Control, Tax, Confiscate
BALTIMORE – Harvard economist Larry Summers is a reliable source of claptrap. And a frequent spokesman for the Deep State.
To bring new readers up to speed, voters don’t get a say in who runs the country. Instead, a “shadow government” of elites, cronies, lobbyists, bureaucrats, politicians, and zombies – aka the Deep State – is permanently in power.
Larry Summers – the man with a plan for everyone. An economist whose economic theorizing is truly abominable crap (more on this in an upcoming post), a reliable, crypto-fascist, bought and paid for evil intellectual in the service of the Deep State. His “policy proposals” all have one thing in common: they are apodictically certain to restrict economic progress and individual liberty.
Photo credit: Fabrice Coffrini / AFP / Getty Images
Put simply, it doesn’t matter which party is in power; the Deep State rules. Want to know what the Deep State is up to now? Read Larry Summers.
“It’s time to kill the $100 bill,” he wrote in the Washington Post (another reliable source of claptrap).
The Deep State wants you to use money it can easily control, tax, and confiscate. And paper currency is getting in its way.
France has already banned residents from making cash transactions of €1,000 ($1,114) or more. Norway and Sweden’s biggest banks urge the outright abolition of cash. And there are plans at the highest levels of government in Israel, India, and China to remove cash from circulation.
Deutsche Bank CEO John Cryan predicts that cash “probably won’t exist” 10 years from now. And here is Mr. Summers in the Washington Post:
“Illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500 euro note rather than more than 50 pounds, as would be the case if the $20 bill was the high denomination note.”
He proposes “a global agreement to stop issuing notes worth more than say $50 or $100. Such an agreement would be as significant as anything else the G7 or G20 has done in years.”
What makes Mr. Summers so confident that a ban on Ben Franklins would be a good thing? It turns out that a research paper – presented by Peter Sands, the former CEO of British bank Standard Chartered, and published for the Harvard Kennedy School of Government – says so.
“High denomination notes,” said the report, “play little role in the functioning of the legitimate economy, yet a crucial role in the underground economy.”
Mr. Sands should know about hiding money. While he was CEO, New York’s top financial regulator threatened to strip Standard Chartered of its banking license. It claimed the bank “schemed” with the Iranian government to hide at least 60,000 illegal transactions – involving at least $250 billion.
If the Benjamin is killed, it will “deter illicit activities” they say, apparently taking us all for complete idiots. Very organized criminals all over the world could be heard rolling on the floor laughing their heads off at this pronouncement. Here’s another idea: if we lock all the peasants up in a small room without doors and windows, they will no longer have to suffer the indignities and dangers inflicted by bad weather! Never again will they be made wet and uncomfortable by rain, and the threat of skin cancer due to excessive exposure to sunlight (as recently highlighted by Hugh Jackman’s withering nose) will soon be but a distant memory. Isn’t such a comprehensive level of security well worth whatever small trade-offs it involves?
Here at the Diary, we don’t pretend to know how to improve the world. We just know what we like. And we don’t like other people telling us what to do. Last year, we traveled all around the world. We went where we wanted to go. We did more or less what we wanted to do. Rarely did we feel that someone was bossing us around. But back in the USA…
“Take your belt off. Take your shoes off. Anything in your pockets? Take it out…”
“Turn on lights. Fasten seat belts. Turn on windshield wipers.”
This morning, walking through the park, we found this sign:
Curb Your Pets
Not just a courtesy to your neighbors
IT’S THE LAW
The unspoken threat behind the “law”, made explicit.
Image credit: Francesco Francavilla
People who insist you follow their ideas are always the same people whose ideas are idiotic.
“Always do the opposite of what they tell you do,” said a friend in France whose father was mayor of a small town during World War II.
“There had been ‘an incident.’” he explained. “I think the Resistance had killed a German soldier in the area. It was that time, late in the war, when the Nazis were retaliating against civilians.
“So, they told my father to get everyone in town to assemble in the town square. Instead, my father told everyone to run for the woods. They all did. They were lucky. They survived the war.”
And now, Mr. Summers wants us to bring our cash to the town square. Instead of $100 bills, he wants to force us to use electronic notations faithfully recorded in a federally regulated bank. Have you ever seen one of these “electronic dollars,” dear reader?
We have not. We don’t know what they look like. And we’re deeply suspicious of the whole thing. The European Central Bank and the Bank of Japan – along with central banks in Denmark, Sweden, and Switzerland have already imposed a negative interest rate “tax” on the accounts commercial banks hold with them (known as “reserve accounts”).
Negative yielding government bonds in Europe as of December 2015 – a monument to the decline of Western civilization
These central banks are hoping banks will pass on this new tax to their customers. This has already happened in Switzerland…
As colleague Chris Lowe told Bonner & Partners Family Office members at our recent annual meeting in Rancho Santana in Nicaragua, Alternative Bank Schweiz (ABS) will begin charging a negative interest rate on customers’ deposits this year.
ABS will levy an annual penalty of 0.125% on deposits of less than 100,000 Swiss francs ($101,173) and an annual penalty of 0.75% on deposits of more than 100,000 Swiss francs. Essentially, ABS is charging its customers to keep their money on deposit.
If you put $1 million in the bank, at 0.75% negative interest, you come back a year later, and you have $992,500 left. The bank has confiscated the other $7,500. At a negative rate of, say, 3%… you pay $30,000 a year just to keep your money on deposit. It sounds like a scam…
Governments abolish cash. You have no choice but to leave your savings on deposit. And you’re forced to pay banks for storing your money.
But wait. Banks are not really storing “your” money at all. A bank deposit is an IOU from your bank. There is no vault cash backing it up… just 1s and 0s on a database somewhere. If the bank decides not to give you “your” money, you’re out of luck.
It’s as though someone offers to store your cherry pie. Then he goes and eats the pie, promising to give you one just like it when you want it. He then has the cheek to charge you every month for “storing” the pie. And when you want it, he won’t be able to give it to you.
The precedent – no-one can say they weren’t warned.
Cartoon by Harm Bengen
“I don’t have any baking powder. You’ll have to come back tomorrow,” he says. Or, “I’m sorry. But the federal government has declared cherries an endangered species. I’m not allowed to give you your pie back. It was very tasty, though.”
How much could this electronic pie be worth anyway… if you have to pay someone to eat it for you? Imagine the automobile you have to pay someone to drive away. Or the rental unit you have to pay someone to live in.
When you have to pay someone to take it off your hands, you can imagine how much your money is really worth. And when your bank – or the Deep State – wants to confiscate your money, who will stop it?
At least if you have your money in cold, hard cash, they will have to come and physically get it from you. When it is “in the bank” – existing as nothing but electronic account balances – all they have to do is push a button.
Once it’s all numbers in a computer, they won’t even have to point their guns at you anymore. Then it will be possible to rub out your money savings by simply pushing a button on a computer keyboard. At that juncture you’d better not be too uppity, citizen.
Cartoon by Chappatte
That’s what happened in Cyprus. The banks were going to the wall. So, they confiscated deposits to help make themselves whole again. Who will stop the same thing from happening in America?
The judge the Deep State appointed? The police on the Deep State’s payroll? The politicians the Deep State bought and paid for?
When cash is outlawed… only outlaws will have cash. And we intend to be among them.
Chart by: Deutsche Bank
Chart and image captions by PT
The above article originally appeared at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.