The War On Cash: Transparently Totalitarian

Tyler Durden's picture

Submitted by Nick Giambruno via Doug Casey's International Man blog,

George Orwell once wrote “If you want a picture of the future, imagine a boot stamping on a human face—forever.”

Not exactly a cheery thought, and one I don’t agree with.

While the forces pushing for centralization of power have been prevailing for decades, they haven’t won a total victory yet. Technologies that empower the individual and that tend toward decentralization—including the Internet, encryption, 3D printing, and cryptocurrencies—offer a powerful ray of hope, reasons to be optimistic about the future.

So the tug of war between the collectivists and the rest of us continues.

One thing that would tip the scales heavily in favor of the collectivists would be victory in the War on Cash. Their goal is to eliminate the use of hand-to-hand currency, so that governments can document, control, and tax everything.

It’s exactly like what Ron Paul said: “The cashless society is the IRS’s dream: total knowledge of, and control over, the finances of every single American.”

One way they are waging the War on Cash is to lower the threshold at which reporting a cash transaction is mandatory or at which paying in cash is simply illegal. In just the last few years…

  • Italy made cash transactions over €1,000 illegal;
  • Switzerland has proposed banning cash payments in excess of 100,000 francs;
  • Russia banned cash transactions over $10,000;
  • Spain banned cash transactions over €2,500;
  • Mexico made cash payments of more than 200,000 pesos illegal;
  • Uruguay banned cash transactions over $5,000; and
  • France made cash transactions over €1,000 illegal, down from the previous limit of €3,000.

I recently spoke about this with Dr. Joe Salerno, an Austrian economist with the Mises Institute. Joe is the best chronicler of the global War on Cash and is here to offer an Austrian rebuttal to the economic nonsense peddled by advocates of this war.

I am happy to bring you his informed insight.

Until next time,

*  *  *  *

Nick Giambruno: What is the War on Cash?

Joe Salerno: The War on Cash is the attempt by governments to phase cash out of their economies. Governments hate cash because they hate the financial privacy cash makes possible. And they prefer that you keep your money in a bank to help prop up an unsound fractional reserve banking system.

Nick: How did you get interested in this topic?

Joe: I noticed that every time there was a war on something—a war on crime, a war on drugs, a war on terror and so forth—the more the government encroached on financial privacy. The US government has long been waging a hidden war on cash.

One symptom of the war is that the largest denomination of US currency is the $100 note. US currency used to be issued in denominations running up to $10,000 (including also $500; $1,000; $5,000 notes). The US government stopped printing large denomination notes in 1945 and officially discontinued their issuance in 1969, when the Fed began removing them from circulation.

Since then, the largest currency note available has a face value of $100. But since 1969, the inflationary monetary policy of the Fed has caused the US dollar to depreciate by over 80%, so that a $100 note today has less purchasing power than a $20 bill in 1969.

So in addition to lowering the nominal size of the largest bill, they also reduced the bill’s purchasing power through inflation.

Despite this enormous depreciation, the Federal Reserve has steadfastly refused to issue notes of larger denomination. This has made large cash transactions extremely inconvenient and has forced the American public to make much greater use than is optimal of electronic-payment methods. Of course, this is precisely the intent of the US government.

Nick: Looking around, what are the latest examples of the War on Cash?

Joe: One right here in the United States occurred in 2011. It flew under the radar for a while. The State of Louisiana banned “secondhand dealers” from making more than one cash transaction per week. The term has a broad definition and includes Goodwill stores, specialty stores that sell collectibles like baseball cards, flea markets, garage sales and so on. Anyone deemed a “secondhand dealer” is forbidden to accept cash as payment. They are allowed to take only electronic means of payment or a check, and they must collect the name and other information about each customer and send it to the local police department electronically every day.

Nick: What about Europe?

Joe: In France recently, the limit on cash transactions was lowered from €3,000 to €1,000. The reason given was the attacks on Charlie Hebdo. It turns out that those attacks were financed in part by cash. Well, what a big shock that criminals use cash to finance their operations. They also use, of course, public sidewalks and automobiles, they buy clothing and so on. So this whole thing is ridiculous. It’s just a way of obscuring the government’s true goal, which is to get rid of financial privacy. Governments don’t really think that by lowering the limit of legally allowable cash payments that it’s somehow going to cut down on terrorist attacks. That’s just the narrative we’re given.

Nick: What is the mindset of someone who would advocate the elimination of cash?

Joe: Let me give you an example. Recently Willem Buiter—a prominent economist for Citibank—came out with a proposal to abolish cash. The reason is to enable the Fed to push interest rates into negative territory. He suggested that we could have avoided a lot of the problems with the financial crisis if the Fed could have set the interest rate at negative 6%.

But of course the availability of hand-to-hand currency would get in the way of that plan. People would say “I’m not going to put my money in the bank and have them take 6% every year.” They would avoid the bite of negative interest rates simply by holding hundred-dollar bills.

This really shocked me, that a prominent economist would make a case for abolishing cash, so that the central bank could set interest rates at a negative level. This is really crazy thinking, but it’s their mindset. It’s nuts.

Nick: Harvard economist Kenneth Rogoff made a similar argument. Did you hear about that?

Joe: Yes, I did. In fact, Buiter took his cue from Rogoff. But there are a number of hyper-Keynesian economists who want to remove all barriers to negative interest rates, so that you’ll hurry up and spend whatever cash you have. But the only way they can do that is to corral everyone’s money in to the banking system.

It’s absurd, and they’ve gone way beyond Keynes with this craziness.

Nick: It reminds me of how Paul Krugman advocated for faking a space alien invasion as an excuse for the government to waste money on countering it. Or how he later supported minting a trillion-dollar coin. The real scary part is that he—and his juvenile solutions—are taken seriously by many people. Krugman, Buiter, Rogoff and their ilk have the government’s ear, they are presented respectfully by the mainstream media and are given Nobel prizes in economics. How do people not see what they are advocating, like eliminating cash, as transparently totalitarian?

Joe: I think that harkens back to the progressive era, from 1900 or so to the end of World War I. Government-employed experts supposedly were disinterested and dispassionate and would apply their knowledge and skills to do what was best for society. They would be the technocrats.

That’s how they pulled the wool over the American people’s eyes, by saying, well, you know, we are fixing the economy’s problems. This has nothing to do with politics. This has nothing to do with totalitarianism. We are trying to make the economy better for you and for everyone else.

That was just a bunch of nonsense, and it still is. People who believe it are still living in the 1930s, always worried about deflation, rather than worrying about the real problem, which is, of course, the Fed’s monopoly control of money and the inflation the Fed promotes.

Nick: What is the response of Austrian economists to this way of thinking?

Joe: Fortunately, the free market provides the prospect of an escape from the fiscal police state that seeks to stamp out the use of cash through either depreciation of central-bank-issued currency combined with unchanged currency denominations or direct legal limitation on the size of cash transactions. As Carl Menger, the founder of the Austrian School of economics, explained over 140 years ago, money emerges not by government decree but through a market process driven by the actions of individuals who are continually seeking a means to accomplish their goals through exchange most efficiently.

Every so often history offers up another example that illustrates Menger’s point. The use of sheep, bottled water, and cigarettes as media of exchange in Iraqi rural villages after the US invasion and collapse of the dinar is one recent example. Another example was Argentina after the collapse of the peso, when grain contracts priced in dollars were regularly exchanged for big-ticket items like automobiles, trucks, and farm equipment. In fact, Argentine farmers began hoarding grain in silos to substitute for holding cash balances in the form of depreciating pesos.

Austrian economists would think that the War on Cash is really absurd and unscientific. We would say, allow people to choose the form of payment they want to use, whether that be cash, gold, debit card, or something else. We want to remove all barriers to people using different kinds of currency, take all excise taxes, sales taxes, capital gains taxes off gold and silver and off foreign currencies. And also get rid of all legal tender laws. You can keep the dollar in existence, but allow people to use currencies that compete with the dollar.

So we want to move in the exact opposite direction from abolishing cash. In fact, we want to encourage people to withdraw money from banks they don’t trust. Fractional reserve banking, apart from the ethical question, is unsound economically.

Nick: We recently published an article from Doug Casey on sound and unsound banking.

If you look at all the skirmishes in the War on Cash in recent years in so many different countries and map it all out, it looks like there is coordination among those governments. Is that right?

Joe: Formation of the Better than Cash Alliance in 2012 is one piece of evidence. The partners in the Better than Cash Alliance include the Ford Foundation, USAid, Citibank, MasterCard, Visa, and a number of UN agencies. They want to abolish the use of cash and force all payments to be made electronically, especially in emerging nations. These are international organizations that influence almost every government in the world. They could be the basis of coordinated efforts to discourage the use of cash.

They are promoting the idea that the use of cash excludes poor people from the economy. But that’s nonsense. Poor people don’t have checking accounts or credit cards; they depend on cash.

Also, so deeply ingrained is cash in the Italian culture that over 7.5 million Italians do not even have checking accounts. The Italian government will continue to attempt to dragoon these “bankless” Italians into the banking system. That way the notoriously corrupt Italian government can more easily spy on them and invade their financial privacy.

Nick: What happens next?

Joe: I don’t see any end in sight. What keeps this movement going are wars—made-up wars—like the war on terror, the war on organized crime, the war on poverty, war on drugs. That’s what allows governments to ratchet up the intrusiveness into our financial affairs. So I don’t see an end in sight to that. I see the US right now with its Russia policy, for example, goading Russia and inviting more hostility. This feeds a warlike atmosphere in the US so that people just give in, time after time, as the laws become more despotic and intrusive.

What might save us is that we’re due for another crash, we’re due for another financial crisis. In the aftermath, politicians might be forced to move to more free-market-oriented policies. I don’t think that’s a done deal, but I’m hopeful.

Nick: What can International Man readers do to protect themselves from the sociopaths waging the War on Cash?

Joe: I think keeping a good part of your assets outside the banking system is extremely smart. Keeping some cash in a safe is also smart, especially in an era when financial crises are likely. I wouldn’t encourage that as a strategy for earning income, but as a way of protecting yourself and your family.

Nick: One solution I like is the 1,000 Swiss franc note (picture below). It’s the most purchasing power you can pack into a single bill of a relatively sound currency. So if you want to hold cash outside the banking system, having a stash of these might make sense. Any last thoughts?

Joe: The War on Cash reflects the desperation of governments. They want to squeeze every last penny out of their citizens. And they are at wits’ end on how to cure the stagnation of the global economy that began in the 2008 financial crisis. So it really says that they are bankrupt, both literally, in the sense that they can’t pay what they’ve promised, and intellectually.

Nick: I completely agree. Joe, thank you for your time.

Joe: My pleasure.

*  *  *

Editor’s Note: International diversification is the best way to protect yourself from the destructive actions of a desperate government.

Wealthy families have been doing it for centuries. Today, with modern communications, international diversification is within everyone’s reach.

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Ignatius's picture

"Physical violence is for the amatuer in dominance; structural violence is the tool of the professional."        --  Johan Galtung

This is about control, nothing else.

j reuter's picture
j reuter (not verified) Ignatius Apr 30, 2015 8:21 PM

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TeamDepends's picture

Mark of the Beast. Never!

Captain Debtcrash's picture
Captain Debtcrash (not verified) TeamDepends Apr 30, 2015 8:33 PM

I have been in the camp of an E-dollar transition to a cashless economy, mainly so they could implement significant negative rates:

They may be bold enough to cut out cash cold turkey.

Squid-puppets a-go-go's picture

...and then what do they suppose will happen to the velocity of money?

you know, they consider 'liquidity' sacrosanct on wall street, but sprinkle grit into the oil of main st machinery

fucking idiots

Supernova Born's picture

Planned obsolescence.

A $100 bill is worth pennies over $14 bucks in 1967 buying power (and that's per their tortured and mutilated CPI).

They'll never print a denomination over $100.

Don't get caught up with nostalgia over the doomed paper company scrip.

Electronic scrip/money they'll control, PMs and barter items. That's it.

Plan accordingly.

OceanX's picture

There is a large illegal drug trade that depends on cash, how will that be maintained?

in4mayshun's picture

HSBC has an account for that.

espirit's picture

Rather than hold Swissy TP as the best horse in the glue factory,

a Chinese Panda is a moar assured store of value.

ThanksChump's picture

(Jeff Goldblum voice) "Markets...ummm...find a way."

MonetaryApostate's picture

I guess some people don't see all the problem with Digital Currencies / Cashless Societies...

(Which are difficult to outline them at this point)

1) Government Tracking Live Time

2) Goodbye Banking Jobs (Thousands upon thousands!)

3) Goodbye Street Trade (Like forever)

4) Taxation To The Max

5) Corporate Financial Terrorism

in4mayshun's picture

Good bye street trade? Not a chance! This would force people to get creative and society would quickly figure out why gold and silver have been money for 5,000 years.

doctor10's picture

Negative interest rates is what they're willing to pay for the control of a "cashless economy" -

Vullsain's picture

Thats it, Thats the ticket, fight them with separation of Church and State constitutional issues, a coalition of Southern Baptists, sound money advocates,libertarians, preppers,drug dealers, gun runners and whoever else. This is leading to a one world government, with a chip in your forehead required for any transaction, a totalitarian world order ruled by the antichrist. It says so in Revelation!!!!

agent default's picture

Most people today are not really affected by by this war on cash since they view plastic money as a convenience and don't bother to look at the greater picture.  They usually think that you are a conspiracy theorist the moment you mention the risks of an all electronic transaction system.  But the moment you lock them in and charge them -5% interest, 1861 will look like a civilized debate.  There will be a incredibly violent revolution.

Benjamin123's picture

That already exists, its called inflation. The goal of a non cash society is control, gathering information and preventing tax evasion. It would never succeed 100% as people could always resort to barter, and gold is a form of barter.

agent default's picture

Politics is very much about the packaging.  Inflation is stealing, but at the same time is stealthy and you can to a certain degree protect yourself against it as long as you don't store value in cash for the long term.   This is blatant in your face expropriation.  It is a clear and downright invasion of your privacy, it feels wrong even to people who don't care much about economics.  Add a negative interest rate, as in direct taxation, and you have the perfect mixture for violent resentment. 

roddy6667's picture

When you start talking about Antichrist and the Bobble, we know you are off your meds.

kchrisc's picture

Great quote, and a very important author and thinker.

For those so inclined:

The premier work by Galtung, "Violence, Peace, and Peace Research":

A summary and defense of on the 40 year anniversary of its publication:

Happy reading and thinking.

Liberty is a demand. Tyranny is submission.

SubjectivObject's picture

Second link appears to be incorrect.

Thank you for your generosities.

Benjamin123's picture

Structural violence is physical violence hidden behind a a few intermediate steps. No one is putting a gun to my head right now but if i were to step out of line, too much, a predictable and easy to imagine sequence of events would happen ending up with some cop's gun aimed at my face.

If i were a dog, goldfish or any other animal or low IQ human living in the present with no concept of the future and only some memory of the past i would be unable to visualize the cop's gun were it not to be actually aimed at me, right now. But it does not matter, the gun is still there, it has just been hidden in the future.

FrankDrakman's picture

"Who is Johan Galtung?"

(just to get a laugh out of LetThemEatRand..)

q99x2's picture

Well there you have it. The world of 7 billion now knows explicitly who the enemy is. Arrest them.

kowalli's picture

you have only civil arrest...

Jonesy's picture

Bad for Goyim, good for many Jews, and great for Israel.

Soul Glow's picture

This is bigger than some Jews Jonesy.  This is a banking class whose god is POWER.  They wanted to bankrupt the i1st world peasants by using propaganda to convince them tp buy cheap crap and work 40+ hours a week to keep up with the Jonesies.  They then turned the 1st world's peasants army on the 3rd world and stole their land and water to feed the 1st world piggies.  

This is bigger than Jesus, this is bigger than Jerusalem.  This is Jews, WASPs, Cathlics, Mormans, Muslims, the lot of 'em.

Jonesy's picture

Those evil Mormons, sonsabitches turn up running the scam everywhere I look!  At least they don't conspire against everybody else not like them, and refer to others as cattle or livestock like the racist Jews do.  Judaism is a sick cult, check it out then spread the word.

crisrose's picture

Cattle?  Livestock?

How else to refer to fat, disgusting, indebted, shabbily dressed Walmart shoppers?


Jonesy's picture

Exactly.  Don't forget the Talmud came long before Walmart, today is a Jew's wet dream.

Benjamin123's picture

One would think zerohedgers are not racist by hearing their condemnation of jews's racism!

Consider the following: Every trick up the jews sleeve is available to the wasps. The bribing of politicians, the production of propaganda, the finance. But you fuckers are armed to the teeth and when a jew comes over to rape you you just drop your M16 and bend over. Unbelievable. Sheldon adelson gives 80 million to the dems, everyone cries it is unfair, as if 300 million non jewish americans could not possibly outmoney him. Unbelievable how passive you are.

Dont know what is it with jews but they are famous not so much for their intelligence, but for their energy. They take risks, they make big plans and follow them and often lose big time. You goyim have but one plan: Get married, get a job, raise a family, bitch about how hard it is, surrender your weapons when the commissar comes over. Doesnt matter how many times your read Gulag Archipelago, you just dont get it.

Soul Glow's picture

King dollar!!!


Gone Full Retard's picture

Are digital currencies part of the war on cash?

Is it true that Satoshi Nakamoto is an alias of Benjamin Weinberg from Tel Aviv hired by the IMF to develop Bitcoin?

22winmag's picture

I prefer the term NSACOIN.


I hear the early ones with the "NSA" mintmark are really set to take off.

agent default's picture

Where have all the bitoin faboys gone?  Every time there is a story about the real intentions behind digital currencies, they just disappear.

commander gruze?'s picture

The real intentions behind digital currencies depend who you ask. For governments and the establishment it's always been about utter control. For bitcoin faboys (sic) it's what's stated in Bitcoin whitepaper abstract:

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a
financial institution.

Thus, if you ask bitcoin crowd to voice their opinion here it is: the above articlue is almost 180 degree opposite to what bitcoin is and digital currency system like the outlined one is completely unacceptable to bitcoin community.

If you are to remember one sentence from my diatribe let it be this one: Bitcoin is much more like cash than anything else, including gold and silver.

commander gruze?'s picture

Sorry mate, NSA is not good enough to crack Bitcoin. Not kidding. Just educate yourself a little bit on Bitcoin and you'll be stunned what an important invetion it is. Here's a good teaser video:

agent default's picture

Have one of those Bitcoin idiots explain it to you in their own words.  Don't let them point you Shitoshi's paper, their words.  You will realize that they don't know fuck all on the subject.  It just blah, blah it is high tech, it is this encrypted thing,but they understand nothing about encryption, it is that anonymous thing (they don't claim that anymore since it has been demonstrated that it is not), there is a limited number of them but missing out on the fact that there is an unlimited number of similar digital coins that can be produced, they have zero and I mean zero understanding of the real issues involved.  It is just being a trendy idiot who is spending too much time on slashdot and is trying to impress.  Either that or an NSA stooge.  Either way you are dealing with class A shitheads they should at best be ignored and shunned.

Hey bitcoin assholes, there is another war raging against the IT industry right now (flash back to the Clinton's key escrow attempts), it has profound implications, it is very quiet and kept behind the scenes.  Do you know what it is?  If you say DRM, it is related, but no ciggar.  It is far worse, far more reaching and the ultimate in lockdowns.   Have fun peddling your bitco(i)n ignoramuses.  

agent default's picture

Good point. Where the hell is fonestar anyway? 

endfedup's picture

ZH is feeling a little KWN-silverdoctors ish in the headlines lately?

falconflight's picture

So, how many here have made a conscious effort to use more cash, checks, and less electronic payments?  We have never used the atm so much as the past couple of years.  

seek's picture

I never really stopped using cash. My card is only used for online purchases and gas, checks for big-ticket items. Nearly 100% of my local day to day spending is cash. I also don't use an ATM card, when I pull my money out it's usually in amounts that are 5-10X the daily limit of an ATM -- even the ATMs are rigged to get you to not use cash!

Mr.Miffed's picture

Miffed and I have switched to much more cash usage and storage. It's a deliberate change. The ease of the electronic has great allure especially for a software guy. It really is practicing resistance. Bundy ranch for me was an eye opener that we are really not powerless but we do have to stand up at each juncture.

falconflight's picture

I'm with you.  Most Merikans can't even literally lift a finger to 'resist.'  It's just too inconvenient.  

TrumpXVI's picture

I use cash for everything that I can.


I think the scary thing is that the thing that will help TPTB win the war against cash is that fewer and fewer people have any cash.  If people can be forced into debt, and this effort seems to be succeeding, then electronic transactions are baked right into the cake.

A Lunatic's picture

Diversify internationally in order to maximize your exposure to governments trying to make war on your cash. WTF.....

22winmag's picture

Exactly. Simon is going to be shit out of luck when Chile and New Zealand crack down on whatever they use for cash there.

ebworthen's picture

I give cash another 4-5 years, tops.

Crying shame, but they want complete and total capture and control of every aspect of our lives.