The Catastrophic Consequences of Banning Cash

I’m about to give you some very good and very sound investment advice, so take this down.

My good friend at the Esser Agoroth blog sent me this post on the new editions of cash bills to be printed by the Bank of Israel. He links to Ynet, which makes a big deal about the nice little pictures of dead people that will be on the new bills, and because they are women we are all supposed to clap about how amazing and equal the world has become.

For the record, I don’t want any person created in the image of God on any government bill. Make it dots, or stick figures, or whatever. In fact, I consider it a dishonor to have one’s face on a government cash bill. Someone who really cares about the status of women should insist that no women appear on any cash bill. To delve into this specific narrow issue for only a single sentence, since that is all I can bear of this nonsense of who is on a bill, they plan to have Leah Goldberg and Rachel the Poetess on the 20 and 100 shekel bills. These are both Jewish women and good writers who I admire, who wrote beautiful poems.

Because I admire them, the last thing I wish for them is to have their likenesses printed on inflationary government money.

Anyway, the point of my friend’s repost of the Ynet news blurb was to emphasize the last paragraph of the sneaky monstrosity and journalistic serpentine trickery. Here’s the last paragraph:

Economic officials have estimated this would be the last series of paper bills issued in Israel, as paper money is only changed once every few decades, as has been the case in this instance, and in 10-20 years payments are more likely to be made using smart phones, computers and credit cards, all but nullifying the need for cash.

This way, the article is set up to focus the attention of the masses on women being featured on government paper as the important item. The very last paragraph of the article mentions a seemingly bedieved (after the fact) consequence that most people do not read at all, that is structured to make it sound like there is no consequence to it, namely that this “happens to be” the last cash that the bank of Israel will ever print.

Well, here are the consequences of a cashless economy. Before you read my extrapolations for Israel, here’s what happened in India when only high-denomination bills were banned there. Cash is still legal, just not the highest denomination bill there. The results for people’s lives were still catastrophic.

The first thing that has to be understood about a cashless economy is that banks now control 100% of the money supply, and all of it is within the banking system at all times. The banking system is built on fractional reserve, meaning only about 10% (depending on the specific insistence of your local central bank) of your bank deposits are available in the form of physical tangible cash at any given time. The only thing that keeps banks from continually loaning out 90% of your money, from bank to bank, is the fact that theoretically, you can legally withdraw your money in the form of physical paper at any time from any ATM in the country.

The fear that any and all of your deposits theoretically can be withdrawn out of the banking system in the form of physical cash is the only thing that keeps banks from inflating the money supply continuously through infinite loans to other banks and making profits off the interest and enslaving you even further. If every single transaction is electronic, then everything remains in the centralized banking system at all times, with loan volume exploding. The money supply goes sky high and price inflation gets out of control. In the absence of real, physical cash, prices skyrocket. Real assets like gold, oil, food, real estate, skyrocket.

That’s the main, theoretical point. But let’s get down to things that are more specific and concrete.

Think about cash transactions that happen in the economy. Normal, legitimate ones, not drug deals, which these mainstream media government shills are obsessed with you focusing on. Say your kid does some babysitting for cash. Your wife does a private lesson and is paid in cash. The guys at the shuk in Machaneh Yehuda in Jerusalem sell fish or fruit or whatever for cash.

Now, all that cash is gone. All transactions are now digital and therefore recorded. That means they are all recorded by government. And government taxes every single one of those transactions. What does that mean?

It means that every transaction that used to be finalized in physical cash and which may or may not be taxed because the sellers can hide some of the cash, will now be taxed fully at the legal limit set by idiotic politicians in the knesset who can dictate how much money from each transaction they feel like taking for themselves. Let’s assume, reasonably and conservatively I think, that 30% of the cash earned by the simple Jews at the shuk is not delcared as income. That means in a cashless world, taxes rise on shuk food purchases by 30%, because now it would all be taxed. Profits fall by 30%, marginal producers are forced out, supply gets lower, demand stays equal, prices go up.

But worse than that. I’d be willing to bet that 90% of babysitting services in the entire country are undeclared. It’s 90% under the table, because it’s done mostly by kids. With no cash, it’s all taxed. Profits for babysitting plummet. Which means, by supply and demand, that the cost of babysitting services skyrocket by around the same price as the tax. More for food, more for babysitting. At least.

Further, the private tutoring economy will be destroyed. Very little of that cash is declared. It will all be taxed. Private tutors make less money for their services, marginal players exit the market, supply of private tutors shrink, prices for them go up, and the middle class will be less able to hire private tutors for their kids. Only the rich will be able to afford it. Contributing to that dreaded “inequality” that the left fears so much.

Private tutors, babysitters etc. though are just the tip of the iceberg. I only mention these examples because I am personally familiar with them. Can you think of any other legitimate services that are mostly cash transactions that will be destroyed by the lack of cash? Ah, I can, here’s another, and this has to do with a situation that Moshe Feiglin has spoken out about as the child of divorced parents. (This is public information.)

I have a friend in Katzrin in the Golan where I live who is a divorced father. Through some stupid mishap the government still thinks that he needs to pay alimony, when his own ex-wife has agreed that he owes her nothing. But since there is a computer error somewhere, his bank account is frozen. He can only eat and live if paid in physical cash.

Without cash, he would starve. Literally. He gets his salary through some convoluted path ending in cash. Without it, he’d be screwed. He would rely entirely on tzedaka to stay alive. The government controls the banks, and therefore all the bank accounts. If there’s an error, it’s your problem, not the government’s. That’s the reality.

Now think of anything in your personal lives finalized in cash that will now be taxed because it will all be recorded. All of those prices will go up because marginal providers are forced out of those markets, constricting supply and raising the price.

This will cause severe disruptions in the economy and will make those people’s lives who are just making end’s meet in Israel absolutely miserable, even more so than they are now, and add on top of this the exploding price inflation by the fact that there will be no check on factional reserve bank loans. It will be a disaster. People’s lives will be ruined.

But at least tax evasion will be a thing of the past in Israel.

הודו לה’ כי טוב, כי לעולום חסדו.

The investment advice I have? This will happen. Zehut cannot stop it. We will only stop it when Moshe Feiglin is Prime Minister. Before that happens, load up on commodities and physical assets of your choice. Provided they are still needed to make stuff, anything that humans need or want, they will rise in price dramatically when physical cash is no longer available.


Respect Cannot Come From Force

It seems self-explanatory but it isn’t. It is impossible to force another human being to respect something or someone. So what is the point of forcing anyone to stand, sit, or twerk for the flag?

What are people angered and insecure about when someone kneels for a flag? What are they angry about? Why do they care? That whoever it is does not “respect the country”? What does “respect the country” mean? How does one “respect a country”? I understand respecting people. But what is “respect a country”?

I understand that not standing for the flag disrespects people who invaded foreign countries and planted that flag in those countries. But what if you really do not respect the people that did that? To paraphrase Louis CK, if you go into another country with a gun and start shooting people and you get shot and killed, it’s really not so weird. Maybe it’s a tiny bit your fault?

Do you really have to respect everyone who invaded a foreign country because they were “just following orders”? We’ve heard that one before. I don’t respect them. Forcing a person who does not respect them, to stand for the flag, won’t force him to respect them.

If a person doesn’t steal from anyone, lives his life without bothering anyone else, and fulfills all his commitments, but kneels for the flag, does he still “respect the country”? Must he really be ostracized because he doesn’t like the flag?

I don’t stand for the prayer for the State of Israel. If I am the shliach tzibur for Musaf, the gabbai knows I will not say the prayer and he will have to do it if he wants to. He’s OK with that. I’m OK with that. We don’t fight over it. We get on with our lives. We don’t freak out over doing or not doing the prayer because the people in the shul respect me and I respect them. I just don’t do the prayer, and people are mature enough not to take it personally, because really, it has nothing to do with them.

Can one respect a country but not its government? Why can’t people make this distinction ? For someone who sees unjust wars when he looks at the flag, must he still stand? What will his standing accomplish?

Someone who just doesn’t like the flag because he doesn’t like red and blue together because it makes him nauseous or his father beat him with a red, white, and blue whip as a child, what is the purpose of forcing him to stand?

Who cares why people don’t stand for a flag? Why does it matter? Nobody can explain this to me in any way that makes sense.

Something about a culture war. That’s what people say. They immediately go to war war war. If not standing for a flag can start a war where people kill each other over it, the culture of everyone in that country is a תרבות רעה, or a bad culture. They will kill each other over something if it isn’t a flag, and this will happen in the USA when the money runs out and the run on bonds begins.

Forcing people to go through the motions of an act of respect when they do not respect the thing in their own minds, is counterproductive and just childish. America is led by a child and he’s riling up the other children into a giant national temper tantrum over a flag.

Catalonia Proves Democracy is a Sham – What Would Honest Abe Lincoln Do?

Spanish police are beating Catalonians in the streets and shooting them with rubber bullets for “illegally” voting in a referendum to secede from Spain.

All this proves is that when people want to vote on something that really, actually, can make a difference, the government does not allow it. They only allow voting when your vote will change nothing. When your vote threatens the centers of power in any fundamental sense, they’ll beat you. Democracy is a joke, as an idea, as a regime, as a form of government. There is no democracy. When people try to actually vote on something that will change something, they get beaten. Some will probably get killed.

We saw the same thing with Feiglin’s protests of the Oslo Accords here. Feiglin threatened the regime – not any specific government, but all of them and their potential replacements. That’s why they beat his Zo Artzeinu followers in the mid 90’s and why the establishment (left and right) never let him get far in politics.

The question can be raised, why even attempt anything with Zehut? The answer is for the same reason that I am running on its ticket. Because we have a religious obligation to try, and leave the rest up to God. I’m running for religious reasons, not for any practical reason. I will vote Zehut for religious reasons, not for practical ones.

If God wants us to succeed, we will, but not if we give up or don’t try.

Back to Catalonia though. What would Abraham Lincoln have done as Prime Minister of Spain? Send a few policemen in to beat voters? No, he’d send his generals in to slash and burn Barcelona to the ground. A Spain divided, after all, cannot stand.

Or to put it another way, a Madrid government without its biggest province for tax loot, cannot survive. The regime is fighting for its life. That’s why it’s beating voters with batons and shooting them with rubber bullets.

When a regime is really threatened, all the meaningless politician talk goes out the window and they start beating you.

Have the courage, Catalans, to get out, and bring the Eurozone and EU down with you!