David Friedman

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Paul Joseph Watson: France Bans Cash Sales Of Gold & Silver Over $600

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“[...] the US government’s dollar position is short, not long — its dollar-denominated debts are greater than its dollar-denominated assets. In financial terms, a short position is a way to bet against the value of the underlying commodity. The US government is currently about $7 million million dollars “short”.

An illustration may help to clarify. Suppose you are a private in the Zimbabwean military in September 2007. Suppose your monthly pay is about US$180, but you are paid in Zimbabwean dollars, so your pay packet is actually Z$5.4 million for the month. The Zimbabwean dollar has been hyperinflating, and you expect it to continue to lose value. You don’t currently need to pay any expenses. Consider the following options:

A. Keep the Z$5.4 million in cash.

B. Immediately buy other commodities with it; for example, buy 300 kilograms of rice and store it in Tupperware in the pantry.

C. Immediately buy other commodities with it, and also borrow an additional Z$10 million some poor sucker is willing to lend you at an extortionate 20% APR, and use that to buy rice too.

Option “A” is maintaining a “long” position in the Zimbabwean dollar. This amounts to a bet that the Z$ will retain its value. If you had taken this option, you would have lost 90% of your salary within a few weeks.

Option “B” is maintaining no position in the Zimbabwean dollar. It doesn’t matter what the Zimbabwean dollar does thereafter; you still have the same amount of rice. (Practically speaking, in situations like this, there tend to be price controls on most things you can buy with the collapsing currency.)

Option “C” is maintaining a “short” position in the Zimbabwean dollar. If you had somehow found such a sucker, then within a few weeks, you could have paid them back by selling off a tiny percentage of the rice you bought, as the Zimbabwean dollar continued to inflate.

This is the position the US government has taken relative to the US dollar.”

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“[...] Feeling satisfied as I enjoyed my lunch, I remembered how many people I’ve heard continue to call Bitcoin imaginary, or a pyramid scheme. But I used it in a retail point-of-sale transaction and got a tasty meal, with nothing more than a cryptographic signature asking everyone whom it might concern to consider the Meze Grill the new owner of my half an imaginary coin. [...]

I find it incredible that people are so captivated by the notion of Bitcoin as Ponzi scheme that they would simply overlook the potential appeal of these properties: of cash that we can spend on-line. [...]

The idea that a bank’s responsibility to its customers might sometimes be useful is becoming increasingly concrete in the Bitcoin world as the scandals about Bitcoin thefts unfold and we see that, much of the time, Bitcoins really do work like cash: if someone steals them from you, there’s a real chance that they’re just gone. Keeping thousands of coins under your digital mattress is a great thing for financial privacy, but it raises the possibility that your mattress might not be the safest place for them. Hence the prediction that many of the financial intermediaries we use with traditional currencies may get reinvented in some form for cryptocurrencies and may even get regulated the way the weary giants of flesh and steel did.

All fiat currency is imaginary sub specie (hee hee) aeternitatis and gets its value from psychology and various institutional arrangements. And that’s true of the currency in your wallet right now. It’s fair enough to point at the tremendous resources that might be brought to bear to defend the value of the U.S. dollar. Not much will defend the value of a Bitcoin once anything at all goes awry, and as Adam Smith might have said, there is a great deal of ruin in a currency. But I have no patience for theories that say that I couldn’t possibly have bought lunch with my half a Bitcoin or that the restaurant was crazy to accept it. It was a delicious thrill; I suggest you go down to Columbus Circle and try it for yourself while we watch to see what else this experiment has to teach us.” http://starburst.hackerfriendly.com/?p=1530

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The Destruction of Economic Facts – Financial crisis wasn’t just about finance, but about the lack of knowledge http://www.businessweek.com/print/magazine/content/11_19/b4227060634112.htm
Cf. Reader comments http://app.businessweek.com/UserComments/combo_review;jsessionid=FA242695A0DC6ACABD095E9280C13911.ny04tls?action=all&style=wide&productId=127293&productCode=spec

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Forget piracy, US government is going after Bitcoin http://venturebeat.com/2011/06/08/government-crackdown-on-bitcoin/ Cf. http://news.ycombinator.com/item?id=2636078

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Richard Stallman

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U.S. Congressman Ron Paul:

The last nail is being driven into the coffin of the American Republic. Yet, Congress remains in total denial as our liberties are rapidly fading before our eyes.

The process is propelled by unwarranted fear and ignorance as to the true meaning of liberty. It is driven by economic myths, fallacies and irrational good intentions.

The rule of law is constantly rejected and authoritarian answers are offered as panaceas for all our problems. Runaway welfarism is used to benefit the rich at the expense of the middle class.

Who would have ever thought that the current generation and Congress would stand idly by and watch such a rapid disintegration of the American Republic?

Characteristic of this epic event is the casual acceptance by the people and political leaders of the unitary presidency, which is equivalent to granting dictatorial powers to the President. Our Presidents can now, on their own:

1. Order assassinations, including American citizens,
2. Operate secret military tribunals,
3. Engage in torture,
4. Enforce indefinite imprisonment without due process,
5. Order searches and seizures without proper warrants, gutting the 4th Amendment,
6. Ignore the 60 day rule for reporting to the Congress the nature of any military operations as required by the War Power Resolution,
7. Continue the Patriot Act abuses without oversight,
8. Wage war at will,
9. Treat all Americans as suspected terrorists at airports with TSA groping and nude x-raying.

And the Federal Reserve accommodates by counterfeiting the funds needed and not paid for by taxation and borrowing, permitting runaway spending, endless debt, and special interest bail-outs.

And all of this is not enough. The abuses and usurpations of the war power are soon to be codified in the National Defense Authorization Act now rapidly moving its way through the Congress. Instead of repealing the 2001 Authorization for the Use of Military Force (AUMF), as we should, now that bin Laden is dead and gone, Congress is planning to massively increase the war power of the President.

Though an opportunity presents itself to end the wars in Iraq, Afghanistan, and Pakistan, Congress, with bipartisan support, obsesses on how to expand the unconstitutional war power the President already holds. The current proposal would allow a President to pursue war any time, any place, for any reason, without Congressional approval. Many believe this would even permit military activity against American suspects here at home.

The proposed authority does not reference the 9/11 attacks. It would be expanded to include the Taliban and “associated” forces—a dangerously vague and expansive definition of our potential enemies. There is no denial that the changes in S.1034 totally eliminate the hard-fought-for restraint on Presidential authority to go to war without Congressional approval achieved at the Constitutional Convention.

Congress’ war authority has been severely undermined since World War II beginning with the advent of the Korean War which was fought solely under a UN Resolution. Even today, we’re waging war in Libya without even consulting with the Congress, similar to how we went to war in Bosnia in the 1990s under President Clinton. The three major reasons for our Constitutional Convention were to:

1. Guarantee free trade and travel among the states.
2. Make gold and silver legal tender [cf. http://en.wikipedia.org/wiki/Legal_tender ] and abolish paper money.
3. Strictly limit the Executive Branch’s authority to pursue war without Congressional approval.

But today:

1. Federal Reserve notes are legal tender, gold and silver are illegal.
2. The Interstate Commerce Clause is used to regulate all commerce at the expense of free trade among the states.
3. And now the final nail is placed in the coffin of Congressional responsibility for the war power, delivering this power completely to the President—a sharp and huge blow to the concept of our Republic.

In my view, it appears that the fate of the American Republic is now sealed—unless these recent trends are quickly reversed.

The saddest part of this tragedy is that all these horrible changes are being done in the name of patriotism and protecting freedom. They are justified by good intentions while believing the sacrifice of liberty is required for our safety. Nothing could be further from the truth.

More sadly is the conviction that our enemies are driven to attack us for our freedoms and prosperity, and not because of our deeply flawed foreign policy that has generated justifiable grievances and has inspired the radical violence against us.

Without this understanding our endless, unnamed, and undeclared wars will continue and our wonderful experience with liberty will end.

http://www.ronpaul.com/2011-05-25/ron-paul-is-this-the-end-of-the-american-republic/

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Why I’m Putting All My Savings Into Bitcoin http://falkvinge.net/2011/05/29/why-im-putting-all-my-savings-into-bitcoin/ Cf. http://news.ycombinator.com/item?id=2596475

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Namecoin is a distributed domain registration system based on the bitcoin concept. http://namecoin.bitcoin-contact.org It is part of the Dot-BIT project. http://dot-bit.org

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“Cryptocurrency brings new challenges to the table. The government can’t see the wealth of an individual, nor their inflow or outflow of funds, not with any amount of applied force.

I know a lot of individuals in government will react with normalcy bias to this statement and say “but we have to!”. It doesn’t matter if you have to. You can’t. Period.” http://falkvinge.net/2011/05/19/the-information-policy-case-for-flat-tax-and-basic-income/

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How to exit the euro – a proposal from 1997 http://moslereconomics.com/2011/05/16/how-to-exit-the-euro-a-proposal-from-1997/

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Tax havens: the heart of the global economy “[...] tax havens have grown so fast in the era of globalization, since kind of the 1970s, that they have now become right—they are now right at the heart of the global economy and are absolutely huge. I mean, there are 10—anywhere between 10 and 20 trillion U.S. dollars sitting offshore at the moment. Half of world trade is processed in one way or another through tax havens. It’s all around us, and it’s absolutely huge. [...]” http://www.australia-offshore.com/offshore-banking-and-tax-havens-have-become-the-heart-of-global-economy/

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Attack against Bitcoin: PayPal has frozen CoinPal

“My personal view is that PayPal freezing my account is a coming of age for Bitcoin. Previous PayPal account freezes in the Bitcoin community were related to chargeback volume. That was obviously not the problem here. Someone inside PayPal specifically decided that Bitcoin was a big enough risk that it should be prohibited. I see no greater compliment to a Hydra than cutting off one of her heads” http://www.bitcoin.org/smf/index.php?topic=2555.msg101084#msg101084

Cf. http://coinpal.ndrix.com/

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BRICS make move to shove dollar aside “Leading high-growth economies [BRICS: Brazil, Russia, India, China and South Africa] have taken landmark steps toward lowering the importance of the dollar in international financial transactions — part of a seminal shift in the move towards a multicurrency reserve and trading system. [...]” http://www.marketwatch.com/story/brics-make-move-to-shove-dollar-aside-2011-04-17

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