At least you can't trivially circumvent the redaction just by copy and paste which was the case for lots of PDFs from the Obama years, such as this one:
From the Project 2025 chapter (#24) of the Federal Reserve:
> As in the Suffolk System, competition keeps banks from overprinting or lending irresponsibly. This is because any bank that issues more paper than it has assets available would be subject to competitor banks’ presenting its notes for redemption. In the extreme, an overissuing bank could be liable to a bank run. Reckless banks’ competitors have good incentives to police risk closely lest their own holdings of competitor dollars become worthless.[Fn24]
[…]
> [Fn24] Reforms should also strengthen the incentives of bank depositors (customers) and bank shareholders (owners) to monitor bank portfolios. Deposit insurance undermines the former, as even President Franklin Roosevelt recognized. Bailouts and last-resort lending undermine the latter.
Reading the entire chapter, I got the impression that they want to take the entire US banking system back to the 1800s, including references to free banking:
> In this way, free banking leads to stable and sound currencies and strong financial systems because customers will avoid the riskier issuers, driving them out of the market.
What every fan of removing protections ignores is that we have already tried the version without the regulation and collectively chose (imperfectly, to be sure) the current system. It is much harder for them to make an argument that we should return to the glory days of bank runs, child-labor, rivers that caught fire, tainted food, and childhood mortality.
> It is much harder for them to make an argument that we should return to the glory days of bank runs, child-labor, rivers that caught fire, tainted food, and childhood mortality.
This is one of the things about Bitcoin-as-currency that makes no sense to me: it's basically gold-standard-but-digital. We've tried the gold standard and got rid of it for good reason:
> The idea behind a gold standard is that a currency becomes tied to a commodity with a stable value. The great problem with this is that gold does not have a stable value. Like any other commodity, its relative value goes up and down. For instance, in September 2022, US dollar milk prices were rising over 16%. In gold terms milk prices were rising over 23%—dangerously high inflation.
And it was only after leaving it that countries started to recover:
> In the end, recovery from the Great Depression does not begin until countries give up on the combination of the Bagehot Rule and of commitment to sound gold-standard finance. Those countries that have central banks willing to print up enough money so that people are willing to spend it--it is when you adopt such policies that your economy begins to recover. If you don’t, you become France, which sticks to the gold standard all the way up to 1937, and never gets a recovery. When World War II begins, Nazi Germany’s production--equal to France's in 1933--had doubled between 1933 and 1939. French production had fallen by 15%.
Thought experiment: If all bitcoin holders redeemed their bitcoin for US dollars, would this affect the "price" of bitcoin, i.e., the value of bitcoin in US dollars. If yes, how, i.e., up or down.
I'm giving it a non-zero chance that the bulls running through the china shop are going to try and eliminate the FDIC because of nonsense like this. I can't imagine how bad the bank run will be if that happens.
I keep pondering if I should stash a bunch of cash overseas in Europe or what not. But then I worry if the dollar crashes, does everything else crash anyway?
First, cash. Actual, physical cash. As much as they'll let me take.
Second, why not T-bills? When would T-bills be a problem? If the federal government went down. Compared to a bank, which would be a problem if the bank went down. Well, which is more likely to happen? I think the bank is far more likely.
The cash approach is probably what I plan to do. At least enough for 2-3 months of expenses. If I keep overthinking this I would worry about hyperinflation, but one anxiety attack at a time, right?
Nah. A bunch of bank failures are going to cause the opposite of hyperinflation. (I mean, hyperinflation could happen you while you're worried about bank failures...)
Can we please change the title? "Chokepoint 2.0", from skimming, doesn't appear in the documents at all.
Quoth Patrick McKenzie:
"Nic Carter, a crypto VC and podcaster, who occasionally does very good work, has been steadfastly attempting to brand a constellation of regulatory activities regarding crypto as Choke Point 2.0. This branding is an attempt to delegitimize them by associating them with politically-motivated lawlessness. It has since become popular among crypto advocates.
Unlike Operation Choke Point, which actually was a centrally directed operation with written project plans, status meetings, ongoing progress reports, and a code name decided by the participants (who, in hindsight, should have talked to their own Comms department and picked something that didn’t sound nefarious to describe their plans), Choke Point 2.0 stretches like taffy to attach to any recent regulatory activity crypto advocates don’t like. So we’ll have to review quite an involved history of very disparate issues to give advocates a fair hearing."
(whereupon follows many details of crypto and bank regulation and what happened in 2023, which is much more readable than this pile of documents)
I think the general stance of allowing legal cryptocurrencies is a mistake (I'll be clear - I've used bitcoin as an actual currency on dark markets. It's ok for that purpose, but that purpose is opposed to sane government policy. As a speculative asset, I think it's a scam.)
But it is legal.
So I'm mixed because I feel like the actual governmental response to this at a legislative level (congress) has been a complete failure.
It's hard to argue that crypto is not a net negative right now
- It's used to generate new "coins" that are just outright scams and rugpulls, that manipulate and abuse the less educated in the populace (and for the all the folks with they "they deserve it" attitude... they are your follow citizens. For good or bad their welfare impacts your welfare. You shouldn't be happy they're getting scammed and abused)
- It's consistent with criminal activity in hacking/blackmail for corporations from foreign agents
- The larger coins (ex bitcoin) are mostly controlled by non-us mining groups, outside the control of the government, but the government is going to be on the hook for costs related to enforcement (courts, banks, fdic, etc).
- It's a bad hedge as an asset (it's price tends to correlate strong with the markets, indicating it's not really a digital gold).
----
Frankly - I think for all the issues I otherwise have with a country like China, their stance on crypto is a sane response. It clearly shouldn't be legal, but I wouldn't spend much on enforcement.
wall street doesn't need mules to move money -- they already have insane loopholes to exploit.
this is to create a shadow regime and provide alternative markets. it exists because people all over the world need to launder money, and the BRICs have an incentive to shun it (but still allow it by neglect) as a way to challenge the US Petro-Dollar
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The scam was a masterclass in deception. Under the guise of a promising new decentralized finance (DeFi) project, the fraudsters lured investors with promises of high-yield staking rewards. Thousands of people poured their savings into what they believed was a revolutionary blockchain venture. However, in a single coordinated move, the perpetrators executed a “rug pull” – draining all the deposited funds and vanishing into the depths of the dark web.Authorities and independent investigators initially struggled to track the stolen bitcoins. The criminals had used tumbling services, privacy wallets, and AI-driven laundering techniques to obscure the transaction history. The blockchain, though transparent, was now a maze of dead ends. When law enforcement agencies hit a wall, they turned to Galaxy Ethical Tech, a cybersecurity powerhouse specializing in ethical AI, blockchain forensics, and quantum-resistant security solutions. Led by Dr. Elena Vasquez, a former cryptographic expert at MIT, GET had a reputation for solving the unsolvable.Upon taking the case, GET deployed its proprietary AI-powered blockchain analysis tool, NovaTrace. Unlike traditional tracking methods, NovaTrace used predictive analytics, machine learning, and behavioral forensics to follow digital footprints left behind by cybercriminals.The criminals had scattered the stolen bitcoins across thousands of wallets, splitting transactions into fragments so tiny they seemed insignificant. They leveraged Layer 2 solutions, privacy coins, and decentralized exchanges to mask their movements. However, NovaTrace didn’t just look at transaction IDs; it analyzed patterns, behaviors, and historical connections between wallet addresses.Within 72 hours, the AI had uncovered something crucial—several of the scammers had unknowingly reused addresses linked to previous fraudulent schemes. Even the most careful criminals had left digital fingerprints. Additionally, GET’s Quantum Ledger Recon (QLR), an advanced cryptographic tool, identified a vulnerability in a few of the laundering methods used. Some of the criminals had relied on outdated mixers that inadvertently leaked metadata. By cross-referencing this information with data from dark web marketplaces and blacklisted addresses, GET pinpointed the real-world identities of the masterminds.Armed with undeniable evidence, GET worked alongside Interpol, the FBI Cyber Division, and blockchain intelligence firms to orchestrate a global sting operation. Multiple arrests were made across three continents, and a significant portion of the stolen funds was frozen in digital escrow before they could be laundered further.
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The crypto bros and VCs killed not one but two banks that started getting into trouble after being very accommodating by pulling out money. Now they want the rest of the financial system to keep doing business with them.
I think your logic comes up a bit short because you are basically saying that a bank was accomodating a customer who was generally unloved and then the customer just pulled their funds out because...?
I think SVB's actual failure was triggered by their lousy balance sheet which got pinched once the fed finally brought interest rates higher. Once customers saw the consequences of this, they left.
It's the banks fault for terrible investments not the customers. Any customer would withdraw their money if they knew their bank is on the brink of collapse.
Many banks have no problem taking on unnecessary risk because they believe the govt will bail them out anyway.
maybe that means the space should be more competitive with more banks freely offering services to crypto businesses without being pressured by the government
maybe that's why most crypto companies end up being too concentrated on a handful of banks only
the proximate cause for SVB collapsing was that YC partners and other VC bros took their money out of it, then told the companies they cared about to do the same.
so incredibly exciting that it's US Federal government policy for cryptocurrencies to defraud normies and then cause a global financial crisis again. perhaps we'll learn a lesson about allowing sociopathic billionaires to exist in future.
Skimming this stuff reinforces the belief that one will regret attempting to compete in a market with any significant regulatory requirement. Compliance seems boring, exhausting, complicated, occasionally arbitrary, and sometimes petty.
Regulatory thickets are moats for businesses that know how to use them. And some businesses encourage regulations because it's a financial advantage: e.g. H&RBLOCK. In New Zealand there's large companies that encourage excessive and pointless safety regulations, because they have the teams to work it and small businesses lack resources to fairly compete.
It seems like banking services should be available for all legal activities. Allowing (or forcing) the banks to discriminate against one subset of society enables may be great if you hate that subset, but some day the tides may change and you'll end up on the receiving end.
I've been skimming the first bit of this huge, heavily redacted PDF, and what I see so far is no discrimination against people but things of the form:
- "if you are going to offer these services, please explain how you will comply with existing rules XYZ"
- "you may not imply that crypto services are FDIC insured because they are not"
- "you tried to claim you NFT involvement was like buying art for the branch, but you're still offering it to customers [i.e. you lied to the FDIC in your last letter]"
Would be good if people could find things they're complaining about in the actual PDF, rather than generally re-litigating anecdotes.
(US AML law is pretty onerous, but it's not really up to the banks or even the FDIC as to whether or not to comply with the law!)
If a legal activity is heavily overrepresented by financial crime, as crypto is, it would be incredibly irresponsible not to take action from a regulatory level.
A full-stop is surely overboard, but a pause on business related to this activity until mitigation strategies are implemented seems reasonable to me.
For a microcosm example, I work in fintech and have had to pause all gift card processing on payment gateways due to insecure/improperly implemented payment forms belonging to integrators being used to test stolen gift cards or do refund scams.
Two of the most fraud areas of society are in SNAP benefits and improper Medicaid payments. Yet we never seem to take regulatory action to solve this over-representation of crime.
Individuals who defraud those programs are regularly caught and prosecuted, the systemic offenders who get away with it are always wealthy and connected, and they wind up becoming the Governor and Senator of Florida instead of going to prison.
You find something you made up hilarious? That's kind of sad, don't you think?
I said individuals are routinely prosecuted, which doesn't take a massive effort, it takes a regular effort. It would take a massive effort to do something about Rick Scott's $100M+ fraud, and since he's in the Senate, you can be sure I don't think that.
I know someone involved in organized crime, and the entire crime is around stealing from Medicaid. The scam he is a component of involves hiring an immigrant to get into a contrived accident, then they go to their clinic to get treatment, then go to their specialists, and so on. All of it bilks Medicaid. There is literally no one who could care if I report this, and probably I would be killed.
The mafia never disappeared. They just fleece the government now. Much safer than shaking down pizza shops
Cool story? Doesn’t conflict with what I said. Medicaid still does way more good than bad and has lower overhead and waste than private insurers. The alternative is the working poor dying in poverty from a lack of available care.
This is the core difference in opinion. You are empathetic, which is a noble virtue, and give the benefit of the doubt. I am a hustler, and I understand the mindset of hustlers, and there are way more hustlers out there than you think, because your virtue and good nature has made you think the vast majority are this way.
Unfortunately the hustlers are businessmen, and their business is stealing from taxpayers. We need to do far, far more to prevent the fleecing of taxpayers from top to bottom. It is endemic and I have seen it with my own eyes in so many ways.
I am empathetic, but my viewpoint is based on the math that it's cheaper to provide basic care from cradle to grave than to shoulder the cost of chronic diseases - regardless of how you manage them. Even if you adopt the ultimate individualist position and decide everyone is on their own. Sick citizens make bad workers, bad workers have low output. Sick kids don't learn, don't gain skills, don't become the future.
Hustlers spend all their time thinking about how to fleece people, while people like me bake that in as a cost of doing business. There is always some waste, because at some point it's cost prohibitive to root it out.
I would argue your nature makes you far too cynical - you probably see other scammers everywhere because that's where you look, but don't seek out the vast amounts of good those programs do, so your priors are messed up.
And my counterpoint is that the lack of effective counter-measures to prevent fraud and abuse erodes the basic trust that society requires in order to support such societal welfare funded by taxpayer dollars.
Where is the outrage and indignation for people who make millions from government programs? Why not hire 80,000 agents strictly to audit NGOs, politicians, and anyone who sucks from the government tit? I believe you would find far more fraud, and it would be much more politically popular. Then hire 80,000 IRS agents to attack actual productive members of society
No, Fox News and right-wing media erode basic trust by heavily overemphasizing the waste aspect vs. the utility aspect, just like you are doing now. There is more waste and fraud happening with private insurers than Medicaid, so unless you have an alternative to health insurance, you are tilting at windmills.
> Biden trumpeted hiring 80,000 new IRS agents to audit taxpayers.
To audit wealthy* taxpayers. Working class people were already being audited because it's really easy to audit an incorrect return that only has a W-2 and Schedule A.
> The IRS is now auditing people who sell $600 on etsy and ebay
That's a lie and I'm assuming it is in bad faith since the article you linked doesn't support what you said. Having to enter a 1099-K is not the same as being audited. You are ridiculous.
You say the government found a tiny amount of fraud as evidence there is not fraud. My counterpoint the government doesn't have systems in place to ensure there is no fraud, and I know there is massive fraud, because I am friends with people who do this fraud. Why am I friends with them? Because I am an active member of my church and I help these people, and I know the way they work the system in order to earn cash.
Additionally, I own many rental properties. Some of them I have rented via Section 8. And I am a good landlord, and my tenants trust me. So I sign their forms, and help them work the system, and I don't make them pay me the cash portion of the section 8 because I'm rich and I don't need it. I know how the scams work, the disability, the SNAP, the "my niece lives with me so I get extra payments". It's so incredibly easy to scam the system.
I don't like this! I don't like the fraud! I'm not reporting these people, but it's so ingrained into the process it's just commonplace. I don't want an entire society of people who refuse to get gainful employment because it would jeopardize their welfare benefits. The system is fucked
You put a great deal of prose behind it, but what you have said is “don’t trust data from the administrators of this program, trust my personal anecdotes”.
That is not and should not be a compelling argument to anyone, for anything.
Surely if fraud on the scale you fervently believe exists, someone is tracking it. Until you can present that evidence, there is absolutely no reason to treat your beliefs as even probable.
Beyond that, by your admission you are a landlord who engages in crypto speculation. Two markets that provide you with profit that would be heavily stifled by common sense regulation. There is ample reason specifically to distrust anything you claim on this issue.
Because they don't pose systemic risk. If it were possible for a customer doing SNAP fraud to do so much damage that the stores they shop at are forced to close, there'd be a lot more regulation.
Electronic money accounts and ability to send and receive electronic money should be constitutionally protected rights (and government provided infrastructure). Governments can penalize people by fining them, but they should never be able to de facto revoke people’s ability to send and receive money.
"We must be able to use your service to send billions of dollars of fraud proceeds to Hamas" is never going to be politically sustainable. That's going to run into demands to Do Somthing very quickly. And that's before you get to the tax evasion questions.
I would point towards the Synapse collapse as good illustration of why it's more complicated than this. You can't be agnostic as a bank to what your business clients are doing, because there's a wide variety of things they can do wrong that will become your problem.
`curl https://www.fdic.gov/foia/correspondence-related-crypto-rela... | sha384sum` returns `57544123a92d7f318aa1e1ff98e30993ced7c0aaa37faba4672a12d377f65f833bfc21ca184785e9e5af59340731f885` for me right now
Also it's a 150 MB PDF of scanned images, for anyone with data limits