Jim Davidson on PATRIOT Act and jewel industry [priv]

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Tue, 11 Nov 2003 09:28:50 -0500
From: Declan McCullagh <declan () well com>
Subject: [Politech] Jim Davidson on PATRIOT Act and jewel industry [priv]
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Date: Mon, 10 Nov 2003 22:44:11 -0600
Subject: Re: [Politech] U.S. Treasury invokes PATRIOT Act against jewel 
industry [priv]
Cc: politech () politechbot com
To: Declan McCullagh <declan () well com>
From: Jim Davidson <davidson () net1 net>
In-Reply-To: <6.0.0.22.2.20031107180244.02ef32a0 () mail well com>

Dear Declan,

These Treasury rules have been in the development phase for
quite a while.  They were submitted for public comment in
February 2003 as I recall, and were expected to be in place
by Summer 2003.

The rules establish that gold and other precious metals,
gemstones, and jewelry are excellent stores of value.
Evidently, the US Treasury has not forgotten this fact, in
spite of Nixon taking the last tie to gold away in 1971.

Unfortunately, the rules have a large element of insanity
to them, paired with a healthy dose of inanity.  I admit
that these rules may have changed from the ones I was
asked to review last Winter.

One of the obvious tips for precious metals dealers and
jewelers is that the rules require a dealer who buys from
the public and sells to the public beyond $50K per year to
maintain detailed money laundering "know your customer"
or, to convert from Biblical language, "screw your customer"
documentation.  The quick workaround is to split any business
into two pieces, half of which only buys from the public and
the other half of which only sells to the public.  Doing
so would completely bypass the money laundering paperwork
requirements.  Equally obvious, it would leave the businesses
both open to the sort of capricious application of "justice"
that the government has become famous for.

Another of the interesting features of these rules was
the obligation for automobile dealers to register as
precious metals dealers, owing to the large amount of
platinum in the catalytic converters of their vehicles.
Gnarly.

The rules themselves point up the unconstitutional vagueness
of the USAPATRIOT Act, which fails to establish what is or
is not a regulated business under its terms, and leaves to
government agencies to promulgate rules hoping to spell
such things out.  The rules also point out the hopelessness
of the challenge the government has set itself.  It can
certainly destroy the domestic precious metals industry,
as it has destroyed the domestic airline industry, or it
can simply ignore the fact that money is converted into and
out of gold at a fantastic rate every day.

My guess is that the socialist-Republicans will choose to
destroy whatever they cannot control.  Like they did with
the steel tariffs and the incipient trade war that has
brought on, it seems clear that these tax-and-spend
Republicans are very different from the earlier mold. These
new Treasury regulations remind me that there was once a
moratorium on new government regulations instituted by
a guy named Reagan, and lifted by his successor, Bush the
elder.

Regards,

Jim
 http://www.ezez.com/
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