Internet Payment Processor Liberty Reserve Accused of Laundering $6 Billion 205
pdclarry writes with a followup to this weekend's story that Liberty Reserve, a huge international payment processor, had been shut down and its founder had been arrested.
"Liberty Reserve, apparently the Internet bank of choice for criminals, as reported by the NY Times, Wired and Business Week, has been accused of laundering over $6 billion dollars. Incorporated in Costa Rica in 2006, Liberty Reserve allegedly 'facilitated global criminal conduct' and was created and structured 'as a criminal business venture, one designed to help criminals conduct illegal transactions and launder the proceeds of their crimes,' Manhattan U.S. Attorney Preet Bharara said in an indictment (PDF) unsealed today. Chatter on criminal web sites show a rising sense of panic as fortunes have disappeared in an instant."
as opposed to the 300 trillion (Score:5, Insightful)
Re:as opposed to the 300 trillion (Score:5, Insightful)
I believe its called 'too big to fail'
Also known as 'the people in power keep their money there'
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I believe its called 'too big to fail'
Also known as 'the people in power keep their money there'
Also known as a bunch of douchebagels who manipulate the market and come whining to the government for handouts when someone calls them out.
What is 300 trillion ? (Score:4, Insightful)
Liberty Reserve may have laundered 6 Billion, HSBC may have laundered 300 trillion, but all in all, what does that all mean ?
How come governments can "create" new money out of thin air, trillions at a time, and it's all legal, but when Joe-on-the-street did some side jobs and made some money out of it and does not want it to be taxed, they call it "money laundering" ?
It's all about control, it's all about TPTB exerting their control over us
It's a case of the Great Leader can do everything they want to (even to the point of supplying weapons to some groups of seedy people to fight/kill/murder other groups of seedy people) but you, the Joe-on-the-street, don't get to do anything you want because you just ain't nobody
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They never "create" money. The Fed increases the money supply through Mx. Which has a proportional affect on inflation.
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I do not believe that the Fed increasing the money supply results in inflation and here's why. How do we know how much money OUGHT to be in the system at any given time? There are literally billions of people trying to join the economy and get paid wages that will permit them to buy modern conveniences and a higher standard of living. Without more money, they will not be able to do that. The price of a computer chip is related to not just demand , but also the real cost (indebtedness) AMD , say, has incurre
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That's what illiterate people always say.
Re: What is 300 trillion ? (Score:5, Insightful)
Idiots who don't understand fiat currency make me sad. Basically we dillute the money supply as a proportion of the GDP. In other words we base our money off of our collective labor rather than some arbitrary metal we deem rare enough to care about.
Re: What is 300 trillion ? (Score:5, Insightful)
You must make yourself very sad.
"We" dont do any of this. A cabal of the best connected and wealthiest bankers in the country do it, in private, as they see fit, and we get no say. When they inflate the currency, they dont create new value - they just suck some of the value out of the old currency. And then they get to spend the new currency. Great scam. Of course they try to restrain their greed enough to keep the inflation at a level where the increase in GDP can mask it - they dont want to be set on with torches and pitchforks any more than anyone else does.
Re: What is 300 trillion ? (Score:5, Informative)
"We" dont do any of this. A cabal of the best connected and wealthiest bankers in the country do it
Do you understand that banker are creditors, who benefit from a strong currency? So if their unenlightened self interest is the opposite of what they are doing, why are they doing it? Maybe because they (along with 99% of all economists) believe that we all benefit from expansionary monetary policy during recessions?
When they inflate the currency, they dont create new value - they just suck some of the value out of the old currency.
Except that inflation is near record lows, despite trillions in new money. When unemployment is at 10% and factory utilization is below 80%, there is plenty of slack for "new money" to create real value by putting labor and capital to work.
Of course they try to restrain their greed ...
Could you please explain how a creditor diluting the currency can be considered "greedy"? You might want to read some history books. In the past the conspiracy nuts were accusing the bankers of suppressing the "common man" by doing the exact opposite of what they are doing today. The most eloquent expression of this was the Cross of Gold [wikipedia.org] speech by William Jennings Bryan.
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Bankers just want to see money circulate so that they can take a cut. The bank will never collapse, you see, because the government will bail the bank out.
Diluting the currency is greedy when the low-interest loans (i.e. used as leverage) are invested in bubbles such as housing, stocks, commodities, currency arbitrage. These things make the value of assets increase, so the rich get richer and the poor find it harder to get out of poverty (must continue to rent instead of b
Re: What is 300 trillion ? (Score:4, Insightful)
Over the past 20 years the currency supply as estimated by the Fed themselves has gone from $400 billion to $3,000 billion dollars - a gain of $2,600 billion. That means 6.5 times more US currency than *existed* 20 years ago has been *added* to the supply since then, and that's *net* so gross numbers would be even bigger. That's a pretty huge slice of 'pie' even for the richest men on the planet. In the meantime the devaluing aspect that pays for this windfall is spread out evenly among everyone holding US dollars, while the enriching portion hits you alone, so you are taking a relatively small hit for a relatively large return. In sum, your thesis that this is against their self interest is simply ill-founded. Particularly considering that what matters to the very rich is not actual value (since they have more than they could need already) but rather proportional value (since this is the aspect of money that brings power, and at that level money really is only a tool for acquiring power.)
Except that your numbers are heavily massaged for propaganda purposes and dont actually resemble reality. Unemployment numbers only count people that lost their jobs recently (the chronically unemployed become invisible this way) and only people that have no work at all (so people that lose good jobs and have them 'replaced' with minimum wage jobs that they cannot live on dont count as unemployed either.) 'Our' factory utilisation is low because 'we' are busy moving those jobs overseas.
Bryant, for all his flaws and mistakes, was advocating a bimetallic monetary standard, not fiat currency, and your citation of him seems a bit gratuitous.
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Money supply is largely irrelevant. What matters is inflation and there's very little of it. I could go into why that is but there's no point in arguing with conspiracy theorists. Nice try for another world conspiracy though. You clearly have no understanding how currency is valued.
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Actually, I do understand inflation. You're the one who seems to have no fucking clue what it actually is.
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I haven't seen you demonstrate anything either.
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If you think I think I 'have it all figured out' you are wrong. One thing I am very sure of is that the economy is more complex than any economists model of it.
This is one of the reasons why relying on central control doesnt work. Even if conflicts of interest and corruption werent issues centralised control of an economy still wont work because of calculation problems.
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Over the past 20 years the currency supply as estimated by the Fed themselves has gone from $400 billion to $3,000 billion dollars - a gain of $2,600 billion.
You don't know what you are talking about. The Fed did not print all that money. It's the so called M2 type of money that has grown so rapidly. Please, educate yourself a little bit [khanacademy.org] before you start spewing fire all over the internet about it.
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Except that your numbers are heavily massaged for propaganda purposes and dont (sic) actually resemble reality.
What kind of country has a population so stupid they can't keep tabs on inflation via the cost of a basket of goods?
I like the way you glid over the inflation argument, the strongest argument (for me) in your parent post. You could maybe make it in politics. But not in Europe.
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Sorry, I had to amend your bad grammar. When you post on the internet, it is forever. Please take care in future. And, finally, to outrage you, it's not your language. (But the grammar was bad by your own rules..)
( Expect to lose karma, it's worth it to make a point, ) #StupidOverThere
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couldn't
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Over the past 20 years the currency supply as estimated by the Fed themselves has gone from $400 billion to $3,000 billion dollars - a gain of $2,600 billion. That means 6.5 times more US currency than *existed* 20 years ago has been *added* to the supply since then, and that's *net* so gross numbers would be even bigger.
As long as the value produced by the country in question increased by the same ratio, there is no problem. You are working on the assumption that the increased science, increased technology, increased production of goods, increased production of ideas, concepts, arts, literature and all the rest; that all those things that have increased that give a currency its value in the world; that those things have not kept pace with the increased amount of bills floating around. Perhaps you're right, but I get the i
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Length of unemployment and receipt of unemployment benefits are irrelevant. While those moving to lower paying jobs are counted as employed (pretty hard to argue otherwise), any reduction in pay gets reflected in wage data.
Wow, that's confused (Score:2, Informative)
"Do you understand that banker are creditors, who benefit from a strong currency?"
They don't care, they lend in dollars and receive dollars, not lend in dollars and receive euros. They don't benefit from a strong dollar, they benefit from receiving more dollars.
"Except that inflation is near record lows, despite trillions in new money."
Implosion + Explosion = zero
Without the money printing, the economy is contracting. People who made successful things should be getting richer as the dollar increases, but in
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Do you understand that banker are creditors, who benefit from a strong currency? So if their unenlightened self interest is the opposite of what they are doing, why are they doing it?
Because they convert the money to other currencies, then cause the dollar to fall, then convert it back, then dump it into some investment on which they don't have to pay taxes.
If you have any other questions with obvious answers, I'll be here for you.
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Do you understand that banker are creditors, who benefit from a strong currency? So if their unenlightened self interest is the opposite of what they are doing, why are they doing it? Maybe because they (along with 99% of all economists) believe that we all benefit from expansionary monetary policy during recessions?
Banks are international. They play one country's currency against another, and there is no reason to keep the US dollar level with the other currencies. One day they may decide to "cash in"
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Re: What is 300 trillion ? (Score:5, Insightful)
That's the kind of insanity that's driving the US deeper into the hole. Doubling down on failed policies won't turn the economy around, and such failed policies haven't even worked as advertised for the last several years.
The opposite of what America is doing is called "austerity". That is what Europe is doing. Two years ago we both had near 10% unemployment. Today, America is at 8% and Europe is at 12%. In the face of this reality, I think you look pretty foolish arguing that America's monetary expansion is wrong and we should be more like Europe. It is important to balance budgets and pay down debts, but trying to do it in the middle of a recession is nuts.
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The opposite of what America is doing is called "austerity". That is what Europe is doing. Two years ago we both had near 10% unemployment. Today, America is at 8% and Europe is at 12%. In the face of this reality, I think you look pretty foolish
The person who looks foolish is the person who cites unemployment figures based on the number of people eligible to collect unemployment insurance benefits. The actual number is definitely at least double that, and probably quite a bit higher.
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That may have been an argument if countries like Germany are doing better. The fact is, they're not, and neither is the UK, which shares a similar business culture as the US.
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Unemployment statistics are based on one metric: did you actively look for work in the past 4 weeks?
That's it. Unemployment insurance has nothing to do with it.
Who is foolish now?
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That is a huge problem with deflationary economies - when something that cost
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Instead, by and large, most people are using what money they have to pay off mortgages and settle other debts.
Yeah, but that's quite important in the long term. We had moved to accepting insane levels of debt as "normal", but that just wasn't sustainable. We're moving to a more reasonable (but still quite high) level of consumer debt as "the new normal": painful, but we had to. It's a necessary (but not sufficient) step to climbing out of recession.
Hopefully this will put us in a more realistic mindset about the US federal debt, which is up to $148,000 per taxpayer now. I'm not sure what can be done about that,
Re: What is 300 trillion ? (Score:2)
Talking heads quote the real GDP which is calculated using the CPI. If CPI is lower than reality then real GDP will be overstated.
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In other words we base our money off of our collective labor rather than some arbitrary metal we deem rare enough to care about.
Damn, I've never seen it put quite so eloquently! So as the GDP grows, the value of each "share" of that decreases accordingly. Though at the same time, the proportion of shares going to the rich keeps increasing. Hmm...
I can't really think of many better arguments for investing in metals (or hell, vintage Garbage Pail Kids cards for that matter! Just about anything but US Do
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I had a Fiat once, total crap.
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I had a Fiat once, total crap.
Fix It Again Tony.
I much prefer the Gold(wing) standard
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Idiots who don't understand fiat currency make me sad. Basically we dillute the money supply as a proportion of the GDP. In other words we base our money off of our collective labor rather than some arbitrary metal we deem rare enough to care about.
Hahahaha. No wonder they keep printing money, when common Joe believes in what you just said.
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So even if you work more and more, the government dilutes your work so you will be as if working the same as usual?
No. It means if you stuff all your money under your mattress and don't do any work at all you're not entitled to a share of a growing economy.
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Exactly. Inflation is a way to force extremely wealthy individuals to actively invest their money and put it to work, instead of just locking it into a vault and waiting for it to appreciate in value by keeping it out of circulation. Inflation is a partial defense against eternal feudalism. It doesn't necessarily empower the impoverished, but it at least stirs the wealth pot every now and then and shuffles the deck once in a while.
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Re: What is 300 trillion ? (Score:2)
You are in the group that doesn't understand money. Money is a market phenomenon.
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If I do not work why should I be punished(through inflation) for having set some money aside?
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If I do not work why should I be punished(through inflation) for having set some money aside?
Because you aren't contributing to the growth that occurred between the time you set that money aside and the time you realised it's worth less.
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Cash is not meant for setting money aside - it's meant to be easier than barter. To put money aside you want wealth (ownership of the means of production), which both generates income and self-adjusts for inflation. Just like gold, buying some micro-percent of all publically traded companies (easy these days thanks to funds) will have some exchange rate against cash that floats against inflation. Unlike gold, your money is actually doing something useful and so you benefit from real GDP growth.
Re:as opposed to the 300 trillion (Score:5, Insightful)
Came here to make an HSBC quip.
Although Matt Taibi has it at 10 Billion, his description of the settlement with HSBC is sadly hilarious:
http://www.rollingstone.com/politics/blogs/taibblog/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213 [rollingstone.com]
Anyway, one thing is clear. Liberty Reserve didn't donate enough to Obama's campaign to get a slap on the wrist and and a cabinet post.
Re:as opposed to the 300 trillion (Score:5, Informative)
Anyway, one thing is clear. Liberty Reserve didn't donate enough to Obama's campaign to get a slap on the wrist and and a cabinet post.
I don't think that's the issue here: According to opensecrets.org, in the 2012 cycle, HSBC gave only about $30K to Obama and $23K to Romney. By comparison, Goldman Sachs spent about $8 million on lobbying and "donations" (a.k.a. bribes). So I don't think HSBC bought them off at the highest level, I think they might have simply offered some extremely well-paid and cushy jobs to the bureaucrats investigating their crimes to convince them that they couldn't find specific wrongdoing on the part of specific people.
But put me in the camp that says that both HSBC execs and Liberty Reserve execs should probably be in jail for this. Or even better, you might take George Carlin's advice:
And you know, in this country, now there are alot of people who want to expand the death penalty to include drug dealers. This is really stupid. Drug dealers aren't afraid to die. They're already killing each other every day on the streets by the hundreds. Drive-bys, gang shootings, they're not afraid to die. Death penalty doesn't mean anything unless you use it on people who are afraid to die. Like... the bankers who launder the drug money. The bankers, who launder, the drug money. Forget the dealers, you want to slow down that drug traffic, you got to start executing a few of these bankers. White, middle class Republican bankers.
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Oh man -- I'm anti-death penalty ... but Carlin justmight make me reconsider!
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It's amazing that anyone is surprised by this. HSBC is part of the establishment and therefore exempt from the penalties that the little people have to face.
Imagine this. 0.1% of human beings have managed to strip mine the world's wealth. They understand that the only way to keep the other 99.9% of humans from murdering them and taking all their stuff is to keep them so stressed out that they can't think straight enough to notice.
When you are worried about terror, paying your mortgage, keeping or getting a
Re:as opposed to the 300 trillion (Score:5, Funny)
Universal claims over the empty set are true. Now if he had written "Some honest prosecutor in America", you would have a point.
Re:as opposed to the 300 trillion (Score:5, Interesting)
Good on Judge Gleason! I'm glad to hear that he may torpedo that travesty of a deal. Still, Obama's legal team is working hard to protect the banksters:
Re:as opposed to the 300 trillion (Score:4, Interesting)
Or the $420 billion laundered by Wachovia [wikipedia.org], for which they paid a $160 million fine.
This is almost certainly less than the profit they made - international money transfers are not cheap - and nobody was prosecuted.
It really is one law for the rich...
Re:as opposed to the 300 trillion (Score:5, Informative)
I'll just leave this right here...
http://www.guardian.co.uk/business/2013/may/23/hsbc-court-threat-money-laundering-charges
Re:as opposed to the 300 trillion (Score:4, Insightful)
The last "C" stands for "Corporation", actually, but close enough.
And yes, an American judge (albeit it with the name "Roberts", since the case would unavoidably end up with the USSC) could order them split up for the purpose of acting as a corporate entity in the US. Worldwide, we can't do much about them. If they want to do business in the US, however, we have every right to insist on the terms under which we allow them to do business in out country.
Re:as opposed to the 300 trillion (Score:4, Informative)
An American judge order the splitting of the HONG KONG SHANGHAI BANK OF CHINA? Yes, that's what HSBC means.
The last "C" stands for "Corporation", actually, but close enough.
HSBC was created when Hong Kong and Singapore were territories of England. They moved their headquarters to London before the English handed back Hong Kong to the Chinese (end of the 99 year lease). HSBC, despite being named Hong Kong and Shanghai Banking Corporation are a UK company and realistically, always have been.
Now it feels odd using this argument FOR the United States but...
HSBC do business in the US, so they are subject to US laws and judgements.
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Hong Kong and Singapore were overseas territories (ie. colonies) of the United Kingdom (of Great Britain and (Northern) Ireland) back then. Shanghai at that time was the financial centre of China, due to the presence of many foreign powers which has land ceded to them after Treaty of Nanking in 1842.
The HSBC logo was developed from the cross of St. Andrew, the patron saint of Scotland. As you might have guessed, HSBC was founded by Scots.
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that HSBC may have laundered..
Blue collar crime does not pay...
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but they give the US their cut so it is OK. I work in various countries and have had to get used to the simple fact that money laundering just means not giving a cut to the US. I can shift as much money as I like from any country to any country without question as long as I pay 6% but if I take too much of my hard eant money in cash from one country to another I am called a money launderer. All the guff about criminals is just guff. Criminals can use any system, but good people and bad people want to sa
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That's a really facile and useless quip.
Just because murders and rapists exist does not make it right to rob you, for example. This 'tu quoque' argument is a fallacy precisely because while it may point out the hypocrisy in one party, it does not address the right or wrong of the action under discussion.
So, simply on the facts, is money-laundering a crime, and did LibertyReserve engage in it? Tough shit. They brought the prosecution on themselves then.
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Your comparison to HSBC fails because (1) HSBC was not specifically set up to facilitate money laundering and other criminal activity, and (2) the vast majority of HSBC's business is not in support of criminal activity.
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karma truck (Score:5, Insightful)
"a rising sense of panic as fortunes have disappeared in an instant"
So now they know how their victims feel?
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let's hope the scum weeds out other scum in revenge
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So now they know how their victims feel?
Money laundering outfits like this rarely take down just criminals. There are legitimate reasons for currency conversion, etc., that both companies and private individuals engage in. Money laundering works by throwing good money in with bad and obfusciating which is which;
Undoubtedly some innocents will be harmed by this draconian action. But don't let that scare you off getting righteous about the whole affair. In other news, your bank stole nearly killed the world economy, and cost trillions upon trillion
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This is only idiots trust their money to a corporation that doesn't follow the laws. It will attract criminals, and eventually they'll end up without their money.
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This is only idiots trust their money to a corporation that doesn't follow the laws.
Every company you've purchased something from recently has broken the law. Every. Last. One. And you want to know how I know? Because even our own government can't keep track of the number of laws on the books. Our legal system is hopelessly complex; People break the law just making dinner these days (no really; google for 'short salmon').
It will attract criminals, and eventually they'll end up without their money.
Yes, and in the same way, if a couple terrorists hole up in a hospital, we should just blow up the entire hospital, killing everyone inside... because otherwise it will at
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Such a terrible, terrible argument. There is a difference between what I as an individual should do to maximise my survival, and what a mythical diety in the sky should do to promote "fairness". I as an indivdual should look to minimize risk. Absolutely no one who was using liberty mutal ( edxcept the criminals) was minimizing thier risk. They really do have only themselves to blame for putting themselves in that sitaution. It was very clear for a very long time that liberty reserve was not following the la
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They went up in value to $800, so I listened to Slashdot and sold them when they were worth about 1/10 as much as they would be today. Back then, the only way to get your money out of Bitcoins for a Canadian was from Mt. Gox to Liberty Reserve, then to private traders. I gradually traded $200 of that LR out for cash and w
Re:karma truck (Score:4, Funny)
"..., so I listened to Slashdot..."
You're lucky to be alive.
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Oh woe is you, considering Mt Gox has been taken down as well on similar charges. You put your money in unregulated, opaque non-physical assets - you got what you deserved.
How is this news? (Score:5, Interesting)
There's a financial agency that's not a money-laundering operation? We live in interesting times.
The rule of the New World Order (Score:2)
LR went too big and decide not playing by the rules of the "establishment" and hand over the data requested. This is what they get in return.
Remember UBS get bullied to hand over depositor information to the IRS?
Keep your eyes on the real criminals (Score:2)
Re:Keep your eyes on the real criminals (Score:5, Informative)
the federal reserve corporation pumped out trillions of dollars to mask banker fraud
No they didn't. The Federal Reserve pumped out trillions of dollars because that's what the Federal Reserve is supposed to do in a recession. They pumped out a lot of cash after the S&L collapse in the 1980's too, when the bankers weren't protected and many went to jail.
And I'm not saying the Fed shouldn't be questioned or examined, but that's not in the category of things they've done that's actually wrong or fraudulent in some way.
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Except this time, unlike the S&L crisis, NOBODY is going to jail. Google:
William K Black (http://en.wikipedia.org/wiki/William_K._Black)
And just read any random thing he's written or transcript from an interview he's given.
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Austrians are finally getting a little attention precisely because the last 100 years have actually proven them 100% correct.
[citation needed]
In order for an economic theory to be 100% correct, you will need to:
1. List out all predictions made by the Austrian school of economics regarding the last 100 years. To qualify, the prediction has to be made before the events in question occurred, and the events in question must have happened before now. For example, if Hayak predicted in 1930 that something would happen in 1932, that's in, but if Hayak only described the events of 1932 in 1934, or if Hayak described in 1990 the events of
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The economy is not a car, there's no engine to stall. No expert can fix it, there's no 'it' at all. The economy is US, we dont need a mechanic. Put away the wrenches, the economy is organic. [youtube.com]
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This seems entirely at odds with the reality of US treasuries in certain categories experiencing negative yields for the past few months and China continnuing to hoover them up like its going out of style. Meanwhile, EU countries are actually experiencing debt refinancing issues, hence all the bail outs.
Where exact;y do you imagine all this capital can actually flee to?
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Exactly.
$85B/month = $1,020B in a year. The projected federal deficit for 2013 is $960B.
If it wasn't for the Fed monetizing the debt, the government would not be able to finance its spending at these insanely low interest rates.
Heh. (Score:2)
Chatter on criminal web sites show a rising sense of panic as fortunes have disappeared in an instant.
Are you sure this wasn't just a MMORPG?
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Three thousand hours, three thousand hours clicking on that mouse, collecting weapons and gold. It's almost as if it was a huge waste of time.
--Sheldon Cooper
Six dollars billion dollars (Score:5, Funny)
Their mistake: (Score:3)
global criminal conduct (Score:2)
Why is it that reading ''global criminal conduct' makes me think
of states, whether or not united, first.
Comment removed (Score:4, Insightful)
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They can literally manipulate, and force people to flee away from bitcoin if they can manage to take control above 51% of the network computing power. The government have the money to build such computing infrastructure.
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They aren't doing it. There have been studies, basically they found that the all-star traders in most investment banks were little better than coin flips when averaged over long periods, it's just that when they guessed right, things went well, and for everyone doing badly, there was someone hitting the right buttons. That and Libor and inter bank exchange rates.
Re:Attack on digital currency (Score:4, Interesting)
I'm here to say that I am fine with this.
Governments are needed to bring order and stability, and they do that by enforcing the rule of law, including the legality of business. Money laundring undermines this, so it must be prosecuted. Actually, I am quite happy that they are finally doing somthing about money laundring.
That goverments don't get all what they do 100% right is normal for any human endeavour, and a reason to engage into politics, not to pretend we will be better off without governments.
Anyway, bitcoins & co need to be regulated to avoid it becomming a vehicle for illegal business.
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A government that does not enforce the rule of law UNIFORMLY throughout the nation has given up its just power to govern.
Wall St. banks engage in thousands of acts of fraud, forgery and perjury yet continue to operate with none of their employees investigated and prosecuted? Government employees smuggle guns to the Mexican drug cartels and those guns are used to commit murder yet nobody is prosecuted. Where's this "rule of law" you mention?
Like the OP said, the money monopoly is the cornerstone of the ban
Accused? They do it be design (Score:2)
Isn't that, by definition, what they are supposed to do?
They take in one type of currency and give you back a different set of currency.
Not only about money (Score:2)
I'd ask what HSBC might have agreed to other than fines - such as giving information on their (offshore) customers to US investigators.