Armed Polite Society
Main Forums => Politics => Topic started by: Ben on February 18, 2016, 11:50:12 AM
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Apparently the idea of banning the $100 bill (i.e., large denomination bills) is in the news right now related to potential negative interest rates. They're also trying to link it to crime and tax evasion, but it appears to be mostly focused on keeping people from storing cash.
http://www.valuewalk.com/2016/02/ban-on-100-dollar-bill/
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Ban the $100 bill? Heck, I want a $500 and $1000 bill introduced and in general circulation.
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Ban the $100 bill? Heck, I want a $500 and $1000 bill introduced and in general circulation.
I still remember when I was a little kid, my parents gave my sister a $1000 bill for her wedding.
I actually can't remember why they removed those larger denominations (i.e., was it for similar reason to the $100 bill?). Off to Google. :)
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I'm kinda at a loss about the negative interest rate and desire to ban large denomination bills. Which wouldn't even have to be a ban. Just stop printing new ones, and have the banks refuse to issue existing stock. Sure, criminals will still have $100's but that's not what such measures are meant to stop.
Why exactly would anyone aside from the banks think it'd be a good idea to punish anyone who stores money at a bank? Why would EVERY bank and credit union participate? It'd be free money for every bank IF every bank participated. Those that didn't however would get more customers and depositors than those that did want to essentially fine their own customers. All it would take would be a single bank in any area to break the lockstep and it wouldn't work. There's anti-trust and anti-cartel laws on the books. I'm not sure how they specifically apply to banks, but I'm quite sure rebel banks would gladly use them if necessary.
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Let 'em. It'll just drive more people into metals for bulk wealth storage.
Brad
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Let 'em. It'll just drive more people into metals for bulk wealth storage.
Brad
And then confiscate the metals, like FDR did.
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And then confiscate the metals, like FDR did.
Lead and copper first?
Brad
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I'm kinda at a loss about the negative interest rate and desire to ban large denomination bills. Which wouldn't even have to be a ban. Just stop printing new ones, and have the banks refuse to issue existing stock. Sure, criminals will still have $100's but that's not what such measures are meant to stop.
Why exactly would anyone aside from the banks think it'd be a good idea to punish anyone who stores money at a bank? Why would EVERY bank and credit union participate? It'd be free money for every bank IF every bank participated. Those that didn't however would get more customers and depositors than those that did want to essentially fine their own customers. All it would take would be a single bank in any area to break the lockstep and it wouldn't work. There's anti-trust and anti-cartel laws on the books. I'm not sure how they specifically apply to banks, but I'm quite sure rebel banks would gladly use them if necessary.
In Euroland, so far only the large central bank has instituted the negative interest rate. No idea if the smaller banks plan on doing it to, or if it will be passed down to "savers."
Insert mark of the beast, apocalyptic rant *here*
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And then confiscate the metals, like FDR did.
Meh. I suspect it didn't work that great back then, and wouldn't now. I wouldn't be buying overpriced gold.
Copper, brass, aluminum, etc are common, impossible to ban or confiscate and will always be in demand. If you want something more expensive, tungsten or praseodymium neodymium oxide is $20/lb.
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Meh. I suspect it didn't work that great back then, and wouldn't now. I wouldn't be buying overpriced gold.
Copper, brass, aluminum, etc are common, impossible to ban or confiscate and will always be in demand. If you want something more expensive, tungsten or praseodymium neodymium oxide is $20/lb.
..Or trade all of your $100 bills in for rolls of Nickels, at least the Nickels are worth their face value in metal. >:D
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The pseudo-Keynesians are obsessed with M2, the money velocity, because they want inflation, because that's how socialist spending on welfare, and "stimulus" can survive deficits and the debt, instead of paying it down, they just want to shrink their liabilities.
And Quantitative Easing/printing money doesn't drive inflation and the "brick and mortar" (cough) "recovery" unless that money is pushed out onto the street and end-users/consumers/businesses are forced to spend it or lose it to negative interest rates. Because of the crappy non-recovery in real jobs and brick-n-mortar investment, the low-no interest rate money has all just gone into savings or securities and other paper-wealth with institutional savers and investors.
And it all comes back round to the Fed, and the other nation's central banks being constantly used as a throttle/brake on the economy, instead of just sticking to what they should *expletive deleted*ing be doing, which is trying to maintain the stability of the currency, and let the damn economy sort itself out as it sees fit.
Like every other Lefty/Socialist idea, when everyone does not comply with what they try to dictate, because basic human nature and enlightened self-interest is against most forced collectivist solutions, the stick comes out to get compliance. So they shake the money out of the banks with negative interest rates. And the second step is to try and restrict other value stores like precious metals, or cash.
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The pseudo-Keynesians are obsessed with M2, the money velocity, because they want inflation, because that's how socialist spending on welfare, and "stimulus" can survive deficits and the debt, instead of paying it down, they just want to shrink their liabilities.
And Quantitative Easing/printing money doesn't drive inflation and the "brick and mortar" (cough) "recovery" unless that money is pushed out onto the street and end-users/consumers/businesses are forced to spend it or lose it to negative interest rates. Because of the crappy non-recovery in real jobs and brick-n-mortar investment, the low-no interest rate money has all just gone into savings or securities and other paper-wealth with institutional savers and investors.
And it all comes back round to the Fed, and the other nation's central banks being constantly used as a throttle/brake on the economy, instead of just sticking to what they should *expletive deleted*ing be doing, which is trying to maintain the stability of the currency, and let the damn economy sort itself out as it sees fit.
Like every other Lefty/Socialist idea, when everyone does not comply with what they try to dictate, because basic human nature and enlightened self-interest is against most forced collectivist solutions, the stick comes out to get compliance. So they shake the money out of the banks with negative interest rates. And the second step is to try and restrict other value stores like precious metals, or cash.
What if goldman-sachs has billions in long gold etf positions, and this all just a ploy to get people to buy up these positions- gold indices back up by vapor? [tinfoil] >:D
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As I read more, I found this article from Slate. I guess it was to be expected, considering the source but wow, just wow. How familiar does this sound?
Technological change has reduced much further the plausible need of any law-abiding American to carry a C-note in his wallet or to stash a pile of C-notes in his mattress.
http://www.slate.com/articles/business/the_customer/2010/12/ban_the_benjamins.html
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The pseudo-Keynesians are obsessed with M2, the money velocity, because they want inflation, because that's how socialist spending on welfare, and "stimulus" can survive deficits and the debt, instead of paying it down, they just want to shrink their liabilities.
And Quantitative Easing/printing money doesn't drive inflation and the "brick and mortar" (cough) "recovery" unless that money is pushed out onto the street and end-users/consumers/businesses are forced to spend it or lose it to negative interest rates. Because of the crappy non-recovery in real jobs and brick-n-mortar investment, the low-no interest rate money has all just gone into savings or securities and other paper-wealth with institutional savers and investors.
And it all comes back round to the Fed, and the other nation's central banks being constantly used as a throttle/brake on the economy, instead of just sticking to what they should *expletive deleted*ing be doing, which is trying to maintain the stability of the currency, and let the damn economy sort itself out as it sees fit.
Like every other Lefty/Socialist idea, when everyone does not comply with what they try to dictate, because basic human nature and enlightened self-interest is against most forced collectivist solutions, the stick comes out to get compliance. So they shake the money out of the banks with negative interest rates. And the second step is to try and restrict other value stores like precious metals, or cash.
This.
Basically, the central money planners are running out of knobs to turn (while forgetting that the knobs they do turn have inflection points--a little stimulus, good...more, not so much, a little monetary tweak, good, a lot, not so much)
Fiscal stimulus (2009)--no result
MASSIVE monetary stimulus (QE1,2,infinity)--no result
Now we are at the point where we have massively increased the money supply, which would normally cause massive inflation (by definition, money supply growing more than nominal GDP = inflation), but we haven't since the velocity has cratered. So the "push for 'nominal' inflation" that would normally cause some level of real investment and economic quasi-growth has stalled.
The last real knob is to penalize banks for holding substantive reserves / penalize savers for not spending (demand side economics), but since ZIRP is, well, zero, the only way to turn the knob is to negative.
Since you can't penalize non-soending of a mattress full of cash, or a big block of gold, that leads to the push toward cashless--as then the toll can be paid...otherwise, since negative interest means cash is actually deflationary, it just wouldn't work if you could just pull your accounts and not be affected.
Also, given that current law allows for a "bail-in" of banks HERE...(see Cyprus)...well, ugh.
Also, if they do a NIRP, IMHO, it will rapidly get out of control, as the velocity would spike, meaning the existing huge bulwark of money supply would suddenly hit at "normal" velocities and blammo--inflation.
Which means the "spend everything now" would accelerate, and spiral.
Given the resistance (and inability) of central banks to pull money out of the economy (since no one wants the bullshit they are selling), putting the breaks on would be tough.
It's kind of a perfect storm scenario where a black swan event could really cause issues...
Time to be diversified...
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This.
Basically, the central money planners are running out of knobs to turn (while forgetting that the knobs they do turn have inflection points--a little stimulus, good...more, not so much, a little monetary tweak, good, a lot, not so much)
Fiscal stimulus (2009)--no result
MASSIVE monetary stimulus (QE1,2,infinity)--no result
Now we are at the point where we have massively increased the money supply, which would normally cause massive inflation (by definition, money supply growing more than nominal GDP = inflation), but we haven't since the velocity has cratered. So the "push for 'nominal' inflation" that would normally cause some level of real investment and economic quasi-growth has stalled.
Japan's lost decade (which, I believe, is already 2 decades...) Oh, and look! We didn't learn from other countries' mistakes, so we had to try it ourselves!
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Say this happened and 100s disappeared now drug dealers and other black market types have to move to 50s which makes thing less convenient for them somehow. The money is too bulky to be easily concealed I guess.
Well, I looked up the measurements of US currency. Currently an ounce of gold is @$1200. Expressed as an American Golden Eagle coin it has a weight of 28.3 grams, a thickness of .11 in and a diameter of 1.2 in.
It would take 24 50s to get to $1200 and 24 US notes weigh 24 grams, have a thickness of .10 in, and a surface dimension about four times as much as a coin.
So for 10% more in thickness, and 16% more weight you get a 75% reduction in surface area.
Say the deal is a million dollars. In 50s that's 20,000 notes. Assuming the notes are in 100 ct bundles of $5000 each that's 200 bundles. Each bundle weighs @3.5 oz and is .43 in thick.
Total weight is @44 lbs. And if stacked up as a single column would be 7.16 ft high. And with a surface area of 16 sq in.
As 1 oz coins that would 833 coins weighing 52 lbs and if stacked would reach 7.6 feet but with a surface area of 25% of the notes. Which means you could do four stacks of coins in the same footprint of a note and that would only reach @ 2 ft high. A little heavier, yes but far easier to hide.
Plus gold doesn't burn and it does not give off an odor. And minting your own gold coins or just making bars might be an easier process to hide as opposed to gathering up so many 50s.
If I was in that business and had to use physical currency of some sort and didn't have access to 100s I would have to seriously look at using gold coins or bars. They might already in some instances but that would be a tipping point for sure.
Of course gold isn't liquid in the way notes are, yet. Though it could transpire that with enough movement of gold through dark channels gold becomes more popular in normal channels of commerce.
In any event I eagerly await the first newscast of a drug bust where on the table along with the drugs and weapons taking from the dealers is an actual treasure chest brimming with gold. With maybe a few gemstones and bits of miscellaneous jewelry thrown in for good measure.
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The pseudo-Keynesians are obsessed with M2, the money velocity, because they want inflation, because that's how socialist spending on welfare, and "stimulus" can survive deficits and the debt, instead of paying it down, they just want to shrink their liabilities.
Good point. I'm a flavor of Keynesian, but I've never really seen my policies implemented. I like the idea of a high 'velocity' for money, because that indicates actual economic activity, because economic activity takes place whenever money trades hands.
But I'm much more neutral on inflation because I believe that debts should actually be repaid. When the economy is doing 'good' - and by 'good' I mean 'worse than hoped, not everything is perfect, but we don't have rampant unemployment', debts should be being payed off. When the metrics are about in the middle, the budget should be balanced. Deficits should only be run during wartime and clear economic downturns.
Because people can't seem to manage this, the tax and spending systems should be set up such that this happens automatically. Not that we're likely to ever see this.
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Say this happened and 100s disappeared now drug dealers and other black market types have to move to 50s which makes thing less convenient for them somehow. The money is too bulky to be easily concealed I guess.
Well, I looked up the measurements of US currency. Currently an ounce of gold is @$1200. Expressed as an American Golden Eagle coin it has a weight of 28.3 grams, a thickness of .11 in and a diameter of 1.2 in.
It would take 24 50s to get to $1200 and 24 US notes weigh 24 grams, have a thickness of .10 in, and a surface dimension about four times as much as a coin.
So for 10% more in thickness, and 16% more weight you get a 75% reduction in surface area.
Say the deal is a million dollars. In 50s that's 20,000 notes. Assuming the notes are in 100 ct bundles of $5000 each that's 200 bundles. Each bundle weighs @3.5 oz and is .43 in thick.
Total weight is @44 lbs. And if stacked up as a single column would be 7.16 ft high. And with a surface area of 16 sq in.
As 1 oz coins that would 833 coins weighing 52 lbs and if stacked would reach 7.6 feet but with a surface area of 25% of the notes. Which means you could do four stacks of coins in the same footprint of a note and that would only reach @ 2 ft high. A little heavier, yes but far easier to hide.
Plus gold doesn't burn and it does not give off an odor. And minting your own gold coins or just making bars might be an easier process to hide as opposed to gathering up so many 50s.
If I was in that business and had to use physical currency of some sort and didn't have access to 100s I would have to seriously look at using gold coins or bars. They might already in some instances but that would be a tipping point for sure.
Of course gold isn't liquid in the way notes are, yet. Though it could transpire that with enough movement of gold through dark channels gold becomes more popular in normal channels of commerce.
In any event I eagerly await the first newscast of a drug bust where on the table along with the drugs and weapons taking from the dealers is an actual treasure chest brimming with gold. With maybe a few gemstones and bits of miscellaneous jewelry thrown in for good measure.
FRNs are debt gold coins are physical assets. Just remember that when you try to melt down $50 bills after our currency goes all zimbabwe.... :old:
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Good point. I'm a flavor of Keynesian, but I've never really seen my policies implemented. I like the idea of a high 'velocity' for money, because that indicates actual economic activity, because economic activity takes place whenever money trades hands.
This is where you keynesians have it backwards- cart before the horse if you will...
Money changes hands because economic activity takes place, not the other way around.
Let me break that down, its a fine distinction, but its not very well understood, even by nobel laureate economists...
Two people make an arrangement that benefits and enriches both parties, and make an exchange. Money does not need to be involved, though it can be used in place of an agreed value. Dumping money on either one or both of the parties or taking it away doesn't make the arrangement more likely, it just makes them both more skeptical about the value of the money as an exchange medium.
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All of this points to why it is a horrible idea to have only one issuer of currency.
Free Banking is the only way to go. The total circulation is 100% based on actual demand in the market place and the denominations (and the other physical attributes) of the issued notes are based on customer feedback. So what the people want, they get. And the competition between issuers keeps sub-optimal behaviors to a minimum.
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I remember when a $20 bill would buy what a $100 does today, and it ain't that long ago.
If they can get people to be cashless, then control is easy. Just deny the transaction electronically.
How ya gonna pay cash, even black market it would be worthless, if it is not redeemable officially.
IMO, if this flustercluck keeps on in this direction economically, politically, the only things worth a damn are gonna be consumption items like booze, sex, smoke, food, and ammo.
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I remember when a $20 bill would buy what a $100 does today, and it ain't that long ago.
If they can get people to be cashless, then control is easy. Just deny the transaction electronically.
How ya gonna pay cash, even black market it would be worthless, if it is not redeemable officially.
IMO, if this flustercluck keeps on in this direction economically, politically, the only things worth a damn are gonna be consumption items like booze, sex, smoke, food, and ammo.
Well, and the capital equipment and knowledge to create those consumption items (well, for those items some of us are either not in possession of the requisite equipment or unwilling to, in the words of the missile technology control regime, use dual-purpose hardware).
Also, when you hear "ban the $100" the best and most apt analogy is "ban Magazines above X"...if you think it stops with X...you are really blind.
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Also, when you hear "ban the $100" the best and most apt analogy is "ban Magazines above X"...if you think it stops with X...you are really blind.
^This.
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I remember when a $20 bill would buy what a $100 does today, and it ain't that long ago.
If they can get people to be cashless, then control is easy. Just deny the transaction electronically.
How ya gonna pay cash, even black market it would be worthless, if it is not redeemable officially.
IMO, if this flustercluck keeps on in this direction economically, politically, the only things worth a damn are gonna be consumption items like booze, sex, smoke, food, and ammo.
Is sex really a consumption item? I'd consider it more of a "service" and that while the purveyor does have a somewhat limited "shelf life" nothing is really being "used up" per se.
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Is sex really a consumption item? I'd consider it more of a "service" and that while the purveyor does have a somewhat limited "shelf life" nothing is really being "used up" per se.
It all depends on whether you see yourself consuming some sex or being serviced.
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It all depends on whether you see yourself consuming some sex or being serviced.
That's why I never kiss 'em on the lips.
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This is where you keynesians have it backwards- cart before the horse if you will...
Money changes hands because economic activity takes place, not the other way around.
Uh. Duh? It's an indicator. It's like your speedometer. You get it to go higher by pushing on the gas pedal - which means that you're consuming more gas(resources being traded). Increasing monetary velocity is a tricky thing. I think the best way to do it is to get the frack out of people's way.
Dumping money on either one or both of the parties or taking it away doesn't make the arrangement more likely, it just makes them both more skeptical about the value of the money as an exchange medium.
Of course. But just dumping money on people isn't going to change the velocity of that money, if you get what I'm saying.
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Good point. I'm a flavor of Keynesian, but I've never really seen my policies implemented.
Kind of like socialism and communism correct?
Great ideas that just haven't been implemented properly by the right people :laugh:
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Kind of like socialism and communism correct?
Great ideas that just haven't been implemented properly by the right people :laugh:
Yeah, pretty much. At least, unlike the communists, I can point out right where the problem is.
Due to politicians, the economy is always considered to be in a 'bad' mode and thus needing stimulus. We never get around to poking holes in bubbles like we should.
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Keynesian economics is dangerous not because it's inherently wrong or evil like communism. It tells politicians they can have their cake and eat it as well. That's why politicians love it so much, it tells them exactly what they want to hear. The less lovely parts they just ignore. Anyone with half a brain knows this, and Keynes should have been more vocal about it. Friedrich Hayek is generally a more informative economist to read up on. He was more of a realist.
Someone made a fairly well done Hayek vs. Keynes rap economics battle: https://www.youtube.com/watch?v=d0nERTFo-Sk
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Keynesian economics is dangerous not because it's inherently wrong or evil like communism. It tells politicians they can have their cake and eat it as well. That's why politicians love it so much, it tells them exactly what they want to hear. The less lovely parts they just ignore. Anyone with half a brain knows this, and Keynes should have been more vocal about it. Friedrich Hayek is generally a more informative economist to read up on. He was more of a realist.
Indeed. As I've said earlier - the budget should be balanced and all that when the ashes of the last crash are still warm. You should be running a surplus about now. Definitely during the lead-up to the housing market crash.
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Someone made a fairly well done Hayek vs. Keynes rap economics battle: https://www.youtube.com/watch?v=d0nERTFo-Sk
The economist behind those videos also hosts the Econtalk podcast. Worth listening to.
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Indeed. As I've said earlier - the budget should be balanced and all that when the ashes of the last crash are still warm. You should be running a surplus about now. Definitely during the lead-up to the housing market crash.
Not just balanced, by definition, it would have to be running a surplus.
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So..... Negative interest rates... Plus a drive to eliminate paper currency... Plus bail-in regulations... Hmmmm....
I can't imagine what could possibly go wrong. Nope, no problem here.
I think I'll go sell some platelets or something so I can buy a pre-65 silver dime. Or something.
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Hahahaha you proles think you'll be allowed to determine your own destiny ??
Hahahahahaha it's all about control....
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And now some academic pinhead wants the twenty & fifty gone and bitcoin & the like severely restricted. (http://www.economicpolicyjournal.com/2016/08/harvard-professor-creates-blueprint-for.html)
If that happens, if we're left with just ones, fives, tens and pocket change then what I said upthread about gold becoming the go-to for the black market will happen.
That will certainly rustle their jimmies.
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From the article, it appears he's also pro-negative interest rates. He wants my cash, and he wants the bank to use my money and charge me for it. Nice.
The whole freakin' world is going bizarro on me.
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From the article, it appears he's also pro-negative interest rates. He wants my cash, and he wants the bank to use my money and charge me for it. Nice.
The whole freakin' world is going bizarro on me.
The only way that'll work is to eliminate cash altogether.
Force everyone to use a "bank" of some sort and tax every transaction and since cash transactions have been eliminated there is no option to withdraw your funds into cash.
.gov in its various incarnations are already working on it in incremental steps.
I actually managed to get a couple hundred dollars of my money back from the state this year. They sent my refund in the form of a pre-paid MasterCard. The was a fee attached to every transaction. Even if I simply transferred the balance into my checking account.
It kind of pissed me off.
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From the article, it appears he's also pro-negative interest rates. He wants my cash, and he wants the bank to use my money and charge me for it. Nice.
The whole freakin' world is going bizarro on me.
I'd be good with the credit card company paying me ...
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If they can get people to be cashless, then control is easy. Just deny the transaction electronically.
How ya gonna pay cash, even black market it would be worthless, if it is not redeemable officially.
https://en.wikipedia.org/wiki/Enemy_of_the_State_%28film%29