It's possible that Diem, a new version of Facebook's Libra, will soon be on the market. What does this mean for bankers and politicians? And will this project prove to be a bigger threat to these groups than Bitcoin? Power over money Let's start by asking one fundamental question: why don't politicians want to cede power over money to other groups or entities? Notice that the vast majority of services we have in the private market are mirrored in the state space, and no one is surprised. Health care: you can be treated at Social Security expense, but you can also be treated privately. The police are supposed to take care of your safety, but you also have another choice - hiring personal bodyguards. Access to information? Well, you can use public television, but if you prefer, you have the option to switch to some private station. It's different with money. And it has been for centuries, indeed the dawn of humanity. Today it is assumed that money was invented in Asia Minor. Historians are still arguing whether the money was issued by a local ruler or whether private mints operated at the time. Well, without a time machine, we won't be able to settle this question. One thing is certain. Even if initially the coins were minted by private issuers, these quickly lost their rights to the process. The ancient rulers discovered that it was too profitable to have control over the medium of exchange for anyone other than themselves to do it. The result was that politicians have been spoiling currencies before our eyes for centuries. Yes, inflation is nothing new! The Roman Empire struggled with it and tried to fight it with similar methods that centuries later politicians closer to us used: they tried to regulate the prices of products and services from above. The result? Easy to imagine: the destruction of markets through shortages of goods and the creation of a process of selling from under the counter. This problem did not discourage princes or kings. Medieval rulers stubbornly and maniacally spoiled coins, minting larger amounts of money from less and less bullion. Their subjects defended themselves by trying to issue their own currencies (yes, Satoshi Nakamoto was not as original as you think!). The result? Such daredevils were punished with death or torture. Interestingly, it did not help. Still the subjects either refused to accept inferior "royal" coins or introduced their own currencies. Why did the rulers pursue such a policy? It's simple. For them it was pure profit. For example, they paid their warriors theoretically the same number of denarii, but in reality they lost less bullion, because more and more worthless metals were used to produce currency. Modern politicians do the same. Only today this process is nicely called debt rollover and economic theory has been added to it. ... And suddenly Diem goes all white Recall that the first news about Facebook's currency appeared in mid-2020. The news that something like Libra (today's Diem) was about to appear on the market led politicians to white fever. Looking from the sidelines, nothing bad happened - just a technology company issuing its digital currency. Only that company was Facebook - a global network with billions of users. If these users start trading using this new e-money, the demand for fiat currencies of countries will fall. As a result, Mark Zuckerberg was questioned in Congress. The reason? Officially, concern for citizens. After all, we are talking about that terrible Facebook, the mechanisms of which were used in Donald Trump's presidential campaign! The congressmen pleaded that it was only about the privacy of citizens. It even came to the point that the CEO of Facebook stated that the fate of Libra is not certain and it may not be created. However, months have passed and the topic has returned with a new economic crisis. However, Libra is expected to come into being (admittedly under the name Diem) and appear on the market in 2021. It is supposed to be a stablecoin initially based on the dollar. It's possible that this is just the beginning, though, and the project will expand and its currency basket will swell with euros, yuan or other fiat currencies. Why is this so important, though? And for what reason does Facebook seem to have waited until the crisis to launch Diem? The new dollarization You're familiar with the concept of dollarization. This one occurs in those countries where the local currency is destroyed by hyperinflation. In Venezuela, consumers prefer the U.S. unit of payment to their bolivars in successive installments. They are also increasingly turning to Bitcoins. We will now look at what central banks are doing. They are trying to print a crisis. They have already printed such a huge amount of cash that even the Marshall Plan seems like a child's game in a sandbox. What is more, the aforementioned plan to rebuild the economy after World War II supported the supply side, while the current printing supports the demand side, which further shows what tragedy may await us. Let's add that today inflation is rising, but it is still not very high. The reason? Lockdowns and crisis - in other words, consumers are not spending as much as, say, a year ago, because they are afraid for their jobs and their future in general. However, when the situation normalizes, e.g. when the COVID-19 pandemic expires, and people recognize that the worst
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