There is a “war on cash” going on from the central banks, trying to reduce the usage (and personal storage) of cash. This is something that makes sense as a power move against the common people in a time of forced negative interest rates, but it is a shocking reduction of liberty and privacy (of finance), not to mention that the official justifications don’t hold a shred of water. What’s really behind this trend?
Would you like your government to have more insight into your personal finances than you have yourself? That’s where we’re heading with the ongoing “war on cash” – into a world where every transaction is not just loggable by the government (or a government-coerced agent), but where you can also be held responsible for anything and everything you buy and sell.
There’s both a carrot and a stick in this scheme of making everything traceable and trackable. The stick consists of outright bans on cash transactions – several European countries have banned cash transactions exceeding 1,000 euros. Uruguay has banned cash transactions over $5,000. Even Switzerland has proposed banning cash transactions over 100,000 Swiss francs (admittedly a high number, but once a government declares a right to ban cash transactions, the number is a matter of degree and not principle).
The carrots and incentives for not using cash, meanwhile, mostly take the form of making it easier to pay using cards. The latest example of Amazon Go, a brick-and-mortar store where there’s no checkout at all but just just grab what you want and leave, is one example of such a carrot. It is undeniably more convenient than standing in an annoying checkout line. Combine this with various fees for withdrawing cash from your own account in the bank, and the incentives become clearer.
But why pursue this direction? There are many conceivable reasons for wanting to eliminate cash from circulation altogether. ZeroHedge has homed in on the elimination of cash being an absolute necessity to maintain a zero-interest (or even negative-interest) policy, which in turn remains necessary to prevent a financial bloodbath. Others have talked about the costs inherent in transporting cash in armored cars, or the risk of robbery being eliminated.
From a national policymaking perspective, though, the general excuse seems to be to “make it difficult for organized crime”. This was the excuse behind the elimination of the 500-euro note, for example.
But from a national perspective, this excuse makes absolutely no sense at all. At the national level, the game is to dominate other countries. Petty organized crime is not really relevant at that level, unless it is useful in the context of dominating other countries. And that’s where we find that this excuse – this “we need to be tough on organized crime” – is a complete Maskirovka, a complete façade, an utter lie. It doesn’t make sense at all.
The notion of a currency being used as a default currency in global organized crime is a concept that has geopolitical strategists positively salivating.
Organized crime – which in many cases is just free and consensual non-aggressive trade which is still governmentally banned – is a significant part of the global economy, an estimated ten per cent. A very significant part, one that uses large amounts of currency in cash format. If you’re responsible for dominating other countries, one of the best and safest ways to do this is to pull strings that increase the value of your currency. We know from supply-and-demand lessons that this can take the form of causing the demand for the currency to increase.
If your currency is the default trade currency for organized crime (which I’d rather call “free and consensual trade” to a large degree), this brings an enormous benefit to your economy as a whole – it has been estimated that it means as much as 25% higher standard of living, for everybody. Given this number, there are two immediate and obvious observations:
1) A crackdown on cash transactions with the excuse of “combating organized crime” is utter bollocks of the highest order. When you’re working on the national policy level, you’re doing your utmost to have organized crime use your currency and nobody else’s. It’s the equivalent of printing lots of free money – roughly the equivalent of 10% of the world’s GDP.
2) More concerningly, given the enormous benefit of having organized crime use your own currency, what concern is more pressing than this – 10% global GDP essentially for free – that is the actual cause for these actions to fight cash?
Liberty and privacy, including financial privacy, remain your own responsibility.
Getting rid of cash is mostly a control grab on possible taxation. If money changes hand, most states want their “added value” tax to pay for nice things.
The beancounters would love for everything to be nicely indexable so as to be able to make plans for the future based on data.
The idea that this data is neither true nor complete is something a beancounter has trouble getting to grips with. So to make the data more complete for informed decisions they want us to give up some privacy… It’s either we give them the data willingly, or they go on making decisions based on guesswork… take your pick.
Electronic money also makes it possible to track expenses, to assess the true needs of a population. It also makes it possible to track hidden costs or complex costs such as privatised welfare.
If you ever played Monopoly you would know that once somebody starts to go beyond a certain wealth they win the game. As a society we are trying to slow or reverse this process of money or power accumulation… trying through taxes and through democratic political systems.
Having all the money untreceable would just mean it ends up in the pockets of people on top of the economic pyramid. It’s difficult enough as it is to have those people pay their taxes now, imagine what would happen then.
The liberty ends when you loose control of things you can buy. Also when someone counts every asset you have! Cash is one!
And when you eliminate cash, what is left? Credit issued out of thin air by commercial banks who then charge you interest. Of course politicians, who are in thrall to the banksters, want to eliminate cash.
But cash is effectively an interest free loan to the issuing government. You hold a piece of paper, allegedly worth, say, $10. But because it is fiat currency, the is no guarantee that the issuing government has gold or whatever to support that $10.
Either way, they,ve got you. But I agree with Rick’s point that eliminating cash is about keeping tabs on all our financial transactions.
Electronic money also makes it possible to track expenses, to assess the true needs of a population. It also makes it possible to track hidden costs or complex costs such as privatised welfare.
That’s where we’re heading with the ongoing “war on cash” – into a world where every transaction is not just loggable by the government (or a government-coerced agent), but where you can also be held responsible for anything and everything you buy and sell.
We know from supply-and-demand lessons that this can take the form of causing the demand for the currency to increase.