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Bundesbank Chief Says "Nein" To Cash Ban

Tyler Durden's picture




 

Last month, the calls for a cashless society got a bit louder when Peter Bofinger, a member of the German Council Of Economic Experts and a prominent Keynesian economist in a land where sound money policies generally predominate, called coins and bills “an anachronism” that limits the influence of central banks. Bofinger’s comments come on the heels of a growing chorus of cash abolitionists including Harvard economist Ken Rogoff and Citi’s Willem Buiter. Why a cashless society you ask? Here’s a brief refresher:

The collective actions of the world’s most influential central banks have done wonders when it comes to inflating asset bubbles but have done very little to revive robust economic growth. In fact, far from smoothing out the business cycle and resuscitating DM demand, post-crisis monetary policy has actually had the exact opposite effect: it has set the stage for an even more spectacular collapse while simultaneously creating a worldwide deflationary supply glut. At this stage, a sane person might be tempted to call it a day on the monetary experiments, especially considering that the limits have been reached. That is, there are literally no more assets to buy and rates have hit the effective lower bound where rational actors will eschew bank deposits in favor of the mattress. But not so fast. The world could always ban cash because if you eliminate physical currency and force people to use a debit card linked to a government controlled bank account for all transactions, you can effectively centrally plan everything. Consumers not spending? No problem. Just tax their excess account balance. Economy overheating? Again, no problem. Raise the interest paid on account holdings to encourage people to stop spending. 

On the heels of Bofinger’s comments we said the following: “Paging Mr. Weidmann, your countrymen are going Keynesian crazy.”

Lo and behold, Weidmann has indeed entered the debate and unsurprisingly, he is not a fan of the cash ban calls. FAZ has more (via Google translate):

Bundesbank President Jens Weidmann has advocated that cash despite technical innovations and digitization should continue to play an important role in payment transactions. "The Bundesbank does not believe to abolish the cash," Weidmann said on Monday in Frankfurt at the biennial held payments Symposium of the central bank. On the one hand, every citizen should continue to pay as he wants - "So cash or cashless" argued Weidmann. Secondly, monetary policy would be reasons that may be brought against the adherence to the cash, "standing on feet of clay."

 

By its second justification Weidmann resorted to the last often raised by critics cash-argument, in a world without cash monetary policy would work better. Underlying this is the idea that savers react to negative interest rates of the central and commercial banks, by removing their money from accounts and keep in the form of cash. If there were no cash, the negative interest rates would direct impact on the accounts of depositors. Because they can not just withdraw your money, they would consume more and invest instead - and thus stimulate economic growth.

 

Weidmann contradicted this argument sharp. On the one hand, a moderate negative interest would not necessarily "lead flight to cash" to.On the other hand - and this is much more important - going discussion on "real problem" over. The control and capital market interest rates are due to the subdued growth prospects "and a subdued inflationary pressures in the foreseeable future" at a low level. The expansive monetary policy of central banks is to be understood as a reaction to it. So the most important task was to tackle the cause of the weak growth in the euro area. "So if the weak growth is the crux of the problem, then it is necessary to overcome this weakness, rather than to operate daring acrobatics in the form of wanting to do away with the cash, so that the monetary policy seem even more expansive and cover long-term structural problems in the short term with cheap money can "Weidmann said.

 


So once the Keynesian cabal gets its way and abolishes cash, effectively weighing the anchor on negative rates and thereby making it possible to manipulate not only macroeconomic outcomes, but microeconomic ones as well, it appears those who still value their right to choose for themselves how and when they spend their money can at least move to Germany where Bubba will make one last stand against the insidious Peter Pan crowd. 

 

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Wed, 06/17/2015 - 09:30 | 6205192 wildbad
wildbad's picture

well that what he says in public

Wed, 06/17/2015 - 09:32 | 6205199 Haus-Targaryen
Haus-Targaryen's picture

I am aroused. 

Wed, 06/17/2015 - 09:42 | 6205209 Momauguin Joe
Momauguin Joe's picture

Be wary of that nailgun atop your refrigerator Herr Weidmann, as you reach in for your bier. 

Wed, 06/17/2015 - 09:56 | 6205267 Haus-Targaryen
Haus-Targaryen's picture

If he is a typical German -- he keeps his beer in the basement.  It keeps it cool without having to take up space in his fridge.  

Wed, 06/17/2015 - 09:59 | 6205274 Pladizow
Pladizow's picture

Soon to be added to the banker suicided list!

Wed, 06/17/2015 - 10:08 | 6205314 froze25
froze25's picture

Who is actually call for this the people or a few of the Banksters supported by some control freak politicians?

Wed, 06/17/2015 - 10:17 | 6205346 Captain Debtcrash
Captain Debtcrash's picture

Wait till we have a bit of a crisis, then he’ll change his tune.  “I was against banning cash, but considering these extraordinary circumstances it is the only option.” 

Wed, 06/17/2015 - 11:14 | 6205534 MonetaryApostate
MonetaryApostate's picture

It's all a Gov. Charade you see, they plan to turn it into a political parade / debate....

http://galeinnes.blogspot.com/2015/06/the-political-parade-government-ch...

Wed, 06/17/2015 - 21:25 | 6207691 philipat
philipat's picture

Excellent news,"Ich bin ein Berliner".

It is reassuring to know that the mechanism of a Bank Transfer to Germany then cash withdrawal will always be available. Good for the German Banking system to....

Wed, 06/17/2015 - 10:31 | 6205394 caconhma
caconhma's picture

Nazi Germany started a fight against the international Zionist banking mafia. Hitler has lost. He was not strategically and mentally competent to wage the fight. He did not understand that there was no difference between FDR, Churchill, and Stalin. They all were servants/agents for this mafia.

However, this fight was not  over since it is a fight between good and evil. 

PS

One cannot forget that the Democratic Party is a representative of the WallStreet and Big Banks. Obama is a very convenient fraud to advance their agenda. Now, they need Hiltary to further advance their agenda.

Wed, 06/17/2015 - 10:39 | 6205426 agent default
agent default's picture

As opposed to the Republican Party that is... no wait.   Do you still believe the Republican vs Democrat scam?  Flip side of the same coin.  THEY ARE BOTH THE SAME.

Wed, 06/17/2015 - 11:55 | 6205753 HopefulCynical
HopefulCynical's picture

Very true. However, the Democrats, being openly "progressive" - which is, of course, merely a code word for Marxist - are jammed much higher up the banksters' asses.

Wed, 06/17/2015 - 11:39 | 6205657 samjam7
samjam7's picture

So you're saying Hitler was fighting on the side of the good? 

Says a lot about you.

Wed, 06/17/2015 - 10:57 | 6205489 Bokkenrijder
Bokkenrijder's picture

Well, the BuBa also said that the Euro would have the same strength and purchasing power as the Deutsch Mark that it replaced...

I don't trust ANY central bank anymore.

Wed, 06/17/2015 - 09:32 | 6205197 Bill of Rights
Bill of Rights's picture

Goldman Sachs plans digital lending for consumers

http://economictimes.indiatimes.com/small-biz/small-biz-usa/goldman-sach...

Wed, 06/17/2015 - 10:03 | 6205291 BlowsAgainstthe...
BlowsAgainsttheEmpire's picture

Well, if its from Goldman, I'm on board. 

Wed, 06/17/2015 - 09:31 | 6205198 silverer
silverer's picture

Take out a life policy on this guy.

Wed, 06/17/2015 - 09:35 | 6205207 XAU XAG
XAU XAG's picture

Nail gun on it's way!

Wed, 06/17/2015 - 10:12 | 6205322 HonkyShogun
HonkyShogun's picture

Yep, first thing that came to my mind also.

 

The Bagel Medici aren't going to like this.

Wed, 06/17/2015 - 09:33 | 6205205 wildbad
wildbad's picture

And why then am I limited to €1000 per day from my account in Germany?  Wait until capital controls are slammed down on Greece, other Euro countries could quickly try to stop contagion through ATM and other controls.  Cash is anathema to control freaks.

Wed, 06/17/2015 - 09:39 | 6205221 Wolferl
Wolferl's picture

Your are not limited to € 1000 per day in Germany by law. It´s just a safety feature of most banks to prevent theft in case credit cards or passwords get stolen. Talk to your bank if you want this to be removed.

Wed, 06/17/2015 - 09:44 | 6205239 wildbad
wildbad's picture

sure, i've done that dozens of times.  they keep setting it back. this is a policy that i BELIEVE is being pushed on the banks.  you are right that it is not yet in german law.  in Spain, Portugal and France it IS law..here its "pre-law"

Wed, 06/17/2015 - 09:49 | 6205249 Wolferl
Wolferl's picture

How often do you withdraw more than € 1000 per day in cash from your bank account?

Wed, 06/17/2015 - 10:15 | 6205339 Bunghole
Bunghole's picture

Hookers and blow can be addictive.

Wed, 06/17/2015 - 10:19 | 6205353 Overfed
Overfed's picture

That's his business.

Wed, 06/17/2015 - 11:42 | 6205677 samjam7
samjam7's picture

In Switzerland it's 5000 CHF a day, got a problem with that? People should access their money when they want it without having to give an explantion!

Wed, 06/17/2015 - 09:44 | 6205233 disabledvet
disabledvet's picture

Government control freaks maybe.

Only academia would promote this though. Why would a country (the USA) still sitting on the world's reserve currency (for reasons unknown) want to suddenly ban cash?

The problem is money as power I imagine...ironic considering the inflation and money printing meme we've been on for so long now.

Must be the lack of government spending or the "peace dividend."

Wed, 06/17/2015 - 09:45 | 6205243 wildbad
wildbad's picture

maybe because there's more cash outside of the USA, and thus out of their control, than in it.

Wed, 06/17/2015 - 10:57 | 6205488 agent default
agent default's picture

So once they ban cash how will the CIA sell drugs to finance its black ops?  Unless you think mercenaries and arms dealers take AmEx.

Wed, 06/17/2015 - 10:18 | 6205347 Manipulism
Manipulism's picture

Change your bank.

I can withdraw whatever I want.

 

Wed, 06/17/2015 - 09:34 | 6205206 Rock On Roger
Rock On Roger's picture

Jens had better avoid standing by windows in tall buildings and nailguns.

 

He said the evil word 'citizen'.

Wed, 06/17/2015 - 11:02 | 6205493 jakesdad
jakesdad's picture

I actually read the full text of fdr's gold grab executive order yesterday (just curious) - it actually uses the word "subjects" as opposed to citizens!

Wed, 06/17/2015 - 09:48 | 6205211 gwar5
gwar5's picture

The Knotsy is making way too much sense here.... A German Banker spilling beans about cashless is akin to saying, "It's not a real shower."

 

 

Wed, 06/17/2015 - 09:38 | 6205217 Quinvarius
Quinvarius's picture

A huge defeat for the Apple Pay fanboys pushing this nonsense.  Lets see if AAPL takes a hit on losing their lost cause.

Wed, 06/17/2015 - 09:41 | 6205224 CHX
CHX's picture

Me thinks BB chief is living a dangerous life henceforth...

Wed, 06/17/2015 - 09:44 | 6205235 Bemused Observer
Bemused Observer's picture

I see three possibilities here...

1) This article was translated from its original language by a computer program.

2) This article was written by a computer program.

3) The editor is on vacation.

Wed, 06/17/2015 - 09:55 | 6205263 Bioscale
Bioscale's picture

What editor?

Wed, 06/17/2015 - 10:14 | 6205307 Wild Theories
Wild Theories's picture

1)

they did warn it was google translate, but you can get the jist of it anyway.

Wed, 06/17/2015 - 09:48 | 6205247 Debugas
Debugas's picture

Lithuania: cashing out your wages is 500 euros per month without charge, anything above is 0.4% (of withdrawal amount) commission tax

Wed, 06/17/2015 - 09:56 | 6205266 zvzzt
zvzzt's picture

Must be a safety measure. Here in Holland you can get 10k cash diretly at your bank (ING, ABNAMRO), and more if you make reservation/order. 1k is bollocks, or perhaps a limit you have on a debit card (?). Making large deposits is a different story - you have to be somehwat careful with that (you will be screened). 

Wed, 06/17/2015 - 10:08 | 6205310 Wolferl
Wolferl's picture

It´s the same in Germany, you can have as much cash as you want/have if you show up with your ID card or passport. Those banks limits are just a safety feature.

Wed, 06/17/2015 - 10:06 | 6205299 post turtle saver
post turtle saver's picture

a cashless Germany? yeah, that'll be the day... try going through Germany cashless the next time you're over there... just take your credit cards then see what happens... I guarantee you'll be at an ATM within the first couple of days if you do anything other than stay in your hotel room...

Wed, 06/17/2015 - 10:07 | 6205305 Panic Mode
Panic Mode's picture

I think he nailgun it.

Wed, 06/17/2015 - 10:08 | 6205313 css1971
css1971's picture

Physical cash is what solves the debt problem... They want to get rid of it because it's an exit.

Wed, 06/17/2015 - 10:32 | 6205401 BadDog
BadDog's picture

Give that man a cigar.

Wed, 06/17/2015 - 10:38 | 6205420 mastersnark
mastersnark's picture

Press release to walk back comment in 3, 2, 1...

Wed, 06/17/2015 - 10:49 | 6205459 mojojojo
mojojojo's picture

Cash, coins, CD's, securities, futures, none of this is money. To make matters worse, only a small pecentage of M3 is hard currency.

Wed, 06/17/2015 - 10:55 | 6205482 janus
janus's picture

Deutschland is sounding bettah and bettah each day.

let's see here...awhoricas don't even know their neighbors, our schools must be patroled by cops with dogs, inner cities are rioting and ablaze, policiticans are race-bating, bankers are currency manipulating, traders are equiteis manipulating, NHA is real estate manipulating, washington is war fomenting, every strata is dividing against itself at home, the department of state is making permanant enemies abroad, betraying generational allies for temporary tactical gain, congress sacrificing its economy to foreign interests, corporations are bullying and blustering every entity that raises a peep and all whilst this nation's every remaining morsel of goodness is carved off the bone and either cannibalized or sold to the highest bidder in a despotic dictatorship in some dusty bleakistan.  awhorica has betrayed mine and every succeeding generation as it's pursued the 'ethic' of "get all you can, can all you get and squander all you've canned."

the German government is exhibiting some of the most unacceptable gestures in modern state-craft; these are affronts that amorica will not brook; after all, she has systematically quashed all such madness with extreme prejudice throughout the world in recent years.  how many 'regime changes' & 'democratic restorations' is it gonna take, you insolent DC hating world?  do you not see that we will shock and awe you into the stone-age for lack of fealty to our exported logos.  now pledge allegiance to the brand, of the united states of awhorica, and to the compounded interest for which it stands, one debt bearing note, under mammon, with tyrrany and debt slavery for all... amen. 

any government that acts in the interests of its citizens as opposed to the corporate-rubric is officially anathema.  Germany, you are playing with fire when defending the interests of your citizens.  You know better than that.  we will rattle some f-15s outta ramstein AFB and shake brandenberg's foundations till it quakes if you impudent mensch sustain in this masochistic folly...have you taken leave of your senses?  shit like demanding actual gold and putting human being's welfare before the united states supreme court sanctioned 'real' people who float above in a supra-national & untouchable ether -- corporations.  don't believe me?  it's the fuckin law, Deutschland...a US corporate citizen will sue the whole rhine valley if it does not comply with the mandate of maximizing profits -- and taking the whole month of august off to laugh and drink lager will land you in the dock so fast it'll snap your leiterhosen.  and we'll take a dozen dolphin class subs to go along with that settlement if you don't mind...you'll have plenty of time for expanded production goals with an extra month of august to work.     

and riddle me this, hans & franz:  how is it that you have your corporations under control, and yet you at the same time domicile many of the world's finest corporations?  happy workers are dangerous workers.  they may want to pay cash for some purchase that they don't want their girlfriend or mistress to see on their monthly statement.  or, heaven forefend, what if they want to endorse a cause not officially licensed and funded and NGO-approved by pax american?  

oh, Germany, God help you...please don't be so foolish as to put the welfare of the German citizen over that of the minions scuttling about the deathstar's nerve center in DC.

but, comrads, if you need a pilot that knows just how to maneuver in for the kill-shot, give ole janus a call -- i've found their achilles heel:

https://www.youtube.com/watch?v=DOFgFAcGHQc

the force is strong with this one,

janus

 

Wed, 06/17/2015 - 10:55 | 6205483 Youri Carma
Youri Carma's picture

Earlier I said – I have my doubts that this cashless society will ever come to pass. Yes, the upper lexicon of banker bureaucrats want it but their not the only criminal game in town.

Think about the banks laundering drug money. Think about the criminals paying off mercenaries to kill somebody. Think about the very lucrative drug money business in general which can’t exist without the cash money system.

I expect more bankers suicided who strongly bring up this cashless society idea and now not only in the lower and middle cadre but also at the top.

Wed, 06/17/2015 - 10:58 | 6205490 i_fly_me
i_fly_me's picture

Banning cash would be extremely inflationary, and I doubt the idea would make it through any planned cash phase-out before it became obvious that it was a really really bad idea (from the bankers perspective).  It will just push people to buy hard assets, essentially converting their digital currency to something still somewhat liquid but not affected by negative interest rates.  The banks will try to head this off by controlling the PMs, but people are flexible and creative. They will find other stores of value outside the system.  Ammunition, fuel, medicines, drugs, bitcoins, toilet-paper, any of these or a million other things would be used to keep the banks from stealing purchasing power. Unfortunately, those types of spending tend to be on the low end of the economic stimulus spectrum so it would undermine the bankers stated objectives. Worse though, going cashless to attempt to keep people from saving money really rips back the curtain on how criminal the system itself is, by attacking confidence in it directly. It is faith in the fiat system itself that will be the most important thing lost, and *that* combined with the already inherent inflation described above would seriously increase the likelihood of hyper-inflation ... imho.

Wed, 06/17/2015 - 11:06 | 6205500 gcjohns1971
gcjohns1971's picture

Want to abolish cash.

Good luck with that.

People will trade their money for their commodities of choice.

Some of those commodities will become defacto currencies. 

The analysis that imbues government with the key influence in the establishment of currency flies in the face of both history and common human experience - as can be seen in any 'Pirates of the Caribbean' movie. 

A "Piece of Eight" refers to a silver coin, cut into eight pieces, after being minted to a standard weight and fineness as specified for the one-time Spanish Tholar... Yes, that is where the 'Dollar' came from.

The 'Dollar' in its original form wasn't any national currency.  It wasn't minted by a government mint exclusively.  It didn't bear any particular devices or artwork. 

It was a silver coin of particular metal content, and weight that pirates commonly cut into pieces for the purpose of making change.

 

How does abandoning cash prevent people from simply spending the controlled government money on some variety of commodities, that can then be used as a proxy currency????

Get ready for it.

It will happen.

Wed, 06/17/2015 - 11:09 | 6205512 vegas
vegas's picture

Well, at least somebody has some fucking common sense. On the other hand, don't you want to protect the children from pedophiles and prevent terrorism?

 

www.traderzoo.mobi

Wed, 06/17/2015 - 11:12 | 6205524 MilwaukeeMark
MilwaukeeMark's picture

"Herr Weidmann, komm mit us to za roof top, zere is a beautiful view ve vant you should see ..."

Wed, 06/17/2015 - 11:18 | 6205553 moneybots
moneybots's picture

"Peter Bofinger, a member of the German Council Of Economic Experts and a prominent Keynesian economist in a land where sound money policies generally predominate, called coins and bills “an anachronism” that limits the influence of central banks."

Simple math limits the influence of central banks.  No matter how hard they try, 1+1 still equals 2.

Wed, 06/17/2015 - 11:22 | 6205572 moneybots
moneybots's picture

"Consumers not spending? No problem. Just tax their excess account balance. Economy overheating? Again, no problem. Raise the interest paid on account holdings to encourage people to stop spending."

 

Like that would really work.

Wed, 06/17/2015 - 11:41 | 6205669 roadhazard
roadhazard's picture

There will be no cashless society. None in America for sure. It is as stupid an idea as it sounds.

Wed, 06/17/2015 - 12:00 | 6205784 Terp
Terp's picture

"On the one hand, a moderate negative interest would not necessarily "lead flight to cash" to.On the other hand - and this is much more important - going discussion on "real problem" over."

Wut?

I hereby volunteer to translate german texts that ZH wishes to quote so that they don´t have to rely on these shitty google translations. :/

Wed, 06/17/2015 - 12:11 | 6205846 DuneCreature
DuneCreature's picture

My local beer joint takes nothing but cash.

You want’a see the USSa revolution kick off? Tell a bunch of beer swilling rednecks they are cut off without plastic in hand and then put on your hard hat and stand waaaaay back before their last brewski gets too warm to drink and they want another, colder, fuller bottle.

~ DC

Wed, 06/17/2015 - 12:53 | 6206051 mendigo
mendigo's picture

Is he the guy that routinely speaks orthodoxy and is routinely over-ruled.

Still half of the reason for cashless is to be able to monitor whrre the cash is and what its being used for - that will be a hard sell in duetchland.

The wealthy will find outlets - maybe this would put a floor under ruble or real.

Wed, 06/17/2015 - 13:49 | 6206261 ClowardPiven2016
ClowardPiven2016's picture

somehow it's racist to insist on IDs at the voting polls...so how do we go cashless and get IDs and debit cards into the hands of every American. What happens to ATMs, Brinks Drivers, Arcades, Flea Markets, tipping a bellhop, paying a highschool kid to do some yard work, fund raising car washes etc etc etc.

My wife manages a hotel and 80% of the maids don't even have bank accounts.

This better than cash alliance needs to fuck off! I'm not too worried though, if the US did eliminate cash it would require a reduction in government spending through the elimination/downsizing of the bureau of engraving and printing and when has the government ever reduced their workforce. 

Tue, 06/30/2015 - 11:32 | 6254205 SweetDoug
SweetDoug's picture

'

'

'

They'll get rid of him quick enough.

Has anyone ever calculated the tax income lost on all the revenue that would occur from things like passing the local kid 10 bucks to mow your lawn and such?

It would halt the economy.

 

 

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