refusing to accept cash

Quote: AZDuffman

It is about buying $100 of anything from Oil to Toyotas..

I still don't get it. What does
it matter what it's spent on
as long as it's traded for value.
Why should we care if it never
comes back, we got $100 worth
of goods and services for it and
whoever is spending it now is
doing the same.

What am I missing here.

Iran has $135.5 billion dollars of gold and foreign currency reserves as of 31 December 2016
United States $125.238 billion dollars of gold and foreign currency reserves as of 30 March 2018 (most of which is gold).

Yest the GDP of USA is many times that of Iran. USA has no need of foreign currency reserves as it produces the world standard of money.

China has $3,125 billion dollars of gold and foreign currency reserves as of 30 April 2018, most of it is foreign currency, and most of it is dollars. Although in some ways it has a bigger GDP than the USA, it's financial security is backed with USD.

The $100 banknote in Iran was probably not secured by an American tourist spending cash in Iran. More than likely it was brought into the country by a currency broker who finds a citizen concerned about the ever eroding value of his home currency. He keeps the $100 banknote as security because it will retain it's value. The charge by people like the President of Iran is that the world financial system means that the USA exports inflation. The world sells the USA things of value, and the USA repays them with paper. The $100 banknote is really more of a symbol, because the actual finances of the world are not conducted with paper.

Quote: NBC NEWS: 11/18/2007 RIYADH, Saudi Arabia

Iranian President Mahmoud Ahmadinejad said Sunday that OPEC’s members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar, which he called a “worthless piece of paper.”
His comments at the end of a rare summit of OPEC heads of state exposed fissures within the 13-member cartel — especially after U.S. ally Saudi Arabia was reluctant to mention concerns about the falling dollar in the summit’s final declaration.
The hardline Iranian leader’s comments also highlighted the growing challenge that Saudi Arabia, the world’s largest oil producer, faces from Iran and its ally Venezuela within the Organization of Petroleum Exporting Countries.
“They get our oil and give us a worthless piece of paper,” Ahmadinejad told reporters after the close of the summit in the Saudi capital of Riyadh. He blamed U.S. President George W. Bush’s policies for the decline of the dollar and its negative effect on other countries.
http://www.nbcnews.com/id/21870271/ns/business-world_business/t/iran-president-calls-us-dollar-worthless/

Quote: Evenbob

I still don't get it. What does
it matter what it's spent on
as long as it's traded for value.
Why should we care if it never
comes back, we got $100 worth
of goods and services for it and
whoever is spending it now is
doing the same.

What am I missing here.

Lets try it another way.

Give me your car. In return I will go into my office and print off a few "notes" on my computer. That is what I am going to give you.

You had to create something of value. I gave you pieces of paper.

Quote: Evenbob

I still don't get it. If I went to Iran
and traded a $100 bill for $100
worth of Iranian money, and spent
it on goods and services there, how
are they losing.

That is a way we export inflation to MENA. "The U.S. dollar jumped in a day from 54,700 rials to 60,000 rials in the open market in Tehran on Monday. A dollar was worth 36,000 rials in mid-September."

The Rial being the official currency in Iran, many locals don't want to hold many of them because of the insane inflation rate they have to spend on day to day goods. Iranians are paid in Rials, and say a pack of gum costs 36k rials in Sept., that same gum is now close to 60k rials. By traders and others shipping in dollars, we are causing crazy inflation in the streets. We are whipsawing their economy to bits.

Once the US prints a 100 bill and it leaves, we hope it never ever comes back. China had close to 3 trillion at one time in US treasury's, and the fear of them all coming home to the US at once is quite the leverage. Inflation loosely described is more money chasing the same amount of goods.

Quote: AZDuffman

Lets try it another way.

For 2017, Exports were $2,329.3 billion , Imports were $2,895.3 billion.

That deficit is over half a trillion dollars. How is USA paying for that difference? With circulation of $100 bills up to $1.25 trillion most of it overseas, cynics feel that the USA is paying for the trade deficit partly with secure paper.

In turn the people of the world are addicted to US secure paper because the policies of the US export inflation and makes their own currency increasingly worthless because the primary goods like fuel are dictated by the value of the dollar.

A lot of it is "gut reaction" and not necessarily sound economic analysis.

===============================================================================
Number of banknotes in circulation per capita at end of 2016

Denomination	USA	Canada	Australia
$100	36	12	14
$50	5	7	29
$20	27	25	7
$10	6	4	5
$5	9	7	9

All three countries require you to fill out a form to notify the IRS in the event of a cash transaction over $10,000 or if you are carrying that much on an international flight.
Australia is now proposing to simply make cash transactions over $10K illegal. Since Australia is already more accustomed to using the $50 banknote, there is a possibility that this new restriction on cash transactions may make them decide to severely roll back the number of $100 banknotes in circulation.

A currency strap is formally defined as 100 banknotes (play money in image)and weighs 100 grams or 3.53 ounces. It will soon represent the maximum value cash transaction in Australia



Of course if Australia does it, you know it will become a national debate in Canada. If both of them make such transactions illegal, it may even become an issue in the USA.

Quote: Pacomartin

If you talk to the President of Iran, it is USA stealing from the rest of the world. .

Which undoubtedly angers Iran and will continue to anger Iran until such time as Iran's economy is big and strong and Iran can steal from the rest of the world.

I don't mean to overly simplistic about this macroeconomics and international banking stuff but isn't that just about the sum total of the matter? Iran doesn't like it now but hopes to do the exact same thing in the future. India complains that the USA uses too many natural resources but hopes some day to be come a strong powerful economy wherein they can use too many of the world's natural resources for their people.

Am I truly missing something here or is there really something of substance other than greed at work?

Quote: Fleastiff

Which undoubtedly angers Iran and will continue to anger Iran until such time as Iran's economy is big and strong and Iran can steal from the rest of the world.

I don't mean to overly simplistic about this macroeconomics and international banking stuff but isn't that just about the sum total of the matter? Iran doesn't like it now but hopes to do the exact same thing in the future. India complains that the USA uses too many natural resources but hopes some day to be come a strong powerful economy wherein they can use too many of the world's natural resources for their people.

Am I truly missing something here or is there really something of substance other than greed at work?

Lots of countries hate that the USA can just print money to finance fiscal and trade debt. To be the reserve currency, you have to run current account deficits so as to get your currency in use. It is a very few countries that can borrow at will in their own currency. But go one step further. Iran considers the USA "the great satan." BUT, most anything they want to buy requires greenbacks! Sort of as if Steve Wynn could only pay his employees, vendors, and debt in cheques from the MGM.

You hear a lot of complaints about "fiat" money, or money that has no intrinsic value except we say that it is money. You hear a lot of people of people say we should get back to "real money" like silver certificates that up until 1968 were redeemable for silver coins, then silver bullion.



The reality is that money has almost never been worth it's face value, even when it was made out of a precious substance. Roman coins were valuable only because everyone accepted them as such.

Quote: Fleastiff

Am I truly missing something here or is there really something of substance other than greed at work?

I don't know if Iran would export cash even if they could. Certainly one of the goals of the EURO would be that cash could be exported like the USA. The massive denominations in Switzerland, Singapore and Hong Kong seem to indicate that they expect some of those bills to circulate outside of the country. But Japan and Canada don't seem all that interested, although Canadian cash is used in South America


USDT or "Tether" was launched in 2015 and is a crypto currency which is tethered to the value of the dollar.

One thing that occurs to me is that people are less interested in a crypto currency that equals the dollar as they are a physical coin or physical plaque that is worth 10,000 dollars or Euros that has RFID that guarantees it's authenticity.


It would be more convenient than a currency strap

Quote: Pacomartin

You hear a lot of complaints about "fiat" money, or money that has no intrinsic value except we say that it is money. You hear a lot of people of people say we should get back to "real money" like silver certificates that up until 1968 were redeemable for silver coins, then silver bullion.

All things financial seem to fit the train analogy: You get on when its already moving and you get off when it begins to slow down. Rather than look at the fundamentals you take a technician's stance at just look at the buying actions of others.

If everyone is interested in some currency, it has value. When that interest begins to wane, it no longer has value.

Standing around debating the largely-imaginary good old days of minted coins and fully backed currency means you miss the profit train that everyone else has hopped onto. I've often wondered if anyone actually tried to exchange a federal reserve note for actual silver. What would they want with it? It was a comforting phrase to have on the note but the silver bullion in a vault somewhere hardly mattered to anyone who used the currency. Its like the word "authentic" on these silly privately minted gold and silver "collectible" coins. Its a real pretty word but adds nothing whatsoever to its supposed value, nor does the fact that the coin is legal tender in some obscure island economy add one whit of value to it.

>although Canadian cash is used in South America
Perhaps because there is faith in a steady supply from Canadian tourists and a general belief that it is a stable economy and a fairly stable government.

Quick comparison of two island nations with similar size population.

Bahamas Population 2016 estimate 391,232
GDP (PPP) Per capita $25,173
GDP (nominal) Per capita $24,630

Iceland Population 1 March 2018 estimate 350,710
GDP (PPP) Per capita $54,288
GDP (nominal) Per capita $83,750

Iceland is much wealthier than the Bahamas.

The Central Bank of Bahamas (established 1974) does not have an independent currency. The Bahamian dollar is pegged 1-1 to the USD and is fully backed by conservative investments in Treasury Bonds. As of March 2018 they are circulating $289.80 million in Bahamian currency. US cash is freely accepted anywhere in the Bahamas.

Iceland does have an independent currency, which tend to change in value radically over the decades. Over a long period the Icelandic Crown goes down. At present one Danish Crown - 16.4 Icelandic Crown. A hundred years ago the Danish, Swedish, Norwegian, and Icelandic Crown were all at parity and all were defined as (2480 crowns equal to on kilogram of gold).

At present $1 USD = 102.45 Icelandic Crowns. It seems to me one advantage of digital currency is that you could just declare that the Icelandic Crown is no longer a free floating currency and is now set at $1=100 ISK.

Iceland is circulating about US$650 million in Iceland currency, more than twice as much as Bahamian currency. The people are much richer than the Bahamas. But a digital currency would allow them to peg to USD, CAD, EURO or a basket of all three.

Both banknotes are worth US$100