(Lynn and RAH point to) an article on the sad declines of e-gold, which I was involved with in some sense back in the period 1998 to 2000.
Bullion and Bandits: The Improbable Rise and Fall of E-Gold
Following his story, the picture that emerges of Jackson is not a portrait of a calculating criminal. Rather it is one of a naive visionary who thought his dream was bigger than any financial regulations, who got in over his head, and who finally struggled, too late, to make up for his missteps.
“There was no indication at all that anyone had a problem with what he was doing,” says Richard Timberlake, a former economics professor at the University of Georgia and author of several books on U.S. banking. Timberlake visited Jackson at his E-Gold office in 1997 and vouches for Jackson’s innocent intentions. “He was always very honest and very forthright in what he was trying to do as a business. Even the Federal Reserve believed it was legitimate.”
Well, in 1997, and indeed up until the end of 1999, it was indeed easy to believe that all was good. As we entered into 2000, the signs started popping up, and by the middle of that year, they were everywhere. It was this inability to deal with the changing makeup of the business, while always standing firm to the 1997 business model, that sewed the seeds of disaster.
It is possible to say, "naive visionary." It's also necessary to say, "responsible director." Which is, at its core, the Founder's paradox: we need that Founder to get us this far, pass the unbeatable odds, beat the regs, bash the naysayers.
Then, when he's done his job, how do we ease him aside to start running the business, as a business, and not as a mission from God?
As Jackson envisioned it, E-Gold was a private, international currency that would circulate independent of government controls, and stand impervious to the market’s highs and lows. Brimming with evangelical enthusiasm, Jackson proclaimed it a cure for the modern monetary system’s ills and described it at one point as “an epochal change in human destiny” and “probably the greatest benefit to humanity that’s ever been thought of.”...
Over the next few years, Jackson drained his retirement accounts, sold his medical practice and charged credit cards to raise more than $1 million to nurture the fledgling venture. Cynics might have considered him just another internet hustler looking to strike it rich, but those who knew him say he was a true believer. “He truly thinks that having a gold-backed currency is what’s needed in the world,” says James Clement, a libertarian attorney who met Jackson in 2003. “I don’t think anyone would have stuck with it … other than that he thinks it’s extremely important and somebody has to do this.”
Something like that. We stuck with him (and really, many many of us committed a great deal to the community!) because it was a truly great idea, and he'd done the hard work to get it off the ground. We left when it became clear that Jackson's visionary focus was going to take e-gold to disaster.
Jackson, who’d hocked his future to start E-Gold, now faced the potential of a federal prison term. He was frustrated and confused.
“It never crossed my mind that anyone could seriously want people like us in prison,” he says. “But I guess my bigger fear was that we would go bankrupt, and there would be a train wreck of people that had trusted value to us who couldn’t get their money.”
The worst part about it is that we were right, he was wrong, and the world lost the benefit of his great, original vision.
The financial innovations that came out of the 1990s were extraordinary, and e-gold was one of them. Now they are all confined to the history books, perhaps with little footnotes such as "with this, the financial crisis might have been averted." Oh well. Learning is not humanity's strong suit.Posted by iang at June 11, 2009 10:27 AM | TrackBack