The birth of the Internet and the spread of digitalization has led to great advances in liberty and consumer welfare. But the same technologies that we rely on to spread the message of liberty are viewed by the government as a potential tool than can and should be manipulated for to maintain control over the populace. Any attempt to keep digital information secret from the government is met with howls of protest. Just read the FBI director’s recent comments that Apple’s privacy features protect kidnappers, pedophiles, and terrorists.
Increased digitalization of banking and finance has helped to enable international trade and has created all sorts of conveniences for individuals, but it has also made countries dependent on the continued goodwill of their trading partners to maintain those closer relationships. Consider the case of the Foreign Account Tax Compliance Act (FATCA). The United States has decided to extend its tax laws to other countries, trampling on the sovereignty of other nations and threatening them and their businesses with draconian penalties if they fail to kowtow to Washington’s edicts. FATCA is just one part of the US government’s push for total control over the financial system.
That push for control also explains the war on cash. Cash transactions take place outside the government’s sphere of control, so the government seeks to eliminate them. Carrying large amounts of cash is demonized by associating it with drug dealers, prostitution, and other illegal and unsavory endeavors. Carry “too much” cash on you and you may find yourself being robbed by the police under the guise of asset forfeiture. If you can’t prove that you acquired that cash legally, it becomes the property of the police department.
Banks are required to report cash transactions above $10,000, and even transactions under $10,000 can be reported if the banks believe that you are “structuring” your dealings to avoid that $10,000 limit. When it comes down to the bank protecting the privacy of customers’ transactions from government prying or protecting the bank’s own continued existence, you had better believe that customers will be ratted out in a heartbeat.
If that weren’t bad enough, the Federal Reserve System continually inflates the money supply, devaluing the purchasing power of the dollar year by year. When the first Federal Reserve Notes were issued in 1914, the smallest note had a $5 face value, equivalent to $119 of purchasing power today. The largest had a face value of $100, equivalent to $2,379 today. And in 1918, the first $10,000 Federal Reserve Notes were issued, equivalent to $238,000 today.
In fact, Section 16(8) of the Federal Reserve Act still requires the Secretary of the Treasury to maintain plates to print notes in denominations up to $10,000. Unfortunately, Treasury Secretaries have decided not to print notes above $100, all part of the effort to: combat money laundering, crack down on terrorist financing, eliminate tax evasion, etc. Those are the arguments they’ll give in public, but the real reason is that they know that eventually $100 bills will be so devalued by inflation that people will have no choice but to ditch cash and enter the digitalized, government-surveilled financial system. Those outside the system will find themselves in a no man’s land, unable to use the financial system, forbidden from creating their own competing system, and forced to endure the high costs of financial exile.
Bitcoin is considered a threat by the government not because bad actors can use it for illegal activities, but because its decentralized nature means that no one entity controls it. Because it is a peer to peer method of financial transfers and is outside the banking system, the government has no clue about who is transferring money and why. That lack of control is anathema to the government, and is the reason federal agencies are attempting to force Bitcoin into the strictures of the current financial regulatory regime. If the authorities are successful, another threat to their control will have been subverted.
The American people have been at the mercy of the Federal Reserve System for the past 100 years. It is plainly evident how disastrous government control over the money and banking system has been, yet that control grows stronger year after year. Because the use of money holds civilized society together, control over money and banking has always been an aim of government. Whoever has control over money can control the entirety of economic activity. Only when money and banking are freed from the control of government will liberty flourish. Arguments that free markets in money and banking will provide a safe haven for criminals and ne’er-do-wells are tired tropes that should be recognized and called out for the fear-mongering that they are. The people have nothing to fear from free markets and consumer choice. That freedom threatens the government’s control, which is why it should be embraced.
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