The Coming Cashless Society/Greek Tragedy

Electronic-Euro

Now you are watching newspaper and TV shows all preparing the public for the coming cashless society. This is a marketing campaign and this may be indeed what October 1st, 2015 is all about – 2015.75. I doubt that the USA will be able to move to a cashless society as easily as Europe. The dollar is used around the world and cancelling that outstanding money supply would bring tremendous international unrest. Additionally, the USA is not in crisis financially as is the case in Europe.

Europe, on the other hand, has an entirely different problem. The failure to have consolidated the debts of member states meant the reserves of the banks were constituted of a politically-correct mixture of debt. Instead of fixing the problem, politicians who are lawyers always move one step forward with laws. To them the logical solution is to eliminate cash to protect banks from a panic run that would collapse Europe and take Brussels with it.

This is a deliberate marketing campaign now. I know who these things work and just pay attention. They are selling this idea everywhere and that is the preparation for the inevitable action. With the speed at which they are moving, it certainly appears they are gearing up for October 1st on out model. It is also interesting that some German press misquoted our date as October 17th. I was not sure why they would do that, but perhaps that was intentional as well. This is very curious for when they take that final step, it will most likely be sudden and overnight. This would announce it and give everyone some time period to take your paper currency and deposit it into you bank account.

For European readers, swap to the dollars for hoarding and you can open accounts in the US which for now is a safety valve where gold makes sense for local hoarding but it may have lost its movability.

There are two ways governments have defaulted in the past and so far I have not seen a third option materialize. That is our proposed solution. Staying with history, a nation defaults either entirely on everyone, or they default partially on external debt that is justified by the claims that foreigners have exploited their country.

Galbraith Great Crash

I understand this subject was never taught in school. I believe that was part of our “conditioning” by government to accept them as out savior. My eyes were opened when I stumbled upon a very rare book – Herbert Hoover’s Memoirs. He did not want to appear to have profited from the Great Depression so he demanded that the publisher not make any money. As a result, they published 500 copies. I stumbled upon a copy in a antique book store in London. When I read his chapter on 1931, everything I was taught in school collapsed. It became obvious, if you wanted to know history, you had to go to contemporary sources and become self-taught seeking the truth rather than being fed propaganda. The classic book that defined the Great Depression was Galbraith’s The Great Crash 1929. It became obvious that it was just propaganda with no mention of any government ever defaulting in 1931.

Ukraine is already looking at the debt and arguing for the default on external debt that has exploited their country. This will include Russia, but there will be other caught up as well. The USA will guarantee new debt to keep the borrowing cycle going.

When I was in Poland, the response of the crowd was not to join the Euro for they feared what happened to Greece and Spain would happen to them – smart move. Politicians want to rule the world and assume they can just write a law and make things happen. They are DEAD WRONG, but unfortunately it our dead bodies that result from their stupid actions.

The stupidity of creating the Euro without consolidating the debt when debt is used as money and reserves of banks. The debt of Greece was converted to Euro and then the Euro rose from 80 cents to $1.60 and Greece then had to pay back twice as much. The new government is looking at selling national assets to pay off these debt. They will lose the entire country because politicians cannot grasp what they have done to the country.

So what value the drachma would have if it is reintroduced depends entirely upon how much more they allow the strip-mining of the nation. This is a crazy period where lawyers acting as politicians have ruined out society and out future.

Greece should default on external debt at the very least. What they are doing is trying to honor the debt on the demand of Brussels and this is destroying the future. Eventually, the Greek government will be forced to default on the entire debt and that will be social unrest in Greece and not end nicely. They have to wake up before it is too late.

For the individual, hoard dollars not Euro. I seriously doubt the USA will be able to cancel dollars but the ECB can cancel the Euro overnight.

 

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DC Sunsets

There are two things he’s conflating here.

First is bank withdrawals, second is cash itself. They are two distinct and different things.

I absolutely believe that there is only one way to stave off collapse of the dollar-based economy, and that is to monetize most of the outstanding debt. This would have essentially zero effect on inflation except that it would make permanent the current nominal price regime.

The only way to do this is either print up literally 5-10 modern (behemoth) cruise ships in weight of $100 bills, or (obviously the only possible solution) up the largest denomination of currency to $100,000 or even $1,000,000 bills. I doubt this will happen, but it would work (even as it scared the spit out of people, though.)

The “war on cash” is exactly like throwing gasoline on a fire. If bank withdrawals are limited (which I believe is INEVITABLE), the amount of money circulating in the economy will crash even farther than it has to anyway.

If outstanding cash is forced, during a grace period to re-deposit it, back into banks then people will undoubtedly panic into gold coins, Tide detergent and all manner of other things even as they have no choice but to dump their paper back into the teller window. The effect will be catastrophic as well.

Forcing cash into the bank would take an act of Congress, which takes a lot of time and practically can’t happen until the crisis is fully in play.

Limiting bank withdrawals could occur with a stroke of POTUS’ pen, or an emergency decree from the Fed…or it could happen stealthily when obtaining cash simply became difficult…banks don’t generally keep that much on hand, and have to order banknotes on a weekly or semi-weekly basis to replenish their stock of it.

Mark
Mark

D.C. I think you are referring to the idea of exchanging non interest bearing notes for government bonds.

The government must then also have a law to forbid itself from borrowing again.

Tommy
Tommy

I can handle a typo hear and their, but damn.

Francis Marion
Francis Marion

Is it just me or does this article read like it was filtered through a translator?

The problem I have with a lot of this “US Dollar is gonna crash” stuff is it appears to have been written by those with some pretty strong “anti US” sentiment (not that the US doesn’t deserve some the resentment it often receives on the web) but it is not objective. It fails to take into account the much larger financial and political picture at play. The world is changing – and it seems it is happening quickly at times – but it is not going to end… change is coming (for better or worse) but not “the end”. The US dollar will still be around even if it is dethroned and replaced as a reserve currency. America will then experience what the rest of the world calls “life”. Recent strength in the US $ and weakness elsewhere means that those of us living outside of the USA have experienced rapid inflation (Think 10% to 15% in a few months) in any goods bought and paid for in US currency (most of them). If you think we aren’t tired of living in a yo-yo financial system because of it just ask me. We are. What the dethroning of the US $ means is not global collapse – it means things are going to get a lot more expensive for Americans. For the rest of us – life goes on much the same as it always did. As for the war on cash – time will truly tell how far it will go. I suspect many will find a way to “cope” if gets extreme. Others will suffer. Same story as always…

Francis

DC Sunsets

I agree with Francis; our ancestors surmounted much worse than what I think we face.

I disagree in one sense: The USD will not be replaced by another nation-state’s reserve currency.

What we are witnessing is the beginning of the end of fiat money. Fiat money rested on trust, largely trust that the monetary authorities (and political systems) issuing it would not debase it radically. This was silly at the outset given history and common sense, but cycles are cycles and stupid ideas reoccur precisely because the mass mind will not be denied and it Does Not Learn.

Money is supposed to be both a store of value and a representation of prior, profitably-sold product. It is intended to simply REPLACE the difficulties of barter, a system where in order to be part of a transaction you actually have to have MADE SOMETHING to offer someone else.

Fiat money was the statists’ dream. It is everyone’s nightmare as it explicitly allows counterfeiting by Political Authorities. Of course they abuse it, just like every other power delegated to (fallible) humans.

By the end of this cycle, I suggest that some sort of market basket of Real Things (the stuff of life) will form the basis of money, and the Real Bills doctrine will govern credit creation…until people of the future inevitably forget the lessons we’re all going to learn The Hard Way in coming years.

There will be no reserve currency. Money will simply be a receipt for ownership of a known basket of real things, and those real things should be food and industrial feedstock commodities, plus possibly a basket of productive land. Above all, money will be trivially accountable to anyone wishing to verify its underlying basket of product, rendering inflation (and deflation) impossible.

In this regard I am NOT a gold bug. Silver has a spectrum of important uses but gold is not nearly as useful. Usefulness, and demand no matter what (like a market basket of basic foods or raw food inputs) would be a much better choice for money’s basis. Units of money must be directly convertible to real, useful things for which market demand is permanent (if always in flux), otherwise it does not represent a uniform version of prior product.

Francis Marion
Francis Marion

DC,

Never said the US$ would be replaced by another “nations” currency.

Just that it would no longer be the reserve currency for the planet.

Think IMF and SDR baskets. I’m guessing of course – based on chatter from the banks themselves – but only time will tell how it plays out.

Francis

DC Sunsets

Banknotes remain the only physical debt security dollar which does not need to pass through a market transaction to “exist.”

Today most wealth exists only in abstract form. It must pass through a sale (someone else must wish to buy it at some price) to become a bank balance, and if banks are untrustworthy parking places for wealth (see Cyprus) then it must pass through a transaction at the bank to become banknotes.

Abstract wealth vs physical wealth in dollar form. The former is mostly IOU-dollars. The latter is the dollar (which paradoxically is an IOU-nothing.)

We live in a crazy world. The “war on cash” meme is basically a “we don’t want to give you the wealth you just THINK you own” statement.

DC Sunsets

Francis, by the time this fully plays out, I doubt the banks (or bankers) will have much say.

Already there are better ways to connect lenders (owners of money capital) to borrowers (see Lending Club) so that banks need not create credit for loans.

Banks should be a place to store financial wealth and effect means of payment. They should NOT be in the business of creating credit (and thus no need for central banks at all, if there ever was one) and absolutely no need for the execrable IMF, BIS, etc.

We’re a long way from that, but all of these hyper-institutions depend on vast quantities of trust and trust is the ONE thing I think has peaked in low Earth orbit and due to burn up almost entirely upon re-entry.

Steve Hogan
Steve Hogan

Was Martin sauced when he wrote this? How many typos can one blog have?

As for the message, I don’t know why anyone would have any meaningful amount of cash in the bank. Negative interest rates on deposits? Greece’s impending default? Negative real rates on government bonds? Trillions in unfunded liabilities? A proxy war in Ukraine?

For God’s sake, people. What are you waiting for? Take your cash out of the bank, convert most of it to gold/silver, and hunker down. Those who wait for a miracle are going to be very disappointed.

bb

Steve , now you’re being a pickie little bitch. Do you have gold and silver ?If so do you realize that makes you a target.One other thing, do you realize you still live in California?You plan on being the last white man standing?In the coming collapse those people of color that now surround you are going to view you as their ATM MACHINE. Runnnnnnnn while you can.

Kill Bill
Kill Bill

Don’t know if I would trust Hoovers book either so had to find a PDF of it and read it myself…but I think Hoover a propaganda dist.
http://www.ecommcode.com/hoover/ebooks/pdf/FULL/B1V2_Full.pdf2

DRUD
DRUD

I absolutely believe that there is only one way to stave off collapse of the dollar-based economy, and that is to monetize most of the outstanding debt. This would have essentially zero effect on inflation except that it would make permanent the current nominal price regime.

The only way to do this is either print up literally 5-10 modern (behemoth) cruise ships in weight of $100 bills, or (obviously the only possible solution) up the largest denomination of currency to $100,000 or even $1,000,000 bills. I doubt this will happen, but it would work – DC

I’m sorry, how would this “work?” What exactly would printing large denominations of cash accomplish?

ZombieDawg
ZombieDawg

I have a fair amount of silver bullion in varying denominations, having fallen prey to the silver promoters BS years ago.
The problem now however is that cash is indeed becoming extinct with digital ‘currency’ the future.
Given that metals are historically a safe haven from government incompetence how will metal owners sell metals without getting paid in digital currency which then ends up in government owned banks which the sellers bought metals in the first place to avoid !
Catch 22..
Best bet is to buy everything you could possibly need to ride out the rest of your life and become as totally independent of ‘the system’ as you can.

DC Sunsets

DRUD, think it through.

T-bonds exist by the trillions, but WHEN interest rates rise, they will collapse in value. That’s axiomatic, right?

That’s deflation in action.

If you swap in banknotes to replace the T-bonds, the banknotes don’t respond to interest rates.

I didn’t say this is coming. I just suggest that it is the only way to prevent a credit collapse deflation.

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