Interviewed by Louis James, Editor
Wednesday, March 7, 2012
L: Doug, we've had a lot of questions from readers
about the apparent push governments are making to go to paperless
currency – all electronic, no cash. Do you think that's likely, and
what would be the implications?
Doug: I think it's probably inevitable. It's not
just cash, but the whole world is becoming increasingly digital. Credit
cards already work very well all around the world, and everyone in the
world, it seems, will soon have a smartphone – or at least everyone
who might have any cash.
But it's not just a question of evolving technology. Governments
hate cash for lots of reasons, starting with the fact it costs a couple
of cents to print a piece of paper currency, and they have to be
replaced quite often. As the US has destroyed the value of the dollar,
they've had to take the copper out of pennies, and soon they'll take
the nickel out of nickels. Furthermore, with modern technology,
counterfeiters – including unfriendly foreign governments – can turn
out US currency that's almost indistinguishable from the real thing.
And the stuff takes up a lot of space if it's enough to be of value. So
sure, governments would like to get rid of tangible currency. They'd
like to see all money kept in banks, which are today no more than arms
of the state. But it's not so simple: increasing numbers of people
trust neither banks – most of which are insolvent – or currencies –
most of which are on their way to their intrinsic values.
L: Hm. On the technology front, when I was in
central Africa a few weeks ago, plastic money was accepted happily
everywhere I went – Rwanda, Burundi, the DRC, and Kenya – though not by
street vendors yet. And I had access to the Internet everywhere I
went, even in the middle of the jungle…
Doug: Yes, the move towards digital currencies is already happening, and not just as a result of government efforts. Remember Bitcoin. And, as you know, I'm a big fan of Goldmoney.com,
which is leading the way to a sound digital currency. Although
Goldmoney.com has bowed to government pressure and has suspended its
service allowing customers to transfer funds among one another, it's
another sign of the times…
L: Yes, and Goldmoney.com is not the first attempt,
nor will it be the last. We should mention to new readers that you are
an investor in Goldmoney.com.
Doug: The world's going to digital currencies is in
part a good thing, because it's convenient. But it's definitely a
double-edged sword, because of government involvement in the field. If
it were a strictly market phenomenon, I'd have no problem with it. It'd
be just another choice. But if the state runs it, it would reduce
people's choices – and privacy. But that's entirely apart from the fact
that government – and I know this assertion will be shocking to most
readers – has no business creating currency or minting money. Money, of
all things, should be a purely market phenomenon. Government, as an
institution, inevitably and necessarily corrupts everything it touches.
Money is far too important to be left to the tender mercies of the
L: Sure. A completely digital currency would be an
unlimited license to print and spend. Need to give people more welfare?
Just tap a few keys, and it appears in their bank accounts. Need to
buy more missiles? Just a few more taps on the keyboard… But the
privacy issue is even scarier: digital money would seem like Big Brother's
dream come true. They wouldn't even have to send their minions out to
go through people's trash. They could see everything anyone ever spent
money on and where they were physically when they did it, search for
activity nearby, and much more, just by having computers report the
details of people's accounts.
Doug: Exactly. They would justify it with a host of
phony excuses ranging from the so-called War on Terrorism to the
so-called War on Drugs. Maybe they'll tie it in to their disastrously
failed War on Poverty. As the War on Islam heats up, one front will be
an attack on the excellent Muslim hawala system, which allows cheap and
reliable transfer of money between countries; that system, which is
kind of a private SWIFT network, is excellent for evading FX controls.
Ironically, Islamic countries are some of the very worst perpetrators
of currency controls.
L: Maybe that's why the informal network exists in
the first place? But yes, they gotta stop those evil money launderers
from washing their money and hanging it out to dry…
Doug: Don't get me started on "money laundering."
It's a completely artificial crime. It wasn't even heard of 20 years
ago, because the "crime" didn't exist. Now, everyone speaks of it as
though it were a real crime, like murder. It's ridiculous, and further
proof of the totally degraded state of the average person worldwide,
absolutely including US citizens – what we used to call Americans. The
government proclaims something as a law, and "sheeple" robotically
assume it's part of the cosmic firmament. If an official tells them to
do or not to do something, they roll over on their backs like whipped
dogs and wet themselves out of fear. The War on Drugs may be where
"money laundering" originated as a crime, but today it has a lot more
to do with something infinitely more important to the state: the War on
Incidentally, not that a US citizen can open an account with a Swiss
bank anyway any longer – except with at least seven figures and loads
of paperwork – but now the policy in Switzerland is to insist that
clients prove that their funds are all tax paid. The situation is out
of control. And the world's governments are increasingly working
together to make sure no one slips through the net.