At 8:24 AM 8/7/94 -0400, Perry E. Metzger wrote:

Robert, you don't understand. The U.S. is not governed by laws any more. In the financial community, every action you perform is illegal. The only way that you stay out of jail is by being nice to the bureaucrats.

This reminds me of my criminology class in college. The prof's main point was that there is no crime, particularly organized crime. It is all just illegal business. There was some research done in Seattle in the early 60's. The researchers discovered that practically every business could be found to be breaking a serious law in Seattle's byzantine city code. Vending machines were illegal, for instance. This allowed cops to shake down anyone they pleased. It also allowed a sizable criminal class to exist, because those people just paid the cops and went about their business. There was reason to believe that all this was done on purpose to enhance the income of various politicians at the top of the payoff tree. Of course, vending machines were everywhere, particularly in cash-based businesses like resturaunts and bars. This could be extended to people in the main business district as well. Their "fees" may not be so much outright bribes, but campaign contributions, "donations" to a politician's favorite charity or civic event, investments in a politician's business activities, and of course, taxes.

They allow money market funds, even though they technically violate a dozen laws, because they feel like it. They could prohibit them if they felt like it, too. The bureaucrats aren't going to want digicash, so they are going to find plenty of excuses to prohibit it. You can't do legal hacks in an environment like this. It doesn't work. If the bureaucrats don't like you, they shut you down, and there is not a damn thing you can do about it, period.

Democracy is in fact mob rule, with various Robbespierres guillotining people to keep the crowd happy. Michael Milken was one of those people who got it in the neck, not so much because what he did was wrong (it was) in the eyes of the people who pulled him down, but because he was too good at what he did and thought he could ignore the crowd. Hubris. So, we have to include Mme LaFarge in our thinking. I believe that legal hacks are necessary, but not sufficient. The economic necessity of ecash, the business case, has to be demonstrated. We can't really know whether it will work unless it's tried. We can't really do that until the "civic authorities" let us put up the vending machines. To do that, we need to be able to incent their cooperation. The possibility of profit furthers that discussion enormously. If regulatory agencies can be convinced to allow non-bank banking ala Fidelity, and a multi-billion dollar industry can result, than it might be possible to allow a non-treasury currency (with proper controls of money supply, to keep Uncle Miltie happy) on the promise of another multi-billion dollar industry. In the above quote you're assuming that they aren't going to want ecash, that they won't find plenty of excuses to allow it. The point is, we have to make the bureaucrats *like* us. The best way to get that to happen is to talk about the business e$ could create. It is a proven fact that sizable proportions of regulatory officials leave their agencies for jobs in the markets they regulate. If there's to be a market on the other side of that revolving door, they have to help us out a little. It was ever thus. Columbus did it. Brahe did it. Oppenheimer did it. Friedman did it with the Chicago Mercantile Exchange. Hell, even Lysenko did it and made it stick for 50 years even when the science was bogus. Fortunately, we don't have our dear comrade, the "Man of Steel", to back us up.

True, you can leave the country and do your business there -- I know several hedge funds that already refuse to take any customers from the U.S. because they don't want the headaches, and there are other similar things happening in lots of other parts of the financial industry. However, don't think you can finesse the folks at the Fed, the IRS, the Treasury, and the SEC -- they are monsters, and they won't be stopped by the courts.

Ever since I've been old enough to understand English, I've heard the various libertarians and ultraconservatives in my family say that they had Seen the Golden Age of America and It's Over Now. I have no idea if they, or you, are right about that. (Not to call you either of those political labels, I know better.) The Roman Empire mutated into the Holy Roman Empire (can you say "Byzantine"?, I knew ya could) and lasted another 1000 years before it was sacked by the Turks in the 1400's. People did business in Constantinople the day the place burned; they were doing business there the day after it burned. If there's a market, there'll be a business. If there's a business there'll be excess money (profits). If there's excess money, there'll be politicians, elected or otherwise. However, it's a stupid parasite which kills it's host, and that's what I'm counting on here. Cheers, Bob Hettinga ObThreadRelevance: Anyone have speaker/demo ideas for the morning "intro to e$" session? ----------------- Robert Hettinga (rah@shipwright.com) "There is no difference between someone Shipwright Development Corporation who eats too little and sees Heaven and 44 Farquhar Street someone who drinks too much and sees Boston, MA 02331 USA snakes." -- Bertrand Russell (617) 323-7923