Got Cash?

bankrunNot if the government and banks can help it. As the nations of the world continue to wallow in economic doldrums of their own making, there are the predictable moves to move your cash from your pocket to theirs.

Chase Bank has a new policy that will help stem your use of hard cash. From not being able to pay certain debts with it in some locations, to not being allowed to store it in safe deposit boxes. Not that this should surprise us. Chase was one of the biggest bail-out benefactors of the US government during the last economic crisis. Its natural that they would assist the government in its concerns for fighting terrorism. Or am I guilty of conspiracy thinking?

What does cash have to do with terrorism? Besides everything having to do with terrorism, the government says that controls need to be in place to discourage the ability of terrorist organizations to move money about. And to help with that, the US government started strongly urging banks to report any cash transactions carried out by their customers that exceed $5,000. And if they don’t report a certain percentage of the transactions they are subject to possible inspections. If you were a banker, what would you do? You’d report the transactions of your customers.

There is always a good reason given for such measures. The State of Louisiana says it is targeting crime by now prohibiting cash transactions when buying and selling secondhand merchandise. No more garage sales dealing in cash unless the seller dutifully documents and reports a pile of personal information concerning the transaction. That will surely keep drug lords from laundering money through the neighborhood yard sales.

Across the world governments are slowly increasing the pressure on the cash-saving and cash-spending population. Crete pushed the envelope a few years ago by conducting a “bail-in”—confiscating a percentage of large cash accounts to pay for bank losses. Australia is now moving towards imposing fees on banks for accounts with large amounts of cash. A fee that will obviously be passed on in penalties to the account holders.

Why all this concern over cash? Because its there and because they want it. Despite lies to the contrary, cash is very valuable. And in the mind of governments and banks, it never belonged to you, anyway. As Lord Acton once warned, “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”

Governments and bankers have an unhealthy, symbiotic relationship. They both want your money and if it is in cash, and not in the bank, they can’t easily take it. Not that you should complain, in their minds, at least. They’ve never believed it belongs to you, anyway.

Last week a leading economist recommended a cashless society. He gave the typical list of benefits of digital money and how it would lift us out of our economic hard times. And there may be some possible advantages, but few have to do with you and I. And this isn’t a new idea. There are municipalities around the nation that already prohibit payment of certain fees and taxes with cash. So much for the law that says that US money is legal tender and must be accepted.

The advantages to a government are almost too many to mention. By forcing all transactions to occur digitally, the government can know everything about your financial life. Think taxation. Think control of the economy that currently slips out of their clutches. Those that work for cash. Those that wish to buy things and keep things private, for tax or personal purposes. Those aren’t the first reasons given, of course. We get the “control drugs and crime” excuse, and the “justice for those who are not paying lawful taxes” reasons, instead.

Most of the cash that exists at the moment is not paper and coin. It’s digits in computer accounts. Way cheaper than actually printing and coining, or transacting in a currency. For them. There goes another reason. Just think of the money that government could save.

Does any government have a right to know every transaction you make in life? Admittedly they already know when you spend money via an electronic transaction, thanks to government banking regulations and the NSA. And it gives them a wonderful track record of much of your entire life. By analyzing where, when, and what, any government agency with the interest can piece together your travels and activities. But don’t worry. They are just looking for terrorists…

Besides the right to spend your worth where, when and for what you desire, there are practical reasons to have cash. Ask a citizen of Ukraine how reliable digital cash is at the moment. Or a family of refugees trying to leave the Middle East. Any of us who have been through a natural disaster know that when the power is out, credit and debit cards are useless. Hard cash is the only means of buying and selling necessities when the conveniences of modern life are unavailable.

As the times grow worse, count on government to clamp down even more on hard money. Currency controls. Always for a good, sound reason, of course. And many are already in place. Try leaving or arriving in the country with more than $10,000 in cash and you will soon educate yourself. Or open a bank account in a foreign nation, as an American citizen. Good luck finding a foreign bank that will be willing to put up with the reporting requirements to the US Government. And don’t even think about not reporting it, yourself.

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Digital cash is easy to clamp down on. At a moments notice, ATM’s can be shut off. Banks can cease transactions much less noticeably than locking their front doors. And when government aids the process by shutting down the use of hard cash, all the better. You don’t even have to be the bad guy. Just following government regulations.

Thinking safe deposit boxes? Don’t go there. Just as they currently can seize your bank account at a moments notice, governments regularly seize the contents of safety deposit boxes.

Does that leave your mattress? Perhaps. It certainly is a safer place than banks, in some ways. During the Great Depression, Americans learned the hard way. They got into he habit of creatively stashing their money. Coffee can buried in the back yard. Not a great storage container but there weren’t a lot of other options. Water rusts through containers and destroys paper. But go easy on the folks of that time. Having had their gold coins confiscated, storage of any significant amount in silver coins was bulky. And pity us. Our coins do not even contain silver. The metal “melt value” of most US coins is insignificant.

I’m not wise enough to be a monetary advisor. And I don’t want to contribute to legal troubles for anyone. So I won’t advise you to set some hard cash money aside, outside of the grasp of bankers and governments. But if you do, think it out well. Storing it in your home or business, even in a safe, is not very safe. There are ample, recent examples of government agents searching homes and confiscating the contents of safes and other caches of money. And besides the lawful crooks, there are the common types to be concerned about.

But, if for the purpose of argument we assumed that having some cash might be wise, how much do you need? It’s not that hard to plan. How much would you need to support your family during a natural disaster that lasted for two weeks or more, like Hurricane Katrina? How much would you need to buy gas, food, and water, at emergency inflated prices?

Keep in mind that the government is rapidly moving towards becoming one that views possession or use of cash suspicious. Show discernment in how much cash you deposit or withdraw from your bank at any given time. And if a law enforcement agency shows up at your door following a recent cash deposit or withdrawal, be ready to prove what you did with the money. Especially if you live in Louisiana.

In the end, nothing beats cash in hand. Whether buying or selling, all that has to be done is “show me the money.” If it cash wasn’t so valuable, bankers and governments wouldn’t be so interested in having yours.

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