by John Young
Readers of this website already know that the way our Federal Reserve and government deficit spending interact drives inflation. This drives a need for constant economic expansion at any cost, turns social security into a Ponzi scheme and fuels illegal immigration and many other ills.
EAU is far from the first organization to reach this conclusion. Numerous organizations ranging from libertarian think-tanks to traditional conservative groups have long understood that giving elected officials a blank-check to withdraw funds from an empty account can only be a recipe for evil.
Likewise, our banking system has become the most monitored on earth, where every citizen’s purchase of toenail fungus treatment is viewable in real time by an overzealous federal bureaucracy that has no stomach for enforcing immigration laws.
So the emergence of numerous alternatives to the standard monetary and banking system is not surprising, including e-gold, the Phoenix Dollar, the Ithaca Hour and the Liberty Dollar, just to name a few.Undoubtedly, anytime value can be exchanged anonymously, there is potential for foul play. This is the case with regular Federal Reserve Notes in cash form, the preferred medium of exchange for drug dealers. Unsurprisingly, when the Federal Government went after e-gold earlier this year, their claim was that the popular digital currency was being used to hide money-laundering and and other illegal activities. E-gold’s press release regarding the matter is http://www.e-gold.com/letter3.html.
What the government doesn’t mention, and undoubtedly sticks in its craw, is that the totalitarian tactics of its thought police have made it hard on people who espouse unapproved views; and alternative payment systems allow this to be bypassed. They can allow a degree of anonymity, and the U.S. Supreme Court has ruled, quite rightly, that the ability to publish anonymously in order to avoid reprisals is a precondition for free speech. This is undoubtedly one of the big reasons why the Anti-Defamation League has been a big proponent of destroying such payment systems.
Let’s be honest about how this is done.
Most of the alternative payment systems are not, in and of themselves, doing anything wrong or illegal in any reasonable sense. Being audited yearly to make sure their reserves add up, if anything they are more above-board than the Federal Reserve System. In addition, all of these alternative payment systems respond to subpoenas and search warrants that seek records. Since these records include the IP addresses used by their customers and a great deal of other personally identifiable data, they are sufficient to piece together to find a criminal.
So, if they aren’t doing anything wrong or criminal, how does the government shut them down?
Well, it turns out that we have a full time legislature full of hacks with nothing better to do than pass laws. Just the annotated U.S. Code takes up about 20 feet of shelf space. Then the Code of Federal Regulations issued pursuant to that code takes up at least that much again, not counting the tax code. Then all of the court decisions needed to interpret the practical aspects of the U.S. Code take up maybe another 100 feet of shelf space. To make matters even worse, a fair number of those laws actually depend upon the interpretation of particular State laws, and the shelf space required there is ridiculous.
The IRS regulations are a disaster. When Money magazine did a test of 50 Certified Public Accountants doing Federal tax returns for the standard family of four, there were 49 incorrect forms. The regulations are so incomprehensible that even specific and documented IRS advice doesn’t get you off the hook if the IRS later decides that following its own advice is a crime.
What’s my point? My point is that I can absolutely guarantee that you have broken dozens of laws. Committed dozens of felonies, in fact. Don’t you wonder how it is that the United States somehow manages to have the largest proportion of its population behind bars compared to any other civilized country? Did everyone suddenly go berserk and start mugging people, or did more things become illegal? The answer is the latter. Practically everything has found its way into the criminal codes. So it’s not a matter of whether or not you are a criminal — we are ALL un-convicted felons. Rather, it’s just a question of whether or not the government decides to target you.
A great example of this is http://www.thebullionexchange.com/, a company that specialized in turning national currencies into gold-backed digital commodities. In June, the Feds seized all of their assets, froze all of their accounts and shut them down cold. Their crimes? “The Bullion Exchange failed to register, or secure a license to act as a money transmitter (in violation of 31 C.F.R. Section 103.11(uu)(5)(1)); additionally, the complaint contends that The Bullion Exchange failed to obtain a business license in the State of Delaware, violating 5 Del. Code Section 2303.”
Since they were not exchanging or transmitting money – but rather selling a commodity – the first doesn’t even apply. The second, failure to obtain a business license in Delaware, is a “crime” of which probably half of the corporations in the country are guilty. Because Delaware has no corporate taxes and minimal paperwork requirements, most corporations, no matter where they are located physically, are created in Delaware. From your local used car lot to practically every credit card company. The majority are Delaware corporations. How many of them do you think actually have the required business license? Few if any.
One could even look at these rules and say to the company, “okay, obtain these licenses” and forget criminal matters altogether if the license were the real issue. But that’s not what happens. First off, no matter what the laws on paper may say, what they MEAN is exactly, and only, what a bureaucrat SAYS they mean. (And a later court interpretation if challenged.) So laws completely inapplicable to a certain circumstance suddenly become applicable. Likewise, even if a law hasn’t been enforced against anyone for thirty years, it will be dusted off and applied at the discretion of the grand inquisitor.
Obviously, these rather weak charges and justifications regarding inapplicable or obscure licensing requirements are not the real issue. They are merely a pretext, and when the folks in D.C. require a pretext, one WILL be found. That’s what happened to The Bullion Exchange, whose real activities were not a criminal, but the Feds didn’t like.
Enter the http://www.libertydollar.org, a spit-in-your-face challenge to the Federal Reserve. The Liberty Dollar, issued as silver coins and paper warehouse receipts, was issued primarily as a protest against the Federal Reserve starting in 1998.
Pretty soon it caught on and as of right now there are 20 million Liberty Dollars in private hands, and thousands of people accept them in barter for various goods and services.
Yesterday morning the FBI and Secret Service moved in and shut down the Liberty Dollar by seizing everything that could possibly be seized, including bullion that was held as backing for the paper warehouse receipts.
The pretense for this one? Well – a whole stack of alleged crimes including “mail fraud” and the whole nine yards, a very flimsy case indeed. But the core “crime” was that Liberty Dollar had allegedly run afoul of a law that prohibited the minting of gold or silver coins, in any form, for use as “current money.” Of course, the coins weren’t used as “current money” (a/k/a currency) any more than subway tokens. They were a form of private barter with intrinsic value. The paper warehouse receipts issued by Liberty Dollar were, in fact, currency, and stated as much on their face. The paper currency is explicitly legal according to the Department of the Treasury.
This is another salvo in a war that the government is waging against alternative currencies. It doesn’t like the privacy they afford to ordinary people and it certainly doesn’t like competition for its faith-based fiat-based house of cards at the Federal Reserve.
But those who live by the sword, die by the sword.
In their zeal for a world of open borders for goods, services and money to facilitate profits for a handful of people; they also create an environment in which most U.S. mutual fund companies are actually offshore entities and legitimate companies locate offshore as a matter of course to gain tax advantages. Transacting business across borders is now almost effortless.
Alternative currencies, seeing the hostility of the U.S. government, are simply moving their operations offshore. The only way to stop them, and right now American citizens have hundreds of millions of dollars in these currencies, is to close our borders to financial transactions.
I hope nobody really thinks Uncle Sam is going to keep illegal aliens from wiring funds back to their countries of origin. If they won’t stop that, then they can’t stop citizens from funding offshore accounts in alternative currencies.
The sorts of desperate measures that the government has employed against the Liberty Dollar, e-gold and exchanges like The Bullion Exchange show that while the government is quite dangerous, it is also scared to death of very small things. It sees how vulnerable its house of cards is.
Oddly enough, it is their own desperate measures that confirm our worst suspicions.