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First Major Offensive in War on Cash

Terrorists are no longer public enemy number one. Nor are drug lords, people traffickers, arms dealers, cyber terrorists, or any other unsavory do-badder. Today, the biggest threat to global peace and security is physical cash, a means of exchange that has flourished for over 4,000 years but which now stands accused of being the world’s biggest enabler of criminality.

A Criminal’s Accomplice

The latest person to publicly highlight the deadly threat posed by cash is Peter Sands, the former CEO of the British bank Standard Chartered, who just published a report for Harvard Kennedy School of Government imploring central banks around the world to stop issuing high-denomination notes and bills. They include the €500 note, the $100 bill, the CHF1,000 note and the £50 note.

“Such notes are the preferred payment mechanism of those pursuing illicit activities, given the anonymity and lack of transaction record they offer, and the relative ease with which they can be transported and moved,” the report warns. In other words, only criminals use cash. High-denomination notes, the report adds, “play little role in the functioning of the legitimate economy, yet a crucial role in the underground economy.”

Sands is no doubt a leading authority on the role of cash in the criminal economy, having led a company that schemed with the government of Iran to avoid U.S. sanctions and “hide from regulators roughly 60,000 secret transactions, involving at least $250bn, and reaping SCB hundreds of millions of dollars in fees.”

That’s according to the New York State department, which in 2012 fined Standard Chartered close to a billion dollars for leaving the US financial system “vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity.”

…click on the above link to read the rest of the article…

Softening up the Rubes – the War on Cash Continues

February 3, 2016

Softening up the Rubes – the War on Cash Continues

More Anti-Cash Propaganda by Bloomberg

Former NYC mayor Bloomberg is probably one of the worst nannycrats who ever strode upon the US political scene. No-one has done more to take the fun out of New York than this man (we have chronicled the efforts of people of his ilk in “America’s Killjoys”). It always amazes us to no end when successful businessmen – once they have made enough money to last them a thousand lifetimes – suddenly discover their penchant for socialism and State control of every nook and cranny of people’s lives.

angry midget Ex-NYC mayor Michael Bloomberg, owner of the famous financial data service and professional nannycrat.

Photo via politistick.com

If not for the huge amount of capital our forebears wisely accumulated while the market economy was still relatively unhampered, Bloomberg wouldn’t have been able to amass his fortune – and yet, we strongly suspect that he has never really been a big fan of free market capitalism. His willingness to join the political class is by itself a major “crony indicator”. There is after all a big difference between wishing to serve consumers and wishing to rule over them.

The financial services offered by his company are nevertheless quite valuable – an unrivaled wealth of data is available via Bloomberg terminals and the financial commentary on the Bloomberg web site is often quite informative as well – as long as it is confined to the neutral reporting of facts that is. It is quite different with the magazine’s editorial line, which is steeped in the statism of the service’s founder.

For instance, central banking and central planning of the economy in general remain routinely unquestioned; Keynesian shibboleths are woven into the narratives as if they represented incontestable truth. It is therefore not a big surprise that the magazine is also editorializing in favor of banning cash.

…click on the above link to read the rest of the article…

The International War on Cash

January 12, 2016

The International War on Cash

Back in 2008, I began warning of increasing capital controls that we would see in the future, as a component in the decline of Western economies (Western in the broad sense, including Japan, Australia, etc.)

Along the way, it occurred to me that, at some point, governments might collectively attempt to eliminate paper currency in favour of an electronic currency – transferred from party to party solely through licensed banks. Sound farfetched? Well, maybe, but what if the U.S. and EU agreed on an overall plan, then suggested it to other governments? On the face of it, this smacks of conspiracy theory, yet certainly, all governments would benefit from this control and would be likely to get on board. In fact, it might prove to be the only way out of their present economic problems.

So, how would it play out? Here’s roughly how I saw Phase I:

Link the free movement of cash to terrorism (Create a consciousness that any movement of large sums suggests criminal activity.);
Establish upper limits on the amount of money that can be moved without reporting to some government investigatory agency;
Periodically lower those limits;
Accustom people to making all purchases, however small or large, through a bank card;
Create a consciousness that the mere possession of cash is suspect, since it’s no longer “necessary”.

When I first wrote on the subject, there was considerable criticism as to the possibility that such a programme would ever be attempted, let alone succeed. And, granted, it was so Orwellian that it was understandably seen as a crackpot idea. But since that time, the programme has been developing extremely rapidly. In the last six months alone, it has become so visible that it has even garnered a name – “the War on Cash”.

…click on the above link to read the rest of the article…

The Risks of the War on Cash

January 2, 2016

The Risks of the War on Cash

“Quick and easy is winning the war.”

On January 1st, Londoners woke up to a rather perplexing reality: all of the cashless Oyster card readers on the city’s buses, rail and tube stations had stopped working. With cash as good as banished from the London transport system, attendants had little choice but to wave passengers through open ticket barriers and onto buses without paying, until the problem was fixed.

Serious Pause for Thought

Ironically, the costly glitch came on a day that new fare increases were to be introduced, with journey prices going up by an average of 1%. According to research by the UK Labour Party, rail fares have risen at three times the rate of wages since 2010, with campaigners saying ticket prices have become “increasingly divorced from reality.”

While for London’s commuters the glitch offered a welcome respite from ever-spiraling transport costs, the temporary collapse of the Osyter Card system should give serious pause for thought about our growing dependence on electronic cashless payment systems, especially as government, central banks, financial institutions, credit card companies, and large corporations conspire openly to pull the plug on cash [read: The War on Cash in 10 Spine-Chilling Quotes].

Just this week the UK Department of Transport announced plans it is developing with banks, credit card companies, and train groups to extend the London Underground’s cashless payment system across the entire UK rail network.

“We are in the early stages of exploring how passengers could pay for and store tickets on their contactless credit or debit cards as part of our wider aim to improve the experience of rail passengers and move towards smarter types of ticket,” said Jacqueline Starr, managing director of customer experience at the Rail Delivery Group, which represents Network Rail and train operators.

…click on the above link to read the rest of the article…

WAR ON CASH: Banks to start charging for cash deposits

November 1, 2015

WAR ON CASH: Banks to start charging for cash deposits

Few could have envisioned it even just a few years ago, but it’s happening now, and on an ever-widening scale. More big U.S. banks are shunning cash, because the banking system has become so dependent on other “assets” that large cash deposits actually pose a threat to their financial health, according to The Wall Street Journal.

State Street Corporation, a Boston-based institution that manages assets for institutional investors, has, for the first time, begun charging some customers for making large cash deposits, according to people familiar with the development.

And the largest U.S. bank in terms of assets — JP Morgan Chase & Co. — has dramatically cut “unwanted” deposits to the tune of $150 billion this year alone, in part by charging customers fees.

What gives? What kind of world do we live in when banks no longer want cash?

As the WSJ reported:

“The developments underscore a deepening conflict over cash. Many businesses have large sums on hand and opportunities to profitably invest it appear scarce. But banks don’t want certain kinds of cash either, judging it costly to keep, and some are imposing fees after jawboning customers to move it.”

As usual, the problem originated largely in Washington, D.C.

Criminalizing cash?

The paper said the banks’ actions are being driven by low interest rates (set by the Fed) that eat into profits, as well as “regulations adopted since the financial crisis to gird banks against funding disruptions,” adding in a separate report that a number of large financial institutions have become more dependent on buying and selling stocks, bonds and commodities like oil.

The latest round of fees for large deposits stems from regulators’ deeming them risky. They are sometimes dubbed hot-money deposits that analysts believe is likely to flee quickly in a crisis (think runs on Greek banks recently, which the government eventually curbed).

…click on the above link to read the rest of the article…

Moneyweek: Hands Off Our Cash Petition

October 21, 2015

Moneyweek: Hands Off Our Cash Petition

Andy Haldane recently floated the idea of abolishing cash so that radical monetary policy like negative interest rates can be implemented.

You can sign the Moneyweek petition against this here:

http://moneyweek.com/wp/hands-off-our-cash-petition

Whereas the Bank of England’s Chief Economist Andrew Haldane announced on 18th September 2015 his intention to abolish use of cash in Britain in order to allow the bank to impose negative interest rates on savers;

Whereas this would allow banks to charge you to keep your money on deposit and make it impossible to remove your money as cash in response;

Whereas Denmark, Sweden and Switzerland have already imposed negative interest rates;

Therefore, we the undersigned, as concerned savers and investors of Great Britain, do call on Her Majesty’s British Government to:

1 Guarantee that cash will not be abolished from use in the UK

2 Guarantee that negative interest rates will not be imposed undemocratically on British savers

3 Establish a form of public consultation on the specific mandate and monetary policy limitations of the Bank of England

Legal Fictions and new Battlegrounds in the War on Cash

October 8, 2015

Legal Fictions and new Battlegrounds in the War on Cash

Greece – Ground Zero in the War on Cash?

We believe it was our friend Claudio Grass of Global Gold in Switzerland who first mentioned that the eurocracy may possibly have plans to use the Greek crisis as an opportunity to expand the ongoing war on cash. It stands to reason: Greece is well known for its extremely large “shadow economy” (the name for economic activity that flies under the radar of the greedy grasp of the State). Greece’s citizens not unreasonably regard the State as akin to a mafia organization which they are trying to avoid as much as possible (unless it promises them free goodies to buy their votes – they do of course gladly accept those).

We vividly recall an interview with a Greek shipping magnate about the constitutional provision that has relieved the country’s shipping industry from income tax. The interviewer asked (we are paraphrasing) whether the magnate thought it “fair” that this was so, and if he wasn’t troubled by his conscience in light of the Greek government debt crisis. The shipping magnate replied (again paraphrasing) along the lines of: “Just look at the government in Athens. They’re nothing but a bunch of crooks. Would you hand over your money voluntarily to Al Capone? Surely not. Well, neither do I.”

al capone Not someone you want to hand your money to…
Photo credit: Bettmann / Corbis

A great many ordinary Greeks undoubtedly agree with the shipping magnate. They have a very cynical, but ultimately quite well-informed view of the political class and the State. The reason why the Greeks are way ahead of most other European citizens in this department is rooted in history. Greece had been under Ottoman occupation from the 15^th century until 1821. The so-called millet system led to the Orthodox Christian Greek community remaining a fairly cohesive group. However, the Greeks certainly chafed under Ottoman rule.

…click on the above link to read the rest of the article…

The War On Cash: Why Now?

July 29, 2015

The War On Cash: Why Now?

You’ve probably read that there is a “war on cash” being waged on various fronts around the world. What exactly does a “war on cash” mean?

It means governments are limiting the use of cash and a variety of official-mouthpiece economists are calling for the outright abolition of cash. Authorities are both restricting the amount of cash that can be withdrawn from banks, and limiting what can be purchased with cash.

These limits are broadly called “capital controls.”

Why Now?

Before we get to that, let’s distinguish between physical cash — currency and coins in your possession — and digital cash in the bank. The difference is self-evident: cash in hand cannot be confiscated by a “bail-in” (i.e., officially sanctioned theft) in which the government or bank expropriates a percentage of cash deposited in the bank. Cash in hand cannot be chipped away by negative interest rates or fees.

Cash in the bank cannot be withdrawn in a financial emergency that shutters the banks (i.e., a bank holiday).

When pundits suggest cash is “obsolete,” they mean physical paper money and coins, not cash in a bank. Cash in the bank is perfectly fine with the government and its well-paid yes-men (paging Mr. Rogoff and Mr. Buiter) because this cash can be expropriated by either “bail-ins” or by negative interest rates.

Inflation and Negative Interest Rates

Mr. Buiter, for example, recently opined that the spot of bother in 2008–09 (the Global Financial Meltdown) could have been avoided if banks had only charged a 6 percent negative interest rate on cash: in effect, taking 6 percent of the depositor’s cash to force everyone to spend what cash they might have.

…click on the above link to read the rest of the article…

Why Banks & Governments Hate Cash: Bank Runs

July 1, 2015

Why Banks & Governments Hate Cash: Bank Runs

The photos from Greece showing long lines at ATMs are astonishing. Even after the deposit outflows from Greek banks over the past weeks, there are still large numbers of people who are trying to get their money out of the banking system. With the banks closed, ATMs are the only way for people to get any cash. Let’s not beat around the bush in describing what is happening: this is a bank run. Even though Greece has a deposit insurance scheme that covers up to €100,000 in savings accounts, trust in the banking sector is declining and people are trying to get their money out. Cash is the ultimate means by which consumers can restrain the behavior of governments and banks, which is why governments and banks are doing everything they can to do away with cash.

The problem with the banking system is that banks today operate as fractional reserve banks. Money deposited into savings accounts is loaned out up to the bank’s reserve requirement. If the reserve requirement is 10%, then 90% of the money in savings accounts is loaned out. If the reserve requirement is 3%, then 97% of the money in savings accounts is loaned out. The problem comes about in that the bank simultaneously gives the full use of that money to borrowers, often lending at long terms up to 30 years in the case of mortgages, while still telling depositors that they can withdraw their money at any time. So what happens when depositors want to withdraw more money than the bank has on reserve? The bank tries to refuse to honor withdrawal requests. Then the public loses confidence in the bank, depositors line up to demand their money, and you have a scene out of “It’s a Wonderful Life.”

…click on the above link to read the rest of the article…

Gold, the War on Cash and Greece – a Podcast with Claudio Grass

June 20, 2015

Gold, the War on Cash and Greece – a Podcast with Claudio Grass

Claudio Shares his Ideas

We were quite busy lately and are therefore actually a bit late in posting this podcast, in which our good friend Claudio Grass of Global Gold is interviewed by The Daily Coin on the recent hot topics of Greece, the declaration of war against cash and how gold fits into all of this.

3263efd Claudio Grass, CEO of Global Gold

Anyway, it is always refreshing to hear Claudio’s viewpoints, and although there is currently always the potential of events overtaking one’s guesses/predictions in connection with Greece, Claudio does offer an interesting perspective here. One of the problems Greece has (which at the same time, is the only trump card of the creditors, since they can switch off ELA anytime) is deposit flight. People are taking their money out of Greek banks in droves, inter alia hoarding cash. As Claudio avers, similar to Cyprus, Greece could end up becoming a test bed for unsavory policies in the attempt to bring it to heel.

The people interviewing Claudio are trying to direct the conversation toward a discussion of alleged gold price manipulation at the beginning, but Claudio politely sidesteps the issue. We’re just mentioning this because we want you to know that in spite of the impression one might get at the beginning, this topic isn’t what the podcast is about.

As far as we are concerned, we do have some sympathy regarding the idea that governments and central bankers don’t really want to see the gold price going bananas, given that it would deliver an unwanted verdict on their fiat money Ponzi. That seems obvious enough. However, if, as some observers allege, a conspiracy to suppress the gold price on an ongoing basis over the past several years, even decades, exists, the endeavor has to be called one of the biggest successes in history in terms of enforcing omerta on its members, and in light of the gold price trend between 2000 and 2011, also one of the biggest failures in the entire history of market manipulations.

…click on the above link to read the rest of the article…

The War On Cash: Officially Sanctioned Theft

June 13, 2015

The War On Cash: Officially Sanctioned Theft

How banks & the government are diminishing your savings

You’ve probably read that there is a “war on cash” being waged on various fronts around the world. What exactly does a “war on cash” mean?

These limits are broadly called capital controls.

The War On Cash: Why Now?

Why are governments suddenly acting as if cash money is a bad thing that must be severely limited or eliminated?

Before we get to that, let’s distinguish between physical cash—currency and coins in your possession—and digital cash in the bank. The difference is self-evident: cash in hand cannot be confiscated by a “bail-in” (i.e. officially sanctioned theft) in which the government or bank expropriates a percentage of cash deposited in the bank. Cash in hand cannot be chipped away by negative interest rates or fees like cash held in a bank.

Cash in the bank cannot be withdrawn in a financial emergency that shutters the banks, i.e. a bank holiday.

Mr. Buiter, for example, recently opined that the spot of bother in 2008-09 (the Global Financial Meltdown) could have been avoided if banks had only charged a 6% negative interest rate on cash: in effect, taking 6% of the depositor’s cash to force everyone to spend what cash they might have.

…click on the above link to read the rest of the article…

The European “Template” For Dealing With Crises: Freezing Accounts, Bank Holidays, and Capital Controls…

June 8, 2015

The European “Template” For Dealing With Crises: Freezing Accounts, Bank Holidays, and Capital Controls…

More and more analysts are beginning to take note of the “War on Cash.” However, they’re missing the fact that the actual template for what’s coming to the US first appeared in Europe back in 2012.

Back in March of 2012, when the EU Crisis first began to spin out of control, then Prime Minister of France Nicolas Sarkozy openly called for the renegotiation of the Schengen Treaty: the treaty that established the 26-nation EU as a “borderless” entity in which individuals could move from one country to another with little difficulty and which also made trade among EU members easier.

France was not alone either. A few months later, both France and Germany proposed imposing border controls in June of that same year.

A Vote of No Confidence in Europe

Germany and France’s joint proposal to allow Schengen-zone countries to temporarily reintroduce border controls as a means of last resort might sound harmless. But doing so would damage one of the strongest symbols of European unity and perhaps even contribute to the EU’s demise.

Germany and France are serious this time. During next week’s meeting of European Union interior ministers, the two countries plan to start a discussion about reintroducing national border controls within the Schengen zone. According to the German daily Süddeutsche Zeitung, German Interior Minister Hans-Peter Friedrich and his French counterpart, Claude Guéant, have formulated a letter to their colleagues in which they call for governments to once again be allowed to control their borders as “an ultima ratio” — that is, measure of last resort — “and for a limited period of time.” They reportedly go on to recommend 30-days for the period.

http://www.spiegel.de/international/europe/german-and-french-proposal-for-border-controls-endangers-european-unity-a-828815.html

…click on the above link to read the rest of the article…

The War on Cash Destroys a Small Entrepreneur

May 16, 2015

The War on Cash Destroys a Small Entrepreneur

Lyndon McClellan is a small entrepreneurwho owns and operates L & M Convenience Mart in Fairmont, North Carolina. L & M comprises a gas station, convenience store, and a small restaurant serving hot dogs, hamburgers, and catfish sandwiches. One day last July, more than a dozen federal, state and local law enforcement agents swarmed Mr. McClellan’s business, including agents from the FBI and the North Carolina Alcohol and Law Enforcement agency—and they were “asking” for him. When Mr. McClellan arrived, he was escorted by two federal agents into his stock room for a private chat. The agents showed him paperwork indicating that he had made two cash deposits totaling $11,400 within a 24-hour period in his bank account at the Lumbee Guarantee Bank. They informed him that the papers also indicated that he had a history of “consistent cash deposits” of less than $10,000, which was a violation of the the Federal law against “structuring.” They also informed him that the IRS had seized all of the $107,702.66 in L & M’s bank account.

What Mr McClellan did not know was that it was against the law to make cash deposits of less than $10,000. Banks are legally obligated to report any deposit of more than $10,000 to the U.S. Treasury Department. But if an individual makes several cash deposits of less than $10,000 over an unspecified period of time that total more than $10,000, then he is presumed to be a money launderer or drug trafficker who is committing the dastardly crime of structuring, that is, seeking to circumvent the bank’s reporting requirement and maintaining the privacy of his financial affairs Thus banks are also required to file “suspicious activity reports” on cash deposits of less than $10,000.

…click on the above link to read the rest of the article…

The War on Cash: Transparently Totalitarian

May 1, 2015

The War on Cash: Transparently Totalitarian

George Orwell once wrote “If you want a picture of the future, imagine a boot stamping on a human face—forever.”

Not exactly a cheery thought, and one I don’t agree with.

While the forces pushing for centralization of power have been prevailing for decades, they haven’t won a total victory yet. Technologies that empower the individual and that tend toward decentralization—including the Internet, encryption, 3D printing, and cryptocurrencies—offer a powerful ray of hope, reasons to be optimistic about the future.

So the tug of war between the collectivists and the rest of us continues.

One thing that would tip the scales heavily in favor of the collectivists would be victory in the War on Cash. Their goal is to eliminate the use of hand-to-hand currency, so that governments can document, control, and tax everything.

It’s exactly like what Ron Paul said: “The cashless society is the IRS’s dream: total knowledge of, and control over, the finances of every single American.”

One way they are waging the War on Cash is to lower the threshold at which reporting a cash transaction is mandatory or at which paying in cash is simply illegal. In just the last few years…

Italy made cash transactions over €1,000 illegal;

Switzerland has proposed banning cash payments in excess of 100,000 francs;

Russia banned cash transactions over $10,000;

Spain banned cash transactions over €2,500;

Mexico made cash payments of more than 200,000 pesos illegal;

Uruguay banned cash transactions over $5,000; and

France made cash transactions over €1,000 illegal, down from the previous limit of €3,000.

I recently spoke about this with Dr. Joe Salerno, an Austrian economist with the Mises Institute. Joe is the best chronicler of the global War on Cash and is here to offer an Austrian rebuttal to the economic nonsense peddled by advocates of this war.

…click on the above link to read the rest of the article…

The “War on Cash” Migrates to Switzerland

April 25, 2015

The “War on Cash” Migrates to Switzerland

Banks Increasingly Refuse Cash Withdrawals – Switzerland Joins the Fun

The war on cash is proliferating globally. It appears that the private members of the world’s banking cartels are increasingly joining the fun, even if it means trampling on the rights of their customers.

Yesterday we came across an article at Zerohedge, in which Dr. Salerno of the Mises Institute notes that JP Morgan Chase has apparently joined the “war on cash”, by “restricting the use of cash in selected markets, restricting borrowers from making cash payments on credit cards, mortgages, equity lines and auto loans, as well as prohibiting storage of cash in safe deposit boxes”.

This reminded us immediately that we have just come across another small article in the local European press(courtesy of Dan Popescu), in which a Swiss pension fund manager discusses his plight with the SNB’s bizarre negative interest rate policy. In Switzerland this policy has long ago led to negative deposit rates at the commercial banks as well. The difference to other jurisdictions is however that negative interest rates have become so pronounced, that it is by now worth it to simply withdraw one’s cash and put it into an insured vault.

Having realized this, said pension fund manager, after calculating that he would save at least 25,000 CHF per year on ever CHF 10 m. deposit by putting the cash into a vault, told his bank that he was about to make a rather big withdrawal very soon. After all, as a pension fund manager he has a fiduciary duty to his clients, and if he can save money based on a technicality, he has to do it.

…click on the above link to read the rest of the article…

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