Dear Julian,
> Thanks for the plug, Jim.
You're welcome.
> I'll post the URL as soon as it's ready.
(Might save 'em a buck or two! Good work)
> Now on to Jim's objections. I'll skip the arguments
> about Keynes and crashes and so forth.
Excellent. I win.
> (Like I've got time to fight a religious war, sheesh.
The notion that a discussion of economics amounts to
a religious war is quite strange.
> (Though actually, I am curious to know how Argentina
> fits in on the goldbug side of the argument. Isn't a
> dollar-pegged currency as close as modern finance gets
> to a national gold standard?
No. A gold standard currency is a gold standard currency,
and a fiat money currency, even one tied (at the strong
recommendation of the likes of Steve Forbes) to the dollar
remains a fiat money currency. Especially when all it
takes to untie it from the dollar is having three or
four presidents resign in the space of two weeks. Argentina
is on, what, their fifth president in a month?
"What do former Argentine presidents have in common
with Presbyterians? If you see four of them, there's
bound to be a fifth around somewhere."
Just kidding.
> And isn't that what did the poor bastards in?
What, being able to freely convert their paper money
to gold or silver specie? No, Julian, they never had
that capability, and it did not do them in.
> (Oh cripes, now I've done it -- onward, Christian
> soldiers!)))
Style points for correctly closing all your parentheses,
but points off for triple-nested parentheticals.
> Thanks for bringing this up, Jim.
You're welcome. I mentioned it to Steve, and he agrees
that he was talking about some HYIPs.
> in an earlier, longer draft of the piece, it was clearer
> what I meant by this --
Editors. You can't live with 'em, and yet...they're
everywhere! (With a nod to French Stewart.)
> no better than chain letters, and those are shady enough
> for me.
Sure. Chain letters are fraud. I made that point in
an earlier post when HYIPs and the like were being
defended by someone on this list who claimed that all
sales organizations are pyramidal. Perhaps it remains
in the archive.
> because the tape would prove otherwise.
Thus ends any chance the Awdal Roads Company board of
directors would approve a voice interview of me by you.
I'm still lobbying for an e-mail interview, but have
not seen a list of questions from you.
> The Gold Casino, and that the gold economy would
> do just fine without it.
What, and miss out on all those fun bonds?
> The fact is, e-gold has a Ponzi problem.
I disagree. The fact is that Ponzi schemes are fraud,
and a problem.
> took four kinds of payment: OSgold, Evocash, PayPal,
> and e-gold.
So, why are Ponzi schemes a problem for e-gold and
not for PayPal?
> Well, Evocash is so half-assed and sketchy
And yet Graham Kelly seems to like it. Huh.
I appreciate the depth of your criticism of evocash.
> OSgold is all-but-admittedly in business to profit
> from HYIPs.
Whereas e-gold is not, and is all-but-effectively
fighting HYIPs. <smile>
OSgold and evocash, to my understanding are not
backed by gold or silver. PayPal certainly is
not.
> And PayPal, whatever morally questionable uses
> its system gets put to, can at least point to its
> huge adoption by auctioneers as evidence that
> its users are mostly on the up and up.
On the other hand, its operators don't appear to be
on the up and up, and have generated dozens of
complaints that I've seen on this list in just the
last ninety days or so. PayPal has a problem with
freezing accounts and not providing any recourse or
appeal to merchants who have been doing business
with PayPal in good faith, it seems from the
evidence.
> But e-gold, which Doug Jackson basically claims
> is going to transform the world economy and cure
> male pattern baldness,
Is it really true that one can buy Rogaine with e-gold?
That's an excellent development for those in the market
for Rogaine. I can't really tell from the portrait of
Doug Jackson in your magazine article whether he would
be in the market or not. <grin>
> so far shows no real evidence of broad adoption
> by anybody but Ponzi players.
Nonsense. It shows real evidence of broad adoption
by gold enthusiasts.
What difference does it make if 100,000 Ponzi players
have e-gold accounts, if 25,000 legitimate parties
have accounts? Are you thinking that maybe e-gold
should be shut down by the SEC because on balance
the participants are Ponzi players?
Again, nonsense. The SEC doesn't really care about
Ponzi players, it cares about Ponzi schemers. The
SEC does very little to return funds bilked out of
Ponzi players by and large, but does a lot to go
after Ponzi scheme operators.
So, a more interesting question would be: exactly
how many e-gold accounts have ever been controlled
by Ponzi scheme operators? I'm willing to hazard a
guess here that a number of these accounts have been
identified by the SEC or by e-gold.com, and some of
them may have been terminated. I would welcome an
official statement from e-gold on the subject, of
course.
> Folks, this is a problem.
For whom?
> It makes e-gold look shady, and it's no use
> protesting that far more "FRNs" (for Christ's sake)
I think it is highly insulting to the memory of Jesus
for you to imply that FRNs are in any way for His
sake.
You seem to think that PayPal doesn't look shady,
despite the way they seem to screw over merchants
without recourse, even though PayPal is used by
thousands of Ponzi players. I think you are engaging
in the application of a double standard.
I don't think e-gold looks shady. You are confusing
the tool with the tool user.
Not many years ago in Britain, two youngsters
used bricks and boards to beat to death a
toddler. Were the bricks and boards evil tools?
Should the British government license or ban
access to bricks and boards, because young boys
might use them to murder toddlers? No. The tool
is not to blame for the use to which it is put.
A gun was used to shoot an unarmed woman in Idaho
who was holding her infant at the time. Guns are
also used by private individuals to stop over 2
million crimes a year. The tool is just a tool.
It can be used for good or for ill.
Money is just money. It is the love of money, and
the behavior that love of money causes, which is
the root of evil to be torn out root and branch.
E-gold is just e-gold. It is just a tool. Sure,
it can be used by Ponzi players for the purpose
of being taken advantage of by Ponzi schemers.
So what?
As I point out, most of the fraud in the world is
done with fiat currency. You won't propose that
Federal Reserve Notes be outlawed because they:
> are used in off-color dealings.
Therefore you are employing a double standard. One
tool should be criticized if anyone uses it for the
least bad thing, but another should be exempt from
criticism because you like the idea of a privately
owned Federal Reserve Bank running the currency of
the USA for whatever reasons, it seems.
> The amount of dollars spent illegally is simply
> dwarfed by the amount that's legit (and I mean
> spent, not just moved around among banks and
> currency markets).
So, what? Answer JP May's question: how much money
in e-gold is actually spent on HYIPs? Exactly
what percentage of e-gold's $3 million in daily
activity is spent on HYIP activities? How many,
exactly, of the 11,000 spends per day is going
through an HYIP program of any sort? Because,
if you are going to assert that the basis for
your criticism is entirely that you perceive a
low percentage of FRNs used for fraud and a high
percentage of e-gold use for fraud then:
YOU SHOULD PROVE IT.
Or, you should stop saying it.
> With e-gold, the proposition seems to be reversed
Seems to be? Let there be no more seeming, then.
Let's have the facts.
> (the huge amounts passed between MMs notwithstanding).
What do you mean notwithstanding? Why should the
activities of exchange providers, who are oddly
called "market makers" by those fellows at e-gold
who seem to think the agio fee mentioned in their
user agreement should refer to a storage fee rather
than the point value between metal money and fiat
money, not be counted? Really.
A huge amount of the activity on e-gold, a very
large proportion of the $3 million in daily activity
and 11,000 spends per day is being undertaken by
so-called market makers. And market makers are
not HYIPs. I'm willing to admit that I don't know
if market maker activity is a majority of all e-gold
activity, and I'd like you to admit that you don't
know that HYIP spends are a majority of e-gold
activity, either, or show your evidence that they
are.
By the way, that figure JP quotes: $3 million a day
is a billion and ninety-five million per year. Are
there even half a billion dollars going into HYIPs?
Extraordinary.
> Indeed, the evidence that Ponzi's are e-gold's
> killer app
Has not been presented by you. I would say, rather,
that your contention that Ponzi schemes are e-gold's
killer app remains unproven.
> the far greater interest of my editors in money-mad
> Muslims --
Let me take a moment to say that I really did like the
details you offer on the e-dinar and the individuals
who are courageously promoting it.
> that kept me from making it the central
> point of my article.
Editors are so weird about exercising editorial
control. You can't live with 'em, and you aren't
allowed to use them as chopsticks.
> (Well, plus, Doug Jackson did warn me that if I
> stressed the HYIP angle, e-gold would fail, the
> world economy would crash, parents would be forced
> to eat their own children to survive, and it would
> all be my fault. He literally said this.)
I find the use of exaggeration for irony, to stress
a point, and to engage the reader's attention to be
an excellent literary tool. To be fair to you, even
if only for a moment, the crash of the world economy
would not be your fault. Argentina and Japan would
seem to be quite able to instigate a large-scale
liquidity crisis without your assistance.
> The dilemma being: How can digital gold currencies
> grow any further while the HYIPs still dominate
> their market?
Without reiterating JP's criticism that you haven't
proven the dominance of HYIPs, let me note that you
are now tarring other digital gold currencies (DGCs)
with the same brush as e-gold.com. I don't think
you have demonstrated that a preponderance of new
accounts at GoldMoney.com or 3PGold.com or e-Bullion
or Pecunix or Standard Reserve are HYIP based, nor
that a preponderance of the daily spends in dollar
or volume are HYIP related, across all DGCs.
The answer to your question, which appears to be
a rhetorical question for the purpose of slamming
all DGCs unjustly, is: by effectively marketing
the benefits of DGCs to merchants and to consumers.
DGCs can grow much further by effectively being
marketed to merchants who offer legitimate products
and services. Merchants are going to like the
low cost of accepting e-gold and 3PGold as compared
to the high cost (5% or more) of accepting credit
card money. Merchants are going to like the very
nice feature of irrevocability. Merchants should
also like the ability to have a "market maker"
spend e-gold into a wire or a check to third parties.
For my own part, I was sent a book link by a friend.
The link was on Loompanics. They don't accept e-gold.
So, I contacted them using their e-mail link and
suggested that I would buy the book if they would
accept e-gold. To their credit, an individual
replied to indicate that they would research the
possibility. Even if my new account incentive
link isn't used to generate their new account, I
would be very pleased by the result of Loompanics
accepting e-gold.
Consumers should also like digital gold currencies.
It is better money. It affords greater privacy.
It is highly fungible. The basic e-gold system
allows for micropayments down to the millionth
of a gram, which is good for both consumers and
merchants who find innovative ways to use this
feature. DGCs offer stable value. A gram of
gold in 1970 is still worth a gram of gold today,
which cannot be said for your Federal Reserve
Notes.
> And, on the other hand, how could they ever have
> gotten this big without them?
How much of the e-gold market is HYIPs? You never
say. I don't think you know.
Which means, I think, the answer to your question,
which again appears to be rhetorically stated for
the purpose of slamming all DGCs, is: by being
marketed through word of mouth among goldbugs,
among merchants, and among consumers.
For my own part, I am happy with your article's
front page blurb (which I realize you may not have
written) which attributes the enthusiasm for e-gold
to gun-toting libertarians like Jim Ray and
curiously fundamentalist Islamics like Yahya Cattanach.
Individuals who know what is good for them want DGCs.
(Indeed, the fact that HYIP operators or Ponzi
schemers like e-gold suggests that they know what
is good for them.)
> The first question is Doug Jackson's horn of
> the dilemma.
No, it isn't. Doug Jackson can grow the market for
DGCs, and e-gold in particular, by now spending some
quality money on a well researched and executed
marketing program. I would be happy to explain the
details of marketing research, publicity, and
advertising that should go into such a program for
my customary fee.
The innovators are all here. The early adopters
have mostly arrived, and while it is true that
nobody except an innovator can convince an early
adopter to try anything, that word of mouth is
already handled. The next group in the product
life cycle cannot be reached without a more
comprehensive marketing program. The good news
is that if the 125,000 users are all innovators,
the near-term market should be around 12.5 million
users, within three to five years. (If the 125,000
figure also includes all early adopters then the
mature market comes to only about 2.5 million
users.)
> The second would appear to be James Turk's.
Not James Turk's alone, though. e-Bullion has
about 20% of the ounces of gold that e-gold has
on hand. And 3PGold does a fine job of keeping
private such information.
> Dang, this is weird. Every single reference I can
> find on the Web -- and I've found a lot of them --
> gives 19.3 or 19.29 as the specific gravity of
> gold. None gives 18.88. Is 19.3 maybe gold's specific
> gravity at absolute zero or something? Odd that that
> would become the standard figure.
The difference is about 2.17% of the figure I give.
Rather than absolute zero, I would hazard a guess
that 19.29 is the specific gravity at zero degrees
Celsius. The figure I gave is for 20 degrees
Celsius. Zero degrees Celsius and one atmosphere
are used in physics and chemistry as "standard
temperature and pressure" which is even abbreviated
STP. When a physicist or a chemist refers to the
property of anything, he might well use the figure
at STP.
As you can imagine, temperature does matter, since
at a high enough temperature (CRC gives 1,064.43
degrees Celsius) gold melts and at an even higher
temperature it changes phase again, boiling into
a gas (3,080 C). A variation of a bit over 2%
in specific gravity due to a temperature difference
of 20 degrees isn't terribly surprising.
In future, of course, it would be well to name
the temperature at which the specific gravity is
measured, if indeed that is the source of this
variance.
> Believe it or not, normal people have no idea what
> a pound troy feels like.
Normal people are so strange. <grin>
"Oh, brave new world that has such people in it!"
"'Tis new to thee."
-- Shakespeare, "The Tempest"
> then some editor or another thought 27.5 would
> look better,
It's like I've been saying: what do you call a
thousand editors at the bottom of the sea? A
good start.
> Anyway, thanks again for the plug, and even more
> for the attentive read.
You are welcome.
Hey, thanks for doing a story on digital gold money
in a fairly major publication.
JP May writes:
> It would appear Argentina simply failed because
> it is so corrupt.
Argentina's government certainly is corrupt. The
factors leading to the Argentina "long haul" of
the 1980s and early 1990s is detailed by my
namesake, James Dale Davidson, and his co-author,
Lord William Rees-Mogg, in their excellent book
_Blood in the Streets_, 1987 vintage, perhaps
available through the Amazon.com book finding
service which you can buy using e-gold through
that excellent Bananagold.com web site which is
not, to my knowledge, ever touched by a single
HYIP operator. <smile>
The Argentina economic "miracle" was certainly
helped by the decision to peg the peso to the
dollar. It was harmed by reckless government
spending and taxation. It was wrecked by the
International Monetary Fund's policy of making
all economic players in a country pay harshly
for the debts of a few governmental miscreants.
The default on $139 billion in debt should get the
attention of the international banking cartel any
moment now. The trillion dollars in debt that
it appears may be defaulted upon in Japan ought
to really shake things up.
It might be that we are going to see, in the
next three to eighteen months, what James Dale
Davidson and Lord William Rees-Mogg called
_The Great Reckoning_. In the words of T.E.
Lawrence, "It's going to be fun."
> The absoltuely key book is _The Mystery of Capital_
> by Hernando de Soto, which everyone should read
> this afternoon.
Or, at least buy at Bananagold.com today!
> The politicians are going to devalue it, screwing
> everyone, so that the politicians can print more
> money. Funny that!
Yes. Of course, we do have an interesting notion
of funny, you and I, JP. If I read his message
correctly, Julian Dibbell is saying that you and
I are not normal people. Which is odd because I
do know what it feels like to lift 30 pounds avdp.
Bob writes:
> And, one of the government of Argentina's biggest
> problems was that it simply took on more debt than
> was safe to do.
Yes! Which tendency is encouraged by the IMF and
the various banking concerns that love to lend to
governments.
> Which reminds me of the US. Which isn't capitalistic
> anymore. It's socialistic.
Yes, it is. As Neil Smith points out in his
excellent book _Forge of the Elders_ if the government
of the USA had its way, it would haul the world back
into an era of socialism the likes of which Russia
and China have only begun to recover from. Of
course, it would be an American Soviet Socialist
Republic. Which makes all the difference to the
jingoistic patriots, and none at all to the
liberty-minded patriots.
> I believe the World Trade Towers were owned by
> goverment. The New Jersey and New York Port
> Authorities.
The Port Authority of New York and New Jersey, which
was consolidated in the 1960s, as I recall, and built
the twin towers without an environmental impact
statement, issuing permits to itself, and not
bothering to coat the steel framework with flame
retardant, among other clever points of trivia. (In
a side note, the Port Authority of Houston and
the Port Authority of Galveston just narrowly failed
to merge, thanks to the clever voters of Galveston
who refused to endorse the deal (or, anyway, the
clever vote counters of Galveston who were against
it.))
And, for good measure, not only were the Twin
Towers built and operated by government, but so
was the Pentagon. The only thing hit by planes
on 11 September that wasn't built by government
was Pennsylvania, and that thanks to the courage
of passengers who were not afraid to fight in
spite of having been disarmed by their government.
SnowDog writes:
> It's another thing to have the self-discipline to
> limit the number of Pesos that one puts into the
> system, to the number of dollars available for
> redemption.
Excellent point. And we know that a government
with self-discipline is soon replaced by one
without.
> new money found its way into the Stock Market
It is true that the Fed was very easy with credit
throughout the 1922-1929 period. It also moved
a huge amount of gold bullion to the Bank of
England during this period.
> After the stock market crash, a 'run' began on the
> currency and people were turing dollars in for the
> gold coins which backed them.
Actually, quite a bit after the crash. The crash
did not even figure in the important events of the
year 1929 in the annual review of the New York Times.
Shortly after the stock market crash, two events
took place, one of which had been anticipated by
the market. That one was the passage of the Smoot
Hawley Tariff Act. This act created a trade war
with Europe and Japan. As a result, the liquidity
crisis begun by the stock market crash (which took
a lot of valuable stocks which were readily converted
to cash and turned them into a lot of not so valuable
stocks which could be converted into much less cash)
which was itself prompted by the imminent passage
of the tariff act, was greatly enhanced by the sudden
twin problems: foreign goods were more expensive due
to the tariff and domestic goods produced for export
were suddenly sitting on the docks owing to the
lack of an export market (the retaliatory tariffs
taking their toll). Way too many goods were now
on the domestic market, with way too few dollars
available to purchase them. A deflationary shock
was initiated.
In response, the Federal Reserve raised interest
rates. Yes, raised them. Claiming that they were
responding to the easy credit which had prompted
the stock market bubble, the Fed bankers raised
interest rates to tighten things up even further.
Milton Friedman suggests in his _Monetary History_
that this choice was inadvertent and erroneous.
In my view, it was deliberate, and achieved the
desired effect.
> By 1933,
By 1933, the country was on the verge of a revolution,
with up to 25% of the workforce displaced. A
national banking emergency was declared by Congress
on 9 March 1933, effectively suspending the
constitution. That emergency has been renewed
from time to time by Congress ever since. It
has even been the subject of hearings in both Senate
and House.
> the Fed was reeling money in at a tremendous rate.
> This caused the tremendous deflation of the dollar
> which caused so much upheaval.
The Fed caused it, yes, in part. The Smoot Hawley
tariff also caused it. And to a minor extent, the
stock market crash precipitated these events, though
I think the evidence is clear that the crash itself
was prompted by the reports that Congress would pass
and the president would sign the tariff).
> Companies couldn't reduce wages
Indeed. Many had recently submitted to pressure to
unionize, and some states were beginning to experiment
with closed shop laws. Much of the union enthusiasm
was promoted by the son of John Davison Rockefeller.
Junior had been sent by his dad to crush the strikes
in Colorado, where he saw a lot of brutal business.
> He stopped the deflation,
No. He didn't. Deflation continued to be a problem
from 1933 to 1935. A short respite and it became a
problem again in 1937.
> and despite the long-lasting ramifications, he
> solved a problem which had been started
> twenty years earlier.
Not by tinkering with the exchange rate for gold
nor by stealing the gold out of the safety deposit
boxes, he didn't. No, sir.
It was the war in China which began to set things
straight, prompting some American production to
support the forces under Chiang Kaishek with
weapons and aircraft and the occasional American
pilot. The enthusiasm of Hitler for, in his
words, consolidating "greater" Germany to
include Sudetenland, Czechoslovakia, and Austria,
whether or not the locals found it suitable, had,
by 1938, prompted considerable spending by
European powers on new weapons and preparation
for war. It was the preparation for WW2 which
finally resolved the deflation problem.
And, for all that, by the time it broke out,
in 1939, things were still touch and go with
the American economy. During 1940 and 1941,
it became clear that peace time production of
refrigerators wasn't moving things forward
fast enough. So, FDR kept provoking the Empire
of Japan until they had enough. And maybe he
did his bit as one of the few privy to the
work of the code breakers who were reading
Japanese naval and diplomatic codes in DC
faster than the Empire's embassy could, to
delay preparations out in Hawaii for imminent
attack. Or, maybe not. Speculation is just
that.
What is clear is that it was WW2 that brought
the economy around. All that lovely war time
production getting destroyed and more being
demanded. Of course, the cost of ending the
economic crisis was very high. Some sixteen
million casualties in all countries, dead and
wounded, from combat actions. The Rape of
Nanking and endless atrocities by the Japanese
army throughout their "Co-Prosperity Sphere."
The decimation of Jewish and Slavic populations
throughout Europe, to the tune of perhaps
six million Jews, seven million Slavs. Zestful
use of famines, executions, and other forms of
mass murder by Stalin, to the tune of perhaps
25 million Russians, Ukrainians, and other
subject peoples. Similar behavior in China
by Mao both during and after Japanese
occupation, to the eventual loss of perhaps
80 million lives.
The Twentieth Century was the century of death
by government. _Death by Government_ is another
excellent book.
> It is with those who don't have the will to
> maintain the one-to-one relationship needed
> to support that 'standard'.
Yes. It is the problem of not sticking with
the standard when it ceases to be convenient for
politicians.
> legal gaming license in Dominica.
How interesting. Dominican Republic or the Commonwealth
of Dominica?
> So, from law enforcement's point of view, is
> E-Gold a 'good thing' or a 'bad thing'
> for HYIPs to use as a payment service?
Interesting question. I don't wish to take their
point of view. But, they seemed to enjoy the
hospitality at e-gold HQ.
JP May again:
> Roughly speaking the 11,000 spends break
> down to about 5000 under about one dollars'
> worth, and about 5000 over one dollars worth.
Hmm. I bet a few hundred are two-cents-worth.com
spends. I wonder if some of those other spends
are payment receive fees and the like. I know
there are a bunch of incentive payments from
e-gold every month. I'm curious, actually,
whether these spends are "payments made" or
include "fees," "incentive payments," and other
such like.
> Question: Do You Know, Julian, what percentage
> of these spends, are Hyip/Ponzi related?
And, JP May, do you know?
> JP!
JP, you rock!
Are we having fun, yet? <grin>
Regards,
Jim
http://www.two-cents-worth.com/?101468&EG
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