It Was to Be Expected …

 

As we have frequently pointed out in past articles on Bitcoin, the biggest danger to the currency was always government. The currency challenges the State's money monopoly, even though it does so only in a minor way so far, and even central banks have taken notice. As we pointed out in a previous post, the ECB for instance worries that 'Bitcoin may undermine confidence in central banks' (in this article we have listed all the reasons why one should expect governments to attempt to crush the currency). In other words, Bitcoin is seen as unwanted competition by the money monopolists.

It started out with a concerted attack by the handmaidens of the State, the banking cartel, on the viability of Bitcoin exchanges (which incidentally reminds us a bit of the recent attacks on gold). Many banks simply closed down the accounts Bitcoin exchanges held with them, which linked Bitcoin trades to other currencies. As far as we're aware, in most cases no reasons were supplied as to why these accounts were closed down – it wasn't necessary to supply them. Everybody knows what it's about, so making up spurious reasons would only expose the banks concerned to ridicule.

 

Now the 'Department of Homeland Security' has struck against Bitcoin – something we long expected to happen (as an aside, we continue to be astonished that the political elite has chosen such a  Nazi-sounding name for this department. It goes to show how little effort they are making these days to conceal the true nature of government. They don't expect the sheep to care, and they are mostly right).

 

“Department of Homeland Security officials have reportedly seized an account used to handle bitcoin payments in the U.S. for Japan-based Mt. Gox, which claims to be the largest exchange for the electronic currency.

Gawker reported late Tuesday that the DHS had obtained a warrant from a federal judge to seize the account at Dwolla, a mobile payment processor based in Des Moines, Iowa.

Mt. Gox issued a statement Wednesday saying it was aware of media reports about the action, but that it hadn’t received a copy of the court order or warrant. The affidavit in support of the warrant cited probable cause to believe that the account was used to violate federal laws against unlicensed money transmitting businesses.

Bitcoins were quoted at $114 in recent action on the exchange. Trading activity in bitcoins surged earlier this year as the crisis in Cyprus intensified.”

 

(emphasis added)

See how easy it is for the State to declare any activity it doesn't like criminal? The jungle of administrative law that covers much of what is left of a once free society allows the government to target anyone at anytime it wishes. Since ignorance of the law is no valid legal defense, citizens are presumably supposed to know all the ins and outs of the blanket of prohibitions that covers every nook and cranny of life these days.

 

Is Bitcoin 'Money' After All?

One cannot transmit money without a 'license' apparently. One has to be part of a licensed industry cartel to be allowed to do that. However, does that mean that the government now acknowledges that Bitcoin is actually money?

There are legitimate doubts as to Bitcoin's 'moneyness'. We plan to address the question of how Bitcoin ties in with monetary theory in a separate article soon. Our assessment differs slightly in some aspects from that presented by Keith in an earlier article on the topic.

In any case, it is noteworthy that governments and the banking cartel are apparently getting worried about the crypto-currency. It is of course no coincidence that trading in Bitcoin soared after the Cyprus deposit confiscation – some people are trying to flee the system for what they regard as safer alternatives. Hence the recent full court press against both gold and Bitcoin: the establishment wants to eradicate such ideas before they take root. There is no escape is the message, and the system is 'totally safe'.

As Irish finance minister Noonan for instance declared: "There was general agreement that deposits below €100,000 in any resolution will be sacrosanct."

However, that does not alter the fact that the fractionally reserved banks simply don't have the money. As we have pointed out several times, 'uncovered' money substitutes in the euro area amount to more than € 3.5 trillion. In the US, they amount to more than $6.4 trillion. Again, this is money due to depositors on demand that is in fact not covered by bank reserves (either in the form of vault cash or bank deposits with the central bank). It is money the banks have literally created 'from thin air'. Therefore Noonan's promise is standing on very shaky ground indeed. It is true that many people are apathetic and remain unaware of these facts and of the risks they are exposed to. Rising prices of gold and Bitcoin raise their awareness, hence the authorities and the banking cartel are trying to put their foot down. Meanwhile, in spite of the attacks, Bitcoin's price has remained fairly stable recently – in fact, it has recently been rising against the US dollar:

 


 

Bitcoin




Bitcoin: stable with an upward bias since the April crash – via bitcoincharts –  click to enlarge.

 


 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

4 Responses to “The State Moves Against Bitcoin”

  • therooster:

    The government is correct to prevent gold and silver from being called dollars. It’s important to move toward a break in the debt paradigm. Dollars, even as a measure (as opposed to a currency) are very much like a “rubber ruler”. Precious metals should be coined by weight and adhere to market law. As for bitcom, it’s a centralized algorithm …… so need I say more ? Only precious metals provide the freedom of decentralized debt-free currency ….. along with the current information age age feature of instant global liquidity. Can it get better than debt-free, store of value with instant transferability ??? I doubt it. Keep it simple and don’;t think for a second that any government has the ability to swat flies (decentralization down to the individual) with a hammer. Impossible !

  • This lends credence to the idea of a legal fiction, in the name of JOHN DOE, as opposed to John Doe, otherwise known as a nom de guerre. Note you get nothing from the government in your real name, but in all caps. it is a legitimate question as to why they never address you in your proper name, though it appears so tinfoil. Government, in a constitutional Republic, operates elsewise, in war, under a different set of rules. It appears they are making more and more war rules as we go forward. The public is continually conditioned to buy these rules, under the rule of necessity. But, who is making war?

    My sentiment accordingly, as to why they selected such a NAZI name for the anti-terror organization? Have we progressed so far down the road of totalitarianism that there is no reason to hide the fact? 12USC95a allows them to regulate everything to do with money and declare enemies. This is despite the Constitution guarantees the right to contract and that the government itself should not infringe contract. It also prohibits titles of nobility, which is what a state chartered bank is. None of the rest of us can create money out of thin air, create liabilities that are impossible to pay off and receive the shield of the government in the process. Has our government been hijacked by a small elite or is it even more serious, a group interested in waging war and controlling the world?

  • Jim:

    Excluding the arguments for or against Bitcoin being money, the argument that this is a government move against Bitcoin ignores a few facts. FinCEN has always had regulations in place that made it mandatory for anyone engaged in “Money Transmission” be registered. They also defined any one in the business of exchanging Bitcoin for U.S. Currency (but not the other way around) as a money transmitter. When Mt. Gox’s shell corporation filed it’s paperwork it was asked specifically whether they were going to be exchanging funds into dollars on client demand they stated they would not. That was a untrue. The Feds bought Bitcoin via Mt. Gox and then cashed them in. When Mt. Gox, via their shell corporation, put the money into their Dwolla account, they were in violation of several long-standing Federal regs and the account was seized. In the meantime Bitcoin is rocking along and other exchanges are untouched. Most of the U.S. exchanges currently operating are fully registered and comply with all AML/KYC regs. It is obvious that FinCEN intends to treat Bitcoin like any other currency. If you are going to operate a Bitcoin exchange in the U.S. that is something you have to live with. That isn’t the same thing as attacking Bitcoin, though.

    • Keith Weiner:

      I agree with Jim re: the regulations. A similar case was Bernard von Nothaus and the “Liberty Dollar”. People often paint this as a government attack on silver coinage. There are many privately manufactured silver rounds, medallions, and bars. You just cannot call them by the name “dollar”.

      I do agree with Pater that the trend is clear, the government of the US and the other governments are becoming increasingly desperate to close of all escape routes. They will need exponentially more capital in the future. But I don’t think we are there quite yet, and I rather suspect that the Fed and the big banks do not regard Bitcoin as much of a threat just yet. It’s like Google looking at some voice recognition startup company. Sure, it could grow to become a threat. Right now, it’s not, and if you’re the 800 pound gorilla you can afford to be patient. Many times the startup will self-destruct. If not, you have time to take action later such as acquire it or develop your own technology.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • What Kind of Stock Market Purge Is This?
      Actions and Reactions Down markets, like up markets, are both dazzling and delightful. The shock and awe of near back-to-back 1,000 point Dow Jones Industrial Average (DJIA) free-falls is indeed spectacular. There are many reasons to revel in it.  Today we shall share a few. To begin, losing money in a multi-day stock market dump is no fun at all.  We'd rather get our teeth drilled by a dentist.  Still, a rapid selloff has many positive qualities.   Memorable moments from...
  • How to Buy Low When Everyone Else is Buying High
      When to Sell? The common thread running through the collective minds of present U.S. stock market investors goes something like this: A great crash is coming.  But first there will be an epic run-up climaxing with a massive parabolic blow off top.  Hence, to capitalize on the final blow off, investors must let their stock market holdings ride until the precise moment the market peaks – and not a moment more.  That’s when investors should sell their stocks and go to...
  • US Stocks - Minor Dip With Potential, Much Consternation
      It's Just a Flesh Wound – But a Sad Day for Vol Sellers On January 31 we wrote about the unprecedented levels - for a stock market index that is - the weekly and monthly RSI of the DJIA had reached (see: “Too Much Bubble Love, Likely to Bring Regret” for the astonishing details – provided you still have some capacity for stock market-related astonishment). We will take the opportunity to toot our horn by reminding readers that we highlighted VIX calls of all things as a worthwhile...
  • When Budget Deficits Will Really Go Vertical
      Mnuchin Gets It United States Secretary of Treasury Steven Mnuchin has a sweet gig.  He writes rubber checks to pay the nation’s bills.  Yet, somehow, the rubber checks don’t bounce.  Instead, like magic, they clear. How this all works, considering the nation’s technically insolvent, we don’t quite understand.  But Mnuchin gets it.  He knows exactly how full faith and credit works – and he knows plenty more.   Master of the Mint and economy wizard Steven Mnuchin and...
  • Why I Own Gold and Gold Mining Companies – An Interview With Jayant Bandari
      Opportunities in the Junior Mining Sector Maurice Jackson of Proven and Probable has recently interviewed Jayant Bandari, the publisher of Capitalism and Morality and a frequent contributor to this site. The topics discussed include currencies, bitcoin, gold and above all junior gold stocks (i.e., small producers and explorers). Jayant shares some of his best ideas in the segment, including arbitrage opportunities currently offered by pending takeovers – which is an area that generally...
  • Seasonality of Individual Stocks – an Update
      Well Known Seasonal Trends Readers are very likely aware of the “Halloween effect” or the Santa Claus rally. The former term refers to the fact that stocks on average tend to perform significantly worse in the summer months than in the winter months, the latter term describes the typically very strong advance in stocks just before the turn of the year. Both phenomena apply to the broad stock market, this is to say, to benchmark indexes such as the S&P 500 or the...
  • The Future of Copper – Incrementum Advisory Board Meeting Q1 2018
      Copper vs. Oil The Q1 2018 meeting of the Incrementum Fund's Advisory Board took place on January 24, about one week before the recent market turmoil began. In a way it is funny that this group of contrarians who are well known for their skeptical stance on the risk asset bubble, didn't really discuss the stock market much on this occasion. Of course there was little to add to what was already talked about extensively at previous meetings. Moreover, the main focus was on the topic...
  • “Strong Dollar”, “Weak Dollar” - What About a Gold-Backed Dollar?
      Contradictory Palaver The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronouncements and reversals which will take place in the coming months and years as the world’s reserve currency continues to be compromised.  So far, the Greenback has had its worst start since 1987, the year of a major stock market reset.   A modern-day...
  • Strange Economic Data
      Economic Activity Seems Brisk, But... Contrary to the situation in 2014-2015, economic indicators are currently far from signaling an imminent recession. We frequently discussed growing weakness in the manufacturing sector in 2015 (which is the largest sector of the economy in terms of gross output) - but even then, we always stressed that no clear recession signal was in sight yet.   US gross output (GO) growth year-on-year, and industrial production (IP) – note that GO...
  • US Equities – Retracement Levels and Market Psychology
      Fibonacci Retracements   Following the recent market swoon, we were interested to see how far the rebound would go. Fibonacci retracement levels are a tried and true technical tool for estimating likely targets – and they can actually provide information beyond that as well. Here is the S&P 500 Index with the most important Fibonacci retracement levels of the recent decline shown:   So far, the SPX has made it back to the 61.8% retracement level intraday, and has weakened...
  • Update on the Modified Davis Method
      Whipsawed Frank Roellinger has updated us with respect to the signals given by his Modified Ned Davis Method (MDM) in the course of the recent market correction. The MDM is a purely technical trading system designed for position-trading the Russell 2000 index, both long and short (for details and additional color see The Modified Davis Method and Reader Question on the Modified Ned Davis Method).   The Nasdaq pillar...   As it turns out, the system was whipsawed,...
  • Market Efficiency? The Euro is Looking Forward to the Weekend!
      Peculiar Behavior As I have shown in previous issues of Seasonal Insights, various financial instruments are demonstrating peculiar behavior in the course of the week: the S&P 500 Index is typically strong on Tuesdays, Gold on Fridays and Bitcoin on Tuesdays (similar to the S&P 500 Index).   The quest for profitable foresight...[PT]   Several readers have inquired whether currencies exhibit such patterns as well. Are these extremely large markets also home to...

Support Acting Man

Item Guides

Top10BestPro
j9TJzzN

Austrian Theory and Investment

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com

Diary of a Rogue Economist