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bernorange

By bernorange
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On 8/21/2018 at 8:19 AM, bernorange said:

Just imagine how awesome this dynamic plays out in a cashless society!

More:  https://www.nbcmiami.com/news/local/Wells-Fargo-Terminates-Campaign-Account-of-Florida-Candidate-Who-Supports-Pot-491269981.html

Good lord...I don't know what's more ridiculous---that Florida, America's Meth Lab, looks down upon a candidate who is ahead of the curve and sees what legal marijuana could mean for the state; or Wells Fargo who has the ethics set of the Secretary-Treasurer of the Manson Family thinks her stance isn't worthy of their fantastic banking platform.  They opened up another two accounts under her name since she left.  

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bernorange

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In recent months, a slew of political and financial institutions have raised concerns about the march toward a cashless economy. They include:

  • The ECB warned that a phase-out of cash could pose a serious risk to the financial system. Depending too heavily on electronic payment systems could expose financial systems to catastrophic failures in the event of power outages or cyber attacks. The European Commission has also backed off is war on cash.
  • The People’s Bank of China announced that all businesses in China that are not e-commerce must resume accepting cash or risk being investigated, and cautioned businesses against hyping the “cashless” idea when promoting non-cash payments.
  • In Sweden, one of the most cashless societies, the central bank and parliament have spoken out in support of cash.
  • Cities too have spoken out, including Washington D.C., whose City Council introduced a bill that sought to ban restaurants and retailers from not accepting cash or charging a different price to customers depending on the method of payment they use.

Now, it’s the Bank of Canada’s turn to sound the alarm. In a paper — “Is a Cashless Society Problematic?” — it outlines a number of risks that could arise if the country went fully cashless.

...

More:  https://www.technocracy.news/backlash-against-war-on-cash-reaches-the-bank-of-canada/

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bernorange

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Rickards warned about this 2.5 years ago (I posted a note about in the one of the cashless society threads on the old site), now the IMF is promoting it:

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One option to break through the zero lower bound would be to phase out cash. But that is not straightforward. Cash continues to play a significant role in payments in many countries. To get around this problem, in a recent IMF staff study and previous research, we examine a proposal for central banks to make cash as costly as bank deposits with negative interest rates, thereby making deeply negative interest rates feasible while preserving the role of cash.

The proposal is for a central bank to divide the monetary base into two separate local currencies—cash and electronic money (e-money). E-money would be issued only electronically and would pay the policy rate of interest, and cash would have an exchange rate—the conversion rate—against e-money. This conversion rate is key to the proposal. When setting a negative interest rate on e-money, the central bank would let the conversion rate of cash in terms of e-money depreciate at the same rate as the negative interest rate on e-money. The value of cash would thereby fall in terms of e-money.

To illustrate, suppose your bank announced a negative 3 percent interest rate on your bank deposit of 100 dollars today. Suppose also that the central bank announced that cash-dollars would now become a separate currency that would depreciate against e-dollars by 3 percent per year. The conversion rate of cash-dollars into e-dollars would hence change from 1 to 0.97 over the year. After a year, there would be 97 e-dollars left in your bank account. If you instead took out 100 cash-dollars today and kept it safe at home for a year, exchanging it into e-money after that year would also yield 97 e-dollars.

At the same time, shops would start advertising prices in e-money and cash separately, just as shops in some small open economies already advertise prices both in domestic and in bordering foreign currencies. Cash would thereby be losing value both in terms of goods and in terms of e-money, and there would be no benefit to holding cash relative to bank deposits.

This dual local currency system would allow the central bank to implement as negative an interest rate as necessary for countering a recession, without triggering any large-scale substitutions into cash.

Pros and cons

While a dual currency system challenges our preconceptions about money, countries could implement the idea with relatively small changes to central bank operating frameworks. In comparison to alternative proposals, it would have the advantage of completely freeing monetary policy from the zero lower bound. Its introduction would reconfirm the central bank’s commitment to the inflation target, rather than raise doubts about it.

Still, implementing such a system is not without challenges. It would require important modifications of the financial and legal system. In particular, fundamental questions pertaining to monetary law would have to be addressed and consistency with the IMF’s legal framework would need to be ensured. Also, it would require an enormous communication effort.

The pros and cons of the system are country specific and should be carefully compared to other proposals, such as higher inflation targets, for increasing monetary policy space in a low-interest environment. We consider these issues, and more, in our research.

https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-negative-interest-rates-work/

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RDCanecutter

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Use This Anecdotal Data As You Will, inc:

Just got back from selling at an art show for the first time since the 80s. More than half the sales were done though things like Square or Paypal. What surprised me was how many young people paid with cash. The dude who bought the most stuff with cash was a self-described "computer guy" so I am sure he could have paid 8 other ways as well.

Too small a data set to draw any conclusions from, just surprised at how many people in their twenties also carry a couple of twenties.

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bernorange

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I missed this one from a week ago (roughly) and there is a lot to unpack in it:

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... BIS General Manager Agustin Carstens gave a speech at the Central Bank of Ireland 2019 Whitaker Lecture. Under the heading, ‘The future of money and payments‘, Carstens mapped out what has been a long standing vision of globalists – namely, to acquire full spectrum control of the international financial system through the gradual abolition of what Bank of England governor Mark Carney has called ‘tangible assets‘ i.e. physical money. ...

More:  https://stevenguinness2.wordpress.com/2019/04/04/bis-general-manager-outlines-vision-for-central-bank-digital-currencies/

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UncleCharlie

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The selling of data we have seen up to this point is nothing compared to what will come with a cashless society.  Every retailer in the country will be selling your purchases to financial institutions.  No more checking no tobacco when there are receipts of every can of Copenhagen you buy is out there.

Insurance companies not issuing life/health policies to you because of the risk that your parents drink a lot.  

I love the convenience of using credit/debit cards, but there will be a need for physical currency exchange.

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bernorange

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Sweden, nation that pioneered living without cash, warns: Hoard your banknotes

As Britain edges towards a cashless future, Sweden has urged its citizens to stockpile change in case of power cuts, a cyber-attack or war
...

https://www.thetimes.co.uk/edition/money/sweden-nation-that-pioneered-living-without-cash-warns-hoard-your-banknotes-6f72jqbf3

~~~

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Australia's Liberal Party government has announced that it will soon be illegal to purchase anything over $10,000 with cash. The government says it's "encouraging the transition to a digital society" and cracking down on tax evasion. But not everyone is happy with the move.
...
The ban starts on 1 July 2019 and any payment over $10,000 will have to be made by check or credit/debit card. The government will enforce the measure by allocating roughly $300 million for what it calls the Black Economy Standing Taskforce. ...
...
Australians have a strange relationship with cash - strange in the sense that they still use it. Roughly 37 per cent of all commercial transactions in Australia are made using cash. That number is just 32 per cent in the US and 15 per cent in Sweden. Many Swedes are angry about its slow move to a cashless society, arguing that going completely digital causes security concerns. And India began phasing out a whopping 86 per cent of its currency in November of 2016 by invalidating ₹500 and ₹1000 notes as legal tender.
...
Today it's any sum over $10,000 in Australia, but anyone with their eyes open can see where this is going. ...

https://www.gizmodo.com.au/2018/05/australia-bans-cash-for-all-purchases-over-10000-starting-july-of-2019/

~~~

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San Francisco officials voted Tuesday to require brick-and-mortar retailers to take cash as payment, joining Philadelphia and New Jersey in banning a growing paperless practice that critics say discriminates against low-income people who may not have access to credit cards.
...

https://apnews.com/e4e95476e4e74756b3973ed23fa3b00e

 

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bernorange

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The IMF has noted that central bankers typically cut interest rates by 5% to 6% during recessions. However, with interest rates in many countries close to zero, this does not give them enough room to cut as it has been considered difficult to cut rates below zero because people could just withdraw physical cash from the bank to avoid having to pay to keep their money in digital form.

The IMF, maybe taking inspiration from its namesake the Impossible Mission Force (cue Tom Cruise), has recently provided a handy guide for its 189 member countries on how to enable deep negative rates (emphasis, deep), saying that zero need not be a bound(ry). What is noteworthy about the release of this document is that it indicates that in central bank circles, negative rates has moved from a “should we do it” discussion to “how do we do it”.

While the idea of paying to hold money, or even paying people to borrow money, may seem absurd, the IMF sees deep negative rates as “critical for central banks to maintain effectiveness of monetary policy in the future and will help mitigate the hardships associated with prolonged recessions”. At least they are explicit that lower interest rates “work” because they favour borrowers at the expense of lenders (i.e. savers) as borrowers are more likely to spend any reduction in their loan repayments. Seems like a one-sided hardship mitigation.

In additional to setting a lower exchange rate between paper and digital currency (e.g. when depositing $100 cash in a bank, you only get $98 credit to your account), which is the IMF’s preferred approach, they discuss other methods of enforcing negative interest rates including:

  • Cash withdrawal limits or limits on cash deposits
  • Purposely keeping low inventory of cash in bank branches
  • Banning storage of paper currency as a business
  • Putting restrictions on flows of paper currency in and out of the country
  • Retiring large denomination notes
  • Abolishing paper currency outright


If you think this all sounds unlikely, governments have shown a willingness to consider similar measures. The Federal Government is still pushing forward with its $10,000 cash payment limit to commence on 1 January 2020 (delayed from 1 July 2019).  ...

https://www.abcbullion.com.au/investor-centre/pdf/china-buys-gold-as-trade-wars-escalate

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elfenix

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^^ cities in china are pretty much all QR code payments.  faster than a credit card.  small time vendors like food carts don't need any equipment (literally a sheet of paper with a QR code on it is all a vendor needs). 

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tantric superman

tantric superman 4667

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On 4/4/2018 at 10:34 AM, Brisketexan said:

It's difficult to tuck a bitcoin or credit card in a stripper's g-string.  And it's even harder to keep your wife from finding out about those transactions when she reviews your monthly statement.

Ha ha.  I walked into a Tiff's Treats after lunch a couple of months ago.  Was going to grab a couple of chocolate chip cookies to eat that afternoon.  They told me they didn't accept cash. 

Wife watches the credit card transactions like a hawk.

Cashless society = me getting back to my high school weight.

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relapse98

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57 minutes ago, tantric superman said:

Ha ha.  I walked into a Tiff's Treats after lunch a couple of months ago.  Was going to grab a couple of chocolate chip cookies to eat that afternoon.  They told me they didn't accept cash.

I noticed that too. Can you imagine how much cheaper it is for them to not have to deal with getting robbed for the cash on hand, having to either take it to a bank or get a Brinks truck. Even with the credit card service fee, it's gotta make financial sense.

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F250

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3 hours ago, bernorange said:

The Economist published a real turd a few days ago:

https://www.economist.com/leaders/2019/08/01/rich-countries-must-start-planning-for-a-cashless-future

The remedies for the consequences of going cashless are pretty weak. At least the article addresses the problem of going fully digital but it's a hell of a lot more complicated than the way it's presented in the article.

 

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bernorange

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Governments need to eliminate cash to implement negative interest rate policies (NIRP) effectively.  Australia today provides an interesting snapshot of this issue.  The wheels are turning over there and the people are for the most part completely ignorant.

Australia is attempting to fask track legislation that will ban can transactions of $10,000 or more.  Of course, this is just the first step that will put the infrastructure in place.  The ban limit can later be tightened as authorities deem fit:

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In the 2018-19 Budget, the Government announced it would introduce an economy-wide cash payment limit of $10,000 for payments made or accepted by businesses for goods and services. Transactions equal to, or in excess of this amount would need to be made using the electronic payment system or by cheque. The Black Economy Taskforce recommended this action to tackle tax evasion and other criminal activities.

The Government has today released for public consultation exposure draft legislation and accompanying explanatory material to implement the economy-wide cash payment limit from 1 January 2020 and for certain AUSTRAC reporting entities from 1 January 2021.

Submissions to the consultation are open until Monday 12 August 2019.
...

https://treasury.gov.au/consultation/c2019-t395788

And just reported today...

Quote

The head of the Reserve Bank has told Parliament that all options are on the table to stimulate Australia's economy, potentially even cutting interest rates to zero or negative levels and implementing unconventional policies such as quantitative easing.

This week, four countries — New Zealand, India, Thailand and the Philippines — cut their official rates, with more nations expected to follow over the next few weeks.

That follows the first US Federal Reserve rate cut in more than a decade at the end of July.
...

https://www.abc.net.au/news/2019-08-09/reserve-bank-cuts-economic-forecasts-again/11399576

There are a couple of guys down there that produce a show on YouTube that has a fairly large audience.  This video is fascinating (skip to around 5:20 or so if you just want the pertinent part):

 

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WBT

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I don't understand why they think this will work.  It seems like just the thing to make people realize what fiat currency is actually worth.  There would be a huge move to crypto and other alternatives would spring up.  There's always gold as well.

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bernorange

bernorange 8346

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59 minutes ago, WBT said:

I don't understand why they think this will work. ...

They way I see it, there isn't any alternative.  They don't have any other realistic choice.  Shit is getting real.  We really are approaching the cusp of fiat failure.

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RDCanecutter

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On 8/8/2019 at 11:49 AM, tantric superman said:

Ha ha.  I walked into a Tiff's Treats after lunch a couple of months ago.  Was going to grab a couple of chocolate chip cookies to eat that afternoon.  They told me they didn't accept cash.

I woulda stood there and just pissed down my leg.

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tantric superman

tantric superman 4667

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Just now, RDCanecutter said:

If only they talked like that. I bet they combined uptalk and vocal fry plus if it was a dude, no bass whatsoever in his prissy-ass preachy voice.

You're spot on, of course.  I'm just imaging the day that the non-Krispy Kreme donut shot market is saturated and the those people start moving into the overpriced cookie and cupcake space.ople

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Nice Guy Eddie

Nice Guy Eddie 13391

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1 hour ago, WBT said:

I don't understand why they think this will work.  It seems like just the thing to make people realize what fiat currency is actually worth.  There would be a huge move to crypto and other alternatives would spring up.  There's always gold as well.

I'm not a conspiracy theorist by any means but the govt wants to track all transactions. This is why cash has to go away. I don't believe they really care what you are buying but they want to find people cheating on taxes.  However they will cloak the reasons by saying it's to catch drug dealers and terrorists.

Crypto isn't a valid spend option at this point because current US law is that spending or selling crypto creates a capital gain or loss.  Buy a coffee with Bitcoin, and you need to calc your gain or loss from the Bitcoin purchase.  It's a reporting nightmare. Hopefully this will change at some point in the future.  

I used to spend more cash but to honest, I'm tied into the world of maximizing my credit card rewards. The money outlay is the same so I might as well get something back even if its only 2%.

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Guest Lobo

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If it brings along the death of branch banking, I'm all for it.  We need banks, we don't need overpriced branches.  And I say this as someone whose livelihood is tied to a branch bank.  

Credit card awards seem nice, debit card reporting is nice and neat, etc, etc, etc.  I use cash most of the time because an upgrade on a flight isn't worth the questions I get.  

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bernorange

bernorange 8346

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26 minutes ago, Nice Guy Eddie said:

I'm not a conspiracy theorist by any means but the govt wants to track all transactions. This is why cash has to go away. ...

You don't need to be a conspiracy theorist to understand this issue.  The IMF, Rogoff, etc. have published everything you need to know quite publicly.  I've posted a lot of the material here and at pmbug.com, but if you don't want to read it, you can always just watch the Adams & North video I just posted above.  Sure it's rather long, but they cover the issue perfectly.  The bottom line is that global debt is unsustainable and central banks need negative interest rates to attempt to create inflation.  Having perfect knowledge of the electronic financial industry is a nice bonus, but it's not what is really driving this train.

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Guest Lobo

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A lot of mortgages are based on an amortization schedule that eventually pays down the principal over time.  What this loan suggests is..."what if if didn't?"  

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F250

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Bloomberg article discussing the push for negative interest rates in Europe.

 

 

"In other words, to store money at a bank requires the existence of some other borrower who will pay the bank.  As such, just as you’ll pay more to store grain when grain is abundant and warehouse space is scarce, you have to pay more to hold money when savings are abundant but demand for borrowing is scarce.

 

This is the world we have today. Thanks to ever-increasing wealth concentration and meager growth across the developed world, you have some people sitting on incredible piles of cash and a shortage of people with robust opportunities to borrow and use that cash.

 

There’s a reason Europe is ground zero for the explosion in negative rates. Growth has been mediocre seemingly forever, there is still tons of wealth, and beyond that, there's a relative shortage of stable institutions in which to park money."

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Guest Lobo

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18 hours ago, Grade of D as in David said:

Cash Bitcoin, grass, or ass nobody rides for free.

Bits, Tits, or Lits.  Nobody rides for free. 

Coins, Loins, or Joints.  Nobody rides for free 

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AustinHorn

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On 7/22/2018 at 6:15 PM, MaybeACoordinator said:

Much rather be in line behind a cash-paying abuela than Meemaw not pulling out her checkbook until the total comes out on the register, then her scrawling her payment into her balance sheet, then her showing off her 1940s penmanship on her check, then checking it over to make sure there's no mistakes, then slowly tearing it out of her checkbook, then squabbling over something she should have seen before, and so on....If I see an old lady in one line, and two or three younger people in another, I will get in the longer line cause ol' Aunt Hattie is gonna take 15 minutes up there. 

This happened to me couple years ago on HEB. Extra added attraction was that Old Aunt Hattie was Chinese. Lord have mercy. 

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RPM

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On 7/20/2018 at 3:38 PM, Nice Guy Eddie said:

Was at CVS over lunch.  Credit card machines were down.  Several people had to walk out without their intended purchase because they didn't have cash.   Always good to carry up to $100 on you.  

I always have $300 stashed in my wallet for emergencies. Used to be $100, but inflation... I've been stranded in the middle of nowhere with no cash and it won't happen again.

Even if we became a cashless society, there would always be barter commodities. Gold, jewels, grain, whatever. We watched a filmstrip on it in Jr. High. The weak link in digital currency is the network itself. You have to be able to connect to transact.

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JBJ

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On 8/10/2019 at 9:38 PM, bernorange said:

Not sure what the author meant by "robust opportunity", but a lack of access to credit/loans isn't really the problem.

He meant in the eyes of a potential borrower not the lender.  The lender is willing to loan beyond what borrowers are actually willing to take on as debt.

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elfenix

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1 hour ago, RPM said:

I always have $300 stashed in my wallet for emergencies. Used to be $100, but inflation... I've been stranded in the middle of nowhere with no cash and it won't happen again.

Even if we became a cashless society, there would always be barter commodities. Gold, jewels, grain, whatever. We watched a filmstrip on it in Jr. High. The weak link in digital currency is the network itself. You have to be able to connect to transact.

jeff?

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bernorange

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That article doesn't even pretend to touch the many significant dangers of a cashless society.  And this...

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...
One way the Fed could implement the e-dollar is by simply allowing any American to open an account at the Federal Reserve, where other forms of money, like a check from an employer or a deposit at a private bank, could be exchanged in e-dollars.
...

I'm guessing the author hasn't heard about The Narrow Bank and the Fed's efforts to prevent even a limited scale of the idea.

Quote

...
Meanwhile, Bank of England Gov. Mark Carney proposed in a speech on Aug. 23 at the Kansas City Fed’s annual summit in Jackson Hole, Wyo., that central bankers around the globe could coordinate to issue a digital “Synthetic Hegemonic Currency” to replace the dollar as the world’s reserve currency.
...

NWO holla!

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Neonmoon

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Would it be harder or easier to launder e-dollars?

Currently, one either has some cash businesses (strip clubs, laundry mats, limo service) and mixes the dirty money with the clean money. 

The other way is creating a shell company, finding a banker who doesn’t give a shit in another county, and then moving money around, using said money to buy property, then selling property and the money is clean, 

Would it matter if you buy drugs with e-dollars? Would that leave a digital trace that drug dealers don’t work?

seems like they would just hire computer programmers to make it looks like the money came from legitimate sources? I don’t know 

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Nice Guy Eddie

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For convenience purposes, more and more people are switching away from cash. For the most part, cash seems to exist for people unwilling or unable to utilize banking services. Add to the fact that govt banking would see something like bitcoin as too much of a threat, they have to come up with some e-dollar option.  And I'm not saying bitcoin is the answer to everything.

In many ways, many do not work for or spend dollars anymore. Everything is numbers in a ledger. 

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bernorange

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The Federal Reserve is investigating the second significant disruption in 2019 of a payments service administered by the U.S. central bank.

Certain bank transactions were delayed after ACH -- which stands for the automated clearinghouse system -- experienced delays, but it is now up and running.

“The FedACH service, which processes transactions for commercial banks, is currently operating normally after experiencing delays in processing yesterday afternoon and early this morning,” Jean Tate, a spokeswoman at the Atlanta Fed, said in an e-mailed statement. “Some customers experienced delays in receiving confirmations of yesterday’s transactions. Federal Reserve technical staff continue to investigate the root cause of the issue.”
...

https://www.bloomberg.com/news/articles/2019-12-19/fed-says-ach-payment-system-operational-after-suffering-a-delay

h/t:  https://www.zerohedge.com/markets/nationwide-direct-deposit-outage-hits-due-federal-reserve-network-issues

Digital systems can fail, be compromised or selectively targeted (ie. no banking for you, dissident!). 

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