An Escalating War on Cash

• An Escalating War on Cash
  by John Browne, http://www.europac.com/  
  On February 16th, The Washington Post printed the article, “It’s time to kill the $100 bill.” This came on the heels of a CNNMoney item, the day before, entitled “Death of the 500 euro bill getting closer.” The former cited a recent Harvard Kennedy School working paper, No. 52 by Senior Fellow Peter Sands, concluding that the abolition of high denomination notes would help deter “tax evasion, financial crime, terrorist finance and corruption.” In recent days, former Treasury Secretary Larry Summers, ECB President Mario Draghi, and even the editorial board of the New York Times, came out in support of the elimination of large currency notes. Apart from the question as to why these calls are being raised now with such frequency, the larger issue is whether these moves are actually needed or if they merely a subterfuge for more complex economic manipulations by central banks to extend control over private wealth.
  In early 2015, it was reported that Spain had already limited private cash transactions to 2,500 euros. Italy and France set limits of 1,000 euros. In France, all cash withdrawals in excess of 10,000 euros in a single month must be reported to government agencies. In the U.S., such limits are $10,000 per withdrawal. China, India and Sweden are among those with plans under way to eradicate cash.
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  On April 20, 2015, the Mises Institute reported that Chase, a subsidiary of JPMorgan Chase and a bailout recipient of some $25 billion (ProPublica, 2/22/16), had announced restrictions on its customers’ ability to use cash in the payment of credit cards, mortgages, equity lines and auto loans. Before that, on April 1, 2015, Chase, in concert with JPMorgan, updated its safe deposit box lease agreement to provide, “You agree not to store any cash or coins [including gold and silver] other than those found to have a collectible value.”
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  The war on cash unquestionably has extended from government into the private banking sector. But the public is predominantly unaware of the ever-increasing encroachment into individual privacy and freedom.
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  On February 5, 2016, The New York Times reported, “the United States could face a new recession in 2016 due to a ‘perfect storm’ of economic conditions.” Ten days later, in an introductory statement, Draghi told a European Parliamentary Committee that, “In recent weeks, we have witnessed increasing concerns about the prospects for the global economy.”
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  When consumers worry about the economy, unemployment and their own finances, spending on non-essentials diminishes. Caution results also in paying down loans and hoarding cash.
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  When economic growth falters, central banks lower interest rates and inject funds into the economy. But if consumer confidence falls further, cash hoarding causes a fall in the velocity of money. This stimulates central banks to discourage the hoarding of cash by introducing negative interest rates to force deposits out of banks. On February 10th, during her congressional testimony, Fed Chair Janet Yellen admitted that there had been a discussion but never fully researched “the legal issues”. However, her Vice-Chair, Stanley Fischer, already had told the Council on Foreign Relations, nine days earlier, that the Fed had discussed negative rate policy all the way back in 2012.
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  Should negative rates fail to force funds out of banks, governments may look to limit, and even forbid, the use of cash in large transactions. This is tantamount to a war on cash as part of an effort to eliminate citizens’ control over their wealth.
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  Furthermore, a war on cash could extend even to seizure of cash deposits under certain circumstances. The confiscation of bank deposits may seem remote to Americans. However, the 2013 Cypriot banking crisis exposed the new central bank stance of ‘bail-ins’ whereby deposits could now be frozen and even confiscated to rescue a bank!
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