Drumbeats for the cashless society

benjamen

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http://www.financialsense.com/contr...ng/expect-cashless-society-not-hyperinflation

"...in the next economic downturn, expect the Federal government to simply outlaw cash altogether. With rates already at zero and the Fed’s tools for stimulating consumption all used up, the only way to prevent hoarding of cash, gold, or other tangible forms of wealth outside of the banking system is to go 100% electronic"

:popcorn:
 

pmbug

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Randy Moss isn't going to like that.

The financial system has been working towards this end for a long time now. Restrictions on cash transactions (withdrawals from a bank/atm and [paperwork on] purchases at stores) have been working towards discouraging the use of cash for anything other than petty use.
 

pmbug

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The world's central banks have a problem.

When economic conditions worsen, they react by reducing interest rates in order to stimulate the economy. But, as has happened across the world in recent years, there comes a point where those central banks run out of room to cut — they can bring interest rates to zero, but reducing them further below that is fraught with problems, the biggest of which is cash in the economy.

In a new piece, Citi's Willem Buiter looks at this problem, which is known as the effective lower bound (ELB) on nominal interest rates.

Fundamentally, the ELB problem comes down to cash. According to Buiter, the ELB only exists at all due to the existence of cash, which is a bearer instrument that pays zero nominal rates. Why have your money on deposit at a negative rate that reduces your wealth when you can have it in cash and suffer no reduction?

Cash therefore gives people an easy and effective way of avoiding negative nominal rates.

Buiter's note suggests three ways to address this problem:
  • Abolish currency.
  • Tax currency.
  • Remove the fixed exchange rate between currency and central bank reserves/deposits.

Yes, Buiter's solution to cash's ability to allow people to avoid negative deposit rates is to abolish cash altogether. ...
http://www.bloomberg.com/news/artic...onomist-says-it-might-be-time-to-abolish-cash

Drumbeats. They always start slowly.
 

Penn

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I worried when I seen that- but it could be great for PMs. Also note that ghetto folks trade in tide soap. People will still trade... if anything folks are getting more creative
 

DoChenRollingBearing

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...

I was just about to pop-off a "Molon Labe" comment (yeah, come & take it...) when I realized that, yes, maybe they could pull it off (outlawing cash).

Even though drugs are outlawed (and readily available), cash is different. You can´t eat it, smoke it, or.............
 

dontdeBasemebro

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I was just about to pop-off a "Molon Labe" comment (yeah, come & take it...) when I realized that, yes, maybe they could pull it off (outlawing cash).

Even though drugs are outlawed (and readily available), cash is different. You can´t eat it, smoke it, or.............
And if they stop making it* the current supply will eventually wear out from use.



*Is this the one case where we want money to be created? :paperbag:

:D
 

pmbug

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The war on cash is proliferating globally. It appears that the private members of the world’s banking cartels are increasingly joining the fun, even if it means trampling on the rights of their customers.

Yesterday we came across an article at Zerohedge, in which Dr. Salerno of the Mises Institute notes that JP Morgan Chase has apparently joined the “war on cash”, by “restricting the use of cash in selected markets, restricting borrowers from making cash payments on credit cards, mortgages, equity lines and auto loans, as well as prohibiting storage of cash in safe deposit boxes”.

This reminded us immediately that we have just come across another small article in the local European press (courtesy of Dan Popescu), in which a Swiss pension fund manager discusses his plight with the SNB’s bizarre negative interest rate policy. In Switzerland this policy has long ago led to negative deposit rates at the commercial banks as well. The difference to other jurisdictions is however that negative interest rates have become so pronounced, that it is by now worth it to simply withdraw one’s cash and put it into an insured vault.

Having realized this, said pension fund manager, after calculating that he would save at least 25,000 CHF per year on every CHF 10 m. deposit by putting the cash into a vault, told his bank that he was about to make a rather big withdrawal very soon. After all, as a pension fund manager he has a fiduciary duty to his clients, and if he can save money based on a technicality, he has to do it.

What happened next is truly stunning. ... SRF reports:
“Since the national bank has introduced negative interest rates, pension funds in the country are in trouble. Banks are passing the negative rates on to them. This results in the saved pension money shrinking, instead of producing a return. A number of pension funds are therefore thinking about keeping their money in an external vault instead of leaving it in bank accounts.

One fund manager showed that for every CHF 10 m. in pension money, his fund would save CHF 25,000 – in spite of the costs involved in vault rent, cash transportation and other expenses.

However, as our research team has found out, there is one bank that refuses to pay out money in such large amounts. The editorial team has gotten hold of a letter from a large Swiss bank in which it tells its customer, a pension fund:

“We are sorry, that within the time period specified, no solution corresponding to your expectations could be found.”

Bank expert Hans Geiger says that this “is most definitely not legal”. The pension fund has a sight account, and has the contractual right to dispose of its money on demand.
...
So how come the unnamed “large bank” (they should have named it, just to see what happens…) is so bold as to break the law by refusing to pay out funds in a demand deposit? Note here that it is indeed breaking the law, as there is nothing in Swiss legislation that states that banks are allowed to refuse or delay servicing withdrawals from demand deposits upon request.

The answer is that it has probably received a “directive” from the Swiss National Bank. Note here that these directives are not legally binding. SFR further:
“The president of the pension funds association ASIP, Hanspeter Konrad, has been irritated for weeks that pension funds are suffering from negative interest rates. He says: “We simply cannot understand that the banks are butting in here”. Konrad suspects that the National Bank is exerting its influence.

Indeed, the SNB confirms that it doesn’t like to see the hoarding of cash to circumvent its negative interest rate policy. “The National Bank has therefore recommended to the banks to approach withdrawal demands in a restrictive manner.”

Hans Giger, professor eremitus at the University of Zurich, says to this that the question how far the SNB can go is legally complicated. While the SNB is not allowed to influence the contract between a bank and a pension fund, it can however “issue directives to the banks in the collective interest of the Swiss economy”. What banks do with the SNB’s directives is however up to them.
...
It is undoubtedly a huge red flag when in one of the countries considered to be a member of the “highest economic freedom in the world” club, commercial banks are suddenly refusing their customers access to their cash. This money doesn’t belong to the banks, and it doesn’t belong to the central bank either.

If this can happen in prosperous Switzerland, based on some nebulous notion of the “collective good”, which its unelected central planners can arbitrarily determine and base decisions upon, it can probably happen anywhere. Consider yourself warned. ...
http://www.zerohedge.com/news/2015-04-25/war-cash-migrates-switzerland
 

pmbug

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A proposed new law in Denmark could be the first step towards an economic revolution that sees physical currencies and normal bank accounts abolished and gives governments futuristic new tools to fight the cycle of “boom and bust”.

The Danish proposal sounds innocuous enough on the surface – it would simply allow shops to refuse payments in cash and insist that customers use contactless debit cards or some other means of electronic payment.

Officially, the aim is to ease “administrative and financial burdens”, such as the cost of hiring a security service to send cash to the bank, and is part of a programme of reforms aimed at boosting growth – there is evidence that high cash usage in an economy acts as a drag.

But the move could be a key moment in the advent of “cashless societies”. And once all money exists only in bank accounts – monitored, or even directly controlled by the government – the authorities will be able to encourage us to spend more when the economy slows, or spend less when it is overheating.
...
More: http://www.telegraph.co.uk/finance/personalfinance/comment/11602399/Ban-cash-end-boom-and-bust.html

Drumbeats heating up
 

11C1P

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Ending the cycles of boom and bust usually means those in power stay rich and the peasants stay put in their place.
 

pmbug

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Last week, the influential Financial Times newspaper ran an article calling for the abolition of cash. It was titled “The case for retiring another ‘barbarous relic.’” And it claimed that cash causes “a lot of distortion in the economic system.”

Can you believe it?

Cash causes economic distortions! From the FT:
The existence of cash – a bearer instrument with a zero interest rate – limits central banks’ ability to stimulate a depressed economy.The worry is that people will change their deposits for cash if a central bank moves rates into negative territory.
It also repeated the familiar claims that cash also is what finances terrorism, tax evasion, and the black market. Making cash illegal, it says, would “make life easier for a government set on squeezing the informal economy out of existence.”

You see where this is going, don’t you, dear reader?

If the feds are able to ban cash, they will have you completely under their control. You will invest when they want you to invest. You will buy when and what they want you to buy.

You will be forced to keep your money in a bank – a bank controlled, of course, by the feds.

You will say that you have “cash in the bank,” but it won’t be true. All you will have is a credit against the bank. (Bank deposits are nothing more than IOUs from your bank to you.)
...
More: http://www.bonnerandpartners.com/the-case-for-outlawing-cash/
 

pmbug

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The problem is that if you go NIRP and still are not able to achieve the kind of economic outcomes you were looking for by essentially forcing depositors to choose between a tax on their savings and pulling money out and spending it, well then the next logical thing to do is to stop accepting deposits, which is apparently what it’s come to in Sweden. ...
http://www.zerohedge.com/news/2015-09-02/meanwhile-sweden-banks-are-refusing-open-savings-accounts

When you are dependent upon the banks, they have total control of your finances and indirectly, your life.
 

ancona

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Outlawing cash merely speeds up the point where we see total anarchy and the end of modern civilization and the takeover of everything except some of the enclaves built for the ultra wealthy.

those who remember Soylent Green will remember what I am talking about. This shit will go feral before long if they do not level the playing field, and banning cash is not the way to do it. Ending fascism is the way to do it.
 

Penn

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The one credit union I use- put a 2 week hold on a $1000 atm check from capital one. They said they need time to verify it.

I think the problem is scammer checks tho.
 

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Banks have been laundering drug money electronically for decades. But's what's a slush fund from skimmed drug money compared to 100% complete control of the nation's money?
 

pmbug

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Bloomberg broached this subject back in April, 2015 (see post #3 above) by attributing the idea/story to a Citi analyst. Now Bloomberg is taking ownership of the issue by publishing an op-ed themselves:
...
If policy makers are wise and attend to all that, they just might convince the public of a surprising truth about cash: They're better off without it.
...
http://www.bloombergview.com/articles/2016-01-31/bring-on-the-cashless-future

h/t: http://www.zerohedge.com/news/2016-01-31/bloomberg-op-ed-calls-end-cash#comment-7124561
 

pmbug

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Bloomberg hitting the drum again:
...
After the Bank of Japan cut some rates below zero last month to spur growth and inflation, strategists are weighing the Federal Reserve’s options in case of a crisis. If the world’s biggest economy weakens enough that traditional policy measures don’t help, the Fed may consider pushing rates below zero, according to Bank of America Corp. and JPMorgan Chase & Co.

That step would broaden the Fed’s toolkit beyond what was available during the financial crisis, when it slashed its overnight benchmark near zero and bought bonds to stimulate the economy. In 2012, New York Fed researchers said negative rates could prompt individuals to avoid depositing money in banks, potentially weakening the financial system.

“They’re still concerned, but not as much as they once were,” said Mark Cabana, a New York-based interest-rate strategist at Bank of America. “They’ve seen how successful they were in other countries, where there haven’t been adverse impacts on market functioning.”

Traders may be getting on board with the possibility too. The implied probability of U.S. rates sinking below zero by the end of 2017 has jumped to roughly 13 percent, the highest since at least July, data compiled by Bloomberg show. The wagers are tied to the London interbank offered rate, which partly reflects expectations for Fed rates.
Uncharted Territory

Michael Feroli, JPMorgan’s chief U.S. economist in New York, wrote in a note last week that the Fed may consider negative rates because the five central banks that have done so -- in Denmark, the euro region, Japan, Sweden and Switzerland -- haven’t faced hoarding of cash by individuals or financial-market disruption. Those were among the risks the New York Fed analysts warned about.
...
Fed officials say the question of negative rates won’t arise unless the U.S. looks like it’s in a recession, which they don’t anticipate. ...
http://www.bloomberg.com/news/artic...een-as-option-for-fed-as-boj-ecb-pave-the-way

 

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