Largest Bank In America Joins War On Cash

Tyler Durden's picture

The war on cash is escalating. Just a week ago, the infamous Willem Buiter, along with Ken Rogoff, voiced their support for a restriction (or ban altogether) on the use of cash (something that was already been implemented in Louisiana in 2011 for used goods). Today, as Mises' Jo Salerno reports, the war has acquired a powerful new ally in Chase, the largest bank in the U.S., which has enacted a policy restricting the use of cash in selected markets; bans cash payments for credit cards, mortgages, and auto loans; and disallows the storage of "any cash or coins" in safe deposit boxes.

 

Buiter defended his "controversial" call for a ban on cash, as Bloomberg reports:

“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:

  1. Abolish currency.
  2. Tax currency.
  3. 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. (Note that he’s far from being the first to float this idea. Ken Rogoff has given his endorsement to the idea as well, as have others.)

 

Before looking at the practicalities of abolishing currency, we should first look at whether it could ever be necessary. Due to the costs of holding large amounts of cash, Buiter puts the actual nominal rate at which the move to cash makes sense as closer to -100bp. So, in order for a cash abolition to become necessary, central banks would need to be in a position where they wished to set nominal rates much lower than that.

 

Buiter does not have to go far to find an example of where a central bank may have wanted to set interest rates much lower to -100bp. He uses (a fairly aggressive) Taylor Rule to show that Federal Reserve rates should have been as low as -6 percent during the financial crisis.”

As mentioned above, no meddling by a central bank is ever too extreme or too crazy for Mr. Buiter.

But now the banks themselves are getting involved, (as Mises' Joseph Salerno notes),

The war against cash has, up to now, been waged almost exclusively by national governments and official international organizations, although there are exceptionsNow the war has acquired a powerful new ally in Chase, the largest bank in the U.S. and a subsidiary of JP Morgan Chase and Co., according to Forbes, the world's third largest public company.

 

Of course , it is hardly surprising that a crony capitalist fractional-reserve bank, which received $25 billion in bailout loans from the U.S. Treasury, should want to curry favor with its regulators and  political masters and, in the process, ensure its own stability by helping to stamp out the use of cash.  For the very existence of cash places the power over fractional-reserve banks squarely in the hands of their depositors who may withdraw their cash in any amount and at any time, bringing even the mightiest bank to its knees literally overnight (e.g., Washington Mutual).

 

What is a surprise is how little notice the rollout of Chase's new policy has received.

  • As of March, Chase began restricting the use of cash in selected markets, including  Greater Cleveland.
  • The new policy restricts borrowers from using cash to make payments on credit cards, mortgages, equity lines, and  auto loans.
  • Chase even goes as far as to prohibit the storage of cash in its safe deposit boxes .  In a letter to its customers dated April 1, 2015 pertaining to its "Updated Safe Deposit Box Lease Agreement,"  one of the highlighted items reads:  "You agree not to store any cash or coins other than those found to have a collectible value."  Whether or not this pertains to gold and silver coins with no numismatic value is not explained. 

As one observer commented:

 

This policy is unusual but, since Chase is the nation's largest bank, I wouldn't be surprised if we start seeing more of this in this era of sensitivity about funding terrorists and other illegal causes.

 

Bet on it.

As we previously concluded,

We keep being bombarded by moves to restrict the use of cash and demands to ban it altogether. These demands seem to mainly revolve around two arguments:

 

one is that “only criminals need cash”, which is on a par with the absurd assertion that we should all be fine with Stasi-like ubiquitous government surveillance “if we have nothing to hide”.

 

The other one is that a cash ban would make life easier for the central planners who are actively undermining the economy with their policy of debasement.

 

We would argue that central banking and fiat money have done more than enough harm already and that the eradication of financial privacy has gone way too far. Money and banking should be freed from the clutches of government-directed monopolization and cartelization and should be returned to the free market.

*  *  *

In short, things in the already insane monetary realm are about to get a whole lot insane-er. But don't worry, the central banks are in full control.

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Fun Facts's picture

complete control of the money = complete ZWO tyranny 4 u donkey.

johngaltfla's picture

OF course the part they don't tell you:

They get to set prices electronically every day. Not to mention start a direct taxation system where your only appeal is to prove you the individual did not make as much money as they claim to be entitled to a "refund"...

Citxmech's picture

. . . and enter the new barter economy shortly thereafter.

Fukushima Sam's picture

Isn't it against US Federal law to not accept USD as legal tender?

That was how they forced the populace to accept USD when the Fed was created.

Supernova Born's picture

The NRA needs a bank.

Some credit card companies have already refused to deal with any firearms-related businesses.

 

 

espirit's picture

Bartertown Bitchez.

Lb, Cu, Ag, Au.

Rice and beans, lots of rice and beans.

Surly Bear's picture

This isn't new or orginal. I worked at a super-regional and this was discussed as part of their BSA/AML program. The powers that be want to know who pays your mortgage, your car note, your credit card. Why? Taxes. There is a underground society surviving on cash. Don't believe me? One-third of Americans are not working. How do you think they live? Don't shoot the messenger.

boogerbently's picture

How can they steal it if they don't get you to take it out of your mattress and put it in the bank ?

El Vaquero's picture

These dumbfucks are playing with fire.  But first they need to get congress to pass a law banning cash.  As it stands now, I kind of wish I had an auto loan with Chase.  I'd walk in with cash, offer to pay, and when rejected, I would default.  The legal tender laws that they probably lobbied for back in the day would come back to bite them in the ass. But, they do own a few congress critters, so we'll see how long that lasts.

 

On the flip side, poor people and street level drug dealers would be the most affected.  People who cannot get a bank account would be hosed, and they'd start making noise.  Drug dealers can only carry so much Tide around, so they'd start causing problems too.  If they push this through, there will be hell to pay.  If they push this through, it will be the point where we don't have a choice when it comes to insurrection. 

Stackers's picture

Chase will also not allow anyone but the signed account holder to deposit cash into an account of any amount....

 

For all you spouting legal tender laws that force business to accept cash, I would suggest you look into what the true definition and use of the phrase "lega tender" actually means. It's really a more or less useless term unless you are writing contract law. It does not mean that someone or some business must accept it as a form of payment, but simply that it is a legally recognized form of payment.

 

wiki actually has an accurate definition

http://en.wikipedia.org/wiki/Legal_tender

Gaius Frakkin' Baltar's picture

Rest assured the law will be changed or redefined anyway, if it gets in their way.

Murikans will accept this like they accepted Obamacare and every other ass-raping, because they're fucking cowards. The only plus side is this will coincide with a large expansion of the black and gray economy, where the last remnants of American ideals still dwell.

Tom Servo's picture

How is the drug trade going to operate?!  LOL - Until that issue gets resolved, cash will always be around...

 

Keyser's picture

Hang all the bankers, do it today... They have taken our world to the brink of collapse due to greed... We need a purge... 

tmosley's picture

Literally kill all central bankers and their banker co-conspirators.

Part of doing that is to transact in anonymous cryptocurrency, like Dash, formerly DarkCoin, as well as gold and silver where possible.

JamesBond's picture

I haven't seen any bank runs on Citi so the sheeple don't seem to mind.  Of course, if you can't withdraw cash because Citi doesn't operate in cash, you can't have a fiat run on the bank.

Can you have a digital run on a bank?  Why transer funds to another bank that doesn't operate in cash?  Plus, the move would flag you at the Stasi level...

fooked is the word that best describes this environment.

 

jb

ZerOhead's picture

First they take away gold and silver as legal tender to trap you into bankster profiting debt based fiat that slowly becomes worthless.

Now they want to take your paper fiat so they can rob you even faster by trapping you in electronic accounts at negative rates.

The micro-chipped muttonheads will actually love it if they see their heroes use it in some new Hollywood movie.

And don't forget to take your mandatory annual vaccine shot with your name written on the vial or they will put you in jail.

Banksters Uber Alles

Stuck on Zero's picture

May the CEO of Chase be dying of thirst in front of a drink vending machine that only takes cash.

waterwitch's picture

Bullets, bullion, and booze...

Haus-Targaryen's picture

The day the United States bans cash is the day I recommend my friends and family leave.  Once a government can track & control 100% of the monetary supply, your other remaining liberties are next on the chopping block.  

I imagine that most of my friends and family will scoff and bang on about American exceptionalism, the American dream, blah blah blah.  Most will ignore me.  I have a feeling one or two people if not doign it, will seriously look into it.  

I am telling you guys, have a way to get out.  I guarantee you all -- if the Bolsheviks & the Nazis could have done this they certainly would have.  Tyranny is coming to the United States.  Plan accordingly.  If you sit around and wait for this to "get bad" before making contingency plans to get out and go abroad, it is truly too late.  

RIP USA

EDIT - They'll ban cash first. The USA's various black markets and industries will switch over to Phys silver and gold for trade.  It'll send the price up as those at the top start hoarding AG and AU.  Thereafter, da gub'ment will make a few nifty documentaries about this, and then ban Gold and Silver "for the children" to stop the drug cartels and markets.  They'll ban cash first, then AG & AU.  

For those of you who ever paid for AG or AU with a CC, Debit Card, Check, PayPal, etc., etc., ever -- you are on a list.  Guaranteed.  Depending on your holding size and personal assets, you guys should *really* start looking for international bug-outs for you and your family.  

There are already Americans filing for POLITICAL ASYLUM in Western Europen countries every year.   

old naughty's picture

Leave now, or it'll be too late soon,

with Jack Helm and all...

 

" and disallows the storage of "any cash or coins" in safe deposit boxes"

rest assure, au-ag will be included.

The Navigator's picture

Back some years ago, the Japanese faced "negative interest rates/charges against checking accounts" and they started saving their cash in their freezers or mattress safes.

Think I'll yahoo (I will not google anything anymore) those old articles and see if a dealership is available for the west coast.

https://search.yahoo.com/search;_ylt=AqaypLddAPhYFazZDVJKuOWbvZx4?fr=yfp...

old naughty's picture

Please do share them, thanks.

nailgunnin4you's picture

Only the economically illiterate fear a cashless society. When reason and logic are employed it is obvious that if the state achieved a cashless society today, the people will be bartering tomorrow, with an alternate black market currency created by and for the people being favoured and used the day after that.

 

Anyone who can't see this has the foresight of an economist.

NeoRandian's picture

I can't barter with someone on the other side of the world, and they've designed it so that the other side of the world is where all my stuff comes from.

Seek_Truth's picture

All actual necessities are (or can be made) local: food, clothing, shelter.

All modern luxuries are (or can be made) local: energy, communications, weaponry, medicine.

Everything else is unnecessary luxury.

 

El Vaquero's picture

The problem isn't that you can't grow food, the problem is that you neighbors think that steaks grow on fucking trees in the back of the fucking supermarket.  OK, not really, but start asking people where a steak comes from and  some people will know that it moos, and a lot will say that it comes from a store.  People don't think about where their food comes from.  People don't know how complex the supply chains are.  To anybody who advocates revolution, ask them this question: Where was your last meal produced?  In this particular case, I will tell you that my answer is "I don't know," but I also could change that a lot quicker than most.  I save way the fuck too much seed.  Well not really, but we've all gotta get along in today's world.

Billy Sol Estes's picture

The metal spring I found wrapped in my last (I do mean last) Smithfield Farms pork loin leads me to believe it was from China.

El Vaquero's picture

LOL!

 

But even if it wsn't from China, Smithfield is still owned by the Chinese.

nailgunnin4you's picture

As the other dude said there is nothing you need that can't be made here. Think change.

whirling tword freedom's picture

"May the CEO of Chase be dying of thirst in front of a drink vending machine that only takes cash."

 

How about slipping in a puddle of AIDS and dying of ass cancer???

Handful of Dust's picture

I predict Chase's "War on Cash" will be as successful as Uncle Sam's "War on Drugs."

jeff montanye's picture

since the feds don't want to win the war on drugs (they will be unemployed) any more than they wanted to win the cold war or the global war on terrorism (ditto), you may very well be right.

N2OJoe's picture

The differenece is they do want to win the war on cash because none of them would lose their jobs. In fact, it may lead to them all getting a raise because they can siphon a cut from the ENTIRE pie.

MrPalladium's picture

Millions of people will start using silver rounds.

N2OJoe's picture

Is it too much to hope that they would use lead and brass rounds instead?

g'kar's picture

The war on drugs is only to keep the prices up, the war on cash will mean cash (dollars, gold, silver, etc...) will be king.

McMolotov's picture

Everyone smell that? It's called desperation. They know their little system of graft and tyranny is getting wobbly and could tip over at any time. Expect even more acts of desperation as we get closer to the day when it all comes tumbling down.

"The more you tighten your grip, Tarkin, the more star systems will slip through your fingers."

Shit's starting to get mighty slippery, in my opinion.

TahoeBilly2012's picture

We need a purge but what we are getting is a surge...

MonetaryApostate's picture

Well, I've been trying to warn people for over a year now, haven't really had much of an audience, & I've been talking about cashless societies & bank bail-ins for quite a long time...

http://galeinnes.blogspot.com/2014/06/preparing-for-cashless-society.html    

I Wrote that article well over a year ago, published it last year on my blog.  You can trust my information, it's not mindless psycho-babble, it's careful thought out conclusions that I've dervied from years of research & study...  I see what these globalist / elite are doing, every day we talk about it in on social forms with critical thinkers, and it's paramount that we work all together to inform one another FAST!  (So pass the word on please!)

 

turnoffthewater's picture

Watch for layoffs at the CIA, to be called downsizing due to less imminent threats

AlaricBalth's picture

From the Federal Reserve
http://www.federalreserve.gov/faqs/currency_12772.htm

Is it legal for a business in the United States to refuse cash as a form of payment?

Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal reserve notes and circulating notes of Federal reserve banks and national banks] are legal tender for all debts, public charges, taxes, and dues."

This statute means that all United States money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law which says otherwise.

So, legal tender in the form of FRN's (cash) are considered a valid and legal offer when paying a debt to a creditor. Therefore technically banks refusing cash for auto, mortgage or credit card debts are in violation of Federal Code.

However, since when has the rule or law applied to our major banks? It ain't justice, it's "just us"!!!

Urban Redneck's picture

Doesn't a debt usually involve a contract?

And if you look at the contract that creates the debt there is clause that reads, "This contract shall be goverend by laws of [insert STATE name here]", and NEVER "This contract shall be goverend by laws of The United States of America".

El Vaquero's picture

Federal law always trumps state law every time. 

Urban Redneck's picture

And where in the USC is the Federal Commercial Code?

El Vaquero's picture

It is not in the USC, but it would still be considered law.  While it is complete bullshit, congress has delegated a lot of its legislative powers to various alphabet soup agencies.  You can still be thrown in prison for violating regulations not passed by congress, but passed by various alphabet soup agencies.  And besides, 31 USC 5103 states that FRNs are legal tender. 

Urban Redneck's picture

It certainly is bullshit, especially when the Federal government effectively rewrote private contracts between parties within a State when FDR outlawed gold settlement.  But the Bankers buy the laws and the regulations, and they like the ability to ignore or defy the Congress-critters when they get uppity or jurisdiction shop when indebting the serfs.  

Of course if they go this non-paper/non-coin route, it will raise some interesting theoretical legal questions about the continued applicability of the coinage clause prohibition on States.  e.g. Why couldn't the States have their own e-bonds as digitally circulating medium of exchange?  (as long they don't call it a "currency" or "money")

MonetaryApostate's picture

Your question & much more can be answered here...   https://youtu.be/7qIhDdST27g  (That's a legit YouTube Video Link, don't fear)

It's WELL WORTH the time to watch the whole video, it really will put things into clear perspective for you, especially who really controls America... (& the world for that matter)

ali-ali-al-qomfri's picture

A man must be honest to live outside the Law.