
U.S. GOVERNENT DECLARES WAR ON CASH:

	"Whenever any form of government becomes destructive... It is the right
of the people to alter or abolish it." [Declaration of Independence (1776)].

Using the "War on Drugs" as justification, the U.S. Government is tightening the
screws on cash transactions. The fear is that the next step is a "cashless
society," where surveillance is easy.

	Government bureaucrats don't like cash transactions. After all, cash is
difficult, if not impossible, to trace. Cash makes it easier to do business
"off the books" without paying taxes. In short, cash is a private way of doing
business, and the United States Government doesn't like too much privacy.
	
	To fight cash, the United States Government has adopted legislation to
discourage its use. The Bank Secrecy Act, for example, requires banks and other
financial institutions to report cash transactions over $10,000 and any other
"suspicious cash transactions." [Subsequently amended to lower the threshold
level of "suspicion" to cash transactions over $3,000] The Act also considers
money orders, cashier's checks and traveler's checks as "cash."

	Amendments to this Act enlist ordinary businesses for the war on cash.
The new cash reporting form for business, Form 8300, even requires merchants to
report "suspicious transactions" by their customers. No one is exempt, not even
your attorney! The money you pay your defense attorney can now serve as the
"smoking gun" to convict you of a crime.

	Section 1957 of the Money Laundering Control Act states that merchants
who accept cash from customers they suspect of committing a crime may themselves
be entering into criminal conspiracy. But if you refuse to do business with
someone you suspect of a crime, you may be sued for discrimination!

	Forfeiture laws adopted in the 1980s give the federal government the
right to seize cash "tainted" by drugs. Yet analysis by the Drug Enforcement
AdministratHidden Agenda: Cancer Exposeof all cash in circulation is drug
tainted. Does this make cash illegal? You be the judge!

NEW DIRT ON MONEY LAUNDERING

	By definition, money laundering is any action you take to disguise cash
tied to an illegal activity. Obviously, income tax evasion is an illegal
activity. So, if you earn cash that you fail to report on your tax return,
you're not just a tax evader, you're a money launderer.

	Money laundering now includes the deposit and/or use of cash on which
taxes have not been paid, and violators are threatened with prosecution. And
the maximum 20-year prison term and $500,000 fine for money laundering is far
harsher than the maximum penalties for tax evasion. Moreover, convictions are
far easier to obtain, since "money laundering" and "drug crimes" are inexorably
linked in the minds of juries.

	By far, the most insidious money laundering crime is "structuring",
defined as any act taken in order to avoid filling out a currency transaction
report (Form 4789 for banks, Form 8300 for other types of businesses). This
might seem a fairly trivial offense, but fines run up to $25,000 per violation,
in addition to forfeiture of the funds involved.

	This statute, for all practical purposes, makes any attempt to protect
financial privacy from government financial inquisitors unlawful. And because
the structuring law is worded vaguely, not even Internal Revenue Service agents
are sure what it means.

	It is clear from IRS regulations that a person depositing $2,900 in cash
into an account on two consecutive days is "structuring" his transactions. But
six consecutive $490 deposits may be considered structuring as well. The
regulations don't address this specific possibility, or any of an infinite
number of other possibilities.

	One of the first individuals prosecuted for structuring was Charles
Scanio, an ordinary citizen who attempted to pay off a $13,000 loan in cash
without filing a currency transaction report. The government never claimed that
Scanio had any criminal intent. Even so, he was convicted of the offense, and
his money was FORFEITED TO THE IRS.

NEW CASH CRIMES

	The latest salvos against cash come in the form of 13 proposed anti-money
laundering bills introduced in the current Congress. The most comprehensive
bill is HR-26, the Money Laundering Enforcement Amendments. If enacted, this
bill will:

	(1)	Prohibit banks from informing customers of an investigation of
their financial records by any government agency;

	(2)	Permit the government to seize bank accounts or cash whose origins
or transaction records were suspicious, without a trial;

	(3)	Greatly expand the definition of "structuring" by making it
illegal to arrange transactions to avoid IRS reporting requirements for money
transferred outside the U.S. Currently, structuring is illegal only when it
involves a U.S. financial institution; and

	(4)	Require the Treasury Department to recall all $50 and $100 bills,
and to study proposals for a dual currency; one to circulate inside the United
States, another currency for use outside the country.

	HR-950, the Money Laundering Control Act, duplicates many of the
provisions of HR-26, but would also:

	(1)	Permit customs officials to conduct body searches, open mail, and
inspect the private correspondence of anyone entering or leaving the United
States; and to seize cash or monetary instruments it finds, all without a
warrant; and

	(2)	Require the Treasury to study proposals for a "more traceable"
currency.

	HR-3326, the Drug Supply Reduction Act, contains the most incredible
provision of all. It would permit the government to confiscate your car or boat
if it contains any hidden compartments "not part of the normal vehicle
configuration". Such compartments might conceivably be used to hide drugs or
"illegal cash", according to the Bill's sponsors. (Do you own some tools you
don't want to leave in the back of your pickup truck? Don't construct a "hidden
compartment" to put them in, your truck might be seized!)

MAGNETIC MONEY

	If the government can't end the use of cash overnight, the next-best
solution from a bureaucratic perspective might be to require all citizens to use
currency whose movements can be tracked.

	The first example of a new, "more traceable" currency, the $100 bill, was
introduced in 1991. The new $100 bills contain a microscopic line of print
circling the portrait in the center of the bill and a tiny thread running
vertically down the left side of the bill. The bills also contain magnetized
ink. New $20s and $50s were introduced in early 1992.

	The polyester thread running down the left side of the bill is interwoven
with magnetic threads. Moreover, these threads are capable of being encoded
with messages, a Social Security number, for instance. At least some U.S. banks
are said to be already equipped with machines capable of "reading" the messages.

	Now that the new money has been introduced, the next step might be for an
outright recall of the "old money". In 1989, a suggestion for a currency recall
came from former Treasury Secretary Donald Regan, who recommended that all $50
and $100 bills be recalled and replaced with a new currency. The changeover
should occur in a ten-day period. Regan proposed, and the old money would no
longer remain legal tender after that time. Furthermore, Regan recommended that
anyone turning in more than $1,000 in old bills be required to prove that all
taxes on the cash had been paid, and that the cash had not been generated
through illegal activity. Otherwise, the funds would be impounded by the IRS,
and their former owner would face further investigation.
	
	Shortly after the Regan proposal was made public Senator John Kerry (D-
Mass) introduced an act that called for machine-readable bar codes on all U.S.
currency, so that all $20s, $50s, and $100s would be "more traceable". Kerry
recommended that serial numbers on these bills be tracked by optical scanning
devices such as those used in grocery store checkout counters. In this manner,
perhaps in combination with a national ID card, the identity of the individual
spending the currency could be ascertained.
	
	Today, the tools are in place to put into effect Regan's and Kerry's
suggestions. If a sudden currency recall were to take place, it would
presumably be justified as part of the "war on drugs". And once the old money
had been recalled, the Treasury could announce that money laundering, for all
intents and purposes, had been eliminated.
	
.c.:A LICENSE TO PRINT MONEY

	But the recall could have a much more sinister purpose: the introduction
of a two-tiered currency--a "domestic" currency to circulate in the United
States, and an "international" currency to circulate abroad. The two-tiered
system could also be justified as providing a permanent end to the money
laundering problem. The real reason for the changeover, however, would have
nothing to do with money laundering. The real reason would be to establish a
two-tiered exchange rate for the dollar.
	
	At first, the values of the domestic and international dollars would be
equal. However, the use of a currency that could not leave the country except
under restricted conditions would permit the Federal Reserve and the Treasury to
inflate away the government's gargantuan debts and unfunded obligations, using
the power of the printing press. This would rapidly depreciate the value of the
domestic currency against the international currency.
	
	A law on the books for nearly a decade makes this kind of debasement
completely legal--and the U.S. dollar has already lost more than 90 percent of
its value in relation to gold in the past 60 years. U.S. Public Law 96-221, the
Depository Institutions Deregulation and Monetary Control Act of 1980 added
"bills, notes, revenue bonds and warrants with a maturity date not exceeding six
months...by a foreign government or agency thereof" to the list of items
constituting "legal monetary reserve" for the U.S. money supply.
	
	In other words, it is perfectly legal for the U.S. government to simply
buy or borrow a few trillion dollars' worth of foreign bonds denominated in the
Russian ruble, Brazilian cruzeiro, or any other Third World currency. It could
then use these "assets" as a "legal monetary reserve" in order to print as much
currency as is required to meet the obligations for the welfare state.

	Moreover, the Fed could allow the international dollar to float in the
international currency markets. U.S. Treasury securities issued for purchase by
foreigners would be denominated in this new currency, perhaps even backed by
gold. This would have the effect of greatly increasing foreign purchases of
U.S. Treasury debt which have declined from net purchases of $75 billion in 1988
to less than $5 billion in 1991.
	
	Treasury securities held by U.S. citizens would be denominated in the
virtually worthless, non-gold-backed domestic currency. Only selected banks
would be authorized to exchange domestic dollars for international dollars, and
the amount of currency that could be exchanged at one time could be made
progressively smaller. The domestic dollar would become a "blocked" currency,
no longer freely exchangeable in world markets.
	
	Currency recall could touch your life directly, even if you don't think
you have anything to hide. Millions of citizens have perfectly legitimate
reasons to hold cash. For instance, many people who experienced the Great
Depression firsthand recall that thousands of banks failed during those years.
Anyone who lost money in a failed bank, or fears that the government could
someday violate current deposit guarantees, might prefer to keep his or her
money in cash.
	
	If you think that there would be massive opposition to a new money
conversion, opinion polls show otherwise. Market Facts, a market research
company, revealed enormous public support for any currency exchange that was
part of a fight against counterfeiting or drug trafficking. "Conservative"
columnists such as William Safire have gone on record as favoring currency
recall to fight money laundering. And when former Treasury Secretary Regan
proposed his recall of all $50 and $100 bills, his suggestion met with virtually
no criticism outside the alternative press.
	
.c.:THE ULTIMATE BUREAUCRATIC GOAL

	One way for bureaucrats to do away with cash is to make possible
substitutes very convenient. Today, credit cards and personal checks have
eliminated most cash transactions. And tomorrow, electronic "debit cards"
promise to eliminate the rest.
	
	With a debit card, purchases are paid for with a card read by a
merchant's computer terminal. Your bank account is debited automatically for
the amount of purchase and the merchant's account is simultaneously credited the
same amount (minus a service charge). The process is neat, simple, and all the
paperwork is done automatically. A paper trail on every item you purchase is
created. But if you are making a purchase or contribution that you wish to keep
private, then you have a problem.
	
	Debit cards are popular with merchants because they provide an instant,
foolproof credit that is applied to their account. Credit card chargebacks and
bounced checks are eliminated. Debit cards also permit a merchant to categorize
his customers by what they purchase and how much they spend, allowing the
merchant to direct his marketing efforts appropriately.
	
	Banks like debit cards because they can deduct a service charge for each
transaction. Banks are already imposing service charges for use of automatic
teller machines (ATMs), which are nothing more than debit card terminals.
	
	Marketing firms like debit cards since the profile created from
individual purchases will create a much more detailed picture of consumer
spending patterns than is currently available. And government bureaucrats like
debit cards because they eliminate cash and permit much more detailed financial
surveillance.
	
	Debit cards won't eliminate cash overnight. But their convenience will
make them a hot product of the 1990s and beyond. A national debit card system
is already in use in France. Canadian banks intend to launch a national debit
card system as well. A recent agreement between a dozen of the largest regional
ATM networks would set up a national debit card system that would allow
consumers to instantly deduct purchases from their checking accounts anywhere
they travel. In the near future, you will hear much more about debit cards.
	

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(This file was found elsewhere on the Internet and uploaded to the
Patriot FTP site by S.P.I.R.A.L., the Society for the Protection of Individual Rights and Liberties. E-mail alex@spiral.org)
