Economist Trashes Libra Calling It ‘’Facebook’s Fake Money’’

Economist trashes Libra calling it Facebook’s Fake Money in a news article that we have in our altcoin news today by Thorsten Polleit.

Far from the criticism of Facebook’s fintech ambitions, Polleit also noted that his doubts are based on an entirely different set of metrics than the regulators. He wrote:

 “The critical question, however, is this: Is the Libra really good — or sound — money? Unfortunately, this question cannot be answered in the affirmative. The reason is this: The quality of the 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. Fiat currencies 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, fiat currencies lead the economies into over-indebtedness.”

The term ‘’sound money’’ is a term that evolved over the years and once it was used to refer exclusively to gold-backed currencies but now it refers to Bitcoin. When he spoke about Bitcoin, Polleit who is the chief economist at Degussa did not mention the largest cryptocurrency at all. However, he did say that Libra presents a real threat to banking. When he was asked by Caroline Maloney who is a New York Representative if too much money goes into Libra, Polleit stated:

”Traditional banks have good reasons to worry. The Libra is about to siphon transactions out of bank accounts and put them into the LA’s [Libra Association’s] hands. Not banks, but the LA will collect the fees and will receive precious data on who pays what, when, and where. The banks will be left even more in the cold should customers begin to use the Libra for savings purposes as well. Because then they would also lose the time and savings deposits with which they refinance their balance sheets at low costs.
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Or think of the credit business: The LA may at some point also provide its customers with short-term consumer loans.”

The economist trashes Libra since it could become a major concern in the United States where people are mostly reliant and have great access to Banking as it was explained in some of the best cryptocurrency news sites.