Nobody paying attention should have been surprised last week when the US government effectively shut down for US citizens Intrade, the popular website that lets users bet on the outcome of future real-world events. This illustrates yet another example of the need for Americans to internationally diversify, and the increasingly smaller world for them. A world that will continue to be restricted by overbearing and excessive government regulations that will no doubt increase as the fiscal/monetary situation deteriorates.
Last year online poker was the target, and then it was Megaupload.com, now the US government is alleging that Intrade is guilty of the horrendous crime of letting consenting Americans wager on the future price of certain commodities, like gold or oil. According to David Meister, the director of the CFTC's division of enforcement, it is illegal to solicit Americans to buy/sell commodity options, even if they are called “prediction” contracts unless they are listed on a CFTC-registered exchange or are legally exempt.
While the CFTC surely knows the difference between an options contract and a prediction market like Intrade, they claim the power to regulate nearly any commodity-related activity unless Congress provides a specific exemption. A complete perversion to the concept of a government with limited powers – an interpretation by no means unique to the CFTC.
The CFTC is seeking a permanent injunction and suing to prevent Intrade from operating in violation of the Dodd-Frank Act while seeking fines and penalties equal to all monetary benefits received as a result of the alleged violations. Intrade is indeed fortunate to be based outside US jurisdiction in Ireland; otherwise, they probably would have lost more than just their US clients at the moment.
Naturally the US government is claiming (as they and all governments do) that they are taking these steps for your own protection. Deliberately vague concepts such as the ”public interest” and ”market integrity” serve as catch-all justifications for any imaginable government intervention. A sick joke, considering that while Gary Gensler’s CFTC was looking after the American “public interest” from the evils of Intrade, they totally dropped the ball when it came to the scandal at MF Global, then run by politically-connected criminal Jon Corzine.
Financial intuitions around the world already treat US citizens as if they had the plague – closing American accounts and refusing to do new business with American clients due to the onerous costs of doing so. The Intrade outrage is just the latest example of this trend and certainly won’t be the last; the window is fast closing for US citizens looking to diversify internationally.
Doug Casey believes it’s time to speak out against ever-increasing government meddling in US citizens' lives and the treacherous lure of the nanny state. Check out his latest book, Totally Incorrect here, which is a thought-provoking and enjoyable read.
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