Tuesday, July 18, 2017
"How Governments Can Kill Cash"
"The Third Front in the War on Cash"
by Brian Maher
"The armies of the cashless society have trapped the heroic but overmatched cash note in a classic pincer movement... Governments advance against the entrenched center… The banks move against one vulnerable flank… Now the credit card companies have sprung against the other.
Visa is now offering small merchants using its payment systems $10,000 each to help them upgrade those systems. In exchange for this “gift”, they can no longer accept cash payments.
The Wall Street Journal: "Visa Inc. has a new offer for small merchants: take thousands of dollars from the card giant to upgrade their payment technology. In return, the businesses must stop accepting cash. The company unveiled the initiative [last] Wednesday as part of a broader effort to steer Americans away from using old-fashioned paper money. Visa says it is planning to give $10,000 apiece to up to 50 restaurants and food vendors to pay for their technology and marketing costs, as long as the businesses pledge to start what Visa executive Jack Forestell calls a “journey to cashless. We’re really viewing this as the opening salvo,” adds Mr. Forestell.
And “salvo” seems to be just the right word here - it implies an enemy on the receiving end. That would be cash itself. And by extension, you - if you value the financial privacy cash affords you. In fact, Visa Chief Executive Al Kelly declares war itself. “We’re focused on putting cash out of business.”
Obviously. But what motivation lies back of it? As is so often the case in this fallen and human vale of sin… manna. Financial analyst Yves Smith of the Naked Capitalism blog strips bare the agenda: "The payment networks that want to kill cash (and checks!) as competitors to their oh so terrific (and fee-gouging) credit and debit cards. Those oh so terrific and gouging credit and debit card fees run to about 2% of total transaction costs, says the National Retail Federation. Multiplied millions of times a day, that 2% accumulates, rapidly, and in Visa’s favor. Visa is trying to cony in on economic sectors running heretofore on cash, like food vending and parking services.
But also on sectors traditionally run by check, like rent payments. About 35% of all U.S. households are renter-occupied, according to the National Multifamily Housing Council - at least as of last October. We don’t know what percentage of their occupants sign a monthly rent check. But we hazard it’s pretty handsome. In Visa’s vision, the venerable old rent check would fall like the dodo. And a digital phoenix would rise in its place. So from Visa’s self-interested perspective, here is a vast field of untapped profit — for now."
This February, we suggested that cash will vanish not so much because it’s illegal, but because elites convince us all of its inconvenience: Going digital could practically eliminate petty crime, free up resources and save forests of trees into the bargain. And that’s how elites will peddle it… Enter German Bundesbank President Jens Weidmann, elite: "The private-sector-led de-cashing seems preferable to the public-sector-led de-cashing. The former seems almost entirely benign (e.g., more use of mobile phones to pay for coffee)... In any case, the tempting attempts to impose de-cashing by a decree should be avoided, given the popular personal attachment to cash."
The message, clear as a rifle shot at dawn: Don’t frighten the horses with talk of an outright ban. Sell the cashless society on its convenience (e.g., more use of mobile phones to pay for coffee). Sorry, Herr Weidmann… no sale.
Jim Rickards knows the pitch well: "The surest way to lull someone into complacency is to offer a “convenience” that quickly becomes habit and impossible to do without. The convenience factor is becoming more prevalent, and consumers are moving from cash to digital payments just as they moved from gold and silver coins to paper money a hundred years ago."
So how does Jim think you can fight back in the war on cash? The way he does: "A significant portion of my wealth is in nondigital form, including real estate, fine art and precious metals in safe, nonbank storage. Wealth outside the banking and digital payment systems, that is. Governments and banks assault cash by day and by night. Now with the credit card companies escalating their own offensive, valiant cash could soon enough be surrounded, all escape routes closed, forced to accept terms. And the white flag that ultimately goes up will also be the flag of your personal financial privacy..."
Below, Jim Rickards shows you the main aggressor in the war on cash and what the global elites have in store for you. Read on.”
"How Governments Can Kill Cash"
By Jim Rickards
"Everyone must realize the global elites have launched a war on cash. The war on cash has two main thrusts. The first is to make it difficult to obtain cash in the first place. U.S. banks will report anyone taking more than $3,000 in cash as engaging in a “suspicious activity” using Treasury Form SAR (Suspicious Activity Report).
The second thrust is to eliminate large-denomination banknotes. The U.S. got rid of its $500 note in 1969, and the $100 note has lost 85% of its purchasing power since then. With a little more inflation, the $100 bill will be reduced to chump change.
And last year the European Central Bank announced that they were discontinuing the production of new 500 euro notes. Existing 500 euro notes will still be legal tender, but new ones will not be produced. This means that over time, the notes will be in short supply and individuals in need of large denominations may actually bid up the price above face value paying, say, 502 euros in smaller bills for a 500 euro note. The 2 euro premium in this example is like a negative interest rate on cash.
Why are central banks like the ECB imposing negative interest rates? What is the point of this policy? The whole idea of the war on cash is to force savers into digital bank accounts so their money can be taken from them in the form of negative interest rates. An easy solution to this is to go to physical cash. Yet if physical cash becomes scarce (or nearly worthless due to inflation), savers may pay a slight premium for large-denomination notes. Your premium disappears because the note pays no interest. The elites have actually figured out a way to have negative interest rates follow you from digital accounts to paper money.
Negative interest rates are a thinly disguised tax on savers. The traditional way of stealing money from savers is with inflation. You may get a positive interest rate of 2% on your money, but if inflation is 3%, then your real return is negative 1%.
If we take the same €100,000 bank deposit in the example above and apply a 2% positive interest rate, you would earn €2,000 in interest, leaving an account balance of €102,000 after one year. But after adjusting for 3% inflation, the purchasing power of the €102,000 balance is only €98,940. This leaves the saver worse off than in the negative interest rate example above (assuming no inflation in that case).
In the first case, the banks extracted €500 through negative interest rates. In the second case, they extracted €1,060 in lost purchasing power. Any way you look at it, you lose.
That’s the reality. The second answer is the academic theory behind negative interest rates. In theory, savers will be dissatisfied with NIRP and react by spending their money. Likewise, entrepreneurs will find negative interest rates attractive because they can borrow money and pay back less to the bank. This combination of lending and spending by consumers and entrepreneurs alike will lead to consumption and investment that will stimulate the economy, especially after the famous Keynesian “multipliers” are piled on top.
This theory is junk science. The reality is the opposite of what the elite academics project. The reason savers are saving in the first place is to achieve some future goal. It could be for retirement, children’s education or medical expenses. When negative rates are imposed, savers don’t save less; they save more in order to make up the difference and still meet their goals.
The other unintended consequence of NIRP is the signal it sends. Savers rightly conclude that if central banks are using NIRP, they must be worried about deflation. In deflation, prices drop. Consumers defer spending in order to get lower prices in the future.
Instead of inducing savers to save less and spend more, NIRP causes savers to save more and spend less. It’s a perfect example of the law of unintended consequences. When abstract academic theories are applied in the real world by central bankers with no real-world experience, you get the opposite result of what’s intended.
These unintended consequences have already appeared in Japan and Europe. Serious doubt has been cast on the ability of central bankers to extend NIRP beyond current levels. Banning cash would make those plans much easier to implement.
One solution to negative interest rates is to buy physical gold. But governments always use money laundering, drug dealing and terrorism as an excuse to keep tabs on honest citizens and deprive them of the ability to use money alternatives such as physical cash and gold. When you start to see news articles about criminals using gold instead of cash, that’s a stalking horse for government regulation of gold. Guess what? An article on the topic or criminals using gold has already appeared in Bloomberg. This is one more reason to get your physical gold now, while you still can.
As if inflation, confiscation, and negative rates weren’t enough, the global elites are coordinating a new plan for global taxation. As usual, there’s a technical name for global taxation so non-elites won’t understand the plan. It’s called base erosion and profit shifting, or “BEPS.” The BEPS project is being handled by the OECD and the G-20, with the IMF contributing technical support. If you’re interested in BEPS, there’s an entire website devoted to the global taxation plans and timetables. The website is worth a look. To paraphrase that famous line attributed to Trotsky, “You may not be interested in BEPS, but BEPS is interested in you.”
The global elite plan doesn’t stop there. There’s also the climate change agenda led by the United Nations. This agenda goes by the name United Nations Framework Convention on Climate Change (UNFCCC). The science of climate change is a sticky topic, but we don’t have to dive into it for our purposes. It’s enough to know that climate change is a convenient platform for world money and world taxation. That’s because climate change does not respect national borders. If you have a global problem, then you can justify global solutions. A global tax plan to pay for global climate change infrastructure with world money is the end game.
Don’t think that climate change is unrelated to the international monetary system. Christine Lagarde hardly gives a speech on finance without mentioning climate change. The same is true for other monetary elites. They know that climate change is their path to global financial control. That’s the global elite plan. World money, world inflation and world taxation, with the IMF as the central bank of the world, and the G-20 Leaders as the Board of Directors. None of this is secret. It’s all hiding in plain sight. The papers, articles and links above give you the resources you need to learn more.
This will be playing out in the next few years.
In conclusion, the war on cash is alive and well. It’s getting worse and coming to a country near you. I expect the U.S. will join in sooner rather than later. The only alternative is to get out of the digital payment system to at least some extent, and that means some tangible assets. That includes gold, land, natural resources and fine art."