
Drug money saved banks in global crisis, claims UN advisor (2009) - hippich
https://www.theguardian.com/global/2009/dec/13/drug-money-banks-saved-un-cfief-claims
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sonnyblarney
The article only makes sense with a certain, fixed view of money.

Money is a social contract, it's worth whatever we want it to be, and we can
change the value of it at any time.

The credit crises is not a issue of money, it's an issue of confidence in the
system. No confidence, no credit, no system.

During this time, any government can play magic with the balance sheet and do
as they please. This is what TARP etc. was about. The issue is really just
about 'who wins and who loses' in a centrally planned game of money magic.

The drug industry mightn't have been too affected, by the downturn, and
'confidence' in their economy just kept on trukin'.

But any 'crash' in a post financially literate age that is not due to a true
existential shock (like an earthquake that destroys nations) ... then we
should be able to handle it ourselves without the crunch. The real issue just
comes down to how we're going to divide up the pie when we wave our magic
money wand, and it more than likely ends up benefiting the bankers more than
others.

~~~
pesmhey
I agree with you whole-heartedly that money is a social contract. I did
disagree with how you’ve formed your argument:

 _The credit crises is not a issue of money, it 's an issue of confidence in
the system._

 _Money is a social contract..._

You wouldn’t enter into a contract with someone you had no confidence in that
they would uphold their end.

Money is credit is debt is a social contract. I think that maybe you’ve gone
slightly too far in the opposite direction of money being some fixed thing. It
represents confidence, and we can’t just make it whatever we want, although we
can bend it in a lot of ways.

Interestingly enough, with this view of money, it does make sense that at the
pinnacle of failure of regulated, government-sanctioned contracts, you might
find people (in aggregate) turning their confidence towards organized crime,
with a proven record of organizing massive operations to move products.

~~~
sonnyblarney
We can make money whatever we want. Fixed currencies that are backed by gold,
surely, we can't 'make' gold ... but that's an artificial limitation.

I'm not saying we _should_ make it what we want, but we have to remember
that's what's at stake.

Organized crime may have the advantage that contracts are ruthlessly enforced
... so you can't have the totally corrupt value chain as you had with housing,
wherein there was fiction from the house buyer, to the lender, to the VP of
mortgages, to the bundlers, to the buyers of said bundlers, and to all the
people trading on top of that.

Also, there are no derivatives or complex financial instruments riding on top
of the drug trade, so the 'house of cards' would have a lot less falling to do
if it were to come apart.

But you can't build an economy of killing people who don't pay you or sell to
your customer ...

~~~
hndamien
The "artificial" or rather "natural physical" limitation on gold is what give
it value in the social contract in the first place, so you can't just make it
what you want. If you remove the limitations, its very hard to form the
contract - but not impossible.

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zarriak
Every time I read about this it makes me think back to the video of the cartel
depositing perfectly sized boxes at a HSBC bank.

~~~
liftbigweights
Well HSBC ( Hongkong and Shanghai Banking Corporation ) was created by the
british after the opium wars to launder opium money out of china to the west.
If any bank is adept at procuring drug money, it's HSBC.

It's a shame how little we are taught about the opium wars in the US. It
fundamentally changed the world. Some historians describe it as the greatest
wealth transfer in human history. The capital extracted from china is what
funded some of the largest banks in the world today, the industrial revolution
in the US/britain and political dynasties well into the 20th century.

Of course it left china in shambles, but the opium trade was the true gold
rush of the 19th century.

[https://www.nytimes.com/1997/06/28/opinion/the-opium-war-
s-s...](https://www.nytimes.com/1997/06/28/opinion/the-opium-war-s-secret-
history.html)

~~~
infinity0
Can you put some numbers on that? How much money was transferred, in today's
dollars?

~~~
liftbigweights
It's impossible to say. We can realistically only see the broad strokes of
history.

1\. We know that the west was running a significant trade deficit with china.
To such a degree that we finally decided war was the only option. We know that
soon after the first opium war, china started running a trade deficit with the
west.

2\. We know that economic impact was so significant it collapsed much of
chinese society and led to the greatest catastrophe in the 19th century. Up to
30 million people died.

[https://en.wikipedia.org/wiki/Taiping_Rebellion](https://en.wikipedia.org/wiki/Taiping_Rebellion)

Putting that into perspective, up to 20 million chinese during ww2.

[https://en.wikipedia.org/wiki/World_War_II_casualties](https://en.wikipedia.org/wiki/World_War_II_casualties)

3\. We know that half of the largest western banks were founded in the mid
1800s ( HSBC, Wells Fargo, BNP Paribas, Santander, Deutsche Bank, Toronto-
Dominion, Royal Bank of Canada, Societe Generale, etc ). Doesn't mean that all
the banks were financed by opium money but that immense capital accumulation
occurred in the west making it possible to found a large number of banks.

4\. We know enough capital was accumulated in the west to heavily
industrialize. Though we credit britain with starting the industrial
revolution in the early 1700s, it didn't become significant until the mid
1800s when britain and primarily the US went on a major industrial campaign.

5\. On the flip side, we know that china didn't have the capital or stability
to industrialize.

6\. We know opium money produced at least two US presidents in short time.

As for getting a specific number. I don't know how we'd even get that. We know
it was significant enough that it completely tilted the world in favor of the
west and ruined china for 100 years.

~~~
acct1771
Sources on the Presidential funding? Not that I'm in disbelief or even mildly
surprised.

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nimbius
my armchair finance question isnt whether this is good or bad, but is it going
to work again during the 2018/2019 recession? Call me paranoid, but I fully
subscribe to the inverted yield curve theory of recession.

A big question is cannabis earnings...With canada's legalization, and most of
the worlds decriminalization of cannabis, the drug trade cant be operating at
the levels of 2009 profit. heroin and harder drugs are not as popular as
cannabis and i suspect the earnings curve is flat as is evidenced by the
increased introduction of carfentanyl in the supplychain.

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beamatronic
Imagine if access to banking was a fundamental human right

~~~
fgheorghe
Imagine if british banks would be prosecuted for all the crime they help
finance.

~~~
marcosdumay
Well, access to transactions is not the same as access to financing.

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booblik
Someone watched Ozark?

~~~
denzil_correa
Ozark is a 2017 TV show while the article is dated to 2009.

~~~
ebullientocelot
Yea but they mention this in Ozark, so parent might have meant someone saw the
show and looked this up.

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booblik
Yep

