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Brad DeLong's Grasping Reality 2019-07-19 23:49:32

Summary:
Barry Eichengreen does not appear pleased with Facebook's non-blockchain blockchain called Libra. As I have said, it looks like a second-order grift. There might be real value there—competing with visa and the others is a worthwhile task. But calling it "blockchain"? And calling it "blockchain" when it isn't? There do appear to be several levels here at which Facebook is not on the level. And that makes one wonder about the value to society of the project: Barry Eichengreen: Questions on Facebook's Libra: "In light of my Washington Post op-ed on Libra, I thought I might pose some questions about this new blogpost from Facebook’s David Marcus https://www.facebook.com/notes/david-marcus/libra-2-weeks-in/10158616513819148/ on the same subject: Still no details on what will ensure that

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Barry Eichengreen does not appear pleased with Facebook's non-blockchain blockchain called Libra. As I have said, it looks like a second-order grift. There might be real value there—competing with visa and the others is a worthwhile task. But calling it "blockchain"? And calling it "blockchain" when it isn't? There do appear to be several levels here at which Facebook is not on the level. And that makes one wonder about the value to society of the project:

Barry Eichengreen: Questions on Facebook's Libra: "In light of my Washington Post op-ed on Libra, I thought I might pose some questions about this new blogpost from Facebook’s David Marcus https://www.facebook.com/notes/david-marcus/libra-2-weeks-in/10158616513819148/ on the same subject: Still no details on what will ensure that Libra continuously trades at par vis-à-vis the underlying basket? Is the idea that Libra will function like an ETF (which won’t work) or like a currency board (which will be incredibly expensive)? Will the members of the Libra Association have the power to decide later to hypothecate the underlying assets? If this is against the rules, what prevents them from changing the rules?... Would Osama Bin Landen have been able to operate a wallet on his own? Would his wallet have had to first be approved by the members of the Libra Association? On what basis can regulators be confident that those members have the information to make a reliable determination? You write that you will have 'proper know-your-customer practices'. What information will you collect from your customers to make this determination? How will you collect it? Ensure its confidentiality?...

Bradford DeLong
J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

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