Hot on the heels of Spain banning cash transactions, Canada has just released the "thin edge of the wedge" MintChip card to "replace" cash.
By James E. Miller of the Ludwig von Mises Institute of Canada
Thus one government intervention begets a further government intervention. Because government has failed in its primary task…politicians ask, in effect, for price and wage fixing; and we are driven toward totalitarian control.
- Henry Hazlitt “What You Should Know About Inflation“
Though commenting on the state’s backing of union thuggery, Hazlitt pinpoints one of the essential rules of conduct for public officials. That is, intervene in private life to appease one wealthy interest group to then create the groundwork for further power grabs with the inevitable disaster which emerges. Thankfully, blatant usurpation of authority by lawmakers is still frowned upon by many taxpayers. That’s why, less a case of opportunistic disaster (“you never let a serious crisis go to waste” as lifelong parasite and former ballerina Rahm Emanuel put it), authoritarianism is achieved in small doses.
Can’t be feeding the people too much information on what their money is really being used for, now
At the beginning of April, Canadian Prime Minister Stephen Harper revealed his budget for the fiscal year of 2013. Contained within the budget, besides the promising feature of axing 12,000 public sector sponges, was the provision where the Royal Mint of Canada is to cease the production of pennies. The government blames the cost of production for its decision while ignoring the culprit of relentless currency debasement. As Maple Leaf Metals Exchange founder Chris Horlacher documents:
In the late 1960’s the quarter and dime were ended in the de-facto sense. Those coins used to be made from 80% or more silver but after the price of silver began to exceed the face value of those coins they were quickly pulled from circulation and replaced by a nickel imposter. After it became too expensive even to use nickel then the government turned to steel in 1999 in order to continue creating what now amounted to little more than a casino token.
The penny followed a similar trajectory. It was made from nearly pure copper up until 1996, at which point the government turned to zinc in order to make them. In only 2 years it could no longer even maintain the zinc penny-standard and has made them out of steel ever since. Now it’s farewell to even that denomination of currency and for the first time in Canadian history there will no longer be such a thing as 1/100th of a dollar, all transactions will be rounded to the nearest nickel. Don’t expect that to last very long at this pace.
With the Canadian penny slowly making its way to the dustbin of currency history, the Royal Canadian Mint has its sights set on a new target: tangible, hard money in general. From the National Post:
Last week, the Mint announced the release of MintChip, a completely digital currency. “Money, as we know it, is fine for today, but tomorrow is a different story,” says an introductory MintChip video. “MintChip is better than cash, since you can use it online.”
MintChip stores value in a physical chip, and transfers money between chips using heavily encrypted “value messages.” The system has no centralized database. “They’re calling it anonymous … their intention is that it’s no more associated with who you are than [traditional] currency,” said Jacqueline Chilton with Glenbrook Partners, a California-based payment consultant.
The trick here is that nothing government does is voluntary. The forced usage of the Canadian dollar via legal tender laws renders the assertion of “voluntary” laughable. The Mint claims the chip can be used anonymously but this assurance comes from the institution in cahoots with a central bank that can’t manage a simple metal standard for more than a few decades. According to the Bank of Canada’s inflation calculator, a basket of goods that cost $100 in 1934 (the year the Bank of Canada was established) costs $1,683.33 today. That’s a 1,583.33% increase!
Then again, inflation to the benefit of the state and other first receivers of newly printed money was always the objective of the Bank of Canada. The “lender of last resort” justification was just a euphemism for financing the government’s stranglehold on society. The banks are guaranteed a liquidity backstop to their risky lending (and subsequent payout of exorbitant executive bonuses) while John Q. Public is squeezed at the gas pump and the grocery store queue.
Central banking has always been about centralized control over what Murray Rothbard referred to as the lifeblood of the economy; the universal medium of exchange known as money. The real impetus behind the “Mintchip” is not convenience but an insidious desire on the part of the ruling class to assert their dominance over free transactions by forever digitizing their history. Governments have been waging a war on anonymous business since central banking became the norm. According to Pace University economist Joseph Salerno, the Federal Reserve has eliminated the issuance of denominations of the paper dollar over $100 since 1945. As Salerno writes:
This has made large cash transactions extremely inconvenient and has forced the American public to make much greater use than is optimal of electronic-payment methods. Of course, this is precisely the intent of the US government. The purpose of its ongoing breach of long-established laws regarding financial privacy is to make it easier to monitor the economic affairs and abrogate the financial privacy of its citizens, ostensibly to secure their safety from Colombian drug lords, Al Qaeda operatives, and tax cheats and other nefarious white-collar criminals.
Privacy has been sacrificed to ensure fewer transactions go undocumented. As long as large scale purchases and payments are recorded, the goons at the IRS and tax collection agencies around the world are better able to legally plunder more wealth from the citizenry. Politicians remain unwilling to let the party come to an end despite economic recession decreasing the amount of tax revenue flowing into their coffers. Spending money that isn’t theirs is all they know. Instead of living within their means, they opt for more thievery to keep buying votes. While the Eurozone crashes and burns due to unsustainable welfare states and lawmakers addicted to profligacy of public funds, both Spain and Italy have put a limit on large cash transactions. Tax evaders, looking for nothing more than to alleviate the pain of the tax enforcer’s whip, have become the enemy for not ponying up to satisfy the various highway gangs at the local, state, and federal levels of government.
The introduction of the “Mintchip” is really just another extension of the state’s effort to wield supremacy over private affairs. It is creeping socialism under the guise of efficiency. But, as anyone familiar with the nature of state understands, government efficiency is an illusion. As anonymity in free transactions goes, so goes another barrier on further centralized planning.
Lew Rockwell’s rule of thumb follows that anything the government or its apologists in the media claim must be assumed to be an outright lie. The development of the “Mintchip” for “convenience” is no different.
If the state wanted to save Canadians money, it would relinquish its control over the monetary sphere and put an immediate end to perpetual inflation. Instead, keeping track of the serfs is the real name of the game.
James E. Miller holds a BS in public administration with a minor in business from Shippensburg University, PA. He is the chief blogger at the Ludwig von Mises Institute of Canada and a current contributor to his hometown newspaper, the Middletown Press and Journal.
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