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  • deanhedges deanhedges May 4, 2007 8:45 PM Flag

    e-gold

    A little background. In the gold community, it is dictum that the US is no respecter of property rights. Twice in the 20th century, the financial rebels will point out, the US seized the gold of its private citizens, generally as a result of its own bad management of the currency, and trying to stop people from fleeing the over-inflated dollar.

    In this case, the US government is seeking to seize all of the gold held within the system as reserves to the currency, without due regard to the operation of property rights for the rest of the user base. It would seem an over-broad reaching by the government, but sadly, expected and unsurprising to the digital currency community.

    Whatever one thinks of e-gold, its operators and their actions, this is likely to reinforce the reputation of complete and utter disrespect that the US has for property rights around the world.

    Unfortunately, this is no isolated case, but is in fact a concerted and long-lived programme by the US government to undermine property rights the world around. The US-invented Anti Money Laundering (AML) regime stretches back 20 years or more to Ronald Reagan's war on drugs, and is now sufficiently strong to destroy the effect of property laws, which latter are nothing if not strong.

    AML takes implementing countries backwards in time and history. Although England and its former colonies inherited strong property rights from the days of the Magna Carta, it is as well to realise that the English experiment may have been more an exception than the rule. Consider Russia as counterpoint:

    Since only the Tsar or the Party had property, no individual Russian could be sure of long-term usage of anything upon which to create wealth. And it is the poor to whom the property right matters most of all because property is the poor man's ticket into the game of wealth creation. The rich, after all, have their money and their friends to protect their holdings, while the poor must rely upon the law alone.

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    • "The Rape of Russia" was not ancient history according to Williamson's 1999 testimony before the US House of Representatives, but living times: during the decade of the 1990s, the same group conspired with Russians to launder much of the residual value of the Russian people.

      One would hope that the court is a little wise to the fact that if e-gold Ltd's system was used for crimes, then there was also use for good purposes; that is, it was the operators and some users that were responsible. Normally we would expect the system to be placed under administration, and then a wholesale cleanout of any "bad" accounts to occur, under court supervision.

      If not, the author above warned the US Congress what will happen to those who dismantle what property rights there are:

      Connections
      In the absence of property, it was access - the opportunity to seek opportunity - and favor in which the Russians began to traffic. The connections one achieved, in turn, became the most essential tools a human being could grasp, employ and, over time, in which he might trade. Where relationships, not laws, are used to define society's boundaries, tribute must be paid. Bribery, extortion and subterfuge have been the inevitable result. What marks the Russian condition in particular is the scale of these activities, which is colossal. Russia, then, is a negotiated culture, the opposite of the openly competitive culture productive markets require.


      It is fairly clear that the e-gold operation was presented to the world and operated as a property rights operation. Although not without shenanigans, the very basis of the digital gold community has been a joyful expression of the right of property, and what good it can do when it is left to run free.

      Unfortunately, the US government may have learnt too much from the Russian experience. The substantial crime in the indictment is "property rights without a licence" and the fine for that is "seizing all the property." Welcome to the world of tribute; bribery, extortion and subterfuge to follow.

 
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