Voltaire’s theorem predicts that fiat-money emitting states will ultimately not manage to increase taxation and borrowing sufficiently to prevent the money supply from growing out of bounds, and that this process will eventually result in worthless fiat money. Indeed, Laffer predicts that the taxation base will keep adjusting to new attempts at increasing taxation and ultimately neutralize its effects.
In fiat-money states, taxation will keep going up, but ultimately in vain.
In order to beef up the levels of taxation, a fiat-money state will increasingly have to collect more information on its citizens. Generalized spying on the population will become unavoidable. The fiat-money state will create and maintain elaborate databases on: Where did you get the money? What did you do with it? Who did you give it to?
A fiat-money state will inevitably turn into a surveillance state in which every citizen is a suspect. But then again, the surveillance state will not even tell you what you are suspected of. You will increasingly be held against secret rules.
For example, the practical AML (Anti-Money Laundering) rules are never published. The user can impossibly know if his next financial transaction will trigger AML measures. AML is like imposing a speed limit without telling the drivers what the maximum speed would be. It is true that this makes it easier to catch more drivers for speeding, but it is also plainly illegal:
Article 19 of the ICCPR treaty requires that “to be characterized as a “law,” a law must be formulated with sufficient precision to enable an individual to regulate his or her conduct accordingly and it must be made accessible to the public. According to the treaty, the user must be able to know that his next financial transaction will trigger AML measures. He cannot. Therefore, AML is illegal.
This is normal, because the entire surveillance state is illegal. As the Voltaire process runs its course and pushes the fiat-money system to the brink, the fiat-money state will increasingly engage in illegal behaviour. State officials are already enhancing their proficiency at carrying out extraordinary renditions, targeted killings and enhanced interrogations. At the same time, they could not care less about any terrorists, because that is not where the money is. It is in your pocket that the money is.