Killing the $100: The war on cash is underway
A former top economic advisor is calling on the Treasury to do away with $50 and $100 bills, claiming that larger currency denominations make it easier for criminals and terrorists to do business. But as with all “for security” arguments, there’s an entirely different hidden motive at play.
Larry Summers, an ex-treasury secretary who served as an economic advisor to the Obama administration, argues in a recent Washington Post blog that large bills such as the U.S.’s $100 and the European Union’s 500-euro bills aid in corruption and criminal activity throughout the world.
His rather simplistic basis for the argument: Large sums of money consisting of big bills weigh less than if they were made up of smaller currency denominations.
To make it harder for criminals to move money unnoticed, Summers is calling for “a global agreement to stop issuing notes worth more than say $50 or $100.”
From his post:
Such an agreement would be as significant as anything else the G7 or G20 has done in years. China, which is hosting the next G-20 in September, has made attacking corruption a central part of its economic and political strategy. More generally, at a time when such a demonstration is very much needed, a global agreement to stop issuing high denomination notes would also show that the global financial groupings can stand up against “big money” and for the interests of ordinary citizens.
Of course, the change would also make it far more difficult for ordinary citizens who don’t have full faith in banks to keep cash on hand for emergencies.
As financial turmoil throughout the world facilitated by reckless central banking policies is driving trust in financial institutions to new lows, Summers’ idea to make cash dealings more difficult is certainly not unique.
In fact, Summers got his idea about the danger of large currency from Harvard Business School fellow Peter Sands who, in a recent paper, said large-denomination bills are the “preferred payment mechanism of those pursuing illicit activities, given the anonymity and lack of transaction record they offer, and the relative ease with which they can be transported and moved.”
Again, large bills are also the preferred denominations for anyone locking cash away in a home safe in the event that the banking system collapses. In other words, the two financial insiders are essentially suggesting that lacking faith in the banking system is an illicit activity.
There’s a reason. You see, the prospect of negative interest rates poses a problem for central bankers who lack the ability to apply those negative rates to physically held assets with the push of a button in the same way they can manipulate currency in consumer accounts.
In a period of deflation, when people hoard money rather than spending and investing, physical cash becomes king and its spending power increases as bank deposits and share prices lose value. That’s why central bankers in Europe are currently pondering ways to automatically shrink the value of on-hand cash. So far they’ve considered things like randomly invalidating notes in circulation using serial numbers or introducing new exchange rates so that the cash devalues automatically when it reenters the banking complex.
In the U.S., major government-propped financial institutions are also doing their best to make cash less appealing to everyday consumers. As Bob Livingston pointed out last week: “JP Morgan Chase recently implemented new controls on cash. Want to make a cash deposit or pay a loan or credit card with cash? You must show ID. And now Citibank is preparing new policies for cash deposits. Cash deposits to an account will require the depositor to state the purpose of the deposit, provide a Social Security number, provide identification and provide a place of employment and job type.”
For banksters, the upside of making cash harder to use and hold is that it creates an insurance policy that no matter how badly central planners bungle the economy, they never face ruinous consequences like bank runs. It also makes it easier to skim consumer cash with every single transaction. For government, less cash passed from hand to hand also means far fewer missed opportunities to tax citizens.
But for you and me, the war on cash is a big problem. Imagine no longer being able to make a big purchase at a local trade-day, pay the neighbor kid to cut your lawn or buy ammo at a gun show without getting ensnared in some Operation Chokepoint-type scheme. Worse, think of the implications for vital local commerce when the central banks finally manage to totally destroy the global economy.
It’s all by design. They know the collapse is coming… anyone who understands the folly of even discussing negative interest rates does. And the global financial elite are doing everything in their power to make sure that average folks must rely on them for financial survival even after their uselessness is on full display.
In other words, the war on cash is about criminals—it’s just that everyone’s talking about the wrong ones.
The European Central Bank is already considering scrapping its 500-euro note, which accounts for some 30 percent of all cash in the euro economy.
If the U.S. follows suit as negative interest rate madness takes hold, similar action regarding the $100 would wipe out some 78 percent of U.S. paper circulation by value, according to Zero Hedge.
Editor’s Note: Have you ever considered CASHING OUT? You better think about it now, before it’s too late. The crumbling global economy has set gold, silver and other alternative investment holdings on an upward trajectory. While your cash still has some value (and you still have some on hand), now is the time to learn how to leverage these investments to protect your family’s well-being and financial future. Click here to learn more about the best contrarian investment products and strategies known to date.