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Saturday, April 25, 2015

Largest Bank In America Joins War On Cash

The war on cash is escalating. Just a week ago, the infamous Willem Buiter, along with Ken Rogoff, voiced their support for a restriction (or ban altogether) on the use of cash (something that was already been implemented in Louisiana in 2011 for used goods). Today, as Mises' Jo Salerno reports, the war has acquired a powerful new ally in Chase, the largest bank in the U.S., which has enacted a policyrestricting the use of cash in selected markets; bans cash payments for credit cards, mortgages, and auto loans; and disallows the storage of "any cash or coins" in safe deposit boxes.

Buiter defended his "controversial" call for a ban on cash, as Bloomberg reports:

“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. Buiter’s note suggests three ways to address this problem:

Abolish currency.
Tax currency.
Remove the fixed exchange rate between currency and central bank reserves/deposits.

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4 comments:

Anonymous said...

The elitists want total control over us and this is the way they will do it.

Anonymous said...

How the hell do you pay your credit card bill with corn?

ginn said...

This is probably part of the Trans-Pacific Partnership deal our 'working for the people and not BIG BUSINESS' Republican controlled Congress is just itching to get passed.
Parts of the 'secret negotiations' have leaked and one of the chapters deals with removing a participating nation's right to regulate banking.
Mind you that's just one of the chapters.., do a little searching to see all of the other 'goodies' these red eyed with greed mega-multinational corporations have in mind for you.
Current TPP negotiation member states are the United States, Japan, Mexico, Canada, Australia, Malaysia, Chile, Singapore, Peru, Vietnam, New Zealand and Brunei.

Anonymous said...

Obama is the one pushing for this.