US Fed Plans Negative Rates & Ban On Cash
 

Have any of you heard about this? Im surprised its not bigger news lately. There's a lot of buzz going on about the US Fed considering to:

(1) Making Interest Rates negative (ie below zero).

Switzerland, Denmark and Sweden already doing it or were having negative rates before. So you lose money if you leave your cash in the bank. What's the point you might ask? Well basically the fed can't raise rates unless inflation hits target and we obviously now have deflation and the economy is falling off a cliff all of a sudden. By making rates negative they want to force people to help stimulate the economy by forcing people to buy goods, buy stocks, buy property etc, etc and make investments and drive inflation. It's also helpful as inflation means prices go up and government can tax gains on these things - you cannot tax deflation.

Result? Well if you have $100,000 in the bank and rates are -1% it means you have $99,000 at the end of the year but if inflation is 2% you've lost another $2000 in purchasing power so net loss is $3000 USD. End of the year you have $97,000.

The Fed's next move? Negative interest rates?commentary

(2) Totally banning the use of cash.

So why ban cash? They have to do this in order to stop people emptying their bank accounts and keeping the money in the form of cash. So the two things have to come together - scary thing is that we're being prepared for this in the media and some countries are already moving in this direction.

Citi Economist Says It Might Be Time to Abolish Cash - Bloomberg Business

Ban cash, end boom and bust - Telegraph

Abolish cash? You?d be losing a crucial part of free society - Telegraph

They've been talking about this in the US, UK and Europe and I think it would be a first time for most countries.

The government has fucked every American who followed traditional retirement planning. Cash is worthless as an investment right now and has been for years.

*Declared (see below) Negative interest rates will not happen in the USA -- I can't see the politicians allowing it.

Banning cash is very possible -- even likely. Cash-under-the-table will no longer exist and I don't have a problem with it -- as long as you can hold hard assets -- what's the problem? You have to pay taxes on your income -- tough shit!

Drug and other illegal income (read: undocumented workers paid cash) will be reported? Won't effect me at all ...

If the goal is to keep people from pulling out their cash then you don't reduce their rate of return and/or incentive to keep it there.

People don't trust banks anymore, period. The only thing I use my bank for now is essentially to pay a bill.

Cash in the bank is worth less every year -- this is true. Inflation is a de facto negative interest rate anyway -- been like this most of my life.

Also if people understood how the banking system truly worked then they would also understand that the bank should be paying them for the use of their money regardless of fed rates.

Well if interest rates are lower than the inflation rate, that's a negative real interest rate so sure you lose purchasing power on your money and its like an invisible tax. However, it's different to actually losing the real amount held in your bank which you can see depleting every year in your account (in addition to inflation).

And it's being seriously considered, a couple of Fed guys have been touting this idea to get people prepared for it.

Fed raises possibility of negative interest rates

The mad thing is that under negative rates people would effectively be paid to borrow. Although, in practice people wouldn't actually be paid or it would be a tiny amount of the negative rate but this is really and truly insane. They really want to crash this system.

will just be the push to make crytpocurrencies mainstream.

How can they pull out their cash if cash no longer exists?

That's the whole reason for the ban - to eventually remove cash from the system completely. Stops run on the banks but the banksters will say it stops money launding, fraud etc. In fact, a lot of banks are already starting to impose restrictions in many countries to gradually move towards this.

Forbes Welcome

Denmark Becomes First Country To Ban Cash | Your News Wire

HSBC imposes restrictions on large cash withdrawals - BBC News

http://www.zerohedge.com/news/2015-1...-cash-ban-next

My new bank does :)

Money is in motion as they say.

Good, I may need some cheap money soon ...

It's actually no different, the difference is only in your mind... so really, if negative interest rates were to be implemented, nothing would change except those that now fail to see that real interest rates are now negative, might get nudged to productively invest their funds... :2 cents:

Yeah, I can see my yard keeper whipping out his credit card reader after I loan him a mower and a rake and buy the trash bags too.

I will tip my stripper with bitcoin.

:1orglaugh

Bernie wants to start Postal Banking so low-life casual labourers that are legal can have accounts for you to load the $20 they have coming for a few hours work. The beer store will take Postal Bank Debit Cards... The strippers will use a smartphone with Square I guess ... or the new tip2strip app? :1orglaugh

same here:2 cents:

only 30% of US cash is held by US residents...its about 2% of the GDP...I do not see a boost to the economy happening...everybody would have to ban cash or transactions in the USA would be done in Euros because people would adapt and look for an alternative...

the poor would rely exclusively on the government for handouts because they do not have banking...

the world would drop the printed US$ like its the plague...china will never ban cash they have hundreds of millions of poor people...

this all seems like a desperate attempt at kicking the can further down the road and not address the real issues...it aint gonna work :2 cents:

Zero interest rates is just that, Borrowing from the future. If the unemployment rate is so great now, The Fed should have already raised interest rates.

When the markets crashes again, It will be everyday people that lose their money. Goldman, Citi, and all the rest would have already pulled their cash out.

You obviously are one of those that doesn't understand how the banking system works. If the banks are doing anything it's trying to get away from fractional reserves and into limitless lending (which they've pretty much already done illegally). The reserves/cash on hand (your money) is what allows them lend in multiples of 10+x$. Bank runs puts them below reserves and is what kills the bank. If they can get away from these reserves then they could care less how much you put in or take out as long as they have unrestrained lending powers. The reason those banks are imposing restrictions on withdrawals is so runs don't obviously crash the banks reserves (cash on hand). Getting rid of cash to the bank means getting rid of reserves....

Ok well, I like the tip2strip app!
The name is so catching too.

:1orglaugh

Central bank interest rates should always be low. They are a private bank lending trillions of dollars. Why should they get paid more for computing loans with zero risk involved? They dropped interest rates when they finally had to admit they were private banks. The rest is all bullshit. BTW Citi ,Goldman and and handful of others are the shareholders.

money must work in the real economy.
and when all have a lot of money and nobody works.
who will make good?

Living here in Las Vegas is probably the place where you still actually see people using cash.

And the only reason is that you have to have cash in the casino (they won't let you play with a credit card).

So if they "banned" cash tomorrow...most people wouldn't even notice it. We all use debit cards everywhere.

Most lower income businesses don't even process credit cards.
Of course people who live in wealthy areas have no clue about this.
This would limit business start ups to only those that can get a merchant account.

Do you even have a merchant account?

This idea is exactly why non-wealthy people need to get elected into government.
Wealthy people seem to have no clue of how the world works outside of their small little box.
Yet their wealth makes them the most arrogant "know it alls" in the world.

Also, what good would a dollar be if you can't spend one?
Wanna devalue the dollar forever, then keep talking this shit.
No nation is going to trade for a currency that they can't move.

Its actually getting to the point where merchants are going to start not accepting cash. More times then not, when I pay in cash, they are always checking to see if its even real.

I don't know of any businesses (even little thrift shops) who don't have the ability to take a debit card...and that's in any part of the city. Even the plumber comes with an app on his smart phone.

And yes, of course I have a merchant account. I've had merchant accounts since the 1990's when I was selling content discs with my content company. :)

Anyway, my point is that when you see people buying gasoline, or a soda at a store...or going to a restaurant (yes, even Mickey D's)...they usually pay with a card in some form.

I was joking at the grocery store the other day with the checkout lady. I paid in cash and we were laughing about how rare that is compared to the way it used to be.

When the Canadian dollar was on par or above the USD the last few years, I would take my cheques to the bank and cash them in USD and stack it in my safety deposit box.

They gave me the exact dollars and cents on the checks. No fees, no exchange rate issues. To the fucking penny.

Now that the dollar is back up, I win.

Revelation 13:16-18

And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads:

And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.

Here is wisdom. Let him that hath understanding count the number of the beast: for it is the number of a man; and his number is Six hundred threescore and six.

You just proved my point.
You know how things work where you are; but it doesn't work that way everywhere.

:(

Like all credit transactions are real.

:1orglaugh:1orglaugh:1orglaugh:1orglaugh:1orglaugh

:1orglaugh:1orglaugh:1orglaugh:1orglaugh:1orglaugh

You're the one who's clueless man - they are imposing restrictions for a variety of reasons but are gradually moving towards a total banning of Physical cash (paper notes - the kind we keep in our wallets) not cash in the bank. Zerohedge explains it quite well:

Is a Ban on Physical Cash Coming Soon? | Zero Hedge

Why The Powers That Be Are Pushing A Cashless Society Washington's Blog

These things are openly being discussed at the highest levels and in G7 and country group meetings.

Actually I'm very well versed in it all. The physical cash you are referring to IS the reserves in fractional reserve banking.. You obviously didn't comprehend anything I explained. Zero Hedge is the Alex Jones of finance. And of course TPTB want a cashless society because if gives them more control..

When Iceland goes cashless, I'll worry.

Obviously, so what is your point?

Well you've just proved how clueless you really are. Zero Hedge is just one small part of the "alternative media" where you get real news rather than mainstream sources like CNN and FOX which will deliver the bullshit propaganda for the masses.

I prefer to pay with cash just to leave one less digital footprint. I just tell that that I am "old school".

Why don't they just chip us all at birth...well, with smart phone and the internet I guess they really don't need to!

Thank you technology - An't it great! :(

I don't know why you guys are getting your panties in a bunch over this -- the US Dollar is fiat currency -- not worth the paper it is printed on anyway :upsidedow

Everybody gets a card with a chip and Banking on the Postal Service - Senator Bernie Sanders of Vermont . Everyone will have a USPS bank account available -- ACH will replace paying by check in a decade.

You won't need a payment processor or merchant account -- customers will just credit your account, eventually: in real time in transactions that your bank will postback to your server. Consider the possibilities and the advantages of digitalizing this fiat currency :thumbsup


You can still buy physical gold or other commodity to barter for goods. However, you will be taxed on the money you receive that is income -- there will be nowhere to hide ... Coming up a new VAT type tax on the now recorded sales transactions. Weeeee ... :upsidedow

Time to buy gold again.

For starters your examples primarily refer to "large cash deposits." I can guarantee you the banks aren't turning down Walmart's daily deposits. What they are referring to is individual deposits. Those that trigger IRS reporting and require extra effort/paperwork. Many banks have been fined heavily lately for quietly laundering drug money and that's ultimately the reason. They are/were more than willing to do it to meet their reserves.

Not deposits, withdrawals. Sure but the plan seems to be a move towards a complete ban on cash... this isn't something that happens over night, it's something that occurs in a gradual way.

You're completely clueless and have totally misunderstood.

If cash (paper money) is removed altogether from the system, the only payment methods available for the purpose of buying or selling will be electronic. So there will be no cash and the banks WILL turn down ANYONE's physical cash (including Walmart) because there will be no way to transact using physical cash as physical cash won't be a part of the new system.

I suppose none of us need be surprised about this....

If I use $500 cash in a year it's a lot.

My understand is the fed wants to pay banks to keep "cash" in their balance sheets and not loan it out to in order to pull the QE cash out of the "system".

If they start charging for cash, more people will be in the stock market. Very foolish to have your society to not have as much "secure" and "insured" money.

I understand quite well. Again if a bank is turning down cash it's likely from an individual walking in with 5k+ and no source. If a bank receives a 5k+ (use to be 10k+) then they have to do extra paperwork to source the funds for IRS reasons and this is where the fee comes in. And again quite a number of the banks referred to in all of your articles have been fined heavily for knowingly laundering drug money.

I also understand the cashless society dream. I say dream because it will never actually happen the way those who want to control (governments) wish. Sure maybe the paper cash itself goes away but there will always be another way whether that be barter, digital currencies, precious metals, etc, etc.

My guess is the Denmark experiment will end up a disaster. They will chop off a large portion of their economy. But kudos to Denmark for being the guinea pig.

I have people walk into my business and/or call me every single day wanting cash. None of them ask for credit. In fact if you even mention "can I paypal you the money" or something along those lines they think your fucking nuts or trying to pull a scam.

I took $900.00 cash to Europe with me last month I came back with $750.00. I had 210 euros left in cash from last year to spend in the open air markets and on the tax evading taxis that would only take cash -- like in Nice, France.

So, France didn't get their VAT (TAV) tax nor income tax on the sales that these people made. Technically, C2C sales are VAT tax exempt LOL <= who is laughing I really don't know ...

The only cash I spent that was tax exempt was at a Catholic Church rummage sale -- my lady friend wanted to go. We scored a 3/4 length suede winter fully lined coat for her -- 20 euro -- they thought it was suedecloth -- the tag was missing ;)

Tax evaders love cash there is no record. 15% to 20% of the USA's economy is under the table -- that is a fuckload of taxable money :2 cents:

In the end they will just create a black market. People will want to buy drugs and hookers and they will use Euros for it or whatever currency is left. One has to ban ALL cash or the only remaining currency will become the substitute. Also how are you gonna bribe politicians? LOL

Yes, which is why I think they would need a major crisis to get global co-ordination but of course they may find other ways around this. Still, I very much doubt there will be any physical paper money in the system 20 yrs from now.

Governments always want more control and banning cash does exactly that. If confident collapses, how can there be a run on any bank if there is no physical cash? Only option would be to buy physical goods, all of which would be traceable of you can only do so through electronic means.

The Secret Meeting in London to End Cash | Armstrong Economics

there are like 2 billion people on this planet who rely on cash alone...they will never have access to banks...the grey economy is the worlds largest welfare program...no discussion about this...kill off the grey economy and you leave billions without a means to provide for themselves...

its a poorly thought out plan, just another form of taxing everybody with the transaction fees, and will crash and burn because politicians want their bribes :2 cents:

So what's replacing traditional retirement investment vehicles?

Maybe, buy things after their value cyclically crashes? It depends if you are 30 or 55 years old. How much time can you wait for a return?
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One thing behind this ''cashless'' conspiracy is to get rid of all the paper US currency that is hoarded outside of the USA.

2/3 of the cash (paper currency) in US Dollars outside of the country may be from illegal enterprises? 1/2?

The US Dollar as a reserve currency is used in electronic transfers these days so this will have no affect. The value of the US Dollar would increase -- there would be less US Dollars outstanding ... Since all those hoarded dollars were never in circulation, and in competition for buying goods, this should not effect the price of goods.

The price of some commodities like precious metals might increase wildly however.

She just mentioned "negative rates" in a live meeting. They're definitely preparing the public for this thing whether or not they actually decide to use it. Here is what she said:

Yellen said she wouldn’t rule out using negative interest rates to help stimulate the economy in the event that another serious downturn occurs before the central bank can lift rates away from zero.

"I don’t at the moment see a need for negative interest rates,” she said. "If circumstances were to change” she added, "potentially anything, including negative interest rates, would be on the table."

Yellen Signals Solid Economy Would Spur December Rate Hike - Bloomberg Business

Economy is going soft. So either its QE, Negative Rates or Something Else.