Upstream Theft

The stories are all over the Internet. Governments are forcing us into a cashless society. Supposedly the pretext is terrorism, and the real reason is to take more control. No doubt more power appeals to politicians, and banning cash seems like the next step after mandatory reporting of cash transactions. However, I think there is a more serious driver than simple power lust.

A more compelling case is that cash banning is the logical follow up to bail-ins. Most people think a bail-in is when banks steal your deposit. So it seems to make sense that governments want to force people to keep their cash in the bank. Then they are easy meat for the next bail-in.

 

33309digital_cash_large

 

However, a bail-in isn’t theft by your bank. There’s theft, alright, but the culprit is upstream. For example, in the case of Cyprus, the theft occurred in plain sight. The thief was Greece. That country sold instruments which it fraudulently called bonds, but it had neither means, nor the intent to repay. Those bonds are bogus paper. The Greek government stole the money, in the guise of borrowing it.

The Cypriot banks invested considerable deposits in Greek bonds. When depositors realized this, they began to withdraw their cash—a run on the banks. The banks were insolvent, so someone had to take losses. A bail-in shifts the losses from bondholders and other creditors to depositors.

It’s an example of how a corrupt monetary system causes corruption in banking. If government bonds are defined as the risk-free asset, then banks must hand depositors’ funds over to governments to spend. That can’t end well.

An honest bank will shut down operations before it burns through so much capital as to harm depositors. However, regulation obliges banks to buy government bonds (typically using short-term deposits). Thus the bail-in was devised to protect banks, though it violates law developed over centuries.

 

More Central Planning Needed

Neither control for its own sake, nor bail-ins, are the primary drivers of going cashless. Central banks don’t care about regulating the people, though they do support this new war on cash. Bail-ins are not a consideration in the US yet, though already American economists and bankers have expressed support for cash banning. So what’s really going on?

Citi’s Willem Buiter and Harvard economist Kenneth Rogoff are quite explicit. Central banks are grappling with the limit to their planning. As they push down the interest rate, more people withdraw their cash. This squeezes the banks, which make money by borrowing from depositors and lending at higher interest. Banks cannot pay a positive rate in order to earn a negative rate. If the interest rate on the government bond is negative, then the bank must set the interest on deposits at an even lower negative rate.

For some odd reason, depositors don’t like paying the bank to deposit their cash. It’s weird, I know. Instead, they withdraw their deposits. Withdrawals reduce bank funding, forcing banks to sell bonds. This pushes interest up, contrary to the plans of the central bank. It’s worth noting that bank runs and interest rate pressure are the reasons why President Roosevelt outlawed gold in 1933.

This simple preference not to lose money is dangerous to central banks. It threatens the monetary system to its foundations, because it’s an escape hatch allowing people to opt out of the central plan. If central banks don’t respond, then they accept a hard limit to their power over people. They’re stymied in their desire to set negative interest.

Thus they’re coming to take away your cash. However, they had better be careful. People will react to the central bank response, which forces another policy response, to which people will react, and so on. Central banks risk the destruction of their currencies.

 

This article is from Keith Weiner’s weekly column, called The Gold Standard, at the Swiss National Bank and Swiss Franc Blog SNBCHF.com.

 

 
 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

15 Responses to “They’re Coming to Take Away Your Cash”

  • There’s an even simpler reason VB, banks owe their deposit customers Legal Tender, Cash Dollars for their deposits. Banks must buy Legal Tender Cash Dollars from The Fed, at face value. The Fed must hold collateral of equal value to the Legal Tender, Cash Dollars it receives from the Treasury. Banks don’t have the assets to buy $11-Trillion in Legal Tender, Cash Dollars they owe to their depositors. The Fed does not have the collateral to get the Legal Tender, Cash Dollars from the Treasury. They are broke.

    Solution: Ban Legal Tender Cash Dollars, ban their legal obligations to pay.
    http://carl-random-thoughts.blogspot.com/

    • therooster:

      You may want to rethink that one, Dwain. Genocide might work just as well with the number of people that would be wiped out. No offense intended. A transition is called for , no doubt, but the process by which it takes place cannot be “an event” by anything that is proclaimed by fiat or legislation in a top-down context. This is where the classical thinking of recent history has to change. It’s been trapped.

      The process must be by the market as we enter real assets into circulation such as gold and silver or their fully backed derivatives. The assets provide liquidity to support real economy and allow debt to be purged, organically without changing people’s habits. Furthermore , it bypasses the political obstructions, pitfalls and delays

      • I’m explaining how the system was designed by law and how far we’re removed from it. They want to ban the cash (fiat money) and keep the credit, which is a product of debt, credit does not exist otherwise. For example, the credit that populates your deposit account, is bank debt and it only exists for as long as the bank can remain solvent. That’s the reason why all the talk of ‘bank bail-ins’ is total nonsense, using their debt to their customers to bail themselves out of debt, how stupid is that? But because people have been conditioned to believe the credit/debt generated by the Fed and the banks is ‘money’ they assume that they have ‘money’ in the banks. There is $1.37-Trillion in legal tender money in circulation around the globe, all the rest is credit, an obligation to pay money, or the assumption that money will eventually be paid. Thus the need to ban cash, ban the Fed and bank’s legal obligations to pay in legal tender….

        The problem is that people don’t think through the words used. For example, Fiat Currency.

        If purging the debt and a reset are the goals then, why not mark the Fed and banks’ ‘credit dollar’ to market. Currently, their ‘credit dollar’ is worth about $0.04 in legal tender dollars, reprice all debt accordingly.

        • therooster:

          How the system was designed by law is only one half of the full design, Dwain. This is the toughest part of the paradigm shift, convincing people that market currency should be designed by the market or at least a significant portion should be designed by the market. Think of a yin-yang hybrid of debt based liquidity and asset based liquidity and you’ll have the framework. What you’ve portrayed, so far, has all been based on debt based liquidity within the referenced yin-yang. The debt based liquidity makes its home on “the dark side” of that yin-yang. Keep in mind that this reference is to a liquidity model ….currency and the nature of the currency.

          Capitalism is far more incomplete than it is flawed.

          In my last post, I made reference to entering real assets into circulation. I’m referring to debt-free market assets from the organic workings of the market, assets with good currency properties such as gold and silver. The added debt-free liquidity allows for the debt based liquidity (fiat currency) to be removed and destroyed. Think of it as a supplementation and a market governed displacement by osmosis.

          Just add real assets and stir …… gently. The rest will just happen as per market law.

          For the sake of appeasing your sense of order and how and why this should come about in this manner, I’d ask you to recall the order of creation. It is light that comes out of darkness …. thank God.

          • 97% of the currency in use is market based. Credit being used as currency (FRAUD) is a product of banks and capitalism. Gold and silver have poor currency qualities. They’ve never really worked as a currency (hard to come by and never enough) and they were the impetus for fractional reserve banking, not to mention wars and government debt. The best market use for gold and silver is to hold as a store of wealth. Of course, people should be free to use gold and silver in any manner that serves their interests.

            OK I’ll say it again: The U.S. Fiat (Legal Tender) Currency Is Not Debt Based. There is no debt generated or owed in the creation, distribution or circulation of Legal Tender Federal Reserve Notes and U.S. Coin. As a currency, in a free market, free enterprise economy, fiat functions best. And there is absolutely no good reason for any government issuing a fiat currency to be in debt, they don’t even need to tax. That should clue you in to just how corrupt our system is.

            Capitalism is little more than a revamped mercantilism, with fascist underpinnings, that shifted the benefactor from the state to the listed corporations. It is a flawed ideology that instills and glorifies all the qualities of a sociopath in its adherents. It’s barbarous, predatory and darwinist, and it requires fractional reserve banking and government to work. But hey, we do get a lot neat stuff from it, that most can only afford to buy with bankster credit.

            I’m more of a free enterprise economy and liberty minded kind of guy, capitalism is just too close to indentured servitude for my taste. And, I wouldn’t say I have a “sense of order”, I’m just mechanically inclined, I like figuring things out and when something is broken, I look for what caused it and how to go about fixing it.

  • therooster:

    The fiat banking system is a participating component in an incomplete model that is still in development, gentlemen. Banks only provide debt based liquidity to the market, liquidity we refer to as fiat currency. The “other side” of the emerging “liquidity yin-yang” is still a work in progress and that “other side” would be asset based liquidity….valued in real-time.

    Consistent with light coming out of darkness in the process of creation, “light side liquidity” could not efficiently makes its debut without the advent of floating currency and real-time pricing for commodities, particularly for monetary assets like gold and silver in view of the fact that they are limited and finite resources. Liquidity is directly proportionate to price. On the basis that elements like gold and silver now have fully scalable liquidity, based on price, adding assets into circulation in order to relieve debt of a historically tremendous proportion , is taking shape.

    This has been an issue of capability/incapability, as a matter of fact, based on capability given any present circumstance. We can only do what we can do given the tools at our disposal.

    You cannot pour new wine into old wineskins.

    • therooster:

      Dwain … you made reference to “97% of the currency in use is market based”. Perhaps we vary in the language we use ? I’m sure you are referring to debt based fiat, which is not what I call “market based”. I find the word “fiat” and the term “market based” to be somewhat of a contradiction. My personal point goes back to currency creation, so that 97%, by my definition, is debt based and falls on the ‘dark side” of the referenced yin-yang of liquidity. When you look upon it in that way, it’s glaringly obvious that there is an overwhelming amount of debt based liquidity in comparison to asset (debt-free) based liquidity. The problem is not debt, as most think, but a massive imbalance of debt …. far too much in reference to the yin-yang relationship for liquidity.

      Traditional coping methods have been tied to the business cycles by way of increasing credit and decreasing credit, a proposal that I simply look upon as being like a karmic wheel of repetition. The balance does not necessarily have to come about by way of withdrawing debt (fiat) and allowing the economy to suffer. We can now add assets to existing debt based liquidity, assets that have no debt, yet have fully scalable liquidity in real-time. Think of those assets as a being a “supplement” . It’s an add-on, only, not a change to what we have in place, thanks to the efforts of CB’s. In the presence of the added debt-free liquidity, the debt based liquidity can be safely removed. Interest rates can rise and be governed responsibly.

      Bullion actually saves the fiat system on the basis of circulation. Most see bullion as an investment and have a polarized view of bullion in contrast to fiat currency and the USD. The yin-yang application of circulating debt and assets is actually a symbiotic relationship that adds to the health and the value of both. Bullion becomes a currency, while fiat “numbers” become measures of value for comparison in support of debt-free trading. In this “light side” application, the bullion (by mass) is the settlement currency and that fiat “numbers” are measurement tools in real-time, but not currencies for settlement.

      Just add assets and stir ….. gently, by way of the market, bottom-up

      In may help to summarize the above by saying that in the process of creation, it is light that springs forward out of darkness.

      • therooster, please don’t reinterpret what I state to fit your delusions, adjust your delusions to fit what I state. 97% of what is being used as if it’s a currency is credit/debt, NOT FIAT, NOT LEGAL TENDER, NOT MONEY and by law, NOT A CURRENCY. The only thing legally valid about is the DEBTS incurred with its use.

        Now, if you want to continue relying upon trite clichés, myths, falsehoods and errors as the basis of your arguments, have at it, but leave me out of it.

  • Crysangle:

    Careful there Keith .

    If the central bank denominates sovereign debt as risk free , it is the bank which has set up the scheme for the free or fraudulent issuance of bonds by a government . Banks could also clearly warn depositors of their position on the ladder , but don’t . The complicity between banks , central banks , and government is complex . FRL might also be considered theft in itself .

    I am saying this as it is too easy to just point the finger at one party to all of that and blame them … that is what they all do ! Ultimately it is up to the depositor/individual to inform himself also , which is actually what you are helping with .

  • therooster:

    Now that gold weight can be be digitized and distributed as a fully bullion backed currency, is that currency considered to be what MSM would call “cash” ? Could this be a heavily veiled attempt to have debt purged from society ? It would help !

    • VB:

      “Cash” is everything anonymous that the governments can’t track and the transacting in which they cannot tax. This is what they want to eliminate. The crap you are constantly pushing can be tracked and taxed just fine, so it is not threatened by this.

    • I don’t see how reestablishing an old debt currency is going to fix anything. We have a debt free currency now, we just don’t use it. Probably because $18-Trillion in bankster credit is so much easier to conceal from public view than $18-Trillion in cash would be. With cash, people would know exactly what government was spending their money on and exactly its cost.

  • VB:

    Nonsense. There are much more obvious and immediate reasons why governments want to outlaw cash. No cash means no anonymous transactions. This means the governments collecting additional tax on all the illegal business. Think about the hundreds of billions involved in the drug trade. The heavily indebted governments are salivating just thinking of getting their cut from that – and we now finally have the technology in place to make it possible.

    It’s not terrorism, it’s not a power grab, it’s not a banking conspiracy – it’s a simple money grab by the governments.

    Will it work? Of course not. The drug dealers will switch to barter or to foreign currencies and will continue their illegal trade, while the rest of us will lose even more of our freedoms. Typical government job, what.

    • All-Your-Gold-Are-Mine:

      Nonsense? You need to go back and read what was written. Unless you’re a conspiratorial nutcase, the author cites the MAIN reason banks are against cash when rates are held artificially low for years (as they have been). lol

      • VB:

        Yes, I did read it and the reason you quote is precisely what I call “banking conspiracy” and “nonsense”. There is a much more simple and immediate explanation, as I explained in my post.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Can Germany Be Made Great Again?
      When Germany Was Great! Ever since the start of the deliberately conceived “migrant crisis,” orchestrated by NWO elites, the news out of Germany has been, to say the least, horrific. Right before the eyes of the world, a country is being demographically destroyed through a coercive plan of mass migration.  The intended consequences of this – financial strain, widespread crime and property destruction, the breakdown of German culture – will continue to worsen if things are not...
  • Yanking the Bank of Japan’s Chain
      Mathematical Certainties Based on the simple reflection that arithmetic is more than just an abstraction, we offer a modest observation.  The social safety nets of industrialized economies, including the United States, have frayed at the edges.  Soon the safety net’s fabric will snap. This recognition is not an opinion.  Rather, it’s a matter of basic arithmetic.  The economy cannot sustain the government obligations that have been piled up upon it over the last 70...
  • Incrementum Advisory Board Meeting, Q3 2017
      Global Monetary Architecture The quarterly Incrementum Advisory Board meeting was held last week (the full transcript is available for download below). Our regulars Dr. Frank Shostak and Jim Rickards were unable to attend this time, but we were joined by special guest Luke Gromen of research house “Forest for the Trees” (FFTT; readers will find free samples of the FFTT newsletter at the site and in case you want to find the link again later, we have recently added it to our blog roll)....
  • Views From the Top of the Skyscraper Index
      Views From the Top of the Skyscraper Index On a warm Friday Los Angeles morning in spring of 2016, we found ourselves standing at the busy corner of Wilshire Boulevard and South Figueroa Street.  We were walking back to our office following a client wire brushing for events beyond our control.  But we had other thoughts on our mind.   Iron workers (the non-distraught variety) atop the 10 ton spire of the Wilshire Grand Center in Lost Angeles. This image is vaguely...
  • Bitcoin, Gold and Silver
      Precious Metals Supply and Demand Report That’s it. It’s the final straw. One of the alternative investing newsletters had a headline that screamed, “Bitcoin Is About to Soar, But You Must Act by August 1 to Get In". It was missing only the call to action “call 1-800-BIT-COIN now! That number again is 800 B.I.T..C.O.I.N.”   Bitcoin, daily. In terms of the gains recorded between the lows of 2009 and the recent highs (from less eight hundredths of a US cent per...
  • Prepare for Another Market Face Pounding
      “Better than Goldilocks” “Markets make opinions,” goes the old Wall Street adage.  Indeed, this sounds like a nifty thing to say.  But what does it really mean?   The bears discover Mrs. Locks in their bed and it seems they are less than happy. [PT]   Perhaps this means that after a long period of rising stocks prices otherwise intelligent people conceive of clever explanations for why the good times will carry on.  Moreover, if the market goes up for...
  • Seasonality: Will Patterns that Worked in the Past Also Work in the Future?
      Historians of the Future Every investor makes trading decisions based on what happened in the past – there is no other way. What really interests us is the future though. After all, what happens in the future ultimately determines investment success.   When in doubt, you can always try to reach the pasture...  In Human Action, Ludwig von Mises described stock market speculators as akin to “historians of the future”. This is without a doubt the most trenchant definition of...
  • Bitcoin Forked – Precious Metals Supply and Demand Report
      A Fork in the Cryptographic Road So bitcoin forked. You did not know this. Well, if you’re saving in gold perhaps not. If you’re betting in the crypto-coin casino, you knew it, bet on it, and now we assume are happily diving into your greater quantity of dollars after the fork.   Bitcoin, daily – adding the current price of BCH (the new type of Bitcoin all holders of BTC can claim at a 1:1 ratio), the gain since the “fork” amounts to roughly $1,000 at the time we...
  • What Went Wrong With the 21st Century?
      Fools and Rascals   And it’s time, time, time And it’s time, time, time It’s time, time, time that you love And it’s time, time, time… - Tom  Waits   Tom Waits rasps about time   POITOU, FRANCE – “So how much did you make last night?” “We made about $15,000,” came the reply from our eldest son, a keen cryptocurrency investor. “Bitcoin briefly pierced the $3,500 mark – an all-time high. The market cap of the...
  • Czar vs. Pope
      Vladimir the Great Sums Up Pope Francis the Fake Vladimir Putin has once again demonstrated why he is the most perceptive, farsighted, and for a politician, the most honest world leader to come around in quite a while.  If it had not been for his patient and wise statesmanship, the world may have already been embroiled in an all-encompassing global conflagration with the possibility of thermonuclear destruction.   Vladimir Putin is sizing up Pope Francis with his “good...
  • Bitcoin Has No Yield, but Gold Does – Precious Metals Supply and Demand Report
      Bitcoin and Credit Transactions Last week, we said:   It is commonly accepted to say the dollar is “printed”, but we can see from this line of thinking it is really borrowed. There is a real borrower on the other side of the transaction, and that borrower has powerful motivations to keep paying to service the debt. Bitcoin has no backing. Bitcoin is created out of thin air, the way people say of the dollar. The quantity of bitcoins created may be strictly limited by...
  • Is Historically Low Volatility About to Expand?
      Suspicion Asleep You have probably noticed it already: stock market volatility has recently all but disappeared. This raises an important question for every investor: Has the market established a permanent plateau of low volatility, or is the current period of low volatility just the calm before the storm?   All quiet on the VIX front... what can possibly happen? [PT] - click to enlarge.   When such questions regarding future market trends arise, it is often...

Support Acting Man

j9TJzzN

Austrian Theory and Investment

Own physical gold and silver outside a bank

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com