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Former IMF Economist Declares War on Cash #159695
09/08/2016 12:10 PM
09/08/2016 12:10 PM
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Hang on to your money.

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The War on Cash continues to gain momentum within the circles of the politically influential.

Bloomberg yesterday posted an article on a new book titled The Curse of Cash, written by Kenneth Rogoff former chief economist of the International Monetary Fund and current Harvard University economist.

Though the Bloomberg piece unfortunately accepts at face value the weak argument that eliminating cash will make it harder for criminals to operate, it does focus on the real goal of people like Rogoff, to give more power to central bankers:

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Rogoff … contends that suppressing cash would make it easier for the Federal Reserve and other central banks to boost economic growth by pushing interest rates into negative territory. That's the strange world where you pay to keep money in the bank and get paid to borrow it. The theory is that negative rates will induce people to save less and spend more, which will revive growth. Savers won't tolerate negative interest rates on their savings as long as cash is an alternative. Why not simply withdraw stacks of $100 bills and keep the cash in a mattress or a safe?
Of course, one of the blessings of cash is the very fact that it allows normal people protection from some of the consequences of bad monetary policy. As Dr. Joseph Salerno wrote last month:

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Cash is a unambiguously a blessing to productive workers, savers, and entrepreneurs who wish to protect their hard earned money from the crazed theories and swindling schemes promoted by statists like Rogoff and the central bankers he advises.
So while Rogoff describes the subject as “a very quirky topic,” in reality the issue isn’t “quirky” at all — as Salerno has noted multiples times, the War on Cash is nothing more than a lust for more power by central bankers and their advocates in academia. It is the consequence of central bankers around the world being frustrated that real people aren’t acting the way they want them to act, and therefore want to eliminate one of the last remaining forms of protection against their antics.

This is what we’ve seen in England, where people have been hoarding cash as the Bank of England cuts interest rates to historical lows.

We’ve seen it in Germany, where the ECB’s negative interest rate policy has Germans putting their money in safety deposit boxes.

We’ve seen it in Japan, where their own negative interest rates has resulted in a boom in personal safes.

Time and time again, the desires of central planners have been resisted by the market, and instead of re-evaluating the wisdom of their actions they are trying to give themselves more control.

Of course, as Bloomberg notes, “Rogoff doesn't view totalitarianism as much of a threat.”

And why would he? Considering his past position with the IMF, and his current position in academia, he is among the privileged class of the elite. The friends of tyrants rarely have much to fear from tyranny.
Onwqrd and upward,
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Re: Former IMF Economist Declares War on Cash #159696
09/08/2016 01:18 PM
09/08/2016 01:18 PM
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I notice that cash is getting fashionable again because of issues with credit card fraud and identity theft. Then there is slick advertising and contract scams where everyone wants to take your credit card number to sell you one thing, then ends up charging you for a bunch of ther stuff you did not really agree to but was implied somewhere in the contract.

A lot of private sellers on bigger ticket items on Craigslist now are saying "cash only". It's just too easy for someone to grab the merchandise on a credit transaction then reverse the charge when them and the merchandise are down the road.

What you don't seem to get much of (yet) is special lower "cash pricing" on very much stuff outside of some private sales. If I don't get a special cash deal, I whip out the discover card and build reward bonus points. There are advantages and disadvantages to that I notice, like ease of accounting and proof of ownership on stuff.


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Re: Former IMF Economist Declares War on Cash #159697
06/18/2017 08:30 AM
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Senate Bill 1241 , the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017,” would force citizens to report cash - including Bitcoin and other digital currencies - to report cash held in excess of $10,000.

See the text of the bill at the link.

Onward and upward,
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Re: Former IMF Economist Declares War on Cash #159698
06/18/2017 08:47 AM
06/18/2017 08:47 AM
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Really? I make it a point to do everything in cash. The senate can kiss my ass.


"The time for war has not yet come, but it will come and that soon, and when it does come, my advice is to draw the sword and throw away the scabbard." Gen. T.J. Jackson, March 1861
Re: Former IMF Economist Declares War on Cash #159699
06/18/2017 09:08 AM
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I just contacted both my senators and asked them to vote NO on this thing. I hope a lot of other people do the same.

Onward and upward,
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Re: Former IMF Economist Declares War on Cash #159700
06/19/2017 06:01 AM
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Now U.S. government threatens to take all your cash

New Senate bill empowers feds to seize everything you own


WASHINGTON – In the name of fighting terrorism financing, a new U.S. Senate bill threatens to force private corporations to monitor your financial activity and empowers government to seize all your assets if you fail to comply with the new law.

Even failure to fill out one form is license for the federal government to take everything you have.

Sponsored by Sens. Chuck Grassley, R-Iowa, Dianne Feinstein, D-Calif., John Cornyn, R-Texas, and Sheldon Whitehouse, D-R.I., Senate Bill 1241, “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017,” was introduced last month and represents what some financial experts say is a new assault on cash and digital currencies.

Proponents say it’s needed to fight criminal and terrorist money laundering efforts, yet the banking institutions that will be given orders to look for evidence are themselves the primary architects of the schemes that make this activity profitable on a massive scale.

“If the bill becomes law, Americans would be subject to a whole host of government intrusions. One little slip-up would open a Pandora’s box of governmental inquiry into your financial life,” says Peter Reagan, a financial-market strategist at Birch Gold Group. “For example, failing to complete a single reporting form would result in the government being granted abilities to freeze and seize not just a portion, but the entirety, of your assets. The bill even goes so far as to include the contents of safety-deposit boxes.”

As the bill stands today, precious-metals holdings are not covered under the required declarations. Most other ‘monetary instruments’ would be locked down tight.

“The war on cash and financial autonomy has been underway for some time,” says Reagan. “But this bill would solidify a serious loss of freedom we’ve been fearing for years.”

Because fighting “terrorism” is one of the purposes of the legislation, it allows any business with government ties to act as a de facto arm of the Department of Homeland Security to take your monetary assets, including Bitcoin and so-called “crypto-currencies.”

Claire Bernish, an independent investigative reporter, says the bill would impose “autocratic financial controls in an attempt to ensure none of your assets can escape one of the state’s most nefarious, despised powers: civil forfeiture.”

“Civil forfeiture grants the government robbery writ large: your cash, property, and assets can be stolen completely sans due process, your guilt – frequently pertaining to drug ‘crimes’ – matters not,” Bernish says. “A court verdict of not guilty doesn’t even guarantee the return of state-thefted property.”

She says the bill also severely curtails the right to travel freely with more than $10,000 in cash. To do so, a citizen will need to file a report with the U.S. government. Other assets that would be at risk for violations of the law include bank accounts, prepaid cards, gift cars, prepaid phones and prepaid coupons. Violators face prison terms of 10 years.

“And if that weren’t enough, this bill also gives them with new authority to engage in surveillance and wiretapping (including phone, email, etc.) if they have even a hint of suspicion that you might be transporting excess ‘monetary instruments,'” reports Simon Black of SovereignMan.com. “Usually wiretapping authority is reserved for major crimes like kidnapping, human trafficking, felony fraud, etc. Now we can add cash to that list.”


"The time for war has not yet come, but it will come and that soon, and when it does come, my advice is to draw the sword and throw away the scabbard." Gen. T.J. Jackson, March 1861
Re: Former IMF Economist Declares War on Cash #159701
06/19/2017 07:27 AM
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Originally posted by ConSigCor:
...“The war on cash and financial autonomy has been underway for some time,” says Reagan. “But this bill would solidify a serious loss of freedom we’ve been fearing for years.” (...)
I can't emphasize enough just how bad this law would be. Please, call your senators and urge them to vote NO in S.B. 1241.

Onward and upward,
airforce

Re: Former IMF Economist Declares War on Cash #159702
02/06/2018 05:51 AM
02/06/2018 05:51 AM
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Governments hat bitcoin and cash for the same reason: They protect your privacy.

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Publicly fretting about Bitcoin and other cryptocurrencies, last month, Treasury Secretary Steve Mnuchin assured an audience at the Economic Club of Washington that "one of the things we will be working very closely with the G-20 on is making sure that this doesn't become the Swiss numbered bank accounts." He specifically cited the difficulty cryptocurrencies pose to tracking transactions as a major concern.

Soon afterward, India's finance minister, Arun Jaitley, sounded an even stronger note, saying, "The government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system."

Why are government officials sounding such similar notes of hostility to increasingly popular non-state cryptocurrencies?

"The core technology underlying cryptocurrencies, known as blockchain, is premised on anonymity," Richard Holden, an economics professor at the University of New South Wales, and Anup Malani, a law professor at the University of Chicago, explain. "But anonymity is also the main fuel for the underground economy, which is now conducted largely via cash." They add, "If cryptocurrencies were to replace cash as the preferred anonymous medium of exchange, they could significantly expand the underground economy because they are so much more convenient than cash."

It's worth remembering that India's government hates cash, too. Less than two years ago, India demonetized all 500- and 1,000-notes—the highest denominations in circulation—turning them into worthless paper overnight. Officials happily plunged the economy into chaos, and forced many people to resort to barter, in an effort to force the private cash holdings powering the country's vast shadow economy into official view, subject to tracking and taxation.

"We can gradually move from a less-cash society to a cashless society," Prime Minister Narendra Modi said at the time, making his ultimate aims clear even as his policies disrupted the lives of people subject to his rule.

Lots of economic heavy-hitters agree with that sentiment, including Peter Bofinger, a member of the German Council of Economic Experts, who calls for "the abolition of cash, since coins and bills are obsolete and only reduce the influence of central banks." He insists that with the end of the anonymity provided by cash, "the markets for moonlighting and drugs could be dried up."

Harvard University's Kenneth S. Rogoff, former chief economist of the International Monetary Fund, puts a similar book-length argument forward in The Curse of Cash. "The big problem with paper currency is that a large part of it is used to facilitate tax evasion and a huge spectrum of criminal activities," he says. Concerns about constant scrutiny by Big Brother don't sway him either, leading him to retort, "the government's right to tax, regulate and enforce laws trumps individual privacy considerations."

Rogoff unsurprisingly also thinks cryptocurrencies are entirely too freewheeling, snarking that "bitcoin—it is a solution if you're wanting to launder money or tax evasion. I think the government will eventually have to regulate it severely and I think someday will issue its own digital currency." He adds, for emphasis, "it's the anonymity that's really the problem."

Even in the absence of a formal policy decision, those concerns are already seeping through into everyday life in the United States. In recent weeks financial institutions including JPMorgan Chase & Co., Bank of America Corp., and Citigroup Inc. have restricted the use of their credit cards to purchase cryptocurrencies at least partially over concerns about the government's ability to track their use. Banks are required by regulators to monitor their customers' transactions for anything the government might interpret as money laundering, notes Bloomberg, "which isn't as easy once dollars are converted into digital coins."

The assault on cryptocurrency is having some effect; Reuters reports that bitcoin "approached three-month lows on concerns about a global regulatory clampdown on the trading of the digital coins."

Since government objections to cryptocurrencies are essentially identical to those made against cash, the arguments in their favor are largely the same too.

"The rich have many ways of hiding assets and making them safe from states and from the taxman," author John Lanchester wrote in a New York Times Magazine column about the push to abolish cash. "Cash is one of the few ways in which ordinary citizens can enjoy a tiny taste of the freedom, privacy and security that the rich take as their due."

"Cash is printed freedom," is how Lars Feld, also of the German Council of Economic Experts, pithily rebutted his colleague Bofinger. And Feld was blunt that by "freedom," he meant escape from complete state scrutiny and control. His countrymen seem to agree.

"The main reason people give for preferring cash is anonymity compared to card payments," Helmut Hammes, head of the German Central Bank's cash department, remarked after the Bofinger-Feld public sparring match.

Well, if you're going to have a debate, the sides might as well be upfront about their motivations.

If advocates of expanded power are going to be so transparent about their motivations in opposing cryptocurrencies and cash, if they're going to be so explicit in their hostility to the anonymity and liberty those means of exchange offer people, we should take them at their word. Let's be clear in response that what they see as problems are the precise features we like about cash and cryptocurrencies. We support our well-worn folding money and bitcoin and its successors to come precisely because they put at least some of our activities beyond the reach of control freaks who want to monitor, tax, and regulate our lives.

Cryptocurrencies and cash are valuable not despite their anonymity, but because of it.
Onward and upward,
airforce

Re: Former IMF Economist Declares War on Cash #159703
02/22/2018 11:53 AM
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Cash may survive in Sweden after all.

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The Swedish government and its central bank have long been in the vanguard of the war on cash. Now they are suddenly having second thoughts about its potential outcome. The value of notes and coins in circulation has crashed to its lowest level since 1990 and now stands at 40% below its level in 2007. “No cash” signs are popping up everywhere in restaurants and retail establishments and even museums throughout Sweden. The rapid disappearance of cash is making the government very nervous. A parliamentary committee charged with reviewing central bank legislation is now preparing a special report on the situation to be released this summer. The head of the committee, Mats Dillen, was refreshingly candid in revealing the general concern of the committee:

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One may get into a negative spiral which can threaten the cash infrastructure. It’s those types of issues we are looking more closely at.
In other words, many Swedes, especially the elderly, do not hold money that can be accessed and transferred electronically to make payments. These people are finding their exchange opportunities severely diminished in an increasingly cashless society.

The Riksbank, Sweden’s central bank, is also concerned about instability that may result from a transition to a completely cashless society. It is contemplating a proposal to introduce a digital currency, the e-krona, to complement, not displace, physical cash. Stefan Ingves, the Governor of the Riksbank, has even encouraged the government to consider legally compelling banks to pay out cash to customers.
This is a far cry from the Rikbank’s attitude at the beginning of this decade when its deputy governor gloated that cash will survive “like the crocodile, even though it may be forced to see its habitat gradually cut back.”

In any case, Swedish policymakers' second thoughts about the war on cash is good news for anyone who values the right to financial privacy and the right of depositors to drive fractional-reserve banks out of business as soon as they lose confidence in them.
Onward and upward,
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Re: Former IMF Economist Declares War on Cash #159704
04/10/2018 08:15 AM
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Why governments, big banks, and big tech companies all hate cash. Another great article at the Mises Institute.

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Big government, big banks, and big tech are now all on the same side in the war against cash. Government — we all know about already. Big banks — they do not want to see the users of cash in retail transactions (for goods and services) getting keener prices than the users of their electronic payment systems. They use their oligopoly power to suppress as far as possible any such differential emerging (as would be the case in a free market) and so expand the market for their plastic alternative. Big Tech — Amazon would suffer a hemorrhage if its present customers could get substantial discounts by taking cash instead to the mall rather than paying by card online. And advertisers on Facebook and Google would surely cut back if appearances on these platforms no longer had the same potential to initiate instant gratification as many viewers postponed any response until they made their next cash-laden journey to the physical market-place.

Common interest does not always mean mutual assistance, but we can decipher this in the case of the war against cash. Big government realizes that its efforts to limit the use of cash can only succeed if the alternatives (card payments and in particular their online use) are widely attractive. That depends on Big Tech and Big Banks (the latter the supplier of the top used payment cards). For cooperation between Big Tech and Big Banks, think of Amazon joining up with JPMorgan Chase (and Berkshire Hathaway) in health care provision. Are we to believe that as part of the wider deal Amazon would not strive to get a good terms on merchant fees paid to the JPM card provider and work towards these becoming standard for other card providers in their interaction with its platform? And who knows, Big Tech in its use of Big Data to expand advertising revenues surely can find new ways to exploit private data about customer payments transactions even if without individual names!

We can get a better idea of the common interests of the Big Three in the war against cash by asking how the economic and financial landscape would change were this war ultimately to fail.

If the World Became Pro-Cash

In particular, a US$300 or even $400 banknote could well become the principal means of payment — like the sovereign in pre-1914 Britain which at today’s gold price is around $330. Users of cash in retail transactions would get a substantially keener price than the user of cards (whether credit or payments) — consistent with the lower cost of the merchant handling cash than the fee to the card companies (which pays for a vast electronic payments infrastructure including anti-fraud systems and a profit margin on top) and costs related to fraud.

Online business and advertising on Google and Facebook would have shrunk substantially. The Big Banks would have much less revenue from their cards and they would also have lost business, in so far as one factor in the growing market share of the Big Banks has been individuals seeking to get their card services.

Governments would be fretting about loss of revenue due to an expanded cash economy, but the actual numbers may not prove this — especially if account were taken of the increased seigniorage from banknote issuance and a vibrant global demand for banknotes as safe haven. And with banks having to hold more cash towards meeting unexpected net withdrawals coupled with strong retail demand for cash the monetary base would again have become a potential pivot to a sound monetary system steered by automatic rules — meaning the end of central bank interest rate manipulation.

This is just a sketch, but there is enough to demonstrate the main losers in the private sector economy from peace in the War on Cash — Big Banks and Big Tech. Their unpopularity, now growing fast for Big Tech, is a source of hope for those opposed to the war on cash. The elected officials of Big Government, realizing the public loathing, could advantage in quiet on the cash front and attacking their allies instead. Problem: Big Banks and Big Tech have tentacles extending far into big government. And big tech has a capacity to delude and indeed manipulate its publics.

The Role of Central Banks, Bailouts, and Cronyism

Even so, we should not underestimate the extent to which monetary inflation has contributed to the formation of the Triple Alliance against cash. By the same token, the eventual passing of the present virulent asset inflation into its final phase of crash and recession should lead to its unwind. The empires of Big Tech with all their promise of actual or potential government-subsidized monopoly profit have been the subject of speculative narratives which have thrived in an asset inflation characterized by desperation for yield and the readiness of investors to dispense with normal rational skepticism.

The tales include a King Midas CEO who will turn to gold every business area he selects and who can thereby attract capital at such low cost that his company can afford to meanwhile gain market share by offering fantastic terms; genius tech leaders who for similar reason can afford to employ the smartest engineers and buy out any potential new or smaller rival. The lack of general prosperity despite all this gives the game away.

Yes, in many cases it is a negative sum game. The advertisers on Facebook for example find a substantially greater amount of their business now derives from this social platform than previously; but in total across all platforms and across all advertisers there are not aggregate net gains, rather losses in the form of greater-than-ever advertising expenditure.

No-one knows the full extent and location of mal-investment until the end of the cycle. But social and political resistance — including that to the abuse and misuse of private data — can also be opposed via asset inflation. But there's a problem: mal-investment unwinds unless socialized. Bailout-supported cronyist ventures can remain well after the cycle ends, and indeed into the long-run, unless political forces rise up and destroy them.

That may happen in the final stage of this cycle. Populists will line up against Big Tech and the Big Banks, the winners through much of the preceding asset inflation. The strengthening of the role of cash — and the potential of that to be the catalyst to broader reform in the direction of sound money by re-pivoting high powered money to the monetary system — is essential to such an outcome and its preservation.
Onward and upward,
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Re: Former IMF Economist Declares War on Cash #159705
04/27/2018 06:05 AM
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The War on Cash is even worse than it seems. A new article by Kevin Dowd at the Mises Institute. Too long to post here, but well worth a read. A snippet:

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...The first point to note is that the WoC is not just about technocratic issues related to payments technologies: cashless payments systems are already both commonplace and spreading. On the cash vs. digital issue, sometimes cash is better (e.g., for small anonymous transactions) and sometimes digital (e.g., where the parties concerned have the technology and anonymity is not an issue). Instead, the core issue in the WoC is whether people should be compelled not to use cash, and this issue is of profound importance. In a nutshell, my argument is that the abolition of cash threatens to cause widespread economic damage – as an example, just look at what has been happening in India - and to have a devastating impact on many of the most vulnerable in our society. It also threatens to destroy what is left of our privacy and of our financial freedom: we wouldn’t be able to buy a stick of gum without the government knowing about it and giving its approval....
Onward and upward,
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