Rohan Grey Profile picture
Jan 20 6 tweets 2 min read
The Fed's report on CBDCs is out, & predictably, on the most important issue of all - protecting/maintaining cash-like privacy - there is no analysis, just assertion, that anonymity is non-viable b/c greater scale/velocity of digital. Very disappointing.

federalreserve.gov/publications/f… ImageImage
I've made this point before, but it's important to emphasize: the Fed is not statutorily responsible for issuing cash, nor does its mandate or expertise extend to issues of preserving civil liberties or balancing security/privacy concerns. Its opinions/preferences are not gospel.
Presently and for thousands of years, individuals are/have been able to transact with cash anonymously, and do not need/have not needed to sign-up or provide their identity in order to make transactions with public money. Eliminating that capacity in the digital age is extreme.
Or to put it another way, designing a digital dollar to preserve the anonymity-respecting features of cash in the digital age is a small-c conservative defense of existing freedoms, not a handout to criminals or money launderers. The burden is on those wanting to kill cash.
Luckily, we don't have to rely on the Fed to have a change of heart, because the creation of a digital dollar is not the exclusive purview of a bunch of macroeconomically trained bureaucrats. It's a core constitutional question that the elected branches have final say over.
So let the Fed require bank-like KYC for an account-based digital dollar. But Tsy-through the Mint, Bureau of Engraving & Printing, or a new Digital Currency Bureau - can/should take responsibility for issuing (e)cash-instruments, as it has for centuries w regular cash, as well.

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More from @rohangrey

Oct 4, 2021
This piece has four major errors.

1. Prates claims Fed only purchases Tsy securities. But that’s incorrect. The Fed buys both notes & coins from Tsy today, and then sells them onto commercial banks and others, who sell excess coins back to the Fed.

newyorkfed.org/aboutthefed/fe…
2. The Fed is also legally the Tsy’s fiscal agent, and is required to accept monies deposited by the Tsy. There’s no indication that excludes coins and the law is quite clear if Tsy and Fed disagree on scope of that authority, the law sides with Tsy Sec.

rohangrey.net/files/coinage.…
3. Prates argues the Tsy cannot deposit the coin in its regular account because "Fed accounts only receive reserves". But this is a category error, reserves are a *liability* of the Fed. The coin would be an asset, like tsys and other acquired assets.
Read 5 tweets
Oct 2, 2021
There's a much deeper rot in the practices and culture of central bank governance than many are willing to admit
Easy to dismiss this as a one off, a bad apple, even a sign of the need to tighten up around the edges. But it's deeper, there's a more fundamental legitimacy crisis at play around the technocratic presumptions of central bank dominance and this feeds right into it.
Because reality is that before you can even begin to contemplate the kind of ethics violation that Clarida did, you have to be in a certain economic class where that kind of temptation exists. I dont know many elementary school teachers with investment portfolios like Clarida.
Read 6 tweets
Oct 1, 2021
Who said it?

"Even the advocates of a strict literal construction of the phrase, 'to coin money & regulate the value thereof,' while insisting that it defines the material to be coined as metal, are compelled to concede to Congress large discretion in all other particulars.
The Constitution does not ordain what metals may be coined, or prescribe that the legal value of the metals, when coined, shall correspond at all with their intrinsic value in the market.

... More than once in our history has the regulation been changed without any denial of
the power of Congress to change it, and it seems to have been left to Congress to determine alike what metal shall be coined, its purity, and how far its statutory value, as money, shall correspond, from time to time, with the market value of the same metal as bullion."
Read 10 tweets
Sep 30, 2021
Youre still just displaying your ignorance. The Tsy "printing" this quantity of money doesn't do anything unless Congress actually directs it to be spent, and if Congress directs the Tsy to spend it doesn't matter whether it's via issuing tsys or coins the economic effect is same
Obviously it would be a stupid idea to try to spend 30,000x GDP in one go, which is why no one is saying Congress should do that. But that has literally nothing to do with minting the coin unless you dont understand public finance like Preston.
And of course, if Preston wants to argue to the court that there is presently a limit on the amount of Reserves or Federal Reserve Notes that can be created, or the amount of Treasury Securities the Tsy can issue when debt ceiling is suspended, or amount of pennies to stamp etc
Read 4 tweets
Sep 30, 2021
Currently there is a $300 million statutory "ceiling" on the law authorizing the Tsy to issue Greenbacks, ie paper currency not subject to the debt ceiling. If we removed the $300 million ceiling and say "as many notes as Tsy Sec deemed appropriate", it could print a quintillion.
Just like the Tsy Sec could issue a quintillion dollars worth of Treasury Securities if/when the debt ceiling was suspended, as it has been for most of the past 8 years in between brief reauthorization-and-resuspension periods. The coin is no different, Preston just hates fiat.
The ompt thing about coinage act is that it has never specified a quantitative limit on amount of coins, or their face value, that can be minted. There has never been a "ceiling" like w other instruments, only denominational limits which the platinum provision doesnt have at all
Read 5 tweets
Sep 14, 2021
"We have no choice but to default....except of course all the choices we just don't want to consider"

For shame.
Obviously the debt ceiling is stupid and should be abandoned. But as so many centrists and moderates love to point out in other contexts, sometimes political realities prevent the best-possible outcome so you have to consider what you *can* do with the power you have.
And in this instance, what is very clear is that threatening a government default or shutdown if the debt ceiling is not suspended or increased in time is *not* the only choice available to the Biden administration, it's just the only one they want to acknowledge and entertain.
Read 9 tweets

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