The Great Recession Blog
by David Haggith
The electronic pixels had not even solidified on my last article about how the tide is turning against cash when Zero Hedge commented on an op-ed by Larry Summers, who has not surprisingly joined the Kill-Kash Kampaign.
Summers — once-upon-a-time chief economist of the World Bank, 71st Secretary of the US Treasury, 27th president of Harvard University (tossed on his head in a no-confidence vote that was fittingly over financial conflict-of-interest questions), 8th Director of the National Economic Counsel that advises the president of the United States, and all-around, hideous-looking jackass of a fellow — is like the Chucky doll that won’t die. When he smiles, worms wiggle between his teeth, begging to escape their captivity.
Larry “Killer of Kash” Summers could be counted on to launch the next salvo against cash. I spell things with a “K” in Larry’s case because he was also the lead adviser during the former Soviet Union’s kollapse, guiding it to privatize the dying socialist economy. Thanks to Larry’s good work, nothing went to the little people of Russia, but everything got divvied up into the hands of very few oligarchs who became Russia’s 1%. Larry is a hard-core one-percenter.
The US government attempted to hold the Harvard players responsible for their clear conflicts of interest and undeniable misuse of government money [in their Soviet konsulting] but action was slow to ensue. The original GAO report was critical, and further funding was withdrawn from [the Harvard Institute for International Development] on the basis that as a contractor HIID has “abused the trust of the U.S. government by using personal relationships for private gain….” The episode became a factor in the dismissal of Larry Summers, who had set up the project as deputy secretary of the treasury under President Bill Clinton.
Set it up, and at the point referenced above, was president of the university running it. In settling the case, Harvard paid $26,000,000 to the federal government while Summers was president. Summers was accused of favoritism in allegations that he put the bill on the university in general and protected some of his economic colleagues in the scandal. Harvard paid Summers to get the heck out of the presidential office. In fact, they paid over a million dollars to get rid of him, but then hired him back as a professor. The Chucky doll that won’t go away.
Larry was also the architect of deregulation of the U.S financial system and a leader in the repeal of the Glass-Steagall Act. He is, in other words, directly involved in the death of the US economy, given that the abolishment of Glass-Steagall allowed banks to play in stock markets:
Summers hailed the Gramm–Leach–Bliley Act in 1999, which lifted more than six decades of restrictions against banks offering commercial banking, insurance, and investment services (by repealing key provisions in the 1933 Glass–Steagall Act): “Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,” Summers said. “This historic legislation will better enable American companies to compete in the new economy.” (Wikipedia)
Well, here you have it: the new economy, folks. We commonly call it the Great Recession. It has certainly been a great recession for Larry, who has made a fortune since it began.
Larry Summers’ deregulation created the perfect swampy environment for the slough of derivatives that spawned the Great Recession, too:
On July 30, 1998, then-Deputy Secretary of the Treasury Summers testified before the U.S. Congress that “the parties to these kinds of [derivatives] contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies.” At the time Summers stated that “to date there has been no clear evidence of a need for additional regulation of the institutional OTC derivatives market.” (Wikipedia)
Larry probably deserves more credit as architect of the Great Recession than Alan Greenspan. He should be credited with the general demise of the entire world because, in my never-so-humble my opinion, everything Larry touches turns to sewage.
Having wrecked the economy, Summers then went on to serve the Obama administration in saving the economy. He became Obama’s key economic advisor, and Obama was reportedly thrilled with Larry’s fine work. One of Larry’s early accomplishments was to see that infrastructure spending was largely removed from Obama’s original stimulus bill and replaced with tax breaks. (No sense actually giving the next generation something they can use in exchange for the extra taxes your imposing on them by handing them the bill as you cut yourself a tax break). Lovable Larry also asked for removal of the imposition of caps on the pay of executives at companies that benefited from the stimulus plan. Why shouldn’t they be allowed to use the stimulus to boost their pay after breaking their banks?
Wherever he goes, Larry winds up being the turd in the swimming pool.
Larry Summers’ salvo against cash
Having destroyed the known world and all hope of financial recovery, Summers now wants to destroy cash. This time he’s making a surgical strike, targeting just Benjamin Franklin. The hundred-dollar bill, he claims, is primarily a tool of the corrupt. (Now, I have to admit that Larry is not outside of his expertise when it comes to knowing about the corrupt.) Summers claims that Ben and the 500-euro note are a “boon to corruption and crime.” He wants to see both eradicated.
In his national plea, Summers references former Standard Chartered CEO, Peter Sands, who said only a week ago that ditching Ben would “deter tax evasion, financial crime, terrorism and corruption.” In Larry’s own words, lynching ol’ Ben would “make the world a better place.”
Consider that most of the US currency in use (in terms of value) is in the form of hundred-dollar bills. Zero Hedge points out that, “of the $1.4 trillion in total U.S. currency in circulation, $1.1 trillion is in the form of $100 bills.” If the US monetary system wanted to move toward making the US a cashless society, getting rid of the Benjamins would get us almost eighty percent of the way there in one swoop. So, I think you can see where this is leading.
As Zero Hedge says, that…
would achieve practically the entire goal of destroying the one paper alternative to digital NIRP rates, in the form of paper currency.
Bear in mind, Summers is a former US Treasurer and regular advisor to presidents. Why people listen to him when so much of what he touches turns corrupt or dies, I don’t know. But they do.
Larry Summers, King against Krime
Says Summers, blithely,
“The fact that — as Sands points out — in certain circles the 500 euro note is known as the “Bin Laden” confirms the arguments against it. Sands’ extensive analysis is totally convincing on the linkage between high denomination notes and crime. He is surely right that illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500 euro note rather than more than 50 pounds as would be the case if the $20 bill was the high denomination note. And he is equally correct in arguing that technology is obviating whatever need there may ever have been for high denomination notes in legal commerce.”
Yeah, that’s the key to fighting crime — increasing the weight of criminal baggage. Of course, the death of Ben will require the immediate sacrifice of Ulysses S. Grant, too, as a twenty-pound briefcase of Ben’s to pay a million dollars easily gets replaced with two twenty-pound briefcases of Grants. Not that much difference in inconvenience since most of us have two arms.
However, by the time you drop down to Andrew Jacksons, one presumably needs a hand truck to make a cash payment in a million-dollar crime. The next logical question, however, will be, if we can readily ditch the form of cash that makes up almost 80% of the value of all US currency in circulation, what do we really need the rest for?
Larry doesn’t suggest we try to rake in all the Ben’s right away, but just that the US Treasury, which he used to run, stop printing them and let them fade out of existence. That way there will be less public resistance.
…a moratorium on printing new high denomination notes would make the world a better place.
Ah yes, how sanguine the world would be if criminals could only play with Grants. Wouldn’t we just move from the Ben Laden of crime to government Grants for crime?
Larry notes that, if Europe would move on eliminating the €500 note, the rest of the world would likely slide right into place in ditching major bills. He’s glad to see that Mario Draghi, head of the European Central Bank, has shown enthusiasm for the idea. As for the resistance, Larry opines,
I confess to not being surprised that resistance within the ECB is coming out of Luxembourg, with its long and unsavory tradition of giving comfort to tax evaders, money launderers, and other proponents of bank secrecy.
Maybe this is just sour grapes because this little city state has a corner on unsavory finance that Larry hasn’t had a hand in. They’re those European elitists who don’t want notoriously big-mouthed Americans in their little club … or cartel.
These are difficult times in Europe with the refugee crisis, economic weakness, security issues and the rise of populist movements. There are real limits on what it can do to address global problems. But here is a step that will represent a global contribution with only the tiniest impact on legitimate commerce or on government budgets. It may not be a free lunch, but it is a very cheap lunch.
Even better than unilateral measures in Europe would be a global agreement to stop issuing notes worth more than say $50 or $100.
Ah, there we go! I hadn’t even read that far in writing this article to this point (just writing as I read). I knew Larry would have to throw Grant to the lynch mob, too. And let’s make sure we go global with all of this at the same time. After all, haven’t I said the new cashless society needs to be global? Summers goes on,
Such an agreement would be as significant as anything else the G7 or G20 has done in years.
Yes, it would, as it would pretty well be the death-knell for all hard cash since getting rid of both Ben and Ulysses would take more than eighty-percent of monetary power out of the cash economy.
A global agreement to stop issuing high denomination notes would also show that the global financial groupings can stand up against “big money” and for the interests of ordinary citizens.
Ah, yes, there’s Larry the egalitarian, concerned as usual about the ordinary citizen. Your life and mine could be practically crime-free if the thugs didn’t have Franklins and Grants to work with. The little people would be so much better off. Thank you, Patron Larry. Now, please brush the manure off your teeth because you might eat this stuff, Larry, but we don’t. We know what you’re full of.
Said Bloomberg in delighted response to Larry’s article,
Summers’s call coincides with a review by the European Central Bank of its 500-euro ($558) note, whose future now looks increasingly uncertain. President Mario Draghi repeated this week that the institution was considering withdrawing the euro area’s most valuable bill to avoid aiding criminals…. Former Bank of England policy maker Charles Goodhart, an authority on money supply, told a conference last year that the central banks in Europe were “absolutely shameless” in issuing high-denomination notes. Peter Sands, previously the chief executive officer of Standard Chartered Plc, argued in a paper this month that such bills should be eliminated and also called for a G-20 accord. The next meeting of G-20 finance ministers is in Shanghai on Feb. 26-27.
Hope is on the immediate horizon. We could wrap this up this month!
I recently reported on how Bloomberg’s editors teamed up recently in their own campaign against cash, so it’s no surprise that the writer of this article refers to such official money printing as, “a practice alleged by police to abet crime and corruption.”
Yeah, that’s what the legitimate printing of money is. The article further notes
President Mario Draghi [of the European Central Bank] repeated this week that the institution was considering withdrawing the euro area’s most valuable bill to avoid aiding criminals.
So, just days after I said cash will soon be treated as if it is criminal, there you have it. The take-down of cash starts with stating that it is technologically obsolete and dirty money for dirty people.