“Washington is secretly implementing MMT.”
The U.S. House of Representatives has successively launched a number of cryptocurrency-related bills. Recently, CoinMetrics co-founder Nic Carter took this topic to talk to Rep. Tom Emmer from Minnesota. He is the co-chair of the Blockchain Caucus and one of the most active advocates of cryptocurrencies. The two sides will discuss topics such as crypto policy, CBDC and Modern Monetary Theory (MMT) in 2022 in an attempt to clarify the impact of cryptocurrencies on the existing world.
Tom Emmer: A few years ago, I learned about a theory called Capitalist Information Theory, which involves a wealth of knowledge. Economic growth is actually the result of knowledge growth. As an entrepreneur like you, take risks and learn from the risks you take. Assuming you work in a truly free market, this knowledge advances. Not only are you doing better as entrepreneurs, but our quality of life as a society has improved dramatically. The result is that the real economy grows amid an expansion of wealth. And politicians like to call it prosperity in general terms.
Nicolas Carter: It’s very important to stay in sync with cryptocurrencies and blockchain, I feel like I’m always inundated with information, but how do you stay in sync with that?
Tom Emmer: Frankly, the financial system has been mismanaged for decades. The Fed has been manipulating the market and controlling interest rates. Near-zero interest rates are actually fraudulent because you are not pricing capital. At its real price, you are actually borrowing money from tomorrow. The White House is full of new MMT theorists who believe that as long as governments control their own fiat currencies, they can print money recklessly. Isn’t cryptocurrencies a direct result of this behavior?
That’s what we’re ultimately going to focus on, because the Fed is manipulating the cost of capital, driving down the cost of capital , and I use the word fraud because it’s very strong. But it’s a tool they use to manipulate the cost of capital, so it’s not really the cost of capital. So capital doesn’t go where it would normally go. In fact, it’s kind of like Medicare. If you reimburse people more for coronavirus-related deaths in the U.S., there are more coronavirus-related deaths, and I’m not saying that’s happening. This is an analogy. When you incentivize the market, the market can be very selfish. They will use this incentive to their advantage, rather than letting the market do it on their own initiative.
In my opinion, these MMT believers are legacy institutions who are now in conflict with people in crypto like you and the crypto community. Because of the mismanagement of monetary policy, the crypto community has taken its place. When you do this with interest rates, when the next crisis comes, you guess the cost of capital will price itself properly and the assets will return to their real value. But debt will remain high. What does this mean for those in the crypto community who have discovered an alternative store of value? People like to compare cryptocurrencies to gold. But I think, whether people know it or not, what they’re doing is protecting themselves from intermediaries that actually distort the market .
Nicolas Carter: I think your analysis is very sharp. If you know Balaji Srinivasan, he also stated that the most influential battle of the next 10 years is the battle for effective sound money between cryptocurrencies and modern monetary theorists. MMT thinks they are not the establishment, but a group of outsiders. In the second quarter of 2020, government spending exceeded 50% of GDP. It seems to me like a normalization of MMT, like a secret implementation of MMT in Washington.
Tom Emmer: I don’t think it’s a secret. I think it’s pretty obvious, overt. MMT people don’t want to be seen as the establishment. If they abandon their ideology and allow their greed, desire, and interests to flourish, they will have to admit that doing so will never work out. Looking at the evolution of the crypto community, before 2008, you really didn’t have much experience until the mysterious Satoshi Nakamoto came along. At first, the traditional financial industry and institutions did not pay much attention to this because they thought it was just a flash in the bubble.
in the US and around the world. The U.S. dollar remains the reserve currency, while cryptocurrencies have begun to flourish. Over the next 10 years, see if the disruptive force of cryptocurrencies will ultimately prevail. One is about personal liberty, the other is more about you handing over your identity to a central authority.
Nicolas Carter: Moving on to the topic of stablecoin CBDC, which is the most attractive topic for me. Just on the topic of the level of spending we’ve seen in the last two years, I’m disappointed by Republicans in Congress who, in my opinion, have not resisted the massive fiscal shock we’ve seen since 2020.
Speaking of inflation, I think it’s interesting. Because Bitcoin enthusiasts and gold investors have a lot in common, I think they are very close ideologically. Of course, for the past 10 years, we have been calling for quantitative easing to achieve inflation, and the results have not come. I think the change started with quantitative easing, which got trapped in the financial system rather than into the real economy. Now you have this direct fiscal monetization where the government spends directly into the economy and directly into the households. Therefore, it is not surprising that there is an actual inflation shock. Interestingly, MMT always holds before an inflation shock, which is the only limitation of MMT. I mean, do you think inflation is the result of spending? Or is there value in MMT’s view that inflation may be driven by monopoly or corporate greed?
Tom Emmer: How do you define corporate greed? Any profitable business is greedy. It’s about commodity capital finding their way through human activity, running through human ingenuity and mind rather than government choice, so, I don’t think it’s corporate greed. But at the end of the day, we’re going to take the emotion out of it all, and we’re going to look at what made this country, not the financial system today.
We need more people in Congress to start realizing this, and I don’t want encryption to be a partisan issue . But I think in the government’s view, there are people who believe in the old banking system, the way it exists, and they are reluctant to discuss new options.
Nicolas Carter: You mentioned CBDC and stablecoins earlier. I think this is a controversial issue facing two paths. Whether it’s the push for stablecoins by private institutions or the takeover of CBDCs by the public sector, I’m a strong critic of CBDCs. What would happen if we gave the Fed unrestricted power to monitor everyday retail transactions? You’ve been outspoken on this issue. What are your concerns about the CBDC regime in the US?
Tom Emmer: I think the US CBDC system is the greatest experiment in the world. We should never allow the Fed to turn itself into a retail bank that collects all kinds of information about the American people and tracks their transactions. Current Treasury Secretary Janet Yellen argues that the sprawling bill failed to monitor U.S. bank accounts with cumulative transactions exceeding $600. In my opinion, this is the red flag that we should be heeding, you have to protect privacy at all costs .
Currently, there are two potential CBDCs. One is a central bank account, where the central bank collects individual customer information and issues CBDC directly to the individual, who can then track all transactions. Another is to leverage our existing financial system. Banks are on-ramps and can collect transaction information just like KYC information. The problem is that the Bank of England can still track these transactions on the blockchain. It’s no different from the digital dollar we use today when we swipe our credit or debit cards.
Nicolas Carter: I don’t think every central bank is talking about rediscovering the value of cash in a digital environment. Cash gives you complete control over where you spend your money. And it gives you complete privacy. You have full discretion with whom you can trade. But you never see any white paper saying we want to create this experience and put it into the digital realm.
For example, we need to inject anti-money laundering system into this system. We need to incorporate KYC into the system and transaction threshold, even beyond the threshold of anti-money laundering. Like we’ve forgotten what cash is like, we’ve normalized monitoring. So CBCD seems different to me than cash. I fear cash will disappear completely.
Tom Emmer: I think when governments have extremely onerous tax policies, it does mean they’re going to deal differently. You create a market for a cash society where people do trade other things of value that the government can’t track. We’re talking about a potential digital totalitarianism, where our government tracks our every transaction through a central bank digital currency. It can actually be done with existing data to build a variety of information about individual U.S. citizens.
Nicolas Carter: I think the politicization of finance is a stated goal of the American far left. There are now $150 billion in stablecoins, a reaction to the politicization of finance. It’s because crypto exchanges are being evicted by banks. As such, stablecoins were created to facilitate their relationships with customers outside of banks. Obviously, this is a cause for concern, but it is also a direct response to a highly rigid and exclusionary banking industry. So now the proposal is to bring stablecoins back to the banking sector and force them to obtain banking licenses. What do you think of this idea?
Tom Emmer: It’s no different from when cryptocurrencies first started. The establishment is trying to keep cryptocurrencies out of traditional markets and trying to find ways to create barriers or friction that prevent transactions. But the beauty of this whole crypto community is that this community has found solutions, found ways to move value, no matter what the government is trying to do to stop it.
That’s why I’m really bullish on future stablecoins. The emergence of stablecoins is actually a reaction to bad policy. I recommend that my colleagues and their staff in Congress pay close attention to cryptocurrencies as a potential solution. We have few new banks now because it is very difficult and expensive to create a bank and comply with regulations that already exist. From our perspective, rather than trying to cram stablecoin issuers into existing banking frameworks, I think we should be more creative with any regulation or regulatory framework.
Nicolas Carter: Some people think that stablecoins are unregulated, which is the case for some offshore funds, but onshore funds are either issued under the US MTL digital currency regulatory license, and then you also have a New York trust license and a Nevada license State Trust License. They treat the issuer as a trustee. So you can’t invest in crazy stuff. There are specific liquidation terms depositors have privileges in liquidation. So there are safeguards. Are you going to seek to cross the line and create some federal legislation or a federal model to give stablecoin issuers?
Tom Emmer: Yes. So I have to be very careful. People like SEC Chairman Gary Gensler, when he makes a public statement, people in the community have to accept that this can be a problem, regulation through public announcements is the same as regulation through enforcement Oops. I want to say two things, first, about regulation . Those who know nothing about society, their entire financial experience is based on the traditional financial system and is completely unregulated. It’s like the Wild West, with no rules.
Second, maybe we can discuss some reserve standards for stablecoins . Our friends in the Senate are talking about some new regulators allocated specifically to the crypto community. The problem we have right now is that every regulator thinks they have some jurisdiction over this community, and that’s causing havoc. From my perspective, it pushes capital overseas. I think our federal government must work with the industry in a way that allows stablecoin issuers to innovate while ensuring that Americans are protected. Policy makers must work with industry to ensure we are doing the right thing. I just don’t think legislation is the quickest way to do this, so I think we need to think about a standard setting framework or a federal charter option.
Nicolas Carter: It’s interesting that you have some specific structures, like special purpose savings institutions in Wyoming, and a couple of issuers do get licenses, but they’re blocked on the Fed master account. So they can’t get the Fed’s authority that way. Stablecoin issuers have been trying to obtain these licenses, but so far, largely unsuccessfully.
Actually part of the reason I moved to Florida is because I feel the policy makers here are more crypto friendly.
One of the things I find interesting about stablecoins is that it kind of flips the script, because cryptocurrencies are often portrayed by some critics as an anti-American thing, and there is a saying that “stablecoins are competing with the dollar.” On the other hand, stablecoins are almost always denominated in USD. They are almost all backed by treasury bonds, which are a big source of their purchasing power, and in fact the crypto industry is spreading the influence of the dollar globally.
When talking to your Republican colleagues, we try not to characterize encryption as a partisan issue. So when you talk to your Republican colleagues, what are their main objections to your encryption advocacy?
Tom Emmer: I hear two major issues on the Republican side, the first being regulation. Second, the issue of sanctions. These are the two biggest questions I hear often. Now, another question for me personally is how to convince them that a central bank digital currency is not really the answer.
Nicolas Carter: I actually see a lot of alignment between Wall Street and the crypto industry and they see it as a profit center. They can still make very strong profits from crypto products. But I think it’s mostly a war between people who have the government taking over all financial operations and people who want private institutions to play a role. Speaking of bipartisanship, you introduced the Securities Transparency Act, which is one of your main agenda items this year.
Tom Emmer: I will continue to promote the Securities Transparency Act, which we actually did in the last Congress. The Securities Transparency Act would create a new definition of investment contract assets that would allow the SEC and token issuers to easily distinguish between tokens when they are offered as part of a securities contract and when they are not offered as part of a securities contract. is a fundamental change. I’m open to tweaks and modifications based on the current state of the industry, but I think we need to be more flexible.
Nicolas Carter: We do see that. We’re seeing startups going overseas, they’re looking for jurisdictions, we’re looking forward to the ability for Congress to pass more legislative changes to support cryptocurrencies, when are you looking forward to that?
Tom Emmer: I believe it will. I think over the next two or three years, you’re going to see some policies coming out of Congress that directly address some of the bigger problems. I don’t know if it means regulation of the industry, I prefer it to resolve some framework that allows this community to grow like the Internet, in this community, I believe in the development of the next generation of entrepreneurship, we can not only see the way we exchange value, but What’s more important is how cryptocurrencies will affect our existing world.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/conversation-with-u-s-house-of-representatives-discussing-crypto-policy-cbdc-and-modern-monetary-theory/
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