Taking Control of Your ‘Cash’

Regular readers know of the cash ban legislation being pushed through Parliament but it is staggering how few of the broader population know of this and more importantly know why it’s happening.  Like him or loath him you wouldn’t normally accuse Alan Jones of not being across most important issues.  It is therefore very telling that he has only just become aware of this and understandably being vocally opposed to it.  You can watch he and Graham Richardson (again oblivious until now) discuss it and interview Matt Barrie.

But first let’s recap and update.  We published Matt Barrie’s submission to the Senate enquiry (click here) last year.  Having passed the Senate, it appears now that the bill will go through as Labor apparently are now in favour.  From the Sydney Morning Herald:

“A controversial bill to ban cash payments over $10,000 and impose two-year jail sentences on those caught using cash above that limit is poised to pass Federal Parliament despite bitter divisions within both major parties.

The Morrison government is set to win support from Labor to legislate the controversial crackdown, which is likely to be opposed by the entire Senate crossbench from the Greens to One Nation.

The proposal has been criticised by tradespeople, pensioners and some ethnic communities, with government MPs reporting a fierce backlash from within their own branches over the laws.

Some Labor MPs have also expressed reservations over the laws, aimed at cracking down on crime syndicates that launder money through the black-market economy.

But the opposition will likely vote in favour of the laws when a Senate committee inquiry hands down a recommendation that the bill be supported on Friday.” 

As the interview below with Alan Jones points out, and as we have before, this has nothing to do with the black market economy and has everything to do with controlling your money and having it in the banking system.  Why?

- This week we dropped to 0.5% interest rates BEFORE a recession.  Any recession normally sees interest rates cuts on average of 5.5% taking us deep into negative rates territory.  That doesn’t work if too many people are in cash.

- Our banks are horribly, highly exposed to Aussie property.  We have the world’s second largest personal debt level largely ‘all in’ one of the world’s most overpriced property markets.  They need your cash deposits to stay liquid on any material property price drop.  This same government has enacted the bank bail in laws that allow them to take your deposits to bail out a failing bank.  If you don’t know about this please read this now.

This has become so much more relevant now as we see the possible effects of Coronavirus and recently the bushfires and even banks seemingly preparing for the cash ban pre-emptively.  Many people experienced lack of access to money during the bushfire crisis and even just last week not being able to buy anything with any store using CBA’s EFTPOS system (which is only one of many recent examples).  When the bank’s down, so are you.  What happens if this virus sees banks go down?  What happens if property crashes and the bank goes down?  We have had numerous customers tell us banks are now demanding an invoice to show where cash being withdrawn is going.  That’s right, they won’t hand over YOUR cash without knowing what you are doing with it!  When challenged the response is simply it is ‘bank policy’. 

We have stated previously 2019 was notable for us as a business for the sheer scale of high net worth individuals cashed up hurriedly getting out of banks and into gold and silver in fear of losing that deposit and given they are not getting paid any material interest for the pleasure of that risk.  Many are cashed up waiting for this market crash to fully play out and then buy low afterwards.  Their choice is to leave that in a bank with all that risk or put it into gold (which in the last crash doubled whilst shares halved) and then pivot directly into cheap shares afterwards.

Last night Wall Street crashed again by nearly 4% and gold up nearly 3%, having its highest USD close since January 2013 (but still well off its USD1900 2011 high).  Year to date gold is up 18% in AUD terms and our ASX200 down 4.3% before the inevitable heavy falls today.  This could be starting right now.

What the video below highlights is there are still a lot of ‘sleep walkers’ out there, including the very politicians that will vote on this bill blindly believing it is about restricting crooks using cash.  There needs to be a broader discussion amongst the electorate with all the facts before them.  Over to you at this weekend’s BBQ….

Alan Jones, Graham Richardson and Matt Barrie on SkyNews - https://www.youtube.com/watch?v=oT9vP_RoCdM

Also later today the always excellent Alex Saunders of Nuggets News will be interviewing Martin North for their monthly economic update and will discuss this further.  He gave another good overview of the cashless agenda and debate last April here - https://www.youtube.com/watch?v=uQKsrOw_UEQ&feature=youtu.be