NEW YORK – In the afterglow of the recent World Economic Forum held in Davos, Switzerland, former Treasury Secretary Larry Summers is waging a war to eliminate America’s $100 bill – as part of the globalist strategy to prepare the United States for negative interest rates that will, eventually, result in punishment for savers.
“I remember that when the euro was being designed in the late 1990s, I argued with my European G7 colleagues that skirmishing over seiniorage by issuing a 500 euro note was highly irresponsible and mostly would be a boon to corruption and crime,” Summers wrote in a op-ed piece published in the Washington Post on Feb. 16.
It was there he argued the 500 euro note and the $100 bill should be discontinued and withdrawn from circulation. The fight he cited included concerns over the profit made by a government by issuing currency, especially the difference between the face value of coins or currency and their production costs.
In support of his argument, Summers cited a study published by the Mossavar-Rahmani Center for Business and Government at Harvard’s Kennedy School that argued eliminating high denomination, high value currency notes from circulation, including the €500 note, the $100 bill, the Swiss Frank CHF1,000 note, and the £50 note, would make transacting business more difficult for criminals.
That includes business, he argued, involving drug traffickers and human smugglers to terrorists, and the absence of those bills would help stem what the study estimated amounts to more than $2 trillion in global financial crime per year.
“Consider this: a stack of 500-euro notes worth $1 million weighs just five pounds and can be carried in a small bag, whereas a pile of $20 bills worth the same amount would weigh 110 pounds and would be much more difficult to move around,” the New York Times editorial board wrote Monday, Feb. 22, getting on board with the argument the $100 bill must go.
On Feb. 17, Reuters reported the European Central Bank had formally announced it was considering eliminating the 500-euro note, commenting that the amount of cash in the Eurozone rose to more than 1 trillion euros ($1.1 trillion) last year.
Almost 30 percent of that was in 500-euro bills, the denomination commonly used by savers, but also the denomination favored by criminals.
While Summers’ argument brings to mind drug-dealers with closets stacked with $100 bills, the underlying motivation for eliminating the $100 bill appears not to be a drive to wage a war on organized crime, but the need to wage a war on savers as a precondition for the implementation by the European Central Bank and the Federal Reserve of a negative interest rate policy, known in financial circles by the acronym NIRP, that has already been set up by the central bank in Japan, joined by Switzerland, Denmark and Sweden.
The ‘War on Savers’
Nick Giambruno, the globetrotting senior editor of the blog InternationalMan.com, warned the idea of eliminating high denomination currency bills from circulation in Europe and the United States is necessary to punish savers, not to combat international criminals who are more than capable of money laundering through international banks, as was proved by the $1.9 billion fine HSBC paid to the United States government in 2012.
Giambruno reported that after secret closed-door meetings in Davos, world leaders decided to escalate dramatically the war on cash, as a precondition for “going into overdrive” to implement negative interest rates that in Germany are known as “punishment interest.”
As WND reported on Feb. 11, savers must pay the bank what amounts to interest to hold their deposits in the through-the-looking-glass world of negative interest rates, with the result that, for instance, a $1,000 deposit today may only be worth $950 a year from now under a scenario where interest rates were set at a negative 5 percent.
Central bankers have in mind that savers could be induced to spend their money, thereby stimulating the economy, if interest rates were negative.
But the concern is that under negative interest rates, savers might just hoard cash, preferring to stuff mattress rather than spend the currency or deposit it in a bank where the bank would charge the depositor a percentage for the privilege.
So, the idea is that by eliminating high denomination currency bills, central bankers make it harder to hoard savings at home, simply because a stack of $50 bills takes twice the space and weighs twice as much as a stack of $100 bills.
“Punishing savers is exactly what central bankers – who are really central economic planners – would like to do. They think stinging savers with negative interest rates will encourage them to spend now. It’s effectively a tax on saving money,” Giambruno wrote.
“Central planners just want you to spend money. Even if you have to go into debt to do it,” he continued. “Consumption based on fear of negative interest rates is somehow supposed to ‘stimulate’ the economy.”
“Their solution to this ‘problem’ is to push the world closer to a cashless society. That cuts off your main escape route from punishment interest,” he notes.
“Central planners are doing this by phasing out larger denominations of currency notes, which makes large cash transactions impractical. Some are outright prohibiting cash transactions over a certain amount. France recently made cash transactions over €1,000 illegal, down from the previous limit of €3,000.”
‘The IRS dream’
Former Rep. Ron Paul has warned, “The cashless society is the IRS’s dream: total knowledge of, and control over, the finances of every American.”
Yet, advocates of central bank management of the economy in the E.U. and the U.S. can be expected to increase the frequency and intensity of their arguments for a quick move to a cashless society with negative interest rates well below 1 percent.
On Feb. 10, widely read economic blog ZeroHedge.com noted ironically that central bankers in large measure are resorting to NIPR because of the failure of previous central bank policies, including the Quantitative Easing printing of money to buy government debt.
That resulted not in economic stimulation as promised, but in global stagnation that ironically may now leave depositors in Europe, and possibly in the United States, stuck with negative interest rates for a decade or more.
Still the enthusiasm among central bankers and their supporters remains alive and well.
In a piece entitled “Bring on the Cashless Future,” published on Jan. 31, the editorial board of Bloomberg.com argued the future of digital fiat currency was soon to dislodge the supremacy cash has enjoyed for some 4,000 years, noting that today currency bills appear “dirty, dangerous, unwieldy and expensive, antiquated and so very analog.”
The Bloomberg editorial board suggested a central bank going to the standard of a digital legal tender could charge banks a fee for accepting paper currency, effectively setting an exchange rate between electronic and paper money that could cause paper money to depreciate against the electronic standard.
“The writing is on the wall,” Nick Giambruno warns. “The War on Cash is accelerating. And it’s setting the table for negative interest rates in the U.S.”
“The War on Cash and negative interest rates are obvious signs of desperation. They are huge threats to your financial security,” he continues. “Central bankers are playing with fire and inviting a currency catastrophe, just like they have done so many times in the past.”
Giambruno’s solution: “We think everyone should own some physical gold. Gold is the ultimate form of wealth insurance. It’s preserved wealth through every kind of crisis imaginable. It will preserve wealth during the next crisis, too.”