Larry Summers Launches The War On Paper Money: “It’s Time To Kill The $100 Bill”

Could these fucking elitist douchebags be any more blatant in their attempt to fuck us over? Eliminate cash, introduce negative interest rates, tax every electronic transaction, outlaw gold and force us to spend our electronic currency before it evaporates. There will be blood.

 

Tyler Durden's picture

Yesterday we reported that the ECB has begun contemplating the death of the €500 EURO note, a fate which is now virtually assured for the one banknote which not only makes up 30% of the total European paper currency in circulation by value, but provides the best, most cost-efficient alternative (in terms of sheer bulk and storage costs) to Europe’s tax on money known as NIRP.

That also explains why Mario Draghi is so intent on eradicating it first, then the €200 bill, then the €100 bill, and so on.

We also noted that according to a Bank of America analysis, the scrapping of the largest denominated European note “would be negative for the currency”, to which we said that BofA is right, unless of course, in this global race to the bottom, first the SNB “scraps” the CHF1000 bill, and then the Federal Reserve follows suit and listens to Harvard “scholar” and former Standard Chartered CEO Peter Sands who just last week said the US should ban the $100 note as it would “deter tax evasion, financial crime, terrorism and corruption.”

Well, not even 24 hours later, and another Harvard “scholar” and Fed chairman wannabe, Larry Summers, has just released an oped in the left-leaning Amazon Washington Post, titled “It’s time to kill the $100 bill” in which he makes it clear that the pursuit of paper money is only just starting. Not surprisingly, just like in Europe, the argument is that killing the Benjamins would somehow eradicate crime, saying that “a moratorium on printing new high denomination notes would make the world a better place.

Yes, for central bankers, as all this modest proposal will do is make it that much easier to unleash NIRP, because recall that of the $1.4 trillion in total U.S. currency in circulation, $1.1 trillion is in the form of $100 bills. Eliminate those, and suddenly there is nowhere to hide from those trillions in negative interest rate “yielding” bank deposits.

Chart of value of currency in circulation, excluding denominations larger than the $100 note. Details are in the Data table above.

So with one regulation, the Fed – if it listens to this Harvard charlatan, and it surely will as more and more “academics” get on board with the idea to scrap paper money – could eliminate the value of 78% of all currency in circulation, which in effect would achieve practically the entire goal of destroying the one paper alternative to digital NIRP rates, in the form of paper currency.

That said, it would still leave gold as an alternative to collapsing monetary system, but by then there will surely be a redux of Executive Order 6102 banning the possession of physical gold and demanding its return to the US government.

Here is Summers’ first shot across the bow in the upcoming war against U.S. paper currency, first posted in the WaPo:

It’s time to kill the $100 bill

Harvard’s Mossavar Rahmani Center for Business and Government, which I am privileged to direct, has just issued an important paper by senior fellow Peter Sands and a group of student collaborators. The paper makes a compelling case for stopping the issuance of high denomination notes like the 500 euro note and $100 bill or even withdrawing them from circulation.

I remember that when the euro was being designed in the late 1990s, I argued with my European G7 colleagues that skirmishing over seigniorage by issuing a 500 euro note was highly irresponsible and mostly would be a boon to corruption and crime. Since the crime and corruption in significant part would happen outside European borders, I suggested that, to paraphrase John Connally, it was their currency, but would be everyone’s problem. And I made clear that in the context of an international agreement, the U.S. would consider policy regarding the $100 bill.  But because the Germans were committed to having a high denomination note, the issue was never seriously debated in international forums.

The fact that — as Sands points out — in certain circles the 500 euro note is known as the “Bin Laden” confirms the arguments against it. Sands’ extensive analysis is totally convincing on the linkage between high denomination notes and crime. He is surely right that 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. And he is equally correct in arguing that technology is obviating whatever need there may ever have been for high denomination notes in legal commerce.

What should happen next?  I’d guess the idea of removing existing notes is a step too far. But a moratorium on printing new high denomination notes would make the world a better place.  In terms of unilateral steps, the most important actor by far is the European Union. The €500 is almost six times as valuable as the $100. Some actors in Europe, notably the European Commission, have shown sympathy for the idea and European Central Bank chief Mario Draghi has shown interest as well.  If Europe moved, pressure could likely be brought on others, notably Switzerland.

I confess to not being surprised that resistance within the ECB is coming out of Luxembourg, with its long and unsavory tradition of giving comfort to tax evaders, money launderers, and other proponents of bank secrecy and where 20 times as much cash is printed, relative to gross domestic, compared to other European countries.

These are difficult times in Europe with the refugee crisis, economic weakness, security issues and the rise of populist movements.  There are real limits on what it can do to address global problems. But here is a step that will represent a global contribution with only the tiniest impact on legitimate commerce or on government budgets. It may not be a free lunch, but it is a very cheap lunch.

Even better than unilateral measures in Europe would be 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. China, which is hosting the next G-20 in September, has made attacking corruption a central part of its economic and political strategy. More generally, at a time when such a demonstration is very much needed, a global agreement to stop issuing high denomination notes would also show that the global financial groupings can stand up against “big money” and for the interests of ordinary citizens.

Lawrence H. Summers, the Charles W. Eliot university professor at Harvard, is a former treasury secretary and director of the National Economic Council in the White House. He is writing occasional posts, to be featured on Wonkblog, about issues of national and international economics and policymaking.

 

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DDearborn
DDearborn

Hmmm

Well that is based on sound logic and rational thinking: After all, the dollar has so much more buying power than in the days it was first introduced. Hell, we should think about going back to an all coin currency!

TC
TC

What is staggering is the level of greed and lust for total power these oligarchs have. If they would be content siphoning off 5, 10 or even 20% of the economy, the vast majority of the ignorant populace wouldn’t know or care. But no, these stone cold motherfuckers like Summers want it all. This unquenchable thirst will be their downfall, at least one can hope.

Anonymous
Anonymous

Wonder if the Constitution says anything about our money?

Not that anyone pays attention to that old thing anyway.

Anonymous
Anonymous

Article I – The Legislative Branch
Section 10

Clause 1:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Both make use of the word “coin”, Section 10 Clause 1 making specific reference to it in the form of gold and silver which would preclude bank notes such as Federal Reserve notes.

Nowhere in the Constitution or the writing of those who wrote it do we find reference to bank notes (i.e. Federal Reserve notes, the Fed is a bank) being as money in place of coin.

Axel
Axel

I suppose the strategy then is to buy stuff as soon as you get paid, that you can physically hold onto that could retain some value, if not immediate usefulness, and expect that no one will ever save money again. No retirement nest eggs. In fact retirement is a quaint concept, only meaningful to a relative few human generations in all of history. It will be meaningless once again. Sigh

Kill Bill
Kill Bill

Really? High denomination notes exacerbates terrorism? A saudi princess ( How I detest such titles ) wrote our former “Freedom Fighter” a check worth well more than 500 euros.

So will these “hAckademics” move to ban high value treasuries??

SpecOpsAlpha
SpecOpsAlpha

Making an armed populace angry by poking more and more sticks at it = NOT a good idea.

Fiatman60
Fiatman60

Yessiree!! It will be like Weimar Germany all over again….. need a wheel barrow full of $1 bills just to pay the grocer!!

Axel
Axel

No wheelbarrows because there will be no bills. I’m not particularly religious, but you will, in essence, have to bear the mark of the beast in order to engage in commerce.

Rise Up

“left-leaning Amazon Washington Post”

Indeed, Jeff Bezos now owns the Post, but it was always left-leaning. Bezos also bought a small local rag here in Northern Virginia called “The Fairfax County Times”. As soon as he took it over, I began seeing anti-gun articles and a general liberal theme to “news” pieces. Photos that accompany articles are usually of non-whites if people are in the pictures.

I hope he loses more money with these papers than he does with Amazon.

Anonymous
Anonymous

Since Larry is now Joe Blow Why not just secede?Gold!

diogenes
diogenes

My wife was at a meeting and a women who works at Wright Patterson Air Force Base said the plan is to chip everybody. My wife said she was deadly serious.

Monger
Monger

Will have to start dealing in gold, silver and lead only very soon I think.

David
David

It is not about stopping crime, just the small criminals. That way the big criminals who run the government and their cronies don’t have any competition.

Rise Up

Seems like things we only thought about in theory (monetary collapse, cashless society) are now at hand. How soon will panic follow?–the kind of panic that leads to runs on bank deposits and food.

Anonymous
Anonymous

Fiatman60,

All the more reason to move to a cashless all electronic and fully surveiled system.

General
General

Can we hang the bankers yet?

kokoda
kokoda

“…and for the interests of ordinary citizens.”

Believe that and I have a bridge to sell to you.

AC
AC

They want their pound of flesh from the ‘informal economy.’ What they don’t seem to be capable of grasping is that their idiotic plan, if successful in forcing the black market into the banking system, would destroy the black market – just as it has destroyed the ‘legitimate’ market. It is a path to absolute destruction.

The Soviet Union endured as long as it did, only because their informal economy – the black market – was capable of providing the essential goods and services to people, while the ‘legitimate’ government-managed market could not do so.

The same is increasingly true in the west.

Destroy the black market – which is in fact the real economy at this point – and you destroy the society. Maybe this is the actual goal, but I am more inclined to see incomprehensible incompetence as the driving force, rather than malign cunning.

The reality is that the informal economy will persist, even without cash. People will use silver, gold, soft drinks, laundry detergent, drugs, or anything suitable, if cash is abolished. The end result will be a further marginalization of the banking system, rather than the destruction of the black market.

Joey
Joey

From Antony Sutton’s book THE WAR ON GOLD

printing on the certificates and paper notes

1928 gold certificate
“This certifies that there have been deposited in the treasury of the United Sates of America, ten dollars in gold coin, Payable to the bearer on demand.”
1928 F.R. note
“The United States of America will pay to the bearer on demand ten dollars, Redeemable in gold on demand at the United States Treasury.”
1934 F.R. note
“The United States of America will pay to the bearer on demand ten dollars, redeemable in lawful money at the United States Treasury”
repeated on 1950 FR notes green paper for green paper
1963 F.R. note
“This note is legal tender for all debts public or private.”
From real official gold to real official paper in 35 years , or less
The gov is your friend in need

VegasBob
VegasBob

Somebody ought to stick a gun up Summers’ fat ass and blow the crap out between his eyes.

Suzanna
Suzanna

Lawrence H. Summers is the Charles W. Eliot University Professor and President Emeritus at Harvard University. He served as the 71st Secretary of the Treasury for President Clinton, the Director of the National Economic Council for President Obama, and as the Chief Economist of the World Bank. As one of President Obama’s chief economic advisors, Summers helped shape the U.S. response to the 2008 financial crisis, the failure of the automobile industry, and to the pressures on the European monetary system. Upon Summers’ departure from the White House, President Obama said, “I will always be grateful that at a time of great peril for our country, a man of Larry’s brilliance, experience and judgment was willing to answer the call and lead our economic team.”

Summers is a distinguished senior fellow at the Center for American Progress and recently co-chaired the Commission on Inclusive Prosperity. He also recently chaired the Commission on Global Health, lauded by the UN Secretary General. Summers has been recognized as one of the world’s most influential thinkers by Time, Foreign Policy, Prospect and The Economist magazines among others.

https://www.yivo.org/Lawrence-Summers-on-Academic-Freedom-and-AntiSemitism

Suzanna
Suzanna

Doesn’t the secretary of the treasury manage that “secret fund?”

(ESF/slush fund/black ops/special projects/colludes with the fed bank.)

I say this guy mind his own business. Maybe he is making big $$$$

as a consultant/announcing which dollar denominations should be

eliminated….stage left.

Erumpo
Erumpo

Interesting that their desire for the labors of others is manifested so ?

The Unproductive class/tribe show their hand verily !!!

Brian
Brian

Admin: “Article I, Section 8 of the Constitution grants Congress the power “To coin Money,” but nowhere is the word “money” defined in the Constitution.

The Coinage Act of 1792 provided for the coining of copper, in addition to gold and silver, and made those coins lawful tender, showing that something other than gold and silver were coined as money by Congress during the era of the Founding Fathers.”

The coin of the realm minted under Art 1 sect 8 clause 5 IS money. It just is. Currency however comes from a different part of the constitution. Art 1 sec 8 clause 2 “To borrow money on the credit of the United States;” Currency MUST be linked and redeemable in the coin of the realm within some certain period of time. The legal tender cases go into this somewhat.

Notice on this page the key terms. https://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx

Both United States Notes and Federal Reserve Notes are parts of our national currency and both are legal tender. They circulate —->as moneyas money<—- of any notes not issued under its own authority. Without this power, indeed, its attempts to secure a sound and uniform currency for the country must be futile."

AS MONEY……aka the ghost of money….

Understand this concept and you may see the fatal flaw in our monetary system.

Brian
Brian

Admin: “Article I, Section 8 of the Constitution grants Congress the power “To coin Money,” but nowhere is the word “money” defined in the Constitution.

The Coinage Act of 1792 provided for the coining of copper, in addition to gold and silver, and made those coins lawful tender, showing that something other than gold and silver were coined as money by Congress during the era of the Founding Fathers.”

The coin of the realm minted under Art 1 sect 8 clause 5 IS money. It just is. Currency however comes from a different part of the constitution. Art 1 sec 8 clause 2 “To borrow money on the credit of the United States;” Currency MUST be linked and redeemable in the coin of the realm within some certain period of time. The legal tender cases go into this somewhat.

Notice on this page the key terms. https://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx

Both United States Notes and Federal Reserve Notes are parts of our national currency and both are legal tender. They circulate —->as moneyas money<—- of any notes not issued under its own authority. Without this power, indeed, its attempts to secure a sound and uniform currency for the country must be futile."

AS MONEY……aka the ghost of money….

Understand this concept and you may see the fatal flaw in our monetary system.

Take two…..didn't post correctly before.

Billy
Billy

Will have to start dealing in gold, silver and lead only very soon I think. – Monger

rhs jr
rhs jr

The crap is really coming so fast now you can’t dodge one flying NWO turd without being hit by another.

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