by
Jeff Berwick
The Dollar Vigilante

Previously
by Jeff Berwick: You
Can’t Secede…Because We’re Exiling You!

Reports have
been swirling around about the death of another business at the
hands of a US government agency.  While those reports weren’t
totally true, as usual, the US Government has squashed any attempt
by unfree US citizens to do what they want.  Intrade is still
alive and kicking (although it probably wouldn’t be if it was
based in the US), minus its US customers…for now anyway. 
As of December 23, 2012, all US accounts with Intrade will be suspended
thanks to the meddling of the US Commodity Futures Trading Commission
(CFTC).

While Intrade
itself isn’t dead, its founder is.  Irish businessman John
Delaney founded Intrade in 2001.  He died at age 42 last year
in an attempt to realize his lifelong goal of climbing Mount Everest. 
He was just 50 meters from the peak and since his body was unable
to be recovered, he’s still there.  (I wonder if there
was a bet on whether or not he’d make it.)  Delaney was
born in 1969 near Dublin where Intrade would later be based. He
got his MBA in finance from the University College Dublin and after
a career in investment banking he got into online gambling in 1999. 

For those of
you who are unfamiliar with Intrade: this company simply allows
anyone to bet on yes-or-no events in the real world.  You can
literally bet on anything with a yes-or-no outcome.  Examples
listed right now on the site’s “How It Works” section
are:

• The Dow
  Jones to close on or above 13,000 on 30 Dec 2012
• Barack Obama
  to be reelected president in 2012
• The United
  States or Israel to bomb Iran before the end of 2012

(Note the second
example.  That’s a little dated.  They should have
replaced it with “CFTC to forbid US customers from using our
website.”… I would’ve put hard earned money on that one…
easy call!)

It’s actually
very simple and serves a very basic desire among humanity to try
to predict events…and make a little money by being right. 
What’s more, since there’s money on the line, the players
tend to have the best information available to make the best possible
guesses. 

Is it accurate? 
That is to say, do the majority of bettors on Intrade tend to be
right about the outcomes on which they’re betting?  Amazingly
so, as you’d expect the case to be in a semi-free market when
money is on the line.  Having something to lose tends to sharpen
performance (the reason entrepreneurs and businesspeople will always
make better decisions than politicians).  In 2011, professional
pundit Rachel Weiner admitted, “The site’s collective wisdom
tends to be more reliable than the cadre of professional pundits
when it comes to forecasting election results.” She continues,
“In 2008, bettors got only two states wrong – Indiana
and Missouri…In 2004 [however] the site got every state right.”

You can listen
to immoral talking head James Karville yammer on about all his picking
of the elections, but he never even came close to the free market’s
performance.  

Delaney sold
Intrade to Tradesports in 2003.  Based out of Ireland, Intrade
does not comment on the legality of customers in other countries
using its services.  And who can blame them? Especially when
there are rogue states armed to the teeth and with a powerful inclination
to meddle with their subjects’ personal lives and financial
dealings, particularly with foreign banks and businesses. 
You know, like the USSA.

The CFTC has
been stiff-arming Tradesports since 2005 when Tradesport first applied
for permission to open a regulated futures exchange in the US. 
You see, while Intrade has nearly 100,000 members in over 162 countries,
the bulk of its membership are US residents.  Yet on November
26, 2012, the US CFTC filed a civil lawsuit seeking an injunction
against allowing US citizens to trade on Intrade’s website.

Why does the
CFTC have such a bug up its collective butt about Intrade? 
According to Brad Plumer on the Washington Post blog:

“Intrade…wasn’t
merely allowing participants to bet on the outcomes of events like
elections or wars or the Oscars. The site was also allowing its
US customers to bet on the future price of things like gold or oil
between 2007 and 2012, the lawsuit said. If that’s true, it
would mean Americans were essentially able to buy and sell commodity
option on Intrade away from regulated exchanges. According to the
CFTC, that’s against the law.”

It was already
difficult for US customers to use Intrade since due to new banking
regulations in 2012, US customers were no longer allowed to fund
their Intrade accounts with their credit or debit cards like non-US
customers could.  This resulted in each trade costing US customers
$20.

Now the CFTC
claims that Intrade’s allowing US residents to bet on commodity
outcomes “violated market integrity.”  How it violates
market integrity is something they’ll never say… because its
total BS.  From government thug David Meister, the Director
of the the CFTC’s Division of Enforcement:

“It
is against the law to solicit US persons to buy and sell commodity
options, even if they are called ‘prediction’ contracts,
unless they are listed for trading and traded on a CFTC-registered
exchange or unless legally exempt. The requirement for on-exchange
trading is important for a number of reasons, including that it
enables the CFTC to police market activity and protect market integrity.”

Anyone paying
attention knows that the CFTC and any government agency does nothing
to protect the integrity of anything.  What they do is protect
their fascist manipulated markets over which they exercise extreme
control to tip the scales towards Goldman Sach$ and the other Wall
Street fascist companies that can do whatever they want.  To
translate, what criminal Meister really means is that Intrade’s
operations placed these bets outside of US regulatory control via
the CFTC, and even though the customers were happy and the market
was self-regulating, the government needs to throw its weight around
and interfere with every exchange in as many parts of the world
as possible.  Intrade dealt fairly with its customers – something
you cannot say the same for with the big banks and brokerages in
the US – and its predictions as determined by the direction of the
majority of bets were consistently accurate.  Liberty-defending
investigative journalist John Stossel put it well:

“These
regulations don’t help police market activity. When people make
money on Intrade, Intrade sends them the money. There are no allegations
of fraud. Customers are happy with Intrade, judging by increased
activity on the site (over $50 million was bet about whether Obama
or Romney would win.)

“The
market polices itself.”

Of course it
does.  But government agencies can’t let it.  It’s
just not in the government’s nature to allow markets to work. 
The very essence of government is “interference backed by the
most and biggest guns”…while making sure to get a healthy
cut of the action.  Intrade is just the latest victim in this
racket.  Last year it was online poker.  People peaceably
betting with each other on outcomes?  “Not on our watch,”
says the CFTC. 

Economist and
Intrade fan Bryan
Caplan has the CFTC’s number, however.

“The
CFTC’s real complaint is that consumers eagerly bet on Intrade
because the company exemplifies market integrity: “I trust
Intrade with my money because of their reputation, not government
regulation. Reputation: That’s the same mechanism, of course,
that underlies eBay, Amazon Marketplace, and the whole cornucopia
of internet commerce that the mainstream information economist of
1990 would have dismissed as free-market Fantasy Island.

“…Americans
send money to Intrade because Intrade delivers the goods (and produces
the positive externality of accurate forecasts in the process!).

“In
the information age, firms’ reputations are just a click away.
That’s all the protection any consumer needs. The only people
the CFTC is ‘protecting’ are their own obsolete employees.”

Reputation
is the only “regulation” the free market needs. 
But government can’t have their subjects understanding that. 
That would undermine the thread-bare legitimacy of the state. 
Imagine, the world doesn’t need a political mafia loaded to
the gills with guns to take our money and tell us what to do!  Well,
that’d be anarchy!

Intrade
Shows Up At Its Own Funeral To Laugh At US Gov’t

In typical
free market fashion, Intrade is already adapting to the state’s
attempts to kill its business.

From Intrade’s
website:

“The
report of Intrade’s death was premature”

We
understand yesterday’s announcement was met with surprise and
disappointment by our US customers, but this in no way signals the
end of Intrade in the US. In the near future we’ll announce
plans for a new exchange model that will allow legal participation
from all jurisdictions – including the US. We believe this new model
will further enhance Intrade’s position as the leading prediction
market platform for real time probabilities about future events.

For
our non-US customers, we will continue to offer real-money prediction
markets. In the coming weeks and months we plan to implement a number
of improvements to the Intrade website. These include expanding
our market categories, adding more convenient funding options and
a new and improved trading interface. We’ll keep you posted
on these initiatives as they develop.

You  just
can’t keep a good business down.  Take note, US government
and governments everywhere.  The free market is more fit for
survival than the state could ever hope to be.  This is more
than just the struggle of some betting site to keep making money. 
The reaction of Intrade is an encouraging sign of things to come.

It should also
be noted of the importance of alternative currencies to the fiat
gumbo in order to sidestep all these violent incursions into our
lives.  If we all could switch to a un-legislatable currency
like Bitcoin or even to precious metals in one form or another it
would keep these violent criminals more at bay.

In the meantime,
staying a step ahead – or out of the way – of the state
is an ongoing task.  Right now only American Intrade accounts
are being closed.  This is just the latest example of why it’s
handy to have a foreign passport and presence, in order to protect
from the aggressions of the planet’s most aggressive and presumptuous
of states.  And though the US is in many ways the worst, most
violent, most criminal, most overreaching government on the globe,
it’s hardly alone in its odiousness.  Recall that recently
the Dutch
government made GoldMoney stop accepting Dutch customers.  Or,
as I wrote about last year, when Internaxx, based in Luxembourg
called me to close my account because I was “Canadian”.
 I responded, I’m not “Canadian”, I’m a human
being.  They retorted, “that’s still not good enough”.
 So I pulled out one of my other passports from a Caribbean
nation and they backpeddled, “Oh, well now we can accept your
business.”  Having another citizenship and passport gives
you an out and a way to keep on operating when one of your tax farmer
governments pulls stunts like this.

I have to point
out, however, that having citizenship in two Western governments
is like having the fire too jump into after the pan becomes too
hot.  That’s why at TDV
Passports, we offer citizenship programs in much freer parts
of the world where governments aren’t quite as…robust…as
they are in Europe and north of the Mexican border.

I highly doubt
the Paraguyan… or Dominican Republic… or Cambodian governments
(just to name a few in which we have been deslaving people) will
soon be calling a press conference to announce that their citizens
can’t use Intrade.

It’s just
a curiosity when the majority of US citizens… or citizens of other
western countries will finally realize they are not only not the
freest on Earth… but some of the least free human beings on this
planet.

November 29, 2012

Jeff
Berwick [send him mail]
is an anarcho-capitalist freedom fighter and Chief Editor of the
libertarian, Austrian economics grounded newsletter, The
Dollar Vigilante. The Dollar Vigilante focuses on strategies,
investments and expatriation opportunities to survive prosper
during and after the US dollar collapse.

Copyright
© 2012 The
Dollar Vigilante

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