With economic growth an anemic 1%, many Swiss withdrew cash from the bank and stashed it at home or in safe-deposit boxes. High-denomination notes are naturally preferred for this purpose, so circulation of 1,000-franc notes (worth about $1,010) rose 17% last year. They now account for 60% of all bills in circulation and are worth almost as much as Serbia’s GDP.Our draconian ex-Treasury Secretary Larry Summers has called for global elimination of bills over $50. To quote Summers:
Japan, where banks pay infinitesimally low interest on deposits, is a similar story. Demand for the highest-denomination 10,000-yen notes rose 6.2% last year, the largest jump since 2002. But 10,000-yen notes are worth only about $88, so hiding places fill up fast. That explains why Japanese went on a safe-buying spree last month after the Bank of Japan announced negative interest rates on some reserves. Stores reported that sales of safes rose as much as 250%, and shares of safe-maker Secom spiked 5.3% in one week.
“A moratorium on printing new high denomination notes would make the world a better place.As always, this is for the sole purpose of “keeping us all safe” and halting “tax evasion and illegal activity.” Somehow, I am sure these measures to eliminate cash would also keep the children safe; rid the world of AIDS; provide free college; eliminate poverty; relieve gender confusion; provide safe spaces for Ivy League grads; lead to the disparagement of Confederate flags; drive the Dow to 25,000; enforce fair trade coffee the world over; and generally, fulfill the entire “American Dream.”
Here is a short piece I recently wrote about the establishment masters screaming for the total elimination of cash:”Slavery and Digital Legal Tender.” Yes, we live in a world where editors at the Wall Street Journal feel compelled to publish an opinion piece that defends the use and savings of cash as “legal.” The satire site, The Onion, is quickly becoming irrelevant in a world that has crossed the line from reality to satire. I cannot help but quote H.L. Mencken because the relevance is so compelling. Follow me on Twitter @karendecoster.