Wednesday, July 24, 2013

Cybermoney and the Age of Immaterialism


Image Source: Telegraph.

Last week, CNN and other media outlets ran a little story about a PayPal error, wherein a minor eBay seller found his PayPal account credited with USD $92 quadrillion:
When Chris Reynolds opened his June PayPal e-mail statement, something was off. The Pennsylvania PR executive's account balance had swelled to a whopping $92,233,720,368,547,800.
That's $92 QUADRILLION (and change).
Money that would make Reynolds -- who also sells auto parts on eBay in his spare time -- the richest man in the world by a long shot.
Rich, as in more than a million times richer than Mexican telecom mogul Carlos Slim. And he's worth $67 billion.
Oh, if only.
"It's a curious thing. I don't know, maybe someone was having fun," Reynolds said.
So he logged online, and reality bit back. His account balance read $0. The correct amount.
PayPal admitted the error and offered to donate an unspecified amount of money to a cause of Reynolds' choice.
"This is obviously an error and we appreciate that Mr. Reynolds understood this was the case," PayPal said in a statement.
Before this incident, the most Reynolds ever made on PayPal was "a little over $1,000" selling a set of vintage BMW tires on eBay.
So what would the would-be quadrillionaire have done with all that cash? "I probably would have paid down the national debt," he said.
Image Source: CNN.

In February of 2013, there was an equally curious article about PayPal at the neoconservative Website, World Net Daily (WND). The article was written by Jerome Corsi, a Boomer conspiracy theorist who has been accused of bending facts in his criticisms of the Democrats. The source is odd, and so is the report:
A former employee of one of the world’s largest international banks who has provided WND with more than 1,000 pages of evidence alleges the Internet giant PayPal and American Express are implicated in an international money-laundering scheme involving hundreds of billions of dollars. The whistleblower, John Cruz, was a relationship manager in the southern New York region for the London-based global bank HSBC.
“I found many accounts where PayPal and American Express were used as conduits through which hundreds of thousands of dollars were deposited or withdrawn from HSBC customer accounts in a pattern of suspicious transactions that should have been reported to legal authorities under various banking statutes, including the Patriot Act,” Cruz told WND. Neither PayPal nor American Express responded to WND email and telephone requests for comment.
Image Source: Socialist Unity.

A piece on HuffPo from May 2011 remarked that prepaid credit cards are commonly used to launder drug money and are reloaded with PayPal and similar services:
No one knows how big a role the cards play in moving the more than $20 billion in drug earnings that U.S. authorities estimate crosses from the U.S. to Mexico annually. Yet while anyone crossing that border with $10,000 or more in cash must declare it, prepaid cards are legally exempt.

Visually, the cards are barely distinguishable from credit or debit cards and the most versatile let users reload them remotely without having to reveal their identity, using cash, moneygrams, PayPal and other online payment services.
Some cards can process tens of thousands of dollars a month. Just load them up in Connecticut or Texas with, say, the proceeds of cocaine sales and collect the cash in local currency from an ATM in Medellin, Colombia or elsewhere in Latin America.
"I'm not so sure we have a sophisticated understanding of how to deal with this," said Richard Stana, who oversaw a report on prepaid access for the General Accounting Office, the U.S. Congress' research arm. "It's just a whole new way of doing business."
Then there was the PayPal goes to space idea, which I mentioned in a recent post:
“As we travel through space and explore new planets, we will still need to pay for life on Earth and out there…” There is no indication that he stopped ... to ask the obvious. Explore new planets? What new planets?
What new planets, indeed? Does it matter? The sooner we stop expecting to connect with reality as far as the economy is concerned, the clearer we will be about what is happening. It is not surprising that incidents like PayPal's clerical error occur behind the scenes in financial circles. Who can say what they really signify? What are three extra zeroes, or fifteen extra zeroes, on a computer ledger? None of it is real.

This is why the conspiracy theorists' ideas about the economy are wrong. For example, to believe a potential conspiracy theory about PayPal and $92 quadrillion, you would have to be very literal-minded and assume that there was something out there worth that amount of money that needed securing. To its credit, the Silicon Valley Mercury News actually realized this. What, out there, is worth $92 quadrillion? Perhaps the most sensible of its suggestions was that with $92 quadrillion, you could buy - or create - 1.37 million Bill Gateses.
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