“The first shot in the War on Cash?”
The headline caught our attention. We’d just finished researching and writing about the “Deep State” for the latest issue of our monthly publication, The Bill Bonner Letter. (Subscribers can catch up here.)
This is something you’re likely to hear more about. The Deep State describes the way the U.S. government really works, rather than the way it’s supposed to work.
Over the years – hardly noticed by the press or the public – a group of insiders has taken control of Washington.
Some of them are familiar government hacks and politicians. Some, largely anonymous, are in the private sector. And some represent foreign governments, foreign businesses (notably banks), and foreign organizations.
These zombies and cronies – who number in the thousands – have much more power and authority than 100 million voters. Research shows that if they want legislation, they get it.
Voters, on the other hand, get what they want only rarely… and probably only because the insiders want the same thing.
The insiders get the money, too. The tens of trillions of dollars diverted into boondoggle bailouts, QE, and ZIRP, for example – they had to go to someone.
And now the Deep State is setting itself up to get even more…
Two Kinds of “Cash”
Dr. Matthew Partridge in our London office reports for MoneyWeek magazine that a small Swiss bank has become the first retail bank in the world to charge customers negative interest on their deposits.
A number of central banks – including the Swiss National Bank – have already taken benchmark interest rates below zero. But, beginning next year, Alternative Bank Schweiz (ABS) will be the world’s first bank to pass those negative rates on to customers.
In a letter to its customers, ABS said it would charge account holders 0.125% a year to hold their “cash” deposits to protect its profit margins. And anyone with 100,000 Swiss francs ($97,316) or more on deposit will have to pay 0.75% a year.
Let’s stop here for a moment and clarify…
There are “cash deposits” and there is “cash.” Cash deposits are an oxymoron. If you say you have cash in the bank, you are mistaken.
The bank doesn’t really hold “your” cash. It owes you money. If it goes broke, you’ll stand in line with other creditors to get it (subject to whatever guarantees may be in place… and however well they may work).
Cash in hand is different. It is physical. Paper. You can do what you want with it. And you don’t pay a negative interest rate.
Which is why the feds want to ban cash…
They say it will make it easier for them to stimulate the economy.
As long as you can hold physical cash, you have an easy way to escape negative interest rates: You just take the money out of the bank and put it in your home safe.
But if physical cash is illegal, you have no choice. You have to keep “your money” on deposit at the bank… and take whatever negative rate the bank imposes on you.
Total Control
Of course, the idea that taking away your money will stimulate economic growth is ridiculous.
As former banker, hedge fund manager, and expert on the fiat money system Warren Mosler recently told Bonner & Partners Investor Network subscribers:
First, central bankers have got the interest rate thing backward. They think lowering rates will somehow stimulate the economy.
But negative interest rates are just a tax. You start off with a certain amount of money – say, $100. If the rate is negative 1%, then you have $99 at the end of a year.
Isn’t there some theory that says when people’s money goes away, and they have less, they spend less?
(Paid-up subscribers can catch up here.)
If negative rates don’t really encourage spending, why bother?
This brings us to the real danger of banning cash… and perhaps the real reason the feds want to do it – more control.
Reports William N. Griggs at The Free Thought Project under the headline “Drone Pilots have Bank Accounts and Credit Cards Frozen by Feds for Exposing U.S. Murder”:
For having the courage to come forward and expose the drone program for the indiscriminate murder that it is, four vets are under attack from the government they once served.
The U.S. Government failed to deter them through threats of criminal prosecution, and clumsy attempts to intimidate their families. Now, four former Air Force drone operators-turned-
whistleblowers have had their credit cards and bank accounts frozen, according to human rights attorney Jesselyn Radack. ‘My drone operators went public this week and now their credit cards and bank accounts are frozen,’ Radack lamented on her Twitter feed. This was done despite the fact that none of them has been charged with a criminal offense – but this is a trivial formality in the increasingly Sovietesque American National Security State.
If we are forced to keep our money in the bank… and cash is outlawed… the Deep State will have total economic control over us all.
Regards,
 |
Bill
Further Reading: The Deep State has taken complete control of Washington. In the latest issue of The Bill Bonner Letter, Bill exposes how the zombies and cronies have unwittingly created the greatest danger to the world today. Learn more here as Bill reveals how the coming catastrophe will unfold… and how it’ll change your life forever.
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The bear market in gold that began in 2011 could soon be the longest in modern history…
Gold has been in a bear market for almost four and a half years. Over that time, the price of the yellow metal is down 45% in U.S. dollar terms.
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In the last 50 years, there have been five gold bear markets: 1966 to 1969; 1975 to 1976; 1980 to 1982; 1983 to 1985; and 1988 to 1993.
Only the 1988-to-1993 downturn lasted longer than the current pullback. But the price decline wasn’t as steep – about 35% compared to 45% (and counting) today.
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Mailbag |
| Yesterday’s Diary about Bill’s mother’s memories of Southern Maryland in the 1930s sparked the following response from a long-lost friend… |
Hi Bill,
I do not know if you remember my family or not. Your mother was one of my mother’s (Jewell C.) favorite friends.
My father (John C.), was born in Shady Side and lived just outside of Galesville until he passed away, at age 94, in 2000. Mother passed away in November 2011, at age 98.
As a young girl we had a small farm where we raised tobacco, corn, a garden, chickens, and a cow for milk, and hogs. I and my brothers all helped on the farm and were 4-H [a youth development program] members and went to Sunday school at Christ Church in Owensville.
I did go to the University of Maryland, College Park. Returned in 1970 to live in Galesville for 10 years and then to Friendship, South County, until we moved to Florida recently.
I am so glad your mom was present at the reunion to help identify some of the family pictures. I am still going through Mother’s pictures and trying with other family members to identify a lot of our relatives. I certainly wished on many occasions that I had stopped and taken time to write down names, events, and dates.
We now have an annual family reunion at Christ Church Hall, in May. We spend time trying to identify people in pictures. The best part is keeping up with the families and the next generations.
Yes, the time in the West River area was precious, and I have a lot of memories similar to yours.
I enjoyed reading your summary of your precious Thanksgiving holiday with the family.
– Phyllis C.
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