Why the War on Cash is really a War on Freedom…” It is about one thing and only one thing – total control. Fight for your freedom before it is all gone.”
By: Larry LaBorde
GoldSeek.com
Sunday, 17 May 2015
Negative interest rates will only work if the people cannot remove their funds in the form of cash. Once cash is removed from the system then “money” is captured within the banking system and they can charge whatever negative interest rates, service charges and fees that they desire. The only thing that will hold them back at all is competition within the banking community and that is disappearing fast with all the mergers and mega-banks.
Negative interest rates discourages saving and encourages spending and immediate consumption. The very basis of capitalism is to acquire capital through savings. The ditch digger who uses a shovel is trapped with a given production rate. Regardless how early he starts and how late he works he can only dig so far. But if he saves his money or capital and one day buys a backhoe he is all of a sudden 100 times more productive and can earn much more with his labor.
Somehow we have decided that we must borrow and consume to make the economy work properly. Consumption on the means of production (such as the backhoe described above) makes us more productive and therefore better off, however, consumption on items that we really do not need (such as the latest new car when our present one is only a year old) nor can afford (purchased on credit) only makes us poorer since we are only left with debt and a consumed object.
Inflation causes a flight from cash. Deflation (or a liquidity crisis) causes a rush into cash and slows the velocity of money. It doesn’t matter how much cash the Fed drops from helicopters or how many versions of QE they come up with if the cash is saved or debt is paid down the velocity of money will not increase. But what if they charge us to hold cash? What if they charge negative interest rates on savings accounts? What if they charged -20%? People would just remove their cash from the banks. But what if there were no cash? Now all saved wealth would be “taxed” and saving would be discouraged. Even worse, what if VISA, MC, AMEX, Discover, Union, etc, all decided to raise their rates even more? What if debit cards charged 5% to process charges. The major credit card companies already charge 1.5 to 4% to process charges even if you pay on time. Of course the merchant pays the fees but those fees are added to what you have to pay. Many merchants will give a 2% discount if you pay cash to avoid the credit card charges they must presently pay. One of the reasons that fees are kept low is the unstated threat to just use cash if they become too expensive (they already are pretty pricy and siphon off great wealth). But what if there is no cash? What then?
The Rest…HERE
