[I_am_tiberius]

Summary of the biggest problem with digital currency managed by central banks:

Central banks can use negative interests in order to force people to buy stuff. In the current system people would just withdraw cash in order to avoid negative interest rates if they are too high/low. In the future people will be forced to pay the interests or buy stuff. Governments want to use this mechanism in order to control the economy.

If digital currencies managed by central banks really do get approved, it is like being forced to use Facebook.

[drcode]

The technical term for what you're referring to is demurrage, i.e. when money that is sitting unused automatically, in any account, has fees applied to it. It's similar to "inflation", but instead of making new money, you take people's existing money. https://www.investopedia.com/terms/d/demurrage.asp

[ackbar03]

This seems to you like a problem, but its actually a major plus for central banks since it gives them a tighter control on economic policy, its actually been touted as one of the major benefits.

Yes it would suck if the value of your money suddenly decreases, but say the central banks wants to subsidize low income groups or small businesses or green tech, they can do that directly digitally without it worrying the money goes to the wrong people / or taken advantage of by the banks, like what we saw with the pandemic

That being said, there are always pros and cons of a centralized entity gaining more control

[afrojack123]

If you had negative interest rates with digital currencies, then everybody buys stocks. This happens even without digital currencies.

[Kosirich]

Anyone care to extrapolate or provide reading material on what would be the imminent consequences of X % of money supply being in cripto and out of the reach of banks. Especially in today's economy of low interest rates I wonder what happens in first Y amount of years as X goes from negligible to significant. What are the better works written on impact of increase of crypto usage on economy and society moving from this point.

[ramshorns]

Point taken, but it might be a bit better than literally being forced to use Facebook, if the Libra currency becomes ubiquitous. Governments controlling the economy doesn't sound too bad if the alternative is one or two huge companies controlling the economy.

[beaunative]

It doesn't have to be approved, central bank is the authority to issue currency, digital or not, it should be thought of as a more economical, convenient replacement for hard cold cash, rather than a replacement for decentralized currencies.

[cinquemb]

That's what I like about CBDC's: They will incentivize more people to use non CBDC's than those who use them now the harder they try to enforce negative interest on savings on their CBDC's.

[sleepysysadmin]

Negative rates only work against the bond market. It's not being applied against against cash balance. In large part negative rates drain money out of fixed asset funds that are typically people's retirement funds.

Negative rates will in majority be harming the boomers reducing their pensions. They are legally forced to be in these investment systems. Boomers who don't even think they can quite retire are going to watch their investments shrink. Why is that happening? Because they didnt invest enough and have been believing they will live off the younger generations. They ran up huge debts and expect the millennials to pay.

That's literally impossible. Intergenerational debt is not possible and the boomers now sit there wondering why they cant retire when they planned to do so; despite not saving enough for retirement.

[zepto]

How can boomers simultaneously be sitting on all the wealth and ‘not have saved’ enough?

This argument makes no sense.

As far as I can see, the boomers just expected there to be continued economic growth in good faith, since that is what they experienced and younger generations have found finding this isn’t true.

Why isn’t it true? Very little to do with boomers mentalities, and much more to do with how economic growth has shifted outside the US.

That is absolutely the result of US political decisions, but much more the fault of economists and politicians rather than “Boomers” as a whole.

If younger generations think they can improve their lot by draining ‘money’ from Boomers, we are going to have a different problem, since the value of anyone’s money is determined by the current health of the economy. Yes a few millennials will be able to displace a few boomers from their decaying houses, but we’ll still have a bunch of sick old people to take care of somehow and an unproductive economy.

[sleepysysadmin]

>How can boomers simultaneously be sitting on all the wealth and ‘not have saved’ enough?

I don't believe my argument is that boomers are sitting on all the wealth. That's the problem.

Who owns the most wealth is just a matter of who has died. The older the generation, the more likely they own significant wealth. Silent and older generations used to own >78% in 1989 and has been declining since. The boomers peaked around 55% several years ago and are now declining. Millenials are more wealthy today than ever before.

https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...

Today: Silent gen, 17%, Boomers, 53%, millenials, 25%.

The Boomers needed to save significantly more and be up in the >75% range before their retirement. The very problem is that the boomers aren't sitting on all the wealth.

>As far as I can see, the boomers just expected there to be continued economic growth in good faith, since that is what they experienced and younger generations have found finding this isn’t true.

To be of this position you would not need to run deficits. Governments and others would not be in this much debt. In fact if you were to debt adjust the wealth figures. I bet there would be an even worse scenario. The boomers didn't save enough and were busy running up debt living outside their means.

>That is absolutely the result of US political decisions, but much more the fault of economists and politicians rather than “Boomers” as a whole.

Well this is happening in virtually all countries. Note: I'm not an American nor am I in the USA.

Your argument also seems to want to blame politicians and economists rather than the people whom they represent. That's incorrect, these are decisions that the boomers made. If they outsourced the decisions poorly, the blame still lays with the boomers.

>If younger generations think they can improve their lot by draining ‘money’ from Boomers,

This is the reality of intergenerational equity. 1 generation cannot indebt the next one. The boomers as they retire will depend on younger generations to service their needs. That labour cost will automagically adjust to service the debt.

At the end of the day, that's exactly what negatives rates represent. The older you are, the more likely you have a low risk pension portofolio. Which means you will be in negative rates. The money is draining from the boomers right now. Google the 'real yields of bonds are negative' as they are often lower than inflation.

>we are going to have a different problem, since the value of anyone’s money is determined by the current health of the economy. Yes a few millennials will be able to displace a few boomers from their decaying houses, but we’ll still have a bunch of sick old people to take care of somehow and an unproductive economy.

We are seeing this in other aging countries like Japan and South Korea. Seniors are largely speaking ending up in poverty. It also creates a new problem of 'silver crime' whereas the seniors basically have to go back to work or start stealing.

Also yes, you are correct about that. The labour shortage of 2030 is set in stone. There wont be enough people to service the elderly or really any skilled trade will be quite short. Therefore wages increase but as we already established, the pensions are shrinking under inflation and negative rates. Seniors wont be able to afford to take care of themselves.

[zepto]

“Your argument also seems to want to blame politicians and economists rather than the people whom they represent. That's incorrect, these are decisions that the boomers made. If they outsourced the decisions poorly, the blame still lays with the boomers.“

Only if your goal is to create an arbitrary division between generations using the concept of blame.

As far as I can see there is literally no amount of money the Boomers could have ‘saved’ that would have made any difference if there isn’t enough surplus value (not money) generated in the present day economy to service their needs.

This has nothing causal to do with generational debt - that is just a symptom.

It has everything to do with economic decisions made by politicians and economists, around education and trade policies, that leave the US (and many other economies) in a weak position.

You can certainly argue that whoever was around to vote for these policies is responsible for them, but that’s a weak position.

Voting is too coarse grained to assign that level of responsibility to the group.

Individual political and economic decisions are in fact important, not who happened to be a certain age when the decisions were made.