From: Steve Schear <schear@lvdi.net>
Date: Mon, 8 Dec 1997 12:49:20 +0800
To: cypherpunks@cyberpass.net
Subject: Re: Cato forum tomorrow: should money laundering be a crime?
In-Reply-To: <199712072343.PAA22192@sirius.infonex.com>
Message-ID: <v03102801b0b124ea6131@[208.129.55.202]>
MIME-Version: 1.0
Content-Type: text/plain



At 3:43 PM -0800 12/7/1997, Mix wrote:
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>Steve Schear wrote:
>>This topic, of course, is near the top of many libertarian e-commerce 
>>agendas.  Almost every mainstream news article and regulatory report repeats 
>>the littany that Money Laundering, that is the movement of money to disguise 
>>it origin (even if there are no predicate offenses) must remain illegal 
>>because it damages or is a threat to the world banking and financial system 
>>(not just the tax take of governments), but I have yet to see any 
>>explanation of how and why.  Anyone care to comment?
>
>Might be a bit of a stretch, but I think this is because money today is 
>inherently a liability, that is a debt that someone, somewhere has promised 
>to pay back.

You've got this all backwards.  The bearer certificates (paper money) issued by governments is an interest-free loan by those holding the paper to the issuer.
 
>A money's value is measured by the quality of debt backing it.  If the debt 
>is defaulted on (whether through obscurity, Chapter 11, etcetera), the money 
>loses value, which in turn can have negative systemic repercussions 
>throughout the world's financial markets.  The recent Asian currency 
>devaluations (South Korea in particular) and the accompanying financial woes 
>are a good example of what happens when the debt quality of money devalues.

Most of this bad debt is from unwise or even illegal speculation.  I propose that it is much more common for those who deal in money from anonymous sources to look to placing that money into mainstream operating businesses and investments than as assests to back fraudulent loans, although this certainly does happen (perhaps some of the bad debt held by Japanese banks to alledged Yakusa might fall in this latter category.

--Steve


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