While The ECB Starts A 'War On Cash', European Citizens Start Hoarding!

Secular Investor's picture

ECB Headquarter

The European Central Bank has shed some more light on its operations in 2015, the year wherein it decided to forget about the free market economy as the bank has become one of the main market participants now.

The Central Bank’s net income from the asset purchase program increased from 2M EUR to 161M EUR, and the asset purchase program was responsible for the 9.4%  increase in the net profit of the bank. Indeed, the ECB has made a very handsome profit of almost 1.1 billion Euro, which was distributed amongst the national central banks in the Eurosystem.

ECB Balance sheet size

Source: ECB

What’s more important is the fact the size of the balance sheet of the ECB is increasing again. At a very fast pace! The total value of the balance sheet of the Eurosystem was 2.8T EUR as of at the end of 2015 (which is approximately $3.1 trillion). That’s a substantial increase compared to just 2.4 trillion last year, and there are no signs of seeing the expansion of the balance sheet slowing down as not only will the ECB continue its asset purchases, it’s even considering to expand its monetary easing program by stimulating the markets even more.

At the same time, the war on cash has started, and several officials and market participants have claimed the bank notes of 500 EUR (and even 200 EUR) should be banned, whilst for instance in the USA, Larry Summers wants to get rid of the $100 dollar bill. It’s understandable the governments are getting nervous about the force of people drawing down cash and hoarding their cash (and other assets) outside of the traditional banking system. Perhaps the next chart explains everything in just one powerful image.

ECB Balance sheet Notes

Source: yardeni.com

The total amount of bank notes has increased by 57% since the end of the global financial crisis, and this really is an indication the European citizens still don’t trust financial institutions with their assets. It’s truly remarkable to see such a sharp (and steady!) increase of the total amount of bank notes in circulation and it’s totally understandable why this makes the monetary powers ‘nervous’.

Portugal ECB

Source: Santander presentation

On top of that, the situation in for instance Portugal seems to be deteriorating once again. The country has been trying to convince the European Commission and the ECB it knows what it’s doing and that it has a plan to get the country back on the right track, but apparently that’s not what the ECB-team saw in Lisbon. The mainstream media seems to have fully ignored this report, but we feel this could be an important problem as it seems to be just a matter of time before Portugal will need a new bail-out.

While the authorities have committed to comply with European budgetary rules, the effort to reduce the underlying structural budget deficit needs to be significantly increased. […]The adjustment in the underlying structural deficit in 2016 reflects an insufficient consolidation effort. […]Banks continue to consolidate their balance sheets, albeit at a slower pace than previously observed, and have seen minor improvements in profitability. […]high levels of non-performing exposures continue to weigh negatively on profitability and capital.

This doesn’t really make us feel comfortable at all, and as the European economy still isn’t improving, Portugal might have to beg the institutions for more cash.

>>> Protect Your Wealth: Download our New Gold Report

Secular Investor offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies are transformed into the Gold & Silver Report and the Commodity Report.

Follow us on Facebook @SecularInvestor [NEW] and Twitter @SecularInvest

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Goldbugger's picture

This picture shows how Larry Summers want's to put a choke hold on the average citizen. This man is fucking evil, you have been forwarnded.

http://uk.businessinsider.com/summers-time-to-kill-the-100-bill-2016-2?r...

Hammer of Light's picture

If it's heavy, you hold it in your hands... you own it. Period!

Silver and Brass and a few thousand cans of Dinty Moore Beef Stew boys and gals! Best start loading up now while you still can, this is going to get fricken weird over the next year or so.

Anyone have a guage to restabilization as a TIME quotient out there?

When this all goes boom this year, how long till we get Dinty Moore cans of Beef Stew back on the shelves!

I know this is a poor analogy, but does any of you poindexters out there still keep a mechanincal ruler in your pocket protector to speak?

Where's the damn nerds when you need them? lol

How long will it take to get things back up to a "normal life"?

NoWayJose's picture

We often overlook the 'add on' items that we also assume will be there. It's hard to stock some because of expiration dates, but think down the road as to just what is going to be the last stuff left on either the store shelves or your shelves - and what you might need to make those items palatable - or even edible. Got some flour? What do you add to make bread? Or biscuits? Got pasta? Eat it plain? Or make sure you have tomatoes or spaghetti sauce. Got rice? What do you eat with it? There will be lots of these simple foods - but not likely as much shortening, baking powder, yeast, etc. Stock up and rotate.

ah-ooog-ah's picture

That chart from yardeni.com.  Anyone know what are the units of the vertical axis ?

stock market loser's picture
stock market loser (not verified) Feb 21, 2016 1:52 PM

Without cash how are the prostitutes and strippers going to survive? That is the real tragedy we are facing. 

bonin006's picture

Don't worry about that, it will just be reported as payment for house cleaning, babysitting, or any such legal services.

peddling-fiction's picture

Look at Cuba a decade ago and you will find an answer to your question.

Favors and services were being paid with a good pair of U.S. jeans, sunglasses, food and barter.

Antifaschistische's picture

threatening to ban cash incentivizes hoarding..

...then hoarding will be the excuse they use to go all electronic fiat...

...the 99% can win without revolution

Bemused Observer's picture

Ha! Loss of trust has arrived. Good luck trying to restore it.

You CAN'T. That's the thing, this is a totally non-reversible phenomenon. What it is is the shot across the bow of the bankster's battleship...

 

Tick, tock, you mother-fucking greedy parasitical grifters! Your end is nigh. Your antics will collapse the stupid Ponzi that made you rich at everyone else's expense. Banks as institutions will never recapture the public trust, or fix their shit reputations. One day, soon, putting one's money into a bank will be viewed in the same way as sending one's money to a Nigerian prince down on his luck...a pretty stupid thing to do with your money.

 

 

 

 

 

 

 

 

 

 

 

 

FIAT CON's picture

Check out this movie it needs to go viral...(Official Movie) THRIVE: What On Earth Will It Take?

See who is behind the bankers and the scheme they have planned for all of us....share this with everyone you know.

I am starting to get pissed at all of the sheep. I do not want to be controlled, but these sheep are keeping all of us down.

Do you deserve your freedom? if you think you do fight for it. freedom is not free.

 We need freedom from the banker cabal, and the puppet Corporations and Politicians they control.

Dragon HAwk's picture

They will destroy the Hoarded cash, by printing so much of it, it becomes worthless..  Oh Wait..

FIAT CON's picture

Get out of their money system, gold and silver is the way out.

Hammer of Light's picture

If it's heavy, you hold it in your hands... you own it. Period!

 

InnVestuhrr's picture

Gold pays ZERO income.

Gold is only for the independently wealthy who do not need income.

Nutsack's picture
Nutsack (not verified) Volkodav Feb 21, 2016 8:07 PM

That coward just repeats the lies, he never explains them!

Bemused Observer's picture

Gold isn't supposed to provide you with an income. That's what WORK is for. A big problem we have is this notion that one's money should be "working" for us...no. It's WE that should be working, the money is the reward for doing so. When you start getting the idea that you can AVOID work by sending your money out to work while you sit home, you end up with a skewed idea of the value of both money and work.

Gold is not your "boy". It won't go out and sweat for your benefit. What it WILL do is allow you to hang onto at least some of your accumulated wealth after your chosen leaders have totally fucked your financial system. And be grateful for that much...many throughout history have learned just how valuable that can be.

adanata's picture

As long as were protecting our ass-ets; silver is more rare than gold, more valuable, safer to hold and will outperform gold. It is quite possible the tiny silver market may bring down this entire shitshow when the first industrial user cannot find it promptly available in the market place. The piles of silver once available are gone and because the phony "paper silver" price is below production costs, mines are closing... AND being bought up by the Big Boys who understand very well what's happening. Most businesses now buy silver in the "just in time" format; without silver supplies they would have to shut down; go bankrupt. When the first guy can't get it, he'll buy LOTS MOAR and all the other silver user dominos will follow suit I reckon.

oncemore's picture

?

about income: check, what is GOFO.

FIAT CON's picture

$7 Trillion in negative returns, stock markets are starting to collapse, bankers are printing money, and you say something this stupid.

Getting 0% interest on sound money is way better than negative interest, on hyperinflating currency invested in a crashing stock market. 

Haraklus's picture

Bonds also pay zero income in real terms now.  They are, however, fixed to a given currency.

Gold and silver, on the other hand, have generally appreciated with inflation, protect against currency failure, and protect against exchange rate fluctuations. Think of them as "money without a central bank", and you begin to see the place they have in your portfolio -- as a protector against currency risk and a diversifier against riskier assets. 

joego1's picture

It's not about income  it's about preserving wealth, it's insurance. All of us would like to have a nice %7 unicorn bond and retire with no worries. Get in your bunker and count your blessings it's about to get snotty.

Kayman's picture

A handsome profit of 1.1 Billion Euros on a 2.75 Trillion Euro balance sheet ???

Another Central Bank fiction as they impoverish the working class. That is the same as earning 36 cents on $1000.  And since they can just conjure it up (more paper/fiction assets), whether they earn or lose is totally irrelevant. 

VWAndy's picture

 Going to cash has its risks too. I like assets like tools and other things with real value. The nice thing about tools is the free shit army avoids tools because they have 0 value to them. They only have value to folks that actually produce. Other than that the tools value is as scrap. ie not worth the major effort to take them. Ever see how constuction workers handle tool thieves? If they catch the thieves its a first class beatdowns with extra sauce.

ebworthen's picture

E.U. certainly has its storm-troopers; plenty of them protecting the Elites at Davos.

All the German hand-wringing over the Holocaust, yet they're chasing Jews out of Germany and Europe by supporting the influx of 1+ Million Muslims.

The E.U. Brussels Bandits would seem to have plans that don't include the indigenous people and cultures.

uncle_disgusting's picture

E.U. certainly has its storm-troopers; plenty of them protecting the Elites at Davos.

That was the Swiss army.

Caleb Abell's picture

"All the German hand-wringing over the Holocaust, yet they're chasing Jews out of Germany and Europe by supporting the influx of 1+ Million Muslims."

 

I hadn't thought about it before, but it appears the Huns have mastered the art of subtlety.

g'kar's picture

stock and bond hoarding should be banned too

anonnn's picture

...and land hoarding.

...and "unimproved" land hoarding to avoid property taxes.

Note that "hoarding" of savings as cash  is deliberate misrepresentation of of genuine need to avoid banking fraud and bank failure. Government FDIC "insurance"  that "guarantees bank deposits  is actually an unfunded I.O.U.and a promise to pay with absolutely no time period given to make that payment.

If too many depositors try to withdraw cash, FDIC cannot pay out for years, if ever. That is reason to go to electronic "money" accounts; to avoid guarantee payout in cash; instead merely substituting an electronic "credit" to your account.

Electronic "digital money" is only another form of credit to avoid paper notes. The "payment" is imaginary and only faith-based.

 

g'kar's picture

it's ok to hoard as long as you are hoarding what "they" want you to....cash and gold is bad hoarding, stocks and bonds is good hoarding

roadhazard's picture

This money is not in circulation because hording is not circulation.  The rich are doing most of it and I can't see them allowing cash to be banned. They have the power to say how it's going to be.

Banning cash will destroy economies even more.

Pickleton's picture

Isn't that the goal?  Kill off this entire system to implement globalist NWO with a new world currency or basket thereof?

HenryHall's picture

Well, well!

People don't trust banks anymore.

People may be naive and gullible, most of them, but they are not entirely stupid.

Anyone who trusts banks fully deserves all that is coming to them.

philipat's picture

If you might excuse my French, Fuck the Central banks and  may they be first in line at the Gullotine stations. Although lamposts would also be fine...