negative - Blog - Global Risk Community2024-03-29T09:47:14Zhttps://globalriskcommunity.com/profiles/blogs/feed/tag/negativeThe Panama Papers, Bail-Ins, and the Push to Go Cashlesshttps://globalriskcommunity.com/profiles/blogs/the-panama-papers-bail-ins-and-the-push-to-go-cashless2016-04-11T18:49:07.000Z2016-04-11T18:49:07.000ZEnrique Raul Suarezhttps://globalriskcommunity.com/members/EnriqueRaulSuarez<div><p></p><p></p><div class="article-header"><div class="article-cover masthead"><img src="https://media.licdn.com/mpr/mpr/jc/AAEAAQAAAAAAAAfjAAAAJGFmMmU0YmM3LWJiZjktNDZlMi1iZDRmLTcwZWM0YWRiMGU5Ng.jpg" class="cover-image align-center" alt="The Panama Papers, Bail-Ins, and the Push to Go Cashless" /></div><div class="source-promo"><br /></div></div><div class="article-content"><h1 style="text-align:center;" class="article-title">The Panama Papers, Bail-Ins, and the Push to Go Cashless</h1><div class="article-meta"></div><div class="article-body" dir="ltr"><h2 style="text-align:center;" class="center"><strong>The War on Savings: The Panama Papers, Bail-Ins, and the Push to Go Cashless</strong></h2><p> </p><p style="text-align:center;" class="center"><strong>Posted on <span>April 10, 2016</span> by Ellen Brown</strong></p><p style="text-align:center;" class="center"></p><p style="text-align:center;" class="center"><strong>The Web of Debt Blog</strong></p><p style="text-align:center;" class="center"></p><p><em>Exposing tax dodgers is a worthy endeavor, but the “limited hangout” of the Panama Papers may have less noble ends, dovetailing with the War on Cash and the imminent threat of massive bail-ins of depositor funds.</em></p><p>The bombshell publication of the “Panama Papers,” leaked from a Panama law firm specializing in shell companies, has triggered both outrage and skepticism. In an April 3 article titled “Corporate Media Gatekeepers Protect Western 1% From Panama Leak,” UK blogger Craig Murray writes that the whistleblower no doubt had good intentions; but he made the mistake of leaking his 11.5 million documents to the corporate-controlled Western media, which released only those few documents incriminating opponents of Western financial interests. Murray writes:</p><blockquote><p>Do not expect a genuine expose of western capitalism. The dirty secrets of western corporations will remain unpublished.</p><p>Expect hits at Russia, Iran and Syria and some tiny “balancing” western country like Iceland.</p></blockquote><p>Iceland, of course, was the only country to refuse to bail out its banks, instead throwing its offending bankers in jail.</p><p><a href="http://www.telesurtv.net/english/opinion/Dance-to-the-Panama-Papers-Limited-Hangout-Leak-20160405-0036.html" target="_blank">Pepe Escobar calls</a> the released Panama Papers a “limited hangout.” The leak dovetails with <a href="http://www.thedailybell.com/news-analysis/transparency-international-plots-to-strip-global-privacy-with-public-registry-of-ownership/" target="_blank">the attempt of Transparency International</a> to create a Global Public Beneficial Ownership Registry, which can collect ownership information from governments around the world; and with UK Prime Minister David Cameron’s global anti-corruption summit next month. <a href="http://www.economist.com/news/leaders/21696532-more-should-be-done-make-offshore-tax-havens-less-murky-lesson-panama-papers" target="_blank">According to The Economist</a>, “The Panama papers give him just the platform he needs to persuade other governments, and his own, to turn their tough talk of recent years into action.”</p><p><a href="http://www.thedailybell.com/news-analysis/transparency-international-plots-to-strip-global-privacy-with-public-registry-of-ownership/" target="_blank">The Daily Bell suspects</a> a coordinated global effort linked to the push to go cashless. It’s all about knowing where the money is and who owns it, in order to tax it, regulate it, “sanction” it, or confiscate it:</p><blockquote><p>Without privacy, authoritarianism flourishes because it is impossible to build and expand private networks that would act as a deterrent . . . . A worldwide transparency regime virtually guarantees abuses and corruption from those in power.</p><p>This is a reason why the “cashless society” idea is such a bad one. When no one is able to use cash, financial histories will be easily available via electronic bank records.</p></blockquote><p>Michael Snyder of InvestmentWatchBlog.com <a href="http://investmentwatchblog.com/panama-papers-long-con-nirp-will-make-holding-physical-cashgoldsilver-an-illegal-tax-haven/" target="_blank">also links</a> the Panama Papers with the push to go cashless:</p><blockquote><p>. . . [W]ith this Panama Paper leak and all its pre-conditioning against tax havens, people aren’t realizing yet that very soon, once Negative Interest Rates and Bail-Ins are being openly discussed and prepared for implementation, the whole tax haven or tax dodger discussion in the media will quickly switch from talking about corrupt billionaires and shell companies half way around the world, and instead will be talking about something much closer to home . . . .</p><p class="center">In my strong opinion this whole thing is all part of the coming capital control war, which ties directly in with the coming transition to a biometric digital currency, the implementation of Negative Interest Rates, the rollout of large scale systemic bail-ins, and the demonization and eventual criminalization of physical assets that are outside of direct taxation control (which again would be done using the pre-conditioned guise of “tax havens”, with physical precious metals and physical cash being the main targets).</p></blockquote><p><strong>War on Corruption or War on Savers?</strong></p><p>What we may be witnessing here is the 1% going after the 10% of people who, according to German researcher Margrit Kennedy, do not need to borrow but are “net savers.” Today the remaining 90% are “all borrowed up.” Either they are unwilling to borrow more or the banks are unwilling to lend to them, since they are poor credit risks. Who, then, is left to feed the machine that feeds the 1%, and more specifically the 0.001%? The power brokers at the top seem to want it all, and today that means going after those just below them on the financial food chain. The challenge is in squeezing money from people who don’t need to borrow. How to legally confiscate their savings?</p><p>Enter bail-ins, negative interest, all-digital currencies, and the elimination of “tax havens.”</p><p>Bail-ins allow the largest banks to gamble with impunity with their depositors’ money. If the banks make bad bets and become insolvent, they can legally confiscate the deposits to balance their books, through an “orderly resolution” scheme of the sort mandated in the Dodd-Frank Act.</p><p>Negative interest is a fee or private tax on holding funds in the bank.</p><p>Eliminating cash prevents the bank runs that these assaults on people’s savings would otherwise trigger. Money that exists only as digital entries cannot be withdrawn and stored under a mattress.</p><p>Exposing tax havens shows the predators where the money is and who has title to it, facilitating its confiscation and preventing the funding of massive rebellions against confiscation.</p><p><strong>Orchestrated at Davos</strong></p><p>That could help explain those coordinated developments we’ve been seeing across the central-bank-controlled world, proliferating particularly after the January summit of the World Economic Forum in Davos, Switzerland, where the global elite gather to discuss the hot economic issues of the day.</p><p><a href="https://www.weforum.org/agenda/2016/01/5-things-i-learned-at-davos-2016" target="_blank">According to one Morgan Stanley attendee</a>, a notable topic this year was the need for “a rapid introduction of a cashless society so that even more negative deposit interest rates could be introduced in Europe to offset likely secular stagnation.” With the use of physical cash curtailed, <a href="http://www.zerohedge.com/news/2016-02-24/exposing-hidden-agenda-davos-2016" target="_blank">J.P. Morgan estimates</a> the European Central Bank could ultimately bring interest rates as low as <em>negative 4.5%.</em></p><p>“Secular stagnation,” the official justification for negative interest, means a chronic shortfall in demand: not enough money chasing goods and services. Today <a href="http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf" target="_blank">virtually all money is created by banks</a> when they make loans; and when old loans are paid off, new ones must be taken out to maintain the money supply. Central banks have traditionally dropped interest rates to stimulate this continual borrowing, but interest rates have now effectively been pushed to zero. The argument is that they can be pushed <em>below</em> zero – but only if cash withdrawals, and hence bank runs, are not an option.</p><p>That is the argument; but as Paul Craig Roberts, former Assistant Secretary of the Treasury for Economic Policy, <a href="http://www.paulcraigroberts.org/2016/03/08/the-financial-system-is-a-larger-threat-than-terrorism-paul-craig-roberts/" target="_blank">observes</a>:</p><blockquote><p>The notion is that the economy’s poor economic performance is not due to the failure of economic policy but to people hoarding their money. The Federal Reserve and its coterie of economists and presstitutes maintain the fiction of too much savings despite the publication of the <a href="http://www.federalreserve.gov/econresdata/2013-report-economic-well-being-us-households-201407.pdf" target="_blank">Federal Reserve’s own report</a> that 52% of Americans cannot raise $400 without selling personal possessions or borrowing the money.</p></blockquote><p>In an article titled “<a href="http://www.zerohedge.com/news/2016-02-24/exposing-hidden-agenda-davos-2016" target="_blank">Exposing the Hidden Agenda of Davos 2016</a>”, Zerohedge reports on a flurry of activity during and after Davos related to the push to go cashless. But stimulating demand may just be the cover story for something darker behind this orchestrated effort.</p><p><strong>Rescuing the Economy or the Banks?</strong></p><p>Of greater concern at Davos than “secular stagnation” was the imminent insolvency of some major banks. Ambrose Evans-Pritchard, <a href="http://www.telegraph.co.uk/finance/financetopics/davos/12108569/World-faces-wave-of-epic-debt-defaults-fears-central-bank-veteran.html" target="_blank">writing in January from Davos</a>, quoted William White, former chief economist of the <a href="https://www.bis.org/" target="_blank">Bank for International Settlements</a>, who warned:</p><blockquote><p>The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up.</p><p>. . . European banks have already admitted to $1 trillion of non-performing loans: they are heavily exposed to emerging markets and are almost certainly rolling over further bad debts that have never been disclosed.</p><p><em>The European banking system may have to be recapitalized on a scale yet unimagined</em>, <em>and new “bail-in” rules mean that any deposit holder above the guarantee of €100,000 will have to help pay for it.</em> [Emphasis added.]</p></blockquote><p>It seems the War on Cash is being waged, not to stimulate the economy, but to save the lucrative private banking scheme at all costs. Quelling the riots likely to result from the mass confiscation of deposits could also underly the heightened push for a global “security state” and for those “anti-corruption” measures designed to determine where the money is and who owns it.</p><p><em>Postscript: Bail-ins under the new 2016 European Recovery and Resolution Directive <a href="http://www.zerohedge.com/news/2016-04-10/austria-just-announced-54-haircut-senior-creditors-first-bail-under-new-european-rul" target="_blank">began officially today</a>, April 10, in Austria. Ominously, <a href="http://thedailycoin.org/austria-orders-first-bank-bail-in-takes-depositors-money-for-failed-bank/2016/04/10/" target="_blank">it was in Austria</a> that a major bank bankruptcy triggered the Great Depression in 1931.</em></p><p></p><p>Ellen Brown is an attorney and author of twelve books, including the best-selling <a href="http://webofdebt.com/" target="_blank">Web of Debt</a>. Her latest book, <a href="http://publicbanksolution.com/" target="_blank">The Public Bank Solution</a>, explores successful public banking models historically and globally. Her 300+ blog articles are at <a href="https://ellenbrown.com/" target="_blank">EllenBrown.com</a>. She can be heard biweekly on “<a href="http://itsourmoney.podbean.com/" target="_blank">It’s Our Money with Ellen Brown</a>” on PRN.FM.</p><p></p></div></div></div>Negative Interest Rates: The Real Reasonhttps://globalriskcommunity.com/profiles/blogs/negative-interest-rates-the-real-reason2016-02-10T17:45:28.000Z2016-02-10T17:45:28.000ZEnrique Raul Suarezhttps://globalriskcommunity.com/members/EnriqueRaulSuarez<div><p></p><p><a href="{{#staticFileLink}}8028242879,original{{/staticFileLink}}"><img width="340" class="align-center" src="{{#staticFileLink}}8028242879,original{{/staticFileLink}}" alt="8028242879?profile=original" /></a></p><p></p><h3 class="center" style="text-align:center;"><span class="font-size-4"><strong>Negative Interest Rates Aimed at Driving Small Banks Out of Business and Eliminating Cash: Economics Professor</strong></span></h3><p class="center" style="text-align:center;"><span class="font-size-4"> </span></p><p class="center" style="text-align:center;"><span class="font-size-4">Source:</span></p><p class="center" style="text-align:center;"></p><p class="center" style="text-align:center;"><span class="font-size-4"><strong>Washington's Blog</strong></span></p><p class="center" style="text-align:center;"></p><p class="center" style="text-align:center;"><span class="font-size-4">February 9, 2016</span></p><p class="center" style="text-align:center;"></p><p>More than one-fifth of the world’s total GDP is in countries which have imposed negative interest rates, including Japan, the EU, Denmark, Switzerland and Sweden.</p><p>Negative interest rates are spreading worldwide.</p><p>And yet negative interest rates – supposed to help economies recover – haven’t prevented Japan and Europe’s economies from absolutely tanking.</p><p>Nor have they even stimulated spending. As ValueWalk points out:</p><p>Japan has had ultra-low rates for years and its economy has been terrible. Trillions of debt in Europe now trades at negative interest rates and its economy isn’t exactly booming. Denmark, Sweden and Switzerland all have negative interest rates, but consumer spending isn’t going up there. In fact, savings rates have been going up in lockstep with the decrease in interest rates, exactly the opposite of what the geniuses at the various central banks expected.</p><p>Why is this happening? Simply, savers are scared. Lower interest rates have wrecked their retirement plans. Say you were doing some financial planning 10 years ago and plugged in 3% from your savings account. Now its 0%. You still have to plan for your retirement. Plug in 0%. What happens to your planning now? 0% compounded for X years is 0%. The math is simple. So in order to have your target savings at retirement, you need to save more, not spend more. But for some reason, the economists that run central banks around the world can’t see this. They are all stuck in their offices talking to one another and self-reinforcing this myth that they can drive spending up by reducing the rate of return on investments. Want to see consumer spending go up? Don’t wreck their savings plans so that they are too scared to spend. But that’s too simple. Instead, central banks use a chain of causation that doesn’t exist to try to create change 3 or 4 steps down the line. It hasn’t worked, and it won’t work. It isn’t in an individual’s self-interest to go out and spend their money on more “stuff” in order to spur economic growth.</p><p>So what’s really going on? Why are central banks worldwide pushing negative interest rates?</p><p><strong>Economics professor Richard Werner – the creator of quantitative easing – notes:</strong></p><p>The experience of Switzerland [shows that] negative rates raise banks’ costs of doing business. The banks respond by passing on this cost to their customers. Due to the already zero deposit rates, this means banks will raise their lending rates. As they did in Switzerland. In other words, reducing interest rates into negative territory will raise borrowing costs!</p><p>If this is the result, why do central banks not simply raise interest rates? This would achieve the same result, one might think. However, there is a crucial difference: raised rates will allow banks to widen their interest margin and make their business more profitable. With negative rates, banks’ margins will stay low and the financial situation of the banks will stay precarious and indeed become ever more precarious.</p><p>As readers know, we have been arguing that the ECB has been waging war on the ‘good’ banks in the eurozone, the several thousand small community banks, mainly in Germany, which are operated not for profit, but for co-operative members or the public good (such as the Sparkassen public savings banks or the Volksbank people’s banks). The ECB and the EU have significantly increased regulatory reporting burdens, thus personnel costs, so that many community banks are forced to merge, while having to close down many branches. This has been coupled with the ECB’s policy of flattening the yield curve (lowering short rates and also pushing down long rates via so-called ‘quantitative easing’). As a result banks that mainly engage in traditional banking, i.e. lending to firms for investment, have come under major pressure, while this type of ‘QE’ has produced profits for those large financial institutions engaged mainly in financial speculation and its funding.</p><p>The policy of negative interest rates is thus consistent with the agenda to drive small banks out of business and consolidate banking sectors in industrialised countries, increasing concentration and control in the banking sector.</p><p>It also serves to provide a (false) further justification for abolishing cash. And this fits into the Bank of England’s surprising recent discovery that the money supply is created by banks through their action of granting loans: by supporting monetary reformers, the Bank of England may further increase its own power and accelerate the drive to concentrate the banking system if bank credit creation was abolished and there was only one true bank left – the Bank of England. This would not only get us back to the old monopoly situation imposed in 1694 when the Bank of England was founded as a for-profit enterprise by private profiteers. It would also further the project to increase control over and monitoring of the population: with both cash and bank credit alternatives abolished, all transactions, money creation and allocation would be implemented by the Bank of England.</p><p>If this sounds like a “conspiracy theory”, the Financial Times argued in 2014 that central banks would be the real winners from a cashless society:</p><p>Central bankers, after all, have had an explicit interest in introducing e-money from the moment the global financial crisis began…</p><p>The introduction of a cashless society empowers central banks greatly. A cashless society, after all, not only makes things like negative interest rates possible, it transfers absolute control of the money supply to the central bank, mostly by turning it into a universal banker that competes directly with private banks for public deposits. All digital deposits become base money.</p><p></p></div>Negative Interest Rates Show “Desperation” of Central Bankshttps://globalriskcommunity.com/profiles/blogs/negative-interest-rates-show-desperation-of-central-banks2016-01-31T01:13:44.000Z2016-01-31T01:13:44.000ZEnrique Raul Suarezhttps://globalriskcommunity.com/members/EnriqueRaulSuarez<div><p></p><p><a href="{{#staticFileLink}}8028242273,original{{/staticFileLink}}"><img width="350" class="align-center" src="{{#staticFileLink}}8028242273,original{{/staticFileLink}}" alt="8028242273?profile=original" /></a></p><h2 class="center" style="text-align:center;"><strong>Negative Interest Rates Show “Desperation” of Central Banks</strong></h2><p class="center" style="text-align:center;"> </p><p class="center" style="text-align:center;"><span class="font-size-3"><strong>Source:</strong></span></p><p class="center" style="text-align:center;"></p><p class="center" style="text-align:center;"><span class="font-size-3"><a href="http://www.washingtonsblog.com/2016/01/negative-interest-rates-sign-desperation.html" target="_blank">Washington's Blog</a></span></p><p class="center" style="text-align:center;"></p><p class="center" style="text-align:center;"><span class="font-size-3">January 29, 2016</span></p><p class="center" style="text-align:center;"></p><p><em>Japan has joined the EU, Denmark, Switzerland and Sweden in imposing negative interest rates.</em> <em>Indeed, <a href="http://blogs.wsj.com/moneybeat/2016/01/29/over-a-fifth-of-global-gdp-is-now-covered-by-a-central-bank-with-negative-rates/" target="_blank">more than a fifth of the world’s GDP </a>is now covered by a central bank with negative interest rates.</em></p><p class="left">The Wall Street Journal <a href="http://www.wsj.com/articles/bank-of-japan-introduces-negative-interest-rates-1454040311" target="_blank">notes</a>:</p><p class="left">TOKYO—Japan’s central bank stunned the markets Friday by setting the country’s first negative interest rates, in a <strong>desperate</strong> attempt to keep the economy from sliding back into the stagnation that has dogged it for much of the last two decades.</p><p>BBC <a href="http://www.bbc.com/news/business-35436187" target="_blank">writes</a>:</p><p>The country is <strong>desperate</strong> to increase spending and investment.</p><p>Japan has been <strong>desperate</strong> to boost consumer spending for years. At one point it even issued shopping vouchers to stimulate demand.</p><p></p><p style="text-align:center;"><a href="{{#staticFileLink}}8028242459,original{{/staticFileLink}}"><img width="550" class="align-center" src="{{#staticFileLink}}8028242459,original{{/staticFileLink}}" alt="8028242459?profile=original" /></a><i>Image: </i><a href="http://ei.marketwatch.com//Multimedia/2016/01/29/Photos/ZH/MW-EE307_neg_ce_20160129121924_ZH.jpg?uuid=718b916c-c6ac-11e5-81af-0015c588e0f6" target="_blank"><i>MarketWatch</i></a></p><p style="text-align:center;"></p><p>The New York Times <a href="http://www.nytimes.com/2016/01/30/business/international/japan-interest-rate.html" target="_blank">writes</a>:</p><p>Moving to negative rates reflects a measure of <strong>desperation</strong> on the part of central banks. <strong>Their traditional tools have been largely exhausted</strong>, as most countries’ interest rates have been pushed to almost nothing.</p><p>MarketWatch’s senior markets writer, William Watts, <a href="http://www.marketwatch.com/story/critics-slam-bank-of-japans-negative-interest-rate-move-2016-01-29" target="_blank">notes</a>:</p><p>This might not be the sort of capitulation stock-market investors were anticipating.</p><p>The Bank of Japan’s surprise decision Friday to start charging depositors for parking excess reserves at the central bank triggered a global equity rally. But several monetary policy watchers and market strategists worried that the move was an acknowledgment that <strong>the world’s central banks are running out of ammunition in the battle against deflation</strong>.</p><p>“This is an interesting move that looks a lot more like <strong>desperation</strong> or novelty than it looks like a program meant to make a real difference,” said Robert Brusca, chief economist at FAO Economics.</p><p>Kit Juckes, global macro strategist at Société Générale, underlined the moment in a note to clients:</p><p>“First of all, forget the details, feed on the symbolism. <strong>Germany, Switzerland and Japan, the three great current account powers of the post-Bretton Woods era, whose surpluses have financed the frivolity of baby boomer Anglo-Saxons, are being told in no uncertain terms to stop saving.”</strong></p><p>Whether the strategy works or not is less important than what the decision says about global dis-inflationary forces, he said, which have forced the central banks to “set off on this path…following a trail of breadcrumbs as they head for the gingerbread house.”</p><p>But others worry that the move underlines a degree of <strong>desperation</strong> and a sense that the asset purchases at the heart of global quantitative-easing strategies are running up against some important limits.</p><p>Daiwa economists and others expect the Bank of Japan to remain under pressure to ease further. And when push comes to shove, the bank will be <strong>likely to push rates further into negative territory </strong>rather than ramp up asset purchases.</p><p>“Ultimately, negative interest rates from a veteran of monetary expansion such as the BOJ <strong>mark a capitulation about the effectiveness of QE alone</strong> as an inflation-targeting tool in world of lingering growth-debt imbalances and commodity price wars,” said Lena Komileva, economist at G-plus Economics, in emailed comments.</p><p>Banks will presumably move their deposit rates below zero in response ….</p><p>Likewise, Bloomberg previously <a href="http://www.bloombergview.com/quicktake/negative-interest-rates" target="_blank">noted</a> of the initiation of negative rates in the EU:</p><p>Negative interest rates are a sign of <strong><a href="http://www.bloomberg.com/news/articles/2015-10-22/the-great-negative-rates-experiment" target="_blank">desperation</a></strong>, a signal that traditional policy options have <a href="http://www.bloomberg.com/bw/articles/2013-11-18/larry-summers-has-a-wintry-outlook-on-the-economy" target="_blank">proved ineffective</a> and new limits need to be explored. They punish banks that hoard cash instead of <a href="http://www.bloomberg.com/news/2013-11-07/the-european-bank-s-underwhelming-surprise.html" target="_blank">extending </a>loans to businesses or to weaker lenders.</p><p>And negative rates <a href="http://news.yahoo.com/fed-consider-negative-rates-economy-soured-yellen-173212674--business.html" target="_blank">will</a> <a href="http://www.marketwatch.com/story/bernanke-says-fed-likely-to-add-negative-rates-to-recession-fighting-toolkit-2015-12-15" target="_blank">eventually</a> come <a href="http://www.zerohedge.com/news/2016-01-29/negative-rates-us-are-next-heres-why-one-chart" target="_blank">to America</a>.</p><p>Central bankers are implementing negative interest rates to force savers to buy assets … so as to artificially stimulate the economy. <a href="http://www.investopedia.com/terms/n/negative-interest-rate-policy-nirp.asp" target="_blank">Specifically</a>:</p><blockquote><p>A negative interest rate means the central bank and perhaps private banks will charge negative interest: instead of receiving money on deposits, depositors must pay regularly to keep their money with the bank. This is <strong>intended to incentivize banks to lend money more freely and businesses and individuals to invest, lend, and spend money rather than pay a fee to keep it safe</strong>.</p></blockquote><p></p><p>Postscript: Ironically, the Fed has gone to great lengths to <a href="http://www.washingtonsblog.com/2013/06/81-5-of-money-created-through-quantitative-easing-is-sitting-there-gathering-dust-instead-of-helping-the-economy.html" target="_blank">DISCOURAGE banks from lending to Main Street</a>.</p><p></p><p style="text-align:center;"></p><p></p></div>Hang Onto Your Wallets: Negative Interest Rates, the War on Cash, and the $10 Trillion Bail-inhttps://globalriskcommunity.com/profiles/blogs/hang-onto-your-wallets-negative-interest-rates-the-war-on-cash2015-11-22T02:00:53.000Z2015-11-22T02:00:53.000ZEnrique Raul Suarezhttps://globalriskcommunity.com/members/EnriqueRaulSuarez<div><p><a href="{{#staticFileLink}}8028241857,original{{/staticFileLink}}"><img width="365" class="align-center" src="{{#staticFileLink}}8028241857,original{{/staticFileLink}}" alt="8028241857?profile=original" /></a></p><p></p><p class="center" style="text-align:center;"><span class="font-size-3"><strong>Hang Onto Your Wallets: Negative Interest Rates, the War on Cash, and the $10 Trillion Bail-in</strong></span></p><p class="center" style="text-align:center;"></p><p class="center" style="text-align:center;"><span class="font-size-3">Source:</span></p><p class="center" style="text-align:center;"></p><p class="center" style="text-align:center;"><span class="font-size-3"><strong>Ellen Brown</strong></span></p><p class="center" style="text-align:center;"></p><p class="center" style="text-align:center;"><span class="font-size-3">The Web of Debt Blog</span></p><p class="center" style="text-align:center;"></p><p class="center" style="text-align:center;"><span class="font-size-3">20 November 2015</span></p><p class="left"></p><p class="left">In uncertain times, “cash is king,” but central bankers are systematically moving to eliminate that option. Is it really about stimulating the economy? Or is there some deeper, darker threat afoot?</p><p>Remember those old ads showing a senior couple lounging on a warm beach, captioned “Let your money work for you”? Or the scene in Mary Poppins where young Michael is being advised to put his tuppence in the bank, so that it can compound into “all manner of private enterprise,” including “bonds, chattels, dividends, shares, shipyards, amalgamations . . . .”?</p><p>That may still work if you’re a Wall Street banker, but if you’re an ordinary saver with your money in the bank, you may soon be paying the bank to hold your funds rather than the reverse.</p><p>Four European central banks – the European Central Bank, the Swiss National Bank, Sweden’s Riksbank, and Denmark’s Nationalbank – have now imposed negative interest rates on the reserves they hold for commercial banks; and discussion has turned to whether it’s time to pass those costs on to consumers. The Bank of Japan and the Federal Reserve are still at ZIRP (Zero Interest Rate Policy), but several Fed officials have also begun calling for NIRP (negative rates).</p><p>The stated justification for this move is to stimulate “demand” by forcing consumers to withdraw their money and go shopping with it. When an economy is struggling, it is standard practice for a central bank to cut interest rates, making saving less attractive. This is supposed to boost spending and kick-start an economic recovery.</p><p>That is the theory, but central banks have already pushed the prime rate to zero, and still their economies are languishing. To the uninitiated observer, that means the theory is wrong and needs to be scrapped. But not to our intrepid central bankers, who are now experimenting with pushing rates below zero.</p><p>Locking the Door to Bank Runs: The Cashless Society</p><p>The problem with imposing negative interest on savers, as explained in the UK Telegraph, is that “there’s a limit, what economists called the ‘zero lower bound’. Cut rates too deeply, and savers would end up facing negative returns. In that case, this could encourage people to take their savings out of the bank and hoard them in cash. This could slow, rather than boost, the economy.”</p><p>Again, to the ordinary observer, this would seem to signal that negative interest rates won’t work and the approach needs to be abandoned. But not to our undaunted central bankers, who have chosen instead to plug this hole in their leaky theory by moving to eliminate cash as an option. If your only choice is to keep your money in a digital account in a bank and spend it with a bank card or credit card or checks, negative interest can be imposed with impunity. This is already happening in Sweden, and other countries are close behind. As reported on Wolfstreet.com:</p><p><br />The War on Cash is advancing on all fronts. One region that has hogged the headlines with its war against physical currency is Scandinavia. Sweden became the first country to enlist its own citizens as largely willing guinea pigs in a dystopian economic experiment: negative interest rates in a cashless society. As Credit Suisse reports, no matter where you go or what you want to purchase, you will find a small ubiquitous sign saying “Vi hanterar ej kontanter” (“We don’t accept cash”) . . . .</p><p>The Lesson of Gesell’s Decaying Currency</p><p>Whether negative interests will actually stimulate an economic recovery, however, remains in doubt. Proponents of the theory cite Silvio Gesell and the Wörgl experiment of the 1930s. As explained by Charles Eisenstein in Sacred Economics:</p><p><br />The pioneering theoretician of negative-interest money was the German-Argentinean businessman Silvio Gesell, who called it “free-money” (Freigeld) . . . . The system he proposed in his 1906 masterwork, The Natural Economic Order, was to use paper currency to which a stamp costing a small fraction of the note’s value had to be affixed periodically. This effectively attached a maintenance cost to monetary wealth.</p><p>. . . [In 1932], the depressed town of Wörgl, Austria, issued its own stamp scrip inspired by Gesell . . . . The Wörgl currency was by all accounts a huge success. Roads were paved, bridges built, and back taxes were paid. The unemployment rate plummeted and the economy thrived, attracting the attention of nearby towns. Mayors and officials from all over the world began to visit Wörgl until, as in Germany, the central government abolished the Wörgl currency and the town slipped back into depression.</p><p>. . . [T]he Wörgl currency bore a demurrage rate [a maintenance charge for carrying money] of 1 percent per month. Contemporary accounts attributed to this the very rapid velocity of the currencies’ circulation. Instead of generating interest and growing, accumulation of wealth became a burden, much like possessions are a burden to the nomadic hunter-gatherer. As theorized by Gesell, money afflicted with loss-inducing properties ceased to be preferred over any other commodity as a store of value.</p><p>There is a critical difference, however, between the Wörgl currency and the modern-day central bankers’ negative interest scheme. The Wörgl government first issued its new “free money,” getting it into the local economy and increasing purchasing power, before taxing a portion of it back. And the proceeds of the stamp tax went to the city, to be used for the benefit of the taxpayers. As Eisenstein observes:</p><p><br />It is impossible to prove . . . that the rejuvenating effects of these currencies came from demurrage and not from the increase in the money supply . . . .</p><p>Today’s central bankers are proposing to tax existing money, diminishing spending power without first building it up. And the interest will go to private bankers, not to the local government.</p><p>Consumers today already have very little discretionary money. Imposing negative interest without first adding new money into the economy means they will have even less money to spend. This would be more likely to prompt them to save their scarce funds than to go on a shopping spree.</p><p>People are not keeping their money in the bank today for the interest (which is already nearly non-existent). It is for the convenience of writing checks, issuing bank cards, and storing their money in a “safe” place. They would no doubt be willing to pay a modest negative interest for that convenience; but if the fee got too high, they might pull their money out and save it elsewhere. The fee itself, however, would not drive them to buy things they did not otherwise need.</p><p>Is There a Bigger Threat than a Sluggish Economy?</p><p>The scheme to impose negative interest and eliminate cash seems so unlikely to stimulate the economy that one wonders if that is the real motive. Stopping tax evaders and terrorists (real or presumed) are other proposed justifications for going cashless. Economist Martin Armstrong goes further and suggests that the goal is to gain totalitarian control over our money. In a cashless society, our savings can be taxed away by the banks; the threat of bank runs by worried savers can be eliminated; and the too-big-to-fail banks can be assured that ample deposits will be there when they need to confiscate them through bail-ins to stay afloat.</p><p>And that may be the real threat on the horizon: a major derivatives default that hits the largest banks, those that do the vast majority of derivatives trading. On November 10, 2015, the Wall Street Journal reported the results of a study requested by Senator Elizabeth Warren and Rep. Elijah Cummings, involving the cost to taxpayers of the rollback of the Dodd-Frank Act in the “cromnibus” spending bill last December. As Jessica Desvarieux put it on the Real News Network, “the rule reversal allows banks to keep $10 trillion in swaps trades on their books, which taxpayers could be on the hook for if the banks need another bailout.”</p><p>The promise of Dodd-Frank, however, was that there would be “no more taxpayer bailouts.” Instead, insolvent systemically-risky banks were supposed to “bail in” (confiscate) the money of their creditors, including their depositors (the largest class of creditor of any bank). That could explain the push to go cashless. By quietly eliminating the possibility of cash withdrawals, the central bank can make sure the deposits are there to be grabbed when disaster strikes.</p><p>If central bankers are seriously trying to stimulate the economy with negative interest rates, they need to repeat the Wörgl experiment in full. They need to first get some new money into the economy, money that goes directly to the consumers and local businessmen who will spend it. This could be achieved in a number of ways: with a national dividend; or by using quantitative easing for infrastructure or low-interest loans to states; or by funding free tuition for higher education. Consumers will hit the malls when they have some new discretionary income to spend.</p><p>Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com. Listen to “It’s Our Money with Ellen Brown” on PRN.FM.</p><p></p></div>How are negative interest rates impacting your derivatives business?https://globalriskcommunity.com/profiles/blogs/how-are-negative-interest-rates-impacting-your-derivatives2015-09-14T15:07:50.000Z2015-09-14T15:07:50.000ZCristin Rifflehttps://globalriskcommunity.com/members/CristinRiffle<div><div class="article-body" dir="ltr"><p>Years ago negative interest rates were unheard of. Modeling assumptions (often purposely) excluded them due to their extremely low probability, it simply seemed counter intuitive that they could even be present in a market, and certainly if they did they seemed as if they’d be a rare blip and not a prolonged market environment.</p><p>Fast forward to today, and <a href="http://www.numerix.com/info-graphic/negative-rates" target="_blank">negative rates are rampant across the Euro Zone</a> and continue to be a critically important issue in global finance. While the <a href="http://www.theguardian.com/business/2015/sep/10/bank-of-england-still-upbeat-on-uk-despite-china-turmoil" target="_blank">Bank of England has announced its plans to proceed with their strategy to raise rates</a>, many countries still teeter near or below the zero mark. And this prolonged negative environment is impacting some of the most basic calculations and procedures used by derivatives practitioners.<a href="{{#staticFileLink}}8028236866,original{{/staticFileLink}}"><img width="322" class="align-right" src="{{#staticFileLink}}8028236866,original{{/staticFileLink}}" alt="8028236866?profile=original" /></a><br /> <br /> <strong>Just how common are negative rates in our current markets? And as a derivative market participant, how could negative interest rates be impacting your business?</strong> <br /> <br /> We’ve crafted <a href="http://www.numerix.com/info-graphic/negative-rates" target="_blank">The Uncharted Waters of Negative Rates</a> map to help visualize these rates across the globe. Explore this helpful snapshot of the markets and <a href="http://mkto-o0055.com/x0Z0000S3L50suK0Bi000T0" target="_blank">access the linked resources to learn more about how the latest negative rates research and insights from Numerix experts can help you navigate the impacts of negative rates on your business.</a></p></div></div>Why the Powers That Be Are Pushing a Cashless Societyhttps://globalriskcommunity.com/profiles/blogs/why-the-powers-that-be-are-pushing-a-cashless-society2015-05-04T21:00:00.000Z2015-05-04T21:00:00.000ZEnrique Raul Suarezhttps://globalriskcommunity.com/members/EnriqueRaulSuarez<div><p style="text-align:center;"><a href="{{#staticFileLink}}8028231501,original{{/staticFileLink}}"><img width="400" height="298" class="align-center" style="width:297px;height:194px;" src="{{#staticFileLink}}8028231501,original{{/staticFileLink}}" alt="8028231501?profile=original" /></a><span class="font-size-3">Enrique Suarez Introducing:</span></p><div class="author" style="text-align:center;"><span class="font-size-3">Washington's Blog</span></div><div class="grDate" style="text-align:center;"><span class="font-size-3">Global Research, May 04, 2015</span></div><p style="text-align:center;"></p><p style="text-align:center;"></p><p style="text-align:center;"><span class="font-size-3"><strong>We Can’t Rein In the Banks If We Can’t Pull Our Money Out of Them</strong></span></p><p style="text-align:center;"></p><p>Martin Armstrong summarizes the headway being made to ban cash, and argues that the goal of those pushing a cashless society is to prevent bank runs … and increase their control. What do you think?</p><blockquote><p>The central banks are … planning drastic restrictions on cash itself. They see moving to electronic money will first eliminate the underground economy, but secondly, they believe it will even prevent a banking crisis. This idea of eliminating cash was first floated as the normal trial balloon to see how the people take it. It was first launched by Kenneth Rogoff of Harvard University and Willem Buiter, the chief economist at Citigroup. Their claims have been widely hailed and their papers are now the foundation for the new age of Economic Totalitarianism that confronts us. Rogoff and Buiter have laid the ground work for the end of much of our freedom and will one day will be considered the new Marx with hindsight. They sit in their lofty offices but do not have real world practical experience beyond theory. Considerations of their arguments have shown how governments can seize all economic power are destroy cash in the process eliminating all rights. Physical paper money provides the check against negative interest rates for if they become too great, people will simply withdraw their funds and hoard cash. Furthermore, paper currency allows for bank runs. Eliminate paper currency and what you end up with is the elimination of the ability to demand to withdraw funds from a bank.</p><p>***</p><p>In many nations, specific measures have already been taken demonstrating that the Rogoff-Buiter world of Economic Totalitarianism is indeed upon us. This is the death of Capitalism. Of course the socialists hate Capitalism and see other people’s money should be theirs. What they cannot see is that Capitalism is freedom from government totalitarianism. The freedom to pursue the field you desire without filling the state needs that supersede your own.</p><p>There have been test runs of this Rogoff-Buiter Economic Totalitarianism to see if the idea works. I reported on <a title="June 21, 2014" href="http://armstrongeconomics.com/archives/22116" target="_blank">June 21, 2014</a> that Britain was doing a test run. A shopping street in Manchester banned cash as part of an experiment to see if Brits would accept a cashless society. London buses ended accepting cash payments from July 2014. Meanwhile, Currency Exchange dealers began offering debt cards instead of cash that they market as being safer to travel with. The Chorlton, South Manchester experiment was touted to test customers and business reaction to the idea for physical currency will disappear inside 20 years.</p><p>France passed another Draconian new law that from the police parissummer of 2015 it will now impose cash requirements dramatically trying to eliminate cash by force. French citizens and tourists will then only be allowed a limited amount of physical money. They have financial police searching people on trains just passing through France to see if they are transporting cash, which they will now seize. Meanwhile, the new French Elite are moving in this very same direction. Piketty wants to just take everyone’s money who has more than he does. Nobody stands on the side of freedom or on restraining the corruption within government. The problem always turns against the people for we are the cause of the fiscal mismanagement of government that never has enough for themselves.</p><p>In Greece a drastic reduction in cash is also being discussed in light of the economic crisis. Now any bill over €70 should be payable only by check or credit card – it will be illegal to pay in cash. The German <a title="Baader Bank" href="http://www.baaderbank.de/ueber-uns/firmenchronik.html" target="_blank">Baader Bank</a> founded in Munich expects formally to abolish the cash to enforce negative interest rates on accounts that is really taxation on whatever money you still have left after taxes.</p><p>***</p><p>Complete abolition of cash threatens our very freedom and rights of citizens in so many areas.</p><p>***</p><p>Paper currency is indeed the check against negative interest rates. We need only look to Switzerland to prove that theory. Any attempt to impose say a 5% negative interest rates (tax) would lead to an unimaginably massive flight into cash. This was already demonstrated recently by the example of Swiss pension funds, which withdrew their money from the bank in a big way and now store it in vaults in cash in order to escape the financial repression. People will act in their own self-interest and negative interest rates are likely to reduce the sales of government bonds and set off a bank run as long as paper money exists.</p><p>Obviously, government and bankers are not stupid. The only way to prevent such a global bank run would be the total prohibition of paper money. This is unlikely, both in Switzerland and in the United States because the economies are dominated there by a certain “liberalism” to some extent but also because their currencies also circulate outside their domestic economies. The fact that but the question of the cash ban in the context of a global conference with the participation of the major central banks of the US and the ECB will be discussed, demonstrates by itself that the problem is not a regional problem.</p><p>Nevertheless, there is a growing assumption that the negative interest rate world (tax on cash) is likely to increase dramatically in Europe in particular since it is socialism that is collapsing. Government in Brussels is unlikely to yield power and their line of thinking cannot lead to any solution. The negative interest rate concept is making its way into the United States at J.P. Morgan where they will charge a fee on excess cash on deposit starting May 1<sup><font size="2">st</font></sup>, 2015. Asset holdings of cash with a tax or a fee in the amount of the negative interest rate seems to be underway even in Switzerland.</p><p>***</p><p>The movement toward electronic money is moving at high speed and this says a lot about the state of the financial system. The track record of the major financial institutions is nearly perfect – they are always caught on the wrong side when a crisis breaks, which requires their bailouts. The fact that we have already seen test runs with theory-balloons flying, the major financial institutions are in no shape to withstand another economic decline.</p><p>For depositors, this means they really need to grasp what is going on here for unless they are vigilant, there is a serious risk of losing everything. We must understand that these measures will be implemented overnight in the middle of a banking crisis after 2015.75. The balloons have taken off and the discussions are underway. The trend in taxation and reduction of cash seems to be unstoppable. Government is not prepared to reform for that would require a new way of thinking and a loss of power. That is not a consideration. They only see one direction and that is to take us into the new promised-land of economic totalitarianism.</p></blockquote><p>People can’t pull cash out of their bank accounts – <a title="for political reasons" href="http://www.washingtonsblog.com/2011/11/big-banks-plead-with-customers-not-to-move-their-money.html">for political reasons</a>, because they’ve lost confidence in the bank, or because <a title="“bail-ins” are enacted" href="http://www.washingtonsblog.com/2014/12/new-rules-cyprus-style-bail-ins-take-deposits-pensions.html">“bail-ins” are enacted</a> – if cash is banned.</p><p>The Financial Times <a title="As Kaminska explains" href="http://ftalphaville.ft.com/2014/01/22/1748152/the-time-for-official-e-money-is-now/" target="_blank">argued</a> last year that central banks would be the real winners from a cashless society:</p><blockquote><p>Central bankers, after all, have had an explicit interest in introducing e-money from the moment the global financial crisis began…</p><p>***</p><p><em><strong>The introduction of a cashless society empowers central banks greatly</strong></em>. A cashless society, after all, <em><strong>not only makes things like negative interest rates possible</strong></em><em><strong>,</strong></em> it <strong>transfers absolute control of the money supply to the central bank</strong>, mostly by turning it into a universal banker that competes directly with private banks for public deposits. All digital deposits become base money.</p></blockquote><p></p><p><strong>The Government Can Manipulate Digital Accounts More Easily than Cash</strong></p><p>Moreover, an official White House panel on spying has implied that the government is <a title="manipulating the amount in people’s financial accounts" href="http://www.washingtonsblog.com/2013/12/u-s-government-changing-amount-peoples-financial-accounts-manipulating-financial-systems-offensive-cyber-capabilities.html">manipulating the amount in people’s financial accounts</a>.</p><p>If all money becomes digital, it would be much easier for the government to manipulate our accounts.</p><p>Indeed, numerous high-level NSA whistleblowers say that NSA spying is about <a title="crushing dissent" href="http://www.washingtonsblog.com/2014/05/spying-meant-crush-dissent-terrorism.html">crushing dissent</a> and <a title="blackmailing opponents" href="http://www.washingtonsblog.com/2014/07/nsa-blackmailing-world.html">blackmailing opponents</a> … <a title="mass spying actually hurts U.S. counter-terror efforts" href="http://www.washingtonsblog.com/2013/07/the-fact-that-mass-surveillance-doesnt-keep-us-safe-goes-mainstream.html">not</a> <a title="here" href="http://www.technologyreview.com/news/519336/bruce-schneier-nsa-spying-is-making-us-less-safe/" target="_blank">stopping</a> <a title="here" href="http://www.washingtonsblog.com/2013/08/top-security-expert-treating-everyone-like-a-potential-terrorist-weakens-our-ability-to-protect-america.html">terrorism</a>.</p><p>This may sound over-the-top … but remember, the government sometimes <a title="labels" href="http://www.washingtonsblog.com/2014/06/spying-dissent.html">labels</a> its critics as “<a title="terrorists" href="http://www.washingtonsblog.com/2014/02/u-s-government-labels-dissent-terrorism.html">terrorists</a>“. If the government claims the power to <a title="indefinitely detain – or even assassinate" href="http://www.washingtonsblog.com/2015/02/lost-constitutional-rights.html">indefinitely detain – or even assassinate</a> – American citizens at the whim of the executive, don’t you think that government people would be willing to shut down, or withdraw a stiff “penalty” from a dissenter’s bank account?</p><p>If society becomes cashless, dissenters can’t hide cash. All of their financial holdings would be vulnerable to an attack by the government.</p><p>This would be the ultimate form of control. Because – without access to money – people couldn’t resist, couldn’t hide and couldn’t escape.</p><p>And see the article called " <span class="font-size-2">Cashless society a threat to freedom? by</span> Signature Bank's chairman Scott Shay who is worried about the potential for a cashless society in the following link:</p><p><a href="http://video.cnbc.com/gallery/?video=3000227294">http://video.cnbc.com/gallery/?video=3000227294</a></p><p></p><p></p><p></p><p></p></div>