Cash Tax - Fed plan to make your money expire if you hold it : LUSENET : TimeBomb 2000 (Y2000) : One Thread

(apology if this has been posted, but I don't see it in the list, and its too important to miss),1294,32121,00.html

Cash and the 'Carry Tax' by Declan McCullagh

3:00 a.m. 27.Oct.1999 PDT WASHINGTON -- US currency should include tracking devices that let the government tax private possession of dollar bills, a Federal Reserve official says.

The longer you hold currency without depositing it in a bank account, the less that cash will be worth, according to a proposal from Marvin Goodfriend, a senior vice president at the Federal Reserve Bank of Richmond.

In other words, greenbacks will get automatic expiration dates.

"The magnetic strip could visibly record when a bill was last withdrawn from the banking system. A carry tax could be deducted from each bill upon deposit according to how long the bill was in circulation," Goodfriend wrote in a recent presentation to a Federal Reserve System conference in Woodstock, Vermont.

The 34-page paper argues a carry tax will discourage "hoarding" currency, deter black market and criminal activities, and boost economic stability during deflationary periods when interest rates hover near zero.

It says new technology finally makes such a scheme feasible. "Systems would have to be put in place at banks and automatic teller machines to read bills, assess the carry tax, and stamp the bills 'current,'" the report recommends.

Goodfriend said in an interview that banks might place a kind of visible "date issued" stamp on each note they distributed. "The thing could actually stamp the date when the bill comes out of the ATM," he said.

Congressional critics say they would oppose any such move.

"The whole idea is preposterous. The notion that we're going to tax somebody because they decide to be frugal and hold a couple of dollars is economic planning at its worst," said Representative Ron Paul (R-Texas), a free-market proponent who serves on the House Banking committee.

"This idea that you can correct some of the evil they've already created with another tax is just ridiculous," Paul said. Other economists say a carry tax is not a wise plan.

"This is going beyond taxing banks for holding reserves. It's taxing the public for holding currency too long. That's even more wild an idea," says George Selgin, a University of Georgia economics professor who specializes in monetary policy. "There are sweeping implications of these suggestions beyond whatever role they might play in thwarting a deflationary crisis... I think it's a very dangerous solution to what may be a purely hypothetical problem," Selgin said.

Goodfriend discusses an alternative: The Fed should at times prevent Americans from withdrawing cash from their bank accounts. "Suspending the payment of currency for deposits would avoid the cost of imposing a carry tax on currency."

[what a GOOD FRIEND he is!!!]

But he concludes that such a move would have "destabilizing" effects, and recommends that the Federal Reserve instead "put in place systems to raise the cost of storing money by imposing a carry tax."

The idea has been discussed before. Economist John Keynes mentioned the possibility, but dismissed it because of the administrative hassles involved.

Silvio Gesell, a Keynes contemporary and like-minded thinker, also suggested taxing money to allow lower interest rates.

But Goodfriend says that technology has advanced since then. "In light of recent advances in payments technology and the less-than-satisfactory alternatives, imposing a carry tax on money seems an eminently practical and reasonable way [to proceed]," he writes.

He said the Federal Reserve has technology that would make it "feasible," but refused to give details.

One reason for a carry tax, he says, is the reduced influence of the US central bank when prices are not increasing and inflation is close to zero. During such a period, banks are less likely to make loans -- even if the Fed tries to spur an economic expansion through open market operations.

But if the government taxes the currency holdings of individuals and banks through an occasional carry tax, they may be inclined to lend money even at a negative interest rate in order to avoid holding on to it.

"This proposal is made well in advance of any problem we have in the US. It's not an emergency proposal at this point," he said. The report says Congress would have to pass legislation allowing such a tax.


Discussion of this on csy2k

-- Linda (, November 01, 1999


The real horror of this story is not in the absurdity of the scheme, but rather in the mindset of those who control our (their) currency.

It really isn't our money.


-- dave (, November 01, 1999.

This scheme has been going on for more than 60 years now, we call it inflation. Or devaluation. It comes VIA the "minimum wage increases."

-- madashell (, November 01, 1999.

I still am intrigued at the concept of the tired, disgusted populace agreeing within themselves to resort to another exchange standard....and leave the money grubbers holding their sacks of useless printed material, screaming, " you all come back here and use this!! We insist!! You can't do that!! Come back!! come back!!: What an amusing mental picture. I must be dreaming!!!

-- Jay Urban (, November 01, 1999.

This from the same bunch of facist who proposed the recent "Know Your Customer" banking regulations. Folks it's way past time for a tax revolt in this country. The upper echelons seem to have lost all grasp of the concept that it's OUR money, not theirs, and we are not a herd of cattle to be milked purely at their whim. I shudder every time I turn on the idiot box and hear Clinton proposing another one of his socialistic monstrous beurocratic nightmares to add yet another ten percent to my already totally outrageous tax burden. Or forgiving foreign debts, or giving away grain, or shovelling money down the bottomless pit of the IMF only to hopelessly enslave another emerging nation in debt from the outset. The sheer arrogance of these people is astonishing. Our tax system has become nothing more and nothing less than legalized armed robbery.

-- Nikoli Krushev (, November 01, 1999.

The downside (like there's an upside?) of this insane plan is that a good chunk - the majority - of cash in circulation is circulating (or NOT circulating as the case may be) OUTSIDE THE U.S. link. It is being held ("hoarded") as a store of wealth, by citizens of other countries who consider it more stable than their own currency.

So.. no matter whether you and I already have taken our measly sums out of the bank in advance of the regulation, what happens to the value of the dollar when everyone all over the world who is holding (hoarding) U.S. dollars tries to get rid of them as fast as possible and choose another form of money as a "store of wealth"?????

Gold or Euros? What's your preference? Dollars will be no-cush-for- your-tush toilet paper. Can we say One World Currency boys and girls?

-- Linda (, November 01, 1999.

They pass this law and I begin putting my direct deposit check in an offshore bank, automatically converting it to Swiss Francs. Any cash on hand will get converted to same or Gold. Piss on them.

-- kozak (kozak@formerusaf.guv), November 01, 1999.

The New World Order plan is to make all financial transactions electronic using digital money exclusively and eventually destroying all paper and hard currency, and this process is nearly complete. Think about it, once this process is complete, they are in total control of your financial situation to manipulate however they please. This is why they are now switching all governmnent employee payrolls to electronic, they encourage you to use plastic cards for everything, and they extend to you exorbitant amounts of credit. Now that people are getting so used to using plastic cards or checks, it will be a very small change when they announce that all currency will be destroyed, and they want you to turn in your cash in exchange for electronic money using a card. If you do not turn in your cash and go digital you'll be screwed, your cash will be worthless. Once the U.S. has made the total conversion, the rest of the world will have to follow since we dictate the world economy. This is happening so fast already that I believe it will be a done deal by 2010, and probably a hell of a lot sooner. Y2K is our last chance to destroy this corrupt monetary system before we no longer have any choice. Withdraw ALL money from the bank and use real currency only for transactions, not electronic. This will expose the digital money system as the fraud that it is, and they will no longer be able to manipulate the condition of our financial welfare.

-- Hawk (flyin@high.again), November 01, 1999.

kozac - is it possible for mere mortals with limited means to do this? Do you know how? So why not do it now?

-- Linda (, November 01, 1999.

Kozak -- if (big if) the international banking transfer system holds up after 2000-01-01, I have similar plans. Do your research now so you can jump as soon as you think it looks OK.

It's a little pricey for many people, but check out the newsletter and related services at:

-- A (, November 01, 1999.


Looks like they've been hacked, probably by gubmint or banks - there ain't much left of that site.

Keep in mind that what you do when you change currency may solve your own personal dillema temporarily, but it does nothing to discourage the NWO plan for the global electronic monetary system. In fact it only reinforces it because instead of holding the currency you will have to use electronic currency for your transactions. You may think you are doing what is in your best interest now, but in the very near future you will wish to God you could change the choices you made. The only real solution is to crash the Federal Reserve banking system now.

-- Hawk (flyin@high.again), November 01, 1999.

Ahhh... but how do you crash the Fed. Reserve banking system? By withdrawing more cash than is in the system, right? But... if Goodfriend's program gets implemented [and by the way, do they even NEED approval from Congress?], then dollars held as cash or electronic dollars are both likely to be worthless when foreigners no longer us dollars as a store of wealth. If we instead use our withdrawn cash to buy guns, gold, or groceries, the electronic money goes back into the system and does not crash the system. Good for us... at least in the short run, but if at any time Goodfriend's plan is put into action, dollars and cash will lose value, and even banks will have no incentive to keep even the tiny reserve of cash they now have. Some other currency, probably Euros, and in electronic form at that, will become dominant nearly overnight. And if we (collectively) DO crash the system by our paranoid incistance on holding cash during the "transition period"... why then the banks close, the economy crashes, and ????? Would the result be the same anyway? Heads Feds win, tails we lose. ???

-- Linda (, November 01, 1999.

Hawk -- It is a members only site in general. But some areas available to non-members, (like "FREE" and various info pages). Just the one main page; everyone has to use the left frame URL jumps to get to other site areas.

I agree about NWO and your comments, but as in voting, the actions of an intelligent few have no effect on the eventual outcome.

OTH, if communicatins and internet hold, and governments do not confiscate all gold, etc., alternatives may arise. There is at least one already established fairly substantially, which is e-gold. They have a good business now, and if communications holds, they will likely experience an explosion in growth mid next year if we don't have a meltdown.

-- A (, November 01, 1999.

I'm renewing my passport, and at the first whiff of trouble, using it. The statements coming out every day are getting more and more insane. Maybe it's just the sick ramblings of a few, but you never know. Today it was all over the news about law enforcement not even needing search warrants in some instances. They'd have me as a "survivalist" for holding bottled water and freeze-dried beef.When you add it all up it's beginning to look very weird indeed. And remember, you're not paranoid if they really ARE out to get you!

-- Gia (, November 01, 1999.


Yes, I agree that gold may be the best way to go and will be the only widely recognized currency of actual value during the economic collapse. I would certainly recommend that or land as an investment for the bulk of any one person's net worth, as long as you are buying the physical gold and not just a piece of paper saying that the banks are holding onto it for you, because that's how this whole mess got started. Use only the minimal amount of cash right now that you need to conduct your lifestyle activities, but by all means get assets out of banks as much as possible.


I'm not sure I'm following your logic. What I suggest is that because a lot of people plan on holding cash as a Y2K precaution, this is probably as close as we'll ever be to being able to actually drain the entire system of cash, forcing them to close. The people who think they still have cash in the bank won't be able to get it and the public will be outraged when they discover that the feds really only have $1 for every $100 they say the have. The people will then be able to demand that they be paid by employers with real money, and only buy things with real money, etc. etc., the way it should be, $1 = $1 in actual currency. You mention concern about this guy's new plan making cash worthless, and that is my point exactly, and why I think it is necessary to do this now, not wait until they start passing more and more restrictions. What I am suggesting is that after you have all of your guns, food, and supplies purchased, whatever remains should be removed from the bank. If you do this, and ask your friends with similar feelings about the reserve system to do this, and they ask a few of their friends, it can happen. As I have told others, I walk the talk, I have not had a bank account for several years, and it is simple to get by without one, and in fact it eliminates a lot of problems. Once these banking tycoons of the NWO get all of your money on their computers, they are going to be able to pull your strings like a puppet. In fact if you've been keeping current with the news you've probably noticed many ways in which they are advancing their overall plan, such as the recent reform of the Financial Services Industries, which will allow them to control all of your financial, investing, and insurance activity within the same organization, and share your personal data on your profile in these areas. This is not a good thing. George Orwell was right... a little ahead of his time, but it is becoming a reality.

-- Hawk (flyin@high.again), November 01, 1999.

Hawk. I agree with your proposed actions. But I just doubt the outcome. A banking collapse would be the perfect opportunity for emergency measures as proposed by Goodfriend. I don't have much faith in the angry people forcing crooked banking system to change. Rather, in any emergency [example Flight 800] the sheeple are more than willing to give up rights as a trade off for "security".

Still seems the most logical course of action for us little people... get all the supplies you want/need, and convert the rest to a combo of gold/silver/cash. At least in the short run it makes us more response-able... though in the long run [which might not be that long at all], a cashless NWO society seems almost inevitable.

-- Linda (, November 02, 1999.

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