Mises Wire

Facebook icon
LinkedIn icon
Twitter icon
A
A
Home | Blog | Denny Hastert and the Fed's War on Cash

Denny Hastert and the Fed's War on Cash

  • Dennis_Hastert_2.jpg
0 Views
05/29/2015

Governments, at least modern western governments, have always hated cash. Cash is private, and cash transactions are hard to tax. As Joe Salerno explains, the US fedgov's relentless War on Cash has been ongoing.

Now one of the primary weapons in that War, the misnamed Bank Secrecy Act of 1970, has targeted a prominent retired politician.

When I worked for Ron Paul in the early 2000s, Illinois Congressman and Speaker of the House Denny Hastert was known as an amiable guy. He was not seen as a political hitman like Newt Gingrich, and thus House Republicans installed him as the kinder, gentler face of the GOP caucus. Behind the scenes, however, he was widely considered a puppet of Majority Leader Tom DeLay and the Bush White House.

Rumors about skeletons in Hastert's closet did circulate among congressional staffers. But it always seemed unlikely that he had a long history of extramarital affairs, simply because of the Bob Livingston debacle. Livingston was tapped to succeed Gingrich as Speaker, until revelations of (Livingston's) marital indiscretions opened the door for Hastert. Surely House GOP leaders would not be so stupid as to nominate another philanderer (gay or straight) for Speaker? But who knows.

Now Hastert has been charged with two noncrimes: allegedly "structuring" over $1 million in cash withdrawals from several banks (i.e. taking out less than $10,000 repeatedly); and allegedly lying to FBI agents about what he had done with the money. 

First and foremost, withdrawing one's own cash from a bank is none of fedgov's business. But of course the feds hate privacy almost as much as they hate not taxing every human transaction. So the Bank Secrecy Act of 1970, sold to the public as a tool to fight money laundering and drug trafficking (for the children!), was born. And along with it came the odious requirement for financial institutions to report any cash withdrawals over $10,000. 

Keep in mind that the original $10,000 reporting rule has never been adjusted for inflation. In 1970, $10,000 could buy a new car, appliances, expensive jewelry, etc. Just keeping pace with official BLS CPI would require raising the reporting amount to nearly $61,000 today! So even if one accepts the premises of the Bank Secrecy Act, individuals should be allowed to withdraw, carry, and conduct business with $60,000 in cash without any suspicion.

Also note that the "structuring" prohibition was added by one of the many amendments to the original Act. Cash withdrawals of $10,000 or more from a bank must be reported, but withdrawals of less than $10,000 may also need to be reported... And the person making this Junior G-Man decision may be a 20 year old bank teller!

While the original Act mandated reporting by financial institutions, subsequent legislation has significantly expanded the types of businesses that must comply. Insurance companies, casinos, car dealers, jewelry dealers, coin shops, and pawn shops have all been deputized into federal service-- and they're all terrified of the penalties for noncompliance. 

As for the charge of lying to FBI agents, are we to take their word for it? Hastert made a terrible and stupid mistake by talking to said agents, but he was not under oath. And the "False Statements Act" is nothing more than a shameful tool for federal agents seeking to elicit dubious confessions from hapless suspects.

Look for the War on Cash to intensify.

Add Comment

Shield icon wire