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 midgetEx-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. Here is the latest example, with Bloomberg’s editors urging to “Bring on the Cashless Future”.

 

The Purpose of Trial Balloons in the Media

Launching these frequent trial balloons in the media primarily serves two functions: for one thing, the rubes are to be softened up with a steady stream of propaganda.

Once upon a time, real money was replaced by irredeemable paper money under the cover of “emergency” – overnight, what used to be a warehouse certificate entitling its owners to redeem a specific quantity of gold was simply declared to be money henceforth.

This was expropriation on a truly breathtaking scale. However, it didn’t just happen out of the blue. Years of intense anti-gold and pro-inflation propaganda preceded the actual deed. By the time the theft was finally committed, people had too many other pressing concerns to worry about it – and the snake oil sellers had it easy, as they promised a “painless solution” to the economic woes of the day.

 

PF-gold-confiscati_2525827bNever let a serious crisis go to waste – the mantra of statists since time immemorial.

 

This propaganda exercise is repeated today with respect to paper money, which has become the new “standard money” after the gold theft. The public is supposed to get used to the idea that a world without cash would be just great. In article after article it has been tirelessly hammered home over the past few years how utterly “bad” cash currently allegedly is (there are even studies that purport to show how germ-infested and hence dirty and unhealthy paper money is. One wonders who actually pays for such studies – probably they are tax-funded).

The reasons for this push to abolish cash should be obvious: forcing everybody to use digital money will enable total state control over the financial lives of citizens. In the glorious cashless future envisaged by Bloomberg, the expropriation of savings will become a matter of a few keystrokes by faceless bureaucrats. Want to implement the IMF’s proposed 10% wealth tax to “fix” the government’s debt problems overnight? Easy, just press “Ctrl+T” (T stands for theft).

Naturally, the fractionally reserved private banking cartel is largely in favor of abolishing cash as well (the vast majority of extant deposit money consists of uncovered fiduciary media, which means that most banks are de facto insolvent). If here is no cash, no-one will be able to escape the banking system anymore. This fact alone should alarm even the most jaded couch potatoes.

If your bank is about to keel over, as indeed happened on several occasions in 2008 (think Northern Rock or Indy Mac), well, tough titties pilgrims! No bank runs will be possible anymore. Depositors will simply have to join the lines of unsecured creditors. As long as a system-wide bank collapse doesn’t render the FDIC or comparable deposit insurance schemes insolvent as well, one will of course get one’s money back – eventually (“eventually” and “on demand” are obviously two very different concepts).

 

Birmingham_Northern_Rock_bank_run_2007Run on a Northern Rock branch in Birmingham, 2008. Worried depositors are trying to withdraw their savings from the insolvent mortgage lender before its doors close for good.

Photo credit: Lee Jordan

 

Lastly, in their relentless drive to implement even more monetary quackery, assorted central planners supported by their claqueurs in the media and their dependents in the mainstream of the economics profession desperately want to overcome the imaginary “problem” of the “zero bound”. Central banks have so far only been able to impose negative penalty interest rates on bank reserves. Commercial banks have very little choice in the matter. QE continually creates new reserves, and these can only be used for interbank lending (a dead market) or to pay, well, for cash withdrawals by bank customers.

Apart from a handful of exceptions (which mainly affect very large deposits) commercial banks have largely refrained from passing these penalty rates on to their customers – they rightly fear that many people will simply withdraw their money and keep it as cash under the mattress. Why would anyone sit idly by and let himself be robbed as long as this alternative exists? Moreover, commercial bankers are of course aware what an utter economic perversion negative interest rates represent.

 

negative ratesBy now, negative interest rates have been introduced by central banks in countries representing 23% of global economic output. This is lunacy on a truly breathtaking scale.

 

It seems obvious to us that forcing people to keep their money on deposit with fractionally reserved banks is incompatible with property rights. This particular problem is rarely mentioned or discussed, but it strikes us as quite a crucial one. Those who regard property rights as a privilege granted by the State are presumably not worried by such objections, but everybody else should be.

The second main reason for launching such trial balloons in the press is that they serve to gauge the mood of the citizenry. Are people ready to surrender yet more of their freedoms, or will there be an outcry?

If you look at the reader comments below the Bloomberg editorial, you will notice that the idea of abolishing cash continues to meet with intense resistance. Although people in developed countries do tend to use electronic payment methods most of the time, the fact that they know they can withdraw their money in the form of cash is evidently still quite important to them. Most people appear to realize that the aim of abolishing cash is to enable total control, and ultimately theft. After all, the fairly recent cases of Greece and Cyprus have demonstrated what can happen to depositors that make the mistake of trusting the promises of politicians.

So far, the reaction to such trial balloon articles is telling the movers and shakers that the time for actually pressing on with the ban has not yet arrived. A bigger crisis will be needed, and the propaganda effort will have to be intensified.

In the meantime, cash bans are already introduced through the backdoor, by means of salami tactics: under the pretext of fighting terrorism and/or tax evasion, several countries have already imposed severe restrictions on cash use. Such restrictions exist e.g. in Greece, France, Spain, and Italy and involve ridiculously low limits (ranging from €1,000 to 1,500). In the US, civil forfeiture regulations are making anyone holding a large amount of cash potentially vulnerable to outright theft without due process – with the State’s takings by now eclipsing those of burglars.

 

forfeiture vs burglaryAsset forfeiture takings in the US are by now eclipsing theft by less professional criminals – click to enlarge.

 

A List of Tired Old Canards in a new Package

The Bloomberg editorial begins by craftily telling readers that “we” are allegedly unsatisfied with cash because it is “dirty”, “dangerous”, “unwieldy”, “antiquated” and terribly “analog”. Evidence for this consumer dissatisfaction allegedly abounds. And most importantly, the move to fully digital money apparently has the imprimatur of governments and central banks now, which “want in on the action” (surprise!):

 

“Cash had a pretty good run for 4,000 years or so. These days, though, notes and coins increasingly seem declasse: They’re dirty and dangerousunwieldy and expensive, antiquated and so very analog.

Sensing this dissatisfaction, entrepreneurs have introduced hundreds of digital currencies in the past few years, of which bitcoin is only the most famous. Now governments want in: The People’s Bank of China says it intends to issue a digital currency of its own. Central banks in Ecuador, the Philippines, the U.K. and Canada are mulling similar ideas.”

 

Naturally, if notes and coins are really so “dirty and dangerous”, something will have to be done! But didn’t Bloomberg just mention that the free market is already offering a great many alternatives to cash? What more is needed? Shouldn’t it be enough that consumers are able to choose freely what means of payment they want to use? Well, no – always keep in mind that such liberties are only provisionally granted by the State.

 

Pile-of-CashDirty, dangerous and “terribly analog” – don’t touch!

 

Here is another little remark craftily woven into the narrative by Bloomberg’s editors: up until recently, defenders of cash have inter alia always pointed to the fact that poor (and often “unbanked”) citizens simply need cash and would be at a grave disadvantage without it. Not so, says Bloomberg:

 

“Much depends on the details, of course. But this is a welcome trend. In theory, digital legal tender could combine the inventiveness of private virtual currencies with the stability of a government mint.

Most obviously, such a system would make moving money easier. Properly designed, a digital fiat currency could move seamlessly across otherwise incompatible payment networks, making transactions faster and cheaper. It would be of particular use to the poor, who could pay bills or accept payments online without need of a bank account, or make remittances without getting gouged.”

 

(emphasis added)

We would note that making “transactions cheaper and faster” is already technically feasible and in fact, they already are very cheap and fast, so this is clearly a pseudo-argument. The question remains though: why would anyone need the clutches of government in this digital pie? And what does any of this have to do with the alleged need to abolish cash?

The editorial now comes to the core of the issue – the real reasons behind the drive to ban cash. Once again readers are told that forcibly taking away the choice of using cash from the citizenry will have nothing but advantages!

 

For governments and their taxpayers, potential advantages abound. Issuing digital currency would be cheaper than printing bills and minting coins. It could improve statistical indicators, such as inflation and gross domestic product. Traceable transactions could help inhibit terrorist financing, money laundering, fraud, tax evasion and corruption.”

 

(emphasis added)

The utterly negligible cost of printing currency should be the least concern on the minds of taxpayers. Meanwhile, macroeconomic statistics are collected for two reasons only: to enable more government meddling in the economy and to make the results of this meddling look better than they are. Apart from the meddlers, any potential improvement of such statistics is at best of interest to economic historians.

The canard that traceable transactions will inhibit “terrorist financing, money laundering, fraud, tax evasion and corruption” is of course just a convenient pretext for the real goal: total control and the complete destruction of financial privacy. The only phrase still missing is “think of the children!”. We are quite sure that criminals will have little problem finding alternative media of exchange to use in their activities. Besides, we recall that the authorities have just recently accused a large bank of being one of the biggest drug money launderers on the planet – which they could not properly prosecute for fear of destabilizing the financial system!

This is followed up by real reason number two – namely the goal of making Soviet-style central economic planning easier:

 

The most far-reaching effect might be on monetary policy. For much of the past decade, central banks in the rich world have been hampered by what economists call the zero lower bound, or the inability to impose significantly negative interest rates. Persistent low demand and high unemployment may sometimes require interest rates to be pushed below zero — but why keep money in a deposit whose value keeps shrinking when you can hold cash instead? With rates near zero, that conundrum has led policy makers to novel and unpredictable methods of stimulating the economy, such as large-scale bond-buying.

A digital legal tender could resolve this problem. Suppose the central bank charged the banks that deal with it a fee for accepting paper currency. In that way, it could set an exchange rate between electronic and paper money — and by raising the fee, it would cause paper money to depreciate against the electronic standard. This would eliminate the incentive to hold cash rather than digital money, allowing the central bank to push the interest rate below zero and thereby boost consumption and investment. It would be a big step toward doing without cash altogether.

 

(emphasis added)

Readers may recognize the idea of “depreciating the value of paper money” – famous monetary crank Silvio Gesell has originally come up with it. Once again readers are presented with articles of faith that Bloomberg’s editors seem to think require no further explanation or justification. For one thing there is the idea that the imposition of negative interest rates by central banks is perfectly normal and worthy of support – when in reality it is utter lunacy.

 

220px-Silvio_Gesell_(1895)German money crank Silvio Gesell originally came up with the idea of depreciating cash automatically in order to force people to spend it on consumption. Keynes incidentally expressed admiration for Gesell and similar quacks. It seems to have escaped all of them that without saving and investment, there will actually be nothing to consume.

Photo via sozialoekonomie.info

 

Secondly, there is the associated notion that central planners have to “boost consumption” against the wishes of actors in the economy – as if one could actually consume oneself to prosperity! Putting the cart before the horse in this manner only works in the primitive Keynesian circular model of the economy. In the real world it will set us firmly on the road to ruin and impoverishment.

The form of investment artificially suppressed interest rates are primarily boosting is malinvestment, which is a waste of scarce resources. Zero or negative rates cannot “boost investment” at all. They will simply lead directly to capital consumption, without the detour of capital malinvestment. This is bound to become crystal clear once negative rates are imposed beyond the realm of central bank deposit facilities.

 

keynesian-glass-cartoonHow to boost prosperity the Keynesian way.

Cartoon by: Jon Kudelka

 

Bloomberg then informs its readers that governments simply need to tell a few lies in order to make the rubes more eager to accept the planned cash-less regime. After listing a few of the concerns people “might” have (such as the small matter of total Orwellian state control), Bloomberg dispenses the following advice to counter such objections:

 

“Governments must be alert to these problems — because the key to getting people to adopt such a system is trust.A rule that a person’s transaction history could be accessed only with a court order, for instance, might alleviate privacy concerns. Harmonizing international regulations could encourage companies to keep experimenting. And an effective campaign to explain the new tender would be indispensable. If policy makers are wise and attend to all that, they just might convince the public of a surprising truth about cash: They’re better off without it.

 

(emphasis added)

Yes, those government promises will really be reliable this time! Honest injun! Once it says on a piece of paper that “access to your transaction history will be restricted” there will be no more privacy concerns!

Convincing people that they will actually be better off without cash seems an impossible task. As the comment section shows, Bloomberg has apparently vastly overestimated the gullibility and naivete of its readers. In any case, we would suggest that while people won’t be better off without cash, they will definitely be better off without “policymakers” – especially “wise” ones.

 

Conclusion

As you can see, they have been working on their propaganda a bit, even if the result is not much to write home about. The same hoary canards continue to be presented, but in a slightly different manner. The emphasis is now on a laughably clumsy attempt to convince people that it would be to their “advantage” if their choices were restricted by force, which makes one wonder what the authors have been thinking. Once cash is prohibited, you’ll be better off serf! Can’t you see that? It’s ridiculous.

Fortunately the serfs are indeed unable to see the light just yet. In fact, they are reacting the way people in the Soviet Union tended to react to Pravda editorials praising life in the planned economy under the dictatorship of the somewhat more equal comrades. The whole effort is simply too transparent and that is bound to remain its Achilles heel for a while yet.

Lastly, we would suggest that if cash were indeed banned, there would likely be unintended consequences (from the perspective of the planners that is). The market will simply fall back on alternatives. People may either begin to use currencies issued by countries that haven’t enacted a cash ban, or they may simply re-monetize gold and silver.

In the long run the proponents of statism are actually fighting a rear-guard battle. The anachronistic nation state and its accoutrements are on their way out, their supporters just haven’t realized it yet. Until statism finally disappears in the dustbin of history (we will probably not see it in our lifetime, but one can always hope), the beneficiaries of the statist model are unfortunately still apt to inflict a lot of damage.

 

Charts by: WSJ, Washington Post

 

 
 

Emigrate While You Can... Learn More

 
 

 
 

Dear Readers!

It is that time of the year again – our semi-annual funding drive begins today. Give us a little hand in offsetting the costs of running this blog, as advertising revenue alone is insufficient. You can help us reach our modest funding goal by donating either via paypal or bitcoin. Those of you who have made a ton of money based on some of the things we have said in these pages (we actually made a few good calls lately!), please feel free to up your donations accordingly (we are sorry if you have followed one of our bad calls. This is of course your own fault). Other than that, we can only repeat that donations to this site are apt to secure many benefits. These range from sound sleep, to children including you in their songs, to the potential of obtaining privileges in the afterlife (the latter cannot be guaranteed, but it seems highly likely). As always, we are greatly honored by your readership and hope that our special mixture of entertainment and education is adding a little value to your life!

   

Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

6 Responses to “Softening up the Rubes – the War on Cash Continues”

  • sufganiyah:

    My experience is that the majority of population are obedient bootlickers. They may rebel if taxes on beer quadruple overnight, but when it comes to cash, the majority will repeat the same BS about money being stained by germs, feces or cocaine and how everybody who uses cash is either old, a gangster or an evil tax avoider.

  • MikeWilliamson:

    Sadly, I don’t agree with the final paragraph. This travesty will be forced upon us. The middle-class will be destroyed. The Orwellian nightmare will become real.
    There will be only the very poor and the immensely wealthy bureaucrats and their cronies.
    “People are very adaptable. If you ruin them slowly enough, they barely notice.”

  • I suggest that mentioning “financial privacy” is counterproductive to your argument.

    The real goal of course is the complete divestment of any vestiges of wealth left in the hands of individuals.

    Exchanging labor for money is already an asymmetrical exchange. We exchange something we own outright for something we do not own, we have no control over and on which we owe taxes. Effectively, the more we earn the more we owe either in taxes or in debasement.

    This is a direct attack on private property.

    As things stand currently, economic actors are allowed the privilege to make temporary use of money but legally, it does not belong to them.

    By abolishing cash, the state will have finally guaranteed the total conquest of everyone’s property.

  • The banning of cash is a sign to run for the hills. Bankers are already creating debt out of nothing. Now, only the people will have to pay, as the banks will never have to have anything, but lawyers and repo guys to take our money. It isn’t enough that the US government has rigged the system for 200 years so that banks don’t have to pay when the chips are down. Now, they will never have to pay anyone, but each other. As for Bloomberg? Pray for cancer.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Gold Price Skyrockets in India after Currency Ban – Part III
      When Money Dies In part-I of the dispatch we talked about what happened during the first two days after Indian Prime Minister, Narendra Modi banned Rs 500 and Rs 1000 banknotes, comprising of 88% of the monetary value of cash in circulation. In part-II, we talked about the scenes, chaos, desperation, and massive loss of productive capacity that this ban had led to over the next few days.   Indian prime minister Narendra Modi – another finger-wagger, as can be seen in this...
  • Gold Price Skyrockets in India after Currency Ban – Part IV
      A Market Gripped by Fear The Indian Prime Minister announced on 8th November 2016 that Rs 500 and Rs 1,000 banknotes would no longer be legal tender. Linked are Part-I, Part-II and Part-III updates on the rapidly encroaching police state. The economic and social mess that Modi has created is unprecedented. It will go down in history as an epitome of naivety and arrogance due to Modi’s self-centered desire to increase tax-collection at any cost.   Indian jewelry...
  • A Note on Gold and India – What is Driving the Gold Price?
      Hidden Motives It is well-known that India's government wants to coerce its population into “modernizing” its financial behavior and abandoning its traditions. The recent ban on large-denomination banknotes was not only meant to fight corruption.   Obviously, this very bad Indian has way too much cash. Just look at him, he looks suspicious! Photo via thenewsminute.com   In fact, as our friend Jayant Bhandari has pointed out, fresh avenues for corruption ...
  • Gold Price Skyrockets in India after Currency Ban – Part V
      A Brief Recap India's Prime Minister announced on 8th November 2016 that Rs 500 and Rs 1,000 banknotes will no longer be legal tender. Linked are Part-I, Part-II, Part-III, and Part-IV, which provide updates on the rapidly encroaching police state Expect a continuation of new social engineering notifications, each sabotaging wealth-creation, confiscating people’s wealth, and tyrannizing those who refuse to be a part of the herd, in the process destroying the very backbone of the...
  • Attaining Self-Destruct Velocity
      Bad Monday Some Monday mornings are better than others.  Others are worse than some.  For one Amazon employee, this past Monday morning was particularly bad. No doubt, the poor fellow would have been better off he’d called in sick to work.  Such a simple decision would have saved him from extreme agony.  But, unfortunately, he showed up at Amazon’s Seattle headquarters and put on a public and painful display of madness.   Good-bye cruel world! On this our planet,...
  • All Aboard! Trump’s Express Train to the Future
      Free Money! BALTIMORE – Last week, the Dow punched up above 19,000 – a new all-time record. And on Monday, the Dow, the S&P 500, the Nasdaq, and the small-cap Russell 2000 each hit new all-time highs. The last time that happened was on the last day of December 1999.   Ironically, two events that were almost universally expected to trigger large stock market declines were followed by quite rapid and strong gains. Would the market have fallen if Hillary Clinton had won...
  • India's Currency Debacle – An Interview with Jayant Bhandari
      A Major Crisis Last week Jayant Bhandari related the story of the overnight ban of certain banknotes in India under cover of “stamping out corruption” (see Gold Price Skyrockets In India after Currency Ban Part 1 and Part 2 for the details).   Banned 500 rupee banknotes   The problem is inter alia that the sudden ban of these banknotes has hit the Indian economy quite hard, given that 97% of all transactions in the country are cash-based. Not only that, it has...
  • Will the Swamp Swallow Trump?
      Permanently Skewed TRUMP HOTEL, New York – Trump’s rambling army – professionals, amateurs, camp followers, and profiteers – is marching south, down the I-95 corridor. There, on the banks of the Potomac, it will fight its next big battle.   Lieutenants in Trump's army: Bannon, Flynn & Sessions Photo credit: Drew Angerer / AFP   Here at the Diary, we do not like to get involved in politics. But this is a special time in the history of our planet – a...
  • There Are Two Types of Credit — One of Them Leads to Booms and Busts
      Stumped by the Bust In the slump of a cycle, businesses that were thriving begin to experience difficulties or go under. They do so not because of firm-specific entrepreneurial errors but rather in tandem with whole sectors of the economy. People who were wealthy yesterday have become poor today. Factories that were busy yesterday are shut down today, and workers are out of jobs.   What has caused the bust? The modern-day economic orthodoxy continues to be unable to provide...
  • Gold Bull Market Remains Intact – Long Term Fundamentals Outweigh Short Term Market Gyrations
      A Strong First Half of the Year, Followed by Another Retreat In early 2016 gold had a big bull run. The precious metal rose close to 25% this year, pushed higher in a summer rally that peaked on July 10th. Gold experienced a bumpy ride over the remainder of the summer though, as investors became increasingly concerned about a potential rate hike by the Federal Reserve. Uncertainty returned to gold market and has intensified further since then.   Initially, gold rallied sharply...
  • Too Early for “Inflation Bets”?
      The Trump Trade After 35 years of waiting... so many false signals... so often deceived... so often disappointed... bond bears gathered on rooftops as though awaiting the Second Coming. Many times, investors have said to themselves, “This is it! This is the end of the Great Bull Market in Bonds!”   The long bond's long cycle – red rectangles indicate when the post 1980 bull market was held to be “over” or “over for sure” or “100% over”, etc.  We have...
  • US True Money Supply Growth Jumps, Part 1: A Shift in Liabilities
      A Very Odd Growth Spurt in the True Money Supply The growth rates of various “Austrian” measures of the US money supply (such as TMS-2 and money AMS) have accelerated significantly in recent months.  That is quite surprising, as the Fed hasn't been engaged in QE for quite some time and year-on-year growth in commercial bank credit has actually slowed down rather than accelerating of late. The only exception to this is mortgage lending growth - at least until recently. Growth in...

Austrian Theory and Investment

Support Acting Man

Own physical gold and silver outside a bank

Archive

j9TJzzN

350x200

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]

 

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

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com