Nick Giambruno: There’s an annual World Economic Forum meeting in Davos, Switzerland. Leaders in business, government, media, and even some celebrities go to these events to discuss the big issues of the day. This conference happens every year in the open. But this year, I think a secret meeting took place during the conference behind the scenes, with huge historical significance…
Immediately after the conference, there was a big acceleration to eliminate paper cash, or at least high-denomination currency notes. A flood of articles fromThe New York Times, The Economist, Zero Hedge, and other publications picked up on this.
For example, a few days after Davos, the head of the Japanese central bank implemented negative interest rates for the first time ever. This was after he repeatedly denied that he was planning to use negative rates. It seems like something might have changed his mind at that conference. But that’s not all.
After the conference, the CEO of Deutsche Bank called for the elimination of cash. Norway’s biggest bank essentially did the same thing.
Bloomberg published a piece called “Bring on the Cashless Future.” Financial Times published something very similar. Then Harvard put out a paper talking about the need to eliminate high-value paper currencies, like the $100 bill and the €500 note.
Negative rates and the War on Cash really went into overdrive after this Davos meeting. I can’t conclusively prove that a secret meeting took place, but there’s a lot of circumstantial evidence that points to it.
Scott Horton: The ideas of negative interest rates and outlawing cash sound like crankery. Plus, we’re talking about the most powerful people in the world, their representatives in media, and their lackeys in government proposing this. This is something to take very seriously.
My question is if the banks are so powerful, why are they allowing the government to engage in this policy? It seems like it’s tailor-made to destroy their business.
Nick Giambruno: It is horrible for the banks, which earn a big part of their revenue charging interest. But they tolerate it because there’s another component of this. It’s the evil twin brother of negative interest rates… the War on Cash.
With negative interest rates, a lot of people would rather take their money out of the bank and put it under a mattress than suffer a penalty or a tax on saving money.
The economic central planners know this, and that’s why the War on Cash has been really ramped up along with the spread of negative interest rates around the world.
The banking system is very fragile. There’s not a lot of actual paper cash in banks. It’s mostly digital bytes on a computer. So if people start pulling paper money out of the banks en masse, it won’t take much to bring the whole system down.
Their solution is to make accessing cash harder, and in some cases, illegal. Take France, for example. It’s now illegal to do cash transactions over €1,000 without documenting it properly. That keeps cash in the banking systems. That makes the banks happy because if you can’t withdraw your cash, there can’t be a bank run.
Scott Horton: You cite Ron Paul here saying, “The cashless society is the IRS’s dream come true: total knowledge of, and control over, the finances of every single American.”
Negative interest rates and the War on Cash sounds like a big joke. It’s a world where nobody can buy or sell anything to anyone without it going on their permanent record.
Nick Giambruno: Yeah, it’s truly horrifying. But this is what it’s coming to. It’s the government’s dream. They’re saying, “Oh, well, terrorists use cash and drug dealers use cash, so we have to get rid of it or make it harder to use.” It’s completely ridiculous, and anybody who can think critically and independently can see right through this.
Privacy is a fundamental human right. It’s necessary to keep human dignity in a free society, and unfortunately, a lot of people have forgotten that.
Scott Horton: Now, Nick, I’m not an international man or an investment adviser, so you’re going to have to help me understand.
These guys want to implement negative interest rates. Not only are they paying you almost nothing in interest, but they’re actually going to punish you for keeping money in your account. Then they’re going to blackmail you into keeping your money in your bank account by trying to outlaw cash and make it impossible for you to take out large bills.
Doesn’t that completely defeat the whole point of negative interest rates in the first place, which is this stupid policy of trying to stimulate the economy by forcing people to spend the money?
Nick Giambruno: Well, no, they’ll just spend the money through electronic means that are tracked, controlled, and taxed to the maximum. If you lose 50 bucks a year for keeping a thousand in the bank, you’re going to spend it.
Scott Horton: So the point isn’t whether you’re keeping your money at the bank; it’s whether you’re spending your money through the bank using their card to do it?
Nick Giambruno: Correct. Think of the information that’s available to governments if no one can buy or sell anything without going through a bank. It’s big government’s dream come true.
Scott Horton: You know, it probably sounds stupid, but I used to be so paranoid about this kind of thing. The idea that every time you buy anything, it has to be on the record or else you could be in for a full-scale investigation. It reduces anybody who wants to be free to a barter economy and poverty. But here it is.
Nick Giambruno: Well, the good news is they haven’t won yet. We’ve seen counter editorials in big newspapers, like The Wall Street Journal, come out and say that this is ridiculous and make the same criticisms that you and I would make.
And they haven’t gone forward with some of these ideas yet. We can still use the $100 bill. We can still use paper cash. But it’s clear where things are headed.
There’s still time to take action to protect yourself. The simplest way is to own physical gold and silver.
Gold and silver are real money. They aren’t susceptible to the sting of negative interest rates. They’re accepted anywhere in the world. And they can’t be devalued by insane government policies.
Scott Horton: It sounds like this could cause financial bubbles, possibly even in precious metals.
Nick Giambruno: That’s possible, although gold and silver are a long way from being bubbles today. We’ll have to see how this plays out over the next few years. For governments to consider such a radical and extreme thing as banning cash shows they’re desperate. This is not a move they would consider if they were confident in the economy and their grip on it.
Another thing to watch is the psychological component to this War on Cash. A few weeks after the Davos conference, the makers of the classic board game Monopoly announced that it will no longer feature paper cash. You’re going to have an electronic “bank card,” like a debit card, instead. I think they’re trying to get people used to not using paper cash anymore.
Scott Horton: You can certainly see how this would form the basis for a total police state, where all your information is readily available at the click of a button. The cops or the government can just type in your name and hit enter.
Nick Giambruno: True. But technology is also a very good thing for the individual. Look at things that move toward decentralization like Bitcoin, encryption, and 3-D printing. It’s a tug of war. I don’t think the outcome is certain nor do I think it’s completely hopeless.
Scott Horton: These kinds of technologies seem like they’ll make cash and banks obsolete. Why do we need them at all when we can trade gold and silver coins with each other and instantly know what they’re worth?
Nick Giambruno: Exactly. The solution is not to restrict options for the money people can use. Everyone should be free to use any kind of money they want. We need to get rid of these ridiculous legal tender laws that force you to use Federal Reserve Notes.
I think if we did that, we would definitely see alternative forms of money in everyday use. It could be gold, silver, or a mix between a cryptocurrency and a commodity currency.
Scott Horton: It certainly points to making big banks like Citigroup and JPMorgan Chase obsolete.
Nick Giambruno: Oh, absolutely. That’s a wonderful thing because at this point, these big banks are just appendages of the U.S. government. They’re not entities of the free market. They’re entities of crony capitalism and economic fascism. So anything that does away with them, the better.
Scott Horton: Thanks very much for coming back on the show, Nick. Good to talk to you.
Nick Giambruno: Any time, Scott.
Editor’s Note: The War on Cash and negative interest rates are radical and insane measures. They are a sign of desperation. They will only speed up the major monetary collapse we believe is coming.
They are also huge threats to your financial security. Central planners are playing with fire and inviting a currency catastrophe.
Most people have no idea what really happens when a currency collapses, let alone how to prepare…
How will you protect your savings in the event of a currency crisis? This just-released video will show you exactly how. Click here to watch it now.
Nick is Doug Casey’s globetrotting companion and is the Senior Editor of Casey Research’s International Man. He writes about economics, offshore banking, second passports, value investing in crisis markets, geopolitics, and surviving a financial collapse, among other topics. He is a CFA charterholder. In short, Nick’s work helps people make the most of their personal freedom and financial opportunity around the world.