This page has been archived and commenting is disabled.
The Financial Times Joins the "Ban Physical Cash" Chorus
Over the weekend, The Financial Times published an article calling for a ban on physical cash.
This is just the latest in a series of articles being promoted by the financial media proposing this concept. The arguments presented in these articles are always the same:
1) The Central Banks are wonderful institutions that are trying to save the world.
2) The reason Central Banks have failed to create another economic boom (despite spending $11 trillion) is NOT because they are incompetent, corrupt, and following financial models that have no connection to reality.
3) The reason Central Banks cannot create growth is because of consumers’ unwillingness to spend money.
4) The solution to this is to punish the stubborn consumers and FORCE them start spending more.
5) If we outlaw cash, consumers cannot remove their money from the financial system and so will be forced to spend it eventually (most calls for a ban on physical cash also suggest a “carry tax” or making it so that physical cash loses value the longer it remains outside of the financial system).
6) If we do this, the economy will suddenly explode with growth!
In short, it’s yet another “we need to do this for the greater good argument.” It’s interesting that other options that would actually be for the greater good are never considered (options such as auditing the Fed or demanding that the Fed follow the law), but I digress.
So why are we seeing calls for the banning of cash.
It’s because actual physical cash is a MAJOR problem for the Central Banks. The reason for this concerns the structure of the financial system. As I’ve outlined previously, that structure is as follows:
1) The total currency (actual cash in the form of bills and coins) in the US financial system is a little over $1.36 trillion.
2) When you include digital money sitting in short-term accounts and long-term accounts then you’re talking about roughly $10 trillion in “money” in the financial system.
3) In contrast, the money in the US stock market (equity shares in publicly traded companies) is over $20 trillion in size.
4) The US bond market (money that has been lent to corporations, municipal Governments, State Governments, and the Federal Government) is almost twice this at $38 trillion.
5) Total Credit Market Instruments (mortgages, collateralized debt obligations, junk bonds, commercial paper and other digitally-based “money” that is based on debt) is even larger $58.7 trillion.
6) Unregulated over the counter derivatives traded between the big banks and corporations is north of $220 trillion.
When looking over these data points, the first thing that jumps out at the viewer is that the vast bulk of “money” in the system is in the form of digital loans or credit (non-physical debt).
Put another way, actual physical money or cash (as in bills or coins you can hold in your hand) comprises less than 1% of the “money” in the financial system.
As far as the Central Banks are concerned, this is a good thing because if investors/depositors were ever to try and convert even a small portion of their “wealth” into actual physical bills, the system would implode (there is simply not enough actual cash).
Indeed, this is precisely what happened in 2008 when depositors attempted to pull $500 billion out of money market funds in the span of a month.
A money market fund takes investors’ cash and plunks it into short-term highly liquid debt and credit securities. These funds are meant to offer investors a return on their cash, while being extremely liquid (meaning investors can pull their money at any time).
This works great in theory… but when $500 billion in money was being pulled (roughly 24% of the entire market) in the span of four weeks, the truth of the financial system was quickly laid bare: that digital money is not in fact safe.
To use a metaphor, when the money market fund and commercial paper markets collapsed, the oil that kept the financial system working dried up. Almost immediately, the gears of the system began to grind to a halt.
When all of this happened, the global Central Banks realized that their worst nightmare could in fact become a reality: that if a significant percentage of investors/ depositors ever tried to convert their “wealth” into cash (particularly physical cash) the whole system would implode.
As a result of this, virtually every monetary action taken by the Fed since 2008 has been devoted to forcing investors away from physical cash and into risk assets. The most obvious move was to cut interest rates to 0.25%, rendering the return on cash to almost nothing.
However, in their own ways, the various QE programs and Operation Twist have all had similar aims: to force investors away from cash, particularly physical cash.
After all, if cash returns next to nothing, anyone who doesn’t want to lose their purchasing power is forced to seek higher yields in bonds or stocks.
The Fed’s economic models predicted that by doing this, the US economy would come roaring back. The only problem is that it hasn’t. In fact, by most metrics, the US economy has flat-lined for several years now, despite the Fed having held ZIRP for 5-6 years and engaged in three rounds of QE.
As a result of this mainstream economists at CitiGroup, the German Council of Economic Experts, and bond managers at M&G have suggested doing away with cash entirely. Over the weekend, an article in the Financial Times called for it too.
The old adage says “you can lead a horse to water, but you cannot make him drink.” The Fed and other Central Banks lead the horse to the water. The horse wouldn’t drink. So now they’re talking about holding the horse’s head underwater until he does.
This is just the beginning. Indeed… we've uncovered a secret document outlining how the US Federal Reserve plans to incinerate savings.
We detail this paper and outline three investment strategies you can implement
right now to protect your capital from the Fed's sinister plan in our Special Report
Survive the Fed's War on Cash.
We are making 100 copies available for FREE the general public.
To pick up yours, swing by….
http://www.phoenixcapitalmarketing.com/cash.html
Best Regards
Phoenix Capital Research
- advertisements -
This wanting to get rid of cash is a harbinger of anticipated financial chaos. Having cash in your possesion gives you a LOT more freedon vs having a digital/computer record in the bank, especially during turmoil. When hyper-inflation hits (and its just a matter of when), the Fed will issue an instruction to limit withdrawals of cash (just like Greece) and intentionally slow-down electronic bank transfers. The reason for this is simple: because it slows the velocity of money and helps tame rampant inflation. Retailers then start to insist on payment in notes because it is instantly useful to convert into commodities (which hold their true value) and their money doesn't decay in the bank on its (delayed) journey to complete the next transaction, by which time the product they need would have increased in price and they need to top-up. Think this is far-fetched? This is exactly what happened in Zimbabwe in recent times whereby physical cash fetched a 10% to 30% premium over money in the bank, yes people started BUYING physical cash with electronic bank tfrs! A similar thing happened in post war Germany. ALL fiat currencies eventually go through this cycle and the USD will be no exception.
When will this happen? Of course this is the trillion dollar question, but by the time you realise it is happening, you would have already lost considerable real-terms wealth. It could happen sooner than we think. The Fed has now painted itself in a corner concerning QE/ZIRP and rate 'tightening', and guess what--it will directly affect the USD's that YOU hold. Everybody knows the US is in arrears to foreign nations that it will never be able to fairly fulfill. The best way to pay back that debt which is not secured in Gold quantity but plain old US fiat currency is to settle in highly debased/made-worthless dollars. That way you settle you debt, say in gold terms, for three tons of gold instead of three thousand tons, and there is legally nothing wrong with it, albeit it is likely to make the creditors rightfully seethe with anger. The conspiracy theorist side of me would imagine the people who run the Fed rather liking something like the following:
Its not about the cash in the system per say its about CONTROL!! considering only 1% of the system is physical cash based, on the face of it doesn't mathematically represent a huge systemic risk, until you consider that "only the little people use cash" and therein lies the problem. When the architects of this system designed it back in the twenties there was only about 2 billion "little people" on this planet. Now we are heading towards 8billion of which 99.999% of them are considered useless eaters (and that includes you and me before you get on your high horse there buddy) and 8 billion people are hard to control if they suddenly wake up to the fraud that is the modern fractional banking and the oppressive conditioning system within which they are enslaved.
I have no evidence to support and this is my opinion only, but surely there are enough statisticians, actuaries, policy makers and economists to come to the conclusion that the current system is not fit for purpose and its creaking, leaking and listing. and essentially we are fucked because there is nothing better. So the only semi passive weapon left to keep control is FEAR.. so like the interest rates were dialled to zero, the fear knob will be turned to 10 to try keep control for that little bit longer!
I'm doing two things and I hope we get another 2 years of relatively calm...
1. Im buying physical gold, as much as I can afford anyway I can as often as I can; and
2. If I can manage it, Im going to acquire some more arable land
www.teamramgold.com/about-us if you want to join me in karatbars and use the affiliate system to acquire your own stack of AU
1oz Silver American Eagle €13 @ EurGold
https://www.eurgold.eu/silver/silver-coins/american-eagle-1oz-silver-coi...
Cash will be very useful during the deflationary phase, which may not last very long. As soon as it becomes clear that (fiat) cash is a false store of value then silver and gold become real money once again, along with any desirable commodities that you cannot live without like water, water filtration equipment, food, fuel, medicine, etc. In this second phase a very large store of ammunition as well as reloading components may become a person's backup retirement plan. Alternately, enough weaponry to create your own squad or squads seems desirable. All those critical items like hand held ham radios will become as valuable as gold but with a free market valuation ... Perhaps $5k, $10k or more per ounce. Prior valuations will become irrelevant. It may become difficult to consider value in the new paradigm. Such is the case during war or collapse.
This if put into effect, would almost be as bad as confiscating peoples guns
It's all to stop the Yard Salers.. those yard sale people are ruining our economy. I just bought a 80$ pressure cooker, for 3$
talk about a nice barter item when the refrigerators stop working :)
or bomb making materials, expect a visit from the fbi soon
What about the NYC hot dog vendor that the Wall Street LBGT's love to eat; they would go out of business. What about the BLACK market economy that the Wall Street loves...simple. "This is for your good, but not for ours; therefore it applies to you, but not to us"...like ObamaCare.
It would be the ultimate control; but their exists an old book that tells us this is indeed GOING to happen in the future. Some may recognize the phrase "mark of the beast"; most would agree the name "fits" or stated well, but deny the Lord who graciously has warned us and offers the ONLY and I do mean ONLY escape from the future judgment coming on YOU and YOU and You over there.
People generally do not want to hear the actual truth simply because they can't find it or because it "messes with their life-style" via moral conviction or simply because they do not look in the place in which they have been told many times its location. It so simple that a child can understand it; yet so difficult to obtain that it literally takes a supernatural act of God to receive it.
The simple escape plan in 2 minutes.
https://www.youtube.com/watch?v=NMlv21zGARM
No more chances, tomorrow when you wake up the economy will be fucked like it was 5,10,... years ago and will be in 5,10,15 ... ad infinitum years into the future while they are allowed to breathe.
Central bankers have failed, yesterday was shit economically and tomorrow follwing the crap period will also be crap. Removing cash from the system will not address either of those points.
I KIND OF LIKE IT WHY? All central bankers worth to be electronically recorded and sifted once a year looking for bribes and payments because there is no cash to bypass the system. Then if any unusual receipts of money are found (coz it ain't cash and you got the electronic value) we hang the fuckers.
What's good for the goose is good for the gander :-) You can't deny the electronic recording of ALL movement of value that is not cash is going to highlight all the tax evasion and bribes. Oh won't be applied to them? These things once legislated for come back to haunt you when you lose power.
It also become a way to create objective arguments against a system not applying it to elites and only to a population.
Go for it ... said it before the above is why might be best to keep your mouth shut.
The vampires are desperately hungry for more tax to grease the hologram's wheels and keep the ponzi moving.
Need. More. Blood.
the digital money in tnose MM accounts in 2008 was safe, the investments the funds made were not. all Treasury MM funds maintained their $1NAV and all insured funds were redeemed. it was only non Treasury MM funds and those for amounts greater than the insurance that lost money.
if the Fed went to a transaction only currency then gold would shoot to themoon, because gold is the one safe place you can park your cash. the fed hopes maybe half the fools who are forced to move out of cash will spend their money, the other half will buy gold. of course they can repress the price of gold all the time they are buying it up with their phony fiat dollars, so you'll probably get screwed either way.
one of the items in the feds doomsday plan is a time stamped currency, which runs out of value like a shopping coupon after a certain date. but so what if you are forced to buy something just buy more toilet paper and beans and wait for the collapse
Do it you geniuses. See what happens lol.
Is Martin Wolf joining the herd? Woooo.....
Ban physical cash. Yea, because we all know those scumbags at the TOP all pilfer their money with greenbacks in suitcases.
What a fucking joke.
When they ban cash is when the people go separate ways from their financial keepers.
Don't be on it. Your countrymen are some of the most useless and unintelligent wool bearers that have ever inhabited this rock.
People respond to the environment prepared for them. Blame lies with the slavemasters and their system of violent subjugation.
Slaveholders are just opportunist. I blame those willing to be enslaved
You want to see the poor consumer spend? Allow them to pull their cash out of their 401k without a penalty. They will spend like drunken sailors.
It will never happen. That's how the US government has seized control over your work product. Offer you a carrot to park your money here, then slaughter you and your savings later on- via 30% tax and withdrawal penalties or through an inflating currency which cuts your buying power in half after 30 years or so when you are "eligible" to draw your savings out. Either way, you get fleeced. The only way to win at this game- is to simply not play in the first place.
The goal seems to be achievement of society via shared pain.....
Except for the Banksters, they are royalty.
Hang the royalty.
Evry city and town needs an adequate number of LYCHING LAMPOSTS. Get after ur city council to get with the program!! Milestones
The South was right.
James Earl Ray had the guts, just the wrong target.
Making the large land owners royalty won't improve matters much.
Trash Cash eh? Better yet--let's fuck the FED!! It exisits thru out and out FRAUD.
Tme to cut to the chase! Mlestones
Sounds like a great time for a run on the bank. Love to see them pull a trillion out of their ass.
Your list should look something similar to this:
$10,000 cash
Tradable assets (gold, silver, or anything tangible that others might need)
At least 3-6 months of food
First aid and medicine stash
A way to trap water and/or filter it (Berkeys are great, Water Bob's can hold 100 gallons, Barrels can hold 55 gallons)
A home defense weapon (preferably an easy to operate shotgun)
A hunting weapon (at minumum .22, but an AR-15 can be used for multiple scenarios)
As much ammo as you can reasonably afford (can be traded)
A place to go if you are not ready to defend your property
If you cannot make food, be sure to have something to trade for it
I think I get an "A".
I KNOW I get an A
The BANNING of physical cash is probably one of the most stupid ideas that has come from the "System" over the last 12 months.
Fortunately, most practical people on the street are well aware that this idea is idiotic. Cash is still very handy for many small daily transactions. And CASH is absoutely essential in an emergency situation.
I noticed that a high-level British advisor actually posted a TWEET telling people to have ample food in their pantries, and good supply of emergency cash. The rationale was simple: The electronic banking system could go down in the event of a major bank crisis. If peoples' ATM cards do not work, they will be helpless. I think that most members of the public will see the common sense behind this idea.
Society does not exist for the sole purpose of making "bankers" an elite class of people ... like the Pharoahs of Egypt. The idea behind an economic system is that it is supposed to work for the better good of society as a whole. Someone seems to have forgotten this.
There will be the flywheer effect too.
If the day comes that cash is declared illegal there will still be those that will take it for a time, then, not so much.
They haven't forgotten it at all. However, I've known professors like the ones calling for negative rates. These were the same ones saying "I'm glad gas is $4 a gallon because it will force (poor) people to take the bus!" While they dine on Whole Foods fish just flown in this morning from the opposite side of the continent.
They don't care about you. They see you as something to study, model, and manipulate through policy. And what's worse is the economic ignorance of the academic elite; they cannot figure out that actually doing this means that there will be no savings, which by proxy means no saved resources needed for the capital projects that a functioning society requires. This almost feels like an experiment to see just how far a nation can contort itself before it finally collapses. The sooner the better IMO.
Glad to have those professors eating fish.
I believe anything I don't catch and clean myself was caught off the coast of Fukashima, Japan.
( I miss tuna)
Mrs Vigor was at the cashier check out, when I noticed a bag of frozen filets...Product of China. I asked if someone dumped that in our cart?" Mrs V said " no, she picked it up...it was on sale and was a product of the north Pacific"...After a few minutes of feeling like I wanted to puke, I said ' I'm sorry hon, you have to put it back" This may be the first time I ever told Mrs V "No" in 35 years.
She took it back to the freezer section of the store without saying a single word. I think she saw my face with its green tinge.
Now they can't even be troubled to print enough scrip for people to stash a little. OK.
No problem, take your stupid debit card to the LCS and store some silver and/or gold in a coffee can.
They never stop tightening the screws.
Easy, they can just print 10.000 and 100.000 and 1 million bills like those 1000 dollar bills in the 1920's!
For example, a 1000 dollar bill back then was worth about 50.000 today!
Crazy? They did it before.
The same banksters did it in Zimbabwe. Just look up the list of Zimbabwe banks to see some familiar names.
Most kids growing up today would probably question why cash even exists. They trust the banks, they trust authority, and they trust the system. Trust misplaced, but nevertheless, it's just a matter of time...
In God we trust...all others pay cash
True, unfortunately. at 30 I am one of the exceptions, but it seems that kids have successfully been propagandized to believe that money is a number that gives you 'access' to things. This is entirely meant to get kids to buy the narrative that we could all have what we want if the government would just create a few more trillion numbers.
In reality, everything is a trade of what people have for what they want. Money = proxy for resources. It's why I'm also surprised when SJW's can't put two and two together when the clear source of 'growing inequality' is a tiny elite having a right to purchase real resources for non-valuable numbers that they can create out of a few keystrokes, or can borrow at 0% interest.
They trust snapchat, they believe facebook friends are the true life long friends, they think performing art is a proper career, they believe they need a degree working in a restaurant, the only readings they do is twitter & facebook, the list is endless ....
Panic - Gen X and millenials doesn't have time for real beauty or arts asswipe. They are in survival mode and what they lack in creativity they make make up with raw fast analysis. It is slightly ugly and dry with a large dose of cynicism thrown in but necessary. Generational dynamics.
Just consider yourself lucky you had a good role of the dice in history to have time to have enjoyed certain things. Blame yourself for shifty self-centered parenting if you wish to personalize it or view bigger evolutionary picture.
I have met many young people, who are quite aware of the fact they are meant to pay the bills they inherited. It is the older generatioons who have been brainwashed and mostly too old to change that will protecet the order, and who have racked up the debt, observe choice of vote in scotland, greece and many more places, young and old voters.
NOTHING wrong in the USA today that couldn't be fixed with a few more William McKinley's, Grover Cleveland's, James Madison's and Salmon P.Chase's floating around. And I mean NOTHING
Maybe a Kennedy or Garfield or Lincoln.
Wait!!
The relative amount of physical cash and electronic cash equivalents is so small that looting it will solve nothing. All that will happen is the complete enslavement of the 99%.
They aren't going to loot that, they're going to ensure you cant convert the rest of it to cash, for some bull shyte reason, so they can loot all of it and enslave the 99%.
If they ban cash, a black market will emerge overnight. If they continue to devalue cash through inflation, the black market will use something other than paper dollars as a means of exchange. This has happened time and time again in human history. It's not complicated.
This is not new. Without coupons, money was largely useless in communist countries. They dont want to ban cash, they want to introduce the electronic cupon. https://books.google.co.uk/books?id=mXwQgdbdV3wC&pg=PA62&lpg=PA62&dq=com...