GOVERNMENTS HATE GOLD!!!

[mobes]

The Next Attack on Gold Has Begun

by Gary North

When governments want to expand power over the monetary system, they invoke the need to clamp down on money laundering by criminals. There is a problem here. After these laws and new rules are passed, crime never goes down, but our privacy does. That is a problem for us. It is not a problem for governments.

The Toronto Globe and Mail ran a story on money laundering and new Web-based businesses that allow people to buy small amounts of gold and then spend this gold as money.

The development of these businesses is the preliminary step to the restoration of private money. This is regarded with great hostility by national governments and central banks. National governments ever since 1914 have worked with central banks to remove gold from circulation as money. This began with the outbreak of World War I. It has never ceased.

The development of the credit card was the culmination of a dream of every fractional reserve banker. Bankers in a fractional reserve system have always feared the withdrawal of currency by depositors. This reverses the fractional reserve process. It shrinks the money supply.

By substituting digits for currency, bankers have solved this problem. A depositor can move digital money out of his account, but it is transferred to another digital account. The system does not lose deposits. When someone withdraws currency and does not redeposit it, the money supply declines. So, credit cards are a banker's dream come true. The threat of bank runs by depositors has ended.

But now a handful of small companies have offered depositors a way to substitute digital money for gold stored in a vault. This gold can now be spent digitally. This creates the threat of a rival form of money.

Hardly anyone accepts gold for transactions. So, the threat to banks is remote today. It is merely the first hesitant step in the creation of an alternative monetary system. Yet this threat has aroused the hostility of some government organizations: those that monitor money.

This alternative money avenue is tiny. Hardly anyone knows of these firms. Fewer still have signed up. Nevertheless, some government agencies are preparing to make war on these tiny firms. "This thing must be nipped in the bud." The Globe and Mail reports on this new pressure by governments.

    Canada's financial intelligence agency warns that criminals may be exploiting Internet-based companies that convert cash into electronic gold, exposing a new front in the international effort to restrict terrorist financing and money laundering.

    While other channels of money laundering are successfully being shut down, authorities are increasingly worried about a proliferation of "digital precious metals operators" websites that offer clients a chance to conduct Internet business in units backed by gold and silver rather than paper currencies.

The Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, has produced a report on this supposed threat to the public. It's bad, the report says. It's huge. It's everywhere. The reporter summarized this report. These companies are "facilitating millions of transactions on the fringe of the international financial system