digital money...

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madhatter
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digital money...

Post by madhatter »

What Do Greece and Louisiana Have in Common? The War on Cash

More and more institutions are trying to make it harder for you to move your money into cash.



Globally, over $5 trillion in debt currently have negative yields in nominal terms, meaning the bond literally has a negative yield when it trades. In the simplest of terms this means that investors are PAYING to own these bonds.



Bonds are not unique in this regard. Switzerland, Denmark and other countries are now charging deposits at their banks. In France and Italy, you are not allowed to make cash transactions above €1,000.



This sounds laughable to most people, but it is a reality in Europe… and in the US, in some regions. Louisiana has made it illegal to purchase second hand goods using cash.



This is just the beginning. The War on Cash will be spreading in the coming weeks.

The reasoning is simple. Most large financial entities are insolvent. As a result, if a significant amount of digital money is converted into actual physical cash, the firm would very quickly implode.



This is precisely what happened in 2008…



When the 2008 Crisis hit, one of the biggest problems for the Central Banks was to stop investors from fleeing digital wealth for the comfort of physical cash. Indeed, the actual “thing” that almost caused the financial system to collapse was when depositors attempted to pull $500 billion out of money market funds.



A money market fund takes investors’ cash and plunks it into short-term highly liquid debt and credit securities. These funds are meant to offer investors a return on their cash, while being extremely liquid (meaning investors can pull their money at any time).



This works great in theory… but when $500 billion in money was being pulled (roughly 24% of the entire market) in the span of four weeks, the truth of the financial system was quickly laid bare: that digital money is not in fact safe.



To use a metaphor, when the money market fund and commercial paper markets collapsed, the oil that kept the financial system working dried up. Almost immediately, the gears of the system began to grind to a halt.



When all of this happened, the global Central Banks realized that their worst nightmare could in fact become a reality: that if a significant percentage of investors/ depositors ever tried to convert their “wealth” into cash (particularly physical cash) the whole system would implode.



None of these issues have been resolved. The big banks remain as leveraged as ever and at risk of implosion should a significant percentage of capital get pulled into physical cash.



European banks as a whole are leveraged at 26 to 1. In simple terms, this means they have just €1 in capital for every €26 in assets (bought via borrowed money).



This is why whenever things get messy in Europe, the ECB and EU begin implementing capital controls.



Consider what recently happened in Greece. Depositors began to flee the banks in droves, so they declared a bank holiday. This holiday included safe deposit boxes… so all the bullion or physical cash Greeks had stashed there remained locked up… just like the “digital” money in their savings accounts.



Again, it was impossible to get cash out of the banks… even cash that technically wasn’t “in the system” anymore but sitting in safe deposit banks.



The US financial system isn’t any better. Indeed, the vast majority of it is in digital money. Actual currency is just a little over $1.36 trillion. Bank accounts are $10 trillion. Stocks are $20 trillion and Bonds are $38 trillion.



And at the top of the heap are the derivatives markets, which are over $220 TRILLION.



If you think the banks aren’t terrified of what this market could do to them, consider that JP Morgan managed to get Congress to put the US taxpayer on the hook for it derivatives trades.



Mind you, this is the same bank that is now refusing to let clients store cash in safe deposit boxes.



This is just the tip of the iceberg. As anyone can tell you, it’s all but impossible to move large amounts of money into cash in the US. Even the large banks will routinely ask you for 24 hours notice if you need $10,000 or more in cash. These are banks with TRLLLIONS of dollars worth of assets on their books.



This is just the beginning.


nah, crazy talk....
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Nikoli
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Re: digital money...

Post by Nikoli »

madhatter wrote:

This is just the tip of the iceberg. As anyone can tell you, it’s all but impossible to move large amounts of money into cash in the US. Even the large banks will routinely ask you for 24 hours notice if you need $10,000 or more in cash. These are banks with TRLLLIONS of dollars worth of assets on their books.



nah, crazy talk....
This is completely untrue. I have seen 80k produced by a Chase Manhattan bank. A friend of mine has a business that deals exclusively in cash transactions. Some of those transactions are for over 250k. Obviously you don't see a teller to do this but they typically have this kind of cash on site. I would imagine that they must not like keeping a ton of cash on site for security reasons. I myself have gotten 8k from a teller without a blink of an eye. I would imagine if I had asked for 10k they wouldn't have said come back tomorrow.
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madhatter
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Re: digital money...

Post by madhatter »

Nikoli wrote:
madhatter wrote:

This is just the tip of the iceberg. As anyone can tell you, it’s all but impossible to move large amounts of money into cash in the US. Even the large banks will routinely ask you for 24 hours notice if you need $10,000 or more in cash. These are banks with TRLLLIONS of dollars worth of assets on their books.



nah, crazy talk....
This is completely untrue. um you mean you;ve seen instances where this isn;t the case? ok he did say "all but impossible" and followed up with "Even the large banks will routinely ask you for 24 hours notice if you need $10,000 or more in cash. I have seen 80k produced by a Chase Manhattan bank. A friend of mine has a business that deals exclusively in cash transactions. Some of those transactions are for over 250k. Obviously you don't see a teller to do this but they typically have this kind of cash on site. so you are saying that banks typically have more than 250k in CASH on site? and that your friend can just show up and ask a bank official for a 250k withdrawal in cash? w/o any prior notice or arrangement? and get it? how does he carry it? I mean, in 20's it'd weigh @700lbs, if its all 100's it still weighs like 130 lbs...
I would imagine that they must not like keeping a ton of cash on site for security reasons. I myself have gotten 8k from a teller without a blink of an eye. I would imagine if I had asked for 10k they wouldn't have said come back tomorrow.
can't find much on exact holdings beyond this which is hardly definitive:


http://www.quora.com/How-much-physical- ... etail-bank" onclick="window.open(this.href);return false;

but I'm still going to say few if any banks "typically" have 250k in cash on hand or even close to that amount...although some in big cities "might" have more than the avg bank, as the above notes...
mach es sehr schnell

'exponential reciprocation'- The practice of always giving back more than you take....
Dr. NO
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Re: digital money...

Post by Dr. NO »

madhatter wrote:
Nikoli wrote:
madhatter wrote:

This is just the tip of the iceberg. As anyone can tell you, it’s all but impossible to move large amounts of money into cash in the US. Even the large banks will routinely ask you for 24 hours notice if you need $10,000 or more in cash. These are banks with TRLLLIONS of dollars worth of assets on their books.



nah, crazy talk....
This is completely untrue. um you mean you;ve seen instances where this isn;t the case? ok he did say "all but impossible" and followed up with "Even the large banks will routinely ask you for 24 hours notice if you need $10,000 or more in cash. I have seen 80k produced by a Chase Manhattan bank. A friend of mine has a business that deals exclusively in cash transactions. Some of those transactions are for over 250k. Obviously you don't see a teller to do this but they typically have this kind of cash on site. so you are saying that banks typically have more than 250k in CASH on site? and that your friend can just show up and ask a bank official for a 250k withdrawal in cash? w/o any prior notice or arrangement? and get it? how does he carry it? I mean, in 20's it'd weigh @700lbs, if its all 100's it still weighs like 130 lbs...
I would imagine that they must not like keeping a ton of cash on site for security reasons. I myself have gotten 8k from a teller without a blink of an eye. I would imagine if I had asked for 10k they wouldn't have said come back tomorrow.
can't find much on exact holdings beyond this which is hardly definitive:


http://www.quora.com/How-much-physical- ... etail-bank" onclick="window.open(this.href);return false;

but I'm still going to say few if any banks "typically" have 250k in cash on hand or even close to that amount...although some in big cities "might" have more than the avg bank, as the above notes...
Would say that depends upon what city you are in and who the clients are. Brother-in-law had no problem grabbing large cash amounts in NYC and Boston area to close business deals. Sometimes banks would request him to make a very large transaction to guarantee the loans and cash transfers. Of course he told the goodbye but they chased him out the door and made the deals.
Big thing is, reports that they want a "world currency". It would be more like the EU credit cards with the chips imbedded. Instead of cash or checks you would pass your card. Guess we would have to all have a reader on our phones or in our pockets if we did personal transactions.
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