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MARC STEINER It is a shadow bank.
BILL BLACK And if it wants to, it can become extraordinarily shadow, right? It, with a two-thirds vote, could invest in anything. It could take your money and buy Macao, you know, gambling joints type of thing. If the People's Republic of China decides to buy a majority share, it could turn all of its investments into the PRC and such. So lots of things could happen. We don't know what will happen and it could happen incredibly rapidly with no notice precisely because this thing will be regulated by no one. And because these institutions that control it will have conflicts of interests and incentives to do lots of wild and crazy things to increase their yield.
MARC STEINER So. Okay. So that's frightening aspect number of what the future could hold.
BILL BLACK Yeah. That's just one. [laughs].
MARC STEINER Right. So Frances Coppola in Forbes wrote a really interesting piece about this, and she wrote for her that the real concern for Libra was that their business model is to "harvest monetized data," as she wrote. And she says that's not changing. That's who they are. And so, what she found is the sentence we started with, the sentence that's buried in the white paper, that implied they're really in this creating Libra to get us to, kind of, store these global digital identities that they'll control, and that should be really scary. I mean, people like Dave Birch from Consult Hyperion is really, kind of, pushing this idea that "there are no throwaway remarks" in Facebook. He wrote that this is the real danger here, and that's also uncharted and unregulated territory in many ways. So to me, that's danger number two and as big as danger number one.
BILL BLACK Yeah, I agree. That's number two. And, here again, stop me when this sounds familiar. All we have is Facebook saying we don't intend do it this way, but there's nothing binding on us and we can change tomorrow. And again, that's if you believe Facebook, which I think is a group of about twelve people all of whom work for Facebook. The other folks who work for Facebook also doesn't trust Facebook. [laughs]
MARC STEINER [laughs] So, you know, Facebook came out with if I remember correctly this thing, Zynga. You know, this game where people play this Farmville-kind of game, and it had its own currency, and they would spread money around, and they spent millions of dollars, billions of dollars, making money for Facebook. That was a game, but this is something different. They intend to make the same amount of money or more.
BILL BLACK Yeah and it is incredibly dangerous. It will provide them with all kinds of information that they will profit from. Remember, almost all the really biggies, what they're really doing is not whatever the surface thing is that they tell us. It is, they're getting data, which they then sell to other folks or sometimes they buy the companies that monetize the value of that information. And so they know all kinds of things about people, and a lot of that information is valuable to others; for example, lenders. So lenders are already trying to figure out, for example, are you a much riskier borrower if at 2 a.m. you're buying porn, as opposed to buying sundries at Amazon type of thing? All right. So that's not so great directly, but it also means that there's information that's embarrassing. And that means that there is a market for blackmail, as well. And also, of course, intelligence agencies go into these kinds of services and go "ha, ha, ha, what kind of dirt do they have on Fred, because we would like to get Fred to be an agent?" And embarrassing stuff is one of the ways to recruit intelligence assets. So yeah, you're going to get all kinds of things like that. Now I know the cliche' is that younger people don't care as much about privacy as old fogies and such, but, you know, as soon as they have kids [laughs]
MARC STEINER No. I think there are a lot of young people who are worried about this, but yeah.
BILL BLACK Yeah. I think that'll change right quick.
MARC STEINER So while we have this time together, I mean, you were a regulator and I'm wondering why it's so difficult to regulate currency like Libra, than to regulate the dollar or the euro? Talk a bit about the difficulties are here and what has to happen to change that if in fact, that can be changed?
BILL BLACK Well, I mean, the easy answer is it shouldn't exist, so the regulation should
MARC STEINER Libra should not exist?
BILL BLACK Should consist of the word, no. Or, if you feel emphatic, no, hell no, type of thing, right? Again, this is what [Fed Chairman Paul] Volcker has been trying to emphasize. He said, just once, I'd like some proof that a financial innovation actually made the world better. And he says, in the last 50 years, the only one that he can think of that made the world better was the creation of the ATM, which again, I don't think millennials use ATMs very much.
MARC STEINER So and, kind of, finally there's another question about identity and this battle over that quote we had in the very beginning and the battle over who controls our identity and what identity is. There's the whole notion of sovereign identity that's been battling against this idea that's another theoretical framework, so talk a bit about that. I mean, to me, also one of the major things is who controls this identity in the digital age and how we define that?
BILL BLACK So if you want to really have anonymity, if you want to disappear, go off the grid, you have to go off of the entire web. You go onto the web and already, they can find you. Most people who aren't incredibly sophisticated and disciplined in avoiding any bread crumbs, so that's going to exist. Also, again back to blackmail, they're going to have the real identity and the real location of all kinds of folks. So, you know, just very recently it's broken that the border control agents have had this off-book network
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