Some years ago, when I suspected there would be a
War on Cash at some point, everything in the behaviour of the central banks
pointed to the idea – it fit exactly into their own informed, yet unrealistic
pattern of logic. I therefore decided that it would be a likely development
and would take place at a time when they had tried everything else and had
run out of other ideas. As to a date when this might happen … I had no idea.
When several countries had begun to limit the
amount of money that a depositor could take out of a bank, I decided that the
first shots in the War on Cash had been fired and began to publish my
prognostications as to what shape it would take. First, there were the
benefits to the bank (the elimination of cash transactions, which would
assure that virtually all monetary transactions, large and small, would have
to be passed through banks, allowing them to effectively “own” all deposits,
charge for every transaction and even refuse transactions.) The governments
would also benefit. In approving the banks’ monopoly on monetary
transactions, they’d benefit primarily through the new ability to tax people
by direct debit, ending any remnant of voluntary payment of taxation.
What I didn’t anticipate at that time was that,
within a few months, the War on Cash would be escalated quickly – more
quickly than was safe for them to do, as it could alarm depositors. (As in
the old analogy of boiling a frog, it’s always best to turn up the heat
slowly, to lull the victim into complacency, as he’s being done in.)
This indicated to me that the central banks had
decided that they’d already waited too late and had better hurry up the
programme to assure that it was in place before a currency crisis could heat
up.
Since then, someone came up with an excellent name
for the phenomenon, “the War on Cash,” one that succinctly describes the plan
in a nefarious way, as it deserves to be described. Today, anyone who is
paying attention is aware of the War on Cash and what it might do to him. As
each new salvo by the banks and governments is uncovered, attentive observers
are publishing such developments on the internet.
However, there’s a further facet to the War on
Cash that no one (to my knowledge) has yet addressed. The war is still new,
and those who will be attacked are understandably still scrambling for their
muskets and hurrying to the ramparts. (Musing on how a war will play out
usually comes later, as it’s winding down and a victor seems apparent.
However, in my belief, it’s wise to examine what the landscape will look like
after the war is over, as it can serve to inform us as to what battle tactics
should be employed.)
So, let’s have a look. First off, we know that whenever
there’s a coming monetary collapse, major banks look forward to employing
their political influence to assure that legislation and emergency government
measures protect them in such a way as to assure that the upcoming
competitors are put out of business. We can expect the same this time around.
These smaller banks arise during boom times by creating many small branches –
the type seen in strip-malls and shopping villages. Typically, they may have
only 1000 or more depositors per bank – just barely enough to create profit,
but, as “convenience banks,” they can count on a steady business from those
who live nearby.
Larger banks also tend to create numerous branches
during good times, in order to hold down the rising competition; however,
they resent the need to create endless less-profitable entities that tie up
funds that could otherwise go out as directors’ bonuses. Consequently, when a
monetary crisis occurs and the government steps in to help out the major
banks, many of the competitors are driven under, as they don’t receive the
same governmental support. At such a time, we see the edifices in the city
remain, whilst the little banks in the strip mall disappear. The majors can
now be rid of them. During a banking crisis, a country returns to 19 th
century banking in terms of available institutions. Want to make a deposit?
Make a trip into the city.
In keeping with the War on Cash, ATM’s will also
be eliminated. All transactions will be by plastic card or smart phone.
Certainly, as a result of the dangerous position
the banks will already be in, we shall witness a steady increase in the
charges by banks for the privilege of having the bank control depositors’
economic worth. Worse, we shall witness the outright confiscation of deposits
(as in Cyprus in 2013) and the control of how much a depositor may debit his
account in any given week (as in Greece today). It’s at this point that a
universal trend will unquestionably take place to get around the banks’
control. This, I believe, will manifest itself in two ways: Top Down and
Bottom Up.
Top Down:
As we speak, in “lesser” countries like Romania,
branches are already closing – all of them in small towns. This will both
grow and spread, eventually to the more prominent countries. Banking will be
increasingly difficult for depositors, as the ability to actually talk to
individuals at the bank will dry up. The bank will become more like a
faceless authority that holds power over their money and will grow to be
hated in a relatively short time. (Most of the people of the world have
already learned to be deeply distrusting of banks and bankers; outright
hatred would not be a major next step.)
Bottom Up:
In the Eastern provinces of Mexico, the Campesinos
already eschew banks, choosing instead to store their money privately.
(Chiapas Province is in a virtual economic war with Western Mexico. They
value the Libertad as East Indians value gold.) Those Mexicans who live
further to the West regard their Eastern brothers as somewhat lawless and
uncivilised at present. However, when the Campesinos prove to be surviving
the crisis better than their Western neighbours, the Western provinces
will, of necessity, follow their lead. Mexico will be amongst the first
countries to return to precious metals as the primary (if not sole)
currency, setting the stage for other countries.
Countries such as Romania and Mexico will serve as
an early-warning system. The solutions they and other “fringe” countries
employ will spread quickly to the larger world. In order to keep from being
controlled by banks, the average person in the EU, US and other “civilised”
jurisdictions will learn quickly that, if other forms of trade (alternate
currencies, precious metals, barter, etc.) allow him to feed his children
when the banks restrict him, he’ll resort to any and all forms of black
market dealing that he can find.
The Treaty of Versailles
Following World War I, the victors decided to
economically cripple the losers – Germany. The Treaty of Versailles was
ruthless in its purpose – to strip Germany of all possibility of future
prosperity so that it could never rise again.
Of course, what happened was the opposite.
Following an economic collapse just five years after the war, the German
people, now desperate, chose to follow a new leader who promised that he
would “make Germany great again.” The more arrogant he became, the more
support he received. The oppression of the Treaty failed, as Germans, pushed
to the wall, came out fighting.
I believe that the War on Cash will end without such an extreme, but, just
as the Treaty of Versailles, will be stopped by the people of the world as a
result of a monetary stricture that is simply too oppressive to be tolerated.
This will by no means be a pleasant historical period to travel through. Many
people will have their savings wiped out. Many will literally starve. But the
anger that’s created in them will reveal the banks as the clear “enemy” in
this drama and, those citizens who are presently respectful of the laws of
their country, will increasingly defy the enemy. They will resort to an
alternate system. This is historically what has always occurred when people
have been squeezed to this degree and it will repeat itself this time
around..
|
|
Jeff Thomas is British and resides in the Caribbean. The son of an
economist and historian, he learned early to be distrustful of governments
as a general principle. Although he spent his career creating and
developing businesses, for eight years, he penned a weekly newspaper column
on the theme of limiting government. He began his study of economics around
1990, learning initially from Sir John Templeton, then Harry Schulz and
Doug Casey and later others of an Austrian persuasion. He is now a regular
feature writer for Casey Research’s International Man and Strategic Wealth
Preservation in the Cayman Islands.
|
The author is not affiliated with, endorsed or sponsored by Sprott Money
Ltd. The views and opinions expressed in this material are those of the
author or guest speaker, are subject to change and may not necessarily
reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the
accuracy, completeness, timeliness and reliability of the information or any
results from its use.
