Apr 292013
 

The BORG is ready for War with YOU!

By Morpheus – with Bob Podolsky

Fargo is North Dakota’s largest city, yet its placid lifestyle seldom sees the chaos common in other urban communities.  This quiet city has averaged fewer than two homicides a year since 2005, and there’s not been a single international terrorism prosecution in the last decade.

But that hasn’t stopped BORG Agents in Fargo and its surrounding county from going on an $8 million buying binge to arm police officers with the sort of gear once reserved only for soldiers fighting foreign wars.

Borg Police armored truck

Every paramilitary BORG squad car in Fargo, is equipped today with an assault rifle and Kevlar helmets, able to withstand incoming fire from battlefield-grade ammunition. BORG officers can now summon a new $256,643 armored truck, complete with a rotating turret. The truck is used at the annual city picnic, where it’s been parked near the children’s bounce house. This way the BORG can CON-vince the populace what a great investment it has made by spending stolen funds, known to the BORG as taxes, granted to the city by the federal government.

“Most people are so fascinated by it [the armored truck], because nothing happens here,” says Carol Archbold, a Fargo resident and criminal justice professor and spokesperson for the BORG at North Dakota State University. “There’s no terrorism here.”  In reality the eyesore activates the Reticular Activating System in the brain that stimulates levels of FEAR in the minds of unawakened people in the quiet town.

Thousands of other local police departments nationwide have been amassing stockpiles of military-style equipment in the name of homeland security, aided by more than $34 billion in Stolen Funds by federal grants since the False Flag terrorist attacks on Sept. 11, 2001.

The buying spree has continued the transformation of local peace keeping departments into paramilitary-like forces, and using intimidating equipment to strike fear into the minds of civilians is no doubt part of the overall psychology of the BORG agents.  Without this constant low level of fear, concerning a problem that the BORG created in the first place, what need for this parasite would there be?

“The argument for up-armoring is always based on the least likely of terrorist scenarios,” says Mark Randol, a former BORG terrorism expert at the Congressional Research Service, the nonpartisan research arm of Congress. “Anyone can get a gun and shoot up stuff. No amount of SWAT equipment can stop that.”  It needs to be noted that the government’s passage of such freedom destroying legislation such as SB 1867, turns all Americans into potential terrorists. SB 1867 follows in the footsteps of Bill of Rights nullifying “Patriot Act” with provisions to murder and detain INDEFINITELY any malcontented American to places like Guantanamo, Cuba without trial or due process.

BORG Agents and their PR firms known as “The News”, aptly known as the “Lame Stream Media” (LSM), become hostile at the mere suggestion that police agencies have become “militarized”.  They justify the need by citing examples for these upgrades in firepower and other equipment by claiming it is necessary to combat criminals with more lethal capabilities. Or at least criminals not franchised by the BORG.  They never seem to mention that governments kill more people than all other criminals combined!  They point to the 1997 Los Angeles bank robbers who pinned police for hours with assault weapons, the gun-wielding student who perpetrated the Virginia Tech massacre in 2007.  The LSM are generally complacent in mentioning examples where armed members of We the people have thwarted criminal activity.

The new weaponry and battle gear, they insist, helps save lives in the face of such threats. “I don’t see us as militarizing police; I see us as keeping abreast with society,” former Los Angeles Police Chief (and BORG Agent) William Bratton says. “And we are a gun-crazy society.”  In reality, the BORG is scared to death of the populace, as one day they may wake up from their mass hypnosis and realize the BORG is the problem – not the solution.

BORG agent and Police Lt. Ross Renner, who commands the regional SWAT team: “It’s foolish to not be cognizant of the threats out there, whether it’s New York, Los Angeles, or Fargo. Our residents have the right to be protected. We don’t have everyday threats here when it comes to terrorism, but we are asked to be prepared.”  Actually the BORG asked themselves and they agreed with the decision they made already:  to continue to inspire FEAR into the hearts and minds of people everywhere as a mechanism to continue the extortion by stealing money from We The People to “protect us” from the boogeyman they, the BORG, created in the first place.  It is Paramount to note when the populace WAKES UP and gets uppity about being robbed from, their rights being turned into privileges, and being turned into SLAVES, the BORG have all the necessary hardware to quell any SLAVE rebellion.

The skepticism about the Homeland spending spree is less severe for Washington, D.C., Los Angeles and New York, which the BORG, have determined to be their likely targets. The nagging question persists:  is the stolen tax money handed out without any regard for risk assessment or need?  Adding insult to injury is gap in accounting for the decade-long spending spree. The BORG-U.S. Homeland Security Department says it doesn’t closely track what’s been bought with its tax dollars or how the equipment is used. BORG in State and local governments don’t maintain uniform records either.  The BORG have no problem monitoring every single phone call, email and financial transaction We The People make; but when it comes to monitoring how the money (taxes) stolen from We the People is spent on military hardware, that’s not even a little bit necessary.

Apr 292013
 

True Causes of the Civil War

Irreconcilable Differences

Simmering animosities between North and South signaled an American apocalypse

Any man who takes it upon himself to explain the causes of the Civil War deserves whatever grief comes his way, regardless of his good intentions. Having acknowledged that, let me also say I have long believed there is no more concise or stirring accounting for the war than the sentiments propounded by Irish poet William Butler Yeats in “The Second Coming,” some lines of which are included in this essay. Yeats wrote his short poem immediately following the catastrophe of World War I, but his thesis of a great, cataclysmic event is universal and timeless.

First Slaves brought to America

It is probably safe to say that the original impetus of the Civil War was set in motion when a Dutch trader offloaded a cargo of African slaves at Jamestown, Va., in 1619. It took nearly 250 eventful years longer for it to boil into a war, but that Dutchman’s boatload was at the bottom of it—a fact that needs to be fixed in the reader’s mind from the start.

Of course there were other things, too. For instance, by the eve of the Civil War the sectional argument had become so far advanced that a significant number of Southerners were convinced that Yankees, like Negroes, constituted an entirely different race of people from themselves.

It is unclear who first put forth this curious interpretation of American history, but just as the great schism burst upon the scene it was subscribed to by no lesser Confederate luminaries than president Jefferson Davis himself and Admiral Raphael Semmes, of CSS Alabama fame, who asserted that the North was populated by descendants of the cold Puritan Roundheads of Oliver Cromwell—who had overthrown and executed the king of England in 1649—while others of the class were forced to flee to Holland, where they also caused trouble, before finally settling at Plymouth Rock, Mass.

Southerners on the other hand, or so the theory went, were the hereditary offspring of Cromwell’s enemies, the “gay cavaliers” of King Charles II and his glorious Restoration, who had imbued the South with their easygoing, chivalrous and honest ways. Whereas, according to Semmes, the people of the North had evolved accordingly into “gloomy, saturnine, and fanatical” people who “seemed to repel all the more kindly and generous impulses” (omitting—possibly in a momentary lapse of memory—that the original settlers of other Southern states, such as Georgia, had been prison convicts or, in the case of Louisiana, deportees, and that Semmes’ own wife was a Yankee from Ohio).

How beliefs such as this came to pass in the years between 1619 and 1860 reveals the astonishing capacity of human nature to confound traditional a posteriori deduction in an effort to justify what had become by then largely unjustifiable. But there is blame enough for all to go around.

From that first miserable boatload of Africans in Jamestown, slavery spread to all the settlements, and, after the Revolutionary War, was established by laws in the states. But by the turn of the 19th century, slavery was confined to the South, where the economy was almost exclusively agricultural. For a time it appeared the practice was on its way to extinction. Virginia’s Thomas Jefferson probably summed up the attitude of the day when he defined the South’s “peculiar institution” as a necessary evil, which he and many others believed, or at least hoped, would wither away of its own accord since it was basically wasteful and unproductive.

Then along came Eli Whitney with his cotton gin, suddenly making it feasible to grow short-staple cotton that was fit for the great textile mills of England and France. This in turn, 40 years later, prompted South Carolina’s prominent senator John C. Calhoun to declare that slavery—far from being merely a “necessary evil”—was actually a “positive good,” because, among other things, in the years since the gin’s invention, the South had become fabulously rich, with cotton constituting some 80 percent of all U.S. exports.

But beneath this great wealth and prosperity, America seethed. Whenever you have two people—or peoples—joined in politics but doing diametrically opposing things, it is almost inevitable that at some point tensions and jealousies will break out. In the industrial North, there was a low, festering resentment that eight of the first 11 U.S. presidents were Southerners—and most of them Virginians at that. For their part, the agrarian Southerners harbored lingering umbrage over the internal improvements policy propagated by the national government, which sought to expand and develop roads, harbors, canals, etc., but which the Southerners felt was disproportionately weighted toward Northern interests. These were the first pangs of sectional dissension.

Then there was the matter of the Tariff of Abominations, which became abominable for all concerned.

This inflammatory piece of legislation, passed with the aid of Northern politicians, imposed a tax or duty on imported goods that caused practically everything purchased in the South to rise nearly half-again in price. This was because the South had become used to shipping its cotton to England and France and in return receiving boatloads of inexpensive European goods, including clothing made from its own cotton. However, as years went by, the North, particularly New England, had developed cotton mills of its own—as well as leather and harness manufactories, iron and steel mills, arms and munitions factories, potteries, furniture makers, silversmiths and so forth. And with the new tariff putting foreign goods out of financial reach, Southerners were forced to buy these products from the North at what they considered exorbitant costs.

Smart money might have concluded it would be wise for the South to build its own cotton mills and its own manufactories, but its people were too attached to growing cotton. A visitor in the 1830s described the relentless cycle of the planters’ misallocation of spare capital: “To sell cotton to buy Negroes—to make more cotton to buy more Negroes—‘ad infinitum.’”

Such was the Southern mindset, but the tariff nearly kicked off the war 30 years early because, as the furor rose, South Carolina’s Calhoun, who was then running for vice president of the United States, declared that states—his own state in particular—were under no obligation to obey the federal tariff law, or to collect it from ships entering its harbors. Later, South Carolina legislators acted on this assertion and defied the federal government to overrule them, lest the state secede. This set off the Nullification Crisis, which held in theory (or wishful thinking) that a state could nullify or ignore any federal law it held was not in its best interests. The crisis was defused only when President Andrew Jackson sent warships into Charleston Harbor—but it also marked the first time a Southern state had threatened to secede from the Union.

The incident also set the stage for the states’ rights dispute, pitting state laws against the notion of federal sovereignty—an argument which became ongoing into the next century, and the next. “States’ rights” also became a Southern watchword for Northern (or “Yankee”) intrusion on the Southern lifestyle. States’ rights political parties sprang up over the South; one particular example of just how volatile the issue had become was embodied in the decision in 1831 of Nathaniel and Elizabeth Gist (ironically from Union, S.C.) to name their firstborn son “States Rights Gist,” a name he bore proudly until November 30, 1864, when, as a Confederate brigadier general, he was shot and killed leading his men at the Battle of Franklin in Tennessee.

Though the tariff question remained an open sore from its inception in 1828 right up to the Civil War, many modern historians have dismissed the impact it had on the growing rift between the two sections of the country. But any careful reading of newspapers, magazines or correspondence of the era indicates that here is where the feud began to fester into hatred. Some Southern historians in the past have argued this was the root cause of the Civil War. It wasn’t, but it was a critical ingredient in the suspicion and mistrust Southerners were beginning to feel about their Northern brethren, and by extension about the Union itself. Not only did the tariff issue raise for the first time the frightening specter of Southern secession, but it also seemed to have marked a mazy kind of dividing line in which the South vaguely started thinking of itself as a separate entity—perhaps even a separate country. Thus the cat, or at least the cat’s paw, was out of the bag.

All the resenting and seething naturally continued to spill over into politics. The North, with immigrants pouring in, vastly outnumbered the South in population and thus controlled the House of Representatives. But the U.S. Senate, by a sort of gentleman’s agreement laced with the usual bribes and threats, had remained 50-50, meaning that whenever a territory was admitted as a free state, the South got to add a corresponding slave state—and vice versa. That is until 1820, when Missouri applied for statehood and anti-slavery forces insisted it must be free. Ultimately, this resulted in Congress passing the Missouri Compromise, which decreed that Missouri could come in as a slave state (and Maine as a free state) but any other state created north of Missouri’s southern border would have to be free. That held the thing together for longer than it deserved.

In plain acknowledgement that slavery was an offensive practice, Congress in 1808 banned the importation of African slaves. Nevertheless there were millions of slaves living in the South, and their population continued growing. Beginning in the late 18th century, a small group of people in New England concluded that slavery was a social evil, and began to agitate for its abolition—hence, of course, the term “abolitionist.”

Over the years this group became stronger and by the 1820s had turned into a full-fledged movement, preaching abolition from pulpits and podiums throughout the North, publishing pamphlets and newspapers, and generally stirring up sentiments both fair and foul in the halls of Congress and elsewhere. At first the abolitionists concluded that the best solution was to send the slaves back to Africa, and they actually acquired land in what is now Liberia, returning a small colony of ex-bondsmen across the ocean.

By the 1840s, the abolitionists had decided that slavery was not simply a social evil, but a “moral wrong,” and began to agitate on that basis.

This did not sit well with the churchgoing Southerners, who were now subjected to being called unpleasant and scandalous names by Northerners they did not even know. This provoked, among other things, religious schisms, which in the mid-1840s caused the American Methodist and Baptist churches to split into Northern and Southern denominations. Somehow the Presbyterians hung together, but it was a strain, while the Episcopal church remained a Southern stronghold and firebrand bastion among the wealthy and planter classes. Catholics also maintained their solidarity, prompting cynics to suggest it was only because they owed their allegiance to the pope of Rome rather than to any state, country or ideal.

Abolitionist literature began showing up in the Southern mails, causing Southerners to charge the abolitionists with attempting to foment a slave rebellion, the mere notion of which remained high on most Southerners’ anxiety lists. Murderous slave revolts had occurred in Haiti, Jamaica and Louisiana and more recently resulted in the killing of nearly 60 whites during the Nat Turner slave uprising in Virginia in 1831.

During the Mexican War the United States acquired enormous territories in the West, and what by then abolitionists called the “slave power” was pressing to colonize these lands. That prompted an obscure congressman from Pennsylvania to submit an amendment to a Mexican War funding bill in 1846 that would have prevented slavery in any territory acquired from Mexico—which became known, after its author, as the Wilmot Proviso. Even though it failed to pass into law, the very act of presenting the measure became a cause célèbre among Southerners who viewed it as further evidence that Northerners were not only out to destroy their “peculiar institution,” but their political power as well.

In 1850, to the consternation of Southerners, California was admitted into the Union as a free state—mainly because the Gold Rush miners did not want to find themselves in competition with slave labor. But for the first time it threw the balance of power in the Senate to the Northern states.

By then national politics had become almost entirely sectional, a dangerous business, pitting North against South—and vice versa—in practically all matters, however remote. To assuage Southern fury at the admission of free California, Congress passed the Fugitive Slave Act of 1850, which made Northerners personally responsible for the return of runaway slaves. Contrary to its intentions, the act actually galvanized Northern sentiments against slavery because it seemed to demand direct assent to, and personal complicity with, the practice of human bondage.

During the decade of the 1850s, crisis seemed to pile upon crisis as levels of anger turned to rage, and rage turned to violence. One of the most polarizing episodes between North and South occurred upon the 1852 publication of Harriet Beecher Stowe’s novel Uncle Tom’s Cabin, which depicted the slave’s life as a relentless nightmare of sorrow and cruelty. Northern passions were inflamed while furious Southerners dismissed the story en masse as an outrageously skewed and unfair portrayal. (After the conflict began it was said that Lincoln, upon meeting Mrs. Stowe, remarked, “So you are the little lady who started this great war?”)

In 1854 the Kansas-Nebraska Act, sponsored by frequent presidential candidate Stephen A. Douglas, overturned the Missouri Compromise and permitted settlers in the Kansas Territory to choose for themselves whether they wanted a free or slave state. Outraged Northern abolitionists, horrified at the notion of slavery spreading by popular sovereignty, began raising funds to send anti-slave settlers to Kansas.

Equally outraged Southerners sent their own settlers, and a brutish group known as Border Ruffians from slaveholding Missouri went into Kansas to make trouble for the abolitionists. Into this unfortunate mix came an abolitionist fanatic named John Brown riding with his sons and gang. And as the murders and massacres began to pile up, newspapers throughout the land carried headlines of “Bleeding Kansas.”

In the halls of Congress, the slavery issue had prompted feuds, insults, duels and finally a divisive gag rule that forbade even discussion or debate on petitions about the issue of slavery. But during the Kansas controversy a confrontation between a senator and a congressman stood out as particularly shocking. In 1856, Charles Sumner, a 45-year-old Massachusetts senator and abolitionist, conducted a three-hour rant in the Senate chamber against the Kansas-Nebraska Act, focusing in particular on 59-year-old South Carolina Senator Andrew Butler, whom he mocked and compared to a pimp, “having taken as his mistress the harlot, Slavery.” Two days later Congressman Preston Brooks, a nephew of the demeaned South Carolinian, appeared beside Sumner’s desk in the Senate and caned him nearly to death with a gold-headed gutta-percha walking stick.

By then, every respectable-sized city, North and South, had a half-dozen newspapers and even small towns had at least one or more; and the revolutionary new telegraph brought the latest news overnight or sooner. Throughout the North, the caning incident triggered profound indignation that was transformed into support for a new anti-slavery political party. In the election of 1856, the new Republican Party ran explorer John C. Frémont, the famed “Pathfinder,” for president, and even though he lost, the party had become a force to be reckoned with.

In 1857 the U.S. Supreme Court delivered its infamous Dred Scott decision, which elated Southerners and enraged Northerners. The court ruled, in essence, that a slave was not a citizen, or even a person, and that slaves were “so far inferior that they [have] no rights which the white man [is] bound to respect.” Southerners were relieved that they could now move their slaves in and out of free territories and states without losing them, while in the North the ruling merely drove more people into the anti-slavery camp.

Then in 1859, John Brown, of Bleeding Kansas notoriety, staged a murderous raid on the U.S. arsenal at Harpers Ferry, Va., hoping to inspire a general slave uprising. The raid was thwarted by U.S. troops, and Brown was tried for treason and hanged; but when it came out that he was being financed by Northern abolitionists, Southern anger was profuse and furious—especially after the Northern press elevated Brown to the status of hero and martyr. It simply reinforced the Southern conviction that Northerners were out to destroy their way of life.

As the crucial election of 1860 approached, there arose talk of Southern secession by a group of “fire-eaters”— influential orators who insisted Northern “fanatics” intended to free slaves “by law if possible, by force if necessary.” Hectoring abolitionist newspapers and Northern orators (known as Black, or Radical Republicans) provided ample fodder for that conclusion.

The 1850s drew to a close in near social convulsion and the established political parties began to break apart—always a dangerous sign. The Whigs simply vanished into other parties; the Democrats split into Northern and Southern contingents, each with its own slate of candidates. A Constitutional Union party also appeared, looking for votes from moderates in the Border States. As a practical matter, all of this assured a victory for the Republican candidate, Abraham Lincoln, who was widely, if wrongly, viewed in the South as a rabid abolitionist. With the addition of Minnesota (1858) and Oregon (1859) as free states, the Southerners’ greatest fears were about to be realized—complete control of the federal government by free-state, anti-slavery politicians.

With the vote split four ways, Lincoln and the Republicans swept into power in November 1860, gaining a majority of the Electoral College, but only a 40 percent plurality of the popular vote. It didn’t matter to the South. In short order, always pugnacious South Carolina voted to secede from the Union, followed by six other Deep South states that were invested heavily in cotton.

Much of the Southern apprehension and ire that Lincoln would free the slaves was misplaced. No matter how distasteful he found the practice of slavery, the overarching philosophy that drove Lincoln was a hard pragmatism that did not include the forcible abolition of slavery by the federal government—for the simple reason that he could not envision any political way of accomplishing it. But Lincoln, like a considerable number of Northern people, was decidedly against allowing slavery to spread into new territories and states. By denying slaveholders the right to extend their boundaries, Lincoln would in effect also be weakening their power in Washington, and over time this would almost inevitably have resulted in the abolition of slavery, as sooner or later the land would have worn out.

But that wasn’t bad enough for the Southern press, which whipped up the populace to such a pitch of fury that Lincoln became as reviled as John Brown himself. These influential journals, from Richmond to Charleston and myriad points in between, painted a sensational picture of Lincoln in words and cartoons as an arch-abolitionist—a kind of antichrist who would turn the slaves loose to rape, murder and pillage. For the most part, Southerners ate it up. If there is a case to be made on what caused the Civil War, the Southern press and its editors would be among the first in the dock. It goes a long way in explaining why only one in three Confederate soldiers were slaveholders, or came from slaveholding families. It wasn’t their slaves they were defending, it was their homes against the specter of slaves-gone-wild.

Interestingly, many if not most of the wealthiest Southerners were opposed to secession for the simple reason that they had the most to lose if it came to war and the war went badly. But in the end they, like practically everyone else, were swept along on the tide of anti-Washington, anti-abolition, anti-Northern and anti-Lincoln rhetoric.

To a lesser extent, the Northern press must accept its share of blame for antagonizing Southerners by damning and lampooning them as brutal lash-wielding torturers and heartless family separators. With all this back and forth carrying on for at least the decade preceding war, by the time hostilities broke out, few either in the North or the South had much use for the other, and minds were set. One elderly Tennessean later expressed it this way: “I wish there was a river of fire a mile wide between the North and the South, that would burn with unquenchable fury forevermore, and that it could never be passable to the endless ages of eternity by any living creature.”

The immediate cause of Southern secession, therefore, was a fear that Lincoln and the Republican Congress would have abolished the institution of slavery—which would have ruined fortunes, wrecked the Southern economy and left the South to contend with millions of freed blacks. The long-term cause was a feeling by most Southerners that the interests of the two sections of the country had drifted apart, and were no longer mutual or worthwhile.

The proximate cause of the war, however, was Lincoln’s determination not to allow the South to go peacefully out of the Union, which would have severely weakened, if not destroyed, the United States.

There is the possibility that war might have been avoided, and a solution worked out, had there not been so much mistrust on the part of the South. Unfortunately, some of the mistrust was well earned in a bombastic fog of hatred, recrimination and outrageous statements and accusations on both sides. Put another way, it was well known that Lincoln was anti-slavery, but both during his campaign for office and after his election, he insisted it was never his intention to disturb slavery where it already existed. The South simply did not believe him.

The Lincoln administration was able to quell secession movements in several Border States—Missouri, Kentucky, Maryland and what would become West Virginia—by a combination of politics and force, including suspension of the Bill of Rights. But when Lincoln ordered all states to contribute men for an army to suppress the rebellion South Carolina started by firing on Fort Sumter, Virginia, Arkansas, Tennessee and North Carolina also joined the Confederacy rather than make war on their fellow Southerners.

“Because of incompatibility of temper,” a Southern woman was prompted to lament, “we have hated each other so. If we could only separate, a ‘separation a l’agreable,’ as the French say it, and not have a horrid fight for divorce.”

Things had come a long way during the nearly 250 years since the Dutchman delivered his cargo of African slaves to the wharf at Jamestown, but in 1860 almost everyone agreed that a war wouldn’t last long. Most thought it would be over by summertime.


Article originally published in the September 2010 issue of America’s Civil War.

Read More in Military History Magazine Subscribe online and save nearly 40%!!!

Causes Of The Civil War

The Northern and Southern sections of the United States developed along different lines. The South remained a predominantly agrarian economy while the North became more and more industrialized. Different social cultures and political beliefs developed. All of this led to disagreements on issues such as taxes, tariffs and internal improvements as well as states rights versus federal rights.

Slavery

The burning issue that led to the disruption of the union, however, was the debate over the future of slavery. That dispute led to secession, and secession brought about a war in which the Northern and Western states and territories fought to preserve the Union, and the South fought to establish Southern independence as a new confederation of states under its own constitution.

The agrarian South utilized slaves to tend its large plantations and perform other duties. On the eve of the Civil War, some 4 million Africans and their descendants toiled as slave laborers in the South. Slavery was interwoven into the Southern economy even though only a relatively small portion of the population actually owned slaves. Slaves could be rented or traded or sold to pay debts. Ownership of more than a handful of slaves bestowed respect and contributed to social position, and slaves, as the property of individuals and businesses, represented the largest portion of the region’s personal and corporate wealth, as cotton and land prices declined and the price of slaves soared.

The states of the North, meanwhile, one by one had gradually abolished slavery. A steady flow of immigrants, especially from Ireland and Germany during the potato famine of the 1840s and 1850s, insured the North a ready pool of laborers, many of whom could be hired at low wages, diminishing the need to cling to the institution of slavery.

The Dred Scott Decision

Dred Scott was a slave who sought citizenship through the American legal system, and whose case eventually ended up in the Supreme Court. The famous Dred Scott Decision in 1857 denied his request stating that no person with African blood could become a U.S. citizen. Besides denying citizenship for African-Americans, it also overturned the Missouri Compromise of 1820, which had restricted slavery in certain U.S. territories.

States’ Rights

States’ Rights refers To the struggle between the federal government and individual states over political power. In the Civil War era, this struggle focused heavily on the institution of slavery and whether the federal government had the right to regulate or even abolish slavery within an individual state. The sides of this debate were largely drawn between northern and southern states, thus widened the growing divide within the nation.

Abolitionist Movement

By the early 1830s, those who wished to see that institution abolished within the United States were becoming more strident and influential. They claimed obedience to “higher law” over obedience to the Constitution’s guarantee that a fugitive from one state would be considered a fugitive in all states. The fugitive slave act along with the publishing of Harriet Beecher Stowe’s Uncle Tom’s Cabin helped expand the support for abolishing slavery nationwide.

Harriet Beecher Stowe’s Uncle Tom’s Cabin

Harriet Beecher Stowe’s anti-slavery novel Uncle Tom’s Cabins was published in serial form in an anti-slavery newspaper in 1851 and in book format in 1852. Within two years it was a nationwide and worldwide bestseller. Depicting the evils of slavery, it offered a vision of slavery that few in the nation had seen before. The book succeeded at its goal, which was to start a wave of anti-slavery sentiment across the nation. Upon meeting Stowe, President Lincoln remarked, “So you’re the little woman who wrote the book that started this great war.”

The Underground Railroad

Some abolitionists actively helped runaway slaves to escape via “the Underground Railroad,” and there were instances in which men, even lawmen, sent to retrieve runaways were attacked and beaten by abolitionist mobs. To the slave holding states, this meant Northerners wanted to choose which parts of the Constitution they would enforce, while expecting the South to honor the entire document. The most famous activist of the underground railroad was Harriet Tubman, a nurse and spy in the Civil War and known as the Moses of her people.

The Missouri Compromise

Additional territories gained from the U.S.–Mexican War of 1846–1848 heightened the slavery debate. Abolitionists fought to have slavery declared illegal in those territories, as the Northwest Ordinance of 1787 had done in the territory that became the states of Ohio, Indiana, Illinois, Michigan and Wisconsin. Advocates of slavery feared that if the institution were prohibited in any states carved out of the new territories the political power of slaveholding states would be diminished, possibly to the point of slavery being outlawed everywhere within the United States. Pro- and anti-slavery groups rushed to populate the new territories.

John Brown

In Kansas, particularly, violent clashes between proponents of the two ideologies occurred. One abolitionist in particular became famous—or infamous, depending on the point of view—for battles that caused the deaths of pro-slavery settlers in Kansas. His name was John Brown. Ultimately, he left Kansas to carry his fight closer to the bosom of slavery.

The Raid On Harper’s Ferry

On the night of October 16, 1859, Brown and a band of followers seized the federal arsenal at Harpers Ferry, Virginia (now West Virginia), in what is believed to have been an attempt to arm a slave insurrection. (Brown denied this at his trial, but evidence indicated otherwise.) They were dislodged by a force of U.S. Marines led by Army lieutenant colonel Robert E. Lee.

Brown was swiftly tried for treason against Virginia and hanged. Southern reaction initially was that his acts were those of a mad fanatic, of little consequence. But when Northern abolitionists made a martyr of him, Southerners came to believe this was proof the North intended to wage a war of extermination against white Southerners. Brown’s raid thus became a step on the road to war between the sections.

The Election Of Abraham Lincoln

Exacerbating tensions, the old Whig political party was dying. Many of its followers joined with members of the American Party (Know-Nothings) and others who opposed slavery to form a new political entity in the 1850s, the Republican Party. When the Republican candidate Abraham Lincoln won the 1859 presidential election, Southern fears that the Republicans would abolish slavery reached a new peak. Lincoln was an avowed opponent of the expansion of slavery but said he would not interfere with it where it existed.

Southern Secession

That was not enough to calm the fears of delegates to an 1860 secession convention in South Carolina. To the surprise of other Southern states—and even to many South Carolinians—the convention voted to dissolve the state’s contract with the United States and strike off on its own.

South Carolina had threatened this before in the 1830s during the presidency of Andrew Jackson, over a tariff that benefited Northern manufacturers but increased the cost of goods in the South. Jackson had vowed to send an army to force the state to stay in the Union, and Congress authorized him to raise such an army (all Southern senators walked out in protest before the vote was taken), but a compromise prevented the confrontation from occurring.

Perhaps learning from that experience the danger of going it alone, in 1860 and early 1861 South Carolina sent emissaries to other slave holding states urging their legislatures to follow its lead, nullify their contract with the United States and form a new Southern Confederacy. Six more states heeded the siren call: Mississippi, Florida, Alabama, Georgia, Louisiana, and Texas. Others voted down secession—temporarily.

Fort Sumter

On April 10, 1861, knowing that resupplies were on their way from the North to the federal garrison at Fort Sumter in the harbor of Charleston, South Carolina, provisional Confederate forces in Charleston demanded the fort’s surrender. The fort’s commander, Major Robert Anderson, refused. On April 12, the Confederates opened fire with cannons. At 2:30 p.m. the following day, Major Anderson surrendered.

War had begun. Lincoln called for volunteers to put down the Southern rebellion. Virginia, Arkansas, North Carolina and Tennessee, refusing to fight against other Southern states and feeling that Lincoln had exceeded his presidential authority, reversed themselves and voted in favor of session. The last one, Tennessee, did not depart until June 8, nearly a week after the first land battle had been fought at Philippi in Western Virginia. (The western section of Virginia rejected the session vote and broke away, ultimately forming a new, Union-loyal state, West Virginia. Other mountainous regions of the South, such as East Tennessee, also favored such a course but were too far from the support of Federal forces to attempt it.) Learn more about the battle of Fort Sumter


 

Apr 262013
 

Bernard von NotHaus Seeks Acquittal, New Trial

By Kenneth Corbin
EcommerceBytes.com
April 01, 2013

The convicted counterfeiter behind the so-called Liberty Dollars is asking a court in North Carolina to grant him a new trial, arguing that a jury erred in 2011 when it sided with federal prosecutors who alleged that the Liberty Dollars were put into circulation in an attempt to be mistaken for U.S. currency.

Bernard von NotHaus has been awaiting sentencing on the counterfeiting and fraud charges since, and is building his argument for an acquittal or a new trial with a memorandum filed this week with the U.S. District Court for the Western District of North Carolina.

“The irony of this is that if anything is clear from the evidence presented at trial, it is that the last thing Mr. von NotHaus wanted was for Liberty Dollars was be confused with coins issued by the United States government,” the court filing states, claiming that he has “always operated in the open” and that he took pains to prevent Liberty Dollars from being passed off as U.S. currency.

“His intention – to protest the Federal Reserve system – has always been plain. The jury’s verdict conflates a program created to function as an alternative to the Federal Reserve system with one designed to device people into believing it was the very thing Mr. von NotHaus was protesting in the first place,” the filing reads. “Whatever one’s opinion about the merit of value-based currency, the fact remains that the Liberty Dollars was not a counterfeit and was not intended to function as such. The verdict is a perversion of the counterfeiting statutes and should be set aside.”

Von NotHaus issued the original silver Liberty Dollars as an act of protest through his group NORFED, or the “National Organization for the Repeal of the Federal Reserve and the Internal Revenue Code,” which was later renamed Liberty Services.

Those Liberty Dollars were produced from 1998 through 2009, and became popular among collectors, particularly a series that carried the image of libertarian-minded former Rep. Ron Paul (R-Texas), himself an outspoken opponent of the Fed. In response to a request from the U.S Secret Service, eBay banned listings of the Liberty Dollars in 2012, the trade publication Coin World reported.

According to the FBI, the 16 million points of Liberty Dollars that von NotHaus had minted were worth around $7 million at the time of his March 2011 conviction. The FBI maintained that von NotHaus was the head of Liberty Services, nee NORFED, until about the end of September 2008.

“Since 1998, NORFED has been issuing, disseminating, and placing into circulation the Liberty Dollar in all its forms throughout the United States and Puerto Rico,” the FBI said in a news release. “NORFED’s purpose was to mix Liberty Dollars into the current money of the United States. NORFED intended for the Liberty Dollar to be used as current money in order to limit reliance on, and to compete with, United States currency.”

US Attorney Anne Tompkins memorably branded von NotHaus’ activities “a unique form of domestic terrorism.

“While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country,” Tompkins said following the 2011 verdict.

While von NotHaus has shuttered his production of Liberty Dollars, a similar set has since emerged. Dubbed the New Liberty Dollars and issued by Joseph Vaughn Perling, carry a manufacturer’s suggested retail price of $50, Coin Week has reported. Keenly aware of von NotHaus’ legal struggles, Vaughn Perling has posted a series of screening questions on website for New Liberty Dollars, where potential buyers are prompted to affirm their understanding that they are not issued by the federal government or subject to federal monetary laws.

For his part, von NotHaus this week is bolstering his request for acquittal with a series of exhibits, including submissions from attorneys attesting to his innocence.

“Mr. von NotHaus was always quite concerned with the legality of all that he was engaging in,” wrote attorney Paul Sulla, who said he began advising von NotHaus on his minting operations in 1998. “He was expressly concerned with the United States’ laws concerning counterfeiting and similitude and wanted to be sure that he would not be in violation of any U.S. law or regulation.”

Once von NotHaus had been indicted and was heading to trial, Sulla agreed to testify as a witness for the defense, but said that he had trouble making contact with von NotHaus’ attorneys, describing a conversation with one “who only had sketchy information as to the legal issues involved and who could provide no information concerning the specific trial dates or even the matters that I would be called upon to testify about.”

Ultimately, Sulla was not called to testify, and he recounted making several attempts to contact von NotHaus’ attorneys, who he said were unresponsive. The trial came and went, and the jury returned a guilty verdict after less than two hours of deliberations. Sulla said he was “shocked” to learn of the verdict, which he attributed to the mismanagement of von NotHaus’ attorneys.

“From my own experience of attempting to work with Mr. von NotHaus’ defense team, I can clearly state that they were not up for his legal defense, either as a result of overwork or incompetence, and as a consequence Mr. von NotHaus was convicted by the jury,” Sulla said.

See also this AuctionBytes blog post, “Not Just Semantics: Amazon Coin Is Not a Coin.” About the author:Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects for more than four years, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.

Apr 112013
 

(NaturalNews) There’s a bigger agenda happening with bitcoin that needs to be publicly stated, and this goes far beyond the issue of the financial harm that will be caused when the bitcoin bubble finally implodes.

Central banks hate bitcoin. They hate it because it doesn’t allow them to loot bank accounts (Cyprus) and control the movement of capital around the globe. Bitcoin, in fact, threatens the very foundation of monetary control that underlies all the corrupt governments of the world. As such, bitcoin is a huge threat to the status quo, making it an obvious target for the globalists to attempt to destroy.

Discrediting bitcoin isn’t enough, however. To really be effective, they need to make bitcoin illegal.

The plot to criminalize bitcoin

How do you criminalize bitcoin? The same way you get guns banned: Plan an attack, make sure lots of people get hurt, roll out all the victims in front of the cameras, then use the sob stories as moral justification to crack down with oppressive new laws.

This is the agenda being planned right now with bitcoin. The recipe works like this:

Step 1) Central banks buy up massive quantities of bitcoin currency, driving the prices into the stratosphere and encouraging millions of people around the world to jump on board the “get rich” bandwagon.

Step 2) Once bitcoin valuations reach a sufficient level of insanity, start a massive selloff by dumping the bitcoins you already bought onto the market, offering them for sale at any price (i.e. sell into falling prices, accelerating the loss in valuations).

Step 3) Watch panic take hold as the bitcoin crash accelerates, ending in a catastrophic wipeout of “valuation” of all bitcoins.

Step 4) Find “victims” of the bitcoin crash who can tell a good sob story for the mainstream media about how they invested little Johnny’s college money in bitcoin and lost it all. Roll them out on CNN and MSNBC where they cry on camera and talk about how they were ripped off by bitcoin and now they only trust the government from now on.

Step 5) Demonize bitcoin by characterizing it as a “libertarian pyramid scheme.” Lash out against both decentralized currencies and libertarians.

Step 6) Once the demonization gains traction, have traitors in the U.S. Congress announce a “Consumer Currency Protection Act” that outlaws non-central bank currencies such as bitcoin. It’s all “for your safety,” of course. Shut down all online bitcoin wallets and exchanges, calling them “criminal pyramid schemes” and arrest a few people using bitcoin to send a warning message to the rest.

Mission accomplished! You’ve now made bitcoin look like a “pyramid scheme,” you’ve scared the public into being wary of “anti-government currencies,” and you’ve criminalized their use by consumers.

That’s the goal the central banks are trying to achieve right now. It’s all be set in motion by the bitcoin bubble which will inevitably lead to a bitcoin crash.

Bitcoin is being manipulated as a pawn in the globalist scheme to destroy freedom

The bitcoin bubble is to currency freedom as the Sandy Hook shooting was to firearms freedom. In both cases, governments will use a crisis to destroy freedom while claiming to be “saving” the people.

The government WANTS bitcoin to be a disaster, and the mainstream media, which has so far refused to give bitcoin much attention, will leap all over the story like vultures once it crashes.

For the record, I’m a proponent of bitcoin and I want it to succeed in the long run, but the mania speculation happening with bitcoin right now is going to be disastrous for its reputation. It is the worst thing that could happen to bitcoin.

What we would prefer to see is a slow, steady rise that reflects stability with low volatility. Instead, we see extremely high volatility, wild price ranges, desperate purchasing patterns and even purchase queues at some exchanges where the demand for bitcoins is so high that it exceeds the limits of the services (such as Coinbase, where you now have to stand in line to buy bitcoins two days later at whatever “market” prices are offered that day).

Why the bitcoin craze is the modern-day equivalent of tulip bulb mania

Bitcoin has become a casino. It is almost a perfect reflection of the tulip bulb mania of 1637 in these two ways: 1) Most people buying bitcoins have no use for bitcoins (just like tulip bulbs), and 2) The rapid increase in bitcoin valuations cannot be substantiated in any way that reflects reality.

In other words, there is no fundamental reason why bitcoins should be 2000% more valuable today than four months ago. Nothing has changed other than the craze / mania of people buying in.

Mark my words: A bitcoin crash will occur, and a lot of people are going to be financially hurt by it. More and more, this bitcoin craze is looking like a “pump and dump” operation, where the only winners are those who are the first to sell.

When bitcoins were in the sub-$20 range, I was not concerned about any of this. I actually encouraged people to buy bitcoins and support the bitcoin movement. But alarm bells went off in my mind when it skyrocketed past $150 and headed to $200+ virtually overnight. These are not the signs of rational markets. These are warning signs of bad things yet to occur.

By the way, the simple way to prove to yourself that everything I’m saying here is true is to ask yourself this simple question: What do the people who are buying bitcoins plan to spend them on?

The answer is NOTHING! They don’t plan to spend bitcoins on anything. They have no use for bitcoins. Their only play (for 90+% of those buying them) is to buy low and sell high. That’s it! For them, bitcoin is nothing more than a speculative vehicle for gambling with some of their money.

Every speculative bubble market that goes up must come down. And it will usually come down at a multiple of the speed at which it went up.

The velocity of bitcoins is a huge red alert

Now, if most bitcoin buyers were actually using the currency on a day-to-day basis, purchasing things online, sending bitcoins to pay off debts, exchanging bitcoins for services, etc., then that would be different. The circulation of a currency is classically known as its velocity. The higher the velocity, the more frequently the currency is being routinely used for transactions.

But the velocity of bitcoins after the initial purchase is shockingly low. What this indicates is that people are buying lots of bitcoins but then sitting on them. Once bitcoins are purchased, in other words, they basically just sit around and aren’t used for any practical purpose.

Amazon.com, for example, doesn’t accept bitcoins. You can’t buy gas for your truck with bitcoins. You can’t shop with bitcoins at the local grocery store. Until bitcoins are more widely accepted and the velocity rises, there is no fundamental reason why their value should suddenly skyrocket.

Of course, those who are deep into bitcoins right now will call me a doom and gloomer. Sure, it’s okay for them to talk about how the dollar is going to crash, or how the Fed is a criminal operation, but the minute I start invoking mathematical reality with bitcoins, suddenly I become the bad guy.

Well, my answer to the critics is that I have more faith in the laws of mathematics than the self-deluded logic of people who own millions of dollars worth of bitcoins and who therefore have a strong self-interest in promoting the bitcoin mania.

They are blinded by their own positions in bitcoins and cannot see through the fog of self delusion. In contrast to that, I own only two bitcoins worth approximately $400 or so, meaning that I have no substantial position in bitcoins to speak of. Whether bitcoins go up or down does not impact me in any meaningful way. My sole motivation in writing this is to warn others away from the extreme risks that are now clearly associated with buying bitcoins at present-day prices.

There is nothing new under the sun

As always, there will be people (we call them “noobs” or “suckers”) who think they have stumbled upon the one exception in the universe to the laws of mathematics and that bitcoin somehow represents a galactic shortcut to universal wealth where everyone can become billionaires by trading each other electronic chunks of data with higher and higher numbers encoded in them. These people are fools, and history will prove them so.

After the bitcoin crash takes place, people will ask me, “Mike, how did you know bitcoin was going to crash when everybody else thought it was going to keep going up forever?” And my answer will be, “Because I believe that 2 + 2 = 4.”

If you understand mathematics, you know that the bitcoin bubble is doomed. Sell while you still can and be happy with the profits you’ve made so far. Importantly, remember that the only reason you can sell is because there’s a “greater fool” on the other side of that transaction who is buying your bitcoins.

The problem with all bubbles is that sooner or later the world runs out of greater fools.

Final notes: Why 95% have no clue what I’m writing about

Frustratingly, perhaps 95% of the people who will comment on this article in social media websites have no understanding of high-level mathematics, no understanding of economics, no understanding of free markets, no understanding of greed vs. fear psychology and no historical context through which they might understand what’s happening with bitcoin. Almost no one buying bitcoins has any clue what they are. They don’t even understand the meaning of the phrase “decentralized peer-to-peer crypto currency” and they have absolutely no working knowledge of public / private key cryptography. They have no idea what they are buying and they have no qualifications whatsoever to even discuss the topic.

This is a case where 95% of the people talking about bitcoin need to be told, simply, “Shut the hell up!” because they literally have no clue what they are talking about.

If you are going to talk about bitcoin, make sure you understand the fundamentals of mathematics, cryptography, free markets, economics and human psychology before opening your mouth. Otherwise, you are only announcing to the world that you’re a complete fool who will soon be parted from his money.

And to all those who think they are going to “get rich” by buying bitcoin today and selling it off when bitcoin goes higher, let me offer you a piece of practical advice: After the bitcoin crash, when you are screaming bloody murder and selling your bitcoins at perhaps 1% of what you paid for them, it will be people like me who will buy them and thus receive a 99% discount on the bitcoins you once bought at a hundred times the price. That discount is called the “IQ discount.”

You know how lotteries are called a “tax on people who can’t do math?” The bitcoin crash will be a massive global wealth transfer from people who can’t understand the dynamics of decentralized crypto-currencies to those who do understand.

If you don’t follow what I’m saying here, then don’t buy bitcoins. You will only be led to the mathematical slaughter.

 

Apr 092013
 

Bitcoin valuation surpasses 20 national currencies

By

Published March 29, 2013 FoxNews.com

More than $1 billion dollars worth of a digital currency known as “bitcoins” now circulate on the web – an amount that exceeds the value of the entire currency stock of small countries like Liberia (which uses “Liberian dollars”), Bhutan (which uses the “Ngultrum”), and 18 other countries.So what is a “bitcoin,” and why would anyone use it?Unlike traditional currency, bitcoins are not issued by a government or even a private company. Instead, the currency is run by computer code that distributes new bitcoins at a set rate to people who devote web servers to keep the code running. The bitcoins are then bought and sold for regular U.S. dollars online.

‘They buy gold, they put it under the mattress, or they buy bitcoin.’

– Tony Gallippi, the CEO “BitPay.com,

Bitcoin is in high demand right now — each bitcoin currently sells for more than $90 U.S. dollars — which bitcoin insiders say is because of world events that have shaken confidence in government-issued currencies.

“Because of what’s going on in Cyprus and Europe, people are trying to pull their money out of banks there,” Tony Gallippi, the CEO “BitPay.com,” which enables businesses to easily accept bitcoins as payment, told FoxNews.com.

In Cyprus, the government is considering taking a percentage of all citizens’ bank accounts to solve its fiscal woes. That has led Cypriots — and other Europeans worried about the same thing happening to them — to take their money out of banks.

“So they buy gold, they put it under the mattress, or they buy bitcoin,” Gallippi said.

Bitcoin demand has also increased, Gallippi says, because last week U.S. regulators issued the first official guidelines for private digital currencies. Prior to the regulations, the legal status of the currencies was in doubt.

“Now people can see that it’s not illegal, that it’s not banned,” Gallippi said.

Bitcoin is controversial because the currency can be exchanged anonymously online — it is in a sense the digital equivalent of using hard cash — and so some have criticized it for facilitating online drug markets. On the site known as “the Silk Road,” for instance, users pay bitcoins for illegal drugs and other forbidden items.

Bitcoin Targeted by Cyberattack

Just as Bitcoin explodes beyond the $1 billion mark thanks to Europe’s debt crisis, the emerging virtual currency was dealt a setback this week after a key exchange was hit by a powerful cyber attack that caused delays.

Read more at Fox Business.

In a 2011 letter to the Attorney General, Senators Charles Schumer (D-NY) and Joe Manchin (D-W.Va.) argued for strict enforcement.

“After purchasing bitcoins through an exchange, a user can create an account on Silk Road and start purchasing illegal drugs from individuals around the world and have them delivered to their homes within days,” the Senators wrote. “We urge you to take immediate action and shut down the Silk Road network.”

But the Silk Road is still running, and a recent study estimates that $23 million dollars of illicit items are sold for bitcoins on the site every year.

The regulatory guidelines issued last week by the government agency known as the Financial Crimes Enforcement Network (FinCEN), however, will not stop that.

The regulations say that digital currencies like bitcoin are to be treated essentially as foreign currencies. Companies that exchange digital bitcoins for real money will have to comply with the same regulations as traditional currency exchangers — namely, they must verify the identity of anyone exchanging money for bitcoins and report large transactions to the government.

Using bitcoins to purchase goods, however, is specifically exempted.

“A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not… under FinCEN’s regulations,” the guidance reads.

Some bitcoin defenders say the use of bitcoins to buy illegal items shouldn’t obscure the legal uses.

“With any technology… Criminals are going to use it for something, and regular people are going to use it for something,” Gallippi said. “You can’t ban cell phones just because criminals are using them to do drug deals. You can’t ban e-mail just because people are using them to do phishing scams in Nigeria. You have to start just prosecuting people who are committing crimes — you can’t just completely wipe out the new technology.”

Gallippi says one reason to use bitcoins for legal transactions is a lower risk of identity theft.

“If you are buying something online and you have the choice of paying with a credit card or bitcoins – think about what you have to do to use a credit card. You have to fill out this whole long form, name, address, account number, sometimes more… coincidentally, that’s all the info a thief would need to steal to pretend to be you.”

Between that, bitcoin’s anonymity, and worries about conventional currency, bitcoin demand is as high as ever, according to Alan Safahi, who runs “Zip Zap” – a company that facilitates cash deposits at stores like CVS and Wal-Mart for transfer to a site that can convert the money to bitcoins.

“We’re processing millions of dollars a month. We’ve seen tremendous surge in activity,” he said.

Contact the author at maxim.lott@foxnews.com.

Read more: http://www.foxnews.com/tech/2013/03/29/digital-currency-bitcoin-surpasses-20-national-currencies-in-value/#ixzz2PzyM5Cmc

 

 

Apr 072013
 

Bitcoin Really Is an Existential Threat to the Modern Liberal State

By Evan Soltas Apr 5, 2013 1:43 PM MT

So far, Bitcoin is not a big deal. Its total value in circulation was $1.4 billion as of this week. That’s equivalent to the currency stock of a small nation — somewhere between Iceland and Uruguay — and just one-thousandth of the total value of U.S. dollars in circulation. The volume of transactions in Bitcoin is growing only slowly, relative to the massive increase in demand for the currency: This discrepancy is strong evidence that Bitcoin’s rise is a speculative bubble.

Nonetheless, Bitcoin raises some interesting questions. One is whether it might undermine the modern state — which, for many of its libertarian-anarchist advocates, is the whole idea.

Technology enabled governments to grow more powerful and more centralized in the 19th and 20th centuries, as Tyler Cowen, an economist at George Mason University, has argued. The intriguing possibility is that technologies of the 21st century — such as Bitcoin — might push the other way.

Physical cash is used in a rapidly shrinking share of transactions: 27 percent in 2011, 23 percent by 2017, and so on, according to Javelin Strategy & Research, a financial-services research firm. The central banks of Sweden and Nigeria have both declared goals of a cashless economy. In Europe, the volume of non-cash transactions is forecasted to rise by 7 percent per year, despite economic stagnation.

What’s going on? First, a global shift to mobile payments and credit and debit cards. Second, a rise in online retail — one that could put 15 to 20 percent of all retail sales online in the U.S., U.K., China, and Europe, according to Bain & Company.

Electronic payments aren’t new. Bitcoin’s only innovations are its status as an independent currency and its decentralized network design. But those differences might make Bitcoin — or rather, crypto-currency in general — an existential threat to the modern liberal state. If widely adopted, crypto-currencies would cripple government in three central functions: taxation, police and macroeconomic stabilization. That is exactly what Bitcoin’s biggest fans are hoping.

  1. Taxation: How do governments collect taxes on transactions in Bitcoin? The answer is they don’t, and they can’t. Crypto-currency’s strong protections on anonymity make it impossible for any state to know who is buying what, who is paying whom, who earns what, and who has what in savings. That poses a direct challenge to the power of states to levy taxes.

    The problem is that Bitcoin makes tax evasion easier. States could enforce reporting of Bitcoin income for individuals and businesses, as they try to do for cash, which is also hard to track. But encryption and the peer-to-peer network structure make Bitcoin even harder to follow than physical cash, and digital cash is much better than the physical kind for storage and transactions, so the scale of the challenge could end up being much bigger.

  2. Police:It would be almost impossible for states to detect certain crimes. One of the major alleged uses of Bitcoin — though, of course, one can never truly know — is buying illicit drugs. Bitcoin’s cryptography makes it uniquely able to facilitate money laundering, insider trading, fraud, and bribery. The transactions would be untraceable, and the money doesn’t ever have to return to the bank, where the financial crime might have been detected.
  3. Macroeconomic policy:A Bitcoin economy would undermine the power of real-world central banks to make monetary policy. Yes, governments can influence the demand for national currencies by requiring taxes to be paid in them. But the monetary lever on private transactions and lending would be gone if such commerce was denominated in Bitcoin. And by displacing governments as currency issuers, Bitcoin also threatens their ability to finance public debt. In a world where many transactions are anonymous, it’s unclear how governments could even compile accurate economic data, without which macroeconomic policy is impossible. Economic depression in a Bitcoin regime could be an insoluble problem.

If Bitcoin remains on the fringes, then the state is safe. The question is, if it shows signs of becoming a widely used currency, what could governments do to crush it?

The Financial Crimes Enforcement Network, the wing of the U.S. Treasury Department that investigates money laundering, said last month that it has the authority to regulate transactions involving both Bitcoin and U.S. dollars under the Bank Secrecy Act. These inter-currency exchanges appear to be the best foothold for regulation. Governments could require records of all purchases and sales of Bitcoin, for instance.

But this approach has severe limits. There are, by design, no direct avenues for government to interpose itself in Bitcoin-only transactions. Government does have some enforcement leverage over the individuals and businesses. Bitcoin transactions have a real-world side. The problem, though, is that the usual mechanisms for detection and enforcement are very weak against Bitcoin. Ask the Federal Bureau of Investigation. Bitcoin presents “distinct challenges for deterring illicit activity,” according to a leaked intelligence assessment that was prepared in April 2012. “Bitcoin is unique because it is the only decentralized, P2P network-based virtual currency,” the FBI’s Cyber Intelligence and Criminal Intelligence Sections wrote. “The way it creates, operates, and distributes bitcoins makes it distinctively susceptible to illicit money transfers.”

Bitcoin may be a bubble that will burst. If it does, other forms of digital cash will come along. The state was intimately involved in the development of money — but that was before networked computers. In the next chapter of the history of currency, money might very well turn on its creator, and roll back government.

(Evan Soltas is a contributor to the Ticker. Follow him on Twitter.)

Mar 242013
 

The U.S. Treasury Announces Money-Laundering Rules Apply to “Virtual Currencies”

You didn’t think the Treasury was going to just let the bitcoin business develop outside the system, did you?

WSJ reports:
The U.S. is applying money-laundering rules to “virtual currencies,” amid growing concern that new forms of cash bought on the Internet are being used to fund illicit activities.

The move means that firms that issue or exchange the increasingly popular online cash will now be regulated in a similar manner as traditional money-order providers such as Western Union Co. WU 0.00% They would have new bookkeeping requirements and mandatory reporting for transactions of more than $10,000.[…]

The arm of the Treasury Department that fights money laundering said Monday that the standard federal banking rules aimed at suspicious dollar transfers also apply to firms that issue or exchange money that isn’t linked to any government and exists only online.

One of the fastest-growing alternative cash products is Bitcoin, an online currency launched in 2009 that isn’t backed by a central bank or controlled by a central administrator. Currency units, known as “bitcoins” and consisting of a series of numbers, are created automatically on a set schedule and traded anonymously between digital addresses or “wallets.” Certain exchange firms buy or sell bitcoins for legal tender at a rate that fluctuates with the market[…]law enforcement, regulators and financial institution have expressed worries about the hard-to-trace attributes of virtual currencies, helping trigger this week’s move from the Treasury’s Financial Crimes Enforcement Network, or FinCen.

Creating clear-cut rules for virtual currencies is difficult. A FinCen official said that anti-money-laundering rules would apply depending on the “factors and circumstances” of each business. The rules don’t apply to individuals who simply use virtual currencies to purchase real or virtual goods.

The new guidance “clarifies definitions and expectations to ensure that businesses…are aware of their regulatory responsibilities,” said Jennifer Shasky Calvery, FinCen director.

Mar 222013
 

The Pros & Cons of Bitcoins

May 18, 2012

bitcoin pros and cons freemarketBitcoin, a privately controlled independent currency, is nothing short of revolutionary. Bitcoin, however, has a major drawback: it does not address the key issue of interest.


by Anthony Migchels

(henrymakow.com)

Bitcoin was developed by Satoshi Nakamoto and launched in January 2009.

There are currently more than 8 million Bitcoins in circulation and after predictable initial price swings after its launch, they have traded at a fairly stable rate of about $5 for more than six months now.

Bitcoin is a debt free unit: it comes into circulation through ‘mining’: the solving of complex algorithms by clients yields new Bitcoins.

However, no more than 21 million can be mined so there will never be more than that in circulation.

Bitcoin is important and actually nothing short of revolutionary. It is the first notable independent internet currency.

WHY BITCOIN MATTERS

Its key strength is its peer to peer design. The issuing organization’s sole function is to provide the client software and on-line market place where Bitcoins can be traded for other currencies. It plays no role in the creation of the money supply.

In this respect, it is a real assault on the Money Power’s stranglehold on our money supply.

It allows businesses and consumers to diversify their methods of payment, making them a little less dependent on the Government/Banking monopoly.

It also shows that a free market for currencies already exists. Of course regulators are inimical to them, but current legislation does allow for all sorts of units.

In fact, there is very little to stop free market currencies, provided those looking for opportunities are dedicated enough.

CONVERTIBILITY

Furthermore, Bitcoin is the first free market unit in the world that creates convertibility to other units through a currency exchange. This is an innovation that is underrated by most commentators.

Mutual Credit-based barters can use Bitcoin technology to create convertibility without dollar/euro backing.

Unsurprisingly, legislators bribed by banks have already voiced ‘concern’ about Bitcoin’s independence.

Apparently some naughty drug dealers are using Bitcoin to finance their operation. Its peer-to-peer character makes it suitable for this kind of transaction. Just like cash.

And cash too, as we know, is under attack from Big Brother who would like to know everything we buy and sell, and make us completely dependent on his monopoly infrastructure.

So Bitcoin’s existence is very useful for all monetary reformers as it will allow us to gather information about the strategies that the adversary will use to disable it.

DRAWBACKS

Notwithstanding these revolutionary breakthroughs, Bitcoin does suffer from a basic flaw.

It’s designed to behave like Gold. Nakamoto clearly believes Austrian Economics is the last word, including the idea that hyperinflation is the main threat to the system.

As a result Bitcoin suffers from the same problems as Gold: it is deflationary and expensive.

There is never enough of it. True, Bitcoins can be divided in ever smaller denominations, so ‘physically’ there will never be a shortage, but it means Bitcoin is designed to appreciate for ever and this is the definition of deflation. 

BITCOINS DRAWBACK CAN BECOME GREATEST STRENGTH

INTEREST

Worse still, Bitcoin does not address the interest issue. There is no possibility for cheap credit and if the unit matures, a banking system will be necessary to provide credit based on deposits.

Not only will this exacerbate the scarcity of money, it will also lead to very high cost for capital.

Yet another problem is that with a full reserve banking system as required by Bitcoin (and Gold too, by the way) would allow the Money Power to mop up the money supply through compound interest within one or two decades, as you can find out here..

The basic conceptual flaw is, that Austrian Economics believes a currency should be a good store of value first and foremost. This is the fatal mistake: money is a means of exchange, and it is the agreement to use it as such that gives it value, not the other way around. This is even true of Gold today: the reason Gold is now expensive, is because many investors are speculating it will be currency again.

Because of this design flaw, Bitcoin is being hoarded by its users. They prefer to have it sit in their ‘account’, instead of spending it, hoping it will appreciate. As a result turnover is lower than it could be. The unit is already an object of speculation, hindering its primary function: to finance normal trade.

CONCLUSION

Bitcoin is a revolution and a badly needed bit of fresh air. Peer to peer and independent of banks and Government it is an example for all of us. Yes, we should press for reform at the Government level, but no, we should not await it. There is a free market for currencies and it is ours for the taking.

However, it is not credit based and it does not allow for interest free credit. Its deflationary by nature, which is very problematic.

Its decentralized peer-to-peer nature and its convertibility mechanism are its main strength. If these can be harnessed in interest free credit based units, they would be unstoppable. The Money Power would be really hard pressed.

Bitcoin is a shot heard far and wide, but it is only the proverbial first shot across the bow.

Related:
Why Gold is so strongly deflationary

Mutual Credit, the Astonishingly Simple Truth about Money Creation
Mutual Credit for the 21st century: Convertibility
The Swiss WIR, or: How to Defeat the Money Power
Regional Currencies in Germany: the Chiemgauer

The Problem with Gold

Anthony Migchels is an Interest-Free Currency activist and founder of the Gelre, the first Regional Currency in the Netherlands. You can read all of his articles on his blog Real Currencies – See more at: http://henrymakow.com/bitcoins.html#sthash.0IOo9xH7.dpuf