There has been discussion for a number of years about the future of the US Dollar and cash. As with many things, the first people to sound the alarm are marginalized and made out to be kooks. Of course, is that not the Alinsky tactic?
I would suggest we have been set up and conditioned for a cashless society. Of course, the future of the Dollar and cash are two separate issues.
I have discussed the danger we are in regarding the dollar as the world’s reserve currency. The “quantitative easing” (printing or digitizing money) has added $16 trillion worldwide which includes all currencies, most of that by our Fed. At the very least, the law of supply and demand tells us that this dilutes the value of the Dollar. As we increase our debt, now nearing $20 trillion and our unfunded liabilities now at $144 trillion it is obvious to the world we can never pay our obligations.
How long can we go on just figuring that our creditors will loan us more and more so we don’t default?
The only reason the Dollar has any value is because oil is traded in “petro dollars,” and therefore, is the world’s reserve currency. There is some evidence that Gaddafi was working on a gold-based currency for the oil trade. Had that happened, the Dollar would have likely have gone the way of the dinosaurs. That could never be allowed. Is that why he was killed? I don’t know, but it is food for thought.
We should have no expectation of assurance the Dollar is sacred. We made a promise to the world that the Dollar would be backed by a solid asset- gold. It has been a little over 45 years since Nixon announced he was breaking the promise that a dollar would be worth 1/35th of an ounce of gold. No longer would the value of the Dollar be set by the value of a hard asset. Instead, it could and would be manipulated by powerful men at the Federal Reserve.
We were promised this move would avoid costly recessions, provide high employment, and strong economic growth. Internationally, we were told the dollar devaluation would reduce our trade deficit and improve the competitiveness of American workers and companies.
Every one of these promises has been broken.
Unemployment has averaged above 6% and we have had three of the worst recessions since WWII. Now unemployment cannot be compared because it is measured in a way that does not count many who are out of work or underemployed.
In the 21 years after WWII, unemployment averaged less that 5% and never rose above 7%. Growth has slowed, as well. Since 1973, economic growth has averaged 2.9%, more than a point below the 4% in the prior post war gold standard years.
1.1% may not seem like much, but a growth rate of 3% just keeps pace with the growing population, adding new jobs to the new workers. 4% gives us higher employment and a lower unemployment rate.
When compounded over 40 years, that 1% slower growth under a paper dollar has had a mind-blowing impact on the US economy. At 3% growth, the US economy is $8 trillion smaller than we should have experienced using the average growth rate prior to Nixon.
The implication is that the median family income today would be about $70,000, roughly 50% higher than it is today. Are you upset yet?
While the survival of the Dollar is important, we are being nudged to a cashless society, and in many cases, we are silent sheep being led to slaughter.
Most people carry little or no cash now, we use our debit card or a credit card. That convenience also translates into a loss of control on our part. In a time of natural or another disaster, digital money is not accessible. If there was a financial crisis, banks, and even the government would have the power to shut off access to the cash you have in your bank.
There have been a couple of instances in which depositors “took a haircut” on their accounts. The banks were insolvent and were allowed to simply take a percentage of people’s accounts. The Dodd-Frank allows banks to do a “bail-in,” and take money to cover their liabilities. This has already happened in Europe and the plan is in place here in the US.
Last week, India announced it was canceling its larger denominations, so people will have a few weeks to exchange for the smaller bills and then those big bills will be worthless. This is ostensibly being done due to corruption and counterfeit currency, but the nation has already given the poor in India debit cards, so the move is about control.
This week, some branches of Citibank announced they will offer NO cash services.
Former Treasury Secretary Larry Summers has advocated getting rid of the $50 and $100 bill. Once again said to stem drug trafficking and other illegal activities, make it hard to move large sums of money. A cashless society would make it harder to pay illegal workers and avoid income taxes.
It would also be very easy for a government to control and monitor every penny you spend or make. I’m sorry, this violates every word and intent of the Constitution…but then, when did that ever stand in the way of our government?
It is said a democracy is two wolves and a sheep voting on what to have for supper, liberty is the wolves discovering a well informed and armed sheep.
Government is a pack of wolves, you have been informed. The rest is up to you.