The Cashless Society Is Going to Backfire for the Establishment
Joshua Krause
The Daily Sheeple
April 21st, 2015
There is nothing the banks would love more than to ban paper currency, though not for the same reason most gold bugs might like to do the same. If there were no cash, then the banks would have absolute control over our savings, and we would all have to keep our money “in the system.” Governments would probably enjoy this as well. It would make it so much easier for them to track our purchases and profits, and tax them accordingly.
The desires of the banking cartel became perfectly clear two weeks ago when Willem Buiter, the chief economist for Citigroup, advocated banning cash to supposedly save the global economy.
The world’s central banks have a problem.
When economic conditions worsen, they react by reducing interest rates in order to stimulate the economy. But, as has happened across the world in recent years, there comes a point where those central banks run out of room to cut — they can bring interest rates to zero, but reducing them further below that is fraught with problems, the biggest of which is cash in the economy.
In a new piece, Citi’s Willem Buiter looks at this problem, which is known as the effective lower bound (ELB) on nominal interest rates.
Fundamentally, the ELB problem comes down to cash. According to Buiter, the ELB only exists at all due to the existence of cash, which is a bearer instrument that pays zero nominal rates. Why have your money on deposit at a negative rate that reduces your wealth when you can have it in cash and suffer no reduction?
Cash therefore gives people an easy and effective way of avoiding negative nominal rates.
So basically what he’s suggesting is that by eliminating cash, it will make it easier for the banks to take your money. Right now it’s difficult for them to enforce a negative interest rate (which would ostensibly fuel the economy by making people spend money instead of saving it) because people will just take the cash out of their accounts. You can’t place a negative interest rate on money that’s hiding under your mattress.
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