[116648] in Cypherpunks
Re: E$ Barter 1
daemon@ATHENA.MIT.EDU (Secret Squirrel)
Tue Aug 17 08:38:44 1999
Date: 17 Aug 1999 12:18:19 -0000
From: Secret Squirrel <secret_squirrel@nym.alias.net>
Message-ID: <427b3305fc15ac82447187503bea6944@anonymous>
To: cypherpunks@cyberpass.net
Reply-To: Secret Squirrel <secret_squirrel@nym.alias.net>
On Thu, 12 Aug 1999 03:24:37 -0700, "Gary Jeffers" <jeffers@htc.net>
wrote:
> My fellow Cypherpunks,
>
> According to Dr. Ludwig in his book CONFIDENCE GAME,
> the Y2K event will bring in the cashless society. It
> will do this due to fractional reserve banking. The
> banks have only a tiny fraction of the cash on hand
> that is owed to its depositors. If even a modest general
> run on the banks occurs, they will fail. Before Y2K,
> there will be at least a modest general run on the banks.
Bullshit. No banks "fail" in the U.S. that the regulators
themselves don't declare "failed." Ludwig and you presume
that the USG will sit through Y2K like a vegetable,
watching banks "fail." Nothing could be farther from the
truth.
Precisely because we have a fractional reserve banking
system and because the legislative limits were removed
from the required reserver fraction _years_ ago and
left to bureaucrats to set, the USG can easily manage
any real or threatened run on the banks. The Fed has
already ordered up large standby supplies of what
laughably passes for "currency" these days. Any bank
subject to greater than normal withdrawals can be
protected by the simple expedients of shipping truck-
loads of FedNotes and lowering the reserve requirement.
The first satisfies the depostors, who don't realize
that the FedNotes in their hot little hands have no
instrinsic value and remain linked to the Fed, the
Open Market Committee, the money supply, etc. The
second solves the regulatory accounting problem of
banks slipping below the reserve requirement.
> The Federal Reserve cannot possibly print up enough
> money to pay the depositors.
Bullshit. The USG/Fed can easily plan to distribute
the quantity of FedNotes practical to print between
[months ago] and Y2k, with a trigger point beyond
which they simply authorize the banks to impose delays
in remitting withdrawals beyond the 30 days the banks
already have on many accounts. Everyone, even the
bank customers, understands that everything will go
back to normal sooner or later, probably sooner. If
the sheeple don't lap up the PR campaigns the USG/Fed
will launch to minimize the runs, they can eat cake.
The average person is already virtually cash-free.
As long as all non-cash transactions remain functional
he will have nothing of substance to complain about.
> What Banking can do is refuse to give cash...
> WE WILL HAVE THE CASHLESS SOCIETY.
> This is a made to order solution for the banking
> industry.
Indeed it is. Whether it will stick remains to be seen.
Personally, I doubt it. People still prefer cash for
many things, small things mostly, and while they won't
rebel if forced by Y2K into temporary cashlessness,
they _will_ insist on the resumption of the availability
of cash. At least this time around.
> A POSSIBLE REMEDY
> DISTRIBUTED E$ BARTER BUSINESSES
Oh, gimme a break!
> 1. E$ because we will have to have value
> denominated in something
You've just gone circular. E$ is not a denomination,
it is something in search of a denomination. If you
imply that E$ will be denominated in dollars, you
have the problem of showing how that will be assured,
guaranteed, underwritten, and be enforceable. If you
think that merely saying it makes it so, you need to
study up on monetary history and theory.
> 2. Barter because what we will have plenty of will
> be products and services.
Attempting to back a currency with goods and services
has to be one of the most stupid, brainless suggestions
ever to come down the pike. Goods and services are not
fungible. "Hours," such as used in Ithaca (Utica?) NY
are imaginary.
> 3. Distributed because UNITED STATE would crush E$
> barter that had a central choke point.
The USG has already adopted a policy toward barter that
makes it impractical in any but a one-on-one context.
The IRS treats barter as an event that yields 100% net
income to both parties. I exchange my roughly $100-value
fishing rod for your roughly $100-value lithograph and
IRS says each of us has "income" of $100.
(continued in Re: E$ Barter 2)
