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Bitcoin: Revolutionary Game-Changer Or Trojan Horse?

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Bitcoin: Revolutionary Game-Changer Or Trojan Horse?

Washington’s Blog: February 4, 2014

(Visit Washington’s Blog to read the whole article)

…it sounds like Bitcoin is shaking up the status quo …

On the other hand, a lot of major mainstream players are backing Bitcoin and other digital payment systems.

Wells Fargo wants to get into Bitcoin in a big way.

JP Morgan Chase has filed a patent for a Bitcoin-like payment system. And Russia’s largest bank is working on a Bitcoin alternative as well.

Ben Bernanke and the Department of Justice have both cautiously blessed Bitcoin.

François R. Velde, senior economist at the Federal Reserve in Bank of Chicago, labeled it as “an elegant solution to the problem of creating a digital currency.” John Browne theorizes:

While crypto-currencies remain insulated from central bank manipulation, governments have thus far been tolerant, perhaps because their capability to track transactions is more advanced than Bitcoin believers admit.

Indeed, Bitcoin is not really that anonymous, as the NSA can track Bitcoin trades.

The NSA can apparently also hack Bitcoin. And see this. Given that the NSA may be changing the amount in people’s accounts, it would be child’s play for them to change the amount in your Bitcoin wallet.

And Yves Smith argues that Bitcoin actually plays into the hands of the central bankers:

Many [Bitcoin enthusiasts] clearly relish the idea of launching a currency outside the control of central banks (plus this beats Cryptonomicon in geekery).

If you believe the hype, you’ve been had. As Izabella Kaminska of the Financial Times tells us, you all are really just doing free/underpaid R&D for central banks, since you are debugging and building legitimacy for one of their fond projects, making currencies digital and getting rid of cash altogether.

I had wondered about the complacency of Fed and SEC officials in Senate Banking Committee hearings on Bitcoin last year.

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As Kaminska explains:

Central bankers, after all, have had an explicit interest in introducing e-money from the moment the global financial crisis began…

Bitcoin has helped to de-stigmatise the concept of a cashless society by generating the perception that digital cash can be as private and anonymous as good old fashioned banknotes. It’s also provided a useful test-run of a digital system that can now be adopted universally by almost any pre-existing value system.

This is important because, in the current economic climate, the introduction of a cashless society empowers central banks greatly. A cashless society, after all, not only makes things like negative interest rates possible [background here, here, here and here], it transfers absolute control of the money supply to the central bank, mostly by turning it into a universal banker that competes directly with private banks for public deposits. All digital deposits become base money.

Consequently, anyone who believes Bitcoin is a threat to fiat currency misunderstands the economic context. Above all, they fail to understand that had central banks had the means to deploy e-money earlier on, the crisis could have been much more successfully dealt with.

Among the key factors that prevented them from doing so were very probable public hostility to any attempt to ban outright cash, the difficulty of implementing and explaining such a transition to the public, the inability to test-run the system before it was deployed.

Last and not least, they would have been concerned about displacing conventional banks from their traditional deposit-taking role, and in so doing inadvertently worsening the liquidity crisis and financial panic before improving it…

Almost of all of these prohibitive factors have, however, by now been overcome:

1) Digital currency now follows in the footsteps of a “disruptive” anti-establishment digital movement perceived to be highly accommodating to the black market and all those who would ordinarily have feared an outright cash ban. This makes it exponentially easier to roll out. Bitcoin has done the bulk of the educating.

2) What was once viewed as a potentially oppressive government conspiracy to rid the public of its privacy can be communicated as being progressive and innovative as a result.

3) Banks have been given more than five years to prove their economic worth and have failed to do so. If they haven’t done so by now, they probably never will, meaning there’s unlikely to be a huge economic penalty associated with undermining them on the deposit front or in transforming them slowly into fully-funded fund managers.

4) The open-ledger system which solves the digital double-spending problem has been robustly tested. Flaws, weaknesses and bugs have been understood, accounted for, and resolved.

The balance of the article describes how the central bank digital currency would be launched, and Kazmina finds a plan developed by Miles Kimball of the University of Michigan to be thorough and viable.

Oh, and why would Bitcoin, um, central bank digital currency make it viable to implement negative interest rates? Kaminska tells us:

…the greater the negative interest rate, the greater the incentive to hold alternative coins. The greater the incentive to hold alternative coins ,the greater the incentive to produce them. The greater the incentive to produce them, the greater the chances of oversupply and collapse. The more sizeable the collapse, the more desirable the managed official e-money system ultimately becomes in comparison.

Either way, the key point with official e-money is that the hoarding incentives which would be generated by a negative interest rate policy can in this way be directed to private asset markets (which are not state guaranteed, and thus not safe for investors) rather than to state-guaranteed banknotes, which are guaranteed and preferable to anything negative yielding or risky (in a way that undermines the stimulative effects of negative interest rate policy).

So all these tales … of how liberating and democratic Bitcoin will be are almost certain to prove to be precisely the reverse. Hang onto your real world wallet.

The head of Signature Bank – Scott Shay – raised these same issues last month on CNBC.

Bottom Line: Too Early To Tell

It’s not yet clear whether Bitcoin will be a force for good or a backdoor way for big banks – and central banks – to get people to accept a cashless society.

Source: http://www.washingtonsblog.com/2014/02/bitcoin-savior-trojan-horse.html/

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Canada’s Conservative Government Cut Short Debate On New Elections Act

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Tories move to cut short debate on new elections act

By Stephen Maher / Glen McGregor
Postmedia News: February 5, 2014

OTTAWA – The governing Conservatives moved Wednesday to cut short debate on a new election bill that critics say helps the Tories and weakens oversight by Elections Canada.

House Leader Peter Van Loan gave notice Wednesday afternoon, a day after the 242-page bill was tabled, that the government will vote to send the bill to committee on Thursday, a move that seemed to signal the government plans to push the bill through the legislative process without changes.

Earlier Wednesday, NDP Leader Tom Mulcair predicted the government would cut short debate, denounced the Conservatives as “serial cheaters” and accused them of rigging the rules in their favour.

Opposition MPs began raising pointed questions about clauses of the act that they say will give a ballot-box boost to the Conservatives while reining in the watchdogs at Elections Canada.

While the bill has received endorsement from some observers, such as former chief electoral officer Jean-Pierre Kingsley, opposition parties are expected to challenge provisions that could weaken Elections Canada’s enforcement clout or give the Conservatives any ballot-box advantage.

The most dramatic change in the act is moving the office of the Commissioner of Canada Elections, home of the investigators in charge of enforcing elections law, from Elections Canada to the office of the Director of Public Prosecutions (DPP).

Pierre Poilievre, minister of state for democratic reform, says the move is designed to enhance the independence of investigators. Critics worry that the change may increase the chances of political interference in investigations, since the DPP answers to the government, not Parliament.

“The chief electoral officer is appointed to and is responsible to Parliament, but the DPP is appointed by the attorney general,” said NDP critic Craig Scott in question period. “Why is the government removing parliamentary oversight from the elections commissioner?”

Poilievre replied that only Parliament can fire the DPP: “The government cannot fire him by itself.”

Other provisions expected to draw resistance:

– The new bill would also restrict the ability of Elections Canada to communicate with voters, narrowing the legal authority of the chief electoral officer, eliminating provisions that allow Elections Canada to promote voting to “persons and groups most likely to experience difficulties in exercising their democratic rights.”

– In the House on Wednesday, Poilievre suggested it’s best for the agency to leave the job of promoting voting to political parties. Critics have suggested that the groups Elections Canada has targeted with advertising campaigns – such as aboriginals – are less likely to vote for the Conservatives than for opposition parties.

– The provision that stops Elections Canada from promoting voting also limits the ability of the chief electoral officer to communicate with the public “only” to inform voters about who and where to vote, raising questions about whether he could answer questions about the conduct of elections.

– The bill would prevent voters from casting ballots without government identification if they are vouched for by another elector. The Conservatives say “vouching” has a much higher level of irregularity than other voting methods and shouldn’t be allowed. Vouched voters account for only an estimated one per cent of all ballots cast and the New Democrats say banning the practice can disenfranchise people without fixed addresses, such as students, the poor and aboriginals – people more likely to vote NDP. Removing voter cards sent out by Elections Canada from the list of valid forms of ID will have a similar effect, the NDP says.

– Increasing the allowable political contribution from $1,200 to $1,500 annually would appear to give the Conservatives a fundraising advantage. In the past, the Tories have won the fundraising wars by taking smaller amounts from a larger number of donors than other parties. That has changed over the past two years. In 2013, a full 20 per cent of donations to the Conservatives were of the maximum allowable amount of $1,200, compared to 16 per cent of a smaller pool of Liberal donors. Increasing the limit should reap more cash for the Conservatives than the Liberals or NDP if this trend continues.

– The law will require the Commissioner of Canada Elections to notify the subject of an investigation when it begins. When the Ottawa Citizen and Postmedia News reported in 2012 that then-Conservative MP Dean Del Mastro was under investigation for alleged campaign overspending, he went on television to complain he had been blindsided by the news and never knew about the probe.

– New provisions allowing donors to make contributions to a leadership campaign every year, instead of just once per leadership race, might have helped Liberal leadership contenders from 2006 and 2013 pay down their campaign debts. The change to the law would be too late for them, but candidates in future races will benefit. And, quite possibly, the Conservative Party will be the next to choose a new leader, should Prime Minister Stephen Harper decided to step down before or after the coming election.

– The bill would allow parties to fundraise from past donors during an election campaign without counting the telemarketing costs as election expenses. The Conservatives have excelled at using sophisticated databases and phone bank companies to raise money and get out their vote. Under the new law, the costs of these call campaigns – thought to figure in the millions of dollars for the central campaign – would not count against their spending cap.

– MPs who are found to have violated elections rules can continue to sit as MPs while they appeal a ruling against them in court. This clause is apparently in response to the cases of two Manitoba Conservative MPs, who, the chief electoral officer said, were no longer eligible to sit in Parliament because of incomplete campaign finance reports. Court challenges can take many years and critics say some MPs could break the rules getting elected and then drag out lawsuits to hold their seats.

(article continues at Postmedia News)

Source: http://o.canada.com/news/tories-move-to-cut-short-debate-on-new-elections-act/

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British Spies Commit False Flags, Snowden Docs Show

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A NBC News report published February 5th 2014 confirms that Britain’s GCHQ spy agency has carried out cyber false flag attacks:

In another document taken from the NSA by Snowden and obtained by NBC News, a JTRIG official said the unit’s mission included computer network attacks, disruption, “Active Covert Internet Operations,” and “Covert Technical Operations.” Among the methods listed in the document were jamming phones, computers and email accounts and masquerading as an enemy in a “false flag” operation. The same document said GCHQ was increasing its emphasis on using cyber tools to attack adversaries.

(read the full report at NBC News)

Source: http://www.nbcnews.com/news/investigations/war-anonymous-british-spies-attacked-hackers-snowden-docs-show-n21361

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New surveillance technology can track everyone in an area for several hours at a time

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New surveillance technology can track everyone in an area for several hours at a time

By Craig Timberg
Washington Post: February 5, 2014

DAYTON, Ohio — Shooter and victim were just a pair of pixels, dark specks on a gray streetscape. Hair color, bullet wounds, even the weapon were not visible in the series of pictures taken from an airplane flying two miles above.

But what the images revealed — to a degree impossible just a few years ago — was location, mapped over time. Second by second, they showed a gang assembling, blocking off access points, sending the shooter to meet his target and taking flight after the body hit the pavement. When the report reached police, it included a picture of the blue stucco building into which the killer ultimately retreated, at last beyond the view of the powerful camera overhead.

“I’ve witnessed 34 of these,” said Ross McNutt, the genial president of Persistent Surveillance Systems, which collected the images of the killing in Ciudad Juárez, Mexico, from a specially outfitted Cessna. “It’s like opening up a murder mystery in the middle, and you need to figure out what happened before and after.”

As Americans have grown increasingly comfortable with traditional surveillance cameras, a new, far more powerful generation is being quietly deployed that can track every vehicle and person across an area the size of a small city, for several hours at a time. Although these cameras can’t read license plates or see faces, they provide such a wealth of data that police, businesses and even private individuals can use them to help identify people and track their movements.

Already, the cameras have been flown above major public events such as the Ohio political rally where Sen. John McCain (R-Ariz.) named Sarah Palin as his running mate in 2008, McNutt said. They’ve been flown above Baltimore; Philadelphia; Compton, Calif.; and Dayton in demonstrations for police. They’ve also been used for traffic impact studies, for security at NASCAR races and at the request of a Mexican politician, who commissioned the flights over Ciudad Juárez.

Defense contractors are developing similar technology for the military, but its potential for civilian use is raising novel civil liberties concerns. In Dayton, where Persistent Surveillance Systems is based, city officials balked last year when police considered paying for 200 hours of flights, in part because of privacy complaints.

“There are an infinite number of surveillance technologies that would help solve crimes . . . but there are reasons that we don’t do those things, or shouldn’t be doing those things,” said Joel Pruce, a University of Dayton postdoctoral fellow in human rights who opposed the plan. “You know where there’s a lot less crime? There’s a lot less crime in China.”

The Supreme Court generally has given wide latitude to police using aerial surveillance as long as the photography captures images visible to the naked eye.

(article continues at Washington Post)

Source: http://www.washingtonpost.com/business/technology/new-surveillance-technology-can-track-everyone-in-an-area-for-several-hours-at-a-time/2014/02/05/82f1556e-876f-11e3-a5bd-844629433ba3_print.html

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