The International War on Cash

bordsilver · Mar 10, 2013

Joseph Salerno said:

Using Legal Tender Laws Against the State?

Posted on Circle Bastiat, Sunday, October 21st, 2012

The relentless war against cash payments waged by governments worldwide has perhaps gone furthest in Scandinavia. The ostensible reason given by our rulers for suppressing cash is to keep society safe from terrorists, tax evaders, money launderers, drug cartels and sundry other villains, real or imagined. But the actual aim of the recent flood of laws rendering cash transactions less convenient or limiting or even prohibiting them is to force the public at large to make payments through the financial system in order to prop up the unstable fractional-reserve banks and, more importantly, to expand the ability of governments to spy on and keep track of their citizens' most private financial dealings. One ingenious friend from Norway has fought to protect his right to use cash by invoking his government's own legal tender laws against it.

Here is his story in his own words:

About a month ago I had a doctor's appointment at the city's health services emergency ward (government institution).

When leaving, I asked to pay cash. I was told that the cashier's desk was closed, that I would be invoiced, and that they generally did not accept cash. I reminded the nurse(?) on duty about legal tender.

When I got the invoice, I called accounting at the ward. I told the accountant that I wished to pay cash. I was told that was not possible. I asked if she knew about legal tender, referring to the specific legislation. She went completely defensive, as I clearly perceived it. She even claimed that legal issues with the no-cash arrangement had been dealt with. I said I would file a written complaint.

So I did. I called in a few days later to check if the complaint had been received, which she could confirm. Now the accountant was apparently more interested in discussing the issue.

Yesterday, I got the written response. I was given the opportunity to pay cash in this one case if I brought the exact amount. Moreover, no changes in the general arrangements would be made. Today, I made the payment in cash.

Why did they do this? I would suspect that they figured they had a weak legal case, that they were dealing with someone who apparently wasn't going to give up, and that allowing it in this case would avoid having to deal with someone with a formal legal interest in challenging their anti-cash system, the alternatives being changing their system voluntarily and fighting an administrative complaint case or even worse, a court case.

Of course, things would be much better if we weren't forced to use this fiat money. However, it is reasonable to expect government institutions to comply with the government's own legal tender regulations.
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I must admit that I started using cash less and less over the years until a number of comments on the forum made me think twice. Since I started using cash again I've been shocked that I ever switched away.

bordsilver · Mar 10, 2013

Sweden's War on Cash Runs Into a Wall and a Heroic Bank

Posted on Circle Bastiat, Thursday, December 27th, 2012

The war on cash in Sweden may be stalling. The anti-cash movement has been vigorously promoted by major Swedish commercial banks as well as the Riksbank, the Swedish central bank. In fact, for three of the four major Swedish banks combined, 530 of their 780 office no longer accept or pay out cash. In the case of the Nordea Bank, 200 of its 300 branches are now cashless, and three-quarters of Swedbank's branches no longer handle cash. As Peter Borsos, a spokesman for Swedbank, freely admits, his bank is working "actively to reduce the [amount] of cash in society." The reasons for this push toward a cashless society, of course, have nothing to do with pumping up earnings from bank card fees or, more important, freeing fractional-reserve banks from the constraints of bank runs. No, according to Borsos, the reasons are the environment, cost, and security: "We ourselves emit 700 tons of carbon dioxide by cash transport. It costs society 11 billion per year. And cash helps robberies everywhere." Hans Jacobson, head of Nordea Bank, argues similarly: "Our mission is to make people understand the point of cards, cards are more secure than cash."

Fortunately, it seems that the Swedish people are not falling for the anti-cash propaganda spewed by private bankers and Riksbank officials and are resisting the trend toward a cashless economy. It is reported that last year the value of cash transactions in Sweden were 99 billion krona which represented only a marginal decrease from ten years ago. And small shops continue to do one-third to one-half of their business in cash. Furthermore a study of bank customers satisfaction released by the Swedish Quality Index in October 2012, indicated that the satisfaction index was pulled down among customers of Swedbank, Nordea and SEB by their policy of eliminating cash transactions at their bank branches. Even more heartening is the fact that Handelsbanken, the largest bank in Sweden, is committed to serving consumers who demand cash. As Kai Jokitulppo, head of private services at Handelsbanken, puts it:

"As long as we know that our customers are asking for cash, it is important that we as a bank [are] providing it. . . . We see places where other banks are taking other decisions, we get customers from them and positive response."

Fewer then 10 of Handelsbanken's 461 branches currently do not handle cash and the bank's goal is to have cash in every branch by the first quarter of 2013.
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bordsilver · Mar 10, 2013

France Ratchets Up the War on Cash

Posted on Circle Bastiat, Sunday, February 17th, 2013

France's state auditing bureau, Cour des Comptes, informed the French government that it was "dreaming" in forecasting that the French economy would grow this year by 0.8 percent, which would enable it to meet its budget deficit target of 3 percent of GDP. The bureau told French Prime Minister Jean-Marc Ayrault that a growth rate of 0.3 percent was more like it, which would not be sufficient to meet the deficit reduction target. This was the case despiteor more likely because ofthe fact that a broad based tax increase had just been imposed that would extract another 32 billion euros from overburdened French businesses and households this year. So would a desperate Ayrault finally open his eyes to economic reality and slash the budget of the bureaucratic and bloated French State, a budget that is liberally larded with fascistic corporate welfare subsidies and bailouts? No way, no how. Instead Ayrault convened a meeting of the National Anti-Fraud Committee to crack down on tax cheats and presided over it himself"A first for a head of government," he crowed.

Tax fraud in France has been estimated to be in the range of 60 to 80 billion annually. Buried in Ayrault's proposal to crack down on tax cheats and further squeeze more revenue from its "fiscal residents"those citizens and foreigners who have not been driven into part-time exile to escape French taxesis a draconian provision that would lower the maximum cash payment per transaction from 3,000 to 1,000. Under the new limit a French citizen would not even be able to buy a used car for cash. The provision would not apply, however, to citizens and foreigners wealthy and savvy enough to have placed their income beyond the clutches of the rapacious French State by becoming fiscal residents of other countries. They would be subject to a limit of 10,000 per purchase in cash, down from the current limit of 15,000 per purchase. This may come to be called the Depardieu exception because French actor Gerard Depardieu recently caused a public stir by obtaining a Russian passport in order to take advantage of Russia's flat-rate income tax of 13 percent.

One commentator perceptively summed up the inextricable link between the war on cash and the war on personal liberties :

With this law, the French government will be able to tighten the vise on its people one more turn, restricting their freedom of choice (how to pay), wiping out any privacy in those transactions, and imposing another layer of government control. Once people have gotten used to the 1,000 limitbased on the great principle of incrementalism with which restrictions of freedom come to pass in democraciesthe vise will be tightened further, until the government can document every purchase made by "fiscal residents."
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bordsilver · Mar 10, 2013

Bloomberg said:

Italian Banks Wage `War on Cash' as Consumers Pass on Plastic

Cash is king in Italy, a lesson Massimiliano Romano learned when he tried to pay for a cab with a credit card at Rome's main train station.

"I thought my cards would be enough," said Romano, head of research at brokerage Concentric Italy in Milan. "But I had to let 10 people go in front of me in the line before I found a driver who would accept a credit card."

The Italian Banking Association has declared "war on cash" in a country where credit-card usage is less than half the European Union average, according to the Bank of Italy. The association, known by its Italian acronym ABI, says it costs banks and companies as much as 10 billion euros ($13.3 billion) a year to process cash payments, mainly in increased security and labor. Rome-based ABI aims to cut those expenses by promoting electronic payments with credit and debit cards and wire transfers in both the public and private sectors.

"Italy urgently needs these changes to catch up with other countries like France, which has allowed non-cash payments for public services for more than two decades," said Rita Camporeale, head of payment systems and services at ABI.

Italy's culture of cash is deeply rooted. Italians are the euro-region's least-indebted consumers and among its biggest savers, according to 2009 Eurostat data. Companies often pay salaries in cash to evade taxes, particularly in Italy's southern region, where organized crime is prevalent.

Lost Revenue
Italy loses about 100 billion euros of revenue a year from untaxed transactions in the so-called underground economy, which amounts to about 22 percent of gross domestic product, according to government statistics. The Finance Ministry agrees with ABI proposals to make public offices accept electronic payments and install point-of-sale terminals, Camporeale said in a Dec. 21 interview. Banks also want a ban on cash salaries, she said.

Consumers and merchants are skeptical. "The banks only want to multiply the transactions they handle to increase their profits," said Carlo Rienzi, head of consumer-rights group Codacons in Rome. "Replacing cash with electronic money is correct from a security standpoint, but should be done for free, which won't happen."

ABI hasn't said how much banks stand to profit from commissions tied to an increase in electronic payments.

The average Italian makes 26 credit-card transactions a year, according to the latest Bank of Italy annual report in May. That's five times less than in the U.K., which leads the ranking with 125 annual transactions, the report shows.

Taxi Drivers
Charges on card payments discourage retailers and small businesses from accepting them. "We have to pay fees from 3 percent to 4 percent for every card transaction," said Efrem Abramo Goi, a Milan taxi driver.

It's the customer though who often gets stuck with the bill. "When I finally got to my destination, as a final surprise the taxi driver rounded up the fare to cover the card commission," said analyst Romano, who arrived 30 minutes late to his meeting in Rome.

Visa Europe Ltd., operator of the largest payment-card network in the 27-nation EU, will reduce debit-card transaction fees paid by retailers as part of a deal announced on Dec. 8 to end EU antitrust action. Visa Europe agreed to cut fees to 0.2 percent per debit-card purchase. MasterCard settled a similar case with the commission last year, agreeing to trim fees to 0.3 percent for transactions with credit cards and 0.2 percent for debit cards.

The 0.2 percent rate is "the level where merchants have no preference whether consumers pay with a Visa debit card or with cash," Joaquin Almunia, the EU's competition commissioner, said Dec. 8 in Brussels.

Tax Burden

With surcharges decreasing in Italy, the price of using plastic is almost in line with the hidden costs of managing cash, said Davide Steffanini, general manager of the Italian unit of Visa Europe. "Merchants only notice the costs of cards because they have to pay a fixed fee," he said. "But cash also has costs related to handling, transport and security."

Many companies accept those costs in the face of some of Europe's highest payroll taxes. An employee at a nougat plant near Naples, who declined to be identified because of concern she might lose her job, said the company pays staff in cash to evade taxes and sells about 20 percent of its products without issuing any receipts.
Increased use of cards and wire transfers would allow authorities to track payments now outside their control, said Steffanini. ABI says it also would help Italy, Europe's most indebted nation in nominal terms, recoup billions of euros in lost tax revenue.

Winning over cash-loving Italians won't be easy, said Carlo Alberto Carnevale-Maffe, a professor of business strategy at Milan's Bocconi University. "Italians have a strong family tradition that leads them to avoid debt and save a lot to ensure their kids a future," he said by phone.

"They like solid investments such as houses. And for renovations or purchases made under the table, what better way than cash?"
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http://www.bloomberg.com/news/2011-...-as-consumers-pass-on-using-credit-cards.html

JulieW · Mar 10, 2013

Paying in cash is a different psychological issue. Holding the cash for a purchase in your hand makes you consider the reduction from your accumulated cash. When it is a card it involves a transaction removed from consequences.

One could be negative and say it's part of the conditioning process.

[youtube]http://www.youtube.com/watch?v=DigiWS1YhxI[/youtube]

Dogmatix · Mar 14, 2013

Great posts bordsilver, i got a lot out of reading them.

Regarding Italy:

Increased use of cards and wire transfers would allow authorities to track payments now outside their control, said Steffanini. ABI says it also would help Italy, Europe's most indebted nation in nominal terms, recoup billions of euros in lost tax revenue.
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vs.

Italy's culture of cash is deeply rooted. Italians are the euro-region's least-indebted consumers and among its biggest savers, according to 2009 Eurostat data. Companies often pay salaries in cash to evade taxes, particularly in Italy's southern region, where organized crime is prevalent.
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It says a lot.

AngloSaxon · Mar 15, 2013

Dogmatix said:

Great posts bordsilver, i got a lot out of reading them.

Regarding Italy:

Increased use of cards and wire transfers would allow authorities to track payments now outside their control, said Steffanini. ABI says it also would help Italy, Europe's most indebted nation in nominal terms, recoup billions of euros in lost tax revenue.
Click to expand...

vs.

Italy's culture of cash is deeply rooted. Italians are the euro-region's least-indebted consumers and among its biggest savers, according to 2009 Eurostat data. Companies often pay salaries in cash to evade taxes, particularly in Italy's southern region, where organized crime is prevalent.
Click to expand...

It says a lot.
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I noticed that too. "It says a lot" is an understatement.

bordsilver · Mar 15, 2013

The Italy case is quite interesting on many levels. Unfortunately a short news article can't delve into all of the details and nuances (eg the use of cash to evade a plethora of harsh interventionist policies and the associated black markets that thrive). Makes you think twice about how reliable many statistics are.

Getting off topic but I've had random musings about whether something as "basic" as an inquisitorial justice system fundamentally kneecaps potential economic output via encouraging a culture of bribery and corruption?

AngloSaxon · Mar 15, 2013

bordsilver said:

Getting off topic but I've had random musings about whether something as "basic" as an inquisitorial justice system fundamentally kneecaps potential economic output via encouraging a culture of bribery and corruption?
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I agree entirely. No time to write a longer reply now but this is one of the many factors that have driven me to be such an advocate for Common Law over the Napoleonic Code/inquisitorial systems.

SpacePete · Apr 26, 2015

The war on cash is progressing...

Caput Lupinum · Apr 26, 2015

thread necrophiliac

boneyard · Apr 26, 2015

https://m.youtube.com/results?q=obama anger translator&sm=1

Clawhammer · Apr 26, 2015

I actually did a search on "war AND cash" before starting my own... but nothing came up. Apologies

SpacePete · Apr 26, 2015

Clawhammer said:

I actually did a search on "war AND cash" before starting my own... but nothing came up. Apologies
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No need to apologise. There are quite a few threads with different titles over the years and some good information with each one adding to our knowledge.

The war on cash is insidious.

Golightly · Apr 26, 2015

Has been a lot reported about it lately, Switzerland is the latest.

col0016 · Apr 26, 2015

I get cash out after getting paid every week and rarely use my card for transactions purely because I know that the banks and government want me to use my card for everything haha. Good enough reason for me.

Most of my friends are the opposite and rarely carry cash however.

systematic · Apr 27, 2015

Using cash gives a person the opportunity to get a sense of how much currency it takes to buy something .... it helps keep their sense of scale and sensibility ... cards on the other hand mean its just a number and makes it much harder to appreciate and relate to how much it took to earn it ....

sammysilver · Apr 27, 2015

I never leave cash in my accounts. I use credit cards all the time. When money comes in, zero the credit card, pay the bills, and take out all excess money to hold as cash and/or buy silver.

col0016 · Apr 28, 2015

sammysilver said:

I never leave cash in my accounts. I use credit cards all the time. When money comes in, zero the credit card, pay the bills, and take out all excess money to hold as cash and/or buy silver.
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I imagine this would be hard if you had $10k+ silver and cash lying around?

sammysilver · Apr 28, 2015

col0016 said:

sammysilver said:

I never leave cash in my accounts. I use credit cards all the time. When money comes in, zero the credit card, pay the bills, and take out all excess money to hold as cash and/or buy silver.
Click to expand...

I imagine this would be hard if you had $10k+ silver and cash lying around?
Click to expand...

SDB!

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