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verfasst von Firmian, 25.01.2002, 20:17

Interview of Jim Davidson by Ragnar Danneskjold, editor - Planetgold.com Part 1 of 2

planetgold: Today, Planetgold is pleased to interview Jim Davidson, Chief Financial Officer of Gold Barter Holdings.

Jim: And Jim is pleased to be interviewed.

planetgold: Thanks for joining us. Jim Davidson is an early adopter of digital gold currencies (DGCs), such as e-gold. He is an entrepreneur who uses DGCs for all kinds of business transactions. Recently, he paid a very talented programmer and web designer to put a shopping cart into Awdal.com. Awdal Roads Company has a number of nifty products for sale. It uses e-gold because DGCs provide for irrevocable exchanges and are the wave of future economic transactions.

Jim has an MBA degree, extensive background in finance, and is a founding participant in Gold Barter Holdings (which operates www.Cambist.net)

Gold Barter Holdings also operates goldbarter.com an online DGC gAu denominated web site, and goldbarterholdings.com which is about to announce an equity and a bond offering.

planetgold: Jim, why do you think DGCs are better than fiat money, such as the US dollar or the Euro?

Jim: There are two basic types of money in the world: money that is real money because it is tied by contract to something of intrinsic value such as gold or silver; and money that is fiat money and is not tied to anything of value. The word"fiat" comes from Latin and means"let there be." In the Bible, the first phrase in the Latin language version spoken by God is"Fiat lux" or"let there be light."

I think that is very good for God. God, by all accounts of His majesty, has the power to let there be things by invoking His word. But, in contrast to deity, humans don't really have this power. Perhaps the most droll commentary on this notion of humans invoking great powers through chatter was given in one of Shakespeare's history plays ("Henry IV, part one" if I recall it correctly) wherein Hotspur and the Welsh shaman Owen Glendower are conferring (prior to the Battle of Monmouth unless I recall poorly).

Glendower strikes awe into every listener with his stentorian tones,"I can call spirits from the vasty deep!"

"Why so can I," rejoins Hotspur, glibly,"Or so can any man. But will they come for you when you do call for them?"

Let there be money

And that's what fiat money is all about. A government or a private party calls money into existence."Let there be money," says the European Central Bank, or the proprietors of flooz, beenz, or US dollars. But does money come for them when they do call for it?

In many cases, we see the answer is no. Euros seem to be less favorably viewed by French citizens than gold and silver. I recently read a story of a French woman who brought about a quarter million dollars in French francs to the precious metals desk of a bank in Marseilles. The clerk got out the official paperwork to report this huge sum, when the woman whispered,"Monsieur, do you want the papers to know where you spend your Thursday nights?" The papers were withdrawn and the specie was handed over.

Recently, Cambist Exchange Services received its very first request for an exchange order from a lady with French francs. Unfortunately, before we knew that was her currency of choice, she sent the cash to a friend in New Orleans to help her with the transaction; had we known in advance we'd have pointed her at one of our European agents. I suspect that she, too, was not eager to have her Francs become Euros.

planetgold: Whats the point to these stories?

Jim: These stories reflect the uncertainty that arises when money, such as the Euro, is created by fiat. Who is to say whether the bankers in Berlin, Brussels, and Paris get it in their heads to devalue the Euro? What prevents them from printing more money to fund some governmental function, while the people of Marseilles or Nimes or Dax or Hamburg or Munich or Antwerp are made to suffer? With a currency on the gold standard or redeemable in silver, there is at least some potential for asset protection.

Indeed, we've seen inflationary and deflationary cycles come and go with fiat money. Jesus complained of the debased Roman coins during His visit to Jerusalem. The privately owned"Bank of England" which was the beneficiary of much public largesse issued a fiat money in the 1690s, which led to the"South Sea Bubble." When that bubble burst in 1722, a 60-year depression resulted. A careful examination of the facts shows that the Great Depression of 1930-1939 was caused by the new Federal Reserve Banks whose fiat currency Federal Reserve Notes are not part of the Federal government, are tied to no reserves, and are not a note redeemable in anything of intrinsic value. It appears to me that the Dot.com bubble which has recently lapsed (it didn't burst, but it is much less inflated right now) may have been caused in part by poorly considered maneuvers by the Federal Reserve during the months leading up to the Y2K crisis-that-wasn't.

central planning and control of a command economy fails...

Over and over again, history teaches the same lesson. Whether the recipients of the knowledge are Soviet apparatchiks caught in the collapse of Warsaw Pact power and the break-up of the Soviet Union, or Gang of Four followers caught in the aftermath of the Cultural Revolution, or Argentine workers seeking to get their children admitted to Spain as returning emigrants, or Japanese"salarymen" waiting for interest rates to exceed zero while defaulting on a trillion dollars in debt, or followers of"Maestro" Alan Greenspan watching the"longest expansion in American history" come to a grinding halt, the lesson is the same. That lesson is very simple: central planning and control of a command economy fails because economic affairs are individual matters.

planetgold: What youre saying, then, is that money must be made by individuals in their capacity to create value using the labor of their minds, and that when governments print money, they devalue that labor? They devalue the human mind?

Jim: Thats correct. Nothing can replace the individual economic decision maker; no computer can be large enough, even if we pull in the parallel universes of the multi-verse with David Deutsch's quantum computers, it isn't possible for the trillions of simultaneous economic decisions to be made for the people by the government. The people must decide for themselves, one at a time, wrangling over every nickel and dime for every brussel sprout and car battery. Nothing else works.

Systems of fiat money come under two headings, I think. One is a system of collective control. Any bond or currency that is backed by the"full faith and credit" of the government is, in fact, backed by the ability of that government to tax productive persons and resources. If necessary, governments will tax their people to death in order to pay debts and avoid default, when it seems expedient. Equally, when faced with riots, the overthrow of their government, or the greater coercion that bankers sometimes apply, those in government default, devalue, and depart.

Here, on a lighter note, is a joke for the times."If you have four former presidents of Argentina, there's a fifth around somewhere." (Tell the joke with a bottle-drinking motion to play up the dual meaning of"a fifth.")

I said there were two headings. Collective control and scam. Beenz and flooz and various other online currencies that were backed by nothing and have disappeared may have been scams all along. Certainly, they represent the attempts of private parties to do the impossible: create a medium of exchange which is disconnected from anything of value.

In contrast, I think, the Federal Reserve System is a system of collective control. It uses the authority and power of the USA federal government to do several things that could not be done by beenz or flooz or evocash. First, Congress has declared Federal Reserve Notes to be"legal tender for all debts public and private" in total disregard for the constitutional admonition that no state may make anything but gold and silver coins a tender in payment of debt (Article 1, Section 10,"constitution for the united States of America," 1789). That legal tender notice appears on every Federal Reserve Note (FRN). It creates a definite market for FRNs because you can use them to pay your taxes. Federal taxes amount to about two trillion dollars a year, so that's quite a captive audience."

The system also separates itself from other scams of less audacity by tying the money to a thing of value, admittedly not one of intrinsic value. The Federal Reserve System manipulates interest rates through its ability to control the issuance of certain types of debt instrument. It also controls the existence of banks within the United States through its influence over a complex array of regulatory agencies and Congressional legislation. Moreover, the Federal Reserve System has the ability to lend money to banks, provides a real service in check clearing (though not as well as private service competitors), and has a lien on or directly owns vast amounts of gold. In many ways, the continuing existence of the Fed owes to the ability of the Fed to take possession of tax receipts of the USA federal government. Most of those checks that are written payable to IRS by the 15th of each April come back endorsed to the account of the Federal Reserve.

The passage of the Federal Reserve Act operated as the permanent indenture of every American taxpayer

So, the money in the system is tied by various means to the labor of the taxpayers. In many ways, the passage in 1912 of the Federal Reserve Act operated as the permanent indenture of every American taxpayer. If we look at the actual effects of the act, and of the numerous economic calamities it has caused, we have to conclude that it is a system of collective control. It exists to benefit those who operate it, who are, by and large, private bankers.

[Editors note: The website www.norfed.com, is dedicated to the repeal of the Federal Reserve Act.]

planetgold: So unlike the FRN (Federal Reserve Notes or dollars), gold or other commodity-based currencies are better money?

Jim: They are real money, backed in full by bullion or specie. DGCs are not just related to gold and silver and platinum and palladium, they are not just paying lip service like the"golden dollar" recently issued by the US mints, but they are *actually* gold and silver and these other metals. Each unit of digital money circulated by these groups corresponds to an exact weight of metal, be it gram or ounce troy or kilo, of metal on deposit in a vault somewhere. That means, to me, that funds stored in these currencies may be converted, at any time, to specie or metal without significant loss (except minor transaction fees).

I'm told that isn't entirely true of all currencies lumped in with e-gold, Goldmoney, e-Bullion, and 3PGold. For example, I've heard that OSGold is not fully backed by metal, and for that reason I'm reluctant to put any of my assets into it. 3PGold, on the other hand, is"as good as gold" because it is gold.

But wait, there's more. Digital currencies have an added bonus. They are digitally fungible. What do I mean by that? I mean that there is no limit to how fine you can slice a gram of 3PGold. You may find that the 3PGold system itself only goes to five or six significant digits. I think e-gold cuts it to a millionth of a gram. But, nothing prevents you from taking every gram of e-gold you have and dividing it into even finer units than the milligrams, micrograms, or nanograms that may be larger than you need to account for transactions. Set up accounts as you please, let people buy as much or as little from you as they like, and create a secondary currency in these tiniest of units which is backed by a DGC which in turn is backed by gold. Sure, redeeming a billionth of a gram from e-gold isn't possible, but combine the billionth of a gram payments from a few hundred thousand customers, and you begin to have something interesting. So, micropayments are possible, to an extent never before. Indeed, the very term"micro payment" employs the prefix for millionth, which may be orders of magnitude higher than the nano payment systems of the future.

planetgold: This all sounds good but, essentially, you're talking about taking control of currency out of the hands of governments, and back into the hands of the producers of the value of currency, the people. Wouldn't the government (being the government) try to put a stop to this or at least try to monitor the activity in these gold accounts like it monitors bank activity?

You may already be a target.

Jim: GoldMoney and 3PGold have wisely chosen to operate from offshore locations. They are not based in the United States. Their servers are, respectively, in the Channel Islands and in Sealand. I think GoldMoney is domiciled in the Channel Island of Jersey and 3PGold is domiciled in the Commonwealth of Dominica. These offshore locales provide for significant protection of data. The prying eyes of government are always looking for resources. When one has a two trillion dollar habit to feed, every neck is a good one to bite. The bloodsuckers want everything you have, which means that if you have anything significant, or if you move through cash in any measurably large way (whether you make a profit or"income" or not), you may already be a target.

Be scrupulous about the law if you like. Obey it in every regard (if you have time to read up on it; with a million pages of new laws and regulations a year, I doubt you have time); be subservient in your meetings with bureau-rats, apologize for any alleged wrongdoing, and avoid any possible hint of dissent, and you are still unprotected from the force of the state. In its caprice, it will take you to jail, to court, and to prison at its own pace, whether you are guilty or not.

I was falsely arrested in 1991

I could name hundreds of people killed by government without so much as a trial or a hearing, in the USA. Others have identified tens of thousands of victims of bureaucratic abuse by the IRS and other agencies, every year.

planetgold: Were you ever one of the abused?

Jim: For my own part, without having broken any law, and having told relevant agencies that any desire on their part for me to stop my business could be expressed by telephone for immediate relief, I was still run through the wringer, falsely arrested in 1991 on trumped up charges, prevented from having access to due process, repeatedly betrayed by supposed negotiations, and ultimately forced to settle for personal bankruptcy and an agreed injunction not to conduct a certain type of legal business in order to see the false criminal charges dropped.

That experience taught me a vital lesson, no less vital than what I've learned from studying the cases of murder victims and abuse victims at the hands of government. The lesson was: do what you will. If the government takes notice, you're in trouble whether you've broken their laws or not. So, I take station with John Galt in saying that I owe no man any obligation save two: to do what I think is right and take no part in a slave society.

[Editors note: Jim is quoting a fictional character, John Galt, from the classic novel,"Atlas Shrugged," by Ayn Rand.]

3PGold and GoldMoney help me protect myself from government. A subpoena or a warrant from a court in Texas has little meaning in Jersey or Dominica or Sealand. At the same time, those concerned with law and order will find that there is a process for gaining the attention and perhaps the action of the governments of those locations if the situation is sufficiently notorious. For example, a subpoena for the records of a known terrorist might be enforced by a Jersey court and might receive detailed records from Goldmoney.com; utter lawlessness is not the nature of these businesses, nor should it be.

I could go on. In your introduction you mention the irrevocable nature of payments, which is certainly good for merchants. Combined with the very low cost of exchanges and operations, DGCs are cheaper than credit cards. They are also less subject to charge-backs, and if you pick your DGC with care, the information about your activities is not as readily accessible.

Theft of identity and credit card fraud are major problems with fiat money. I've never encountered a loss with any of the DGCs I've held. They are private, they are secure, and they are digital, with all the benefits these features imply.

So, the comparison is lopsided to a fare thee well. One might as well ask whether one wants to drink nectar and eat ambrosia, or feast on the swill from a sanitary sewer."Life is like a sewer," says Tom Lehrer,"because what you get out of it depends on what you put into it." Well, all kinds of good thinking and good intentions and good actions have gone into making the superior digital metal-backed currencies. You get what you pay for.

planetgold: Thanks for your time, Jim. We'll continue next week!


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gesamter Thread:

• e-gold - R.Deutsch, 22.01.2002, 10:15
  • Re: e-gold @Reinhard - Peter der Große, 22.01.2002, 11:33
    • Re: e-gold @Peter d.G. - R.Deutsch, 22.01.2002, 13:44
  • e-dinar soll mir erst einmal meine Kohle verbuchen. Bis jetzt nicht geschehen (owT) - Theo Stuss, 23.01.2002, 18:01
  • Der Text zum Link: - Firmian, 25.01.2002, 20:17