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The Plan to Control ALL Your Money is Now at Advanced Stage

Personal_Finance / War on Cash May 02, 2017 - 01:12 PM GMT

By: Submissions

Personal_Finance

“They’re coming for your money. Every last penny.”

That sounds like a weird, tinfoil-hat thing to say, doesn’t it?

And I guess it is.

As the old saying goes, though, just because you’re paranoid doesn’t mean they’re not out to get you!


Because it turns out – as you’ll keep reading you’ll learn exactly why I’m saying this – that they really do plan to take total control of your money.

Every penny you have in the bank and anything you take out of the bank too.

I will show you how the monetary powers plan to take control of your wealth.

You’ll also see why this plan is already at a very advanced stage.

Armed with this knowledge, you’ll be able to spot the warning signs before they put their plan into action. So you can get ahead of this new threat to your financial well-being.

An important point before we go any further.

You may have heard people talk about the “war on cash” before. This is the idea that the authorities will abolish the use of cash.

Sadly though there’s too little discussion of how exactly this will come about.

This matters. Because if you’re waiting for The Big Announcement that cash is no more, you’ll miss the small, incremental steps that lead us there.

And you’ll miss the warnings signs. You’ll miss your chance to prepare.

This will be a lot more subtle than the government waking up one day and saying “Right, no one can use cash anymore!”

That was never the plan. And the authorities will be even more wary of making a sudden move since the Indian government’s shock demonetisation last November, given the chaos and backlash it spawned.

But that doesn’t mean they’ll back off. No, they’ll do what they’ve done before with these things: keep them under the radar until the time’s right.

Policymakers will lay the groundwork first (as you’ll see below, they’ve already started in earnest).

Piece by piece, they’re getting everything ready for the day when they judge that a new, previously unthinkable set of policies is needed.

How do I know such a plan exists?

I looked…

Step one in the attack on your money

We’ve seen how quantitative easing went from being an obscure idea only economists discussed to a real-life policy affecting all of us.

Well, the plan to take total control of your money is already well along the same road that QE went down.

It’s gone from obscure academic notion to something being actively pushed in the highest policy circles.

Today I want to bring your attention to an IMF Working Paper published eighteen months ago.

The paper is called Breaking Through the Zero Lower Bound.

Sexy title, eh?

All it really means is “How central banks can push interest rates below zero”.

The paper’s authors kick off by laying out the problem as they see it:

“The zero lower bound arises when a government issues pieces of paper (or coins) guaranteeing a zero nominal interest rate, over all horizons, that can be obtained in unlimited quantities in exchange for money in the bank.

“This acts as an interest rate floor, making people unwilling to lend at significantly lower rates. The zero lower bound has proved to be a serious obstacle for monetary policy, as shown by the recent efforts of central banks to stimulate economic growth in the wake of the Global Financial Crisis.”


All of which is an economist’s way of saying you can’t push interest rates much below zero so long as people can just take their cash out of the bank.

So, do the authors propose just getting rid of cash?

No. Their proposals are more subtle:

“While the complete abolition of paper currency would indeed clear the way for deep negative interest rates whenever deep negative rates were called for, such proposals remain difficult to implement since they involve a drastic change in the way people transact.

“Moreover, many economic agents have a demand for paper currency for the sake of privacy, ensuring that its total abolition would be quite controversial. Therefore, even if advocates of a cashless economy are ultimately successful, a transition to a cashless monetary system could easily take decades.

“For those who see a cashless economy as a likely eventual outcome of monetary evolution, our proposal can be seen as a transitional system.”


Personally, I’m not sure a transition to cashlessness will take decades.

Once they start discouraging the withdrawal and use of cash, as these guys and other economists suggest, we nudge cash towards a tipping point where businesses stop accepting it because not enough people use it anymore.

That‘s my hunch, anyway.

So what is this big plan this IMF paper describes?

It’s pretty simple, really. You let people take money out of the bank as normal, but then you charge them when they want to re-deposit it.

And by varying the charge, you can effectively set the interest rate on physical cash outside the banking system at less than zero.

You may be asking a question at this point.

“What if I just take my money out of the bank and never redeposit it?”

Ah! That’s where limits on paying for things with cash come in.

If cash becomes much harder to use relative to electronic money, that diminishes the incentive to take large sums out of the bank – and so avoid any negative interest rate on your savings.

This is how they get you.

Note from the following passage how the idea of imposing a charge for re-depositing is presented as the least of three evils.

This is a common tactic when pushing potentially controversial policies. Make the one you want to do seem tame by comparison.

It’s quite a long passage, so you can skip over it if you like, or just read the bits I’ve highlighted in bold:

“…the government can discourage paper currency storage in essentially three ways, corresponding to the three steps needed to earn an interest rate of zero minus storage costs from paper currency: it can attack withdrawal of paper currency, storage of paper currency, or redeposit of paper currency.

“To attack withdrawal of paper currency, the government could implement a restriction or fee on paper currency withdrawals from bank accounts (or in the extreme, end the printing of new paper currency, forcing people to make do with the existing stock). There are several disadvantages to this approach.

“First, it prevents withdrawal for spending as well as withdrawal for storage.

“Second, the ability to withdraw paper currency has great option value for people, which restrictions or fees on withdrawal would damage.

“Third, whether a withdrawal fee of a given size is adequate to prevent massive paper currency storage depends crucially not only on how negative interest rates are, but for how long they will be negative, which is difficult to know in advance.

“Fourth, with quantity restrictions on withdrawals — or fees high enough that the corner solution of withdrawing zero is often attractive — the effective price of paper currency would likely follow a jagged diffusion process as information and expectations evolved.

“Finally, people would still have an incentive to hoard the paper currency already in their possession, and to withdraw as much as possible in advance of the imposition of a withdrawal fee. This makes it more difficult to openly discuss and debate the imposition of a withdrawal fee.

“To attack storage, the government could attempt to make storage of paper currency costly by taxing or prohibiting storage. There is a limit to how effective this can be, since storage of paper currency can be done in low-tech ways by anyone.

“Moreover, criminals already have experience in secret storage of paper currency. Thus, while storage of paper currency can be driven underground, it is hard to fully prevent.

“The ease of small-scale storage of paper currency by households, in particular, could lead to fewer funds left in demand deposits or savings accounts and hence to significant disintermediation even if commercial-scale paper currency storage could be successfully blocked.

“The third option for the government is to implement a temporary fee on deposit or re-deposit of paper currency at the cash window of the central bank. Such a fee, when implemented in a time-varying manner on net deposits, creates an effective exchange rate between paper currency and electronic money, and allows the government to avoid the disadvantages of the first two options discussed above.”

Well whoop-de-doo.

Sorry to be snarky, but let’s take a moment to focus on what they’re actually saying here (NB I deal with the “cash window” thing in a bullet point further down).

The authors say that charging people to withdraw cash would be bad because people might spend less.

That’s bad if you’re fighting an economic downturn – and incidentally it’s a reason why a sudden move to abolish cash is unlikely to be policymakers’ first choice in a crisis (though they may have to impose limits for other reasons, say if the whole system is about to fall over).

Much better, in their view, to nudge people towards accepting cashlessness in advance, including via the use of transitional measures like the ones we’re discussing here.

So that’s one of several reasons they reject imposing a fee on withdrawals (personally, I’m not ruling it out myself, but it appears not to be the favoured approach).

As for banning cash storage, that’d be hard to enforce.

Ipso facto, this logic goes, there should be a charge on re-deposits.

See the sleight of hand?

By discussing the cons of alternative approaches in longwinded academic language, the authors can then present their favoured option as the clear choice merely because it doesn’t suffer from the drawbacks they’ve mentioned.

The question of whether this is a good idea in the first place is left behind as the discussion progresses.

This paper, and the academic conversation around this whole idea of making it cost to hold physical cash, is filled with reasonable-sounding caveats.

They serve to create the impression that this is a measured, well-thought out and non-threatening idea, rather than a panic button that’s likely to have myriad knock-on effects we can’t possibly foresee but which are unlikely to be pretty.

Don’t be fooled.  Find out how you can prepare yourself here.

A few more thoughts on this before I leave you alone today:
  • Technically, this paper takes a line I’ve seen elsewhere. Rather than talk about banks charging savers to re-deposit, it focuses more on commercial banks paying a charge when they deposit reserves at the central bank. The difference is merely one of degree, since beyond a certain level of negative interest rate banks would have to pass the cost onto customers. Still, there’s an interesting discussion in the paper about how banks might try to shield long-standing customers from the full effects of the charge. The authors see this is a potential benefit to policymakers since it would mollify savers and reduce the risk of a backlash.   Trust me, they are really thinking this thing through. Ask yourself why.
  • See how that big section I quote above includes the phrase “implement a temporary fee on deposit or re-deposit of paper currency”? Ah, “temporary”. A long-standing ally of the radical policymaker. They always say “This will be temporary, so don’t get too steamed up about it”, don’t they?

And years later hardly anyone remembers it was meant to be just a short-term thing. Richard Nixon temporarily cut the link between gold and the US dollar in 1971. It is yet to be restored. That’s all I have to say about “temporary”.

I said at the start that the plan to control every last penny of your money is now at an advanced stage.

You’ve just seen how the IMF is pushing the idea, circulating it as a working paper read by high-ranking, influential economists.

But this has much more traction than that.

This is already being discussed in the highest policy circles.

You can see how this might affect you here

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