Why the Fed HATES Physical Cash and Could Move to Tax It

October 26, 2015 in News by RBN

Zero Hedge | Phoenix Capital Research

The big banks want to do away with physical cash.




Because it represents a means of getting your money out of the system.


In its efforts to prop up the Too Big To Fail banks, the Fed has made keeping your money in a bank a low value proposition.


To whit, for decades individuals kept their money in bank savings accounts for two reasons:


1) Safety.

2) Returns.


By not implementing any real reforms to the banking industry, nor jailing anyone who committed the fraud that caused the 2008 Crisis, the Fed has irreparably damaged #1.


The derivatives market remains gargantuan and unregulated. And no one knows that the banks really own (what their balance sheet risk is).


Since 2008, 465 banks have failed in the US. Heck, even 51 have failed this year… despite the fact that supposedly we’re in a recovery and banks have been “reformed.”


Many banks aren’t as safe as most would think.


Regarding #2, (getting a return on capital by putting it in a bank account) with interest rates at zero, you’re not really getting paid to keep your money in a savings account. After all, you could have $1 million in a bank and only be making $2,500 per year.


What’s the point? What exactly are you getting for leaving your money in the account?


The Fed had hoped that by enacting its policies, it would force investors to move their money out of cash and into stocks and other risk assets. But investors aren’t playing ball. And it’s possible the Fed’s worst nightmare might hit.


What’s the Fed’s worst nightmare?


A significant percentage of investors move their money into physical cash.


Consider the structure of the financial system.


1)   The total currency (actual cash in the form of bills and coins) in the US financial system is a little over $1.36 trillion.


2)   When you include digital money sitting in short-term accounts and long-term accounts then you’re talking about roughly $10 trillion in “money” in the financial system.


3)   In contrast, the money in the US stock market (equity shares in publicly traded companies) is over $20 trillion in size.


4)   The US bond market  (money that has been lent to corporations, municipal Governments, State Governments, and the Federal Government) is almost twice this at$38 trillion.


5)   Total Credit Market Instruments (mortgages, collateralized debt obligations, junk bonds, commercial paper and other digitally-based “money” that is based on debt) is even larger $58.7 trillion.


6)   Unregulated over the counter derivatives traded between the big banks and corporations is north of $220 trillion.


Actual physical cash represents a very small “sliver” of the wealth in the US. If a significant percentage of investors went into physical cash, many banks would very quickly be in trouble.


Because of this, connected insiders at the big banks have begun suggesting that the Fed introduce NIRP (taxing cash) or do away with physical cash entirely.


Among those calling for one of these policies are mainstream economists at CitiGroup, the German Council of Economic Experts, the Bank of England and even current Fed Presidents themselves.


This is just the beginning.


Indeed, we’ve uncovered a secret document outlining how the Fed plans to incinerate savings.


We detail this paper and outline three investment strategies you can implement

right now to protect your capital from the Fed’s sinister plan in our Special Report

Survive the Fed’s War on Cash.


We are making 1,000 copies available for FREE the general public.


To pick up yours, swing by….



Best Regards

Phoenix Capital Research