Quote:

---

Q: What do you know about banks not accepting cash deposits into accounts when the person has the account number?
My son, who lives in Phoenix, needed $150 for a tank of gas and some diapers for his baby. He banks with Chase, so armed with his account number, I drove to the nearest branch to make a deposit.
They told me that, despite my having the account number and the name and address of record, my cash deposit was unacceptable per "policy" because I was not a signer on the account.
Since when do you not accept a cash deposit into a legitimate account? Are they trying to steer people toward using wire service and collect the accompanying fees?
I appreciate the concern of drug money/laundering scams, but we are talking $150, not $10,000.
The sad part of the equation is that they sent me home (10 miles round trip) to get my checkbook and not only did they then gladly accept the deposit, but issued immediate credit to the account.

J.H., Parma

A: The change, which was adopted last month, "is being made only to combat misuse of accounts, including money laundering," said Chase spokeswoman Emily Smith.

Chase is the first major bank in the nation to adopt such a policy.

Chase accepts deposit from customer's evicted tenant, and nothing can stop it

"I'm really sorry to hear that your reader had trouble depositing money into his son's account," Smith said. "It would have been so simple for him to do 'quick pay.' He wouldn't have even needed to go to the branch at all."

With "quick pay," a customer can use a smart phone to transfer money from his account directly into another person's account. For more information, go to:

---

Quote:

---

We have discussed the views of Citigroup’s chief economist Willem Buiter previously in these pages (see “A Dose of Buiternomics” for details), on occasion of his coming out as a supporter of assorted monetary cranks, such as Silvio Gesell, to name one. Not to put too fine a point to it, Buiter is a monetary crank too.

Buiter is always shilling for more central bank intervention, and it seems no plan can ever be too silly or too extreme for him. In fact, he seems to have made the propagation of utterly crazy ideas his trademark.

Buiter has now joined one of his famous colleagues, Kenneth Rogoff, another intellectual enamored with central planning, in clamoring for a cash ban (for our discussion of Rogoff, see “Meet Kenneth Rogoff, Unreconstructed Statist”). Both Buiter and Rogoff want to make it impossible for citizens to escape the latest depredations of central bankers, such as the imposition of negative interest rates. This is to be done by forcing them to keep their money in accounts at fractionally reserved banks.



web1_WSOP-FINAL-TABLE_111114DB_020_6

If Buiter gets his way, there won’t be a WSOP final table with piles of cash anymore.

Photo credit: David Becker / Las Vegas Review-Journal

As Bloomberg reports:

“The world’s central banks have a problem. When economic conditions worsen, they react by reducing interest rates in order to stimulate the economy. But, as has happened across the world in recent years, there comes a point where those central banks run out of room to cut — they can bring interest rates to zero, but reducing them further below that is fraught with problems, the biggest of which is cash in the economy.



In a new piece, Citi’s Willem Buiter looks at this problem, which is known as the effective lower bound (ELB) on nominal interest rates. Fundamentally, the ELB problem comes down to cash. According to Buiter, the ELB only exists at all due to the existence of cash, which is a bearer instrument that pays zero nominal rates. Why have your money on deposit at a negative rate that reduces your wealth when you can have it in cash and suffer no reduction? Cash therefore gives people an easy and effective way of avoiding negative nominal rates. Buiter’s note suggests three ways to address this problem:

Abolish currency.
Tax currency.
Remove the fixed exchange rate between currency and central bank reserves/deposits.

Yes, Buiter’s solution to cash’s ability to allow people to avoid negative deposit rates is to abolish cash altogether. (Note that he’s far from being the first to float this idea. Ken Rogoff has given his endorsement to the idea as well, as have others.)



Before looking at the practicalities of abolishing currency, we should first look at whether it could ever be necessary. Due to the costs of holding large amounts of cash, Buiter puts the actual nominal rate at which the move to cash makes sense as closer to -100bp. So, in order for a cash abolition to become necessary, central banks would need to be in a position where they wished to set nominal rates much lower than that.



Buiter does not have to go far to find an example of where a central bank may have wanted to set interest rates much lower to -100bp. He uses (a fairly aggressive) Taylor Rule to show that Federal Reserve rates should have been as low as -6 percent during the financial crisis.”

(emphasis added)

As mentioned above, no meddling by a central bank is ever too extreme or too crazy for Mr. Buiter. Here is his ridiculous “Taylor rule” chart (the conclusions of which by the way would be vehemently disputed by none other than Mr. Taylor himself).



Ridiculous Buiter chart

Buiter’s ridiculous chart asserting that a “negative interest rate of 6% would have been needed” in 2008-2010, via Citigroup, Bloomberg.



This nice gentlemen who wants to either “abolish cash” or “tax currency” for the good of us all, is a typical example of the modern-day viciously statist intellectual (h/t, Hans-Hermann Hoppe), who constantly pines for the authorities to implement social engineering on a grand scale. As long as they implement his plan, everything will be great.


Not Bothered by Concerns

Bloomberg tells us that “Buiter is aware that his idea may a bit controversial”. What a relief. He even lists the disadvantages of abolishing cash, only to dismiss them out of hand. With the exception of one crucial point, he is mainly erecting straw men.



“Buiter is aware that his idea may be somewhat controversial, so he goes to the effort of listing the disadvantages of abolishing cash.

Abolishing currency will constitute a noticeable change in many people’s lives and change often tends to be resisted.
Currency use remains high among the poor and some older people. (Buiter suggests that keeping low-denomination cash in circulation — nothing larger than $5 — might solve this.)
Central banks and governments would lose seigniorage revenue.
Abolishing currency would inevitably be associated with a loss of privacy and create risks of excessive intrusion by the government.
Switching exclusively to electronic payments may create new security and operational risks.

Buiter dismisses each of these concerns in turn, finishing with: In summary, we therefore conclude that the arguments against abolishing currency seem rather weak.

Whatever the strength of the arguments, the chances of an administration taking the decision to abolish cash seem vanishingly small.

We are surprised by the optimism expressed by Bloomberg that “the chances of an administration taking the decision to abolish cash seem vanishingly small”. We believe that governments all over the so-called “free world” are working feverishly to make a ban of cash currency a reality.

Naturally, we couldn’t care less about the “seignorage” revenue of the State. In our opinion central banks shouldn’t even exist, and “seignorage” is nothing but a euphemism for outright theft. It’s a nice touch that Buiter also doesn’t want to “throw seniors under the bus” and gives a brief thought to the poor as well. Why would any of them ever need anything more than a $5 note?

That someone like Buiter doesn’t find it difficult to dismiss the concern that “abolishing currency would inevitably be associated with a loss of privacy and create risks of excessive intrusion by the government” is no surprise, but it is indeed a legitimate concern. Under the cover of the “war on drugs” and lately the even bigger government-sponsored racket known as the “war on terror”, financial privacy has been all but eradicated already.



Buiter

Willem Buiter, shill for statism and central planning, here seen at the Council for Foreign Relations. Did we mention that we believe he’s an atrocious economist?

Photo credit: Bloomberg



Needless to say, we dispute the idea that central banks should ever impose negative interest rates. This policy is revolting economic nonsense that greatly harms the economy. As we have previously pointed out, given that the natural rate of interest can never be zero or negative, it is an inescapable conclusion that any imposition of negative market rates will end up destroying scarce capital and leave society poorer.

Lastly, Buiter fails to list one counterargument that we believe is extremely important. Since he works for a charter member of the world’s most powerful banking cartel, this is no big surprise either. We will make up for his oversight.

The 2008 crisis has not shown that anyone needs “negative interest rates” as Buiter erroneously claims. It has mainly shown how rickety and de facto insolvent the fractionally reserved banking system really is. If not for the introduction of an accounting trick (under immense political pressure, the FASB allowed the banks to dispense with mark-to-market accounting, which suddenly made them “whole” again), a huge taxpayer bailout and money printing by the central bank on an unprecedented scale (in the post WW2 era), several of the biggest banks would have gone the way of Lehman.

It was a good reminder that although fiduciary media – deposit money that is not backed by standard money – are part of the money supply in the broader sense, their main characteristic is that they exist only in the form of accounting entries. Hence, fractionally reserved banks are at all times insolvent, since they cannot possibly pay all demand deposits on demand. This obvious violation of what once used to be a bailment contract has been sanctioned by the courts in the 19th century under the influence of banking interests. If one considers how deposit money is multiplied under this system, it should be obvious that the scheme is fundamentally fraudulent. It goes against the grain of legal traditions that have been well-established in Western culture since antiquity.

If cash were to be banned, people could no longer opt out from this system. Bank runs would no longer be possible at all. While a bank run these days only gives one government scrip that is itself an irredeemable liability of a central bank, it is at least slightly more “real” than the accounting entry known as deposit money. Most importantly, cash can insure one against a bank going under, or the breakdown of the entire banking system, which is always a potential danger. Banks would obviously love a cash ban – quite possibly they are the only ones who would love it even more than governments.

---

Quote:

---

The war on cash is proliferating globally. It appears that the private members of the world’s banking cartels are increasingly joining the fun, even if it means trampling on the rights of their customers.

Yesterday we came across an article at Zerohedge, in which Dr. Salerno of the Mises Institute notes that JP Morgan Chase has apparently joined the “war on cash”, by “restricting the use of cash in selected markets, restricting borrowers from making cash payments on credit cards, mortgages, equity lines and auto loans, as well as prohibiting storage of cash in safe deposit boxes”.

This reminded us immediately that we have just come across another small article in the local European press (courtesy of Dan Popescu), in which a Swiss pension fund manager discusses his plight with the SNB’s bizarre negative interest rate policy. In Switzerland this policy has long ago led to negative deposit rates at the commercial banks as well. The difference to other jurisdictions is however that negative interest rates have become so pronounced, that it is by now worth it to simply withdraw one’s cash and put it into an insured vault.

Having realized this, said pension fund manager, after calculating that he would save at least 25,000 CHF per year on every CHF 10 m. deposit by putting the cash into a vault, told his bank that he was about to make a rather big withdrawal very soon. After all, as a pension fund manager he has a fiduciary duty to his clients, and if he can save money based on a technicality, he has to do it.

A Legally Murky Situation – but Collectivism Wins Out

What happened next is truly stunning. Surely everybody is aware that Switzerland regularly makes it to the top three on the list of countries with the highest degree of economic freedom. At the same time, it has a central bank whose board members are wedded to Keynesian nostrums similar to those of other central banks. This is no wonder, as nowadays, economists are trained in an academic environment that is dripping with the most vicious statism imaginable. As a result, withdrawing one’s cash is evidently regarded as “interference with the SNB’s monetary policy goals”. Thus SRF reports:

“Since the national bank has introduced negative interest rates, pension funds in the country are in trouble. Banks are passing the negative rates on to them. This results in the saved pension money shrinking, instead of producing a return. A number of pension funds are therefore thinking about keeping their money in an external vault instead of leaving it in bank accounts.



One fund manager showed that for every CHF 10 m. in pension money, his fund would save CHF 25,000 – in spite of the costs involved in vault rent, cash transportation and other expenses.



However, as our research team has found out, there is one bank that refuses to pay out money in such large amounts. The editorial team has gotten hold of a letter from a large Swiss bank in which it tells its customer, a pension fund:



“We are sorry, that within the time period specified, no solution corresponding to your expectations could be found.”



Bank expert Hans Geiger says that this “is most definitely not legal”. The pension fund has a sight account, and has the contractual right to dispose of its money on demand.

(emphasis added)

Indeed, although we all know that fractionally reserved banks literally don’t have the money their customers hold in demand deposits, the contract states clearly that customers may withdraw their funds at any time on demand. The maturity of sight deposits is precisely zero.

So how come the unnamed “large bank” (they should have named it, just to see what happens…) is so bold as to break the law by refusing to pay out funds in a demand deposit? Note here that it is indeed breaking the law, as there is nothing in Swiss legislation that states that banks are allowed to refuse or delay servicing withdrawals from demand deposits upon request.

The answer is that it has probably received a “directive” from the Swiss National Bank. Note here that these directives are not legally binding. SFR further:

---

Quote:

---

Originally posted by 1kiki:
How are they going to legislate that it's illegal to pay cash for goods and services?

They can make depositing cash difficult, withdrawing cash difficult, and storing cash difficult - but if you happen to have a large amount in your mattress, how can they keep you from spending it?

---

Quote:

---

However, I intend to move more of my money into gold, and for that money in institutions, out of banks and into credit unions.

---

Quote:

---

Originally posted by 1kiki:
Or, as the slogan went MOVE YOUR MONEY

---

Quote:

---

Originally posted by 1kiki:
Wish
The deterioration of the work environment isn't just about your choices.

imo - Don't ever regret having a family. You don't want to be adopting THEIR values and look at people - and see a balance sheet with dollar signs.

---

Quote:

---

Originally posted by Wishimay:
More GREAAAT news today, since we are officially in the Year of SUCK...

Hubbs has been diagnosed with Hypothyroidism, tentatively. More tests next week.

Would certainly explain the borderline-narcolepsy.


I know, I know, it can always be worse. Taking a pill every day not the worst thing in the world (assuming it isn't caused by a tumor anyway). What's one more straw....

---

Quote:

---

Originally posted by Wishimay:
Dude, I get it, this is your cause, you helped someone -good for you!

---