Home > Uncategorized > Who Exactly is Trying to Kill off Cash?

Who Exactly is Trying to Kill off Cash?

Your Children “Will Not Know What Cash Is”.

by Don Quijones, Spain & Mexico, editor at Wolf Street

Wolf Street (November 24 2015)

In the Irish city of Cork, business leaders recently launched a three-month pilot project to encourage consumers to abandon the archaic use of cash by offering the chance to enter into a prize draw if they use electronic means of payment {1}. It is a cheap, almost insulting inducement, but nonetheless probably an effective one. The ultimate aim of the scheme is to transform Cork into the first Irish city to go completely cashless.

The Race to Kill Off Cash

A few years ago such an aspiration –  to do away with physical cash, a form of payment that has served mankind, for better or worse, richer or poorer, for millennia –  might have seemed a little odd. Not anymore. Today cities all over the globe and even entire nations appear to be in a mad rush to kill off cash.

One obvious place that springs to mind is Scandinavia, where Denmark and Sweden are engaged in a neck and neck race to become Europe’s first cashless nation. But the trend extends far beyond Scandinavia. In London, where physical money has been practically abolished from the public transport system, the borough of Brent has proudly declared itself the first district council to go completely cashless {2} –  with a little bit of help from MasterCard.

In May this year the city of Bergamo launched an ambitious pilot scheme to become Italy’s first cashless city {3}. The initiative, which awards people who use electronic payments with discounts on retail products, is sponsored by (once again) MasterCard, together with CartaSi, Visa, UbiBanca, Banca Popolare di Bergamo and Banco Popolare.

Meanwhile, in the UK region of South Gloucestershire, the local Conservative Party is spitting venom about the lack of “a genuinely comprehensive, multi-model, London-style [that is, completely cashless] ‘Oyster’ payment system” for new planned Metrobus routes.

“If the Metrobus is really going to present the traveling public with something different, then the Authority must insist that electronic alternatives to the issuing of paper tickets by drivers is made a contractual condition of any procurement or tender”, thunders Cllr Lucas. “A ‘Brunel’ card would avoid all of the easily foreseeable problems such as unnecessary delays, engineered congestion, confusion, and fragmented service coverage which arise from sticking with traditional forms of payment”.

These are all small, anecdotal examples of a very large, potentially world-changing trend. As I reported in {4}, the world’s biggest cashless laboratory is sub-Saharan Africa, where Western NGOs and GOs (Government Organizations) are working hand-in-hand with banks, telecom companies, and local authorities to replace cash with mobile money alternatives.

The Usual Suspects

While it is true that recent technological advances and changes in generational priorities mean that cash’s days are probably numbered anyway, there is a whole world of difference between a natural death and euthanasia. It is increasingly clear that a loose, albeit extremely powerful alliance of governments, central banks, big banks, credit card companies, and large corporations wants to pull the plug on cash, for their own distinct motives.

Central banks want to make Negative Interest Rate Policy (“NIRP”) an eternal reality and the only way of doing that is to stop depositors from cashing out. For credit card companies, cash is the ultimate rival. As such, it’s no surprise that the likes of Visa and MasterCard are among those pushing the hardest for a cashless economy. As for banks, the obvious attraction is the virtual elimination of the threat of bank runs. As Ellen Brown warns, the ultimate premise of Dodd-Frank was that there would be “no more taxpayer bailouts”:

 

Instead, insolvent systemically-risky banks were supposed to “bail in” (confiscate) the money of their creditors, including their depositors (the largest class of creditor of any bank). That could explain the push to go cashless. By quietly eliminating the possibility of cash withdrawals, the central bank can make sure the deposits are there to be grabbed when disaster strikes {5}.

 

In most of the cashless schemes government is playing a key or even leading role. Besides being able to tax people and businesses with much greater efficiency, its two primary motives are power and control. What better way of controlling the people than by controlling their access to the money they need to survive? It would amount to what Martin Armstrong calls “totalitarian control over the economy” {6}.

Naturally, none of these projects are being sold to the general public in such a dystopian light. Instead they are being framed as people-friendly initiatives aimed at making life easier, more convenient, safer and more efficient, while of course stopping drug pushers, terrorists (real or presumed), and all other bogeymen (excluding of course those in government or the financial sector) in their tracks. It’s as if all the world needs to become a better, healthier, nicer, less crime-infested place is the complete abolition of paper and metal forms of money.

Here’s a perfect case in point courtesy of MasterCard:

 

Even though much of the world’s population has access to many different options for making payments without it, cash still persists. As a way of making payment, cash takes time to get at, is riskier to carry, and by some estimates, cash costs society as much as 1.5% of GDP. Electronic payments on the other hand have been proven to boost economic growth, while advancing financial inclusion. It is for these reasons that countries around the world are working to make their payment systems less dependent on cash.

 

What conveniently gets lost in all the hype are the potential downsides of a cashless economy, which are legion. They include the complete loss of personal anonymity and control over your own finances; the very serious risk of identity fraud, especially when biometric measurements are introduced; the ease with which government authorities will be able to confiscate (and probably never return) our hard-earned money; the likelihood of new or increased fees as financial intermediaries proliferate; and perhaps most grievous of all, the danger that your government or financial institutions can cut you off altogether from the money you own and need to survive, just as happened with Wikileaks when it published the biggest leaks in journalistic history, in October 2010.

Just over a week ago, Apple CEO Tim Cook predicted the death of cash, while out promoting Apple Pay, when he told students at Trinity College, Dublin, that their children “will not know what cash is” {7}.

He may well be right. Those who want to kill cash already have vital technological and generational trends firmly on their side. They also have the added bonus of public ignorance, apathy and disinterest. As I warned a couple of weeks ago {4}, the governments and banks’ strongest ally in their War on Cash is the general public itself. As long as people continue to abandon the use of cash, for the sake of a few minor gains in convenience, the War on Cash is already won.

Links:

{1} http://www.irishexaminer.com/ireland/cork-bids-to-become-the-first-cashless-city-in-ireland-362583.html

{2} http://www.wired-gov.net/wg/directory.nsf/campaign/London+Borough+of+Brent+becomes+UKs+1st+Genuine+Cashless+Council

{3} http://www.pangeatoday.com/bergamo-to-become-italys-first-cashless-city/

{4} http://wolfstreet.com/2015/11/07/first-they-came-for-the-pennies-in-the-war-on-cash/

{5} http://ellenbrown.com/2015/11/20/hang-onto-your-wallets-negative-interest-the-war-on-cash-and-the-10-trillion-bail-in/

{6} http://www.armstrongeconomics.com/archives/30145

{7} http://www.telegraph.co.uk/news/shopping-and-consumer-news/11989595/Apple-boss-Next-generation-of-children-will-not-know-what-money-is.html

http://wolfstreet.com/2015/11/24/the-death-of-cash/

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