Steve always says the beauty of MMT is “it takes the most convoluted spaghetti diagram and turns it into a straight line.” When it comes to banking, the financial industry, financial technology, and privacy, has the MMT community developed that straight line yet? Today’s guest, Raúl Carrillo, thinks we can get there:
“I don't think we quite have, but I think the straight line flows right through everything else we've done. Just as we don't want banks to be heavily involved in the public provisioning process... We have to pay just as much attention to Silicon Valley, and then start thinking about what it looks like to actually build a democratic public money system that operates on MMT principles.”
It’s been two years since we’ve had Raúl on the podcast, but the conversation is continuous, and it includes our episodes with Rohan Grey and Brett Scott.
Steve and Raúl discuss Raúl’s recently published white paper, "Seeing Through Money: Democracy, Data Governance, and the Digital Dollar." It is essentially an intervention in the discussion about the future of money. It includes analysis of the way government agencies use financial technology today and how it is linked to a broader public money story and an MMT story. Currently, banks are intermediaries between the public and the state. In other words, banks are part of the plumbing. But what’s to stop the government from using financial technology for the public purpose and cutting the middlemen?
Today, however, it’s more than just the banks.
“The inclusion of new technological partners in the plumbing changes many, many things. If a Silicon Valley firm – whether it's a big stablecoin firm like Circle or PayPal – gets a master account at the Fed, we're living in a different terrain for MMT analysis ... I think it's just very important that we keep an eye on Silicon Valley in this sense and take the time for self-assessment when we talk about what kind of public money systems we're building.”
The conversation goes into privacy issues where, again, the lines are blurred between the private sector and the government. Or maybe “blurred” is the wrong word. Their lines of communication are not necessarily visible to the public. What has been blurred is, in some cases, the distinction between left and right.
Some take-aways from the episode. Financial surveillance can have extreme consequences. Think of a state with draconian anti-abortion laws. If the government can’t get a hold of your medical records, they can simply track your payments. After the Dobbs ruling, some suggested using cryptocurrency to pay for abortion, but guess what? It turns out blockchain is not private in the way most people think it is. That’s another take-away from the episode.
Whatever the idealized intentions of the early developers of digital currency (remember how it would address the racial wealth gap?) it has mutated into a world of grifters and fraud. As Raúl says, “It’s not a cool party anymore, if it ever was. When you’ve got the cops and the bankers there, it’s time to leave.”
Raúl Carrillo is the Deputy Director of the LPE Project (Law and Political Economy) and an Associate Research Scholar at Yale Law School. He is on the board of Modern Money Network and the chair of Public Money Action.
@RaulACarrillo on Twitter