This page has been archived and commenting is disabled.
Banks Are Now Rejecting Deposits... Is a Cash Ban Next?
The Central Banks hate physical cash. So much so they there will likely try to ban it in the near future.
You see, almost all of the “wealth” in the financial system is digital in nature.
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 this “wealth” into actual physical bills, the system would implode (there simply is not enough actual cash).
Remember, the current financial system is based on debt. The benchmark for “risk free” money in this system is not actual cash but US Treasuries.
In this scenario, when the 2008 Crisis hit, one of the biggest problems for the Central Banks was to stop investors from fleeing digital wealth for the comfort of physical cash. Indeed, the actual “thing” that almost caused the financial system to collapse was when depositors attempted to pull $500 billion out of money market funds.
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 this time has been devoted to forcing investors away from 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.
If you think this sounds like some kind of conspiracy theory, consider that France just banned any transaction over €1,000 Euros from using physical cash. Spain has already banned transactions over €2,500. Uruguay has banned transactions over $5,000. And on and on.
This will be coming to the US in the near future. Already, the big banks (the ones with the closest ties to the Federal Reserve) have begun turning away deposits OR charging them.
State Street Corp. , the Boston bank that manages assets for institutional investors, for the first time has begun charging some customers for large dollar deposits, people familiar with the matter said. J.P. Morgan Chase & Co., the nation’s largest bank by assets, has cut unwanted deposits by more than $150 billion this year, in part by charging fees…
And here’s another big “tell”…
“At some point you wonder whether there will be a shortage of financial institutions willing to take on these balances,” said Kelli Moll, head of Akin Gump Strauss Hauer & Feld LLP’s hedge-fund practice in New York, saying that where to hold cash has become an increasing topic of conversation as hedge funds are shown the door by longtime banking counterparties.
So where is the physical cash meant to go?
Jerome Schneider, head of Pacific Investment Management Co.’s short-term and funding desk, which advises corporate and institutional clients, said that as a result of the bank actions, he and his customers have discussed as cash alternatives boosting investments in U.S. Treasury bonds, ultrashort-duration bond funds and money-market funds.
When it comes to cash, Mr. Schneider said, “Clients have been put on warning.”
Source: Wall Street Journal.
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 1,000 copies available for FREE the general public.
To pick up yours, swing by….
http://www.phoenixcapitalmarketing.com/cash.html
Best Regards
Graham Summers
Chief Market Strategist
Phoenix Capital Research
Our FREE daily e-letter: http://gainspainscapital.com/
- advertisements -


Banks don't need your deposits anymore - they get their money straight from the Fed. The fed also pays interest on "excess reserves" on depost at the fed, and that money is allowed to be used as collateral for speculation, so they won't need your money anymore. Banking is completely facist in the USA, an arrangement between the .gov and the financial industry. The bankers won and you lost. Don't be a sore loser.
It'll probably go down something like this:
1) planted stories about tax evasion start showing up in the news
2) Sudden arrests to high profile rich guys for "alleged" tax evasion as a show of force to the low info crowd who will cheer their arrests
3) planted stories about the "cash economy" and how that also inspires tax evasion & fraud
4) endless media handwringing about tax evasion and how cash transactions should be capped
5) enter the "Hey, I have a bipartisan solution to this" bill that will no doubt be drawn up, passed, and celebrated as the fastest ever bill to go through to President Hillary (peace be upon Her).
6) Rack up $1,055.00 bill at the hardware store and whip out your cash...get told to fuck right off.
And this will happen with a lot of limp dick complaints filed on chats and forums and red faced screeds by the left and right, but mostly by the right. AND NONE OF US CAN DO FUCK ALL ABOUT IT.
OBEY! It is your destiny.
There is no material cost to holding cash as a result of the greedy government's desire to keep its interest expense low and thereby make more war and more political allies. It takes a big government to payoff political alliances and borrowing cheap money makes this possible. We should want to hold more cash because of the inherent risk associated with this scenario of expanded war and waste of pork-barrell spending. Banks could charge for safeguarding this cash, but that runs contrary to the Keynesian philosophy of taking control by taking away cash. Its a philosophy of totalitarianism. Using money rather than guns to control the masses.
Who cares about interest. Preserve your capital. Keep it in a safe at home. Use it when you need to. Don't risk losing the lot in a bank.
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."
And it won't anytime soon.
The problem here is, and has been, a broken western middle class. THAT'S the real oil in the gearbox, and except for a relative handful, it's about plumb dry.
All of the games, Fed manipulation, lying racketeers, and corporate hacks, can't put back together what we've lost--what THEY gave away. It will take a couple generations, at least, to even begin to restore that. And that's IF we actually get started on a solution--AND the rest of the world holds still for awhile--which is not going to happen.
Instead of GRADUALLY transferring old western industry out, thereby enabling 2nd and 3rd world societies to slowly build market economies--WHILE WE GRADUALLY adjusted to a new future ourselves...
...greedy, profit-at-all-cost western corporate pirates went nuts hacking up the means of western middle class wealth creation--a good paying, manufacturing JOB--to such an extent, that we're left with lousy jobs, choking debt, and little to no real consumption growth.
That's all well and good IF we wish to transform into a socialist third world banana republic.
It is NOT fine if we wish to return to being an economic superpower, driven by more than 70% consumer spending.
It doesn't make a goddamned dime's worth of difference what the currency, what the racketeering (used to be "investing") vehicle, nor what the rackets (used to be "markets") are or claim about even a tepid "recovery"...
...it matters not one wit without an economically-strong middle class...
...and THAT doesn't happen without a completely redesigned economy.
Real from-the-ground-up stuff, eliminating and punishing those who've brought us here FIRST.
That's an absolute MUST.
When Americans are ready to take to the streets to demand this, we'll begin the effort to actually get better. We're loooong past repair; we're really on the precipice of actual revolution. I give it six more months, to a year at best.
If the bastards who caused or enabled the outsourced destruction of our economy want to speed up this process, with STILL MORE manipulation and what increasingly appears as fascist control of what's left of our once-mighty economy...
...go ahead...make our day.
m
Hell,us coins don't have counter party risk. Few mason jars full might be a good idea
'especially physical cash'...huh? I think we have some confusion about the definition of 'cash'.
What does it matter if, in a panic, folks go from the MMFs to some other non paper cash asset? It would all still be a digital entry in the banking system. The problem would be if physical cash was demanded. That would happen if there was a fear of all counter party risk. In today's world I find it hard to see how one could scare up that kind of paper. I guess that's grant's point.
Gold would of course come to mind if there was any time to think.
deleted
Huge Wads of Cash? Need a place to put it? My outbuilding will fit the bill. Remote, rural location. Fenced off property. Clear fields of fire in all directions.
Low monthly storage fees, and complete discretion guaranteed.
Standard Disclaimer: This is a limited time offer.
It's been tried already countless times , fails miserably every time.
Countless times. Name 5. Not really interested in your response.
Utah is trying this right now.
Not enough profit? Or dishonest bankers?
dishonest bankers every time. Otherwise know as human nature ... the temptation is just too great to produce more notes than actual gold exists in the vault.
It's past time that someone started operating a "bank" for gold metal.
You deposit in metal; you withdraw in metal, you receive statements of transactions in metal and - importantly -
you can write (and/or receive and deposit) checks (cheques) written for weights of metal.
Then you can write contracts in gold (X tonnes of wheat next summer for y ounces of pure gold at the same time).
Similarly silver; separate accounts.
Of course such bank accounts won't be free, but the bank makes it's money by selling service, not by taking a slice of the action. Call it ultra conservative banking.
It holds gold, the bank does not lend gold that belongs to depositors but depositors can lend gold to each other.
Far, far simpler way is to become your own bank. Keep your 'deposits' and redeem for cash when required. No third party needed.
Please do not tell me you can't hide it proper;y. Just keep it with your porn stash.
They do, its called the GLD.
It's been tried already countless times , fails miserably every time.