The housing sector in Irvine, California is booming, partly due to an inflow of investment from China. When I ask Chinese acquaintances where the money comes from, they suggest that it is transferred to the US through mysterious channels.

Commenter Ahmed Fares directed me to a Daily Mail story that sheds light on one such channel:

First, [Mexican] cartel money-men in the US arrange to deliver an amount of cash with a courier working for the triads, who message their bosses to confirm when the drop has been made.

As soon as the message is received, Chinese gangsters transfer the same amount of money in Mexican pesos to the cartels – which they are then free to spend as they like.

At the same time, the triads arrange for a wealthy person in China to buy the drug dollars by transferring the same amount of Chinese currency into accounts the gangsters control.

There is huge demand for this service in China, as the government prevents people from transferring more than $50,000 out of the country each year in an effort to stop people offshoring their wealth.

This gets around the system because the money never moves across a border. The Chinese currency only moves between banks in China, and the dollars never leave the US. . . .

Once the wealthy buyer has control of the dollars, they are free to spend them as they would like within America – typically on college tuition or real estate.

The US tries to ban drugs, while the Chinese government tries to ban large currency outflows.  Both types of restrictions on freedom have the effect of creating black markets.  I would expect various governments to respond with even further restrictions on freedom.  And I expect people to find ways of evading those additional restrictions.

Governments will then respond with even further restrictions on freedom, and more black markets will develop.

Rinse and repeat.

PS.  The article provided another example of the recent surge in anti-Chinese bias:

US officials believe it is highly unlikely that such a large volume of money could be moving through Chinese banks unnoticed by Beijing’s all-seeing bureaucrats, and so reason they are either choosing to turn a blind eye or are involved in it.

And yet American officials seem to have no trouble believing that vast quantities of illegal money could move through the US financial system without the authorities being aware of it.  I wonder why?

The attitude of American politicians (of both parties) seems to be:  “Why doesn’t China fix America’s drug problem!”