The effect of negative interest rates in Switzerland and Sweden, and the war on cash

The effect of negative interest rates in Switzerland and Sweden, and 'the war on cash' - Business Insider



If you use too much cash in Sweden the retail businesses call the police, thinking you are a terrorist or a criminal. This article predicts how Sweden's banks will act and how Swiss banks will act to negative interest rates on their storage of cash. Swedes hate cash and the Swiss love cash, so this experiment will likely reveal what attitudes really are. 

I agree with everything in the article except that you don't have to be a conservative to fear the war on cash, the efforts by many to seek the elimination of cash. This is an issue everyone should be concerned about.

The author says the US dollar and Yellen raising interest rates will fix all this. One hopes he is correct but I have my doubts. 

The Privacy Dangers of a Cashless Society Were Clear Over 40 Years Ago

The Privacy Dangers of a Cashless Society Were Clear Over 40 Years Ago



Paul Armor of the Rand Corporation said this about a cashless society back in 1968:

Literally, it means a society without cash or checks. In this extreme,
all financial transactions, even the purchase of a newspaper, the
tipping of a doorman or passing through a highway toll station, would
take place via some mechanism not involving a check or cash.

He was concerned about computers destroying privacy:

The first is that computer technology is introducing order-of-magnitude
reductions in the cost of collecting, transmitting, and processing
information. Second, centralization of data is usually a concomitant of
computer use. The payoff to successful snooping is much greater when all
the facts are stored in one place. Though most of the data to complete a
dossier on every citizen already exists in the hands of the government
today, it is normally so dispersed that the cost of collecting it and
assembling it would be very high. The third factor is that computer
systems with remote terminals can permit, unless proper safeguards are
provided, remote browsing through the data with a great deal of
anonymity.

Armor hoped the USA would develop within the Department of Defense a program or subgroup to prevent attacks on privacy. Since the Department of Defense is now up to its eyeballs in the invasion of privacy, this goal of protecting privacy seems unattainable. 


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Will the Russians Save Us from the Cashless Society?

 This article was first published by me at Talkmarkets: http://www.talkmarkets.com/content/news/will-the-russians-save-us-from-the-cashless-society?post=77136

Sometimes fact is stranger than fiction. It has been reported that the Russians have been observing the cable lines in key areas of the world's oceans. The potential damage that Russia could cause to the United States is not to be taken lightly. Certainly we would all suffer possible financial loss from the destruction, even if temporary, to the digital financial system upon which millions of financial transactions are made.

Since only 200 oceanic lines carry 99 percent of all data and internet traffic, the disruption to those lines could be catastrophic. Trillions of dollars in transactions could be undone.

However, there is a silver lining to this dark cloud. This Russian threat could slow down or even derail the coming Cashless Society! Can you imagine not having any cash when the internet and data systems of the world are brought down? Stealing or starvation would likely be your only choices. Some rural folks could barter, I suppose, but city people? They would be at a distinct disadvantage.

Politicians will be leaned on by bankers and economists who see no other answer to the declining interest rate scenario than to break through the zero lower bound allowing negative interest rates to be charged on customers' bank accounts. Monetary stimulation only works when  interest rates stimulate the economy. Otherwise, the central banks are forced to resume QE, which drives up assets and further diminishes the middle classes.

And monetary stimulation will only work in a negative interest rate environment with the implementation of a cashless society. But that society has perils to us all. Even wealthy people traveling could be in a bind without cash.

We can see how strong the desire is for a cashless society by the desperate cries of those economists and bankers who see no other way out. These will become the most desperate people in the next downturn. Americans need to understand this in order to understand that risk off is death to the bankers. Their very lives revolve around risk on and speculation. They are the only people making real money, and if they find themselves at the mercy of permanent risk off, then they will forcefully push for a cashless society.

And that is where the Russians come in. They are just crazy enough to cut these lines under the right circumstances just as the bankers are crazy enough to seek a cashless society in order to create transparency, which is another word for spying. The bankers figure that their digital framework is all that counts, that the world will operate in fine fashion as long as data can be transported freely along the internet byways.

This pressure applied by both in opposite directions is like the San Andreas Fault. At some point, something has to give.We have seen Bitcoin go through the roof lately. Perhaps there is speculation there of a cashless society.

Jem Bendell has an interesting take on the Cashless Society. You think we live in a "Nanny State" now? Well, we nanny the banks and poor people. I think the later is much more moral than the former.

But I digress. Jem Bendell says that if a person has a heating bill to pay, and is booted off the payment grid for bad credit or whatever, it will become necessary for the state to get that heating bill paid. That is the moral thing to do since cash is no longer an option for the booted ones. 

Can you imagine thousands of people freezing in winter because they don't have a valid positive balance in their bank account with which to make this sort of payment?

Also, Bendell says that a people who is forced to give up rights to privacy and to not be spied on, will be a people who will no longer have a real democracy at work. I don't like to use the F word lightly, but this sounds like pure fascism to me.

I don't like to find myself rooting for the Russians, but they may be the only counter to the totalitarian banking movement we may find ourselves subject to in the near future.

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Why Germans pay cash for almost everything - Quartz

Why Germans pay cash for almost everything - Quartz



Germans loathe debt, and paying cash allows them to stay out of debt. It is something millennials in the USA do as well. These are ways economies can fight the move to a cashless society.



The question is, will younger generations be more tech savvy? And will that necessarily mean they will gravitate to cards and payment systems instead of cash?



We certainly hope that is not the case. 



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What Could Go Wrong to Leave You Vulnerable in the Cashless Society?

There is only one economic, necessary and evil reason to establish a cashless society. And that is to break the zero lower bound. Cash prevents negative interest rates from being imposed if necessary, because cash can be taken out of the bank. The banks must have the cash stay in the banks for negative rates to work. 

So, cash prevents negative interest rates, and results in the zero lower bound. Eliminate cash and you eliminate the zero lower bound.

In the next recession, if we can't raise rates past 1 percent during "boom" times now, then negative rates will be appied in recessionary times. The push for a cashless society will be on, and you can guarantee it. Fight it now, use cash, and also speak out about the evils of cashlessness.

Here are some things that could go wrong in a cashless society:


1. The internet is not secure and cannot be made secure. Retailers require access. Cyber war will increase and we will be more vulnerable as a nation if cashlessness is imposed. A cyber attack would leave the entire populace, rich and poor and middle, without the means to pay for needed goods and services.

2. If governments are not benign, they can use the cashless society and recording of all transactions to spy more than ever. This will be a huge temptation for governments.

3. Poor people or people who have troubles with their banks will be pushed off the digital grid and will not be able to make payments for food for their families, or rent, or utilities, but will have to pay the bank first, with no money left over for necessities.

4. Travelers could be very vulnerable to their bank cards working properly in situations that would be both embarrassing and potentially devastating.

5. The simple anxiety of knowing your transaction must go through would be tenfold if you had no cash as a backup. Anxiety in society would simply go through the roof.


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Summers And Roubini Talk Negative Interest Rates, Sound Logic But Uncharted Waters

Gary Anderson Blog | Summers And Roubini Talk Negative Interest Rates, Sound Logic But Uncharted Waters | Talkmarkets



Negative interest rates are behind the push for a cashless society. This is serious folks. Cash stands between positive and negative rates, creating the zero lower bound. However, if they ban cash, the zero lower bound will no longer exist. This is the whole issue in a nutshell. 


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