Posted on 03/08/2013 4:37:29 PM PST by BfloGuy
The relentless war against cash payments waged by governments worldwide has perhaps gone furthest in Scandinavia. The ostensible reason given by our rulers for suppressing cash is to keep society safe from terrorists, tax evaders, money launderers, drug cartels and sundry other villains, real or imagined. But the actual aim of the recent flood of laws rendering cash transactions less convenient or limiting or even prohibiting them is to force the public at large to make payments through the financial system in order to prop up the unstable fractional-reserve banks and, more importantly, to expand the ability of governments to spy on and keep track of their citizens’ most private financial dealings. One ingenious friend from Norway has fought to protect his right to use cash by invoking his government’s own legal tender laws against it. Here is his story in his own words:
About a month ago I had a doctor’s appointment at the city’s health services emergency ward (government institution).
When leaving, I asked to pay cash. I was told that the cashier’s desk was closed, that I would be invoiced, and that they generally did not accept cash. I reminded the nurse(?) on duty about legal tender.
When I got the invoice, I called accounting at the ward. I told the accountant that I wished to pay cash. I was told that was not possible. I asked if she knew about legal tender, referring to the specific legislation. She went completely defensive, as I clearly perceived it. She even claimed that legal issues with the no-cash arrangement had been dealt with. I said I would file a written complaint.
So I did. I called in a few days later to check if the complaint had been received, which she could confirm. Now the accountant was apparently more interested in discussing the issue.
Yesterday, I got the written response. I was given the opportunity to pay cash in this one case if I brought the exact amount. Moreover, no changes in the general arrangements would be made. Today, I made the payment in cash.
Why did they do this? I would suspect that they figured they had a weak legal case, that they were dealing with someone who apparently wasn’t going to give up, and that allowing it in this case would avoid having to deal with someone with a formal legal interest in challenging their anti-cash system, the alternatives being changing their system voluntarily and fighting an administrative complaint case — or even worse, a court case.
Of course, things would be much better if we weren’t forced to use this fiat money. However, it is reasonable to expect government institutions to comply with the government’s own legal tender regulations.
The war on cash in Sweden may be stalling. The anti-cash movement has been vigorously promoted by major Swedish commercial banks as well as the Riksbank, the Swedish central bank. In fact, for three of the four major Swedish banks combined, 530 of their 780 office no longer accept or pay out cash. In the case of the Nordea Bank, 200 of its 300 branches are now cashless, and three-quarters of Swedbank’s branches no longer handle cash. As Peter Borsos, a spokesman for Swedbank, freely admits, his bank is working “actively to reduce the [amount] of cash in society.” The reasons for this push toward a cashless society, of course, have nothing to do with pumping up earnings from bank card fees or, more important, freeing fractional-reserve banks from the constraints of bank runs. No, according to Borsos, the reasons are the environment, cost, and security: ”We ourselves emit 700 tons of carbon dioxide by cash transport. It costs society 11 billion per year. And cash helps robberies everywhere.” Hans Jacobson, head of Nordea Bank, argues similarly: “Our mission is to make people understand the point of cards, cards are more secure than cash.”
Fortunately, it seems that the Swedish people are not falling for the anti-cash propaganda spewed by private bankers and Riksbank officials and are resisting the trend toward a cashless economy. It is reported that last year the value of cash transactions in Sweden were 99 billion krona which represented only a marginal decrease from ten years ago. And small shops continue to do one-third to one-half of their business in cash. Furthermore a study of bank customers satisfaction released by the Swedish Quality Index in October 2012, indicated that the satisfaction index was pulled down among customers of Swedbank, Nordea and SEB by their policy of eliminating cash transactions at their bank branches. Even more heartening is the fact that Handelsbanken, the largest bank in Sweden, is committed to serving consumers who demand cash. As Kai Jokitulppo, head of private services at Handelsbanken, puts it:
“As long as we know that our customers are asking for cash, it is important that we as a bank [are] providing it. . . . We see places where other banks are taking other decisions, we get customers from them and positive response.”
Fewer then 10 of Handelsbanken’s 461 branches currently do not handle cash and the bank’s goal is to have cash in every branch by the first quarter of 2013.
France’s state auditing bureau, Cour des Comptes, informed the French government that it was “dreaming” in forecasting that the French economy would grow this year by 0.8 percent, which would enable it to meet its budget deficit target of 3 percent of GDP. The bureau told French Prime Minister Jean-Marc Ayrault that a growth rate of 0.3 percent was more like it, which would not be sufficient to meet the deficit reduction target. This was the case despite–or more likely because of–the fact that a broad based tax increase had just been imposed that would extract another €32 billion euros from overburdened French businesses and households this year. So would a desperate Ayrault finally open his eyes to economic reality and slash the budget of the bureaucratic and bloated French State, a budget that is liberally larded with fascistic corporate welfare subsidies and bailouts? No way, no how. Instead Ayrault convened a meeting of the National Anti-Fraud Committee to crack down on tax cheats and presided over it himself–”A first for a head of government,” he crowed.
Tax fraud in France has been estimated to be in the range of €60 to €80 billion annually. Buried in Ayrault’s proposal to crack down on tax cheats and further squeeze more revenue from its “fiscal residents”–those citizens and foreigners who have not been driven into part-time exile to escape French taxes–is a draconian provision that would lower the maximum cash payment per transaction from €3,000 to €1,000. Under the new limit a French citizen would not even be able to buy a used car for cash. The provision would not apply, however, to citizens and foreigners wealthy and savvy enough to have placed their income beyond the clutches of the rapacious French State by becoming fiscal residents of other countries. They would be subject to a limit of €10,000 per purchase in cash, down from the current limit of €15,000 per purchase. This may come to be called the Depardieu exception because French actor Gerard Depardieu recently caused a public stir by obtaining a Russian passport in order to take advantage of Russia’s flat-rate income tax of 13 percent.
One commentator perceptively summed up the inextricable link between the war on cash and the war on personal liberties :
With this law, the French government will be able to tighten the vise on its people one more turn, restricting their freedom of choice (how to pay), wiping out any privacy in those transactions, and imposing another layer of government control. Once people have gotten used to the €1,000 limit—based on the great principle of incrementalism with which restrictions of freedom come to pass in democracies—the vise will be tightened further, until the government can document every purchase made by “fiscal residents.”
Thank you. I did not know about the Coinage Act.
Nonetheless. There will be no differentiation made between checkbook money and actual dollar bills when the purchasing power of the dollar starts to drop. It is not a legal issue; it's psychological.
When your money consists of nothing more than the government's say-so, the faith in money is psychological.
But that is where a very powerful economic law, Gresham’s Law, comes into play.
Simply put, “bad money pushes out good money.” When currencies compete, everybody wants to spend the weaker of the two and save the stronger. And while virtual money can be doubled or trebled with the push of a computer keyboard button, the government *cannot* make more paper money, or even higher denomination bills.
Even if they made $500 or $1000 bills, they would be useless, because nobody could make change for them.
So here are two forms of dollars. Having cash that is completely under your control at home in a safe place, means that you can act quickly no matter what happens.
Virtual money is under someone else’s control, made worse by yet another recent change in the law, so that bank customers cannot even demand “demand accounts”, if the bank doesn’t want to, or has orders not to, relinquish them.
The public seems to be reaching this conclusion as well, because home safes and strongboxes have been flying off the shelves for several years now.
There is a way to see the virtual vs. physical split from an objective viewpoint as well, by understanding the behavior of ‘scrip’. Scrip is a non-legal tender complementary currency that is very tightly controlled as to its value and the price of things purchased with it.
It was created hundreds of times in the US during the Great Depression, and kept local markets and local government functioning when the US dollar had severe deflation and shortage.
The expression at the time was “You could buy a pound of hamburger for a nickel, but nobody had any nickels.” So scrip filled that gap. For example, if a pound of hamburger cost 1 scrip, no matter what the dollar did, it still cost 1 scrip. People bought their scrip with dollars, and could use whichever currency gave them the better deal.
Importantly, on the local level, scrip actually helped to stabilize the dollar.
http://en.wikipedia.org/wiki/Scrip
Once again, there is no difference between checkbook dollars [what you call -- not incorrectly -- virtual money] and paper dollars. They spend the same. People use them in the same way.
Paper dollars have no more purchasing power than the others. You are trying to make a distinction where none exists.
There is one scenario where you might be right. If an electro-magnetic pulse from a nuclear bomb destroys all of our electronics [wiping out trillions of dollars instantly], then paper dollars might become relatively valuable.
But that's not even certain, because the only reason green pieces of paper have any value at all is the confidence of individuals that they will be accepted as payment. After a nuclear attack, I'm not so sure such confidence would exist.
Instead of trying to defend paper fiat money, go study up on why gold would be a better currency.
> Once again, there is no difference between checkbook
> dollars [what you call — not incorrectly — virtual
> money] and paper dollars.
Ah, but there is. You control paper money in your possession. You do not control checks, credit or other instruments. Other people, corporations, and the government does. Any of them can simply refuse it to you.
Likewise, when you purchase something, whoever sells it to you does not have to take credit, debit, or checks. But once the transaction has been made, they *must* take paper money.
Right now, many banks and major retailers are trying to phase out personal checks, because they are expensive to them to process. This leaves credit and debit, which are totally in the province of the issuers and underwriters. If they decide to withdraw your credit they can, and there is nothing you can do about it.
If there is a bank holiday, you might have a million dollars in the bank and have access to none of it. If there is a “cash run” on banks, they would be emptied of paper currency in just a few hours. They would be unable to provide funds except virtually, to *another* such institution. Not you.
While the government might effectively cause hyperinflation, and say that virtual money is the same as paper money, it cannot back that argument. If a retailer is willing to sell you $10 worth of merchandise for cash, yet refuses a check for $10,000, it is all the difference in the world.
After the stock market crashed in 1929 my grandmother had a loan on three houses, rented two out and lived in one. She also had quite a lot of money in the bank. Her bank closed and she did not ever get her money back, but the bank sold her notes on the property to another bank that stayed in business so eventually when she couldn’t pay her payments the houses were foreclosed on.
My grandmother went from being pretty well off to being a penniless, homeless widow with 4 children practically overnight.
“Even if they made $500 or $1000 bills, they would be useless, because nobody could make change for them.”
I know a lot of people, including me, that carried a $1,000 bill in their wallet especially for emergancies in the 1950s.
The car owner gave me one for weekend expenses for the race car in 1957 and by the end of the weekend it was spent.
Exceptions are made for illegals for a variety of laws to include no insurance on vehicles...I am sure a law of some sort would be passed to make them exempt from any law restricting cash.
$500 and $1000 bills have value only as collectibles, and require substantial identification, including a thumbprint, to spend today, except among collectors. Most retailers would just refuse the sale in exchange for them.
What I am talking about is an attempt by the government to reissue them as currency to support inflationary or hyperinflationary policies. Right now, because of shortage, our paper currency is de facto 95% deflated, but our virtual currency is under powerful inflationary pressures.
So even with printing $1000 bills, they would still have to print them in the billions just to make the paper currency on a par with virtual money. On or about 6 billion $1000 bills, which is about two years full production. Assuming no more inflation to the virtual currency in the meantime.
And nobody could make change for them.
I can see why they are such profound advocates of a “cashless” society, because if cash was no longer used, they imagine infinite spending and endless devaluation.
If that were the case, then you'd be right. But that situation doesn't exist and if we reach that point, then all confidence in the government -- and therefore its money -- will have been lost.
Paper dollars are intrinsically worthless. Their purchasing power is based on faith alone. I wish you luck hoarding your paper dollars. I really wish you'd sell them for some gold, though, instead.
“I am sure a law of some sort would be passed to make them exempt from any law restricting cash.”
There would have to be an exemption for them; as more of the leftist northeast is left with only welfare parasites and illegals, there would be no other way to transact business.
Banks aren’t making the case for the cashless society with their security breaches, either.
Sorry, I know way too much about gold to want any appreciable amount. For me it is just a metal. As a thing of value it is far too hard to convert, so in many practical ways it is no more valuable than paper money.
For those who embrace it, though, I strongly recommend that they become learned about scrip, as it is one of the most effective ways to retain gold’s value and convertibility—not by being backed by gold, but by being a very controlled currency that is stable independent of gold. That is, it can make change for gold, and provide it access to the rest of the market.
Stability is the great secret of gold, but only backing something else. It has no great stability when it is used as a currency. The best demonstration of this was the transition, in Weimar Germany, from the hyperinflated fiat currency Papiermark, to the gold backed non-public currency, the Rentenmark, to finally the also gold backed Reichsmark, which even survived the war.
Gold itself could not have done that, but by backing currency, it could.
It’s not really necessary to horde cash, beyond a certain amount, but mattress money can be particularly good insurance against government perfidy.
Study some real economics. Start here. You are trying -- as we all do at one time or another -- to figure out economics without the benefit of those who have gone before us.
And, also, don't be so quick to dismiss people who are offering you sound advice when you don't have any idea of what you're talking about.
Now that’s just aggressive talk. You have no idea of my background or experience as relates to gold, which I would hazard to guess is a lot greater than yours.
I also know it is pretty fruitless to argue with a gold bug, so I’ll pretty much end it here. Good luck with your shiny yellow metal.
I find your theories about the difference in purchasing power between paper money and electronic money unconvincing and I have explained why.
You might find interesting a book that deeply influenced my thinking on the topic of money: The Theory of Money and Credit by Ludwig von Mises.
Your background makes no difference to me at all and I hope you don't find my book suggestion too "aggressive".
All banks are government agents here in the states. All are mandated reporters of transactions above what about 9k and other regular transaction of large amounts. Seems as though these days 1K is a large amount.
They also are mandated to report to the government any on line transfes above the 6 permitted per month.
My bank connects any money order with my account. I cannot get one without giving account numbers.
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