Your roguish economist has four sons. Several of them invested in the virtual currency Bitcoin. They thought it was the money of the future.
‘Watch out,‘ cautioned their father. ‘Governments always try to look into the future and prevent it from happening. And this is a future the feds are especially keen to stop. They have a monopoly on money. And there is no way they’ll give it up without a fight.‘
The fight has begun. The Financial Times is on the story: ‘Blow to Bitcoin as $3.6 million seized.‘
The feds began with a flank attack. They shut down the illegal drugs market website Silk Road, which they described as a ‘black-market bazaar‘.
They’ve also arrested a 29-year-old hacker who goes by the name of ‘Dread Pirate Roberts’…allegedly the brain behind the Silk Road site.
A black market bazaar sounds like a good thing to us. Fewer zombies to worry about. Just crooks, scoundrels, and the usual riffraff.
But a ‘black market bazaar’ also sounds like the sort of thing the feds would like to stop. Who collects taxes in a black market?
Since the Silk Road site is where many Bitcoin enthusiasts turn their money into goods and services, its closing substantially reduces the value of the new currency.
We will come back to this subject in a moment. First…a quick market check.