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Red Money - (Conspiracy Theory #11)
A muse on a hot day.
I was having a drink at a swell bar in the city the other night. The
place was packed. My friend and I had a laugh about an old story that
crossed our lives many years ago. The story of Red Money. Some time
later, as we were leaving, a well-healed guy comes to me and says a bit
conspiratorially, “ I believe in Red Money too”.
I am not sure where this story originated. It has been around forever.
The reason it has stood the rumor mill test of time is that it is so
fundamentally believable.
It goes like this. One morning we wake up and the Treasury has made an
announcement that it is going to convert all US currency from green to
red. The process will commence immediately and continue for a period not
to exceed four months. Very few would be impacted. If you had money in a
bank, money fund or brokerage account it would make no difference. If
you had some green cash you would either spend it or deposit it into
your account. It would not influence the value of the holdings of
foreign reserves. That is all “electronic” money. Red money would only
impact cash money.
The Federal Reserve reports that there is approximately $1 trillion of
US coinage outstanding currently. That number is up from $570b in 2000
and $260b in 1990. As a percentage of economic activity it has risen
from 4.5% of GDP in 1990 to 7% today.
For as long as I can remember the Federal Reserve has always had this
disclaimer on the Coinage Outstanding line in the reported balance
sheet:
16. Estimated.
In this case “estimated” could mean anything. It might be something
reasonable like +/- 10%. But if you are inclined to believe in Red Money
you might also be inclined to believe that this estimate could be off
by 100%.
What might happen if we woke up to a red money world?
-Again, for all electric money and most of the actual cash holders this
would mean nothing. The next time you went to an ATM it would come out
red. The new and old would be equally acceptable. As old is spent it
would work its way through retailers and Banks with no problem. After
the four months money could still be changed. But it would require
disclosure.
-US money is in every corner of the world. When the word gets out that
it can’t be used after a given period of time it too will be exchanged
back through the banks. The moneychangers around the world would have a
field day for a while.
-There are many groups out there that are holding onto cash money for
reasons that go in color from grey to black. You have the husband who
tries to hide money from his wife. You have a million small retailers
who skim cash every week to hide from the IRS. Illegal aliens in the US
all have cash money. There is a ton of gambling money. On the completely
illegal side we go from bad to worse. Drug dealers, drug cartels,
organized crime, bank robbers and all manner of burglars. Throw in the
pirates, gunrunners, crooked politicians and very bad boys that I put in
the Jihadists camp.
How much of the money outstanding is in these hands? More than we want
to believe. $300-500 billion would be my guess.
-You can’t deposit more than $10k into a bank and not have a “flag item”
requiring disclosure and identification. While some black money will
get back into the banking system the bulk of it will be stuck. This will
be a global phenomenon.
-If you had a million or so in hundred dollar bills that were going to
be toilet paper in a few months and the “teller window” was closed, what
would you do? Spend it as fast as you could. What might you buy?
Anything, including: Jewelry, uncut diamonds, gold and silver, big
boats, as many cars as you could find, houses, raw land, cases of wine,
art works. Anything that had a chance to hold value. Fur coats and
expensive clothes would be flying off the shelf. Restaurants would be
full and travel/leisure would explode.
-Red Money would have to be done with a wink and a nod. It would be
understood in advance that a consequence would be that Bergdorf Goodman,
Saks and Macy’s would quadrupled their cash sales overnight. That would
be the intended consequence. So long as the money was going into
consumption they would look the other way. But at the same time some
very big (and smart) eyes and ears would be looking at the money flow.
This would be a good way to flush some of those bad boys into the open.
-Counterfeit money would be burned.
-The Fed sends billions of new money out every day. This would be a
massive ramp up. If you believe in this concept it is no stretch to
assume that the contingency plans for how this would get done are
already in a book. It would be expensive. But the jolt to the economy
and the associated increase in tax receipts would offset it. How much
would we pay to get a “follow the money” lead to Bin Laden? How much
have we already spent?
-The most desperate characters would face the biggest risks of
disclosure. They might just let the money they are sitting on turn to
dust. That would not be a bad outcome either.
-This could backfire on the Fed. What would be the consequence of this
if we went into it assuming there was a trillion out there and after a
few months we find it is actually 2 or 3 trillion? A very big
credibility problem. Economists would have to burn the mid-night oil
trying to re-figure the connections between monetary grown and GDP. The
old ratios would be worthless. If the number were much bigger than we
are guessing at then it would be a big slap in the face of the
Keynesians. Money does not multiply as fast as we thought.
-On the flip side we could get an unanticipated result. Only $500b could
show up. The rest would be smoke and off the balance sheet. It would be
quickly replaced by the Fed. They would love that opportunity.
-I have seen several reports of big ticket missing cash in both Iraq and
Afghanistan. How much of this has not been reported? Who has this
money? What are they doing with it?
-If one wanted to give the global economy a ~$300 billion of “instant
demand stimulus” this would be on the list. It would be a micro burst of
activity that would support another (longer) inventory cycle. Yes, a
lot of this money would be re-channeled into useless things like a
packet of diamonds, a Corvette or a condo in Miami. But that is what we
have been doing for the past twenty years. This just picks up the pace a
few notches. There is next to no cost to this. We might just catch a
bad guy.
-For some this would destroy the dollar bill as a store of wealth and a
medium of exchange. Roubles, Yuan, Euro’s, Yen, Aussies, Loonies and
Kiwis would fill the void. That would not be a bad result either. Who
doesn’t want a weaker dollar?
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This has been rolling around as an option forever. I remember my uncle, 20+ years ago, talking about how the gov't ought to make everyone turn in their currency for new blue dollars.
Complete chaos. The government could never accomplish such an endeavor. Remember Cash for Clunkers? They'd waste any $$$ gained with efficient poor planned execution. Not to mention the theft you have to consider in allowing government employees to implement it.
*inefficient
captain crunch will replace currency with cold cereal.
Then we'd see real inflation wouldn't we?
Silver blanks for small day to day purchases by the rabble...
"We don't need no stinkin' Fed notes... red or green..."
Certain smart people would simply switch to Gold - arguably a better form of hiding wealth since it cannot be arbitrarily declared to be "not money" by the crooks at the Fed. No matter what the Feds say, Gold would keep doing its job of hiding/storing/protecting wealth just as well (actually better) than the crappy FRN's. In fact, if there are too many of these "smart people" [who will buy Gold] and too much cash, it would simply implode the Fed itself. Further, the idiots who think the dollar is money will also be destroyed - another desirable outcome and a step forward in human evolution.
+1000... I made basically the same point above prior to reaching your post.
Good point. The last thing they want is for the world to dump dollars and buy gold and silver.
Since the only thing keeping the federal government afloat is the willingness of foreigners to loan money to the US, invest in the US, hold US dollars and generally trust the US government more than any other in the world, if they ever do this they will be totally screwed.
I have no idea how many US assets foreigners own. It is a big number. The US funds its self from "electronic" money. No cash. No legitamte holder of any US asset, including green money would be hurt. So I am not sure the threat you speak of is that big a concern.
But then again, this is all make believe. Right?
Anything that shakes confidence in the US dollar would be a disaster. You don't have to shoot someone to scare the hell out of them, a near miss is good enough.
why? if it only affected FRN's, wouldn't their USD held as ledger entries be the same? minus any inflationary effects of bringing all that currency back into curculation?
US $ in the form of currency or dollar bills are used around the world. In countries like Zimbabwe, Cuba, the Soviet Union and other socialist paradises US $ are preferred to the local currency, because the local currency is subject to inflation, "Red Money" confiscation, and is generally not trusted to hold its value. The US dollar is trusted to hold its value.
Billions and possibly trillions are in circulation, or buried and hidden outside the US. But if those foreigners ever lose faith in the US dollar for any reason all that currency will hit the foreign banks which the US will not be able to control. Furthermore, no one will trust the US dollar again and all that demand will go into other currencies, gold, silver, anything but US dollars.
Or look at it this way. A slick operator can go on passing bad checks for a long time, but as soon as the suckers stop trusting him the game is up.
Diogenes...Agree totally. Since TPTB are already looking at dollar hegemony as too great an advantage for the US, a change of currency would, at this point in time, would bring other currencies to the fore.
The last thing the Fed/Treasury wants is to cast the dollar in a bad/worse light.
In any case, the smart money would go into gold/silver, etc and would not boost the economy as much as Bruce seems to think. 4 months is a long time for those holding greenbacks to move into other assets.
The US government is in bad shape financially but is still able to borrow at tiny interest rates because the US is trusted as a safe haven for money. Not because the US is perfect but because every place else is worse.
If anything happens to shake that trust, and the US economy is toast. A Red Money event would put the US in the same class as the Soviet Union, Cuba, and Zimbabwe.
But the US IS now in the same class as the Soviet Union, Cuba and Zimbabwe so why should the remedies be any different than they have used?
All governments that reach the point of currency implosion (or explosion) resort to the same failed remedies. There is no magic plan to borrow or print your way out of bankruptcy. There is only chaos, poverty, hunger and upheaval. Those are on the way.
Exactly. As soon as the world wises up the US is toast. Calling in the currency and replacing it with "red" would be last thing they would do, literally.
As long as the same old scams are still working, they aren't going to bother with a new one?
this is the last fed bullet....i have been waiting for sometime for this to happen...
is there a drawback to this plan ?
Yes. The amount of red ink required to print the new currency would leave the federal, state and municipal governments without enough of the one essential resource necessary to complete their budgets.
Red ink, bitchez!
Do you think the new bills will be printed on both sides?
Actually it's conspiracy theory # 733-66639
Use your phone keypad to decipher.
pee-money pee-moody red-moody see-money see-moody pee-Mon-ex pee-mom-ex pee-moo-ex pee-no-mew pee-no-new pee-non-ex pee-on-mew pee-on-new re-Don-mew re-Don-new re-doom-ex red-Mon-ex red-mom-ex red-moo-ex red-no-mew red-no-new red-non-ex red-on-mew red-on-new redo-no-ex redo-on-ex see-Mon-ex see-mom-ex see-moo-ex see-no-mew see-no-new see-non-ex see-on-mew see-on-new seem-no-ex seem-on-ex seen-no-ex seen-on-ex
Seen no X? Pee moody? What are you trying to say?
Lol. He meant red-money.
Lmao!
So many things wrong with this theory (I guess thats why its a good one?). This would be highly inflationary. All the money stuffed in cans burried in the back yard would now be put into circulation within the 4 months. Money velocity would spike.
"Money velocity would spike."
.
no. it just amounts to a confession that you, the fed and treasury, have
been conducting an incestuous affair and have given birth to a two headed
red headed orphan child that stands on the world stage, naked, begging
to be beaten to death. good luck with that act, but audiences around the world
love good entertainment and promoters stand to make a nice load. so, maybe,
it has legs?
.
and not a fine looking red headed orphan child, a cruel brute and an addict; so
maybe no one will care as it is beaten to death. call it justice of a sort, desired
even.
And Bernake would have a problem with that how?
Isn't that the point?
Ok, I get it now. It is an elaborate plan to force people to spend. 4 months after the the red stuff comes out, change it to blue and so on. Here is a better idea, just use disappearing ink, say a two week life span? As soon as you get your pay check, you have two weeks to spend it. I will dust of my ReichMark history book to see how this will end.
Bingo.
Now you're talking!
LOL.
That would be the desired outcome.
I prefer the dropping of greenbacks from helicopters. That way I dont have to be bothered to dig up that can.
If you buried the can of cash 10 years ago, whatever is inside has lost half it's value. And the worms have been feasting for years. I understand they like linen.
"If you buried the can of cash 10 years ago...it has lost half it's value."
Then you would get foreclosed on and evicted before you could remember exactly where in the yard you buried it...
"Damn HELCO and pool, landscaping job!"
Thats why I dont want to dig it up!
I think something like this would finally make gold the preferred currency of the black market.
Besides, to launder the $500b you are talking about would no doubt take $1T for the government to execute the plan.
But these cost would only surface 5 years later ;)
When the Euro entered in Europe, about 7% of the money was never changed. The reason then was: over time, money was lost in fires, just lost en stuff like that.
And for the crime money?
All illegal money could be brought in when you paid a fine of 12% without prosecution. You should know that there is a normal business tax of 22% so it was pretty clear the mob pulled the right strings.
Yeah, I still have 180FF in coin because I never got back to France to spend it while it was still good. Oddly enough, they will still take the old paper money for another two years or so. If they trashed the Euro, I wonder if the old stuff would be good again.
Yet another reason for replacing all taxes with the productive transparent universal APTT:
http://www.apttax.com/
Yea APT! I wondered whether anyone around here would start to catch on to this sweetness.
Needs a huge facelift, though.
From my alma mater and my discipline. Must be another brilliant mind!
Good Lord! Don't give 'em any ideas.
They'll just fold this into the existing tax code.
Interesting..... How did you get put on to this idea?
Gold bitches...not? To add to the fun...didn't the paper companies just increase prices recently?
Its stealing by changing the rules of the contract after the fact for personal gain. Look, I said in one sentance what it took you an entire paragraph.
Here's your red money, a $100,000 Woodrow Wilson Gold Certificate:
http://en.wikipedia.org/wiki/File:US100000dollarsbillreverse.jpg
Here's your blue money, a $5 Lincoln Silver Certificate re-issued by JFK shortly before he was shot:
http://en.wikipedia.org/wiki/File:Silvercertificate.jpg
CNBC claims counterfeiting currencies and goods is at least a $650 Billion a year business.
http://www.wikihow.com/Detect-Counterfeit-US-Money