The New Cash Warfare: Citizen Hoarders and Economic Freedom
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The War on Cash has entered an entirely new phase. After debasing and devaluing paper currencies for generations, governments around the world have now declared open warfare on savers.
In light of the global slowdown, five countries along with the European Central Bank have turned to negative interest rates as a means of economic stimulus. By imposing a tax or a fee on monies held in their vaults, the Central Banks are hoping depositors will be encouraged to spend rather than save.
Instead this unconventional policy is creating fear and uncertainty. Negative interest rates only seem to accomplish their goal of keeping money out of the bank; if there are other places to put it. With a sluggish economy and dwindling faith in government; citizens in Europe, Japan, Denmark, Switzerland, Sweden and Hungary have little appetite for risk and have started to hoard money. Cash stashed under mattresses and in shoe boxes is not exactly what officials had in mind to combat the sagging gross domestic product (GDP).
Rather than allow citizens control over their own spending and saving patterns, there is now talk of cutting currency production and eliminating larger denomination bills in order to prevent money hoarding. The European Central Bank (ECB) is seriously considering dropping the €500 Euro note, and there is even talk of the Fed pulling the U.S. $100 bill. We all recall Fed Chair Yellen’s refusal to take negative rates “off the table” back in February.
Let’s remember we are talking about the hard-earned money of private citizens. Why on earth would central banks try to manipulate that? As I point out in The Secret War, because it “might unravel today’s economic grand illusion and bring the whole game crashing down.”
What’s really at stake is economic freedom and a steady march toward a cashless system where governments, treasuries and policy-makers can forcibly control the volume and flow of private money. It will leave us little recourse to put something away for a rainy day or feather our nest egg as we see fit.
As I explain in The Secret War, the Fed has become a “central planner in the U.S. economy” and with this new assault on cash, that planning has taken a turn toward the absurd. All governments use money as a quick fix and a political painkiller but when artificial stimulus falls short, more and more desperate measures invariably kick in. Negative rates and talk of currency regulation are clear evidence of that.
So all of this begs the question … will pulling large denominations of Euros, Francs, Yen and Dollars out of circulation really force people to spend their own money against their will? Or, will it push them to flex their economic liberty by converting more of their assets into something tangible and autonomous like gold? Gold has proven to be a reliable safe haven and store of wealth throughout time and through the countless wars that have dogged human civilization since the earliest days of trade.
Don't allow the government to discourage you from the stewardship of your savings. Take action today.
- The prudent see danger and take refuge, but the simple keep going and pay the penalty.
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