The War on Cash is coming to an economy near you

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PostPosted: Thu Feb 11, 2016 1:55 am
Another Wall Street investment house, Morgan Stanley, considers a "Dangerous Experiment"

http://www.zerohedge.com/news/2016-02-1 ... tion-slide

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From Morgan Stanley's head of EMEA equity research Huw van Steenis:

One of the most surprising comments this year came from a closed session on fintech where I sat next to someone in policy circles who argued that we should move quickly to a cashless economy so that we could introduce negative rates well below 1% – as they were concerned that Larry Summers' secular stagnation was indeed playing out and we would be stuck with negative rates for a decade in Europe. They felt below (1.5)% depositors would start to hoard notes, leading to yet further complexities for monetary policy.



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PostPosted: Fri Feb 12, 2016 2:48 am
Who's actually going into negative interest rates now?

In Negative Land, you pay the banks to hold your money. The bank pays you to borrow. Depositors are slowly sucked of blood. Manic debt spenders are rewarded.

http://www.bloombergview.com/quicktake/ ... rest-rates

The European Central Bank went slightly negative 1.5 years ago, then negative some more on Dec 3 with a rate drop to minus .30%.

Sweden went into negative rates

Denmark used them to protect its currency’s peg to the euro (Denmark even has some negative rate mortages! That's how desperate they are generate fake economic activity!)

Switzerland recently moved its deposit rate below zero for the first time since the 1970s.

The Bank of Japan went negative on Jan 29

Other central banks are mulling the implications
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PostPosted: Fri Feb 12, 2016 9:00 pm
Next country with negative rates could be… Canada?

http://www.cnbc.com/2016/02/12/next-cou ... anada.html


Who else is actually contemplating this anti-economic madness to punish savers and sound investors?

Aside from the Bank of Canada and the other central banks mentioned previously, the article mentions the central banks of the following countries which are contemplating the negative zone:

Norway, the UK, and the Czech Republic

Next up: the Federal Reserve, central bank of America and half the world

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PostPosted: Wed Feb 17, 2016 1:37 am
More on the Negative Zone and the "New Abnormal"

http://www.telegraph.co.uk/finance/econ ... world.html



The War On Paper Currency Begins: ECB Votes To "Scrap" 500 Euro Bill
http://www.zerohedge.com/news/2016-02-1 ... -euro-bill

$500 Euros? Who cares, right? But it actually means 30% of all Euro cash will disappear and go electronic. $307 billion Euros into the matrix.

The Swiss $1000 Franc just got nuked too.

Others are calling for the elimination of the $100 USD bill. If the Federal Reserve got rid of the $100 bill, $1.08 trillion of the $1.38 trillion in total physical US cash in circulation would also go electronic. That's 78% of the physical monetary base.

Near Cashless society, here we come.
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PostPosted: Wed Feb 17, 2016 9:31 pm
Here we go

It’s time to kill the $100 bill
It's time to go after big money
https://www.washingtonpost.com/news/won ... &tid=ss_tw

By Lawrence H. Summers February 16

Introduced earlier in this thread, Summers is a big economic adviser. He not only writes the op-eds and does the speeches, but then has business meetings with the relevant figures in DC and Wall Street to get things poppin'.

As mentioned before, if the US $100 bill disappears over time, there goes most of America's physical cash base. Once a big chunk disappears, it's very conceivable the rest gradually will as well over time. Once the 'old relic' of cash goes away, you can't remove your wealth from the big machinery.
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PostPosted: Thu Feb 18, 2016 8:18 am
I can definitely believe this is the long term goal.

But the thing I always wonder about gold is, how are you going to use it? If I have a bunch of gold coins and nobody takes physical currency anymore, they're basically useless. And even if I can use them, I'd assume I'd need to convert them into a cash value, at which point I'm in the same situation as anybody else.
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PostPosted: Thu Feb 18, 2016 10:04 am
Well, I think the idea behind gold investment is that you don't use it. You hold onto it and grow wealth with it. It remains an asset that you have that cannot be easily taken from you and will still have some value if the current system becomes massively unstable. And if you do actually need the money later on, you can convert it to currency (cash or whatever system of credit is in place if we really do get rid of cash) as a last resort.

Honestly, the most secure commodity is either food or water, but neither of those tend to work out really well as an investment, because food tends to spoil, water can get contaminated, they both require a lot of containment space, and neither of them is likely to be something that the average Joe can't acquire if he's willing to work hard enough (hunt, fish, plant, dig wells), so it would take a major catastrophe where both became scarce for them to really be of the same value as precious metals are. Of course, in such a catastrophe, the precious metals would become pretty worthless as well, so that's why food and water are more secure. People always need them.

Overall, real estate might be the best bet. After all, all of the other commodities come from the earth, and land is relatively easy to acquire and keep and harder to spoil. Of course, it's more difficult to liquidate, since you have to sell it in larger portions.

I don't know. I'm not exactly a financial guru, but that's my two cents.
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PostPosted: Fri Feb 19, 2016 2:57 pm
Even in an ideal gold-based monetary system, currency -- cash -- absolutely still must exist. It is preferred, in fact, because a gold believer definitely would not want to walk around with expensive units of gold all day. A believer in a well-ordered, stable gold system that promotes prosperity would never advocate for the termination of physical cash. Because what is cash but an easily transportable, easily managed, symbolic IOU? It literally symbolizes the gold, which would be the real collateral, or less-symbolic unit of wealth.

No monetary system is perfect. In a perfect world, I wish we had a better alternative than gold. A system based on land (definitely a real and useful asset) still brings us to a kind of out-dated feudalism ruled by barons. You couldn't buy and sell goods for units of land alone. Those without land would be serfs; the wealthy would own all the land. A system based on water or food wouldn't work so good either, as Darth says. Most food naturally decays. Water falls from the sky, or could be technologically purified from the oceans. And I wouldn't want a system where basic survival staples become totally monopolized by elites to make an economy. Such an economy would be for only good in the context of a troubled, survivalist situation; not for a modern, prosperous civilization.

While not perfect, gold has served as a good monetary unit because for millennia there has been a global, historical consensus that is exceedingly rare, beautiful, technologically useful, and most especially it takes a great deal of labour to gather tiny bits of it and clump it into market units. So its wealth is self-evident. It is wealth "unto itself", which is why the wealthy seek it. It's not an IOU. It can't be manufactured from other elements. Can't be printed. Silver too has these attributes, though it is hardly as scarce.

In the chain of symbols that constitute a modern economy, one normally has a base group of assets that anchor the whole system. Any currency, any stock, any bond, any derivative, and so forth is leveraged to the symbolic wealth of another. They are all paper, all IOUs, all symbols. But what gives them all value is a confidence in anchoring assets. These anchoring assets are the precious, scarce, and useful commodities.

Currency, when torn away from a gold-based system, or torn from any other real asset anchoring system, gets all screwed up. The Powers that Be in control of the currency just start naturally printing money, the IOUs. This is called debasement of the currency, or monetary expansion in the absence of a corresponding rise in production and population. The monetary unit naturally loses buying/selling market value. The recipients of the new currency naturally tend to be the elite strata of society, and the nebula of workers directly serving them or flocking to participate in their increasingly corrupt system. The other labourers and other participants in the economy naturally get less and must slave more in search of the same level of wealth they got before. Savings, planning, stability, sound investment, societal cohesion, fairness, all get disrupted.

Arguably, things really started to go to hell in America by the dawn of the 70s when the Powers closed the gold window, broke the Bretton Woods Monetary Agreement, and severed the greenback from gold. Monetary debasement and debt increased in cycles and surges -- to the point now where it's simply out of control.

I want stability. I want cash to symbolize wealth. Cash free from Orwellian control. And, because of no better alternative, I want gold to anchor it all. I'm open to other, new variations on this tried-and-true successful theme. But I'm not optimistic about the new monetary ideas being broadcasted by the elites.
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PostPosted: Fri Feb 19, 2016 3:53 pm
Sorry, I went on a caffeine rant there. I'm just such a big believer that freedom and fairness is completely linked with sound money -- and the absence thereof. :mrgreen:

Heli wrote:I can definitely believe this is the long term goal.

But the thing I always wonder about gold is, how are you going to use it? If I have a bunch of gold coins and nobody takes physical currency anymore, they're basically useless. And even if I can use them, I'd assume I'd need to convert them into a cash value, at which point I'm in the same situation as anybody else.


Well, we're trapped in the system, so we have to adapt to whatever is coming. So if authorities want electronic money, then we pay them in that. The good thing is, I am convinced gold will not only retain value but it has nowhere to go in the longterm except up. Currencies are the ones in trouble now. Not PMs, which have already been bashed down to their production cost limits.

Not only could we convert gold coins to larger units of future monetary wealth (cash), gold could be bartered privately for possibly large non-monetary gains, because there's millions who of people who love gold and see it as a great hedge/storehouse. Next, I really believe that government debt will get pronounced. It is very conceivable that in the future asset- and cash-starved governments -- state, even fed -- may invite some payments in gold. A citizen could get a lot paid for (say, in taxes) with a relatively small amount of gold.

Whatever the case, it's good to diversify. If all faith is in debased currency, then in the future one's savings might be worth little. Or at least worth noticeably less.
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Snarky!
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PostPosted: Sun Feb 21, 2016 7:59 pm
Makes sense. Thanks for both the rant and the shorter version.
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