The war on cash is getting serious. Ever since Harvard economics guru Kenneth Rogoff and Citigroup chief economist Willem Buiter presented their ideas on eliminating cash in favour of digital money, the anti-cash momentum has gathered pace.
The underlying argument is that cashless transactions would eliminate the underground economy. Moreover, it would help prevent a bank run in the event of a full-flown financial crisis.
JP Morgan Chase, the largest US bank, recently introduced a policy to restrict the use of cash in selected markets. It has banned cash payment for credit cards, mortgages and auto loans. It also prohibits anyone storing cash or coins in its safe-deposit boxes.
Meanwhile Louisiana has passed a law to ban cash payments for second-hand goods. The law requires any purchase of second-hand goods to be made by cheque, electronic transfer or money order.
In Greece, the government has responded to the economic crisis by forcing through a drastic reduction in cash payments. Any bill over 70 euro must now be paid by cheque or credit card. Paying in cash is not only becoming taboo but also illegal.
France has also declared a war on cash, arguing that it will protect its citizens from the threat of terrorism. Finance Minister Michel Sapin said that France needs to fight against the use of untraceable financial dealings in its economy. The French measures to ban cash transactions include:
n Prohibiting French residents from making cash payments of more than 1,000 euros, down from the current limit of 3,000 euros.
n Cutting the cash-payment limit for foreign tourists down to 10,000 euros, from the current limit of 15,000 euros.
n The threshold below which a French resident is free to convert euros into other currencies without having to show an identity card will be slashed from the current level of 8,000 euros to 1,000 euros.
n In addition any cash deposit or withdrawal of more than 10,000 euros during a single month will be reported to the French anti-fraud and money laundering agency.
n Authorities have to be notified of any freight transfers within the EU exceeding 10,000 euros, including by cheque, pre-paid cards, or gold.
Economist Martin Armstrong has pointed out that the war on cash is the foundation of economic totalitarianism. By banning cash, people will no longer have the ability to provide a check against negative interest rates. Now, with many banks in Europe, plus JP Morgan Chase in America, charging customers who deposit at a certain limit, some depositors have little choice but to withdraw their money or to hoard their cash. Digital money will restrict this ability for savers.
In Switzerland, the financial institutions are charging rates for deposits because they are flooded with liquidity seeking a safe haven from the troubled euro zone. Recently, Swiss pension funds withdrew their money from a bank to avoid the negative interest rates. They have decided instead to store their cash in vaults, so as to avoid this financial repression.
Even more so, if savers feel that they don’t trust a certain bank’s solvency, they can withdraw cash, potentially triggering a bank run. But with digital money, savers can’t demand their cash.
Most important, digital money paves the way for the powers that be to gain complete control over the financial system. Any digital transaction leaves a trace, which means the government or other authorities can invade the privacy of it citizens and their every single transaction. Economic freedom comes to an end in a cashless society. But thanks to collusion among the global financial oligarchy, it seems that we are heading towards a world in which cash is bad.