Central Banks Want the Death of Paper Money

We’ve said from the beginning that Brexit won’t actually happen.

They’ll find some way to get out of it.

As Business Insider reports:

A top London law firm is planning a legal challenge to force a UK parliamentary debate and vote on leaving the European Union before the mechanics of an actual Brexit begin.

Apparently, government lawyers have argued the opposite. We’ll see.

We do note the apparent irony, which the anti-Brexit lobby appears to have missed. Only now do they champion the supremacy of parliament.

Yet, by ceding power to Brussels, the parliament in Westminster has become little more than a ‘rubber stamp’ for eurocrat legislation.

Of course, we won’t give the Brexit lobby a free kick on this one either. Their claim has been all about bringing sovereignty and supremacy back to the UK parliament.

It too, would be somewhat ironic, if they claim parliament shouldn’t have the ultimate decision on Brexit.

To misquote John Lennon: Irony, Hypocrisy, Bagiry, Shagiry, Dragiry, Madiry, Who-cares-iry?

It’s all another reason to not bother voting in the first place.

Plus les choses changent, plus elles restent identiques

In English, the phrase is, ‘The more things change, the more they stay the same.’

Search the internet, and we’re told the French is, ‘Plus ca change, plus c’est la meme chose.’

Not so, says our French intern, Charles. He insists it should be, ‘Plus les choses changent, plus elles restent identiques.’

Grammatically it may be more correct, but it’s not as catchy.

We’ve also warned Charles in advance that we have studious readers. Get something wrong, and they’re on your tail…that includes correcting the French grammar of a French citizen.

This, as you may have guessed, is our long-winded way of introducing a quote from a book your editor is currently reading, Caesar, by Adrian Goldsworthy (note: we have broken the unfeasibly large single paragraph into several for reading ease):

Caesar also recalled men such as Sallust, who had been expelled by Appius Claudius during his censorship, as well as Gabinius, the Syrian governor who had restored Ptolemy to the Egyptian throne. Both would fight for him during the war. Full political rights were also finally restored to the children of the victims of Sulla’s proscriptions. Such measures were mainly intended to confirm the loyalty of his supporters and win him new ones.

Of more general concern was the problem of debt, as the value of property had in some cases plummeted since the war began. There was pressure for an abolition of debt, especially from those — many of whom had joined him — who owed huge sums of money. The cry of “new tablets” (novae tabulae) — meaning rubbing out all account books and starting from scratch — had been a frequent one in recent decades, and a major rallying call of Catiline’s rebels.

Many feared that Caesar, well known as a popularis and a frequent debtor himself — would seek support in the same way. However, the dictator refused to employ such a drastic measure and instead sought a compromise. Assessors were appointed to value all property at its pre-war value, and debtors were then made to give this to their creditors in payment.

An old regulation was also revived in which stipulated that no one was supposed to have more than 15,000 denarii in hard cash. The aim was to deter hoarding, which was bound to have an impact on the economic life of Rome and Italy. Such a measure was inevitably difficult to enforce.

Ah, if only the industrious Romans had discovered digital technology. It would have been easy for them to deter hoarding, and even easier for them to enforce financial law.

That’s the premise behind central banks’ enthusiasm for government-controlled electronic money.

As we’ve mentioned before, we are far from being supporters of paper money. We support money that has the backing of something real…something like, oh, let’s say…gold, perhaps.

Our problem with government attempts at introducing digital money is that it’s another method to completely control the supply and price of said money.

Paper money has one benefit over central bank-issued digital money: you can hoard it (something disliked by Romans as much as modern central bankers).

A central bank can’t charge a negative interest rate on the cash in your pocket, or the cash stored under your mattress. Not directly anyway.

The only way it can do so is through inflation. Or as our former colleague, Dan Denning, recently wrote from London, by issuing ‘stamp money’.

That is, the central bank could effectively delegitimise issued paper money by requiring an additional ‘stamp’ placed on the bank notes. The ‘stamp’ may decree that the new face value of the bank note is now less than previous.

Sound crazy?

Most things sound crazy…until they happen. The idea of mobile phones and electric kettles most likely sounded crazy to our 19th century ancestors.

Make no mistake, the idea of digital or digitised money is now mainstream. We have long predicted the demise of paper money. Its end is now in sight.

Unfortunately, the ending is not quite as we predicted. Instead of a return to sound money under a gold standard, we potentially have something far worse than paper money — government or central bank-issued digital money.

Who’d have thought it?

Not us. But because we know our fallibility in predicting the future, it’s why we continue to own, and continue to recommend owning and buying gold.

Plus les choses changent, plus elles restent identiques.


Kris Sayce,
Publisher, Money Morning

Editor’s note: The above article was originally published in Port Phillip Insider.

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