Last week, Canadian Prime Minister Justin Trudeau announced the suspension of Canadians’ rights last week in his invocation of the Emergencies Act to stop the Freedom Convoy protests in Ottawa and elsewhere. Among the restrictions announced are greater controls over the online crowdfunding sites that help to fund the protesters and attempts to control the flow of cryptocurrencies like Bitcoin.
According to news reports, “credit card processors and fund-raising services will be required to report any blockade-related campaigns to Canada’s anti-money laundering agency.” Canadian banks quickly fell in line with the decrees, with Toronto-Dominion Bank freezing two personal bank accounts containing C$1.4 million ($1.1 million) they said was intended to support the truckers.
It bears a striking resemblance to the Biden administration’s recent efforts to intensely monitor what goes in and out of Americans’ bank accounts. The president’s expected announcement this week of an executive order to explore greater regulation of cryptocurrency is likewise an attempt to stick the state’s nose ever deeper into the average citizen’s business.
You Don’t Control Your Money Like You Used To
We’ve grown used to the idea that the government has a monopoly on money. Coining money is one of those powers of the state that most people never consider, like building roads or controlling national borders. Our money has dead presidents on it — it’s plainly a government operation. Where else would money come from, right?
But before the rise of electronic money transfers — the electronic bill-pay, direct deposit, and credit and debit card purchases we make every day now — whether the dollar bill in your wallet was issued by a bank (as in the early days of the republic) or by the Federal Reserve (as they are now) did not much matter. It was yours. No one knew what you spent it on unless you chose to tell them.
That meant greater privacy, both from your neighbors and from your government. But it also entailed risk. Cash could be stolen, lost, or destroyed, and there was no way to get it back. And it was cumbersome, especially as inflation ate away at the value of a dollar. Could you bring cash for a downpayment on a house? Sure. It still happens. But hauling a suitcase full of cash invites the scrutiny of thieves and the state — even when it’s completely legal.
The convenience of electronic money has been clear for decades now, but the dark side is showing itself this year like never before. All of the convenience of moving money around effortlessly comes at the cost of losing control over it.
How Goverment Uses Control of Your Money to Control You
These digital transfers feel, to most of us, like magic. A volley of ones and zeros flies through the cybernetic ether and — poof! — your electric bill is paid. But in truth, the data is routed through banks, and there are fewer of them all the time. Those remaining, many-times-merged financial giants that handle our affairs are, for all their clout and power, susceptible to government pressure.
We have seen it already when the Obama administration leaned on banks to refuse to deal with people involved in marijuana or the sex trade, even where those businesses were legal at the local level. No federal law gave them this power: the threat was enough. And where people keep money in cash, the government often finds a way to take it without even bothering to charge the owners with a crime.
Trudeau’s emergency measures take advantage of these pressure points and lean on banks to choke off the complete flow of money to and from those he deems enemies of the state. No charges, no trial, just shutting it down. Now Trudeau’s government wants to make these “temporary” measures permanent. The slippery slope is usually not so steep, but these are strange times.
Governments have always used the word “emergency” to do what they want and to trample the liberties of the dissenting minority. Control over our money makes that easier than ever. Even the more self-sufficient among us engage in trade and unless you choose to live like a hermit, money is a part of that.
How Crypto Challenges the Government Monopoly on Money
Governments understand that alternatives to state-issued money, like cryptocurrency, are a threat to that hegemony. Trudeau and Biden demonstrate that in their recent efforts to control Bitcoin and other cryptocurrencies. But the beauty of these new systems is that they are made, purposely, to be beyond the control of any person or government.
When Bitcoin launched more than a decade ago, most of us (myself included) barely understood what it was or how it worked. Fake money for dark web mischief, I figured, an eventual failure at best, a scam at worst. Yet here we are in 2022, where government-issued money is eroded by inflation and controlled by statist decrees. They leave peaceful opponents with a choice between the old (gold) or the new (crypto). And crypto is a heck of a lot easier to carry around.
In deciding an earlier banking law question in McCulloch v. Maryland in 1819, Chief Justice John Marshall said that “the power to tax involves the power to destroy.” Two centuries on, we could apply a modern twist: the power to regulate involves the power to control.
Cryptocurrency was just a passing fad until government overreach made it a necessity. Decades of deficit spending have inflated the currency and decades of creeping statism have given the government massive power over how money is used. The government’s monopoly on money has failed and, like it or not, cryptocurrency is at least part of the answer.