Recently, my friend and colleague Louis James, editor of International Speculator, sat down with Doug Casey to discuss the ongoing “War on Cash.”
Doug reveals what people looking to protect their money should do.
As the War on Cash has gone into overdrive lately, this is a timely discussion that you’ll find below.
Until next time,
Louis James: There have been a lot of government moves recently, making it harder for people to do business in cash. What do you think, are the days of anonymous paper money numbered?
Doug Casey: It’s funny. First, there was a war on gold. Now, there is definitely a war on cash. It was inevitable. It’s part of a long-standing trend toward more state control of people’s finances. In modern times, this started back in 1970 with the so-called Bank Secrecy Act, which required U.S. persons to report the existence of any foreign bank or brokerage accounts. Of course, in those days, bank secrecy still existed, so many Americans simply violated the law.
That was followed by the Money Laundering Control Act of 1986. “Money laundering” is an artificial, arbitrary, made-up crime. This law opened the door to everyone having to explain where their money came from. In a free society, the only crimes considered real are those that involve aggression against another person or his property.
L: Actual harm.
Doug: Right. But the average person today has been programmed to think it’s a crime to move money around. Anyway, the screws were further tightened with the Orwellian “Patriot Act” in 2001, which torqued both of these measures up.
But things started getting really serious with the Foreign Account Tax Compliance Act of 2010 (FATCA). That made it mandatory, in effect, for all foreign financial institutions to report Americans who have bank or brokerage accounts. Of course, OECD countries and others had to jump on the bandwagon, making FATCA a global phenomenon.
In several countries, they’ve passed laws outlawing cash transactions above X dollars. It’s €1,000 in France. It’s $5,000 in Uruguay, which used to be the Switzerland of South America. In other countries, including Sweden, Norway, Denmark, India, and Israel, there have been calls to ban cash entirely. Just try withdrawing a large amount of cash from a U.S. or Canadian bank these days. You’re in for an unpleasant experience.
L: And it’s not just governments.
Doug: Large corporations, too. They are all members of the Deep State; they work hand-in-glove with the government. They dislike cash for their own reasons—mainly convenience, and to prevent theft and pilfering by employees. Many large companies have started banning the use of cash. Airlines are one example; they won’t take cash for drinks or meals on board anymore. Chase recently banned the use of cash for certain transactions.
L: But governments invented paper money and passed laws forcing people to use it instead of gold and silver. Why would they want to abolish it now?
Doug: If you can’t use cash, everything has to go through the banking system. Everything that goes through the banking system, of course, is extremely easy for the state to track.
The rationale they will use is obvious; it will supposedly make it impossible for drug cartels, terrorist organizations and other real or imagined bad guys to “launder” their “dirty” money. Of course, abolishing the use of cash will also make tax collection easier. It enables them to track everything you buy and sell, and, effectively, everything you own.
L: Though they’ll say it will be more “fair” because everyone will finally be forced to pay their full share.
Doug: I’m reminded of a ridiculous Bloomberg article I read the other day, saying that cash was a physically dirty, expensive, potentially criminal, and obsolete 19th-century technology. It’s a full court press attack against cash. Statists have always hated the idea of money in general, actually. Money represents freedom for the individual. It gives you the independence to be, do, and have what you want, without asking anyone’s permission. That’s why money shouldn’t have anything to do with the State.
L: All bricks in the wall. But aside from destroying financial privacy, why is this a problem? I mean, if I’m not a criminal, why should I care about hiding my finances?
Doug: If they succeed, and all your money has to be in banks or some part of the financial system governments have complete access to, they can freeze your accounts—all your activity. You’re completely under their control. So be a good little lamb.
Once again, it’s not just a matter of financial privacy. The average chimpanzee no longer really cares about that, or privacy, in general. They post everything about themselves on Facebook. They disclose everything to the IRS or their bank. Privacy is a dead concept. And that’s a cause for real pessimism. There was zero privacy in tribal times, nor much in any time until the modern era. I don’t like the idea of reverting to a primitive era. Privacy is a major way the individual can protect himself from the mob. Privacy in all regards, not just financial, is actually critical to civilization itself.
L: But there’s a bigger picture here…
Doug: Yes. Pushing people out of cash, combined with the zero interest rate policy (so-called ZIRP) and the money-printing that’s called “quantitative easing” (QE) today, has created a huge bond super bubble, plus stock and property bubbles. That also makes this a war on savers. In the EU, Japan, and several other countries, putting money in the bank guarantees a loss.
But the real issue is that the State everywhere wants to be able to control all economic and financial activity. All of it.
L: Making it all the more dangerous when they mismanage these things.
Doug: Exactly. Because you don’t get the best and brightest people going to work for government. You get the most rapacious and morally flawed. People who want to control other people.
Once the average citizen believes the State should be somehow responsible for economic stability and prosperity—a crazy notion, since the State is the cause of most instability and is the enemy of prosperity—anything can happen. The individual, even millions of them, can be sacrificed to some fictional common good. Which really means the good of the State and the major corporations around it.
One recent example is the infamous “bail in” that happened in Cyprus. Anyone who had more than €100,000 in a Cypriot bank had most of it confiscated in 2013. This blatant theft is being discussed as a policy option around the world in case of crisis, as though it were a normal thing.
In my mind, all of this is clear evidence that the global financial system is on the edge of collapse. But this isn’t an economic or financial issue nearly so much as a freedom issue.
L: When might that collapse happen?
Doug: I’ve said it before, but this is worth repeating many times, because people don’t take it as seriously as they should. We entered a gigantic financial hurricane in 2007. We’ve been in the eye of the hurricane since 2010. It’s a large eye, yes, but that’s in proportion to the huge size of the hurricane. I admit: I’ve been early on this, since the degree of what governments have been doing—with ZIRP, QE, and now the War Against Cash, is unprecedented. But we’re exiting the eye of the storm and going into its trailing edge. The global economy will be engulfed in the trailing edge of the storm before this year is over. There are many indications that this is starting right now, as we speak. And the second half of the storm is going to be much worse, much different, and last much longer than what we saw in 2008 and 2009.
L: Which was no picnic. But how can you be sure? Is there no way around the storm?
Doug: I don’t see one. I think they’ve already pulled out all the stops. I mean, I thought it was metaphysically impossible to have negative interest rates. I didn’t think anyone could be that stupid. But here we are with negative interest rates spreading around the world.
L: Your war on savers.
Doug: It’s part of the Keynesian view, in which spending and consumption drive the economy. This isn’t just wrong, it’s the exact opposite of what’s true. It’s production and saving that drive an economy. You have to save to build capital, and capital is necessary for… everything. What these people are doing is destructive of civilization itself. And when we go into the next crisis, governments will use the disastrous results of their own policies as excuses to enact even more destructive versions of the same things. As the sociopathic mayor of Chicago said, they never want to let a serious crisis go to waste. These people really believe that they should have more, perhaps even unlimited, power.
We are truly on the edge of a precipice.
Editor’s Note: As we frequently discuss, the government wants to know every detail of your financial life. That’s why it’s declared a War on Cash. And if you don’t take action soon, you could lose control of your life savings. We recently put together a report that shows you how to protect yourself. You can download the PDF by clicking here.