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: 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:

  • How Beijing Uses Fake Money to Cannibalize the U.S. Transit Market
      A Distorted Landscape One of the more remarkable achievements of fake money creation is that it distorts and disfigures the world in odd and uncanny ways.  Dow (not quite) 27,000.  Million dollar shacks.  Over $13 trillion in subzero-yielding debt. You name it.  Any and every disfiguration is possible with enough fake money.   The global stock of outstanding government bonds with negative yields-to-maturity reaches a new record high of more than $13 trillion – this is...
  • Rick Rule on Investing in Junior Resource Stocks
      Maurice Jackson Interviews Rick Rule Rick Rule is a renowned investor in junior resource stocks. He is currently working for Sprott USA. Recently Maurice Jackson of Proven and Probable sat down with him for an extensive interview which you can watch below.   Rick Rule, legendary resource stock investor   We found this interview quite enlightening and it is probably useful to anyone investing in the junior mining space. Since gold prices have recently broken out...
  • Gold, the Safe Haven - Precious Metals Supply and Demand
      Investments vs. Money Last week the price of gold went up another $11, but the price of silver dropped 4 cents. The gold-silver ratio hit another new high, up another point, though down from Tuesday’s high water mark. This obviously was not the week that wage-earners increased their money holdings or that institutions expressed a preference for the bargain of silver.   Prosperity is just around the corner... and so is the trade deal. [PT]   This coming week...
  • Independence Day in America Circa 2019
      Freedom and Apple Pie The days are long and hot in the Northern Hemisphere when real American patriots raise the stars and stripes. Today the free and brave, with duty and self-sacrifice, begrudgingly accept federal holiday pay to stand tall upon their own two feet. Rugged individualism and uncompromising independence are essential to their character.   Independence day festivities...   With purpose and intent, they assemble as merry mobs along the shoreline to...
  • The Strange Behavior of the US Dollar in the Wake of Fed Rate Cuts
      A Change in Interest Rate Expectations In the last issue of Seasonal Insights I discussed the typical pattern of stock prices when the Federal Reserve cuts interest rates.  As one would expect, the stock market tends to stabilize after cuts in the federal funds rate. The issue is topical, as many investors and analysts expect rate cuts to be implemented soon given that signs of an economic slowdown are beginning to proliferate.   Market expectations about the direction of...
  • Wall of Worry M.I.A. -  Precious Metals Supply and Demand
      Too Much Excitement? The prices of the metals fell last week, with that of gold -$9 and silver -$0.32. Of course, it was a week of stock market exuberance. Why would anyone want to own money, or seek safety when the Fed can seemingly push interest down / assets up indefinitely? As the old TV ad for Lotto proclaimed “you gotta be in it, to win it!”   “Stablecoin” Tether is used as a dollar stand-in on cryptocurrency exchanges that offer no fiat currency pairs. There has...
  • The Four Dimensions of the Fake Money Order
      A Good Story with Minor Imperfections “If you don’t know where you are going, any road will get you there,” is a quote that’s oft misattributed to Lewis Carrol. The fact that there is ambiguity about who is behind this quote on ambiguity seems fitting. For our purposes today, the spirit of the quote is what we are after. We think it may help elucidate the strange and confusing world of fake money in which we all travel.   Consumer price index, y/y rate of change...
  • Resistance Created by Long-Suffering “Hodlers” - Precious Metals Supply and Demand
      Gold vs Other Assets The prices of the metals went up +$15 and +$0.23. We will be brief this week, as Keith just got off a 17-hour flight from Perth to London. Stocks continue their march upwards. And hence the gold price seems stalled—or is it? It may seem like gold goes up, when stocks go down and vice versa. That’s been the recent pattern. Why should people own money without return, when stocks are where the action is?   Gold-SPX ratio: in long-term gold bull markets,...

Support Acting Man

Austrian Theory and Investment


The Review Insider


Dog Blow

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]



Gold in EUR:

[Most Recent Quotes from]



Silver in USD:

[Most Recent Quotes from]



Platinum in USD:

[Most Recent Quotes from]



USD - Index:

[Most Recent USD from]


Mish Talk

Buy Silver Now!
Buy Gold Now!