Bill Gates Could Save Buenos Aires
William Baldwin, Forbes Magazine, 03.04.02
The hoodlums running Argentina have devalued the peso and, in the bargain,
seized dollars on deposit in that country. As Steve H. Hanke details on
page 120, the authorities have discredited not only money but banking. In a
wink they have bombed their economy back to the Stone Age. How can an
economy work without a medium of exchange? For a money supply Argentineans
might as well use large round boulders of the sort formerly in circulation
on the island of Yap.
Nothing that government can say or do about money will have any
credibility, so salvation must come from outside. It could come in the form
of software. I envision Microsoft as savior of the dispossessed in Latin
America.
The programmers in Redmond have a service called Passport that is intended
as a gateway to e-commerce. Once Microsoft makes its products more
hacker-proof, the service could catch on. The day may come when a
stored-value card inside Passport becomes common currency on the Internet.
Picture two peasants on the pampas. One wants to buy a sheep from the
other. He pays by transmitting a signal from his Palm i705 to a bank in
Zurich, which then transfers ownership of 10 grams of gold to the other
fellow, who also has a Palm. Now it doesn't matter if Peronists or generals
are running the country. There is nothing for them to seize.
For a monetary base Argentineans could look to the $75 billion of flight
capital (Hanke's estimate) that they have stashed abroad. Made liquid by
the wireless Net and encryption software, this wealth could be zapped from
plutocrat to cab driver to shepherd, in the process bringing a sick economy
back to life.
What is described here is not entirely fanciful. Already a firm called
E-gold Ltd., run by a radiation oncologist in Melbourne, Fla., offers a
micropayment system using precious metal. E-gold has credibility problems
of its own--it's domiciled in a tax haven in the Caribbean--but there is no
reason its role could not be played by a more substantial institution. UBS
would do.
When will Microsoft software be so trustworthy that even Argentinean
peasants stake their wealth on it? Sooner than you think. Probably while
their country is still being ruled by interim presidents.
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