Cashless Society - Contemplating The Ultimate Surrender To Government

Caput Lupinum · May 17, 2015

Interesting read. All hypothetical opinion by the author except for Denmark contemplating being a guinea pig for it but thought provoking none the less. As deflation gets worse and central banks push harder for negative interest rates or higher bank levies on deposits to stop people from hoarding their cash, the more likely this would be to occur. They would want to introduce a cashless society but allow banks to fail next time round so there is justification to nationalize the banks and have ultimate control of people's finances and to prevent bank runs.

Denmark, known to be the "happiest" nation on the planet, has a long and storied history of providing its citizens with a strong social safety neta system designed, in the words of the nation's official website, to provide its people with "the necessary material framework for living a reasonable life."

Yet, a proposed new law in Denmark that many are describing as nothing less than the dawn of an economic and monetary revolutiona law that is viewed as the first step in removing cash from the economic systems of the world and ending traditional bank accounts as we know themmight very well transform the supposed Disneyland of nations into the land that launched our planet onto the path of ultimate and complete government control of humanity.

The proposed law would allow Danish business operators to refuse cash as payment for goods and services, and, in its place, demand only electronic payment as the means for bartering goods and services.

Granted, it doesn't much sound like a very big deal when considering that so many of us already rely almost solely on credit and debit cards to do our daily business.

But there is so much more to this than what initially meets the eyeand what you may not be seeing should scare the stuffing out of you.

The Danish proposal is based on the notion that by removing the administrative and financial burdens that come with dealing in cashsuch as hiring protective services when transferring large wads of paper money to the bank for depositoverall growth in the Danish economy would be stimulated.

However, for many who believe in the benefits of cashless societies, the proposed Danish law is simply the first step in the movement to remove all cash from all of the economic systems of the world, once and for all.

Why would anyone want to end the use of paper notes and coins?

There are many perfectly good reasons to do so as noted in a fascinating paper entitled, "Improved macroeconomic control with electronic money and modern monetary theory," by Trond Andresen of the Norwegian University of Science & Technology.

Imagine the reduction in crime that would follow if cash were to become a thing of the past.

Illegal enterprises are most often predicated on the use of cash in order to avoid those pesky bank records and other tracking mechanisms that expose such enterprise to the light of day, not to mention the difficulties of doing large drug transactions through traditional banking means. Forgery scams and robberies would be a thing of the past as there is little point in hitting grandma over the head to steal her purse if there is nothing inside her pocketbook that the bad guys can use to make purchases.

What's more, imagine the efficiency that would result when everything on Earth were to be bought and sold by a simple push of a button or scan of your smartphone screen that would move around electronic debits and credits in furtherance of commerce.

However, the dramatic reduction in crime and advances in monetary efficiency that would likely result is but the icing on the cake to those who would further amend the system to include the "benefits" of the second part of the plan being pushed by monetary theorists who believe in a cashless society.

To really reap the benefits of ending cash as a means of concluding transactions, theorists propose that we also end the era of the private bank account as the repository of your electronic credits and, instead, transfer all monetary credits to central bank, operated by the government.

Why would anyone want to do such a thing?

By putting all money accounts under either the actual control of governments or subject to absolute monitoring by governments, nations would finally possess the ability to bring to a close the "boom or bust" economic cycles that prove so deeply damaging to the world's economies.

How this would work is remarkably simple.

Were it to be determined that more spending is required to keep an economy humming, the government could simply impose a negative interest rate on the money in everyone's accountaccounts held in a central bank where government can always gain access to the same.

Thus, allowing your money to sit inactively in your account would result in a penalty, leading most to conclude that they might as well spend the money on goods or services rather than simply see sums confiscated by government as a punishment for not spending one's electronic credits.

When you consider the economic impact of entire populations realizing that they get more by spending their money than saving it, is not hard to see the massive, positive impact this could have on a struggling economy.

If you think the notion of government daring to impose a negative interest rate on your bank account for the crime of deciding not to spend your money is a bit too fanciful, you should know that both the Danish and Swiss governments already charge depositors in their respective countries a negative interest charge on their accounts.

Conversely, when faced with an over-heated economy, the central bankwhere your electronic credits livewould simply drop the negative interest rate on your account, causing you to lose nothing by leaving your money safely tucked away. What's more, governments would be in a position to impose and immediately take a transaction tax every time you chose to spend a few bucksmake that electronic creditson a purchase if the desire is to cool down the economy by removing your incentive to spend.

You have to admit that such a system would be far more subtle, refined and effective than the rather blunt and risky tools we currently use, such as an across the board increases or decreases in the official interest rate.

And that's not all.

The days of income tax evasion would be a thing of the past, what with the government knowing precisely what you gathered up in electronic credits over a given year.

But then, there is this pesky problem that must be considered

Does anyone really want to turn total and ultimate control of one's money over to a government? How could that possibly be a good idea?

If the government gets angry with me, could they then just push a button and wipe out every single, electronic credit in my account?

Should the government and I have a disagreement over how much I should be paying in taxes, do they get to put a lock on my account until that disagreement is resolved? And who would have the upper hand in resolving that disagreement?

Would it be a danger to be registered to one political party if the central bank that controls all my money is under the control of someone who is of a different party?

If I wish to exercise my right to exist outside the system or, as the saying goes, take myself "off the grid," how could I do that if I am denied the opportunity to use cash for my support and sustenance?

It should appear obvious that allowing a government to have total, physical and actual control over the totality of one's finances is not even in the same universe as a good ideaeven to those of us who believe that government is intended and can operate as a powerful force for good.

A cashless societylet alone one where a system of electronic debits and credits are fully managed and controlled by governmentsmay be a great tool for stabilizing economies and efficiently managing monetary policy, but would be a true and frightening challenge to the basic rights of man.

Let's hope that the Danish Parliament is able to see the dangers of what they are contemplating and turn away from what could spark a very dangerous development in the way the world operates and a severe diminishment in the basic rights of all human beings.

The price to be paid for a smoothing of economic policy no matter how useful the tools created might be, is far too large a price to the freedoms that should be inherent to all humanity.
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http://www.forbes.com/sites/rickung...e-ultimate-surrender-to-government-control/3/

JulieW · May 17, 2015

Endless examples hitting the headlines everywhere now.

Of course this is the Western world. I can't imagine Asia or South America embracing the cashless society. Just us trained Western sheep.

From ZeroHedge

At this stage, a sane person might be tempted to call it a day on the monetary experiments, especially considering that at this point, the limits have been reached. That is, there are literally no more assets to buy and rates have hit the effective lower bound where rational actors will eschew bank deposits in favor of the mattress. But not so fast, say folks like Citi's Willem Buiter and economist Ken Rogoff: the world could always ban cash because if you eliminate physical currency and force people to use a debit card linked to a government controlled bank account for all transactions, you can effectively centrally plan everything. Consumers not spending? No problem. Just tax their excess account balance. Economy overheating? Again, no problem. Raise the interest paid on account holdings to encourage people to stop spending. So with Citi, Harvard, and Denmark all onboard, we bring you the latest call for a cashless society, this time from German economist and member of the German Council Of Economic Experts Peter Bofinger.

Via Spiegel (Google translated):

Coins and bills are obsolete and only reduce the influence of central banks. This position represents the economy Peter Bofinger. The federal government should stand up for the abolition of cash, he calls in the mirror

The economy Peter Bofinger campaigns for the abolition of cash. "With today's technical possibilities coins and notes are in fact an anachronism," Bofinger told SPIEGEL.

If these away, the markets for undeclared work and drugs could be dried out. In addition, it would have the central banks easier to enforce its monetary policy.The teaching in Wrzburg economics professor called on the federal government to promote at the international level for the abolition of cash. "That would certainly be a good topic for the agenda of the G-7 summit in Elmau," he said. (Click here to read the full interview in the new mirror .)

Even the former US Treasury Secretary Larry Summers and economist pleaded for an end to the already cash . Likewise, the US economist Kenneth Rogoff . He also argued that the interest rates of central banks have less clout when banks or consumer credit rather than hoard cash.

Critics warn, however , such debates would only distract from the real problems of the current monetary policy.
Yes, the "real problems" with current monetary policy. Like the fact that by design it can't possibly work (but it can and will push stocks to unprecedented highs). Paging Mr. Weidmann, your countrymen are going Keynesian crazy.
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JulieW · May 17, 2015

There has been no long-term recovery. This current mild recovery in the USA has been shallow at best and as the rest of the world declines still from the 2007.15 high with a target low in 2020, the Federal Reserve has been unable to raise interest rates sufficiently to demonstrate any recovery for the spreads at the banks between bid and ask for money is also at historical highs. Banks will give secured car loans at around 4% while their cost of funds is really 0%. This is the widest spread between bid and ask since the Panic of 1899.

We face a frightening collapse in the VELOCITY of money and all this talk of eliminating cash is in part due to the rising hoarding of cash by households both in the USA and Europe.

This is a major problem for the central banks have also lost control of the ability to stimulate anything.The loss of traditional stimulus ability by the central banks is now threatening the nationalization of banks be it directly, or indirectly.

We face a cliff that government refuses to acknowledge and their solution will be to grab more power never reform.
www.zerohedge.com/news/2015-05-16/martin-armstrong-warns-coming-crash-all-crashes
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Interesting comments section:

"
They will come for the cash first -- and then for the Ag and au.

Plan accordingly.
"

Clawhammer · May 17, 2015

"There's something rotten in the heart of Denmark"
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Old Klingon proverb

Caput Lupinum · May 17, 2015

I would think that they would want to do it simultaneously otherwise some people would simply buy precious metals instead of holding cash. A zero yielding asset like gold and silver is still better than negatively yielding cash.

tozak · May 17, 2015

I like how they state there would be a dramatic reduction in crime if there was no cash.

LMAO, that should be in the JOTD section.

I take it they can't think more than one step ahead?

So when Zimbabwe effectively lost it's cash through hyperinflation what happened? They instantly switched to US dollars and creek gold and the crime rate went through the roof. The connections made to cash in society and the crime rate is false logic. Any time you remove cash it's instantly replaced with an alternative, be it by force or by the market place.

dingobiscuit · May 17, 2015

Electronic movement of funds is great for convenience. A lot of people still enjoy using cash but ultimately having the OPTION of payment type is what it is all about.

If pushed into a corner I somehow don't think the general populace would buy into all their transactions being electronic, more items would be traded via barter systems etc. and Bitcoin et. al. would have a much stronger allure.

Crime would remain the same it will just shortcut the electronic system which could be more direct and dangerous.

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