Guest Post by Jim Kunstler
The cynicism among the informed classes has never been so deep. Even the pompom boys in the cheerleading clubs like CNBC and The Wall Street Journal express wonderment at the levitation of stock indexes and bond values. They chatter about a “correction” of 20 percent being a healthful tonic that would clear away some dross and quickly usher in a new episode of “growth” — or growthiness, which, like truthiness, became an acceptable approximation of the real thing. The truth, as opposed to truthiness, is they no longer believe their own bullshit about growthiness.
The suppression of interest rates and pervasive accounting fraud has thundered through the financial system, and the deformities caused by it have emerged in currency war, currency instability, trade collapse, and political crisis. Years of central bank intervention have stolen the capital of the future to construct a Potemkin economy meant to conceal the sickening gyre of diminishing returns strangling business as usual.
Until it collapses by a great deal more than the wished-for mere 20 percent, more perversities will be piled onto the already existing burden. Is it not a wonder that professionalized interest groups like AARP have not screamed bloody murder over the suppression of interest rates which deprives its members of bank account and bond interest on savings? Instead AARP, like virtually every enterprise in America, has turned to racketeering. Don’t worry, they’ll be gone from the scene soon enough.
The next shoe to drop will be various forms of bail-ins and attempts to prevent bank account and money market holders from getting access to their cash. A withdrawal above $2,000 already can trigger a report to the IRS. The next step will be to put a simple ceiling on withdrawals. Will that trigger public ire? Who knows? Nothing yet has in the USA. The meme currently circulating is the fear that government would like to abolish cash altogether and put in a regime of all-electronic money. Being allergic to conspiracy ideas, I’m skeptical about this idea, but I really can’t dismiss it.
A cashless society would conceptually allow government much more leak-proof control of all citizen money transactions. Mainly it could funnel tax revenue into the treasury much more efficiently. It raises some obvious practical concerns, such as: would such a program lead to an enhanced colossal skim of credit card company off-creaming? And what about the percentage of poorer Americans who don’t have credit cards or bank accounts now, either because they don’t understand how it all works, or they’re forced to function in the “gray” economy for one reason or another (e.g. a drug felony rap). And what kind of as-yet-unknown perverse work-arounds would this new system provoke?
I put the question to a table of college-educated people last night and their response was surprising: utter complacency. They’re already used to paying for most things with plastic, they said, and their employer already withholds a big part of their regular paycheck for taxes, so what does it matter? They couldn’t grok the possibility that a cashless money system might easily deprive them of access to whatever reserves they have. Or perhaps, more specifically, the couldn’t imagine an economic or political emergency that might provoke such a situation.
They might find out sooner than they realize. As I suggest in the lede, apprehension is growing that some kind of “corrective” event is at hand on the financial scene. Even the supposedly salubrious 20 percent S & P drop could set off a chorus of margin calls that would make the trumpets of Jericho sound like a kazoo concert. What will Americans do if they can’t get their money out of the banks? The last time this happened, 1933, we were a hard-up but polite and high-regimented society, and the automatic rifle was a novelty restricted to relatively tiny army and Al Capone’s crew. Behind the financial jitters of the informed minority is the greater fear of social unrest.
Note: JHK’s 2014 Garden Report is finally up
The new World Made By Hand novel
!! Is now available !!
“Kunstler skewers everything from kitsch to greed, prejudice, bloodshed, and brainwashing in this wily, funny, rip-roaring, and profoundly provocative page- turner, leaving no doubt that the prescriptive yet devilishly satiric A World Made by Hand series will continue.” — Booklist
My local indie booksellers… Battenkill Books (Autographed by the Author) … or Northshire Books…
or Amazon…
About five years ago the daughter (16 at the time) did some extended pet sitting. She got a $500 check.
Took her to the bank (the very bank – it was a local bank) that the check was drawn on. She had a valid DL.
They looked at us, like we were from Mars. We what? We wanted cash?
After several ‘managers’ (I use the word loosely) we got the money – but had to pay a $5 fee cause we didn’t have an account there.
I explained to my daughter, that it’s nothing to get upset about. But rather, this is how our government is working behind our backs, along with the banks and business to control us. I used the experience as a good history lesson. She actually started to read my old copy of the Federalist Papers.
Is it not a wonder that professionalized interest groups like AARP have not screamed bloody murder over the suppression of interest rates which deprives its members of bank account and bond interest on savings?
I have wondered about that …….
Eliminating cash makes perfect sense to a totalitarian wannabe government. However, it would usher in a black market, which might be a good thing. For example, how would you buy a used lawnmower from your neighbor without cash? Or how would anyone sell anything unless they were officially “in business” and subject to taxes. That’s exactly why we should expect the government to force us into becoming a cashless society. A black market would then become a necessity. However, the reaction of the state would be similar to how they reacted to the guy selling “loosy” cigarettes in NYC.
Olga, the AARP is too busy doing psych programming for a coming martial law / disease outbreak scenario. Caring about their nominal clients is like #836 on their to-do list.
This disease afflicts nearly all advocacy groups with a permanent DC presence. The NRA is just as bad. Perhaps we could call them the NRAINO. Rhymes with Drano.
Y’all don’t understand the “eliminate cash” meme.
In fact, I have yet to see anyone “GET” this.
I’ll stick to the USA, but this applies everywhere.
If you deposit your money in the bank, it becomes the bank’s liability. If the bank fails, (absent the FDIC, which I’ll admit is grossly underfunded and actually weakens the banking system), its liability to you evaporates.
The Fed’s role in this? NOTHING.
Oh, but if instead you turn your money into BANKNOTES? Well, they’re no longer the liability of your bank.
Whose liability are banknotes? READ THE DAMN BILL!
“Federal Reserve Note.” They are an IOU of the Federal Reserve Bank. They are the Fed’s liability.
What happens if (and when) the Mass Mind stops valuing US Treasury Bonds anywhere near face value? T-bonds are the bulk of the Fed’s own capital. If they decrease in value (rising in yield), then the Fed is worth LESS….but if people are also turning more BANK liabilities into FED liabilities, well…..that’s NOT OKAY.
This is in my view the key element of the “War on Cash.” The Fed doesn’t want to see its liabilities skyrocket while its “assets” are already worth as much as they can possibly be, and thus if they encounter any change at all, it will be DOWN.
Taxing us better and controlling us better are just side-effects, albeit they are features, not defects (from the view of the statists who rule us and the statists who otherwise surround us.)
Kunstler at least understands that people want cash…or the attributes that cash offers, and if the assholes who rule us attempt to eliminate cash, workarounds will proliferate.
Everything they (the rulers) do moves us ever closer to the greatest deflationary financial collapse in recorded history.
Is it not a wonder that professionalized interest groups like AARP have not screamed bloody murder over the suppression of interest rates which deprives its members of bank account and bond interest on savings?
I have wondered about that …….
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AARP is an insurance company that masquerades as a lobbying group as a marketing ploy.
As such, it is one of Uncle Sam’s innumerable concubines, taking it however and wherever Uncle wants to give it.