04/03/2017

The War On Cash: Old And New

Louis Rouanet, Mises Institute

Before the United States ran aground on the dangerous reefs of State interventionism and centralism, the dollar was not only a sign of stability, but also a symbol of human freedom. A dollar was a means to express your wants and commands to the business class. The consumer, for the most part, was sovereign. Any American could save, consume, and invest his money whose value was not debauched by a government in lack of resources. To this day, and despite the evils of inflationism and central banking, the dollar remains an instrument of freedom and independence for many Americans. There are those, however, who would like to change that. They are the Wall Street financiers, politicians, annointed intellectuals, and central bankers for whom a centralized control of the money supply is not enough. To them, not only the supply of money but also the free and innocent use of money should be strictly limited and regulated by the State. Their new enemy is the banknote and their new war is the war on cash.

It is said of Heraclitus that he wrote that “no man ever steps in the same river twice, for it is not the same river and he is not the same man.” The river has changed indeed, and so has changed the war on cash. It is an irony of American history that in the 1830s and 1840s, the war on cash meant something totally different than today. In the middle of the 19th century, the circulation of banknotes was synonymous with the excesses of fractional reserve banking and the debasement of the currency. At the time, the war on cash was a war for sound money.

Because banks were emitting banknotes unbacked by gold, the hard money Jacksonians adopted slogans such as “No Monopolies!” “No Union of Banks and State!” “Jackson and Hard Money!” “Gold before Rags!” In 1834, William Leggett, with his typical wit and gusto, called the banks the “incorporated rag-money factories.” and argued for the ban of small banknotes. Similarly, in his book The Curse of Paper-Money and Banking (1833), another hard money Jacksonian, William Gouge wrote:

If the virtue and intelligence of the nation should direct the movements of Government during the ten or twenty years which might elapse in the gradual withdrawal of Bank notes and Bank credits, the people would suffer less from the application of the remedy, than they must otherwise suffer from the operation of the disease. … If a State Government, after having prohibited the issue of notes of a less denomination than five dollars, should afterwards be prevailed on by a complaint of “want of money” to repeal the law, it would act with the same wisdom as a surgeon, who, being engaged in the amputation of a diseased limb, should be frightened by the cries of the patient, and withdraw his knife after having cut through the first artery.

Gouge granted that the sudden ending of the old banking system, especially the prohibition of all banknotes, “would be ruinous” to the economy. His solution was to start banning small notes and proceed gradually to those with highest denominations. Although in 1833 Gouge proposed that the minimum denomination be $5, he later became more radical and by 1837 he held that the minimum should be “$50 or perhaps $100.”

Gouge’s policy remained popular among economists and as late as 1897 the famous American economist Frank Taussig argued that a way of achieving the circulation of gold was to prohibit banknotes of denominations of $20 and smaller.

The situation today is entirely different. The gold standard is not here to limit the power of both banks and of the central government. Gold and silver coins disappeared from circulation and banknotes are now bank reserves instead of gold. Once a curse, cash under the form of banknotes is now a blessing. Banknotes are the instrument through which people can avoid excessive taxation, government surveillance, and the recklessness of our incestuous banking system. Banning cash, on the other hand, is the most efficient way to impose negative interest rates for depositors and making any unsupervised spending impossible. Cash, in other words, is a blessing for the productive people who wish to protect the money they peacefully earned from the vicious schemes of governments and central banks.

Read full article



You May Also Like:

Black Police Officer On NFL Protest: "Now I Have Had Enough" [Watch] Brandon Tatum, YouTube

Ted Cruz Just Stuck A Fork In The Graham-Cassidy ObamaCare Repeal/Replace Bill streiff, RedState

ObamaCare’s Tax On The Poor The Wall Street Journal

How Obama Is Funding The Anti-Trump Resistance Paul Sperry, New York Post

John McCain: Obamacare Savior Guy Benson, Townhall

NFL Picked Sides In The Culture War, Now It Has To Live With The Consequences William A. Jacobson, Legal Insurrection

Trump Tells NFL Fans To Stop Going To Games 'Until Players Stop Disrespecting Our Flag & Country’ [Watch] Joseph Weber, Fox News

NFL Team Owner Shahid Khan Joins NFL's National Anthem Protests USA Today

It Was The Deep State That Colluded With The Russians, Not Trump Clarice Feldman, American Thinker

Theresa May Prepares To Leave The EU John O’Sullivan, National Review

Showdown Looms: FBI Misses Third Deadline To Turn Over Subpoenaed Trump Dossier Docs Byron York, Washington Examiner

Global Warming: Who Are The Deniers Now? Investor’s Business Daily

If Trade 'Deficits' Are Bad, Why Do Rich Countries Have Them? Allan Golombek, RealClearMarkets

Reminder: Obama Paid The NFL Millions To Be Patriotic Timothy Meads, Townhall

Can The Sugary Beverage Tax! John O. McGinnis, Library of Law and Liberty

California Legislature Demands Apology From Trump Casey Ryan, Daily Signal

NFL Issues Official Statement On Donald Trump Brian Thomas, Federalist Papers Project

Solar Panels Perfect Case Of Protectionism Costing More Jobs Than It Saves Jeffrey Dorfman, Forbes.com

What Did The Founders Think About Freedom Of Speech? Mike Sabo, American Greatness

For More go to the Home Page >>>

Search

SIGN OUR PETITION

FreeMarket Central

TELL CONGRESS: STOP THE POLITICS.

PASS A HEALTH CARE BILL THAT PUTS PATIENTS FIRST



Americans need a health care bill that serves needs of individuals—not those of Washington and big corporations.

 

Read more

Bookshelf

FreeMarket Central

Some titles recent, all recommended -

Special Video Feature

FreeMarket Central

Voices From The 2017 International Students For Liberty Conference

In Search Of History

When America Was Truly The Land Of Opportunity

For [early immigrants] America was truly the land of opportunity. For the first time in their lives, many were truly free to pursue their own objectives. That freedom released the human energies which created the United States. There were few government programs to turn to and nobody expected them. But also there were few rules and regulations. There were no licenses, no permits, no red tape to restrict them. They found, in fact, a free market, and most of them thrived on it. 

-- Milton Friedman,

Shadow Stats Snapshot


FreeMarket Central

ShadowStats alternate economic indicators are based on the methodology of noted economist John Williams, specialist in government economic reporting.

  • Unemployment:
    FreeMarket Central BLS: 4.44%
    FreeMarket Central Shadow Stats: 22.2%
  • Inflation:
    FreeMarket Central August Year-to-Year: 1.73% (CPI-U*)
    FreeMarket Central Shadow Stats: 9.4%

*[cpi-u is the Bureau of Labor Statistics inflation rate for all urban consumers]