Central Banks v Clearing | Armstrong Economics

Delos, First Central Bank QUESTION: Dear Martin Wonder if you have any insights as to the history of the bank clearing process. Was the clearing process created mainly so banks could play games and earn interest with peoples’ money with the reasoning that it was to prevent money laundering? With technological advances today, one can accept an hour or two for automatic name and account number checks to happen but 3-7 days seems ridiculous. Any insights to the creation of the clearing process would be enlightening. Thank you again KW ANSWER: The function of bank clearing began with giro-banking, which originated in the Temple of Delos in Greece. The term refers to the circulation of money. It originated where you could write a check to one person and transfer the payment to their account at the same bank. Effectively, in ancient Greece, you would have an account at the Temple in Delos and instruct a transfer to their account in the Temple. The Romans adopted this concept and thus Roman banking was born. A central bank emerged after the Dark Ages in the early modern history as a government or state-owned banks. The Dutch were pioneers and financial innovators who not only created this state banking concept, but they also invented insurance. The Wisselbank was the first such bank in Amsterdam which was founded in the Dutch Republic during 1609. The Wisselbank became the model of the central banking system and it spread throughout Europe; first in 1668 in Sweden known as the Sveriges Riksbank and then the Bank of England in 1694. When smaller private banks began to pop up, the state-owned banks emerged as clearing banks where transfers between the accounts at the central bank took place the same as they did between accounts in ancient Delos. The Wisselbank actually collapsed in 1790 after it was revealed that the deposits have been used secretly to fund the Dutch East India Company. The manipulation was that they represented themselves as just holding money for safe-keeping. They did not lend money out. So when the bank failed and they had been using the money to fund the Dutch East India Company, the city had to bail out the bank and stand behind the losses. To eliminate cash, the ECB has a secret project to provide instantaneous transfers for each transaction. Therefore, the central bank was simply a state-owned bank whereas a clearing bank was one where all banks must clear transactions.
— Read on www.armstrongeconomics.com/history/central-banks-v-clearing/

Cancelling Euros | Armstrong Economics

QUESTION: Dear Martin, you are very right that govs intend to terminate high denomination euros. In Germany it has been impossible to pay cash with a €500 note for quite some time now – at least at most of the shops I usually go to on a weekly basis. At the end of last year they exchanged the ATMs in my house bank, so now €500 bills aren´t dispensed any more. It seems to me the gov is going to cancel these notes completely, i.e. withdraw them from circulation. What would you advise to people holding €500 notes at home? Thank you very much in advance. EZ ANSWER: There will be a cancellation of the €500. That is the rumor behind the curtain. I would convert them as soon as possible to small bills and/or US dollars. There remains a distinct possibility that we will see Europe try to cancel its currency and take up the IMF’ proposal to move toward a cryptocurrency. They are desperate for taxes and they will raise taxes even further. As far as cash is concerned, as we move into 2020, it is time to make changes. Keep in mind that the United States has never canceled its currency. That is a common occurrence outside of the USA. More than 40% of the physical paper dollars circulate outside the USA. It will be a political difficulty to cancel the dollar. It will take a major economic crisis. The USA will be the last to do such a thing.
— Read on www.armstrongeconomics.com/markets-by-sector/foreign-exchange/euro/cancelling-euros/

They wage war on cash for many reasons. They want to know all of your spending habits, they are hunting for more tax revenue, the banks get transaction fees when you don’t use cash.

Rally in Stocks Takes Heat Off Fed, Now They Talk Rate Hikes Again, Market Expectation of a Rate Hike Spikes | Wolf Street

Rally in Stocks Takes Heat Off Fed, Now They Talk Rate Hikes Again, Market Expectation of a Rate Hike Spikes | Wolf Street
— Read on wolfstreet.com/2019/01/09/stock-market-rally-takes-heat-off-fed-now-they-talk-rate-hikes-again-market-expectation-of-a-rate-hike-spikes/

Th fed does not want an overhead economy or too much inflation