A Cashless Society Looms: Cui Bono?
Before you bask in all this convenience, consider just who is gaining from this war on cash.
The banks, of course, are charging as many fees as they can think of. More importantly, your cash card leaves a wide data trail detailing your buying preferences, used by merchants and advertisers to entice you into more buying. How convenient. These thoughtful companies even offer reward points every time you use the card. Cash offers the ultimate in privacy. Your cash card might as well be a walking billboard.
The government, of course, is extremely interested in your spending habits. The taxing authorities use an electronic money trail to monitor your spending and ensure against tax evasion. In addition, cards save the government the cost and trouble of printing and storing additional currency.
Your electronic purchase trail is nirvana to large corporations. Knowing your spending habits allows them to customize their ads to an ever-larger consumer base. They know what you need before you do and are ready to entice you with specials, sales and “act now” deals.
Monitoring against illegal habits, tax evasion, and money laundering may be considered a positive move. Increased spending can give the economy a boost (even as it depletes your bank account). No one, however, discusses the insidious dangers inherent in the move toward a cashless society.
One of the largest perils is that it all but eliminates financial prudence. You’re not handing over cash, but a mere card. The psychological difference is enormous. Cash forces you to consider your purchases as your wallet is depleted. Will there be enough green to purchase dinner? A cash card handily removes that mental obstacle and skews your perception of precisely how much of your hard-earned money is leaving your possession. Bank statements and easy credit terms are far off, so they don’t merit a great deal of consideration.
Millennials, who have embraced card purchases with considerable enthusiasm, can also be lacking in financial knowledge. They are the major group being targeted by lending institutions, and almost half of them don’t know what their interest rates are or about late fees. Easy spending without adequate financial acumen can be a dangerous combination. Greater financial education would be a positive move toward wiser spending and saving habits. However, retailers have much to gain by keeping consumers in the dark as they continue to entice with “special offers” and one-click online shopping.
Cash transactions are declining globally, and the poorest members of society are feeling the backlash.Approximately 7 percent of Americans do not have bank accounts, and the number of homeless has increased for the first time since 2010. The lack of cash has marginalized those who are most vulnerable.
One country that is making strides toward a cashless society in India. To crack down on the country’s huge black-market trade, Prime Minister Narendra Modi is attempting to lure consumers with no bank accounts into the formal economy. That is approximately 40 percent of people in India, who are without access to banking services. The first step, in November 2016, was to withdraw the 500 and 1,000 denominations of rupee notes from general circulation. This accounts for 86 percent of India’s cash. The move has hurt Indian’s poor, some of whom are unable to buy simple fruits and vegetables. Small businesses have reduced their staff by 35 percent. While India’s economy is thriving, the elimination of cash is expected to hurt its future GDP.
Big ticket items have suffered in India, as many consumers remain wary of cash transactions. As Indians are depositing more money into banks, it is banks that are profiting from Modi’s efforts. Major lending institutions have been hiring wealth managers to handle this new influx. It is expected that the number of money managers will double within three years. At the same time, the poor, who have limited access to the new banknotes, have no mean of buying needed food. This is a genuine problem for rural Indians, who have no nearby bank and need the liquidity of cash to survive. They are paying a high price for the government’s efforts to eliminate tax evaders.
India is only one of the countries moving toward a cashless society, with many emerging African and Asian markets developing apps for even the smallest payments. Australia and Scandinavia are also encouraging cashless transactions by making them easier and more convenient. Globally, our every purchase of an ice cream cone is being watched and recorded.
Cash in hand has always represented freedom, and that is now being eroded at an alarming rate. Private, legal transactions will become illegal or impossible in a cashless society when every financial transaction is being monitored and scrutinized.
Without cash, people become purely dependent on big banks. What happens when the banks fail? During times of crisis, banks could shut their doors and prevent depositors from accessing their money. The lack of genuine cash shifts the power from the individual to corporations and government authorities.
If we are relinquishing freedom and power for the convenience of cashless transactions, perhaps we need to consider who is on the receiving end. Banks and governments are amassing the ultimate power by gradually removing the last vestige of freedom – cash. Those who are ready to give up their cash will surely pay the price.
War On Cash Goes into Full Effect — Purchases Over $10,000 ILLEGAL in Australia
The Australian government announced that it will soon be illegal to use more than $10,000 cash to purchase anything, forcing individuals that wish to buy more expensive items to use a cashier’s check or electronic transfer, ostensibly in the name of fighting organized crime and money laundering.
The move reportedly comes in response to the government’s Black Economy Standing Taskforce. In addition to the cash purchase ban, the government has allocated a $319 million package to the Tax Office to develop new strategies to target the black economy.Treasurer Scott Morrison said the Black Economy Standing Taskforce will include a rigorous identification system and “mobile strike teams,” in an effort to detect people making suspicious cash transactions, as well as a black economy hotline for citizens to report anyone suspected of engaging in illegal transactions.
“Cash provides an easy, anonymous and largely untraceable mechanism for conducting black economy activity,” the response said. “Cash payments make it easier to under-report income and avoid tax obligations. This allows businesses transacting in cash to undercut competitors and gain a competitive advantage.”
It said the task force had identified examples of “large undocumented cash payments being made for houses, cars, yachts, agricultural crops and commodities”, which contribute to the $50 billion black economy and “hurt honest businesses.”
Revenue Minister Kelly O’Dwyer said the ban on cash purchases of more than $10,000 would begin on July 1 of next year.
“This cash payment limit will capture high-value transactions and help stamp out opportunities for criminals to launder the proceeds of crime into goods and services, or for businesses to hide transactions to reduce their tax liabilities,” she said.
This of course is not a phenomenon unique to Australia, as there is an ongoing international “war on cash.” In the United States, Larry Summers, a former U.S. Treasury Secretary and Harvard president, pushed and effort during the Obama administration to abolish $50 and $100 bills. There has also been talk within the EU of doing away with the €500 note. India has already made such moves.
While the publicly stated reason for these policies is to fight criminals, terrorists, money launderers, drug dealer, etc., by making it more difficult for them to move cash, the actual reason for the international “war on cash” is to give government more control and power.
A report in The Atlantic explains that while some believe that a cashless system would be “simple and elegant,” there are ominous implications about further centralization of power that must be considered:
Federal, state, and local law enforcement, as well as tax authorities, want to bring as much of the economy under their direct supervision as possible. … Forget folks who like cash. Never mind worries about forcing us all to run all spending through a corrupt corporate-banking system. Never mind the resilience of having a medium of exchange in the non-digital world that works when the power grid is down, when one’s smart phone is dropped in water, when one’s identity is stolen by hackers, or one’s account frozen by Visa or Bank of America because a purchase on vacation was deemed suspicious.Friedersdorf goes on to clarify how the elimination of cash could dramatically erode financial privacy; pointing to Supreme Court case U.S. v. Miller:
There is no legitimate “expectation of privacy” in the contents of the original checks and deposit slips, since the checks are not confidential communications, but negotiable instruments to be used in commercial transactions, and all the documents obtained contain only information voluntarily conveyed to the banks and exposed to their employees in the ordinary course of business.In a report for Forbes magazie, founder Steve Forbes elaborates on this line of thinking:
The real reason for this war on cash–start with the big bills and then work your way down–is an ugly power grab by Big Government. People will have less privacy: Electronic commerce makes it easier for Big Brother to see what we’re doing, thereby making it simpler to bar activities it doesn’t like, such as purchasing salt, sugar, big bottles of soda and Big Macs.The movement against cash is clearly about centralized control of the economy, as international bureaucrats believe they can control the global economy better than the free market.
Forbes goes on to explain:
The move to destroy cash feeds into the economic commissars’ fantasy that they can better control the economy. Policymakers in Washington, Tokyo and the EU think the reason that their economies are stagnant is that ornery people aren’t spending and investing the way they should. How to make these benighted, recalcitrant beings do what they’re supposed to do? The latest nostrum from our overlords is negative interest rates. If people have to pay fees to store their money, as they do to put their stuff in storage facilities, then, by golly, they might be more inclined to spend it. To inhibit cash hoarding—when Japan announced it was imposing negative interest rates, the sale of safes soared—the authorities will want to do away with large notes.Of course, one of the primary purposes of the Australian government’s movement against black markets and large cash purchases comes down to lost revenue for the state. In fact, the government reported that the package against black markets could potentially net the state billions of dollars more in revenue.
So, while governments like to use fear mongering about terrorism and drugs as a means of eliciting support for policies restricting the use of cash, the real motive behind these laws is clearly to give government more power. The ability to track every transaction provides an invaluable asset to a global spying apparatus (Five Eyes) that aims to sweep up all available information with no regard for the existence of individual privacy.
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