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E-gold Owners Plead Guilty To Money Laundering
Ian Lamont writes "The three owners of Internet currency service e-gold have pled guilty to money laundering in the U.S. District Court for D.C.. The service is based in the West Indies, but the directors apparently live in Florida. They haven't been sentenced yet, but potentially face decades in prison and millions in fines. In addition, the principal director posted a blog entry yesterday saying that 'criminal activity will not be tolerated,' and pledging to eliminate the loopholes that allowed money laundering to thrive on the service. He also claims that e-gold has more transaction volume in a single quarter than all of the first-generation Web currency services like Cybercash, Beenz, and Flooz completed over their lifetimes. Ironically, one of the reasons that contributed to Flooz's demise in 2001 was rampant money laundering."
eGold works with bogus money and is backed by claims of company that it has that amount of gold in safe. Gold standard died more than 50 years ago.
PayPal works with real money.
Last year Ron Paul introduced the Free Competition in Currency Act of 2007 which would make alternate currencies legal, though not change other aspects of what you can do with currencies (e.g. money laundering would still be illegal).
Few young people realize that until the 1964-1968 time period it was possible to bring your dollars to the government and get precious metal on demand. This gave the dollar real worth. Since that time, the government has found that it can simply make more money out of thin air and spend it on government programs to generate votes. As with any supply and demand equation, when they start running the printing presses to make more dollars, the dollars you have in you bank account become worth less. You're losing money value and the government is gaining money value, but your 'taxes' are low. One can see this in inflation charts which start to skyrocket in the 1970's, relative to decades previous. Interesting note: if we measured inflation today the way we used to back then, our inflation rate would be 11%.
The Wall Street Journal recently ran a graph showing the value of the dollar vs. gold vs. oil. If we look at the start of the decade until now, if we were holding euros instead of dollars, gas would only be about $2.70 at the pump - that extra $1.30 can be viewed as lost power of the dollar. But, the euro is no panacea either - if you compare the price of gas to the price of gold, it's nearly flat. How about $1.20 gas? I actually saw $5 diesel in CT last weekend.
Not surprisingly, the government decided to stop keeping track of 'M3', or the money supply of the dollar recently. Private economists have continued the calculations and it's easy to see why the government doesn't want to talk about it.
So, back to the beginning, the government has taken irresponsible action with the way it manages the value of its currency, and they have laws preventing people from opting out of their mismanagement. Afraid of a little competition, are they? Experience shows that the most likely effect of competing currencies, even ones that mimic the way the government operated in your parents' generation, would be to pressure the government to exercise some restraint. Of course, if this competition is illegal, they'll continue with their outrageous devaluation.
Folks who think a little competition helps to keep markets fair, and monopolies hurt them, would do well to contact their representatives in government about the aforementioned bill.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
You don't pay a tax for switching to gold. You only pay a tax on the CAPITAL GAIN you make if you sell at a profit. Your trading commissions and losses are actually DEDUCTIBLE.
Also, gold is no more fiat than anything else. Only 20% of it is put to industrial use. The rest is traded because people like it. If people stop liking it, down it goes. Think that can't happen? Think again. When the Conquistadors came to the West, Natives filled their coffers with gold on request. This was, only in part because they wanted to appease the Spaniards. Gold while attractive to them, was not monetary like it was in Spain. They valued jade (another scarce commodity) in that fashion. Had the Spaniards requested a room full of jade, it might have been another story.
Warren Buffet hit the nail on the head when he said: "It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
My own quote on the matter: "Under the current system money is managed by the Fed, which reports to Congress. Under a gold standard money is managed by international mining cartels and speculators. This is better, how?".
Then of course, there's the tendancy of gold standard advocates to ignore the history of business cycles under the gold standard (Hint, it wasn't a recession-free paradise). Why, praytell, have so many otherwise intelligent people been lured onto the gold bandwagon lately?
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
I and many many others will take gold any day as it is more likely to keep its value than most anything else you can name.
I could say the same thing about any element on the periodic table. Point to any metal on the periodic table and you would have exactly as compelling an argument. We're not making any new platinum or copper either and both are equally useful in a practical sense as gold. Personally I find oxygen, carbon, hydrogen and nitrogen to be FAR more valuable than gold. Perhaps you don't like breathing or food?
Gold is a fine asset to own but thinking of it primarily as money belies a fundamental misunderstanding of the difference between money and value. I suspect that gold will remain a desirable asset well into the future but I don't expect it to be a better source of value than any number of other metals.
That is, the creation and destruction of credit by banks. Banks lent fractionally on top of gold in exactly the way they do now on top of paper. Whether the currency is based on gold or paper is irrelevant with respect to business cycles, it's the debt based nature of credit and in particular fractional lending practices which are the problem there. Gold on the other hand is naturally scarce and so would restrict inflation whereas paper is not, and does not.
HTH
Deleted
I think you're seeing history inverted. I look at the 20th century, and I see cycles an interminable sequence of booms and busts mixed with inflationary and hyperinflationary phases. I look at the 19th century, and I see customer and other prices with almost perfect stability, so much that anyone could save money for bad times by simply storing it in their houses, rather than at some bank, as is required now.
What now? The 20th century has been a lot more stable than the 19th in economic terms.
The "gold theorists" answer to this is simple:
In any gold-like money system (it doesn't need to be gold, anything that isn't "tamperable" by 3rd parties, be it the government or other, works the same), you have booms and busts, all right. However, they're always local booms and busts, reflecting a multitude of changes in market, be them purely economical or other (for example, externalities). In other words, while a sector of economy might become problematic, another would be booming; if that one then goes kaput, a 3rd sector would be alright; then the 1st one can recover; and so on and so forth. The end result, if you consider the economy as a whole, is that you get in average a linear rate of economical growth.
When you change this system to that of fiat money, or any other kind of money that can freely tampered with, the economy as a whole ends up indexed by the monetary policy, and as a result, instead of a multitude of economic sectors each one having its own independent booms and busts, the economy becomes a single sector where all booms and all busts become synchronized and end up happening at the same time.
The important thing on all of this is that having huge synchronized boom/bust cycles is no better than having many small independent per sector booms/busts, because the average growth doesn't change. You simply switch from a slow but regular growth, where people on difficult sectors can switch to other, growing ones, to one of a fast growth of the whole followed by a hard or full stop of said growth followed by a fast growth of the whole etc.
Thus, while from the perspective of the nation as a whole, on the long range, it makes no difference, since the booms and busts cancel each other and the result is an average growth all the same, from the perspective of the individuals the synchronized cycle system is bad, since once the single sector becomes a mess, he has nowhere to move to.
Who then actually profits from the synchronized cycles? Just one group: politicians. The "boom half" of the cycle is amazing as far as votes (and taxes, and government money) go, while the "bust half" is amazing for getting the desperate people to vote in a new savior.
That's all there is to it.
Conservatism: (n.) love of the existing evils. Liberalism: (n.) desire to substitute new evils for the existing ones.