at least.
First, Libra is primarily addressed to Facebook, Watsapp, Instagram, and Messenger users, which promises a very large clientele right from the starting point. Second, Libra’s value is to be determined by the initial capital of its founders (of which later) in the form of a reserve made up of the basket of the world’s leading currencies (the dollar, pound, euro, and yen) plus short-term government bonds. This reserve will be taken care of by the Libra Association Council, a managing body to be created. Third, Libra is to be overseen by twenty odd companies whose participation in the project ensures the initial capital or reserve (an entrant is required to contribute at least $10 million) and which enlarges the number of serious market entities that will be accepting settlements in this currency. The founding members include MasterCard, PayPal, Visa, eBay, Lyft and Spotify. The list is not closed as yet. Bitcoin has none of this. No reserve, no managing board, no contributors.
What is this enterprise all about? The declaration that it is created to serve the people, especially in the developing countries, sounds nice and maybe it is what is intended. Whether it will work that way, time will show. Certain is that:
1. In order to purchase Libra, one will have to pay into the system real currencies, which will be accumulated by the Libra Association. Taking into account 2,7 billion users of Facebook, Watsapp, Instagram, and Messenger, it translates into a considerable amount.
2. Even if a negligible commission will be charged for financial settlements as is stated, these negligible sums will – again taking into account 2,7 billion users – total to quite a sum of money.
3. Settlements made in Libra will be taken out of the tax system of a given state, which – if the currency gains in popularity – may undercut national finances or cause new legislation. At present the European Union is cautious about the project, so is the United States while Russia has already announced it is going to ban it on its territory.
4. Money contributions from Libra users will be used by the Libra Association Council, formally headquartered in Geneva, which will operate with it and make profit, and no part of which will be assigned to Libra users.
5. If Libra succeeds as the global digital currency independent of national governments, it will enhance the power of transnational corporations with all attendant results. Will we be witnessing an emergence of new types of states which are not bound to a territory, where loyalties are other than those of blood, language, culture and creed, and whose borders are as fluent as the digital ledgers?
Even if Libra fails, the trend is more and more visible. The emergence of currencies other than the official ones is a fact and each new currency paves the way for yet another one whose creators learn from the mistakes of their predecessors. Admittedly, governments are either cautious or against, but that may be of little importance. We are all witnessing the weakening of national state authorities in that they step by step have renounced the administration of the capital punishment, money creation (relegating it to transnational in the case of the EU or private in the case of the US banks), border protection and even law enforcement (leaving it increasingly to private security companies). Why should the governments find strength enough to effectively oppose a successful cryptocurrency? So much so that the authorities in the white man’s world have long been operating under the spell of new liberal ideologies that compel them to act against the interests of their own nations. The fact that someone like George Soros has the floor in the European Union’s parliament although he is neither a president nor a prime minister, neither a minister nor an ambassador of an EU or any country shows that money rather than democracy is power and this money may make governments miraculously passive and impotent in the face of a rising cryptocurrency. Consider the strange impotence of European and American governments – which still can bomb a country into stone age if they please – while dealing with the “problem” of Third World immigrants.
Thus if powerful masterminds (who else?) are behind Libra, if the launch of this digital currency does not disappoint them, they will render both the American and European governments as complicit in letting Libra be as they are making the governments compliant in accommodating Third World immigrants.
There is quite a lot of criticism of the Facebook coin, as it is called, and people are reminded of the low trustworthiness of the platform because once a lot of private information was leaked outside. Which is to say, people express their doubt as to whether the project is a good idea. Facebook managers remain undaunted because by now they will have known the human nature all too well. Fifty years ago who would have thought that tens of millions of people would be willing to share their intimate pictures and feelings on a platform like this one? Why wouldn’t they eventually entrust their money to it? If within a decade or so every fourth young European has been made to tattoo his body, i.e. “embellish” it with something that his ancestors commonly recognized as a sign of belonging to a criminal world, is there anything impossible?
References
| 1. | ↑ | A simple global currency and financial infrastructure that empowers billions of people, Welcome to Libra. |
