Thirty Percent of Euro Cash Is Off Radar

Interesting article on the 500 Euro note being phased out:

The European Central Bank announced Wednesday that it will phase out the 500 euro banknote because of concerns that this banknote “could facilitate illicit activities.”

“There is a pervasive and increasing conviction in the world of public opinion that high denomination banknotes are used for criminal purposes,” said ECB president Mario Draghi earlier in the year in response to a journalist’s question about the future of Europe’s most expensive bill.

The ECB is responsible for issuing euro banknotes that are used by all 19 nations in the eurozone.

Europe’s top law enforcement officials maintain that the 500 euro banknote (worth about $576) makes it easy for criminals to launder money since it’s so easy to move around undetected.

In a report last year, Europol said cash was still the “instrument of choice” for terrorists and 500 euro notes were in high demand, though they’re not popular for everyday transactions.

“The 500 [euro] note alone accounts for over 30% of the value of all banknotes in circulation, despite it not being a common means of payment,” the report said.

Almost a third of Euro cash appears to be likely off the radar in 500 Euro notes, not counting the hundred Euro notes kept as a more easily spent covert store of wealth. How much of that is being stored in vaults, how much is being used for illicit purposes, and how much is simply being used by the paranoid to stay off the government’s radar and avoid taxes is unknown – not that the EU cares, as it pushes toward the cashless society.

After seeing the example in Cyprus, it should be clear to everyone that bank haircuts are in our future. Already some are talking of a similar strategy, just in milder form:

Helicopter money may be on the horizon, but if Deutsche Bank has its way, there is at least one intermediate step.

According to DB’s Dominic Konstam, now that the benefits QE “have run their course”, it is time for the next, and far more drastic step: “the ECB and BoJ should move more strongly toward penalizing savings via negative retail deposit rates or perhaps wealth taxes. With this stick would also come a carrot – for example, negative mortgage rates…”

“Further QE should be viewed as an experiment in real time, where the point of inquiry is the level of real or nominal yields at which credit will begin to expand more strongly with loan-to-deposit ratios increasing. What seems increasingly clear to us is that this level is likely at negative yields, and probably substantially so. If this is true, it would suggest to us that the equilibrium level of rates in the economy is probably negative. This in turn would strongly suggest a significant re-think to short-rate policy. In this case, central banks should move more strongly toward penalizing savings, rather than just the institutions that “house” those savings – the banks. This would mean allowing significantly negative retail deposit rates or perhaps even wealth taxes. With this stick would also come a carrot – one example being that while deposit rates penalize savings (the whole point), banks might also pay borrowers to buy houses via negative mortgage rates. “

Again, every rabbit strategy is premised around the idea that resources should be freely available. The idea of saving for a rainy day, incentivizing behaviors, structuring a system to strengthen itself by rewarding the strong/stable and removing the weak/unstable, or just the principle that a person’s earned property should belong to them – it is all foreign to the rabbits. They are the locusts, both expecting the free resources they are designed to consume – and designed to consume those resources until there are no more. Morals, logic, reason, common sense – it is all totally foreign to them.

As the collapse approaches, those locusts will look to raid any store of wealth they can find by any means they can come up with.

None of us can say we weren’t warned.