Recession Alert! A Law is Coming to Get Ready for Negative Interest Rates, but it being sold as just another move against the ‘black economy. The bill is the ‘Currency (Restriction Use of Cash) Bill 2019’.
Cash is used in the black economy to avoid tax. But when the GST came in, the obvious time to restrict cash transactions, this was not done. Now it is coming in the above bill, banning cash transactions over $10,000 apart from a few exemptions which can be turned off by regulation, (i.e. without going back to Parliament). This bill was announced last Friday afternoon 26 July, and not picked up by the mainstream media. The consultation period is very short- 26/7/19 to 12/8/19.
It begs the question; ‘Why restrictions on cash now?’
It seems that the answer is that when the economy will not grow, interest rates are lowered. They are at 1% now, so cannot go much lower till they get to zero. How do you stimulate the economy when the interest rates are zero?
One way is to tax people who are not using their money and give it to the banks, who presumably will give people money to take the stored cash and use it.
Some countries already have restrictions on cash. The 500 Euro note was withdrawn by the European Central Bank. France has banned transactions over 500 Euros, Italy 3000, Spain 2,500. Some long-term interest rates are already negative.
From the public’s point of view, if you are going to lose money by putting it in the bank, it would be better to keep it in cash and put it under the mattress or in a home safe. Even bullion has a storage cost. How retirees will manage is hard to say. They will be losing cash just by holding it and they simply have to spend their capital to survive. Naturally it means that all the cash in the world will be available to stimulate industry as the owners of cash will have immense financial pressure to put it into investments.
There is an IMF paper ‘‘Enabling Deep Negative (Interest) Rates to Fight Recession- A Guide’ IMF Working Paper April 2019 by Ruchir Agrawal and Miles Kimball’ which is a ‘how to’ guide for governments to use negative interest rates. At a political level the advantage pointed out is that people will blame the private banks rather than the government. The paper also suggests that a short sharp shock with ‘deeply negative’ rates might get a better response than a longer period of mildly negative rates. This gives an idea of the thinking- it is all about countering recessions. The IMF paper even canvasses the possibility of the abolition of paper money transactions!
The convenience of cards has been lessening cash use, but this new bill looks as though it is following the IMF guide and getting ready for the possibility of negative interest rates. It is not really about stopping the black economy.
The government put out a call for a discussion of this bill on the Treasury website last Friday afternoon, the crowded news day, presumably in the hope that it would not be noticed. They seem to have succeeded- There has been nothing in the mainstream media, apart from old articles referring to controlling the black economy. The Treasury seems to want people to believe that this is all part of counteracting the ‘black economy’ the email address for submissions is firstname.lastname@example.org. But it would seem that this is simply dishonest. The IMF is worried about a long-term global recession. Presumably our government is also, so they are getting their legislation in place on the IMF recipe. They just thought that you had better not know. It says a lot about how we are governed.
This information was given to me by a ‘freedom group’ called, ‘In the Interests of the People’. At youtube.com paste ‘/watch?v=770M2s6ZD8Y’ to see the video. I do not want to be the vector for conspiracy theories, but the implications of this really need to be understood and discussed. It really is not just about stopping the black economy.
The Treasury website that gives the bill has no discussion- merely explanations of the Bill, and even this is quite incomplete as the Part 2 which has the penalties is missing.
The IMF paper that seems to be the origin of the bill is fairly dry reading also but is at: