This page has been archived and commenting is disabled.
The Trouble with Cash
Submitted by Alasdair Macleod via GoldMoney.com,
When interest rates are zero and it costs a bank to look after your money it becomes an unattractive asset. Banks in some jurisdictions (such as Switzerland, Denmark and Sweden) are even charging customers interest on cash and deposits. And if you go to your bank and withdraw large amounts in the form of folding notes to avoid these charges you will be lucky if you are not treated as a sort of pariah. For the moment, at least, these problems do not extend to sound money, in other words gold.
There are two distinct issues involved with government-issued currency: zero-to-negative interest rates, which all but eliminate any interest turn on deposits for the banks; and a systemic issue that arises if too many people withdraw their money from the banking system. The problems with the latter would become significant if enough people decide to effectively opt out of holding money in the banks.
Conversion of bank deposits into physical cash increases reserve ratios, restricting the banks’ ability to create credit. However, while the banks are contractually obliged to supply physical cash to anyone who wants it, a drawdown on bank deposits is a bad thing from a central bank’s point of view. A desire for physical cash is, therefore, discouraged. Instead, if the option of owning physical cash was removed and there was only electronic money, deposits would simply be transferred from one bank to another and any imbalances between the banks resolved through the money markets, with or without the assistance of a central bank. The destabilising effects of bank runs would be eliminated entirely.
In the current financial climate demand for cash does not originate so much from loss of confidence in banks, with some notable exceptions such as in Greece. Instead it is a consequence of ultra-low or even negative interest rates. The desire for cash is therefore an unintended consequence of central banks attempting to inject confidence into the economy. The rights of ordinary individuals to turn deposits into physical cash are therefore resisted by central banks, which are focused instead on managing zero interest rate policies and suppressing any side effects.
Central banks can take this logic one step further. Monetary policy is primarily intended to foster investor confidence, so any tendency for investors to liquidate investments is, therefore, to be discouraged. However, with financial markets getting progressively more expensive central bankers will suspect the relative attraction of cash balances are increasing. And because banks are making cash deposits more costly, this is bound to increase demand for physical notes.
Monetary policy has now become like a pressure cooker with a defective safety-valve. Central bankers realise it and investors are slowly beginning to as well. Add into this mix a faltering global economy, a fact that is becoming impossible to ignore, and a dash-for-cash becomes a serious potential risk to both monetary policy and the banking system.
There is an obvious alternative to cash, and that is to buy physical gold. This does not constitute a run on the banking system, because a buyer of gold uses electronic money that transfers to the seller. The problem with physical gold is a separate issue: it challenges the raison d’être of the banking system and of government currencies as well.
This is why we can still buy gold instead of encashing our deposits, for the moment at least. It can only be a matter of time before people realise that with the cash option closing this is the only way to escape an increasingly dysfunctional financial system.
»
- 28099 reads
- Printer-friendly version
- Send to friend
- advertisements -
Let me introduce you to what I call, The Trouble With Kleptocratic Banking & Digital Currency...
http://galeinnes.blogspot.com/2015/02/digital-terrorism.html
2 + 2 = 5. Got it!!!
Well you know the rules they use for accounting.....
2 + 2 = 4252/4*3^2/25023+423-825.41493825680374055868600887184 = I win You Lose...
Tampons, soap, parfume, booze, bullits.....poor mans gold
> There is an obvious alternative to cash, and that is to buy physical gold.
There is an even more obvious alternative, or rather, extension of cash - digital cash. It has no central issuance authority, no control center, no entity can confiscate it, because no entity has a control over it. NSA cannot out-spy it as it does not even reqire encrypted connection to exist. In fact, it does not have to go over the internet at all.
bum wad man don't forget the bum wad....... ya gotta wipe brother..... you got to!!
there can always be an alternative to any crypto. dont fall for fear porn buddy.
Digital Currency doesn't necessarily mean crypto-currency, it could be a digital bank (e.g. one you can't get cash from) which is only accessible through digital verification means, like an RFID reader (which you will need a Biometic Card or RFID Implant, both of which are already here, thanks but this isn't fear porn, it's called reality based assessments.), anyway much proof is available as to where the future is going, it may be crypto-currencies to start, but ultimately they are moving towards the digital age, because for them it's all about control, which is why the war on cash is real.
Collapse Banks, Collapse Markets, and the only solution they will offer is digital life... (& You'll take it or starve, period)
Indeed I even wrote an eBook about Digital Life 2 years ago...
(If you trust the Kleptocracy, you are obviously living in a dream world somewhere completely unaware, try to keep an open mind)
At least you refer to it as currency, because there is only one form of money - gold.
Says who ?
Almost anything can be used as money , as a medium of exchange - so long as both parties agree on that. That could be anything from fresh water to bitcoin. Saying only gold is money is very closed minded.
When they outlaw cash, they will outlaw gold as well. Bank on it.
I'm glad there are still intelligent gentlemen here on ZH, well said...
(They could also just make the price fall out too, which is just as good as making it worthless, TO YOU)
To all those gold preachers out there....
(History does repeat itself....)
http://en.wikipedia.org/wiki/Gold_Reserve_Act
Hey Hank,
What else has stood the test of time besides gold a silver?
Master of the Human Domain.
http://www.thetruthaboutthelaw.com/dont-forget-the-iron-pyrite-rule/
The Talmud says its ok to lie, cheat, steal from and even murder the goyim, because they are sub human.
Dammit, you serfs can't be trusted to spend your wages correctly!!!
Y more beatings is the answer. What was the question?
Well, I agreed to work for $7.50 an hour...
Why you pay $3.25 instead?
Why you no fair???!!!!
(Why you down vote someone speaking the TRUTH!?)
All wages MUST be deposited in a bank first then withdrawn......You do not have a choice anymore...and if you take too much of it out at one time, they can report you......restrict your account....the IRS has complete access to drain it or put a hold on it.....it is called ...Control
You don't even own your own property....the county does...but Gold? I own it.....until I sell it then have to pay capital gains tax as a collectable.
Fuckers.
If I was foolish enough to try to pay my troops in cash, they would not have fought.
How did that work out for you Pancho?
Did you pay them with crusted old bread instead?
Hookers & Tequila?
Credit. Good at the company store.
Why anyone has significant amounts of currency in a bank mystifies me. People are clearly suffering from an incurable case of normalcy bias.
One day they'll wake up and realize they've been "Cyprus'ed."
One of my three indicators of being "awake":
1) Buying and holding precious metals, gold and silver.
2) Buying "bang metals," steel and lead.
3) Keeping as little cash in the system/banks as possible--savings, checking, 401(k)s, etc.
If they are doing none of these things, then they are only paying lip service to being aware or "awake." When they reach #3, then they can "leave the nest, and fly on their own."
Liberty is a demand. Tyranny is submission..
They are going to confsicate everything, collapse the banks, the markets, and outlaw cash & gold....
And to all of the gold preachers out there....
http://en.wikipedia.org/wiki/Gold_Reserve_Act
Truth!!
But try explaining a normalcy bias or cognitive dissonance to the proles...glassy-eyed stares.
Even if they understand the terminology, they simply cannot fathom the system breaking down...or a government that would lie to them, spy on them, or kill its own citizens to advance global wars and usurp our liberty.
The Trouble with GoldMoney -> Turk.
Sheep need no cash they graze! Remember?
Right, till the cops come along and puts a gun up your ass....
Move it along sheep or you're next...
Welcome to the Open Air Gulag....
Gold does not challenge banking system because most gold is in possession of banks. They benefit as much as anyone else from price appreciation, but unlike individuals they can also collect transaction margins, they can charge money for storage, if you're keeping gold as an investor in their vault. The banks profit off anything and everything.
Buy an asset for cash and they'll use reserve ratios to magically inflate deposits. Take out credit, and money will come into existence out of thin air! Give them money in exchange for their gold and they'll turn right around and buy the same amount of gold cheaper if they so desire with the money, because they have preferred access to everything. Special volume discounts for buying tons of metal instead of measly troy oz pebbles, special interest rates with the central bank etc.
Banks, and central banks specifically can't lose as long as you are forced to work - to produce goods and provide services in exchange for some artificial representation of the wealth generated. The moment your labor becomes a currency of any kind and the money moves from A to B, they've got you. Convert currencies and assets back and forth all you like. You can get rich, for sure, off a greater fool, but not off the casino itself.
Heads - they win. Tails - you loose.
That's how all of the systems work too, like the justice system for example, it doesn't matter what the outcome is if they get you in court, you pay, and it seems they have built their entire structure on fraud, but something tells me that will all come crumbling down soon thanks to issues like immigration & division (through & through).
My biggest beef with the justice system is that they get to confiscate and keep proceeds of crime. Things that are legal generate some profits, but illegal business is insanely profitable. However the government cannot engage in crime openly. It does, as long as it is able to hide it, but when it comes to making big bucks, it instead lets someone else come up with a scheme, rip off countless law-abiding citizens, so that when the satchel is full of stolen goods, a cop could pull up and say: "Hey, hey, hey! What have we got here?"
Crime illegally takes money form law abiding citizens, so that the lawmakers (the zookeepers) could then pocket it. They cannot let the crime run rampant, because then individuals will be less encouraged to produce. Also, when people believe their wealth will be protected, they'll be less inclined to think about its safety. Believing in social justice, individuals will not only make more money, but make it easier to steal.
People like Madoff - the small fish scapegoat - his fund got audited 17 times throughout its existence. 17 times they checked validity of securities that were never bought and found nothing wrong with it.
Ponzi schemes are fine as long as they're expanding, but as soon as the top nears - right before the crook typically "Makes-off" with the money, the agents rush in.
They watch all the schemes and pick their tops.
The justice system - all of it, is an extortion racket. Criminal cartel that doesn't invent crimes and instead relies on vast numbers of creative entrepreneurs.
Lawful citizens work believing they can keep what they make. Crooks steal it thinking they'll be allowed to keep it, but it all goes back to the bank.
All arenas of the legal system are a joke. I went through family court and what a fucking racket.
The whole process is structured to keep you coming in for far more appearances than is really necessary. The lawyers make twice as much and all the "public servants" (judges, bailiffs, clerks, etc, etc) get to keep the workload juiced up to justify their existence.
That is precisely why I did the most sensible thing...paid off all my debts, loaded up the boat on hard assets of all kinds (including land in another country), and removed myself from the official labor force.
Starve the beast. It is our best weapon short of armed rebellion.
Gold - Best when purchased along side of Browning, Smith & Wesson, Glock, Winchester, and a shit load of ammo to partner with your firearm of choice. Don't leave Gold at home without it ...
Gun and ammo speculators sure made a tidy profit in the spring of 2013 after that fake ass made for TV show called Sandy Hook.
I think the Fed. is illegally leaking liquidity into the markets. I've been looking at excess reserve charts, and short term debt should be dropping the overall figure. The fed. appears to be rolling over "short term" debt to provide liquidity again. The balance sheet isn't dropping.
The Fed. is twisting short term debt again.
The Fed has no oversight. They do what they will.
- Alan Greenspan
https://www.youtube.com/watch?v=CM2vMHx46ww
Congress can impeach Fed officials, and can overrule them directly through legislation. The President can strong arm the Fed by threatening to send over a squad of Marines to hang a Fed governor off the eagle on the Eccles Building, and then appoint a more compliant replacement. The Fed is an independent agency, but they aren't invincible..
Lolz the WH and Congress. WTF have they ever done. You want to take the Fed down? March on them. Don't rely on some assholes to do it.
That's entirely laughable...
At a minimum, the Federal Reserve is an Unconstitutional cabal of private banksters.
At best they are a syndicate of grifting thieves running an organized plundering operation of the American country and people on behalf of their minders elsewhere, Zion.
At worse...
Liberty is a demand. Tyranny is submission..
Guillotine the Fed. Audit the heads.
"The United States can pay any debt it has, because we can always print money to do that. So there is zero probability of default"
-Alan Greenspan
https://www.youtube.com/watch?v=q6vi528gseA
PRICELESS
Yen, always enjoy your posts. Can you post links to charts/sources you're looking at? Thanks in advance.
Of course they are. Those Belgians need more liquidity to buy MOAR Tbonds. The USD is getting offered as well. Good pick up on the excess reserve charts, but can one believe any reports put out by the Fed?
The trouble with cash....it is faith based and valued by decree. Essentially it is an IOU printed by the Federal Reserve Bank - a private for profit bank run by a cartel of other private banks, namely JP Morgan and Goldman Sachs.
Illegal Immigrants love working cash-only jobs. Sorry IRS. You done fucked-up!
Who doesn't enjoy working cash only jobs. Fuck giving the government taxes. They don't deserve them.
I will stick with speculating in beans and bullets for the foreseeable future.
What ever happened to the "thoughtful" commentary on ZH?
YenCross and a couple dozen others being exceptions to the hundreds of just inane, juvenile, stupid posts I see more and more of these days.
Go on....
How about this idea hairball48. Tell us a story about your life and what you have seen. What more can I say about my personal experiences... I love guns, gold, silver, numismatics, Russian women, classy motorcycles, horticulture and Austrian economics. What more can I say? To be honest, I really don't give a fuck anymore what anyone thinks because I don't owe anyone any money. This fact allows me the oppurtunity to tell things as they are and I do.
Honestly, I enjoy reading posts on ZH more so than writing them. Go to a site like Huffigton Post and read those comments for a few minutes. You really will lose faith in humanity in a short period of time. Yes, there are some great bloggers here on ZH but sometimes you run out of gas so to speak. One of the first things any ZHer does is check how long a member has been on ZH. In your case, you have been here a long time and if you don't like the content then you need add your own perspective which you just did to a degree. What makes ZH interesting for me is that there are members who are not afraid to say what needs to be said. I like learning new things and chances are that you know a few things that I do not.
Fuck yeah.
BUY SILVER
;)
A pressure cooker reference? I caught it.
This isn't true if you can deposit money with the national treasury
If you can buy T-bills or even deposit your money into Treasury Direct as "C of I" (certificate of indebtedness) while you wait for T-bills to buy, that money is no longer on the books of a commercial bank. I could imagine that in a crisis, trillions of dollars could be put into Treasury Direct as "C of I".
Forcing people out of cash would encourage bartering which would slow the economy and decrease taxation and production. I don't think these commie statists have thought things through.
I think you're missing the other half of the equation. It isn't just forcing people OUT of cash; it is forcing people INTO digital currencies which allow automatic monitoring/taxation/confiscation.
Bingo Greshams, that's the plan.
Here's the problem with cash: it is an illogical fiction.
don't forget structuring laws...applies to withdrawals as well. They (the USSA) are already closing all the exits for cash. Try withdrawing $10,000 or more from your bank, or even $5k and then another 5K the next day. You'll soon be getting a knock on your door.
http://reason.com/blog/2015/05/01/irs-steals-107000-from-convenience-store
http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=10...
The greed and maleficence of the grifting banksters and plundering governments has become so voracious that just retaining and utilizing the fruits of one's labors is becoming criminal--They desire us all to be Toby Wallers.
Liberty is a demand. Tyranny is submission..
Well armed sheep produce little fleece, and no mutton.
Gold is really only a problem for the dollar which competes as the best store of value. Once the dollar fails as the reserve it will be in the interest of the USG to see gold higher...MUCH higher.
And forget confiscation. Gold was money in 1933. It is just another asset now. If the USG needs wealth the APPL will be easier to get. Everyone has some APPL, almost no one has physical gold....think it through.
You know 1975 wasn't that far away, it amazes me how much people have forgotten that history does repeat itself...
http://en.wikipedia.org/wiki/Gold_Reserve_Act
Why so down on metals? I am not one to ever tell folks to put all the eggs in just one basket, and would never advise spending every last dollar on them, but every time someone mentions gold or silver you are a real pisser.
Please state your MO. You are either a troll or a metal hater if you constantly berate all things relating to metals. A few things have changed since that day gold was called in, which by the way amounted to very little if you take a step back and look at the bigger picture. I am not one to say it will never happen but I do think other steps will be taken instead of an outright ban. A ban on anything can be a real bitch, ya know they usually tend to backfire on those that put them in place to begin with.
But holders of APPL are Hip Mainstream Citizens, while gold hoarders are crabbed misanthropes who are not with the Program, and certainly not of the Body.
http://www.marketwatch.com/story/draghi-hits-back-at-argument-qe-fuels-inequality-2015-05-14?link=MW_home_latest_news
WASHINGTON (MarketWatch) — In a major speech delivered in Washington, European Central Bank President Mario Draghi hit back at a popular argument that low interest rates, and quantitative easing in particular, not only hurt savers but also benefit the wealthy disproportionately and fuel inequality.
The remarks are notable as the criticism of the ECB’s action is similar to that faced by the Federal Reserve and other central banks for similar policies. The ECB‘s main interest rate is just above zero, and it announced it would start buying bonds in September.
Draghi said that there’s distributional effects from monetary policy inaction -- younger households in particular would be most affected and they tend to be net debtors.
“They tend to be net debtors, with debt denominated in nominal terms, and are therefore most exposed to rising real debt burdens. In contrast, older households tend to have positive net wealth, some of it held in nominal assets. Inflation undershooting therefore results in redistribution from younger to older households,” he said.
While acknowledging “there are always distributional consequences to monetary policy decisions,” Draghi says it’s necessary to raise aggregate demand by encouraging firms and households to bring forward spending decisions.
He didn’t deny that quantitative easing boosts asset prices.
“It is true that our low policy rates, forward guidance and asset purchases raise the current market value of financial assets and thereby benefit the holders of those assets,” he said. “But what matters more is the exact mirror effect of this rise in asset prices, which is a lower cost of equity for entrepreneurs, a lower cost of finance for investors in real projects, and a lower cost of borrowing for consumers.”
“Financial assets are always, in the final analysis, a claim on the wealth generated by the productive part of the economy,” he added. “So it is in their interest that output growth remains on a robust path as this maximizes the likelihood that their claims are honored in full.”
He also said there’s little sign of financial instability — defending central bankers from another oft-heard criticism.
“At the moment there is little indication that generalized financial imbalances are emerging. As a matter of fact, the two most important indicators of growing financial imbalances — real estate prices and credit growth — show only tentative signs of turning upwards,” he said.
Wrong. It will reduce their profitability, but not their ability to create credit. As long as a bank is solvent, the central bank is obligated to provide as much reserves as needed at the pre-announced lending rate. Since the bank now has to pay the central bank for the reserves it borrowed, it reduces its profitability.
It depends on how much cash leaves the bank...
Here's an interesting take on the banning of cash:
http://carl-random-thoughts.blogspot.com/2015/05/the-ban-on-cash-part-ii...