Long-time readers of EconomicPolicyJournal.com know that I have been a severe critic of the idea that bitcoin will be a libertarian answer to government money.
The nature of the blockchain is such that bitcoin becomes a very trackable currency if bitcoins are used for regular transactions.
However, I have also been careful to point out that for single transactions, bitcoin could be quite useful in making an anonymous transfer.
Enter Donald Trump and his wall along the Mexican border that he will "get Mexico to pay for."
He has just supplied a memo to the Washington Post explaining how he plans to force Mexico to pay for the wall.
Donald Trump says he will force Mexico to pay for a border wall as president by threatening to cut off the flow of billions of dollars in payments that immigrants send home to the country, an idea that could decimate the Mexican economy and set up an unprecedented showdown between the United States and a key diplomatic ally.
In a two-page memo to The Washington Post, Trump outlined for the first time how he would seek to force Mexico to pay for his 1,000-mile border fence, which Trump has made a cornerstone of his presidential campaign and which has been repeatedly scoffed at by cureent and former Mexican leaders...
In the memo, Trump said he would threaten to change a rule under the USA Patriot Act antiterrorism law to cut off a portion of the funds sent to Mexico through money transfers, commonly known as remittances. The threat would be withdrawn if Mexico made “a one-time payment of $5-10 billion” to pay for the border wall, he wrote.
“It’s an easy decision for Mexico,” Trump said in the memo, which was written on campaign stationery emblazoned with “TRUMP Make America Great Again.”
After the wall is funded, Trump wrote, transfer payments could continue “to flow into their country year after year.” He gave the memo to The Post in response to a written question provided to him before an interview last week.
Nearly $25 billion was sent home by Mexicans living abroad in 2015, mostly in the form of money transfers, according to the Mexican central bank. In his memo, Trump said that “the majority of that amount comes from illegal aliens.”...
“We have the moral high ground here, and all the leverage,” Trump concludes.
Trump's memo reveals the remarkable naivete, lack of understanding of the nature of a complex world and his bizarre notion that he as the great leader can micromanage the entire world.
Trump, as president, may full well be able to limit Western Union and banks from transferring money to Mexico, but it would do nothing to stop the transfer of funds from nonregistered foreign-born workers (NFBW).
It is not difficult to see how an NFBW could, on the black market, transfer his US earnings into bitcoin and pay it out to his family in Mexico. He simply buys, with his US dollars, bitcoins on the Mexcian-community black market that would emerge in the US and pay the bitcoins out electronically to his family in Mexico, who would sell them for pesos in Mexico.
Indeed, I suspect on the Mexican side of the border Mexico would encourage bitcoin exchange shops and hawala (another method funds could be transferred across the border to Mexico without physical movement and extremely difficult for governments to detect) shops, as a way to defeat Trump's plan.
A further note: Although, Trump claims he wants to stop illegals who are murderers and rapists, by attempting to block money transfers, he is really attempting to harm those who come to this country to work.
And it should not go unnoticed that Trump's first detailed policy statement includes plans for the expansion of the horrific Patriot Act.
Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics