Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Who is behind Project Libra and is it a Global Central Bank?

I ask who is behind Project Libra because the Libra White Paper looks like a blueprint for a world currency and a global central bank.

The whitepaper states:” The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people.” They will call that digital currency the Libra and an organization called the Libra Association will issue it.

Here is how the Libra White Paper describes the Libra cryptocurrency:

“Unlike the majority of cryptocurrencies, Libra is fully backed by a reserve of real assets. A basket of bank deposits and short-term government securities will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value. The Libra Reserve will be administered with the objective of preserving the value of Libra over time.”

Is Libra a Global Currency?

That sounds like a central bank to me. In particular, the Libra white paper reads like the great economist Lord John Maynard Keynes’ proposal for a supranational world currency.

To elaborate, Keynes proposed a global currency called the Bancor during World War II. The bancor was by gold held by an international central bank. However,  Americans at the Bretton Woods Conference in 1944 killed Keynes’ bancor scheme. 

Interestingly, Zhou Xiaochuan a former deputy governor of the People’s Bank of China made a similar proposal on 24 March 2008. To elaborate, Zhou proposed the creation of a global reserve currency in a speech called Reform the International Monetary System.

Apparently, Zhou’s fear is that the US dollar is no longer an effective international reserve currency. In detail, a reserve currency is money people around the world will accept instead of their fiat currencies. Currently, the dollar functions as the reserve currency.

Is the Libra Association a Global Central Bank?

Moreover the white paper states “The Libra Association is an independent, not-for-profit membership organization headquartered in Geneva, Switzerland.”

That sounds more like a multinational organization rather than a typical cryptocurrency venture. Fascinatingly, the current members include of the Libra Association include: MasterCard (NYSE: MA), Spotify (NYSE: SPOT), (Visa (NYSE: V) PayPal (NASDAQ: PYPL), Lyft (NYSE: LYFT), Stripe, eBay (NASDAQ: EBAY), Facebook, Vodafone (NASDAQQ: VOD), and Uber (NASDAQ: UBER).

Interestingly, Vodafone is behind the world’s successful digital currency, the un-encrypted M-Pesa. Vodafone claims M-Pesa had 29.5 million users in 10 countries in March 2017. Plus, Vodafone processed six billion M-Pesa transactions in December 2016.

Additionally, Facebook is creating a subsidiary it calls Calibra to make applications for Libra. A Facebook press release reveals Calibra is building a digital wallet for the Libra cryptocurrency. Facebook says it will make the wallet available through Facebook Messenger and WhatsApp in 2020.

I conclude that the Libra Project is a separate organization from Facebook. Instead of running Libra, Facebook merely participates in it. Why would Facebook set up a separate company for its digital wallet if it controlled Libra?

What is Project Libra?

Thus Libra resembles quasi-governmental international bodies like the World Health Organization (WHO), and the World Bank. Tellingly, the WHO headquarters is in Geneva. Moreover, the headquarters of the United Nations’ predecessor; the League of Nations, was also in Geneva.

Therefore, the Libra Project does not look like a private commercial venture. Instead, it looks like a government-backed multinational venture. Significantly, the governments involved are remaining secret.

Who is Mark Zuckerberg fronting for?

Thus I think Mark Zuckerberg and Facebook (NASDAQ: FB) are fronts for somebody else. The most likely suspects are Central Banks like the US Federal Reserve System, the People’s Bank of China (PBOC), the Reserve Bank of India, the Bank of England, and the European Central Bank.

To clarify, an effort to organize a global central bank or launch a world cryptocurrency will face insurmountable political resistance. For instance, many intellectuals will view a global cryptocurrency; or a digital Euro, as a threat to national sovereignty.

However, the same neanderthals will dismiss a Facebook cryptocurrency as a harmless digital toy. Remember, these are the same people who dismissed the internet, social media, and Facebook itself as harmless digital toys.

Consequently, I think Zuckerberg and Facebook are fronts for a cartel of Central Banks. I also have to wonder if Zhou Xiaochuan will emerge as the first head of the Libra Association.

Is China Behind the Libra Project?

Interestingly, claims: “A Chinese Government-Controlled Bitcoin Alternative Is Reportedly in the Works.”

To clarify, China has a double standard on cryptocurrencies. The PBOC has tried to suppress private cryptocurrencies like Bitcoin (BTC), while conducting extensive research on cryptocurrency and blockchain.

In fact, the PBOC reportedly had 44 blockchain-related patents and 77 digital currency patents as of 18 December 2018, reports. Plus, the PBOC operates several cryptocurrency research projects., for instance, reports that the PBOC has a Digital Currency Research Lab in Nanjing.

I wonder if Facebook is basing Project Libra on PBOC research. Plus, a PBOC backed blockchain financial trade platform is being tested in Shenzhen; China’s Silicon Valley, CoinDesk claims. The Digital Currency Lab is reportedly behind the platform which includes major commercial banks.

Thus, I wonder if the PBOC is trying to hide its involvement by setting up Libra in Geneva and announcing it through Facebook, an American company. Major Chinese fintechs like Ant Financial, and Chinese tech giants like Alibaba (NYSE: BABA), Tencent Holdings, and Huawei are noticeably absent from the Libra Association’s membership. Why?

Is the Libra Project a decentralized global central bank?

Interestingly, the world’s most powerful central bank, the US Federal Reserve system functions like a cartel of banks.

Notably, you can describe the Federal Reserve as a “decentralized central bank.” To explain, 12 separate District Federal Reserve banks make the up the Federal Reserve system. Like the Libra Project, the Federal Reserve banks are private organizations overseen by a Board of Governors that reports to Congress.

The Libra Association is a decentralized organization composed of validator nodes that will control the Libra Blockchain. A Libra Association Council comprising representatives from each valdiator node will govern the Libra Association.

I think the Libra Association Council looks like the Federal Reserve’s Board of Governors. However, its current members are private companies like Visa and Spotify. Notably, five member companies; Visa, MasterCard, PayPal, PayU, and Stripe,operate global payments networks.

Why the Global Central Bank will need Facebook

However, I think none of those entities would attempt to organize something like Libra without the support of Central Banks.

Facebook is taking the lead in the project because it is the one organization capable of reaching a large percentage of the world’s people instantly. Acodes estimates Facebook’s social media had 2.7 billion users in 2nd Quarter 2020.

In detail, Statista estimates Facebook itself had 2.32 billion users, WhatsApp had 1.6 billion users, Facebook Messenger had 1.3 billion users, and Instagram had one billion users in April 2019.

How the Global Central Bank could use Facebook 

Plus Facebook has near universal reach in some areas. For instance, Facebook product; WhatsApp reached 73% of the people in Saudi Arabia, 56% of Mexico’s population, 65% of the German population and 28% of the people in India in 2017, Statista estimates.

Under those circumstances, the global central bank could use Facebook to distribute money directly to people in those nations in emergencies. If Mexico’s peso suddenly collapsed because of hyperinflation, for example.

The global central bank could theoretically use WhatsApp and the Calibra wallet to send a spendable currency to over half of Mexico’s population, for instance. The cash will take the form of the Libra cryptocurrency or a stablecoin backed by US dollars.

Consequently, people faced with hyperinflation could buy food for their families. Notably, Venezuelans are facing hunger because of hyperinflation in that nation.  

Obviously, there will be complaints about “violations of national sovereignty;” probably from intellectuals and politicians, whose cash is safe in Swiss bank accounts. However, such currency distribution is better than tens of millions of desperate Mexicans storming the US border in search of work or food.

Everybody must watch the Libra Project closely because it is apparently far more than a simple cryptocurrency. Speculators in particular, need to watch Libra because it could totally disrupt the international financial system.