Posted by: M. Walgenbach | March 28, 2012

ATM Machines Are Your Friend by Gary North

Why Your Bank’s ATM Is Your Friend.

Gary North

March 24, 2012

Your bank’s ATM is your friend. Let me explain why.
Currency has many advantages. Tax collectors hate all of them.

1. It leaves no records.

2. It can be hidden.

3. It is not easily taxed.
4. It can be passed along to heirs tax-free.
5. Traders will give discounts for it.
6. People can buy unregistered guns with it.
7. People can buy unregistered anything with it.
8. It is used by anti-government citizens.

For these reasons, governments around the world limit its use. Dr. Joseph Salerno, an Austrian School economist, has reported on governments’ efforts to make it harder to use currency.

Under cover of its multiplicity of fabricated wars on drugs, terror, tax evasion, and organized crime, the US government has long been waging a hidden war on cash. One symptom of the war is that the largest denomination of US currency is the $100 note, whose ever-eroding purchasing power is far below the purchasing power of the €500 note. US currency used to be issued in denominations running up to $10,000 (including also $500; $1,000; $5,000 notes). There was even a $100,000 note issued for transactions among Federal Reserve banks. The United States stopped printing large denomination notes in 1945 and officially discontinued their issuance in 1969, when the Fed began removing them from circulation. Since then the largest currency note available to the general public has a face value of $100. But since 1969, the inflationary monetary policy of the Fed has caused the US dollar to depreciate by over 80 percent, so that a $100 note in 2010 possessed a purchasing power of only $16.83 in 1969 dollars. That is less purchasing power than a $20 bill in 1969!

Despite this enormous depreciation, the Federal Reserve has steadfastly refused to issue notes of larger denomination. This has made large cash transactions extremely inconvenient and has forced the American public to make much greater use than is optimal of electronic-payment methods. Of course, this is precisely the intent of the US government. The purpose of its ongoing breach of long-established laws regarding financial privacy is to make it easier to monitor the economic affairs and abrogate the financial privacy of its citizens, ostensibly to secure their safety from Colombian drug lords, Al Qaeda operatives, and tax cheats and other nefarious white-collar criminals.

Now the war on cash has begun to spread to other countries. As reported a few months ago, Italy lowered the legal maximum on cash transactions from €2,500 to €1,000. The Italian government would have preferred to set a €500 or even €300 maximum limit but reasoned that it should permit Italians time to adjust to the new limit. The rationale for this limit on the size of cash transactions is the fact that the profligate Italian government is trying to reduce its €1.9 trillion debt and views its anticash measures as a means of cracking down on tax evasion, which “costs” the government an estimated €150 billion annually. . . .

Meanwhile the war on cash in Sweden is accelerating, although the involvement of the state is less overt. In Swedish cities, cash is no longer acceptable on public buses; tickets must be purchased in advance or via a cell-phone text message. Many small businesses refuse cash, and some bank facilities have completely stopped handling cash. Indeed in some Swedish towns it is no longer possible to use cash in a bank at all. Even churches have begun to facilitate electronic donations from their congregations by installing electronic card readers. Cash transactions represent only 3 percent of the Swedish economy, while they account for 9 percent of the eurozone and 7 percent of the US economies. . . .

This is not random. The closer to socialism an economy gets, the more the government battles the use of cash. It much prefers digital money, which can be traced.

I am an advocate of buying smart. If you buy used goods, use currency. Ask for discounts.
It is difficult to buy large-ticket goods with currency. But in a crisis, currency works.

In mass inflation, it’s a liability. So is cash in the bank.

In deflation, it is ideal. If banks go bankrupt, currency becomes the best investment.
Before the FED moves from mass inflation to stable money, it will be wise to get currency. If the FED ever adopts a policy of no more government bond purchases, banks will fail. Currency will be king. Small bills will be best for most transactions, where sellers do not have currency to make change.


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