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France Leads the Way in the “War on Cash”

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In a stunningly despotic move, France has launched severe new restrictions on cash transactions. After September 2015, French residents cannot make cash payments of more than 1,000 euros, down from the current limit of 3,000. Foreign visitors’ cash payments will be capped at 10,000 euros rather than 15,000. Not only that, but any bank withdrawal of more than 10,000 euros per month will be reported to French authorities for good measure.

15 03 25 Euro_coins_and_banknotes

The claim is that these restrictions will help to fight terrorism. French Minister of Finance Michael Sapin pointed out that the terrorists who killed 17 people at Charlie Hebdo and a Parisian food store partially used cash to finance their attack.

Of course, the terrorists relied on more than just cash. They also used consumer loans and illegal trafficking of goods. The new restrictions aren’t a means of preventing terrorism — they’re just one more way for the government to exert control over the banking system.

Joseph Salerno, Academic Vice President of the Mises Institute, had this to say about the “war on cash”:

It was just a matter of time before Western governments used the trumped up ‘War on Terror’ as an excuse to drastically ratchet up the very real war on the use of cash and personal privacy that they are waging against their own citizens… The terrorists used CASH to purchase some of the stuff they needed — no doubt these murderers were also shod and clothed and used cell phones, cars, and public sidewalks during the planning and execution of their mayhem. Why not restrict their use? A naked, barefoot terrorist without communications is surely less effective than a fully clothed and equipped one.”

As Salerno makes clear, terrorism is just the cover story. In the bigger picture, these new cash controls allow the French government to better contain the fallout of a major financial crisis. As with most Western nations, such a crisis will likely be a result of a huge national debt. France is the sixth largest economy in the world and the third largest in Europe, but it’s public debt is currently more than 90% of its GDP.

French politicians and central bankers know as well as any other Western government that this financial situation is unsustainable. The eurozone’s money printing and interest rate manipulation will allow European bankers to manage national debts in the short term, but will inevitably lead to inflation and a currency crisis. When that happens, a run on the banks is extremely likely. That’s where currency controls play the part of limiting such a run. This war on cash is a big hint that the powers that be are well aware that Western currencies are on the brink of disaster.

Americans should watch these developments closely. The United States is in even worse financial shape than France and has slowly been making it more and more difficult for its citizens to use cash. For instance, banks are already required to file “Suspicious Activity Reports” when individuals withdraw cash or execute transactions of more than $5,000.

On top of this, the US government is making it ever more difficult for Americans to leave the country with their money. As Peter Schiff explained in his last Gold Videocast, the cost of renouncing one’s citizenship is rising every year. The US is becoming a new type of debtor’s prison in which the citizens are trapped and forced to take on the burden of the national debt through taxes and inflation. It’s a small stretch to imagine that the US would follow France’s lead and restrict cash payments at the next sign of an economic calamity.

What are French or American citizens to do when their large nest eggs are stuck in a bank, while the value of the currency simultaneously plummets? With only small monthly withdrawals allowed, they’ll be forced to watch helplessly as the true value of their savings disappear. By that time it’s too late to buy gold or silver, which will hold their value in such a crisis.

Spain, Argentina, Greece, and Russia are all major countries that in recent memory have dealt with either runaway inflation or limits on cash withdrawals. Many of these people have rallied to barter communities to exchange goods and services. Not only do barter communities offer a fiscal haven from inflation and taxes, but they also provide a sense of individualism and freedom outside of government intervention.

In Russia, it’s popular to buy appliances or electronics as a way of storing one’s wealth outside the banking system. But this is extremely inefficient. Such products lose value quickly and are difficult to barter. Precious metals — silver in particular — are much more practical vehicles for opting out of the increasingly totalitarian banking system. Download Peter Schiff’s The Powerful Case for Silver to learn more about the role silver has to play in our modern world and in your portfolio.

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3 thoughts on “France Leads the Way in the “War on Cash”

  1. Adil Elias says:

    I lived in New Zealand for a year (2010) and it was heading towards a full-blown cashless society aready back then, I recall that in a few occasions I had kiwis asking me why I was paying cash because the governemnt has a right to know of all my purchases, as Mark Twain said “Never argue with idiots, they will drag you down to their level and beat you with their experience”, so I tried to diplomtically escape the conversation by pointing out that I´m not buying anything illegal, but even that seemed to offend them.

    I imagine most western countries are heading that way (not the indoctrination I mean but the capital controls).. Nice article.

  2. Augustine says:

    When I lived in Brazil, as the hyper inflation was raging on, people often bought and sold goods, including durable goods such as used cars and houses, using a foreign currency, even though this was illegal. The fact was that, in the absence of a strong national currency that holds its value, the people will naturally seek one abroad or, in the absence of it, in precious metals. And then the people are just too many to jail.

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