Author Topic: Digital dollars and the end of financial privacy  (Read 879 times)

ChpBstrd

  • Magnum Stache
  • ******
  • Posts: 3452
Digital dollars and the end of financial privacy
« on: May 25, 2021, 01:03:56 PM »
Central bank digital currencies are on the way. China has already introduced the e-CNY in major cities. Meanwhile the US, EU, and a number of other countries are looking at issuing their own digital currencies. The idea is that each dollar/penny would have a serial number and each transaction would be tracked by the government.

The benefit to governments is being able to track every unit of currency through every transaction in the economy, forever. Tax evasion, financial crimes, sanctions avoidance, theft of money, and drug dealing would, in theory, become very difficult to hide. Economic statistics would be real-time. Taxes could be auto-calculated, etc.

On the flip side, every purchase or transfer you make or every penny you earn would be recorded by the government. Your booze, porn, and medical expenses would all be records in a massive ledger that lasts forever - and might be evidence in civil cases or criminal investigations. Yes, all this is already the case if you use a credit/debit card, PayPal, or Apple Pay - you are already handing over a fraction of your financial information to a corporation, and almost all your financial information if you use Mint or Personal Capital - but the difference will be that once physical currency is phased out (and cryptocurrencies will be banned, of course) there will be no way to transact in any way without the government knowing about it.

This of course would represent an enormous increase in the power of government relative to the power of the people. A corrupt regime might use this power to:

1) "Freeze the assets" of dissidents and political opponents, so that they cannot even buy food, shelter, or life-sustaining medicines.
2) Obtain financial records for political candidates or journalists and use them to blackmail or sway public opinion against the person.
3) Engineer a sudden deflation to wipe out the middle class and prop up a ruling class of billionaires in a new feudalism.
4) Set up a government-run credit system that favors supporters or party members by giving them higher credit scores.
5) Track the amount of various things you are buying, like ammunition, medications, etc. E.g. Excess food might suggest you are harboring fugitives.
6) Track the donations you make, to create an ideological profile of you or to target you for harassment by police.
7) Using your earning and purchasing history as a tool to target political ads.
8) Sell information about trading networks and patterns in exchange for bribes.
9) Set up a "hackable" economic system so that its collapse is an eventuality, which would be followed by a military coup.
10) Restricting transactions in particular regions as a form of political payback for disloyalty.

Governments have never had such power. Communism turned out to be an awful way to live for the non-elite because such governments inevitably used their economic power for the benefit of their dictators, and they were always feudal dictatorships because no one could amass enough economic security to challenge them. Digital currencies could go far beyond communism in terms of the amount of economic control handed to governments. Think about that for a minute. Economic control = absolute power.

Perhaps what is needed very early in this process is a financial bill of rights or a HIPAA for money which would prohibit the government from doing certain things, such as using financial information for anything other than statistics, automated taxes, and even-handed, non-politicized criminal investigations. Only a handful of data scientists and security specialists would be allowed access to the raw data, and they would only get access to specific records for specific reasons. The process to examine a particular financial record should be at least as cumbersome as getting a search warrant (Remember the old fourth amendment and the consequences of deciding it didn't apply to anything on the internet? Are you now OK with a rubber-stamp FISA court in your financial life?).

I know a lot of people say we leave our privacy behind when we venture onto the internet or own a smartphone, but at what point does the government's power to track every economic move of every individual become so great that communism or feudalism is inevitable? And what should be done about it?

ncornilsen

  • Pencil Stache
  • ****
  • Posts: 999
Re: Digital dollars and the end of financial privacy
« Reply #1 on: May 25, 2021, 01:16:47 PM »
Control the coinage and courts, let the rabble have the rest. -Paul "Muad'Dib" Areides

I don't think this leads to communism, but would be about as bad. Not sure what to do about it... but if it was abused/percieved to be abused, we would see a return to bartering of goods/services and black markets. And the "Gravy Seal" preppers who buried coffee cans of gold around their bunkers would lord over the rest of us! (I heard the term "gravy seal" the other day, been dying to use it in conversation)

SuperSecretName

  • Bristles
  • ***
  • Posts: 353
Re: Digital dollars and the end of financial privacy
« Reply #2 on: May 25, 2021, 01:20:14 PM »
take a breath.

On the list of things to worry about in the western world, this is pretty low down.  China is a different story though.

ChpBstrd

  • Magnum Stache
  • ******
  • Posts: 3452
Re: Digital dollars and the end of financial privacy
« Reply #3 on: May 25, 2021, 03:00:08 PM »
take a breath.

On the list of things to worry about in the western world, this is pretty low down.  China is a different story though.

Why is a country on the other side of the planet worth worrying about, but the balance of power in one's own government is a low priority?

Mr. Green

  • Magnum Stache
  • ******
  • Posts: 3251
  • Age: 38
  • Location: Wilmington, NC
Re: Digital dollars and the end of financial privacy
« Reply #4 on: May 25, 2021, 05:31:53 PM »
We can't even get broadband to a third of our citizens. Digital-only currency is laughable.

norajean

  • Pencil Stache
  • ****
  • Posts: 603
Re: Digital dollars and the end of financial privacy
« Reply #5 on: May 25, 2021, 08:00:53 PM »
As you say most of have been digital only for decades already. Who carries cash anymore? Places quit accepting it during the pandemic.

AccidentialMustache

  • Pencil Stache
  • ****
  • Posts: 595
Re: Digital dollars and the end of financial privacy
« Reply #6 on: May 25, 2021, 09:08:18 PM »
take a breath.

On the list of things to worry about in the western world, this is pretty low down.  China is a different story though.

I and a certain individual named Edward Snowden would like to disagree with your first sentence. That or your classification of the USA as "western world."

JLee

  • Walrus Stache
  • *******
  • Posts: 6811
Re: Digital dollars and the end of financial privacy
« Reply #7 on: May 25, 2021, 09:10:13 PM »
The super rich cheat so much on their taxes, I don't expect their personal Senators the politicians they make donations to will allow such a thing to happen.

bacchi

  • Walrus Stache
  • *******
  • Posts: 5905
Re: Digital dollars and the end of financial privacy
« Reply #8 on: May 25, 2021, 10:02:58 PM »
As you say most of have been digital only for decades already. Who carries cash anymore? Places quit accepting it during the pandemic.

Yep. That horse ran away days ago.

Paul der Krake

  • Walrus Stache
  • *******
  • Posts: 5610
  • Age: 13
  • Location: UTC-10:00
Re: Digital dollars and the end of financial privacy
« Reply #9 on: May 25, 2021, 10:16:23 PM »
The same government that takes 6 months and 3 billion dollars every 10 years to count the number of people living within its borders?

Malcat

  • Walrus Stache
  • *******
  • Posts: 8337
Re: Digital dollars and the end of financial privacy
« Reply #10 on: May 26, 2021, 05:27:53 AM »
Tons of things are digital, and yet governments haven't bothered putting measures in place to track them.

The information is out there, and it hasn't lead to communism yet, so I don't really see how that's a main concern.

chemistk

  • Handlebar Stache
  • *****
  • Posts: 1084
  • Location: Mid-Atlantic
Re: Digital dollars and the end of financial privacy
« Reply #11 on: May 26, 2021, 05:57:29 AM »
Eh, I as an individual am not going to worry about this.

Is that a fatalistic perspective? Absolutely.

I'll hope that such a system would be not be used to overtly control the populace. I'd probably even go as far as to say that I trust that it wouldn't happen, at least in the near future.

If it does happen (some or all of OP's points), the pieces will have been put into place behind the scenes so that by the time we are all aware of the system, it would be too late to do anything about it.

I am not a revolutionary, I just want to live my life. They can't control me if I don't care whether I'm being controlled. I'm going to die one day anyway, so why not at the hands of an autocratic megalomaniac?

terran

  • Magnum Stache
  • ******
  • Posts: 3533
Re: Digital dollars and the end of financial privacy
« Reply #12 on: May 26, 2021, 08:09:19 AM »
Taxes could/should already be auto-calculated for the vast majority of taxpayers (and are in some countries). The tax preparation lobbies won't let that happen.

ChpBstrd

  • Magnum Stache
  • ******
  • Posts: 3452
Re: Digital dollars and the end of financial privacy
« Reply #13 on: May 26, 2021, 08:42:45 AM »
We can't even get broadband to a third of our citizens. Digital-only currency is laughable.

That didn't stop the credit card companies from setting up a network of terminals in the early 90s. If one is only transferring monetary serial numbers there's not much data to move, so it doesn't have to move fast. Broadband is for data-intensive things like video.

As you say most of have been digital only for decades already. Who carries cash anymore? Places quit accepting it during the pandemic.
Tons of things are digital, and yet governments haven't bothered putting measures in place to track them.

The information is out there, and it hasn't lead to communism yet, so I don't really see how that's a main concern.


The difference is in who owns the means of production. In our current system, dozens of banks, credit card companies, and other financial services companies each own a fraction of the information about our financial lives. In a digital dollar system, the government takes possession of 100% of the information about our financial lives, down to tracking every penny.

In the current system, one can opt out of financial relationships with various companies, or live entirely off of physical cash if one chooses to do so. With a digital dollar, there is no opting out. The government already has a monopoly on money, but it doesn't yet have a monopoly on financial information. The monopoly on financial information is what's being debated.

The comparison with communism only seems a stretch because we usually associate communism with state-owned manufacturing and agricultural economies, not the information economy. But the information economy is the future, so why should we care about government ownership of some industries but not others?