Getting rid of paper money may help fight terrorism and even help prop up the banks—but is there a more sinister reason for these new financial controls?
Germany is considering abolishing the €500 note and introducing a €5,000 (us$5,600) limit on cash transactions. It is part of a plan proposed by Chancellor Angela Merkel’s partners in the Social Democratic Party to cut off terrorist financing in Europe. Banning the bills will supposedly help make people safer. In reality, it will do the exact opposite.
German Deputy Finance Minister Michael Meister told Deutsche Welle on February 3 that Germany would push these reforms at the European level. “Since money laundering and terrorism financing are cross-border threats,” it makes sense to adopt a European Union-wide “solution,” he said. But “if a European solution isn’t possible, Germany will move ahead on its own” (emphasis added throughout).
The €500 note may be a favorite among criminals, but it is also the most popular bill for small, law-abiding businesses. Car dealerships, construction workers and shop owners use it every day.
But the €500 is also popular among another large group of individuals: those who don’t trust the banks or the government!
For these people, physical money represents freedom: freedom to hold cash outside the banking system; freedom to conduct business without notifying others; and freedom from government surveillance and overreach.
Under the Guise
Yet Germany and Europe appear to be moving toward banning cash, even though many people are strongly against it. They are doing this for two reasons.
First, it is an effort to cut the “comfort for criminals,” as European Central Bank President Mario Draghi told the European Parliament on February 1. Changes are needed, and abolishing the €500 note is under consideration, he said.
Authorities want to force people to conduct transactions electronically—where suspicious activity can be detected and monitored. By forcing all transactions to go electronic, it will create a permanent paper trail. Theoretically, a record of every transaction you ever make could be kept and stored—forever. It is a treasure trove for authorities looking for evidence of crime. And when evidence is found, potentially decades of financial transactions could be searched to ferret out financial connections, relationships and any other potential misdeeds.
Some big businesses support the effort because offers multiple opportunities for consumer-spending analysis and marketing possibilities.
Banning paper money, however, is still an unpopular position. In Germany in particular, there is a deep distrust of banks. The old Deutsche Mark had a dm1,000 note. When Germany joined the euro, the €500 was specifically created to assuage the public’s concerns. Today, the vast majority of consumer transactions in Germany are still cash. Less than 20 percent are conducted with plastic. So getting rid of the €500 is a touchy subject.
Paper money is popular in Germany because it is tangible. It is something that can be held and stored outside the banking system. It isn’t just electronic digits on a computer ledger that can disappear with the click of a button. It isn’t something that a computer hacker halfway around the world can steal. In a world of economic upheaval, it is at least something they can hold in their hand—or put under their mattress—and feel some security.
Yet if politicians have their way, eliminating the €500 note would remove one third of all euros in circulation.
Not long ago, few German politicians would have suggested eliminating paper money, because the German public is largely against it.
Then Europe changed. The Charlie Hebdo and Nov. 13, 2015, Paris terrorist attacks startled Europe.
Islamic terrorism is the new fear. And politicians are exploiting it.
Do politicians really think that laws like this will stop the terrorists? A handbag can still carry over €1 million in €100 notes. Laws like this only stop the petty criminals. Organized crime will find another way. Terrorists will find another way. And politicians know this.
On Dec. 3, 2015, the European Central Bank cut its key interest rate deeper into negative territory. Negative interest rates are when the bank charges you to deposit money. In this case, the central bank is charging the big commercial banks for putting money on deposit.
But with an economy stuck in recession, many banks are already stuffed to the gills with junk loans. As Trumpet writer Richard Palmer wrote recently, Italy’s banks are teetering on the edge of collapse. It is feared that even Banca Monte dei Paschi—the oldest bank in the world may be headed toward failure.
If the banks start charging depositors interest—as opposed to paying it—it could cause many investors to yank out their money.
This is the big fear—negative interest rates could set off a chain reaction of old-school bank runs. It may already be happening.
So the trillion-euro question for monetary authorities is: How do you force people to keep their money in the banks when the banks are charging depositors interest?
You make it difficult or illegal to withdraw money. This is the second reason authorities want to ban cash.
Stealth Bank Bailout
This is also exactly what Citigroup’s top economist Willem Buiter recommended in April. He said the world needed to outlaw cash.
According to Buiter, negative interest rates are the only way to jam more debt into the system. And to make this work—without causing a bank run—authorities must abolish cash. Authorities must get rid of cash, he says, because no one in their right mind would keep it in the system if they were being charged 6 percent per year.
Other leading economic authorities are echoing the call. The Bank of England’s chief economist said in September that cash should be eliminated and people should be charged for the electronic equivalent. The president of Norway’s biggest bank made similar remarks. On February 9, popular financial blog ZeroHedge posted a letter from Deutsche Bank’s respected credit analyst, Dominic Konstam saying that negative interest rates should be passed on to depositors and any cash withdrawals should be taxed in order to encourage people to keep their money in the banks.
In case you don’t think governments would ever try outlawing cash, consider that in 2012 Spain banned all cash transactions above €2,500 ($2,800). Italy and France have outlawed all cash transactions over €1,000. Germany’s €5,000 proposal is comparatively high.
Sweden looks set to become the world’s first modern cashless society. According to Credit Suisse, 80 percent of all purchases in Sweden are now electronic. Consequently, Sweden’s supply of physical currency has dropped an astounding 50 percent in the last six years. Norway and Denmark are close behind. Norway says it will be cashless by 2020.
According to Casey Research’s Nick Giambruno, two major Swedish banks no longer carry any cash. Norway’s second-largest bank no longer takes cash at its branch offices. And even homeless street vendors in Sweden use mobile card readers.
Total Surveillance State
Europe is on the edge of a monetary revolution. It is going cashless—whether people like it or not.
Beast Power Rising
Prophetically these are big developments. The Bible talks about a European superpower that will hold huge sway over the global economy in the near future. This economic behemoth will have so much power that, as it says in Revelation 13:17, “no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.”
The rising European beast may not yet have the ability to enforce this mark on everyone. But there will soon be a United States of Europe—a union of 10 nations or groups of nations that will be a union of church and state—with the capacity and will to enforce it.
A cashless society in which all commerce can be observed, monitored and controlled by the government is a huge step in that direction. The beast is rising. ▪
Full article: Why Is Germany Eliminating Paper Money? (The Trumpet)