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The war on cash

by Bob Livingston

He who possesses the currency of the realm is suspect. Having cash or asking for cash money (currency) at your local bank can get you investigated or arrested. Just ask Dennis Hastert.

The authorities can seize your bank account and your assets. They can seize your real and personal property. And they don’t even need to charge you with a crime, much less gain a conviction first.

Of course the excuse for the ongoing restriction of personal privacy and personal liberty is always crime. The government promotes crime and then uses crime to restrict your liberty. Government oppression under the color of law is to reduce the freedom of honest citizens. Criminals and crooks pay no attention to laws. Any child knows this.

Cash money offers a certain privacy and freedom of movement and choice. The underground economy operates on cash and barter. This puts it out of reach of bureaucrats and non-producing government parasites who want to live off of your labor. That draws the ire of the state. It can’t abide those who attempt to operate outside the system.

Cash also creates a problem for the money printers and government men who are continually trying to find a way to prop up the system. Should we enter another recession (in reality we have never escaped the last one, it is merely being papered over with food stamps and phony employment numbers), with interest rates already at near zero, the Federal Reserve has few if any bullets left to fire while still maintaining any legitimacy of a rational system.

With interest rates so low and the banking system on less than sound footing and revealing a disdain for its customers through announcements of potential “bail-ins,” a tax on deposits and currency transaction reports (CTRs) and suspicious activity reports (SARs), people are showing a tendency to hold their cash rather than put it into the banking system.

People holding their cash prevents the banksters from using that money as reserves to further increase the money supply. It also prevents the Federal Reserve from using negative interest rates to further prop up the system by printing even more money.

Last year, Harvard economics professor Kenneth Rogoff wrote for Financial Times that the time has come to get rid of physical currency and replace it with electronic money. Rogoff acknowledged that the central banks are hamstrung by common sense. Should interest rates be moved into negative territory to prop up the system, the people will in greater amounts hold their money in their possession.

Additionally, Rogoff writes, “[P]hasing out currency would address the concern that a significant fraction, particularly of large-denomination notes, appears to be used to facilitate tax evasion and illegal activity.”

The idea is becoming more mainstream by the day. A noted economist at Citi Bank has jumped on the bandwagon. Willem Buiter told Bloomberg in April that a cashless society would save the world’s economy.

He proposes that to give the Federal Reserve free range to electronically print (create) more money to “save” the system that government should:
1.Abolish currency.
2.Tax currency.
3.Remove the fixed exchange rate between currency and central bank reserves/deposits.

Governments around the world have been waging a war on cash for several years. Scandinavia, Sweden, France and Germany either have or are all taking steps to crack down on cash transactions and cash deposits and withdrawals. The limits of these are slowly being reduced as if a boa constictor was tightening its grip on its prey.

The official excuse in all these cases is to reduce crime, reduce tax fraud, fight terrorism and create money. The goal is less liberty and more currency depreciation.

Currency depreciation is a ploy governments have used for millennia. Why do evil men steal through currency depreciation? Because of its huge, ongoing income flow that goes to government over and above all taxes. Taxes have the implied legality of law and consent of the people. Currency depreciation is not allotted the parameters of legality or illegality. It is above the law and is almost never debated in the monetary realm.

Currency depreciation is seductively covert when a regime is relatively stable. But when a government becomes unstable (as the U.S. today), depreciation of the currency becomes more overt until collapse.

The American financial system – like the world’s – is on life support. Inventories are stacking up because the people are not buying and in most cases cannot afford to buy. This is setting up a great deflationary collapse.

But this could be staved off, according to one Bloomberg columnist, by a QE for the people. In other words, what the world needs is a helicopter drop of money, not on the banksters, as last time, but on the people.

“The logic is simple,” writes Clive Crook. “If central banks need to expand demand — and interest rates can’t be cut any further — let them send a check to every citizen. Much of this money would be spent, boosting demand just as (Milton) Friedman said. What, then, is the objection?”

The objection, of course, is that this method of staving off a deflationary collapse will create an inflationary collapse.

A deflationary collapse would be a total loss of confidence and most probably a collapse of the government and the system. On the other hand, a collapse of the currency because of excessive money creation leads to an inflationary depression.

So what’s the difference? The result is, none!

In deflation there’s no money. In an inflationary depression, there is plenty of money but it’s worthless as in the Weimar Republic. So no matter how big the numbers on the paper money become, goods and services become out of reach because the prices are too high.

In both instances of deflation or inflation, impoverishment of the savers and retirees is the result except for those few foresighted enough to exchange their paper money early to gold and silver, and the important commodities of self-sustainment, food, water and lead. In fact, storing food and water purchased before the hyperinflation begins is one of the greatest investments of all.

It’s human nature to cling to the system that one grows up in. We have to go against our emotional fix to make fundamental changes. But it is a difficult transition due to the people’s ignorance of the history of paper currencies and an ignorance of the greedy nature of governments and their politicians. All this mix clouds the people’s perception of current events as well as the economic chaos that is building.

What is the U.S. government trying to do? There is no doubt about it; the U.S. government simply cannot afford deflation as deflation would almost instantly bankrupt the system.

The authorities really believe that they can solve any problem by increasing the supply of money. And up to a point, it appears to succeed until there is a loss of confidence in money and accelerating inflation.

Huge amounts of “new money” spills into some area of the economy and right now we see that the huge production of “new money” sent into the hands of the banksters has brought back a stock market bubble and has begun re-inflating the housing bubble. This has further enriched the 1 percent and destroyed the middle class. Really, what we have now is a bear market rally which is a prelude to a collapse of stock prices in the weeks or months ahead.

In light of the certainty of wild inflation or deflation, my advice is to own gold and silver coins and prepare for the coming chaos with stored food, water and plenty of ammunition for your weapons.

Link:
http://personalliberty.com/the-war-on-cash/