It came from a voice that has, by law, the ear of the German government. Peter Bofinger is a member of the German Council of Economic Experts – the “Five Sages on the Economy” – which in its official function advises the government and parliament on economic policy issues. These folks are taken seriously.
So Bofinger told the German magazine Der Spiegel in an interview (full interview behind paywall) that cash should be done away with.
In Denmark, a new law was proposed that would allow shops to refuse cash payments. Officially, it’s to reduce the “administrative and financial burdens” of handling cash. Since it’s up to the shop to decide, the law sounds innocuous. But it would be another step to making money a purely electronic entity that can be seamlessly tracked anywhere. It would also be another step in granting the central bank the absolute power to inflict confiscatory monetary policies on any entity or person with money in the bank.
This law would come in handy. Danmarks Nationalbank has imposed a negative deposit rate of -0.75%, with the intent of flogging savers and confiscating their money until their mood improves and limiting the appreciation of the krone against the sagging euro. But to evade the wrath of negative deposit rates, savers can pull cash out of the bank and store it under their mattress. And this must be stopped – by making cash useless.
So, Der Spiegel asked, was this law in Denmark “a good idea?”
“With today’s technical possibilities, coins and notes are in fact an anachronism,” Bofinger said. “They made payments incredibly difficult,” with people wasting all sorts of time at the cashier as they wait for the person ahead of them to dig through their belongings to find some cash, and for the cashier to render change (rather than, for example, waiting for someone to find the right credit card, complete the transaction, and wait for approval).
This sort of dubious, government-mandated timesaver was even too shaky for Bofinger….
“But the additional time is not the largest benefit of the elimination of cash,” he said. “It dries out the markets for moonlighting and drug trafficking. Almost a third of the euro cash in circulation consists of 500-euro notes. No one needs those for shopping; light-shy figures use them for their activities.”
To forestall that these criminal elements switch to other currencies, he said that “it would be better if the Eurozone, the US, Great Britain, and Switzerland give up cash at the same time.”
And then he added the real reason for abolishing cash in such a coordinated, wide-ranging manner:
“It would be easier for central banks to impose their monetary policies. At this time, they cannot push interest rates appreciably below zero because the savers would hoard cash. If there is no cash, the zero bound is eliminated.”
So, given that this needs to be a multinational effort, should the German government throw its weight behind the elimination of cash on the international scene?
“That would be at any rate a good topic at the G-7 summit,” he said, which is coming up on June 7–8 in Bavaria.
But support is not unanimous on the German Council of Economic Experts. Lars Feld, one of the other “Five Sages on the Economy,” shot him down in the Frankfurter Allgemeine with a nod to Fyodor Dostoevsky’s famous quote, “Money is coined freedom.” Feld put it this way: “Cash is coined freedom.”
Feld also criticized Bofinger for having “apparently neglected the constitutional aspects of this proposal.” Not that they couldn’t be ruled away by the courts, but for now, the constitution – and not only in Germany – would still be a roadblock.
And there was another problem: Cash enables individual citizens to “escape the reach of the state” when their intentions are not legitimate, including moonlighting, which has the illegal dimension of tax evasion, he said. “But moonlighting is often for those affected the only chance to earn a livelihood at all.”
So deprive them even of that?
Cash is one of the few ways to escape for a tiny moment the powerful octopus arms of our seamless, borderless surveillance society. And it is one of the last, if feeble, checks on the absolute power of central banks. And it represents an aspect of “freedom,” as Feld put it. Hence the by now overt war on cash. Cash simply must cease to exist.
A disturbing scenario is playing out for folks fretting about “financial instability,” as it’s called in central-bank jargon. Read… “Buyers beware”: Capital Markets “Completely Backwards”
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The most obvious and early gain for governments would be complete taxation. Tax evasion is incredibly huge. And really unfair for those unable to evade.
What I don’t now how they solve is money between individuals. Paying someone to mow your lawn. I guess we could all Paypal each other! What a mess that would be.
Next step is some kind of RF based invisible tatoo or chip on our bodies for the sake of ID theft BS sans cash and only way to buy and sell.
Oh wait wasn’t that prophesized already on the Book of Revelation about one has to have the sign of the beast “666” in order to buy and sell?
Revelation 13:17 King James Version (KJV)
17 And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.
And why dont they plant transceivers in our skulls to monitor our thoughts? All Hail Big Brother!
The technology for that cant be too far off. It would certainly be a
be a giant step towards becoming the Borg, the apparent goal of our elite. You know, efficiency is not the name of my God but it certainly seems to be theirs. If they really do try to carry out their mad scheme, then I smell revolution in the air…
Nooooo… we’d be flooded with the incessant babbling thought stream of the Kardishians….
I’m not sure what that revolution, should it even occur would look like and anyone who takes as honest and well measured stock of what passes for a human being today might even have serious misgivings regarding the efficacy of any revolution they could possibly sustain. I mean don’t get me wrong, but the biggest demographic here in the US is bogged down with type 2 diabetes, afflicted with cancer treatments, half crippled, self medicated and so scared to loose what they think they have they will literally butcher and eat their grandchildren on cue. And what about people in the rest of the world, the marginal percentage of which can actually still feed itself; well what have they done so far but just bend at the waist and grimace?
Forgot to mention that Israel is at forefront of cashless society so the government can tax (and of course track) every transaction. Heard people mentioning this when I was there last summer.
http://www.israeltoday.co.il/NewsItem/tabid/178/nid/24635/Default.aspx?hp=article_title
http://www.conspiracyclub.co/2015/02/02/israel-first-cashless-society/
Not for PayPal. They get a cut of every business transaction.
“Tax evasion is incredibly huge. And really unfair for those unable to evade.” So it would be fair if others also had the ability to evade?
Taxation is theft.
Hah. This has nothing to do with taxation. It’s control. Plain and simple. You can’t track people using cash. You can’t break a nation that has cash on hand…
This is not a tax problem, it’s a “how do we control the nation” problem being solved.
no, it is robbery.
So all the politicians will be credit card for hookers and strippers. Mmmmm
For those who are a trifle older, you may remember a popular TV show in the 1980s called Max Headroom. It was a futuristic show based on the premise that a newspaper reporter had merged with a large computer. The computer absorbed the reporter’s personality and had a hologram appearance and stuttering voice. The show demonstrated the effect of doing away with cash. In one episode, the authorities were after a character and as part of their efforts, they deactivated his credit card. This rendered him instantly penniless. There was no legal barrier to doing it and no appeal. If we want a police state, this would be a fine first step
The constitutional issues aside, the idea is based on the Internet which is so porous to hacking that we can’t keep hackers out of the White House, The Pentagon and the Federal Reserve Bank. Could we trust such a system ? Or the people who advocate one ?
a lot from Max Headroom was ahead of its time.
You’ve been living in a police state since at least 2011. The US is the only “democracy” to have a president who can legally order the assassination of one of its citizens without either trial, formal charges being filed, or any chance in this world to save himself, and this present president, presented endlessly by the commercial media as “progressive,” has used this power more than once. In Dec 2011 he ordered the assassination of a 16 yr old high school boy. The hit was carried out by a missile fired from a drone in a public park in Yemen in broad daylight, killing 7 bystanders. The commercial media does its best to hide these stories by putting them on the air for just a few seconds at 3 AM, or hiding them on the inside pages of print media. If you want “all the news that happens” as opposed to “all the news that’s safe (for the power structure) for you to hear” you have to look for it on the internet. But that very dangerous window will eventually close.
I think Obama’s greatest failure was to have Holder Publicly tell the Banksters they would never, ever be prosecuted for any reason, totally destroying any concept of justice. Yes, there has always been influence, but to brazenly admit in public that Banksters could commit any crime and be home free, was a travesty. This, of course, made them double down on their wrongdoing, so they are now even bigger and pulling even crookeder things (Like HSBC, which DOJ just totally absolve of knowingly running billions in murdering drug gang and terrorist money.)
We have always lived in a society that was a lot less free than we have been led to believe and it is indeed a police state, But there are police states and there are police states. We are not North Korea. Not yet anyway………..
good luck with eliminating cash. Mediums of exchange can be anything useful or what people need. Barter pre dates banks and will exist long after the banks are gone.
You are right, After the crash of 29, those who were still rich largely pulled their assets off the economy. Cash was scarce everywhere but in many areas virtually disappeared. People were largely reduced to barter at times. I think all of us on here are sophisticated enough to predict that if the priests of Mammon abolish cash, then a massive black market will spring up and become the real economy. It will be made up of things like silver or old coinage or things like Bit Coin or maybe hacked credits the authorities cannot trace. There will be a tremendous increase in hacking and the burgeoning of technocriminal subcultures. The authorities may find their digital currency effectively worthless and their control of the economy and fictitious riches will vanish like smoke. They seem to have forgotten the “law of Unintended Consequences”.
This might be the elimination of criminality (Amen!) or oblige them to transact in B-class currencies.
A lot of white collar illegal money woulg go under the toilet. Incuding political money.
At the same time, such a revolution would lose taxes as well, because a signifiicant part of the -legal- modern micromarket could turn into barter.
For the predictable future, elimination of cash is going to be used only as a bully against hoarding.
Last Christmas a Danish Facebook friend reminded Danish readers that they must report the value of their Christmas presents to the tax authority (I did not authenticate this). One can imagine that the next step will be obligatory reporting of any barter deals through the year, with stiff sentences for anyone caught agreeing to tzke the neighbour’s dog for a walk in exchange for a dozen eggs..
What’s sad is that even relatively non-evil governments will be forced by the EU to do this sort of thing, to protect themselves from an attack like the ones on Cyprus and Greece.
e record of enforcing such restrictions is a long one. A long record of consistent failure. The more they try to suppress private enterprise, the more they will push it underground.
This is a little off topic. I am old school in that I like to buy CDs and rip them onto my computer and iPod. I also like to spend a couple of hours looking around the “record store”. I used to visit the store once a month and would usually pick up 5 or 6 CDs per visit. Late last year I took my selection to the cashier and took out my check-book and the clerk told me they no longer accepted checks. I have banked the same place since 1976 and have never written a bad check. I had enough cash to make the purchase, so I proceeded. But I haven’t been back. It’s a college town, so I know there is a problem and the owner certainly has a right to set the policy. But it seems to me foolish to lose a good customer, especially when you are selling something practically obsolete. Guess I am really out of luck when cash is outlawed.
Checks…? Nobody around here has taken checks in a decade. Now THAT is where you end up waiting for someone to dig through their purse, write it out, ask the clerk what today’s date is, tear it out, cashier has to look it over, “may I see your drivers license?”, run it through a little scanner, etc. Using checks I’m surprised your buying CDs. I’d have guessed you listen to an Ambreola.
Told you I’m old school, but not quite that old. I stopped using animal pelts for money years ago. I don’t have an Ambreola, but I do still have an 8 track player/recorder. Never know when that format will make a comeback.
Abolition of cash means that the governments at be with their CBs and banksters have TOTAL control over you. They can at will confiscate the “digital” FIAT currency for variety of reason. One cannot hide the cash or for that matter precious metals in mattress since there will come a time they will be deemed “worthless” piece of paper or metal with only currency being digital form that one cannot hold.
Welcome to the brave new world…
Officially, the Denmark “law” is supposed to reduce the “administrative and financial burdens” of handling cash. That lie is as deceptive as the name of “Citizens United,” which didn’t have one actual “citizen” backing it.
What a load of crap. There is a Bigger financial burden in dealing with credit cards, which charge shops through the nose. Many small stores won’t even take credit for a small purchase since the credit company demands more than their profit on the item.
This is all part of the plan to make us slaves of the big banks, which already own the President and Congress.
Electronic cash and Electronic voting – two monsters with the same mother.
I am overwhelmed at the power that has been grabbed by non-elected economists like Peter Bofinger,et.al, and the extent to which they have abused that power.
The economists who run central banks have in effect already confiscated our interest income and used it to subsidize others who will reward them with high paying jobs when they leave government service.
The economists in the Troika have no compunction in imposing more and more austerity on populations that are already struggling to survive rather than accept that bonds that funded prior corruption are worthless and in default.
Peter Bofinger’s attack on cash has ramifications that no one appears to have examined. Its just plain mean to lump moonlighting and drug trafficking together.
Sure it would be inconvenient for many, but the tens of millions of illegal aliens that our agriculture and food processing industries have lured here (and Europe too) because they provide cheap labor, it could be tragic. If these people are forced out of the moonlighting economy do we expect them to just pack up and go home? Most jobs are unavailable to these people who have no Social Security numbers of their own. Or, will we expand public assistance programs for them?
Here! Here! Very well, and beautifully said NY Geezer! That was brilliant insight which you have given me and perhaps us on the cumulative disaster a cashless society would have on our agricultural industry and the general populace. An absolute DISASTER to our communities!
I believe the current war on cash – which is deflationary – is specifically designed to ensure that when the next crash happens, the government and banks will be positioned to seize as much money as they can get hold of! We must not forget the unpublicised legislation which EU/US/Canada have been passing over the last two years so that Banks can be bailed in and pensions confiscated.
Your comment also give real substance to the notion that these so called finance advisors and economist know only one thing: And that is how to break and crash an economy and nothing else.
It would be rather amusing if the EU eliminated cash, and within a month, the normal people had began using Russian Ruble notes for lack of an other option.
This make me wonder just what they have planned for interest rates, and reminds me of something I once read:
http://www.richmondfed.org/publications/research/working_papers/2000/pdf/wp00-3.pdf
If there’s a (pardon the pun) silver lining to this, is that it might snap the Muppets’ heads around faster than almost anything than say a run on the banks. The Banksters are still hiding behind the facade of business as usual. If enough people dig in their heels and refuse to play, poof, they’re all standing around naked in the spotlight. Cake, anyone?
Earlier tonight I was at another site and we were discussing engineering plans for a guillotine. Those always go well with cake.
The US used to have higher denomination notes in circulation; $500 and $1000. I’m sure they were handy for organized crime and such. Suitcases full of $100s are less convenient. The EU could do the same thing. Would that be part of a slippery slope or not?
As a young lad my father showed me a $500 bill, and I had my picture taken in front of the $1 million in $10,000 bills at the Horseshoe Casino on Fremont St. in Vegas. And yes it is a slippery slope, it smuggles in the false premise that anyone who uses large denomination bills is a shady character. It makes an end run around due process, to the point it is now where the cops can impound your property on the simple prima facie evidence that you HAVE it and must therefore be a crook.
I was at the bank recently depositing my check (something they’ve been bugging me to do at the ATM, but I had a small currency swap too) when the lady behind the counter suggested some enhanced investment vehicle for my savings, which would only take a few minutes to set up. This is funny because my savings is only a few grand, which to me should always be kept highly liquid for emergencies. The teller frowned a little bit about this because I could be earning so much more than 2 cents per month! The bank earns 10 times more from me in fees than I’ll ever get in interest at my level of “investment.” I wonder what was in the fine print of that paperwork?
Sounds like your bank is Wells Fargo :-]
What will the political/economic committees call the electric money? credbits? Tron? Crumbs?
Are no longer free to bury the fruits of our labor in back yards or mattresses? Will electronic money, also conveniently accessible to government, make government’s use of it too easy for them to not utilize? For the people’s good?
Wouldn’t the Progressive types see the ‘obvious’ opportunity to ‘fix’ the economy with the leverage of all that cashless cash? Moving it and us inexorably toward incidental totalitarian consequences? GTFOBTSHTF
Who IS John Galt? Invest in ammo.
Well, is it not true that The US and UK government have now enacted new legislation whereby they can freeze seize business bank accounts if they suspect fraud without there being any recourse in law?