E-gold Owners Plead Guilty To Money Laundering 469
Ian Lamont writes "The three owners of Internet currency service e-gold have pled guilty to money laundering in the U.S. District Court for D.C.. The service is based in the West Indies, but the directors apparently live in Florida. They haven't been sentenced yet, but potentially face decades in prison and millions in fines. In addition, the principal director posted a blog entry yesterday saying that 'criminal activity will not be tolerated,' and pledging to eliminate the loopholes that allowed money laundering to thrive on the service. He also claims that e-gold has more transaction volume in a single quarter than all of the first-generation Web currency services like Cybercash, Beenz, and Flooz completed over their lifetimes. Ironically, one of the reasons that contributed to Flooz's demise in 2001 was rampant money laundering."
Re:e-Gold...teh new flooze? (Score:3, Informative)
So then, you've been reposting a post originally written nearly four years ago, just because it irks you that Roland is capitalizing on his /. submissions? You know, there are much more serious things to get worked up about, why don't you choose a few and make yourself useful? And FYI, you can aways go to your /. prefs page and opt out of RP's stories, and then you won't have to see them anymore.
Re:eGold now, Paypal next? (Score:3, Informative)
eGold works with bogus money and is backed by claims of company that it has that amount of gold in safe. Gold standard died more than 50 years ago.
PayPal works with real money.
Re:eGold now, Paypal next? (Score:3, Informative)
What do you mean, eGold works with bogus money? How is US currency "real money" any more than using gold as money?
Free Competition in Currency Act of 2007 (Score:5, Informative)
Last year Ron Paul introduced the Free Competition in Currency Act of 2007 [loc.gov] which would make alternate currencies legal, though not change other aspects of what you can do with currencies (e.g. money laundering would still be illegal).
Few young people realize that until the 1964-1968 time period it was possible to bring your dollars to the government and get precious metal on demand. This gave the dollar real worth. Since that time, the government has found that it can simply make more money out of thin air and spend it on government programs to generate votes. As with any supply and demand equation, when they start running the printing presses to make more dollars, the dollars you have in you bank account become worth less. You're losing money value and the government is gaining money value, but your 'taxes' are low. One can see this in inflation charts which start to skyrocket in the 1970's, relative to decades previous. Interesting note: if we measured inflation today the way we used to back then, our inflation rate would be 11% [mcgonigle.us].
The Wall Street Journal recently ran a graph showing the value of the dollar vs. gold vs. oil. If we look at the start of the decade until now, if we were holding euros instead of dollars, gas would only be about $2.70 at the pump - that extra $1.30 can be viewed as lost power of the dollar. But, the euro is no panacea either - if you compare the price of gas to the price of gold, it's nearly flat. How about $1.20 gas? I actually saw $5 diesel in CT last weekend.
Not surprisingly, the government decided to stop keeping track of 'M3' [capitalspectator.com], or the money supply of the dollar recently. Private economists have continued the calculations [shadowstats.com] and it's easy to see why the government doesn't want to talk about it.
So, back to the beginning, the government has taken irresponsible action with the way it manages the value of its currency, and they have laws preventing people from opting out of their mismanagement. Afraid of a little competition, are they? Experience shows that the most likely effect of competing currencies, even ones that mimic the way the government operated in your parents' generation, would be to pressure the government to exercise some restraint. Of course, if this competition is illegal, they'll continue with their outrageous devaluation.
Folks who think a little competition helps to keep markets fair, and monopolies hurt them, would do well to contact their representatives in government about the aforementioned bill.
Re:eGold now, Paypal next? (Score:1, Informative)
US dollars are backed by nothing but the whims of the federal reserve, and it's this very fact that has brought about America's current financial predicament.
It is also the very fact that created the largest economy in the world and brought this country to where it is today...which really isn't all that bad of a place despite all the doom and gloom you hear in the media.
Re:Free Competition in Currency Act of 2007 (Score:5, Informative)
Last year Ron Paul introduced the Free Competition in Currency Act of 2007 which would make alternate currencies legal, though not change other aspects of what you can do with currencies (e.g. money laundering would still be illegal).
This is the sort of meaningless drivel that marks Ron Paul and his supporters as kooks.
Today, you are most certainly not obliged to use US dollars. You can use any currency you wish, provided the other party in the transaction agrees. You can take payments in beans, Swiss francs, gold or oil. Many US banks are happy to let you have an account in a foreign currency.
The only case where you are required to take US cash is for payment of a USD debt (that's the "legal tender" statement you see on USD bills).
In US states near the Canadian border, you will often see Canadian quarters, nickels & dimes, since they look very similar to US coins and have almost exactly the same value (1 USD is about 1 CAN).
Few young people realize that until the 1964-1968 time period it was possible to bring your dollars to the government and get precious metal on demand.
So? Why is gold valuable? It does have some intrinsic industrial value, but the majority of the price of gold is because people think it's valuable. Why do they think it's valuable? Because it's pretty and shiny and people think it's valuable. It's self-fulfilling. It's valuable because people think it is. The degree to which people think something is valuable varies from time to time. iphones seem to be the currency of choice these days.
The gold standard does prevent some economic problems from occurring, but causes many others. These are well known and have been studied to death by economists.
Since that time, the government has found that it can simply make more money out of thin air and spend it on government programs to generate votes.
Government mismanagement & incompetence is not something that only occurs with fiat money.
Re:Damn, was an easy way to buy gold... (Score:5, Informative)
You don't pay a tax for switching to gold. You only pay a tax on the CAPITAL GAIN you make if you sell at a profit. Your trading commissions and losses are actually DEDUCTIBLE.
Also, gold is no more fiat than anything else. Only 20% of it is put to industrial use. The rest is traded because people like it. If people stop liking it, down it goes. Think that can't happen? Think again. When the Conquistadors came to the West, Natives filled their coffers with gold on request. This was, only in part because they wanted to appease the Spaniards. Gold while attractive to them, was not monetary like it was in Spain. They valued jade (another scarce commodity) in that fashion. Had the Spaniards requested a room full of jade, it might have been another story.
Warren Buffet hit the nail on the head when he said: "It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
My own quote on the matter: "Under the current system money is managed by the Fed, which reports to Congress. Under a gold standard money is managed by international mining cartels and speculators. This is better, how?".
Then of course, there's the tendancy of gold standard advocates to ignore the history of business cycles under the gold standard (Hint, it wasn't a recession-free paradise). Why, praytell, have so many otherwise intelligent people been lured onto the gold bandwagon lately?
Re:Free Competition in Currency Act of 2007 (Score:2, Informative)
Few young people realize that until the 1964-1968 time period it was possible to bring your dollars to the government and get precious metal on demand.
You haven't been able to do this since 1933.
Since that time, the government has found that it can simply make more money out of thin air and spend it on government programs to generate votes. As with any supply and demand equation, when they start running the printing presses to make more dollars, the dollars you have in you bank account become worth less. You're losing money value and the government is gaining money value, but your 'taxes' are low. One can see this in inflation charts which start to skyrocket in the 1970's, relative to decades previous.
The US does not use inflationary finance, nor does any other developed country. The US hasn't used inflationary finance since the civil war.
The US government does not pay for budget deficits by printing money. It simply doesn't. Deficits are paid for by the selling of bonds, i.e. debt, as seen in phrases like "the national debt".
As for inflation being very high in the 70's, what is that supposed to prove compared to any other period of high inflation? If government spending really was the cause of all inflation, wouldn't you expect inflation in the 70's to be much lower than in the 80's which had vastly higher budget deficits (cut taxes + higher spending), the exact opposite of what can actually be observed?
The Wall Street Journal recently ran a graph showing the value of the dollar vs. gold vs. oil. If we look at the start of the decade until now, if we were holding euros instead of dollars, gas would only be about $2.70 at the pump - that extra $1.30 can be viewed as lost power of the dollar. But, the euro is no panacea either - if you compare the price of gas to the price of gold, it's nearly flat. How about $1.20 gas? I actually saw $5 diesel in CT last weekend.
The recent increases in the price of oil is due to supply scarcity. There isn't enough oil being pumped out to meet world demand. Gold isn't going to create more oil. If you start paying for oil by using gold... you think maybe oil would start getting really expensive in terms of gold?
Not surprisingly, the government decided to stop keeping track of 'M3', or the money supply of the dollar recently. Private economists have continued the calculations and it's easy to see why the government doesn't want to talk about it.
M3 is not "the money supply of the dollar", because for one thing, the "money supply of the dollar" is a meaningless term. The Fed tracks m0, m1 and m2 (measures of the money supply) and other government agencies report the CPI (inflation rate). If the government financed itself by printing money, wouldn't it show up in all the M* measures? Especially M0, the sum of all of the printed currency? M3 is just a superset of M2 plus a few other relatively less important instruments, CDs + dollar denominated accounts outside the US + repurchase agreements. If the money supply really did == inflation, and the government caused this on purpose for spending and wanted to obscure it, then why would the government continue to report inflation statistics directly (CPI)? Or the other 3 money supply measures? Does the government's printing money go directly and exclusively to CDs, banks outside of the US or repurchase agreements?
Re:Damn, was an easy way to buy gold... (Score:3, Informative)
Really, cannot the same be said about the gold standard.
Throw a dart at the periodic table (Score:4, Informative)
I and many many others will take gold any day as it is more likely to keep its value than most anything else you can name.
I could say the same thing about any element on the periodic table. Point to any metal on the periodic table and you would have exactly as compelling an argument. We're not making any new platinum or copper either and both are equally useful in a practical sense as gold. Personally I find oxygen, carbon, hydrogen and nitrogen to be FAR more valuable than gold. Perhaps you don't like breathing or food?
Gold is a fine asset to own but thinking of it primarily as money [wikipedia.org] belies a fundamental misunderstanding of the difference between money and value. I suspect that gold will remain a desirable asset well into the future but I don't expect it to be a better source of value than any number of other metals.
Business cycles are caused by *credit* (Score:5, Informative)
That is, the creation and destruction of credit by banks. Banks lent fractionally on top of gold in exactly the way they do now on top of paper. Whether the currency is based on gold or paper is irrelevant with respect to business cycles, it's the debt based nature of credit and in particular fractional lending practices which are the problem there. Gold on the other hand is naturally scarce and so would restrict inflation whereas paper is not, and does not.
HTH
Re:Damn, was an easy way to buy gold... (Score:2, Informative)
Re:eGold now, Paypal next? (Score:3, Informative)
I've seen a theory that the reason for invading Iraq was that in late 2000 Saddam switched to using the Euro. Iran's promoting the same switch, and the talk of war with them keeps popping up.
Yep. It's actually a theory backed by Ron Paul. This the speech where he presented it to the House in 2006: The End of Dollar Hegemony [lewrockwell.com].
Gold standard is no solution... but is a control (Score:1, Informative)
As others have said, the gold standard is just an arbitrary value system. Yet, it serves a valuable purpose: preventing government from blindly printing money... thus devaluing your savings.
Gold is physical and needs to be mined. This puts a natural cap on 'printing' money. Yes, as more gold is dugg out of the ground, technically, your currency is devalued. Yet, that rate is controlled by the fact that it takes time and investment to digg up the gold. Now there's nothing special about gold... a basket of real goods would do just as well.
I'd be fine of course with a completely fiat currency as long as the government was small... but you know that's not going to happen. SO they only way to control government is to limit the money it has to squander...aka... gold standard.
With completely fiat money... there is nothing stopping a government or reserve bank from completely devaluing the currency.. aka... Zimbabwe... aka United States. You know who gets hit the hardest when they do these things? The middle class. The poor don't have savings. The rich have enough and can hide and pay top dollar for good accountants and traders to minimize their risk.
Re:Free Competition in Currency Act of 2007 (Score:3, Informative)
Today, you are most certainly not obliged to use US dollars. You can use any currency you wish, provided the other party in the transaction agrees. You can take payments in beans, Swiss francs, gold or oil.
False. The government will not enforce such a payment and will enforce payment in legal tender instead, at the rate its courts determine. Also it will accuse you of money laundering, and you will not be able to pay into its coffers in anything other than USD.
Re:Damn, was an easy way to buy gold... (Score:4, Informative)
What now? The 20th century has been a lot more stable than the 19th in economic terms. [wikipedia.org]
Re:Damn, was an easy way to buy gold... (Score:4, Informative)
The "gold theorists" answer to this is simple:
In any gold-like money system (it doesn't need to be gold, anything that isn't "tamperable" by 3rd parties, be it the government or other, works the same), you have booms and busts, all right. However, they're always local booms and busts, reflecting a multitude of changes in market, be them purely economical or other (for example, externalities). In other words, while a sector of economy might become problematic, another would be booming; if that one then goes kaput, a 3rd sector would be alright; then the 1st one can recover; and so on and so forth. The end result, if you consider the economy as a whole, is that you get in average a linear rate of economical growth.
When you change this system to that of fiat money, or any other kind of money that can freely tampered with, the economy as a whole ends up indexed by the monetary policy, and as a result, instead of a multitude of economic sectors each one having its own independent booms and busts, the economy becomes a single sector where all booms and all busts become synchronized and end up happening at the same time.
The important thing on all of this is that having huge synchronized boom/bust cycles is no better than having many small independent per sector booms/busts, because the average growth doesn't change. You simply switch from a slow but regular growth, where people on difficult sectors can switch to other, growing ones, to one of a fast growth of the whole followed by a hard or full stop of said growth followed by a fast growth of the whole etc.
Thus, while from the perspective of the nation as a whole, on the long range, it makes no difference, since the booms and busts cancel each other and the result is an average growth all the same, from the perspective of the individuals the synchronized cycle system is bad, since once the single sector becomes a mess, he has nowhere to move to.
Who then actually profits from the synchronized cycles? Just one group: politicians. The "boom half" of the cycle is amazing as far as votes (and taxes, and government money) go, while the "bust half" is amazing for getting the desperate people to vote in a new savior.
That's all there is to it.
Re:Throw a dart at the periodic table (Score:3, Informative)
The history of metallic money is actually pretty obvious. Unlike the paper dollar, if the entire economy built on "IOUs" collapsed, a metallic based currency is still a given amount of metal, metal which can be put to a variety of uses.
In the earliest trade & barter systems, it was inconvenient to use "cow" as the medium of exchange if you wanted to buy something that you felt was only worth half a cow. Or if your trading partner had no particular use for cows in any quantity, whole or otherwise.
Metals on the otherhand, have some great properties for usage as currency
- they can be melted and reshaped and reformed again and again without losing any of their worthwhile properties.
- they can be cut (or recombined) into any size or denomination without diminishing their per-unit qualities (1/2 oz of gold is worth 1oz gold / 2. 1/2 of a cow is not necessarily worth 1 cow / 2.)
- being elementals, there is little qualitative difference between gold from spain, gold fed grass, gold grown in sunny pastures, etc. Gold is gold. Grain, cattle, etc, all have many qualitative differences such that we can rarely say 2 cows or 2 sacks of grain are equally valuable.
- the precious metals are exceptionally good at not oxidizing, corroding, or otherwise vanishing or decaying with age.
Basically, precious metals can be melted and remade in any shape or denomination as many times as you want, and they never decay or expire. Even so, they retain all of the physical properties that make them useful in metallurgy, or desirable to satisfy vanity. Metallic coined money then makes a tremendous amount of sense as a currency. It is not accidental that it was instrumental in the development of market economies.
Links (Score:3, Informative)
This is the way I did it the last time I did it. Another poster says this is no longer possible; I'm going to test and see for myself. But the way I used to do this was:
Go to an Ace Cash Express [acecashexpress.com] store and plunk down cash for an All-Access Visa Gift card. (See the bottom of the linked page.) No questions, no ID, no nothing - you just slide $255 under the bullet-resistant glass and they slide back under the glass to you a Visa card with $250 preloaded. You can take it to any store and use it immediately. However, if you want to use it online, you then go to the All-Access card site [allaccessgift.com], plug in the codes on the card, and activate the card for online use. The activation process asks for identifying information but does not verify. Obviously, if you want something delivered to your home, you'll have to plug in the correct information. However, if you're using the card to pay for something like downloadable software, you can make up anything for a name, address, phone, etc.
Additional info: You can get the card for any amount up to $250. The cost of the card used to be $5. The card is not reloadable. Ace Cash Express sells lots of different kinds of cards and most of them are reloadable so if you're trying to buy one of these gift cards and they start asking you for identifying information, it means they're making a mistake and trying to sell you the wrong product, some sort of reloadable card. Getting the last little bit of cash out of it is difficult; I used to check the credit balance online then go buy exactly that much gas. And if you don't use it, you lose the money because the company charges a small monthly fee against the balance. I don't remember exactly how much (I think it was $5) but it's enough to eat up the balance and kill off the card, eventually.
Note that this info is old. The fees are probably higher and the allowable balances may be lower nowadays. Due to the fees and other hassles, the card is really only worthwhile for the occasional single online purchase that you want to keep anonymous. Still, I know that it *used* to be possible to buy online, anonymously, if you were willing to put up with the hassle.
This actually brings me 'round to my original question. Since the method described above is a bit of a hassle, does anybody have a better way to buy online and anonymously?
Re:Damn, was an easy way to buy gold... (Score:3, Informative)
As far as I understand it, the original intent of the Constitution was something along the lines of "this is a list of things the federal government is allowed to do, and if it's not mentioned here, they can't do it." So it's not an explicit bar against prohibiting gold ownership; it's probably that they couldn't bend the interpretation of one of their granted powers far enough to fit the gold ban into it.
Of course, IANAL, so take my oversimplified guess with a grain of salt. ;)
Re:Damn, was an easy way to buy gold... (Score:1, Informative)
That ban was unconstitutional, of course. Not that that's stopped the federal government from doing whatever the hell they wanted since the Lincoln administration.
It started much earlier than that... check out the Sedition Act (passed in 1798) some time.