Why do governments hate money?By J. Bradley JansenJanuary 14, 2002Why do governments hate money? What people want from theirmoney is a good store of value, medium of exchange, unit ofmeasurement and universal acceptance-without it tracking theirmovements for Big Brother.Private markets used to provide good commodity money beforegovernments got in the act. People traded goods for higher usegoods that better possessed the qualities of good money: easilyidentifiable, easily divisible, durable, etc. Carl Menger, founderof the "Austrian" school of economics, explained thisdevelopment well in his Principles of Economics.Unfortunately, governments seem unable to resist the idea ofusing money to track their citizens. Our anti-money launderinglaws for the past quarter century under the misnamed BankSecrecy Act have required banks and other financial institutionsto monitor our transactions and report large cash or othersuspicious activities to the government.Congress passed quickly and with inadequate debate in the anti-terrorism fervor new proposals to combat money laundering.What is rarely reported is that the continuation of the currentapproach will fail to prevent any terrorism. Our approach is notdesigned to prevent anything-it only aims to make investigationseasier after the fact. We are no safer from terrorism by thefinancial provisions of the USA PATRIOT Act.Unfortunately, the Europeans show even less respect for financialprivacy. Many European nations have decided to give up theirnational monies in place of a single Euro with the promise ofeasier comparison shopping and lower transaction costs fortraders and travelers. Bureaucrats have now seized on theopportunity to use the new currency notes as people trackingdevices. Reportedly, the European Central Bank is developing aproject to add radio frequency identification tags into the fibersof the bank notes that will be introduced in the next few years.Promising to thwart counterfeiters, the new tracking RFID chipswould be used to follow the money-and their owners. It wasn'tdaring enough that euro is the first money in the world to begin asfiat money not backed by anything of intrinsic value-now thebureaucrats want to use money against their own people. Whydo governments hate money so?The technology would enable the carry tax on cash ideaproposed most recently by Marvin Goodfriend, a senior vicepresident of the Federal Reserve Bank of Richmond. Happily,U.S. Representative Ron Paul spoke out clearly and early. Byshining a light on this idea in its infancy, it retreated back under itsrock. The carry tax would have tracked our currency holdingsand taxed the Federal Reserve Notes depending on how longwe held the cash.As they say in the capital markets, money goes where it'swelcome and stays where it's well treated. Argentina seems a
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