Feds push everyone to use electronic transactions


Mitch McGrath, owner of Mitchell Robert Studio Salon in Red Bank, says more people are starting to consider the effect of credit card costs on local economy players. Some ask him how he’d like to be paid. Anything but credit, he says. “Cash is king. You don’t want to have to pay interest that you have to pay with credit card companies, so we always like to take cash or check.”

The national economy that we’re earnestly trying to appreciate has opened another skirmish in an unwinnable war against one of the most compelling consumer products in America. The product is one that everyone uses at least occasionally, a good so wonderfully enabled by incessant advertising that a childlike trust fills the hearts of members of the public as to the continuing value of this financial staple, in whatever form.

We are talking about the American dollar bill, that engraved rectangle printed for the bankers’ bank, the Federal Reserve System, and readily available at any lender on the streets of Chattanooga.

And yes, the Eastern establishment is making war against the old-fashioned version of the Federal Reserve greenback, the printed ones you carry in your purse or next to your driver’s license in your billfold. The government wants to wring from the U.S economy these paper bills and induce everyone to use an even more solid means of exchange, the electronic dollar. These are swapped by tapping an iPhone button or transferring balances via digital handshakes from one gadget to another.

THE ARGUMENT THIS TIME is that reducing the use of cash saves money. A program to reduce cash use will save a whopping F$286 million a year as President Obama makes motions of trying to cut budget deficits by F$4 trillion over 10 years. A Wall Street Journal story says Tim Geithner’s treasury department will blow hard to encourage electronic transactions — such as the e-filing of federal tax returns — and cheapen the production of the Fed’s base metal coins produced by the U.S. Mint. The Fed spends twice as much to circulate coins as the zinc and other metals are worth.

A far more significant effort against physical exchange of currency is a policy of inconvenience. Make the money worth less and less by inflation and extravagant indebtedness, then refuse to print bills in larger denominations. Such relief was granted to the commoners of Zimbabwe when the smart people who ran that country devised a hyperinflation in which billion-dollar notes circulated before the collapse in 2008, when a loaf of bread cost more than Z$6.6 million and the rate of monetary expansion was 650 million googol percent, according to Wikipedia.

The largest Federal Reserve note today is the F$100 bill, which is scarcely anything at all if you have to go shopping, pay for a car repair at our shop, S&S Auto in Brainerd, or make a final payment on a bill collected by the son of the contractor who painted your house.

Economist Joseph T. Salerno of the Ludwug von Mises Institute in Auburn, Ala., tells about this high-minded crimping of the commoner’s cash dealings.

Under cover of its multiplicity of fabricated wars on drugs, terror, tax evasion, and organized crime, the U.S. government has long been waging a hidden war on cash. One symptom of the war is that the largest denomination of U.S. currency is the $100 note, whose ever-eroding purchasing power is far below the purchasing power of the €500 note. U.S. currency used to be issued in denominations running up to $10,000 (including also $500; $1,000; $5,000 notes). There was even a $100,000 note issued for transactions among Federal Reserve banks. The United States stopped printing large denomination notes in 1945 and officially discontinued their issuance in 1969 *** . But since 1969, the inflationary monetary policy of the Fed has caused the U.S. dollar to depreciate by over 80 percent, so that a $100 note in 2010 possessed a purchasing power of only $16.83 in 1969 dollars. That is less purchasing power than a $20 bill in 1969.

The slow process of inflation has diminished the power of Chattanoogans’ buying power, and has been intended to make them more subservient to national and surveillance interests. Salerno goes to the heart of why.

Despite this enormous depreciation, the Federal Reserve has steadfastly refused to issue notes of larger denomination. This has made large cash transactions extremely inconvenient and has forced the American public to make much greater use than is optimal of electronic-payment methods. Of course, this is precisely the intent of the U.S. government. The purpose of its ongoing breach of long-established laws regarding financial privacy is to make it easier to monitor the economic affairs and abrogate the financial privacy of its citizens, ostensibly to secure their safety from Colombian drug lords, Al Qaeda operatives, and tax cheats and other nefarious white-collar criminals.

TO AVOID A SENSE OF DESPAIR about the flameout of the federal system into insolvency and into tyranny that sniffs into body cavities and financial records, let me make a suggestion in my next post that bursts with simple-hearted patriotism and could go far to boost local economy.

Sources: The Wall Street Journal blog, March 28, “Treasury to Cut Costs by Remaking Coins, Replacing Paper” ; Joseph T. Salerno, “Laundered Money,” www.lewrockwell.com