Will Electronic Money Be Deflationary?

QUESTION:

Hi Martin,

I read your article “The Tree Has Been Cut” and I’m playing devils advocate here.

Catherine Austin Fitts, the Former Assistant Housing Secretary, estimates the re-cycling of Narco dollars into the US stock market is substantial.

If electronic money results in better law enforcement and reduces both crime and the possibilities for laundering the proceeds of crime, wouldn’t electronic money then be deflationary for the country implementing it, as honest money may stay, but dirty money would have to hide somewhere else?

Best regards,

PB

ANSWER: I doubt seriously the connect with drug money and the stock market. That is fiction. The amount of know-your-client requirements makes that total bullshit. A friend got a divorce in Switzerland. The account was joint and he had to wire his ex-wife half that money. He had to provide copies of the divorce papers to prove why he was wiring and what was the source of the funds.

Will electronic money become deflationary? In combination with all the other regulations hunting down money for taxes, the answer is probably yes. This would most likely (opinion here) be the similar result to full blown capital controls since that is what would result by default.