The “War on Cash” in 10 Spine-Chilling Quotes

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By Don Quijones, Spain & Mexico, editor at WOLF STREET.

The war on cash is escalating. As Mises’ Jo Salerno reports, the latest combatant to join the fray is JP Morgan Chase, the largest bank in the U.S., which recently enacted a policy restricting the use of cash in selected markets; bans cash payments for credit cards, mortgages, and auto loans; and disallows the storage of “any cash or coins” in safe deposit boxes. In other words, the war has moved on from one of words to actions.

Here are ten quotes that should chill the spine of any individual who cherishes his or her freedom and anonymity:

1. Kenneth Rogoff (from the intro to his paper The Costs and Benefits to Phasing Out Paper Currency):

Despite advances in transactions technologies, paper currency still constitutes a notable percentage of the money supply in most countries… Yet, it has important drawbacks. First, it can help facilitate activity in the underground (tax-evading) and illegal economy. Second, its existence creates the artifact of the zero bound on the nominal interest rate.

In other words, cash (not money) is the source of all evil and must be destroyed because governments can’t trace its every movement, and it represents a limiting factor on central banks’ ability to continue their insane negative-interest-rate experiment.

2. Citigroup’s Chief Economist Willem Buiter responds to the monetary economist Charles Goodhart’s description of abolishing currency as “shockingly illiberal.”

(T)his cost has to be seen against the cost that the anonymity of currency presents to society. Even though hard evidence is hard to come by, it is very likely that the underground economy and the criminal community are among the heaviest users of currency.

This, I believe, is the hidden intent behind all the excited talk about banning cash: to do away with the personal anonymity it offers.

3. France’s finance minister Michel Sapin adds a dose of scare-mongering, which can do wonders.  In the wake of the Charlie Hebdo murders, he put much of the blame for the attacks on the assailants’ ability to buy dangerous things with cash. Shortly thereafter he announced a raft of capital controls that included a €1,000 cap on cash payments, down from €3,000. Such radical counter measures were necessary, he said, to “fight against the use of cash and anonymity in the French economy.”

4. Guillermo de la Dehesa, a Spanish economist, former senior civil servant and current international advisor to Banco Santander and… (cue drum roll) Goldman Sachs, already demonized cash (as opposed to digitalized bank credit) as a source of all crime and evil back in 2007, when he wrote the following in an El Pais article titled “The Great Advantage of a Cashless World”:

Without cash, we would live in a much safer, less violent world with enhanced social cohesion, since the major incentive fuelling all illegal activity [i.e. cash]… would disappear.”

Dehesa also lamented that political authorities in all countries were incapable of taking this “transcendental step” to build a “safer and fairer world, in which there will be a reduced need for public and private policing and fewer wars, terrorist attacks, and burglaries, and drugs could only be bought legally.” So he ludicrously elevated cash (rather than money) as a major cause of war and a laundry list of other evils. They’d be stamped out by electronic payments where every single movement will be tracked and recorded for posterity.

5. Economist and former US Secretary of Labor Robert Reich, among the growing ranks of policymakers, business leaders, academics, and bankers picking up the torch of Dehesa’s dystopian dream, is barely able to conceal his glee as he tells CBS news:

There will be a time – I don’t know when, I can’t give you a date – when physical money is just going to cease to exist.

6. David Wolman, author of the Death of Money, told CBS just why cash is so impractical (not to mention unhygienic, or as he puts it “pretty gross”):

Everyone thinks cash is so simple and so easy and so fast and so secure. It’s NONE of those things. It’s really expensive to move it, store it, secure it, inspect it, shred it, redesign it, re-supply it, and round and round we go!

7. Founder of mobile payments provider Square, Jack Dorsey seems to understand that to kill cash for good the authorities must go beyond just vilifying it; they must romanticize the alternatives. Here’s his take on mobile money:

I think there is a general desire in American culture right now to find something that is more crafted, more personal.

As anyone who’s ever received money as a gift will tell you, there’s nothing more impersonal (and, of course, more untraceable and anonymous) than cash. Mobile payments will fix that shortcoming.

8. Chris Skinner, author of The Future of Banking and Digital Bank, drives home the point that digital money doesn’t just offer a more personal touch; it also offers a far more secure payment system, especially with the advent of biometric authentication systems.

Imagine that your payment mechanism is built into a watch that your bank gave you. The watch includes an RFID or NFC capability, biometric recognition and is supported by existing infrastructures at the merchant front-end and money transmissions process back-end. The retail consumer can therefore go into any store, wave their watch at the contactless terminal, press their finger to the pay point and they have purchased the goods. No card or cash involved.

That is the vision of the future of retail payments and we are almost there today. We already have contactless payment terminals, fingerprint recognition payments, micro and mobile payments. The only logical step is to introduce non-card based (i.e. biometric-based) payment systems.

As the saying goes: you can create a new password many times (for example, if your accounts get hacked), but you can create your biometrics only once. If they’re compromised, they remain compromised. So a payment system based on them would be really cool.

9. Bill and Melinda Gates Foundation, in its 2015 annual letter, adds a new twist. The technologies are all in place; it’s just a question of getting us to use them so we can all benefit from a crimeless, privacy-free world. What better place to conduct a massive social experiment than sub-Saharan Africa, where NGOs and GOs (Government Organizations) are working hand-in-hand with banks and telecom companies to replace cash with mobile money alternatives? So the annual letter explains:

(B)ecause there is strong demand for banking among the poor, and because the poor can in fact be a profitable customer base, entrepreneurs in developing countries are doing exciting work – some of which will “trickle up” to developed countries over time.

What the Foundation doesn’t mention is that it is heavily invested in many of Africa’s mobile-money initiatives and in 2010 teamed up with the World Bank to “improve financial data collection” among Africa’s poor. One also wonders whether Microsoft might one day benefit from the Foundation’s front-line role in mobile money.

10. Buiter’s employer Citi, a big player in the African arena, recently launched a partnership with USAID aimed at accelerating mobile money adoption in developing countries. Here’s a nugget from their joint press release:

[E]xpanding the adoption of mobile financial solutions is a critical economic development strategy with the potential to drive growth and increase financial access and security for the developing world’s poor population. The effort seeks to strengthen alternatives to a cash-based system that is inefficient, costly, and prone to corruption.

As a result of technological advances and generational priorities, cash’s days may well be numbered. But there is a whole world of difference between a natural death and euthanasia. It is now clear that an extremely powerful, albeit loose, alliance of governments, banks, central banks, start-ups, large corporations, and NGOs are determined to pull the plug on cash — not for our benefit, but for theirs.

As I warned in We Are Sleepwalking Towards a Cashless Society, we (or at least the vast majority of people in the vast majority of countries) are willing to entrust government and financial institutions – organizations that have already betrayed just about every possible notion of trust – with complete control over our every single daily transaction. And all for the sake of a few minor gains in convenience. The price we pay will be what remains of our individual freedom and privacy. By Don Quijones, Raging Bull-Shit.

Wolf here: Governments and corporations have one thing in common: they want to know everything. Data is power. And money. Technologies for collecting, mining, and using data are now so cheap that totally impoverished Somaliland has turned into the model of just this sort of cashless society. It sure is convenient. But…. My report from nearly two years ago:  Perfecting The Surveillance Society – One Payment At A Time

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  31 comments for “The “War on Cash” in 10 Spine-Chilling Quotes

  1. Michael Francis
    April 25, 2015 at 10:34 pm

    It would be interesting to see how a cashless society copes with extended power outages or communications breakdowns.
    The simple action of breaking a cable could cripple the ability to both purchase and trade bringing a city to its knees very quickly.

  2. Alec
    April 25, 2015 at 10:48 pm

    Not included on that list, and going beyond the whole privacy issue: the fact that the banks in places such as Greece would really love to take the possibility of people getting their money out of their clutches permanently off their clients’ hands.
    That would definitely make the world a whole lot safer… for the bankers.

  3. Michael Gorback
    April 25, 2015 at 11:39 pm

    How do you reconcile a cashless society with the claim that poor people are discriminated against by voter ID laws? If you can’t get a simple ID how are you going to do electronic transactions? The poor rely on cash more than anyone in American society.

  4. night-train
    April 26, 2015 at 2:16 am

    Data is knowledge is power is control. Sometimes when I make a cash purchase, especially when a young person is the clerk, they look at me like I just threw a beaver pelt on the counter. I do not like the trend described in this article. It is way too Orwellian. Seems to me that digital money just has to be easier to steal. I am old enough to remember people who had been through the Great Depression who never trusted banks again. I thought they were relics of a bygone age. Now I guess I am the relic. And the circle continues.

    • Nancy
      April 28, 2015 at 1:58 pm

      My father lived through the depression years, and he kept every penny he had in his pockets.. used to sew a button hole and a button on his canvas work pants to keep from losing his wallet because it held everything he had.
      He repeatedly told me that Roosevelt STOLE the money from the people, politicians were “the lowest form of life”…. and banks had ONLY one purpose and that was to steal everything you own……
      He was right.

  5. Debtserf
    April 26, 2015 at 3:31 am

    If cash is banned people will just use something else. Gold, silver, cigarettes, time, seashells..

    We would resort to horse-trading if necessary. By which point you would be in a collapse or revolutionary scenario and binary money would be worthless anyway.

    If you banned cash today, it’s possible that the cash already in circulation would only increase in value, and a healthy black market would develop.

    Cash existed long before governments and central banks, and if any are foolish enough to attempt to ban it, it will still exist long after they are gone.

    • d
      April 26, 2015 at 5:29 am

      Saved me the job

  6. B Wood
    April 26, 2015 at 8:30 am

    Lets not forget there would be account transaction costs that Banks would charge you monthly even though without cash their costs on your account would be less than a thousandth of that fee.

    You would have no choice but to pay, changing Banks would just result in paying the same fees elsewhere. A captured market can be charge whatever your masters agree upon.

  7. retired
    April 26, 2015 at 8:48 am

    I think it is all going down,one way or another,regardless of what tricks the financial elites come up with!
    The basic problem is not payment methods,credit or cash,the problem is massive amounts of leveraged debt obligations taken on by the financial sector.These debts cannot & will not be paid,…default is the only way out!
    All these financial types in 3 piece suits & wingtip shoes can scheme all they want,the global economy is reaching the end of it’s run!
    The middle class is being stretched like a rubber band by the financial sector in it’s futile attempt to pay the leveraged debts,in Europe they call it ‘Austerity’ & in America ‘financial repression’.
    when the middle class snaps under the constant pressure,it will be the end of the ‘consumer economy’.The middle classes are the consumers!
    The consumer economy is over 70% of the total economy,when it starts to collapse the whole economic ‘House of Cards’ will fall apart.
    P.S.: All of this is not considering the fact that this will also destroy the ‘Welfare State’.
    There must be hundreds of millions of entitlement recipients who have no known employable skills with which to earn a living! What will they do when they stop receiving their entitlements?
    If the financial types believe that their schemes & tricks will make a difference then they are deluding themselves!

  8. April 26, 2015 at 8:52 am

    All predicated on the existence of technology in perpetuity. As we begin to experience diminishing returns on our energy resources and various complex systems exhibit growing stress, there is the distinct possibility that ‘electronic systems’ will not be sustainable for very much longer…

  9. Petunia
    April 26, 2015 at 10:27 am

    There’s cashless and then there is cashless. If America goes digital I can assure you that people will use Rubles or Yuen or any other currency they can get their hands on. The American financial/political system is in a bubble of isolation if they think they have this kind of control. Digital will only make people more disconnected from the power structures to their detriment not ours.

  10. Robert
    April 26, 2015 at 10:42 am

    “Kenneth Rogoff: Despite advances in transactions technologies, paper currency still constitutes a notable percentage of the money supply in most countries… Yet, it has important drawbacks. First, it can help facilitate activity in the underground (tax-evading) and illegal economy…”
    As opposed to purely digital money which is immune to hackers.

  11. nick
    April 26, 2015 at 11:58 am

    This will allow banks/government to more easily take peoples money, digitally. Bail in style. As it is now, they cannot get want is stashed under your mattress, or stacked in a safe somewhere.
    They want control of every aspect of our lives, and with all that is happening in the world today, the harm they are causing globally, and domestically they may start losing control of it all , soon

  12. Rick
    April 26, 2015 at 1:37 pm

    Deposit interest rates will be negative and banks will be able to charge their fee/rent down to every transaction as small as buying bubblegum. It won’t happen right away but I’m in my late 50s hopefully I’ll be gone when the final denouement occurs.

  13. dr. evil
    April 26, 2015 at 3:02 pm

    Bitcoin is our answer. It is pseudonymous, which means the payer decides what name to use, real or pseudonym. It is odd that an article can be written and not discuss the advantages and growth curve of the Bitcoin network. Bitcoin’s price is down, but it’s functionality, use, infrastructure, and security is growing exponentially. If the curves continue, bitcoin will dominate global payments by 2027.

  14. Jungle Jim
    April 26, 2015 at 3:07 pm

    Years ago, there was a television show called “Max Headroom”. It was about a futuristic society in which a large computer came to life. In one episode, the authorities went after a particular character who was annoying them. The first thing they did was to freeze his credit account, instantly rendering him penniless. Would that work in real life ? You betcha !

    And never forget, we are dealing with a President who used to teach constitutional law, but doesn’t see it applying to him personally.

    • debtslave
      April 26, 2015 at 5:03 pm

      yes. they could take all money. freeze accounts.
      the police are now fully armed with war weaponry to make war on population.

      then banks
      who had previously gone belly up in great depression
      use brand spanking new sizzling BAIL-IN TECHNOLOGY
      so as to “RESOLVE'” their gambling debts with your money

  15. GrandpaSkeptic
    April 26, 2015 at 5:31 pm

    I have always thought politicians would defend cash to the very end. What would bribes be paid with? Traceable e-money? Don’t think so.

    • Jungle Jim
      April 26, 2015 at 8:52 pm

      Since the police work for the politicians , who is going to trace the fund transfers ?

  16. Robocop5626
    April 26, 2015 at 6:25 pm

    We should do everything within our ability to heighten our defenselessness after an event interdicts or destroys our power grid. Imagine the chaos after the realization spreads that EBT is gone for who knows how long? The rest of us will be similarly panicked without some type of valuables to use as currency in the months/years to follow. How long will it be before a substitute is determined to use in lieu of bartering? And the cycle begins anew with currency for the everyday people.

  17. Vespa P200E
    April 26, 2015 at 8:58 pm

    Next up after take cash out and make our various transaction “easy” sans ID theft is that everyone must get tiny chip implanted or RF enabling invisible tattoo ink on our body in order to buy and sell.

    Wait – doesn’t the Book of Revelation warn about one has to get sign of the “beast” 666 in order to buy and sell?

    We indeed live in the interesting times…

  18. Ivy
    April 27, 2015 at 10:51 am

    A good reference source is Jaron Lanier’s book: Who Owns the Future.
    People voluntarily give away information that is monetized by others.

  19. Blank Reg
    April 27, 2015 at 11:40 am

    But what a convenient way to not just stifle but eliminate dissenters entirely? Visualize a day when all “citizens” deemed “libertarian” (by virtue of the Soviet Poverty Law Center) get their accounts frozen, and they all starve, freezing, in the dark?

    But then libertarians are pretty creative folk, and they may have already figured out a survival plan prior to this…

  20. Benedict@Large
    April 27, 2015 at 12:20 pm

    The basis of any currency is trust. Once that trust is lost, it cannot be gained back. The currency is dead.

    Do people trust banks? Not really. Not any more.

    So what do you think will happen the day our elites announce that there’s no such thing as cash anymore? That from then on, the bank will handle everything.

    These people who speak of a cashless society are playing with a fire they do not understand. They will not be happy until they blow civilized society out from under all of us.

  21. Rand Sackerman
    April 28, 2015 at 7:40 am

    Guillermo de la Dehesa almost had it right when he said:

    The Great Advantage of a Cashless World: “Without cash, we would live in a much safer, less violent world with enhanced social cohesion, since the major incentive fuelling all illegal activity [i.e. cash]… would disappear.”

    I have changed one word in the quote to reveal the honest truth:

    Without money, we would live in a much safer, less violent world with enhanced social cohesion, since the major incentive fuelling all illegal activity [i.e. money]… would disappear.”

  22. April 28, 2015 at 9:55 am

    It’s all about control that is why bankers don’t like bitcoin. Bitcoin is peer to peer and cuts out the bankers control. The only bad thing about bitcoin if the grid goes down you can’t access your bitcoin! They want us all to have chips under are skin.

  23. Julian the Apostate
    April 28, 2015 at 12:50 pm

    There still seem to be some of you out there who think that this could be a result of ignorance or shear incompetence. This cashless thing may prove it one way or the other. If they intend to bring the system down so they can declare martial law, they’ll just pull the rug out and tell us ‘you have two weeks to turn in your cash.’ If they don’t want to cause a ripple they’ll shut off the printing presses and not say a word, letting the supply of currency die on the vine. In a year or two the currency that’s out there will just fall apart and not be replaced. Either way the system is doomed. Hmm…maybe I should but away a few of those fiat dollar coins…

  24. ipeter
    April 28, 2015 at 2:43 pm

    Why are we so worried about a (formal) cashless society. The few times that I have used cash in the last ten years were for settling a two dollar Nassau on the golf course. I suspect that a large majority of people in the “developed” world rarely use cash. It’s a credit and debit card world out there. That being said, we have always faced the possibility that some evil banker or Govt. official could arrange to have our bank balances simply “disappear”, while laying down an authentic trail showing that you made the associated withdrawals. That sounds like it would be a trivial exercise for the CIA or NSA.

  25. April 29, 2015 at 5:38 am

    @ipeter: Some of us are darned upset by what the major banks have done since 2007 and do our level best to avoid giving them the slightest profit from our financial transactions. Throw in the fact that Congress in its wisdom has decided that our banking records should be an open book to the NSA and the civil libertarian duty to resist government encroachment on essential liberties kicks in as well.

    It should be kept in mind that the Treasury Department, not the Federal Reserve, issues U.S. currency and coins. The Fed purchases currency as needed and distributes it, but the Treasury operates under a legal requirement that it issue sufficient currency that will, in its informed judgment, be sufficient to meet demand.

    There are constitutional legal barriers to a cashless society in the U.S. One fundamental problem is that any law abolishing cash and requiring the use of fiat electronic Federal Reserve digits instead would necessarily require that citizens loan money to a private bank in the form of deposits to their accounts. That necessity runs head on into National Federation of Independent Business v. Sebelius, 132 S. Ct. 1161 (2012), http://goo.gl/A0bw37 (“The Framers gave Congress the power to regulate commerce, not to compel it, and for over 200 years both our decisions and Congress’s actions have reflected this understanding.”) (Obamacare decision).

    That issue is ripe for a test case because federal law (31 U.S.C. 3332 and 31 CFR 208) requires that all Federal benefit and other nontax payments be made electronically, despite the fact that the Treasury Department offers no alternative to use of a commercial bank for receipt of such payments. Treasury is apparently in no hurry to face such a test case; they still mail Treasury notes to those who decline to participate in that scheme to lend money to banks rather than pay recipients directly.

    In the context of federal payments, a cashless society would also run afoul of another Congressional responsibility laid down by the Constitution: “The Congress shall have power … to pay the debts … of the United States.” By no reasonable stretch of the imagination is a debt paid by loaning the money to a third party, which is the effect of an electronic deposit in a commercial bank account, unless the account holder has agreed that payment may be made in such manner. That interpretation is all the more compelling in the context of a cashless society because of the low payment priority bank depositors are given in bankruptcy court.

    Finally, there is a strong argument that Congressional power to mint and coin money contemplates that money will be tangible rather than electronic, particularly given that in the Constitution’s Article I section 10 provision that States are forbidden to “coin money” but also forbidden to “make any Thing but gold and silver Coin a Tender in Payment of Debts.”

  26. Julian the Apostate
    April 29, 2015 at 5:38 pm

    Ipeter, the difference is one of voluntary vs. involuntary. Giving money to charity is voluntary. Giving it to a robber with a gun pointed at your head is involuntary. The former is YOUR choice. The latter skews the equation by changing the choice to YOUR MONEY OR YOUR LIFE, and he might shoot you no matter what you choose ON A WHIM. Your continued existence cannot be guaranteed without counter-party risk.

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