The War on Cash is About to Go into Hyperdrive Pt 2

Friday, February 12, 2016
By Paul Martin

by Phoenix Capital Research

Yesterday we outlined that Central Banks’ War on Cash is about to go into Hyperdrive.

Today we’re discussing just the policies Central Banks are already working to implement to eviscerate savings.

Globally, over 50% of Government bonds currently yield 1% or less. These are bonds that are negative in real terms meaning they are trailing well below the rate of inflation.

Even more astounding is the fact that over $7 trillion in debt currently have negative yields in nominal terms, meaning the bond literally has a negative yield when it trades.

This means that when an investor buys these bonds, he or she pays the Government for the right to own. There is NO rate of return; by buying these bonds you are literally incinerating your capital. Large bond funds that are required to own certain types of bonds have no choice but to lose money.

However, this is just the start.

Back in 1999, the Fed published a paper suggesting the implementation of a “carry tax” or taxing actual physical cash using an expiration date if depositors aren’t willing to spend the money.

The paper, written 16 years ago, suggested that if the Fed were to find that zero interest rates didn’t induce economic growth, it could try one of three things:

1) Buy assets (QE)

2) Money transfers (literally HAND OUT money through various vehicles)

3) A carry tax (meaning tax the value of actual physical cash that is taken out of the system)

The Rest…HERE

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