e-gold Settles Criminal Charges, Goes Back to Work

by on July 22, 2008 · 14 comments

I wrote here sometime back about e-gold, a very interesting value-transfer business suffering through some difficult legal troubles. They have now pled guilty to criminal charges.

A blog post by e-gold’s Douglas Jackson calls it a “new beginning.” The company will pay some fines, get square with U.S. regulatory law, and go on providing its services.

Payments is an interesting business. Once value is de-linked from a physical asset, representations of it can be transferred electronically, by “wire” or over the Internet. As is already happening with intellectual property, people will eventually create value transfer systems that operate outside the control of any government.

Whether the Secret Service and the Justice Department like it or not, e-gold is the next step in the beginning of the end of government-controlled currency. I don’t expect governments to lose control of payments quickly or to give it up easily, but they will.

  • http://sethf.com/ Seth Finkelstein

    “eventually create value transfer systems that operate outside the control of any government”

    1995 is calling. It wants its cypherpunk cryptoanarchy back.

  • http://sethf.com/ Seth Finkelstein

    “eventually create value transfer systems that operate outside the control of any government”

    1995 is calling. It wants its cypherpunk cryptoanarchy back.

  • http://www2.blogger.com/profile/14380731108416527657 Steve R.

    I’m confused. While government does establish and supposedly manages the currency, I see a lot of the “value” that money is supposed to represent being a function of the private economy and out of government control. For example mortgages. Our current financial meltdown is a result of “creative” financial instruments that were created by private enterprise. Obviously this house of cards was based on imaginary wealth and is imploding. By the way, Scott Adams of Dilbert had a hilarious carton where a hypothetical financial executive is blaming the financial meltdown on the lack of regulation!!!

    I have never been a fan of the gold standard. However, there may be an element of truth in this concept. An obvious example, a candy bar that cost $0.10 in the 1960 now costs $0.60 or more. Technically, the value of the candy bar remains the same, but our currency has inflated over the years. A gold standard, since it would be a limited physically resource (asset), would potentially keep a paper currency from having its value destroyed by inflation. (Not to mention continued deficit spending.)

    The issue that I have had with gold, is that our wealth is not just in gold but in other hard assets such a land and buildings. I may have a serious misunderstanding of how a gold standard would work, but it would seem that you could not build a new building until you acquire or promise to pay back the cost of the building in gold. Since gold is a limited commodity, how would one ever get sufficient access to gold to build something? Wealth creation comes from work, such as constructing a new factory not by mining gold.

    Lets assume that a gold system is put into place and that government control of currency has ended. Given the free market, what would stop e-gold from starting to leverage its gold assets (pyramid scheme) in a manner similar to how the financial institutions have securtized mortgages? (Or to put it another way converting a physical asset (mortgage) through leverage into a black box imaginary asset.) e-gold, for example, could begin issuing gold based bonds where the company actually only has partial physical possession of the gold.

  • http://www2.blogger.com/profile/14380731108416527657 Steve R.

    I’m confused. While government does establish and supposedly manages the currency, I see a lot of the “value” that money is supposed to represent being a function of the private economy and out of government control. For example mortgages. Our current financial meltdown is a result of “creative” financial instruments that were created by private enterprise. Obviously this house of cards was based on imaginary wealth and is imploding. By the way, Scott Adams of Dilbert had a hilarious carton where a hypothetical financial executive is blaming the financial meltdown on the lack of regulation!!!

    I have never been a fan of the gold standard. However, there may be an element of truth in this concept. An obvious example, a candy bar that cost $0.10 in the 1960 now costs $0.60 or more. Technically, the value of the candy bar remains the same, but our currency has inflated over the years. A gold standard, since it would be a limited physically resource (asset), would potentially keep a paper currency from having its value destroyed by inflation. (Not to mention continued deficit spending.)

    The issue that I have had with gold, is that our wealth is not just in gold but in other hard assets such a land and buildings. I may have a serious misunderstanding of how a gold standard would work, but it would seem that you could not build a new building until you acquire or promise to pay back the cost of the building in gold. Since gold is a limited commodity, how would one ever get sufficient access to gold to build something? Wealth creation comes from work, such as constructing a new factory not by mining gold.

    Lets assume that a gold system is put into place and that government control of currency has ended. Given the free market, what would stop e-gold from starting to leverage its gold assets (pyramid scheme) in a manner similar to how the financial institutions have securtized mortgages? (Or to put it another way converting a physical asset (mortgage) through leverage into a black box imaginary asset.) e-gold, for example, could begin issuing gold based bonds where the company actually only has partial physical possession of the gold.

  • http://realestatecrusher.com/ real estate marketing

    A very informative post..Obviously this house of cards was based on imaginary wealth and is imploding.

  • http://sweethomeimprove.com Sweet_Home_Improvement

    Great post, really help me alot. Thanks.

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  • http://sweethomeimprove.com Sweet_Home_Improvement

    Great post, really help me alot. Thanks.

    Cheers,
    sain-web.com

  • http://www.taxforeclosurecurrentevents.com/ Tax Foreclosures

    i think Payments is an interesting business.informative post it really helps a lot.

  • http://www.johnbeckseminar.com/ Real Estate System

    A very informative post..Obviously this house of cards was based on imaginary wealth and is imploding.

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