This is starting to become very concerning…

 

Submitted by Simon Black, Sovereign Man

The momentum to “ban cash”, and in particular high denomination notes like the 500 euro and $100 bills, is seriously picking up steam.

On Monday the European Central Bank President emphatically disclosed that he is strongly considering phasing out the 500 euro note.

Yesterday, former US Treasury Secretary Larry Summers published an op-ed in the Washington Post about getting rid of the $100 bill.

Prominent economists and banks have joined the refrain and called for an end to cash in recent months.

The reasoning is almost always the same: cash is something that only criminals, terrorists, and tax cheats use.

In his op-ed, Summers refers to a new Harvard research paper entitled: “Making it Harder for the Bad Guys: The Case for Eliminating High Denomination Notes”.

That title pretty much sums up the conventional thinking. And the paper goes on to propose abolishing, among others, 500 euro and $100 bills.

The authors claim that “without being able to use high denomination notes, those engaged in illicit activities – the ‘bad guys’ of our title – would face higher costs and greater risks of detection. Eliminating high denomination notes would disrupt their ‘business models’.”

Personally I find this comical.

I can just imagine a bunch of bureaucrats and policy wonks sitting in a room pretending to know anything about criminal activity.

It’s total nonsense. As long as there has been human civilization there has been crime. Crime pre-dates cash. And it will exist long after they attempt to ban it.

Perhaps even more hilarious is that many of these bankrupt governments have become so desperate for economic growth that they now count illegal drug activity and prostitution in their GDP calculations, both of which are typically transacted in cash.

So, ironically, by banning cash these governments will end up reducing their own GDP figures.

What’s really behind this? Why is there such a big movement to ban something that is used for felonious purposes by just a fraction of a percent of the population?

Cash, it turns out, is the Achilles’ Heel of the financial system.

Central banks around the world have kept interest rates at near-zero levels for nearly eight years now.

And despite having created massive bubbles and enabled extraordinary amounts of debt, their policies aren’t working.

Especially in Europe, the hope of stoking economic growth (and even the sickening goal of inflation) has failed.

So naturally, since what they’ve been trying hasn’t worked, their response is to continue trying the same thing… and more of it.

Interest rates across the European continent are now negative.

Japanese interest rates are now negative.

And even in the United States, the Federal Reserve has acknowledged that negative interest rates are being considered.

They have no other choice; raising rates will bankrupt the governments they support and derail any fledgling economic growth.

Look at how low interest rates are in the US– and yet 4th quarter GDP practically ground to a halt. They simply cannot afford to raise rates.

As global economic weakness continues to play out, central banks will have no other option but to take interest rates even further into negative territory.

That said, negative interest rates will be the destruction of the financial system.

Because sooner or later, if banks have to pay negative wholesale interest rates to each other and to the central bank, then eventually they’ll have to pass those negative rates on to their customers.

Many banks have already started doing this, especially on larger depositors.

We’ve seen this in Europe where some banks charge their customers negative interest to save money, and in some extraordinary circumstances, pay other customers to borrow money.

It’s total madness.

There’s a certain point, however, when interest rates become so negative that no rational person would hold money in the banking system.

Eventually people will realize that they’re better off withdrawing their money and holding physical cash.

Sure, cash doesn’t pay any interest. But it doesn’t cost any either.

If you have a $200,000 in your savings account at negative 1%, you’d have to pay the bank $2,000 each year.

Clearly it would make more sense to buy a safe and hold most of that money in cash.

Problem is, the banks don’t have the money.

For starters, there’s literally not enough cash in the entire financial system to pay out more than a fraction of all bank deposits.

More importantly, banks (especially in the US and Europe) are extremely illiquid.

They invest the vast majority of your deposit in illiquid loans or securities of dubious long-term value, whatever the latest stupid investment fad happens to be.

And many banks have been engaging in a substantial balance sheet shift, rotating bonds from what’s called “Available for Sale” to “Hold to Maturity”.

This is an accounting trick used to hide losses in their bond portfolios. But it also means they have less liquidity available to support bank customer withdrawal requests.

The natural side effect of negative interest rates is pushing people to hold money outside of the banking system.

Yet it’s clear that a surge of withdrawal requests would bring down that system.

Banks don’t want that to happen. Governments don’t want that to happen.

But since central banks have no other choice than to continue imposing negative interest rates, the only logical option is to ban cash and force consumers to hold their money within the banking system.

Make no mistake, this is absolutely a form of capital controls. And it’s coming soon to a banking system near you.

PS. Clearly a trend with this much momentum requires some deliberate and measured action if you don’t want your savings trapped.

We’ll discuss this in our upcoming webinar.

I hate to belabor the point, but it should be obvious that these things are happening, quickly, and I can promise that you’ll get a ton of great information and solutions with the small investment of your time.

Buy Silver Eagles SD Bullion

  1. It’s obvious to this bloke at least, they are at their end, they cannot satisfy deposits and need to make money completely electronic/disappear. Its the only way the banks can continue their reign of dominance. If we allow it, we deserve what we get.

  2. Not going to happen. It may come a day when cash is no longer used but it wont be in my lifetime. But hey, any type of fear porn to sell metals is the key eh fella’s? Blow me. And for the record I have a very nice stack of physical silver AT $38.00 A FRIGGIN OUNCE so no, I’m not a “troll” Just sick and damned tired of nearly article stating silver and gold is going the moon and/or the sky is falling so BUY MORE METAL. Feels like I’m reading “King World News” (that I quit over two years ago because of the absolutely ridiculous articles) Again I say; blow me.

  3. Another scare story that holds no water.

    The times that the electronic money systems crash are increasing daily.

    The number of times everyone experiences a credit card refusal (because of random security checks) are also increasing.

    The “cashless” society will be defeated by it’s own banking and security systems.

    • @GBS

      agree another scare story, the $100 bill is the second most bill circulated not very far off from the most circulated bill the $1.00. That is not going to change!!  I mean really do you think they will rely on an all electronic system where a hacker or a corrupt banker, government could empty your account with a single click.  NOT!!!!

    • @GBS you give them to much credit. u think these are smart people as opposed to dumb. they are fighting and stealing to the bitter end because they do not possess the intelligence to come up with a better way. i will have to say it is very entertaining watching the desperation and slow failure of their ‘interest to infinity’ debt slavery system.. everytime they are hit by something fears the economy as they fail i laugh about it.. i think its funny .

    • @@GBS how stupid are they ?? well they will fail, then turn around and do the same things expecting different results, fail again, then do something similar expecting different results, fail again with even more devastating effects than before, then try same thing expecting different results, get backfired again………. into forever.. we are talking about total morons who are doomed to their own darkness and death they have prepared for themselves .

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