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"How Will The Public Receive News Of More QE, NIRP, Cash Bans And Capital Controls?"

Tyler Durden's picture




 

Submitted by Eugen Bohm-Bawerk 

The Fed unsurprisingly chickened out from the much touted September hike. International conditions and a disapproval from Mr. Market was enough to unnerve an increasingly bewildered FOMC board.

Less well known is the fact that the FOMC gave a strong, and unexpected, signal to the Pavlovian world of central bank front runners. Dovish hold as the enlightend call it. It is all about managing expectations – see Goebbelnomics where we said:

As the Keynesian revolution was merged with the models of Robert Lucas, it eventually morphed into something called neoclassical economic thought. The general gist was that economic agents can be tricked into changing their behaviour through surprises in monetary policy, which yes, has somewhat miraculously become the mainstay of central bank economists… … the academic transition led to the “economics of money shifting to economics of psychology”.

With this in mind it seem untenable that the radical change in the dot-plots is due to a rogue, independent minded FOMC member. On the contrary, everything coming out of the Federal Reserve is well coordinated and is there to signal to the rest of the world where the Fed would like speculators to place their bets, or in this case, should not put their money.

With the probability of the Federal Reserve’s funds rate going negative in 2016 suddenly much higher, the one way bet on a stronger dollar (and hence emerging market crash) is put into question. Investors will thus think twice before sending their money into the dollar from now on. This is obviously a desperate move from the FOMC in a futile attempt to stem the emerging market capital exodus.

As the chart below shows, large movements in the dollar coincide with emerging market bubbles and busts. The FOMC, wrongly, believes the strong dollar causes the bust, but in reality it is just a symptom of massive capital misallocations unable to service their debt and a consequent retrenchment in the Eurodollar leverage and velocity. Insisting on maintaining the unsustainable capital flows will only make the inevitable bust that must larger.

In other words, by adding international developments to the FOMC action function the health of the Eurodollar has become the de facto guiding target for the Fed. The Global Central Bank has officially been born.

It also tells investors, especially Wall Street banks with USD2.2 trillion held in a depository account at the Federal Reserve, that they should not necessarily expect to receive 25 basis points on their excess reserves for ever. Some of these banks were undoubtedly looking forward to the day the FOMC was forced to raise the rate on excessive reserves (IOER) because it  would create even more scarce “capital” for the banks to play around with. In addition, those same reserves the Fed is paying banks to hold are part of an intricate  re-hypothecated collateralised financial chain, helping to prop up risk throughout the investable world. We touched upon this in Corporate Foie Gras.  

To banks, excess reserves are a highly valuable commodity. It receives an income (the IOER) as an immobile cash pile at the Fed and can simultaneously be used to trade ever rising markets.

However, the recipient of such collateral will use the very same collateral for their funding needs (re-hypothecation), creating long collateral chains dependent on the excessive reserves staying put.

However, if the cost of keeping  reserves increases it will at some point be better to use the money directly – id est. withdrawing the money from the Fed. Note, the original holder of these deposits only benefits from the IOER and the first link in the collateralised chain. If the interest received  go negative (and markets drop) it is easy to see that the cost of maintaining excess reserves will easily outweigh the benefits. The holder will thus refrain from keeping reserves at the Fed. This will in turn break the collateralised re-hypothecated chain, which will lead to widespread deflation (just as the QE’s wreaked havoc with the shadow banking system) and a general market sell-off through a fall in collateral velocity and leverage.

In the latest update on depository institutions Federal Reserve deposit holdings we may just have gotten a taste of what to expect. Banks withdrew an unprecedented USD405bn in one week; incidentally a week when the S&P500 lost more than 6 per cent. Hardly a coincidence.

So why would the FOMC risk so much by signalling NIRP when they could just keep interest rates unchanged and leave it at that? First of all, we don’t think they have a clue on what is going on behind the most obvious  – the thing that is seen to use an expresson from Bastiat. The perception of central bank omnipotence may be a thing on Wall Street, but we don’t buy it.

Secondly, as mentioned above, they want to stem the strong dollar movement (which is just another way of saying propping up a crumbling Eurodollar).

Third, and this is where we think the Fed is going with this, they need to make sure there is a bid on TSYs as the global vendor funding machine is currently in reverse. Emerging markets and commodity producers have become net sellers of TSYs on a 12mth rolling basis and if the Eurodollar deflates further from here this selling will only intensify.

Imagine what would happen to “risk” if the all the banks, pension- hedge- and mutual funds would sell stocks and corporate bonds to buy TSYs in a deflationary down spiral. Rosengren’s Ternary Mandate would obviously not be met according to standard.

To assure a TSY bid, NIRP, or the possibility of NIRP, should induce banks to reallocate their excessive reserves to the treasury market; especially if there were a chance the Fed may lure them in with hints of both QE4 and NIRP.

In Europe something very similar happened. When the ECB lowered the deposit rate to zero banks moved funds from the deposit account to the current account to avoid the added cost of using the overnight deposit account, but then slowly moved money out of the ECB system and into sovereign bonds.

The striking similarity between Greek bond yields and excess liquidity within the euro bloc clearly suggest banks started to front run the ECB by buying sovereign bonds as the cost of holding excess reserves rose and the lure of buying sovereign bonds increased due to hints of ECB QE.

Greek yields are obviously affected by the dire political situation and negotiations with the quadriga and can make massive moves on the whims of European politicians. However, investor front running the ECB with the use of excess reserves is clearly shown in other markets too, such as the Bunds, Oats and BTPs thus substantiating our argument. 

The European experience with NIRP is exactly what the Fed is looking for. Releasing excess reserves to buy the TSYs being sold by panicking emerging markets. In addition, the mere mentioning of NIRP could actually deter further dollar strength.

The fact that the re-hypothecated collateral chains that currently holds up risk will break and become highly deflationary and that the dollar strengthens because of a crumbling Eurodollar and not some perceived strength in the US economy will be lost on our money masters.

We believe the US will be in recession before the end of 2016 and then things will be really interesting. How will the public receive news of more QE, NIRP, forward guidance, cash bans and capital control in a time when faith in central bank omnipotence disappears?

Ceterum censeo Federal Reserve esse delendam

 

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Sat, 10/03/2015 - 16:20 | 6626009 Fukushima Fricassee
Fukushima Fricassee's picture

So Obama and the rest of the failed FED facist shit want your guns and they want them now, wonder why?

Sat, 10/03/2015 - 16:40 | 6626071 Captain Debtcrash
Captain Debtcrash's picture

The public would not take QE NIRP and banning cash nearly as well as if they introduced a new currency that wrapped NIRP and banning cash all into one, but passed it off as progress.

One of the most powerful and influential central bankers in the world just proposed such a shift, explained here. 

Who would stand in the way of progress after all. 

Sat, 10/03/2015 - 17:37 | 6626272 exi1ed0ne
exi1ed0ne's picture

The public won't give a shit about neg interest because they'll NEVER see it.  Loans that pay you aren't for little people, and there has already been gross largesse to the .01% without much issue.  Banning cash otoh won't ever happen, not ever.  That would put the final nail in mom and pop businesses that service most of rural america, and the outcry would be apocolyptic.

Sat, 10/03/2015 - 18:02 | 6626352 Captain Debtcrash
Captain Debtcrash's picture

If people get scared enough they will, in general, go along with anything.  

What do you think a person in 1928 would have said if you told them that in less than 5 years all the citizens gold would be confiscated by the government who would promptly revalue it up 40% essentially stealing an equivalent amount of their monetary wealth, how about if you were to have told someone in the late 50's or early 60's that in less than 15 years the dollar would no longer be backed by gold.  You will be amazed at what the American people will go along with if they are scared.  Time will tell, I hope your right because physical cash is a protection of our freedom, but I fear we will be amazed at how easy it is to ban cash.  I think this will be a phrase that will be brought up a lot: "I never use cash anyway".  

By the way, how much pull do "mom and pop businesses that service most of rural america" have in Washington. 

Sat, 10/03/2015 - 20:42 | 6626793 skinwalker
skinwalker's picture

You're not wrong, but I think many people will continue to accept cash and spend it amongst like minded people. I will. 

Sat, 10/03/2015 - 21:11 | 6626864 espirit
espirit's picture

"How Will The Public Receive News Of More QE, NIRP, Cash Bans And Capital Controls?"

Why, with pitchforks and torches as a matter of course.

Other than that, "Lock and Load Bitchez".

Sat, 10/03/2015 - 22:05 | 6627012 MeBizarro
MeBizarro's picture

But even then paper money & currency was still widely used.  You have to go back either the Confederacy of 1863-65 or th late 18th century America to see widespread failure/limited paper currency in the U.S.

 

Sun, 10/04/2015 - 00:02 | 6627216 jaxville
jaxville's picture

  Some will go along with anything the gov't dictates.  Others won't.  The proof of that is the gold coins that come into my office on a regular basis.  Those coins were once illegal to possess but I would hazard a guess that less than half of them that were in public hands were turned in. Heck, even some banks didn't turn them over as we hear of frequent discoveries of "misplaced" gold coins found in bank vaults. 

  The issue is really when does the public rise up and get rid of those behind the laws that oppress them?

Sun, 10/04/2015 - 05:45 | 6627504 August
August's picture

>>>The issue is really when does the public rise up and get rid of those behind the laws that oppress them?

When will the current American Public rise up? 

When they have no food.

Sat, 10/03/2015 - 19:53 | 6626628 Mr. Ed
Mr. Ed's picture

Whatever.

I am really getting fed up with people writing crap commentary on a subject as if they had some knowledge of it when in fact, their writing is on the very outermost edge of their real understanding of the subject.

Tyler's It's a little hard to see past all the unproofread typo's, grammar glitches and incoherent arguments... but, DOES THIS WRITER EVEN KNOW THE DIFFERENCE BETWEEN A EURODOLLAR AND A EUROPEAN DOLLAR (ie, the EURO)???!!!

I read some of these articles hoping to learn something only to discover that I've just read the ramblings of a wanker!

And BTW, could we have embedded charts that blow up enough to be read?  Ya know, just for those few of us who acturally want to read them?

Sun, 10/04/2015 - 00:34 | 6627248 CrazyCooter
CrazyCooter's picture

I definately get tired of the idiots promoting god knows what instead of commenting on the OP (Original Post).

I post up-thread as much as anyone if I wanna pick nits. But I try to bring something. The upvotes for morons saying moronic things to drive traffic to their moronic blogs wears on me.

Regards,

Cooter

Sun, 10/04/2015 - 06:26 | 6627541 Mr. Ed
Mr. Ed's picture

???

This guy's post makes complete sense to you?

Sat, 10/03/2015 - 16:59 | 6626077 junction
junction's picture

Obama has the guns and the hired killers to do his bidding. Put a SWAT uniform on your typical low IQ backshooting cop and they will gun you down like that if you don't obey them.  Even the military will follow whatever evil orders they get, as the Afghan hospital bombing incident confirms.  All the tax dodging 0.1% have already transferred the TARP funds they got to overseas secure foreign bank accounts.  The TSA hired those LGBT airport security screeners for a reason, to gleefully molest passengers as they look for gold and cash contraband.  

 

Sat, 10/03/2015 - 23:48 | 6627202 SuperRay
SuperRay's picture

"secure foreign bank accounts." Do such things exist?  I keep hearing you should move your gold offshore.  If I had any gold, where 'offshore' could I put it where it would be 'safe?'  When things fall apart, they're going to far apart everywhere.  No place will be secure, except for the billionaires who bought islands or fortresses...

Sat, 10/03/2015 - 16:45 | 6626104 aint no fortuna...
aint no fortunate son's picture

How will they receive the news? They will stretch out in the barcalonger with a 2500 calorie snack of pure saturated fat and they will ask who is on Dancing With the Stars tonight, and then they will send a selfie of the food dribbling down their chin onto their 400 pound gut to all their other 400 pound friends who are watching the same fucking show! What the fuck do you think, how will they receive the news? Geesh!

Sat, 10/03/2015 - 18:34 | 6626441 Sudden Debt
Sudden Debt's picture

They want to devalue the dollar with 90%, a massive transfer from the people to the state.

And when you do that, some people tend to become pretty upset as it's a pretty painfull process. Especially the transition process.

And that's why they want your guns because it's easier to stem a crowd who has brooms and sticks than a crowd with machine guns and rpg's.

Sat, 10/03/2015 - 16:20 | 6626014 scatterbrains
scatterbrains's picture

Tell ya what...  I smell a gap up and run to mid 17's to 18 in silver futs monday.  Rarely do you see a chart on a daily or weekly for that matter more coiled for a ramp than in the Silver market right here and now.

Sat, 10/03/2015 - 16:25 | 6626029 Fukushima Fricassee
Fukushima Fricassee's picture

Well then I am sitting pretty.

Sat, 10/03/2015 - 16:47 | 6626114 aint no fortuna...
aint no fortunate son's picture

a lot of the commodities look similar

Sat, 10/03/2015 - 18:36 | 6626445 Sudden Debt
Sudden Debt's picture

The LBMA is still in controll. So watch out if you're long short term.

Sat, 10/03/2015 - 21:14 | 6626872 espirit
espirit's picture

...or short long term for that matter.

Sat, 10/03/2015 - 23:55 | 6627210 SuperRay
SuperRay's picture

I don't see it in the silver chart.  Looks to me like it's just going to get manipulated down again. A gap up would freak a lot of assholes out.  They'll do whatever is necessary to drive it back down.

These motherfuckers are not going to go gentle into that good night.  They know what Costello (nee Jack Nicholson) says in the departed - nobody gives you anything.  You've got to take it.  

That's what they do all the fucking time.  And if we want justice and freedom in America, nobody is going to give it to us.  We've got to take it.

Sat, 10/03/2015 - 16:23 | 6626022 Elliott Eldrich
Elliott Eldrich's picture

You know that old saying about "never say never?" Well, as of now, I feel safe in saying that the Fed will NEVER raise rates again. Some future entity may have positive interest rates, but it won't be the Fed.

Sat, 10/03/2015 - 16:47 | 6626116 Dick Buttkiss
Dick Buttkiss's picture

That "future entity" will be the people:

http://www.spreecast.com/events/bitcoin-the-people-s-money

 

 

Sat, 10/03/2015 - 17:41 | 6626283 Yen Cross
Yen Cross's picture

lol/ NOT

 Lay off the hopium.

Sat, 10/03/2015 - 17:49 | 6626306 Dick Buttkiss
Dick Buttkiss's picture

Typical linear, last-centuiry thinking that only perpetuates the status quo.

Good luck.

Sat, 10/03/2015 - 18:41 | 6626454 Sudden Debt
Sudden Debt's picture

been watching the disney channel again he? :)

Remember, old yeller dies in the end.

Sat, 10/03/2015 - 16:26 | 6626032 RopeADope
RopeADope's picture

If every American could see NIRP on their bank statement there would be open revolt. I floated the idea of NIRP once with normal non-financial types to see what their response would be.

It completely blew their minds.

You could see their delusions of special personhood dying in their eyes as they grappled with the concept of modern slavery.

The only way the Fed could get away with it is if it is kept hidden from the public. The same way there is already an effective real NIRP in the United States.

Sat, 10/03/2015 - 16:28 | 6626034 Grandad Grumps
Grandad Grumps's picture

I think people would want a free market (and real elections with real leaders) more than they care about what exactly the interest rates are.

The problem is that we have no markets and all corruption in both the economy and politics.

That is frustrating to people ... even if they do not understand it.

Sat, 10/03/2015 - 16:31 | 6626055 Raoul_Luke
Raoul_Luke's picture

ZIRP, then Helicopter Money and then Hyperinflation.  We know what, we just don't know when.

Sat, 10/03/2015 - 18:48 | 6626465 Sudden Debt
Sudden Debt's picture

Hyperinflation can be averted by a massive devaluation.

It already happend a few times in the last 100 years and will happen again.

And if we look to europe in the 30's and beginning of the 40's and in the 50's again, they all devalued at the same time.

And as we all live in a globalized world, the scope coulb be a lot bigger.

 

 

Sat, 10/03/2015 - 16:42 | 6626091 buzzsaw99
buzzsaw99's picture

this article is eurotarded and full of subtle yet egregious errors

Sat, 10/03/2015 - 16:42 | 6626094 Yen Cross
Yen Cross's picture

 I suggested the $usd was going to strengthen, a couple of weeks ago.

It had NOTHING to do with the so called  5:1 $usd arbitrage.  Wealth can evaporate faster thansingular any CB can print.

 The reason I suggested $usd strength ,was EM [emerging market] covering,  their hedges. There's NO way those Sovereigns are going to liquidate their levered, derivative laden, caugh* caugh* bonds.

  Where's Jon Corzine?  I have some alligators  he might be interested in.

Sat, 10/03/2015 - 21:18 | 6626879 espirit
espirit's picture

Damn YC...

You've been right more then wrong.

(wink)

Sun, 10/04/2015 - 10:22 | 6627955 TongueStun
TongueStun's picture

If he's right, then wrong, wasn't he just wrong all along?

Sat, 10/03/2015 - 16:45 | 6626106 starman
starman's picture

The  push  for E-pay and the use  of CC'S since the eighties will eventually  lead to a casless society. Think of the cash businesses that went from 80% cash to 15% in 30 years!

We will  need a "bitcoin" like currency for "financial freedom" from government. 

 

Sat, 10/03/2015 - 16:51 | 6626131 debtor of last ...
debtor of last resort's picture

So you admit btc is a currency, and not money?

Sat, 10/03/2015 - 19:47 | 6626644 Wow72
Wow72's picture

its a joke.

Sat, 10/03/2015 - 19:49 | 6626636 Wow72
Wow72's picture

Ill get out of the system before I use bitcoin? People will circumvent the system before they will go cashless. What happens if the power goes out? Bitcoin is a joke.  Just what I want during the next cyber war, Ill feel so secure.

Sun, 10/04/2015 - 10:26 | 6627964 TongueStun
TongueStun's picture

We will  need a "bitcoin" like currency for "financial freedom" from government. 

 

Dear Dr. Stupid,

 

Do you really think BitCoin will be legal if cash is illegal?

Sat, 10/03/2015 - 16:46 | 6626112 luna_man
luna_man's picture

 

 

Too deep to climb out...Might as well keep digging, let's see what's on the other side!

 

we should be close to the other side...Right?

Sat, 10/03/2015 - 16:53 | 6626126 lynnybee
lynnybee's picture

How do I think the public will respond to more Q.E, N.I.R.P. & a ban on cash?     

Here's what any informed & educated citizen would do:    Rid yourself of the fake money & swap it out for the real money, the silver & the gold.   Then, grab your friends, pitchforks & torches & march on the fraudulent private-for-profit Federal Reserve Bank.   Frog march those criminal bankers & treasonous politicians to the scaffold.   & tell everyone you know that their inheritance of gold coins was stolen from their grandparents in 1933.    

It's them or us :      https://www.youtube.com/watch?v=ZFFhRq3Gqds

Sat, 10/03/2015 - 17:12 | 6626209 Yen Cross
Yen Cross's picture

 We need moar well informed women. 

 

    Over 40 please. ha

Sat, 10/03/2015 - 21:20 | 6626886 espirit
espirit's picture

I already proposed to LynnyBee, I think.

She's taken.

Sat, 10/03/2015 - 23:05 | 6627131 holdbuysell
holdbuysell's picture

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."

-Lord Acton, 1834 - 1902

Sat, 10/03/2015 - 16:59 | 6626159 debtor of last ...
debtor of last resort's picture

NIRP in combination with a cashless society= bartertown. Period.

Sun, 10/04/2015 - 15:22 | 6628808 explosivo
explosivo's picture

My thoughts as well. And bartertown doesn't have a central bank. We are close to the end now, aren't we?

Sat, 10/03/2015 - 17:02 | 6626170 Colonel Klink
Colonel Klink's picture

Like the compliant sheople they are.

Next question!

Sat, 10/03/2015 - 17:03 | 6626175 Getting Old Sucks
Getting Old Sucks's picture

A ban on cash ain't happening.  Even the dumbest politician knows that it would instantly render tens of millions unemployed.

Sat, 10/03/2015 - 23:59 | 6627213 SuperRay
SuperRay's picture

If we ban cash, we become an open dictatorship.  Who will give a shit about unemployment at that point?

Sun, 10/04/2015 - 10:32 | 6627977 TongueStun
TongueStun's picture

Cash won't be banned. There will just be a 25% 'premium' for it when you take it out of the bank, cash a check, or use it in a transaction.

 

It will be justified by the war of drugs or terrorism, or some such bullshit like that.

Sun, 10/04/2015 - 09:26 | 6627806 silverer
silverer's picture

Like they give a shit.  And they would report an increase in employment anyway.  Because they lie.

Sat, 10/03/2015 - 17:06 | 6626188 Totentänzerlied
Totentänzerlied's picture

The author simply assumes the public will be receiving this news at all, but It's already been nearly a decade since the Fed initiated its all-in bet and yet the vast majority of the hoi-polloi are not acquainted with the terms "the Fed," "the FOMC," "the chairmanwoman," "QE," "interest rates," "ZIRP," "NIRP," etc.

Capital controls, by definition, only affect those with capital... private checking accounts for direct deposit/welfare benefits at minimum balance are not what they're after and will be minimally impacted in the early stages.

As for banning cash ... people don't need to be goaded into debit/credit cards, wire transfers of all kinds, checks, etc., just as cash is more convenient than barter, cashless payment will effortlessly replace cash so long as its perceived to be more convenient. There is no reason to believe that a cashless payment system needs to eliminate every last physical coin and dollar in order to serve well its intended purposes ... eliminating even half of off-the-books cash transactions makes a lot of sense if doing so is cost free and brings a plethora of other benefits, not least of which would be a social stigma against cash.

As for NIRP, it's both widely unknown and generally incomprehensible, and amounts to no more than just one more mystical surcharge/fee among many. Itemize it as a national security funding tax and not one in a hundred thousand will either care or be any the wiser.

"Ceterum censeo Federal Reserve esse delendam"

LOL

Sat, 10/03/2015 - 17:08 | 6626192 ramgold2206
ramgold2206's picture

We all know that .govs/Elites will do everything they can to keep the fiat currency model alive for as long as possible. Ultimately they will fail but we will have the full menu of zirp, deflation, super inflation, hyperinflation, dirty wars etc etc and eventually currency collapse. It's gonna wipe out a lot of decent individuals. Personally I'm doing my best to stack as much bullion as I can and help others do the same

www.teamramgold.com/about-us

Sat, 10/03/2015 - 17:42 | 6626204 Yen Cross
Yen Cross's picture

Based on current interbank rates, and some personal postulation...  My trade is short the $usdx. I might even buy some eur/usd.

 In My Humble Opinion.

Sat, 10/03/2015 - 17:30 | 6626249 Arthur Schopenhauer
Arthur Schopenhauer's picture

Whaddya mean how will the public receive this news?

Exactly the same way the public put up with getting fucked in the ass before, of course.

The 'Occupy Wall Street' protesters will come out of the woodwork and the rest of America will shout at the bums to go get a job.

Sun, 10/04/2015 - 07:06 | 6627580 Wow72
Wow72's picture

Not this time, this time they are poking at the heart of America,  I say to them Good Luck with that.

Sat, 10/03/2015 - 17:37 | 6626269 CHoward
CHoward's picture

I think it doesn't matter what the fuck we think.

Sat, 10/03/2015 - 17:44 | 6626293 Yen Cross
Yen Cross's picture

 Do you hail from Langley Virginia?

 How's life on the farm?

Sat, 10/03/2015 - 17:53 | 6626321 Insurrexion
Insurrexion's picture

 

 

What?

Eurodollars are time deposits denominated in U.S. dollars and held at banks outside the United States.

This fucktard is talking about the Euro (using Eurodllar) and wanders around in catch phrases, illogic and bad Latin.

Now go back and read this article with this in mind.

Or, maybe not.

This is good Latin:

Vidi Vici Veni

I saw, I conquered, I came. 

 

Sat, 10/03/2015 - 18:14 | 6626393 delete99
delete99's picture

Steve Ricchiuto beginning to look like a prophet...

http://www.zerohedge.com/news/2015-02-10/man-will-never-be-invited-back-cnbc

Sat, 10/03/2015 - 18:28 | 6626423 GooseShtepping Moron
GooseShtepping Moron's picture

I find it strange that the same doyens of progressivism who gleefully exalt massive immigration from the third world would now seriously propose the elimination of cash. Do they not realize that that would leave the hordes of illegal immigrants entirely illiquid, prompting most of them to simply go back where they came from?

A cashless economy might just barely work in a country like Norway, which still has an orderly society of mostly white law-abiding citizens and a national population approximately half that of New York City, but it will never work on the scale of the United States. It would fracture the society into unmanageable pieces and create a black market for every conceivable good and service (including the highly illegal and dangerous ones) the likes of which has never been seen before.

As I've argued before, the very fact that they would moot something so preposterous indicates that the economists are getting desperate. This is the Ragnorok solution for them. Should they be so foolish as to actually try it, it would bring their whole world crashing down around them.

Sat, 10/03/2015 - 22:11 | 6627020 MeBizarro
MeBizarro's picture

Completely agree about the breakdown and you would see black markets explode everywhere. 

Just something that won't happen because it is a sign that even the most basic person can understand that the system if finally fucked.  

Sat, 10/03/2015 - 18:57 | 6626490 Wow72
Wow72's picture
"Cash Bans And Capital Controls" 

Go ahead, tell this to the American People, I DARE YOU!

Sat, 10/03/2015 - 19:28 | 6626589 seek
seek's picture

For those that missed the pun at the end, I actually took Latin in high school, (I'm that old!) and nearly flunked out, but I recognized the phrase:

"Ceterum censeo carthaginem esse delendam" was a call to war in Roman times -- "However I think Carthage must be destroyed."

Tyler made a clever substitution.

Sat, 10/03/2015 - 19:38 | 6626611 farmerbraun
farmerbraun's picture

Same. You were close.
Ceterum=moreover or furthermore.

Sat, 10/03/2015 - 21:05 | 6626843 GooseShtepping Moron
GooseShtepping Moron's picture

This is a paraphrase not a literal translation, but I believe the sense of the original passage is more in the nature of, "As far as everything else goes, it is my opinion that Carthage must be destroyed" which is the equivalent of saying, "We cannot adequately resolve those other issues until we have dealt with the threat posed by Carthage."

When understood this way, the fact that Cato ended every speech with it begins to make a little more sense.

Sat, 10/03/2015 - 21:25 | 6626895 espirit
espirit's picture

You guys that took Latin in HighSchool make me feel immature.

(and I'm old)

Sun, 10/04/2015 - 07:16 | 6627579 Wow72
Wow72's picture

I took it, latin is great.  Ego quos amo Argentum

Sat, 10/03/2015 - 22:16 | 6627032 MeBizarro
MeBizarro's picture

No way the US with its current demographics and completely distrust in almost every organization except the military would tolerate a Bank Holiday/fireside chat ala Roosevelt in '33. 

You always see the gun nuts say they will have to be armed to fight whoever but they are completely ignorant of US history & global history from the 18th century on. 

Americans won't be against a military coup but they will actively support it out of desperation and vote it in after that fact to give it legimitacy.  If you follow the long-term numbers on Americans and their faith/trust/interactions with large organizations this is by far the most likely scenario. 

Sun, 10/04/2015 - 06:02 | 6627516 August
August's picture

HeBizarro is correct.

Suspension of the US constitutional order is what's for breakfast, and whoever goes before the cameras and microphones to make the announcement MUST be wearing a uniform.

God bless America!

Sat, 10/03/2015 - 22:23 | 6627046 holdbuysell
holdbuysell's picture

Just FYI...information asymmetry is the most potent weapon.

I wouldn't say a thing about what one might do...even on this site.

Sat, 10/03/2015 - 23:00 | 6627117 Omega_Man
Omega_Man's picture

There will be no cash "bills" to buy gold with, it will all be either withdrawn, or you can't get it...... and they shall not allow gold to be bought with digital money... smart on their part... glad I got my fill already....

Sat, 10/03/2015 - 23:06 | 6627132 Omega_Man
Omega_Man's picture

physical dollars could be worth more than digital dollars... how about that....new currency could be digital...

Sun, 10/04/2015 - 07:22 | 6627596 Wow72
Wow72's picture

"and they shall not allow"

I wonder what the dictatorship will allow?  Without cash there is no freedom from government.  I may need to find a "Free" Country.

Sun, 10/04/2015 - 09:20 | 6627796 silverer
silverer's picture

I guess we can expect the governments to screw with bitcoin, because that will become an alternative.  Panic will ensue among the government when people turn to bitcoin, and then buy gold with it.

Sat, 10/03/2015 - 23:21 | 6627166 gimme soma dat
gimme soma dat's picture

You don't need to ban cash.  I get handed credit cards all day because people want to "earn" points or miles.  Try explaining to someone that the banks make money off the transaction fees which are paid by the retailer and accounted for in the cost of the product you are purchasing.  You don't have to ban cash when people are conviced they are getting something for not using cash.

Sun, 10/04/2015 - 04:52 | 6627468 kappal_toba_dhu...
kappal_toba_dhurr_ne_thook's picture

If you mean a DEEPER RECESSION or DEPRESSION then you are rght, but USA will not be in another recession because it never left the current recession.  Things SUCK there!

Sun, 10/04/2015 - 06:20 | 6627536 Gracy101
Gracy101's picture
"How Will The Public Receive News Of More QE, NIRP, Cash Bans And Capital Controls?"

 

With a beery sing song! BEER! Hear Hear!

http://www.cdbaby.com/AlbumDetails.aspx?AlbumID=thatguybloke&_ga=1.204737360.132707828.1438206264

 

Sun, 10/04/2015 - 07:28 | 6627604 Wow72
Wow72's picture

Enterprise rent a car is now cashless, in my area anyway.  Maybe that’s a great place to protest by boycott.  I wont use them anymore.

Sun, 10/04/2015 - 09:23 | 6627799 silverer
silverer's picture

I would have a high suspicion they were asked to be part of pilot program to evaluate impact and reaction by consumers.  Asked to participate by you-know-who.

Sun, 10/04/2015 - 09:31 | 6627815 PirateOfBaltimore
PirateOfBaltimore's picture

Is NIRP even legal in the US? 

 

If it holds that money is property, and that removal of property from citizens requires due process, then as a policy of an organization with government appointed leaders, removal of property via negative interest rates would require due process.

If you hold that money isnt property, I imagine you're going to have issues with the common law basis that underpins our legal system.  In cases of more regular government confiscation of property occurs (eminent domain) real property is substitutable for money, and due process is required.  On a simple basis, money is abstract property -- that is, a medium of exchange between forms of property, which is why it is superior to barter, but nonetheless still functions as a property substitute.

 

It seems to me that NIRP would be illegal as it involves government-approved confiscation of property without due process or just compensation.  If you argue "then don't use banks!", I would agree, but in the scenario in which cash is also banned, then there is no alternative, except precious metals or other barter in order to avoid due process-less confiscation, which seems unconscionable, to use a word from one of the legal cases I find detestable, so I would happily use it against TPTB... 

 

 

 

 

Sun, 10/04/2015 - 09:36 | 6627831 JailBanksters
JailBanksters's picture

I really don't think the public at large knows or even cares, as long they get paid. If the Public really did care what was happening there would be protests outside banks, government offices. Even with all banking scandals and fraud, it just doesn't phase the public at all, however threaten to take away their guns, well that's a war.

The Banks wotking with Media are doing everything possible to make sure the public are treated like mushrooms, kept in the dark and fed BS all year round..

 

 

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