STAFF NEWS & ANALYSIS
Bloomberg: Abolish Cash to Create a Freer Market
By Daily Bell Staff - September 03, 2016

Want a Free Market? Abolish Cash … If you believe that government meddling in financial markets was responsible for the last recession and the lackluster recovery, you might be right. But probably not in the way you think.  – Bloomberg

Some Bloomberg editorials are stranger than others. This one is especially strange because it argues that banning cash will create a stronger, freer market.

How does a government ban on certain items make anything freer? We don’t understand.

Here’s Bloomberg’s logic:

Two government mechanisms prevent real interest rates from getting too negative. The first is cash: As long as people can hold currency, which loses its value only at the rate of inflation, they won’t buy safe assets that yield even less.

The second is the central bank’s promise to keep the inflation rate low and stable — at about 2 percent in most developed nations. As a result, people have little reason to hold any asset that yields less than negative 2 percent (perhaps negative 3 percent, considering that cash is bulky and hard to store).

In other words, governments — by issuing cash and managing inflation — put a floor on how low interest rates can go and how high asset prices can rise. That’s hardly a free market.

Say what? The reason rates are so low in the first place is because of monopoly central banking, which exists in the US only because Congress voted to create the Federal Reserve.

The Fed is a monopoly money facility. It is not a free-market creation.

So the logic of this editorial is that because the Fed has irrationally damped rates – as part of a larger move to ruin economies and bring in a global central bank – the US government should ban cash and unleash negative rates.

The result of all this government and central bank price fixing will allow a “free-market” to operate more powerfully and efficiently. Wow.

The right answer is to abolish currency and move completely to electronic cash, an idea suggested at various times by Marvin Goodfriend of Carnegie-Mellon University, Miles Kimball of the University of Colorado and Andrew Haldane of the Bank of England.

Without cash, interest rates “would be able go as far into negative territory as the market required.”

The corollary here is that some people, like retirees and seniors, might get very angry about negative rates. But there’s a solution to that too: “If a government wants to redistribute resources to the elderly or the poor, it’s much better off just giving them money.”

So now we have a third, comprehensive government program. First, ban cash. Second release negative rates. Third, give money to retirees to compensate for the lack of interest.

Then a fourth necessity. Government needs to provide people with an alternative to cash that preserves anonymity. “In its absence, governments would have to allow the private sector to offer alternatives with the same attractive features.”

So government will create a new facility that ensures the same privacy as cash transactions. Why do we have a hard time believing this? ….

The way to get rid of monetary distortions is to do away with monopoly central banking. But this editorial does not recognize that alternative. Instead it postulates four separate ways that government must compensate for the irrational and ruinous outcomes of monopoly central banking.

The larger issue here is that government “laws” – any type of government actions actually – fix prices; this inevitably distorts the market and creates unexpected, negative results. Over time these negative results can turn a recession into a depression. Many would argue we’re already living through one.

Conclusion: The way to compensate for government ruin is to do away with its ruinous policies. Instead, mainstream media and those who support activist government area always suggesting other things government needs to do that will counteract what it has done before. This is nonsense. The only “solution” to government problems is LESS government. And maybe someday, somehow, somewhere, no government at all.

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  • georgesilver

    First rule:- Never have anything to do with finance where the government has a hand in it.

    Second Rule:- Try to avoid interaction with government as much as possible.

    Third rule:- Never vote. It only encourages the b@stards.

    Fourth rule:- Get rid of the notion that anyone in government is there to help or save you.

    Fifth rule:- Live your life as a free individual and rely on your own decisions good and bad. It’s the only way to become a self reliant person. Try to gather around people with the same mentality.

    Sixth rule:- Never make yourself a target by confronting governments or their paid mercenaries : just walk around them.

    It’s only the controlled media that makes governments relevant. Have you noticed that every time you pick up a newspaper or turn on the TV the main story is always about politics and politicians. This is done to make the mass population think that the government is in control of their lives and that they must obey every little utterance.

  • theBuckWheat

    Printing money is embezzlement by dilution. The party that is advantaged is government, because the printed money is used to buy government things and pay government benefits that accrue political advantage. This is the grandest scheme of theft in all human history and only gets larger as our economy finds way to “financialize” more things like the new move to use blockchains to enable far easier factoring of company invoices.

    The next step for a governments that are hungry for power is to stop printing the larger bills, nudging people into using electronic money for more and more of their transactions. The terminal phase of this can only take place when most people cannot conduct their daily lives without using electronic money. Government will soon decide that it can threaten people with being forbidden to use government money if they are “criminals”. A person could find their debit card being turned off and they literally would be stranded outside of the normal economy.

    Imagine that no gasoline station would take cash and on the way home from work, you found that the government had revoked your “license” to use electronic money. Imagine that meant you could not pay your utility bill, and that meant your home was declared “unsuitable” for children, that the Child Welfare Police would seek custody of your children for your “negligence.”

    Imagine that when such tyranny becomes so easy to implement with the push of a button (“Revoke Financial License of Citizen Jones? Yes/No. Are you sure?) If government finds it so easy to take your cash and suck your cash cards dry when it can justify “asset seizure”, imagine when it becomes technically easy to threaten us with being cut off entirely, without any money nor even the ability to use its money?

    That day is coming. Mark my words. Yes, mark.

  • Zaphod Braden

    “Cash” is your PRIVATE PROPERTY. It is the physical representation of your time at work or your intellectual output.

    To ban cash is to steal your PRIVATE PROPERTY.

    Plus it is THE “Mark of the BEAST” since every tiny transaction will be recorded and a FEE skimmed off by the BANKERS.
    Time to strip some BANKERS of their wealth to pay for the WARS they started.
    TAKE BACK all the bonuses they STOLE from Taxpayers

  • Alleged Comment

    THIS will NOT create a freer market. Nothing is more freer than CASH.

    This man is a devil liar. He also believes YOU should be disarmed but not him.

    cFku this creep. He is liar.

  • John G

    How about doing away with Bloomberg for more balanced reporting.

  • BillRind

    we need to ban and exile Bloomberg the globalist anti christian jew.

  • Kris

    Things that don’t make sense are nonsense.

  • Ephraiyim

    “They will call good evil and evill good”, God.

  • Joe

    Once again I am going to point out the fallacy of a cashless society. THE COMPUTERS ARE NOT SECURE. Imagine your bank is hacked and all funds diverted somewhere, how long can you live without access to your money? You will incur late charges on your bills be denied the ability to conduct even the simplest of transactions, buying food etc. It just happened to the Fed Settlement Bank. $100 million sent to the Philippines from the Bangladesh account and another $900 million was to follow the next day. They accidently caught the &900 million but the $100 million is gone. I spend a couple of hours per month straightening out problems people and their computers cause me, and no one pays me for my time or inconvenience. Doing away with cash is asinine.

  • Herman Nelson

    Why abolish cash? By abolishing it, you now have a record of ever single financial transaction for everything in your life that your friendly IRS and any other 3 letter agency has access to. Cash is my hand to yours. Transaction between parties, no record. What happens when your government declares that you are a dissident and a threat to their power? They simply freeze your financial assets. For those of you that say I have nothing to fear if I have nothing to hide- Dr. Goebels said that as well. You remember Dr. Goebels..? The minister of propaganda and communications for Hitler’s Nazi party.

    No, abolishing cash does not make a freer market, it means more control over the citizens.

  • BT

    Wow, a crony capitalist controlled market would be great for the elite. Imagine never having to worry about finding those hidden dollars, no savings in the mattress for the middle class, only theft and more theft. If nothing else, we have all certainly learned that there are a set of rules for the working class, and a different set of rules for the elite/political class. So far as cashless, no thanks, as slavery has already been abolished once.

  • Edward Smith

    I so would love less government, but abolishing cash is opposite of what is required.

  • If they did this then market for alternative means’ of exchange (currencies) and stores of wealth (money) would flourish.

  • Dave Barcelou

    Read G. Edward Griffin’s… “The Creature From Jekyll Island”. It’s all you need to know about the FED (which is no more federal than FEDERAL EXPRESS). Truth is always stranger than fiction. Ask David Chaum how “anonymous digital cash” worked out for him? Holds over a dozen patents on it, tries to bring it to market and ends up “retiring’ to a less controversial ‘opportunity’ as a Professor @ Berkeley?

    DigiCash is better than BTC which is why its not available. He’s now back for more…

    http://fortune.com/2016/01/14/encryption-wars-crypto-david-chaum/

  • No More Neos

    “Government campaigns of intimidation — like the wars on drugs, terror, and poverty — have been used to extort the public for decades. Despite the previous failures of institutional “wars,” a new war on cash is being waged that threatens freedom in a more subversive way than ever before.

    Banks and governments around the world are cracking down on the use of paper money, and in turn, eliminating any anonymity left in the current system. Through strict rules on cash transactions and civil asset forfeiture laws, for example, the system has already instituted penalties for using cash. But as payments evolve into a purely digital network, the consequences of this new paradigm are being brought into the spotlight.

    The ability to track, record, and mediate transactions of all individuals is a power dictators throughout history could have only dreamed of. Those who value privacy are turning to alternatives like cash, cryptocurrencies, and precious metals, but these directly threaten central bank dominance. This ongoing tug-of-war in financial innovation will determine whether we enter an age of individual empowerment or centralized enslavement.”

    https://straightlinelogic.com/2016/09/08/why-you-should-be-paying-attention-to-americas-quiet-war-on-cash-by-shaun-bradley/

  • No More Neos

    The globalists really need to let their dream of Technocracy go…

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