Globalized capitalism has inflicted so many defeats upon the working class and people all over the world that it’s hard to give an account of them. Still, everything isn’t sad. In the middle of all this misery there are glimpses of light – if you know where to look for them. In fact, some of these bright spots come as a result of the misery, because they can be turned to our advantage.

Translated by Anne Merethe Erstad for the Norwegian original

The war on cash and the war on free speech

As previously shown through a number of examples, the international finance capitalism has specific plans to wind up cash as an option for payment. In India, this war on cash is led by the richest man in the world, Bill Gates, and his allies. Bill & Melinda Gates Foundation is a leading participant in the “Better Than Cash Alliance” along with Ford Foundation, Clinton Foundation, Citi Foundation, Omidyar Network (eBay), Coca Cola, USAID and the UN – among others.

In Norway, the Norwegian bank DNB has taken the lead. And since politicians in general are trained to do as financial capitalism bids, we can say with almost total certainty that legislation banning cash will be passed. If cash payment is banned by law, we will no longer have money. Or rather: we will no longer have any control over our own money. Whether we’ll be able to use them or not, will be decided by the banks and the authorities. We can no longer withdraw money from the bank and hide them under the mattress, even if the banks should introduce a five percent negative interest rate. And if the authorities decide that a certain person should be blocked from their account, they cannot buy as much as a bus ticket or a piece of bread. The totalitarian society on steroids.

This neo-fascism, or this post-democratic society – or whatever we should name this nightmare – is matched by the draconic legislations against so-called “fake news” and the introduction of public-private censorship bodies. As noted before, a militarization of opinion formers worthy that of a dictatorship, is taking place. And it is happening without the slightest protest from those who supposedly support the freedom of the press and free speech.

Light in the darkness

And where do we find anything positive in all this, you may ask. A reasonable question, indeed. It appears dark as the night, like a dystopia by George Orwell or Albert Huxley. But watch closely, and you’ll find bright spots.

The cash ban will have extraordinary negative effects, but it will also force those of us in the resistance front to think anew. Our defensive struggle can no longer remain merely defensive. The enemy forces us to create our own currency. And they force us to organize collectively in new and interesting ways.

Alternative currencies are not as innovative as they may sound. There probably exist hundreds of them throughout the world, perhaps thousands. According to Wikipedia, Local Economy Trading Systems were particularly popular in the 20^th century and the web-based encyclopaedia also mentions a large number of community currencies in the USA.

Co-operative movements and closely knitted local communities are among those who have gained the most from community currencies. The European fiscal cliff has led to the establishment of several varieties of local currencies in a number of communities all over Europe. It’s not very hard to imagine how a co-operative movement or a network of co-operatives can benefit from this. Like money in general, these currencies will express a certain value, which makes it possible to change one value into another. As long as the co-operatives only trade amongst themselves, they have no need for dollars, Euro – or Norwegian kroners.

A few years ago I watched a news story on Italian RAI 3 from southern Italy about a small, poor village where many Albanians had settled several hundred years back. This village had established a community currency with two values; one Che (Guevara) and one Skanderbeg (the Albanian national hero). According to the news report, this worked well for the inter-trading among the village people. In the village where I am an inhabitant, in Tolfa near Rome, we could very well have had such a local currency. Barter-economy still exists and could be developed further. In addition there are many local craft businesses. I haven’t carried out any serious study of this, but I wouldn’t rule out that one Euro spent at the bakery passes five pairs of hands in Tolfa before it leaves the village. We could call the currency collinaro, as those of us living there are called collinari: the hill people.

The southern Italian che and skanderbeg were most likely paper based. But there is nothing stopping these currencies from being electronically based. In Norway, the one who has performed the most extensive work in this area is Trond Andresen at NTNU (Norwegian University of Science and Technology). He has demonstrated how this can be accomplished, all the way from the local to the national level. Andersen has argued that this system can work on a national level for countries in a time of crisis. However, with a cash ban coming up, it would be even more relevant as a tool of resistance, as means to control a part of one’s own added value without the bank interference and to keep a part of our co-operation and inter-trade outside the surveillance files.

This means that the banks’ and the states’ abuse more or less forces us to organise collectively and produce samples of a future collective society.

This applies to the censorship on social media as well. Increased censorship and harassment will make Facebook and similar systems irrelevant for publishing and discourse. This will enforce solutions on the outside, alternative social media and new platforms. This is more problematic, because the strength of the Internet is the fact that it is a global productive force. But I am absolutely sure it is possible to find a way around this as well. My personal contribution in the near future is to launch a web based medium which will bring the experiences from this blog several steps forward.

The 0.01 percent is extremely powerful, but obviously frightened

Those who benefit the most from the way global capitalism has developed, are the richest 0.01 percent. And among them, the ultra-rich “Masters of the Universe”. They are extremely powerful and some of them have personal assets exceeding entire countries’ gross national product. At the same time they are very few, and while they can buy whomever they want to defend them, the measures they are taking at the moment, above all the censorship, show that they are also very frightened. They know that if the 99 percent organise to fight them, they’re done for. When they cannot even tolerate competition from small blogs and alternative media lacking both money and power, they reveal their fear of rebellion and their fear of losing both power and capital. Their measures don’t reflect their strength, but their weakness, their panic.

These are very important lessons the ultra-rich have given us. A gift of which they are oblivious – they hardy understand what they have given away. And it is crucial to understand how this gift can be put to use.

Le Cri du peuple, Jacques Tardi (2001)
The Paris comune

The future society starts now

This points even further, to a central element in what I have called Communism 5.0. It is a collective society where the producers control the means of productions – jointly. And there’s no need to wait for a revolution fifty or hundred years ahead. In fact, it is possible to start the construction of this future society now. We can start tomorrow. Collective interaction and organizing around such projects will teach us to build a society and it will enhance people’s self confidence and trust in their own strengths. We’re not talking utopia. We’re talking about something we know can be done. And even more important: This has to be done, because the alternative is to be crushed beneath the weight of the ruling class’ power machinery. Some people dislike my calling it Communism 5.0, but that doesn’t matter. The Norwegian author Odd Eidem, once said: “Call me whatever you like. Call me the city tram!”

In this perspective, the 0.01 percent is not our worst enemy. They are few and they are frightened. We can handle them. Our worst enemy is our own feebleness, our own division and our own slave mentality. If we can liberate ourselves from this, we can save the world from the globalists and their gang.

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Remember those old ads showing a senior couple lounging on a warm beach, captioned “Let your money work for you”? Or the scene in Mary Poppins where young Michael is being advised to put his tuppence in the bank, so that it can compound into “all manner of private enterprise,” including “bonds, chattels, dividends, shares, shipyards, amalgamations . . . .”?

That may still work if you’re a Wall Street banker, but if you’re an ordinary saver with your money in the bank, you may soon be paying the bank to hold your funds rather than the reverse.

Four European central banks – the European Central Bank, the Swiss National Bank, Sweden’s Riksbank, and Denmark’s Nationalbank – have now imposed negative interest rates on the reserves they hold for commercial banks; and discussion has turned to whether it’s time to pass those costs on to consumers. The Bank of Japan and the Federal Reserve are still at ZIRP (Zero Interest Rate Policy), but several Fed officials have also begun calling for NIRP (negative rates).

The stated justification for this move is to stimulate “demand” by forcing consumers to withdraw their money and go shopping with it. When an economy is struggling, it is standard practice for a central bank to cut interest rates, making saving less attractive. This is supposed to boost spending and kick-start an economic recovery.

That is the theory, but central banks have already pushed the prime rate to zero, and still their economies are languishing. To the uninitiated observer, that means the theory is wrong and needs to be scrapped. But not to our intrepid central bankers, who are now experimenting with pushing rates below zero.

Locking the Door to Bank Runs: The Cashless Society

The problem with imposing negative interest on savers, as explained in the UK Telegraph, is that “there’s a limit, what economists called the ‘zero lower bound’. Cut rates too deeply, and savers would end up facing negative returns. In that case, this could encourage people to take their savings out of the bank and hoard them in cash. This could slow, rather than boost, the economy.”

Again, to the ordinary observer, this would seem to signal that negative interest rates won’t work and the approach needs to be abandoned. But not to our undaunted central bankers, who have chosen instead to plug this hole in their leaky theory by moving to eliminate cash as an option. If your only choice is to keep your money in a digital account in a bank and spend it with a bank card or credit card or checks, negative interest can be imposed with impunity. This is already happening in Sweden, and other countries are close behind. As reported on Wolfstreet.com:

The War on Cash is advancing on all fronts. One region that has hogged the headlines with its war against physical currency is Scandinavia. Sweden became the first country to enlist its own citizens as largely willing guinea pigs in a dystopian economic experiment: negative interest rates in a cashless society. As Credit Suisse reports, no matter where you go or what you want to purchase, you will find a small ubiquitous sign saying “Vi hanterar ej kontanter” (“We don’t accept cash”) . . . .

The Lesson of Gesell’s Decaying Currency

Whether negative interests will actually stimulate an economic recovery, however, remains in doubt. Proponents of the theory cite Silvio Gesell and the Wörgl experiment of the 1930s. As explained by Charles Eisenstein in Sacred Economics:

The pioneering theoretician of negative-interest money was the German-Argentinean businessman Silvio Gesell, who called it “free-money” (Freigeld) . . . . The system he proposed in his 1906 masterwork, The Natural Economic Order, was to use paper currency to which a stamp costing a small fraction of the note’s value had to be affixed periodically. This effectively attached a maintenance cost to monetary wealth.

. . . [In 1932], the depressed town of Wörgl, Austria, issued its own stamp scrip inspired by Gesell . . . . The Wörgl currency was by all accounts a huge success. Roads were paved, bridges built, and back taxes were paid. The unemployment rate plummeted and the economy thrived, attracting the attention of nearby towns. Mayors and officials from all over the world began to visit Wörgl until, as in Germany, the central government abolished the Wörgl currency and the town slipped back into depression.

. . . [T]he Wörgl currency bore a demurrage rate [a maintenance charge for carrying money] of 1 percent per month. Contemporary accounts attributed to this the very rapid velocity of the currencies’ circulation. Instead of generating interest and growing, accumulation of wealth became a burden, much like possessions are a burden to the nomadic hunter-gatherer. As theorized by Gesell, money afflicted with loss-inducing properties ceased to be preferred over any other commodity as a store of value.

There is a critical difference, however, between the Wörgl currency and the modern-day central bankers’ negative interest scheme. The Wörgl government first issued its new “free money,” getting it into the local economy and increasing purchasing power, before taxing a portion of it back. And the proceeds of the stamp tax went to the city, to be used for the benefit of the taxpayers. As Eisenstein observes:

It is impossible to prove . . . that the rejuvenating effects of these currencies came from demurrage and not from the increase in the money supply . . . .

Today’s central bankers are proposing to tax existing money, diminishing spending power without first building it up. And the interest will go to private bankers, not to the local government.

Consumers today already have very little discretionary money. Imposing negative interest without first adding new money into the economy means they will have even less money to spend. This would be more likely to prompt them to save their scarce funds than to go on a shopping spree.

People are not keeping their money in the bank today for the interest (which is already nearly non-existent). It is for the convenience of writing checks, issuing bank cards, and storing their money in a “safe” place. They would no doubt be willing to pay a modest negative interest for that convenience; but if the fee got too high, they might pull their money out and save it elsewhere. The fee itself, however, would not drive them to buy things they did not otherwise need.

Is There a Bigger Threat than a Sluggish Economy?

The scheme to impose negative interest and eliminate cash seems so unlikely to stimulate the economy that one wonders if that is the real motive. Stopping tax evaders and terrorists (real or presumed) are other proposed justifications for going cashless. Economist Martin Armstrong goes further and suggests that the goal is to gain totalitarian control over our money. In a cashless society, our savings can be taxed away by the banks; the threat of bank runs by worried savers can be eliminated; and the too-big-to-fail banks can be assured that ample deposits will be there when they need to confiscate them through bail-ins to stay afloat.

And that may be the real threat on the horizon: a major derivatives default that hits the largest banks, those that do the vast majority of derivatives trading. On November 10, 2015, the Wall Street Journal reported the results of a study requested by Senator Elizabeth Warren and Rep. Elijah Cummings, involving the cost to taxpayers of the rollback of the Dodd-Frank Act in the “cromnibus” spending bill last December. As Jessica Desvarieux put it on the Real News Network, “the rule reversal allows banks to keep $10 trillion in swaps trades on their books, which taxpayers could be on the hook for if the banks need another bailout.”

The promise of Dodd-Frank, however, was that there would be “no more taxpayer bailouts.” Instead, insolvent systemically-risky banks were supposed to “bail in” (confiscate) the money of their creditors, including their depositors (the largest class of creditor of any bank). That could explain the push to go cashless. By quietly eliminating the possibility of cash withdrawals, the central bank can make sure the deposits are there to be grabbed when disaster strikes.

If central bankers are seriously trying to stimulate the economy with negative interest rates, they need to repeat the Wörgl experiment in full. They need to first get some new money into the economy, money that goes directly to the consumers and local businessmen who will spend it. This could be achieved in a number of ways: with a national dividend; or by using quantitative easing for infrastructure or low-interest loans to states; or by funding free tuition for higher education. Consumers will hit the malls when they have some new discretionary income to spend.

Photo by GotCredit

The post Hang Onto Your Wallets: Negative Interest, the War on Cash, and the $10 Trillion Bail-in appeared first on P2P Foundation.