Economist Thorsten Polleit has taken a sledgehammer to Facebook’s Libra project.
In an article entitled ‘Facebook’s Fake Money’, he writes: “Is Libra really good — or sound — money? Unfortunately, this question cannot be answered in the affirmative. The reason is this: The quality of Libra depends on the quality of the underlying fiat currencies — and fiat currencies do not make for good money, as should be well known by now. They are inflationary; they enrich some at the expense of many others. The issuance of fiat currencies causes distortions in the credit markets, which provokes speculative bubbles and triggers booms and busts, and last but not least, they lead economies into over-indebtedness.”
The fact that Libra will be run on a private (permissioned) blockchain does not change anything, Polleit argues. “Libra is just the upshot of an entrepreneurial attempt to profit from the global market for payment services (and later perhaps also from the credit markets), and, of course, to collect as much precious transaction data as possible.”
“If Facebook and others wanted to offer the world a better, actual good money, the choice is obvious. It would be a 100% gold-backed Libra. But who knows, maybe this will be the next step, initiated by Facebook, Amazon, or any other company because there sure is a vast market for sound money out there,” he concludes.
Libra will be pushed back another two years at least, and is in danger of not even getting off the ground, according to another economist, Janice Winterburn. More on that here.