Sunday, May 31, 2015

You No Longer Own Your Money

Do you really own your money?  If you did, you wouldn’t have to justify large withdrawals from your bank account to the IRS and United States Justice Department.

Denny Hastert was indicted for doing just that.  The former Speaker of the House withdrew large amounts of money out of his own account to pay off a blackmailer.  The last time I checked, blackmail was a crime; apparently not in the Age of Obama.  What constitutes a crime these days is claiming that your money is your own and telling the federal government it’s none of their damn business what you’re doing with it.

The federal government is constantly scheming to control citizens and their pocketbooks.  The latest to come down the pike is banning paper money and going all digital.  This may sound benign, but in reality, the federal government could induce account holders to spend in an attempt to spur economic growth, or lose their savings.  The Telegraph reported the following:

In this futuristic world, all payments are made by contactless card, mobile phone apps or other electronic means, while notes and coins are abolished. Your current account will no longer be held with a bank, but with the government or the central bank. Banks still exist, and still lend money, but they get their funds from the central bank, not from depositors.

Having everyone’s account at a single, central institution allows the authorities to either encourage or discourage people to spend. To boost spending, the bank imposes a negative interest rate on the money in everyone’s account – in effect, a tax on saving.
Faced with seeing their money slowly confiscated, people are more likely to spend it on goods and services. When this change in behavior takes place across the country, the economy gets a significant fillip.

The recipient of cash responds in the same way, and also spends. Money circulates more quickly – or, as economists say, the “velocity of money” increases.
What about the opposite situation – when the economy is overheating? The central bank or government will certainly drop any negative interest on credit balances, but it could go further and impose a tax on transactions.

So whenever you use the money in your account to buy something, you pay a small penalty. That makes people less inclined to spend and more inclined to save, so reducing economic activity.

Such an approach would be a far more effective way to damp an overheated economy than today’s blunt tool of a rise in the central bank’s official interest rate.

He, who controls the money, controls the world.


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