An Attention-Grabbing Headline

“The first shot in the War on Cash?”

The headline caught our attention. We’d just finished researching and writing about the “Deep State” for the latest issue of our monthly publication, The Bill Bonner Letter.

This is something you’re likely to hear more about. The Deep State describes the way the U.S. government really works, rather than the way it’s supposed to work.

Over the years – hardly noticed by the press or the public – a group of insiders has taken control of Washington.

 

DeepGovernment_SocialCard_BWOriginally the term “Deep State” was coined to describe various anti-democratic coalitions within the political system of Turkey (Turkish: derin devlet). In them meantime the term is widely used to describe all types of “state-within-the-state” type arrangements, the real power behind the throne, so to speak.

Image via gadflyonline.com

 

Some of them are familiar government hacks and politicians. Some, largely anonymous, are in the private sector. And some represent foreign governments, foreign businesses (notably banks), and foreign organizations.

These zombies and cronies – who number in the thousands – have much more power and authority than 100 million voters. Research shows that if they want legislation, they get it.

Voters, on the other hand, get what they want only rarely… and probably only because the insiders want the same thing. The insiders get the money, too. The tens of trillions of dollars diverted into boondoggle bailouts, QE, and ZIRP, for example – they had to go to someone.

And now the Deep State is setting itself up to get even more…

 

WOLF-IN-SHEEPS-CLOTHING-2Now you know why it had such large eyes and such big teeth …

Image via psychologytoday.com

 

Two Kinds of “Cash”

Dr. Matthew Partridge in our London office reports for Money Week magazine that a small Swiss bank has become the first retail bank in the world to charge customers negative interest on their deposits.

A number of central banks – including the Swiss National Bank – have already taken benchmark interest rates below zero. But, beginning next year, Alternative Bank Schweiz (ABS) will be the world’s first bank to pass those negative rates on to customers.

 

hauptsitz-der-alternative-bankAlternative Bank Schweiz is a so-called “sustainable” bank that tries to save the planet by funding all sorts of “green” and “ethical” investments. The “ethical investment” fad is in our opinion largely based on exploiting people’s gullibility (the same principle is at work in expensive bottled water and many “bio food” items). This is not meant to cast aspersions on ABS specifically, since there exist of course also organizations and individuals in this field who are genuinely trying to do good. We are instinctively wary of do-gooders and world improvers though, as they usually either strive to enlist the coercive power of the State or thrive on exploiting the innate guilt of first world populations (guilt over having it better than others and allegedly destroying the planet in the process).

Photo credit: Gestumblindi

 

In a letter to its customers, ABS said it would charge account holders 0.125% a year to hold their “cash” deposits to protect its profit margins. And anyone with 100,000 Swiss francs ($97,316) or more on deposit will have to pay 0.75% a year. Let’s stop here for a moment and clarify…

There are “cash deposits” and there is “cash.” Cash deposits are an oxymoron. If you say you have cash in the bank, you are mistaken. The bank doesn’t really hold “your” cash. It owes you money. If it goes broke, you’ll stand in line with other creditors to get it (subject to whatever guarantees may be in place… and however well they may work).

Cash in hand is different. It is physical. Paper. You can do what you want with it. And you don’t pay a negative interest rate. Which is why the feds want to ban cash. They say it will make it easier for them to stimulate the economy.

As long as you can hold physical cash, you have an easy way to escape negative interest rates: You just take the money out of the bank and put it in your home safe. But if physical cash is illegal, you have no choice. You have to keep “your money” on deposit at the bank… and take whatever negative rate the bank imposes on you.

 

switzerland-interest-rateSheer insanity: the Swiss National Bank has set three month LIBOR at an average of minus 75 basis points.

 

Total Control

Of course, the idea that taking away your money will stimulate economic growth is ridiculous. As former banker, hedge fund manager, and expert on the fiat money system Warren Mosler recently told Bonner & Partners Investor Network subscribers:

 

“First, central bankers have got the interest rate thing backward. They think lowering rates will somehow stimulate the economy.

But negative interest rates are just a tax. You start off with a certain amount of money – say, $100. If the rate is negative 1%, then you have $99 at the end of a year.

Isn’t there some theory that says when people’s money goes away, and they have less, they spend less?”

 

If negative rates don’t really encourage spending, why bother? This brings us to the real danger of banning cash… and perhaps the real reason the feds want to do it – more control.

Reports William N. Griggs at The Free Thought Project under the headline “Drone Pilots have Bank Accounts and Credit Cards Frozen by Feds for Exposing U.S. Murder”:

 

“For having the courage to come forward and expose the drone program for the indiscriminate murder that it is, four vets are under attack from the government they once served.

The U.S. Government failed to deter them through threats of criminal prosecution, and clumsy attempts to intimidate their families. Now, four former Air Force drone operators-turned-whistleblowers have had their credit cards and bank accounts frozen, according to human rights attorney Jesselyn Radack.

‘My drone operators went public this week and now their credit cards and bank accounts are frozen,’ Radack lamented on her Twitter feed. This was done despite the fact that none of them has been charged with a criminal offense – but this is a trivial formality in the increasingly Sovietesque American National Security State.”

 

RadackThe four former drone pilots and whistle-blowers whose electronic financial life was simply erased as punishment for their audacity to inform the public about the murderous practices of the drone program. No court order or indictment was required – the State simply flipped a switch, depriving them of the means to defend themselves. Land of the Free, indeed.

Photo via youtube.com

 

If we are forced to keep our money in the bank… and cash is outlawed… the Deep State will have total economic control over us all.

 

Chart by: TradingEconomics

 

Image captions by PT

 

The above article originally appeared at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.

 

 

 

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2 Responses to “The Deep State and the War on Cash”

  • No6:

    America has now become a full blown fascist state.
    The world is heading for a catastrophe.

    • JohnnyZ:

      What else do you think the elephant trampling over Syrian air space is designed to bring about? If Putin were truly a Western enemy, he is not really performing as one by allowing everybody in. Accidents are preprogrammed over there.

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