FC: Followup to "Fed official wants bill tracking devices"

[Declan McCullagh <declan () well com>]

My article:
  http://www.wired.com/news/politics/0,1283,32121,00.html



The Village Voice
November 9, 1999, Tuesday
Nation; Pg. 36
MONDO WASHINGTON
By James Ridgeway

   METAL MANIA

   During the 1980s Midwest American patriots worried the Kremlin would gain
control of America by inserting electric codes in dollar bills. To fight back,
they mounted an underground war to screw the Commies: ditching their currency,
hoarding coins, and stocking up on hard metals like gold, silver, titanium,
and
the like. Time healed the paranoia. Then, out of nowhere last week came news
that the plan had resurfaced at the Richmond Federal Reserve, where one Marvin
Goodfriend, a senior vice president, proposed placing a tracking code on every
dollar bill. ''The magnetic strip could visibly record when a bill was last
withdrawn from the banking system. A carry tax could be deducted from each
bill
upon deposit according to how long the bill was in circulation,'' he told
Wired
News. Conspiracy buffs fear this means the beginning of the banks' war against
cash as we know it, and amounts to a law against hoarding. Not to mention that
any cop could find you and your money with the click of a mouse. Patriots
won't
die easily. The run on gold has just begun.


The Courier-Journal (Louisville, KY.)
November 1, 1999
By Richard Des Ruisseaux

   If you think money burns a hole in your pocket now, imagine how quickly
you'd
spend it if all your paper bills lost value the longer you kept them.

   That's an idea recently floated by Marvin Goodfriend, a Federal Reserve
official who suggested embedding a magnetic strip in each bill that could
record
when it was last withdrawn from the banking system.

   Then, said Goodfriend, a vice president with the Federal Reserve Bank in
Richmond, Va., ''A carry tax could be deducted from each bill upon deposit,
according to how long the bill was in circulation.'' This tax would discourage
hoarding of currency and help thwart black-market and criminal activities,
Goodfriend said.  

   U.S. Rep. Ron Paul, R-Texas, a member of the House Banking Committee, was
unimpressed. ''The notion that we're going to tax somebody because they decide
to be frugal and hold a couple of dollars is economic planning at its worst.''



> =======================================
> NEWS FROM THE LIBERTARIAN PARTY
> 2600 Virginia Avenue, NW, Suite 100
> Washington DC 20037
> World Wide Web: http://www.lp.org/
> =======================================
> For release: November 1, 1999
> =======================================
> For additional information:
> George Getz, Press Secretary
> Phone: (202) 333-0008 Ext. 222
> E-Mail: 76214.3676 () Compuserve com
> =======================================
>
> Federal Reserve official proposes
> plan to tax the cash in your pocket
>
>        WASHINGTON, DC -- A Federal Reserve official wants to add
> "tracking devices" to U.S. currency so the government can tax your
> cash -- a bizarre scheme that could cause your money to plummet in
> value and tighten the government's noose around the economy, the
> Libertarian Party warned today.
>
>        "If the politicians gain the power to track and tax currency,
> then financial privacy will be dead, your money will grow more
> worthless every day, and the government's power over the economy will
> be virtually unlimited," said Steve Dasbach, the party's national
> director. "This idea deserves a swift kick in the cash."
>
>        According to Wired.com -- the online version of Wired
> magazine -- Marvin Goodfriend, a senior vice president at the Federal
> Reserve Bank of Richmond, wants the government to tax private
> possession of cash via a high-tech tracking device on currency notes.
>
>        In a 34-page paper presented at a Federal Reserve System
> conference in Vermont, Goodfriend wrote: "[A] magnetic strip could
> visibly record when a bill was last withdrawn from the banking system.
> A carry tax could be deducted from each bill upon deposit according to
> how long the bill was in circulation."
>
>        Or, banks could mark bills with a visible "date issued" stamp
> when distributed via tellers or an ATM, he said. Either way, the longer
> you hold currency without depositing it in a bank account, the less
> that cash would be worth.
>
>        Such a cash tax could discourage people from "hoarding"
> currency and deter black market and criminal activities, Goodfriend
> argued.
>
>        Besides its longstanding opposition to any new tax, the
> Libertarian Party rejects Goodfriend's scheme for several reasons, said
> Dasbach.
>
>        "The intent of this plan is to drive all commercial
> transactions through the banking system, so the government could snoop
> on -- and tax -- every aspect of the economy," he charged. "In the
> guise of monitoring cash, the government wants more power to monitor
> and control the economy.
>
>        "But this plan wouldn't just punish businesses that operate in
> the cash economy: It's also a huge burden on people who don't trust
> banks or who prefer the security or convenience of cash. Every American
> would suffer from this proposal, as the government nibbled away,
> termite-like, at the value of their cash."
>
>        Besides, said Dasbach, the government already has a "carry tax"
> that decreases the value of your money: It's called inflation.
>
>        "Thanks to politicians' fiscal irresponsibility and the Federal
> Reserve's ability to print more money at will, the value of your cash
> already decreases every day because of government-caused inflation. To
> add another tax to the inflation that's already eroding the value of a
> dollar bill would add insult to injury."
>
>        The Libertarian Party isn't sure if Goodfriend's proposal is a
> "trial balloon" from the government or a fanciful scheme from one
> renegade Federal Reserve official, said Dasbach -- but it doesn't
> matter.
>
>        "Here's our two cents (which would probably be worth a cent and
> a half under this proposal): If this is a trial balloon, it deserves to
> be shot down immediately. The government needs to be told, in no
> uncertain terms, that Americans will not stand for such an intrusive,
> costly scheme," he said.
>
>        "If it isn't a trial balloon, then Mr. Goodfriend should be
> fired immediately, because this kind of totalitarian scheme has no
> place in a free country. Mr. Goodfriend may deserve a job in North
> Korea or Cuba -- but the Federal Reserve shouldn't employ people who
> advocate such un-American, constitutionally bankrupt proposals."
>
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> The Libertarian Party                                      http://www.lp.org/
> 2600 Virginia Ave. NW, Suite 100                          voice: 202-333-0008
> Washington DC 20037                                         fax: 202-333-0072



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