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The War on Cash is Not Over… It’s About to Intensify


 -- Published: Monday, 21 November 2016 | Print  | Disqus 

By Graham Summers

 

The Trump Presidency has distracted from the next major move to be implemented by Financial Elite.

 

That move is a cash ban.

 

Cash, particularly physical cash (as in bills and coins) is a huge problem for insolvent banks.

 

Indeed, it is the ONLY problem they have yet to address.

 

If you’re a large bank and you’re overleveraged due to excessive assets to capital ratios (particularly assets that are at risk of losing value or default) there are three key issues you need to control.

 

1)    You need to be able to value your assets however you please.

 

2)    You need access to liquidity without lowering you asset to capital ratios.

 

3)    You need to be able to stop bank runs or capital flights.

 

The Central Banks have already fixed #1 and #2 by suspending “mark to market” accounting standards and implementing QE, respectively. And thanks to rehypothecation, banks can sell assets to Central Banks via QE and still use those same assets as collateral on their derivatives trades.

 

That leaves #3: capital flights.

 

At the end of the day, no matter how many tricks the Financial Elites employ via accounting gimmicks and QE programs, depositors can still choose to take their money out of the banks and transfer it to physical cash.

 

Hence the call for cash bans, particularly of large bills.

 

The Elites claim that they want to do away with $100 bills (or greater denominations) to stop money laundering or other illicit practices.

 

The reality is that banning large bills makes it much more difficult for depositors to move their money into cash. Taking out $20,000 or more in deposits when it’s broken down into $100 bills isn’t too difficult.

 

Taking out $20,000 in $20 bills or smaller denominations IS.

 

In effect, a cash ban is an attempt to stop bank runs. The process is starting with large denominations, but it will be spreading to even small bills. The process is already underway in France, India, Spain, Uruguay, even Australia have begun implementing or preparing to implement similar schemes.

 

This is just the start. In the coming months the Fed will be announcing similar plans for a cash ban in the US.

 

Best Regards

 

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 


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 -- Published: Monday, 21 November 2016 | E-Mail  | Print  | Source: GoldSeek.com

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