Funny Money Funny Business

A new terrorist is threatening America. The CIA has long been keeping watch on this emerging global power in fear that it will usurp the American economy. This dangerous entity has received hundreds of thousands of votes for the U.S. presidency--the only rodent ever to make a bid for the country's top post. Terror has a name. And it is Mickey Mouse.

Sound far-fetched? Not according to the CIA. There is one very unique aspect of this fictional rodent which may make the spooks a little nervous: Just like our first president, Mickey's face graces his own $1 bill. That kind of funny money funny business is serious business to the CIA. Even something as innocuous as Disney Dollars is watched and regulated very closely by the government to ensure that it doesn't become a real currency and carry a real economy. It's all fun and games when we use Disney Dollars to buy some Goofy clothes or Mickey Mouse watches at the Disney Store. But once we start using Disney Dollars to buy Cokes from the soda machine or--heaven forbid--to pay Disney Store employees' salaries, the government will crack down.

That's because currency is the exclusive domain of the U.S. government. They literally make money, with printing presses, secret dies, counterfeit-proof magnetic strips, special paper recipes and serial numbers. But it's not enough to make the money; they must keep track of it too. When Disney pays their employees, it must be in U.S. legal tender, and not Disney illegal tender, because the Internal Revenue Service needs to know exactly how much money changed hands in order to take the "proper" share for itself.

However, far more threatening to the government than Disney Dollars is an emerging technology known as digital cash. With the increasing popularity of electronic accounting systems such as ATMs, credit cards and automatic paycheck deposits, the American economy stumbles ever closer toward a society with a currency entirely composed of pieces of data.

Imagine a scenario in which private companies are legally allowed to own, develop and export encryption that the National Security Agency cannot crack. In this scenario, encrypted commercial transactions are made anonymously with the swipe of a plastic card. Suppose that I buy some gas from the local Gas 'N' Grub chain owned by an offshore company. If the transactions were digitally encrypted, how would the IRS know if any sales tax had been paid? How would they collect my income tax if salary transactions were privately-encrypted transactions?

Digital-cash advocate Bill Frezza has been quoted as saying, "Encryption is to the Information Revolution what the Atlantic Ocean was to the American Revolution. It will render tax authorities as impotent in projecting their power as the ocean crossing did to King George." Our government will not surrender its tax revenue any more readily than King George did. And despite the vociferous clamoring of civil libertarians over these issues, the right to personal encryption is not guaranteed by law. And even if encryption becomes protected, the law will certainly be changed, either legally or illegally, to protect the tax interests of the federal government.

Despite people's fears about censorship, the government finds bomb recipes, pornography and communist newsletters petty. The far more heinous crime is to rob the government of its tax revenue. If the IRS were rendered impotent, the CIA, NSA, FBI, DEA, ATF, et al. would collapse in short order. Therefore, it is the ultimate goal of every government agency to protect the authority of the IRS.

The conflict is that encryption, and the privacy that it enables, is a friend to the people. We expect our government to protect our privacy rights, but encryption, and the anonymous economy that it may bring, tears at the roots of taxation. Several solutions have been proposed by the government to meet its needs, but they have been unsatisfactory to the people. As the government tries to keep up with the relentless pace of progress, citizens must scramble to make sure that the laws which protect the government also serve the interests of the people.

Tomorrowland is crashing in on us faster than we think, and the debate over encryption will be a far wilder ride than any found in Disneyland.