“First They Came for the Pennies…” in the War on Cash

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But who is the governments’ strongest ally in their War on Cash?

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

The War on Cash is advancing on all fronts. One region that has hogged the headlines with its war against physical currency is Scandinavia. Sweden became the first country to enlist its own citizens as largely willing guinea pigs in a dystopian economic experiment: negative interest rates in a cashless society. As Credit Suisse reports, no matter where you go or what you want to purchase, you will find a small ubiquitous sign saying “Vi hanterar ej kontanter” (“We don’t accept cash”):

Whether it’s for mulled wine at the Christmas market, a beer at the bar, even the smallest charge is settled digitally. Even the homeless vendors of the street newspapers Faktum and Situation Stockholm carry mobile card readers.

A similar situation is unfolding in Denmark, where nearly 40% of the paying demographic use MobilePay, a Danske Bank app that allows all payments to be completed via smartphone. With more and more retailers rejecting physical money, a cashless society is “no longer an illusion but a vision that can be fulfilled within a reasonable time frame,” says Michael Busk-Jepsen, executive director of the Danish Bankers Association.

World’s Biggest Cashless Laboratory

While Sweden and Denmark may be the two nations that are closest to banning cash outright, the most important testing ground for cashless economics is half a world away, in sub-Saharan Africa.

In many African countries, going cashless is not merely a matter of basic convenience (as it is in Scandinavia); it is a matter of basic survival. Less than 30% of the population have bank accounts, and even fewer have credit cards. But almost everyone has a mobile phone. Now, thanks to the massive surge in uptake of mobile communications as well as the huge numbers of unbanked citizens, Africa has become the perfect place for the world’s biggest social experiment with cashless living.

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 organizations involved include Citi Group, Mastercard, VISA, Vodafone, USAID, and the Bill and Melinda Gates Foundation.

In Kenya the funds transferred by the biggest mobile money operator, M-Pesa (a division of Vodafone), account for more than 25% of the country’s GDP. In Africa’s most populous nation, Nigeria, the government launched a Mastercard-branded biometric national ID card, which also doubles up as a payment card. The “service” provides Mastercard with direct access to over 170 million potential customers, not to mention all their personal and biometric data.

The company also recently won a government contract to design the Huduma Card, which will be used for paying State services. For Mastercard these partnerships with government are essential for achieving its lofty vision of creating a “world beyond cash.”

A New Frontier

In India an even more ambitious project is under way: the Unique Identification Authority of India (UIDAI), which aims to create a centralized voter enrolment system for 1.2 billion people. It will be the largest identity platform and biometric database in the world. There’s only one snag: according to its creators, the only way to make the system work effectively will be through the widespread adoption of electronic payment systems, side by side, as always, with biometric recognition systems.

Given that cash is still king on the subcontinent, the government may have its work cut out. Finance minister Arun Jaitley has repeatedly underscored the need to transform India into a cashless economy, supposedly to “rein in the problem of black money.” However, with its huge informal economy, India remains the largest producer and consumer of currency notes after China (as well as the biggest consumer of gold).

Here’s more from India’s Financial Express:

Currently less than 5% of all payments are done electronically. Results from the ICE 360 Cash Survey 2014 show that cash is the preferred mode of payment even in Delhi, the most affluent and developed metropolis. Nearly 73% of all purchases by Delhi consumers are paid for in cash and only 17% by card.

Naturally the Indian government will do all it can to change this situation. In an article in the Daily Mail Nandan Nilekani, one of the technocrats behind UIDAI, urges the government to lead the way. “The government must be the initial driver, using the heft and reach of its social security schemes to drive the adoption of an electronic payments model,” Nilekani asserts. “As momentum grows, private players can step in.”

Those private players will no doubt include banks. After all, in a world where every transaction – or at least every “official” transaction – must be electronic, the power of banks over individuals is likely to dramatically increase, as Brett Scott warns in an article for The Guardian:

With this comes the specter of bank surveillance, where every transaction you ever partake in is authorized and recorded by a privately run commercial bank, giving it a transaction-by-transaction history of your entire commercial life. If such a bank does not like an enterprise – such as Wikileaks – it can just freeze it out.

The New Cost of Doing Business

An oft-overlooked benefit of cash transactions is that there is no intermediary. One party pays the other party in mutually accepted currency and not a single middleman gets to wet his beak.

In a cashless society there will be nothing stopping banks or other financial mediators from taking a small piece of every single transaction. They would also be able to use – and potentially abuse – the massive deposits of data they collect on their customers’ payment behavior. This information is of huge interest and value to retail marketing departments, other financial institutions, insurance companies, governments, secret services, and a host of other organizations.

Another very important perk of cash is that it significantly limits central banks’ ability to continue conducting arguably the greatest financial heist of the modern age, i.e., negative interest rate policy (NIRP). The only way that central banks can maintain negative interest rates ad infinitum is by abolishing cash altogether, as the Bank of England chief economist Andrew Hadlaine all but admitted. As long as cash exists, there’s no way of preventing depositors from doing the logical thing – i.e. taking their money out of the bank and parking it where the erosive effects of NIRP can’t reach it.

So in order to save a financial system that is morally beyond the pale and stopped serving the basic needs of the real economy a long time ago, governments and central banks must do away with the last remaining thing that gives people a small semblance of privacy, anonymity, and personal freedom in their increasingly controlled and surveyed lives.

The biggest tragedy of all is that 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. By Don Quijones, Raging Bull-Shit.

A war conducted by bankers, politicians, academics, even startup guys. Read… The “War on Cash” in 10 Spine-Chilling Quotes

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  34 comments for ““First They Came for the Pennies…” in the War on Cash

  1. Roland
    November 7, 2015 at 6:47 pm

    Ah, the propensity of the masses to go gaga over beads and trinkets — in this case the 1-2% cash rebate when funnelling all your purchases through the banks …. Such is the cost for ones freedom from being “target marketed”.

    • Mel
      November 8, 2015 at 2:39 pm

      Social fragmentation and a feeling of powerlessness probably have an effect. 2% cash back probably means that the bank is skimming 5% instead of 3% from the retailer, but what the heck? They could be skimming 5% without offering cash back. Who would stop them?

      • Roland
        November 8, 2015 at 2:55 pm

        The masses will overlook a lot if it is the cost of acquiring MORE . We let the corps move our manufacturing offshore so we can get lower prices allowing us to buy MORE or stay more comfortable. The sting only happens when we can’t pay our monthly — then those obscene int rates on the card kick in, nullifying the rebates real fast. You can almost hear the banks whisper GOTCHA!

  2. Petunia
    November 7, 2015 at 6:52 pm

    When a country goes digital the people can still use a foreign currency to transact. Watch the Yuan or other currency take the place of the digital currencies. I hope you people realize this is all about stealing what’s left of your money.

  3. Paulo
    November 7, 2015 at 7:28 pm

    Adding to what Petunia said, barter and trading is good.

    Curious, what about drug dealers? Think Shaqua down on the corner has a cash machine? I somehow doubt it. Time to start taking it to the politicians. Before they can get voted out, harass them big time. Then, get rid of them and vote in someone who will look after our interests. Cash!!

    • Tone
      November 7, 2015 at 10:38 pm

      …and what of the oldest profession, or the scalpers? At least the politicians will have to go legit…no more bribes!

      • Sandy Beach
        November 9, 2015 at 9:05 pm

        Politicos don’t care….no one throws them out. They get all the corporate slush they need. The courts back them. No, taking cash away ends privacy and value in personal spending. the ultimate form of control. I hope it all crashes first. Think of all the little merchants that will disappear. Or, maybe they’ll just expense it all out and never show a profit. Ultimately, no one will want to show any profit. Even if its a digital economy, much will go underground.

    • retired
      November 8, 2015 at 9:34 am

      What sort of markers do politicians use when taking their graft?
      Do they accept promissory notes in their under the table envelopes?

    • G
      November 10, 2015 at 9:04 am

      There’s no one to vote in. One side speeds collapse up the other side slows it down (at least that’s what they would have you believe)
      All want cashless society!

  4. Dan Romig
    November 7, 2015 at 7:42 pm

    The ‘War on Cash’ reads like an Orwellian prophecy, and I for one, do not like it!

    Minneapolis and St. Paul have replaced coin only parking meters with credit card, smart phone and coin (quarters) centralized payment stations. While this is seen as a convenience, and to be fair it is, why would someone want to swipe their credit card instead of just dropping a few coins into the pay station to to buy some time to park one’s vehicle?

    The Twin Cities would rather pay the credit card companies a couple percentage points per transaction instead of having a human being actually work by collecting quarters, but if you use your credit card there’s a Big Brother record in the database.

    Cashless places like Sweden are just moving another step away from individual privacy and freedom. Speaking for myself, the human spirit does not want to be caged and watched. Removing cash from citizens’ options is stuffing us all into a cage.

    I know, how do I really feel about this?

    • retired
      November 8, 2015 at 9:42 am

      I think the whole economy is going to start coming apart long before any of these desperation moves by the financial elites come into play!
      I believe that many of these NWO moves are being speeded up by the desperate bankers who see the hand writing on the wall.The current Central Banking Systems are buckling under the strain!

    • Hazel
      November 8, 2015 at 1:38 pm

      If those quarter-gobblers need coins of a certain weight, the new quarters aren’t going to work. New nickels are shiny and weightless too.

    • d'Cynic
      November 10, 2015 at 1:22 pm

      Free human spirit can be, and is crushed by indoctrination starting early in the elementary school. But then, young people are most eager users of new ideas. Think bitcoin which is primarily taken up by the younger generation. More such systems would probably emerge if governments tried to abolished cash. The social experimenters might get more than what the bargained for.

  5. Lee
    November 7, 2015 at 8:51 pm

    A couple of comments:

    1. Here in Oz there has been a campaign of sorts against businesses that only take cash. The campaign has an underlying theme that those types of businesses are not paying taxes.

    However, one also runs into another problem here. Many businesses WILL NOT accept a CC payment unless you buy over a certain amount. For example, I needed to get the chain for my chain saw sharpened. The cost was A$12. The business would not accept a card for anything under A$20…………. So I had to pay for the service with cash.

    2. In Japan cash is king. Many places will not accept a card payment. Travel out in the country areas and if you don’t have cash you are in trouble.

    But even in Japan they are moving to greater control with the adoption of a national identity number for every person there. Eventually this number will will find its way across all government departments and financial institutions as well.

    Wonder if that is one step along the path to do away with cash in Japan…………….

    • MC
      November 8, 2015 at 2:58 am

      You are onto something here.
      Around here most businesses won’t accept cards either for transactions under a certain sum for the simple reason commissions eat in their already paper thin margins. These commissions (which can be as high as 4% for some credit cards) are what is always conveniently left out when attempts are made to push cards as the only solution to “tax evasion”. Banks and credit card companies are making a killing on commissions.

      Regarding Japan: the problem is basically that people learned not to trust the government during the Tokugawa Era and, if partecipation figures post-1945 are anything to go by, that attitude hasn’t changed one tiny bit. I talked to elder Japanese businessmen who told me with a hint of nostalgia of the days when transactions were conducted in cash, all of them. A common method to move large sums around was to stuff wands of cash inside old tatami mattresses. For smaller sums military surplus rucksacks and duffel bags (very common among ordinary people and hence low profile) were favored.
      Elders and people living in rural areas are especially suspicious of credit cards and other cashless payment methods. Plainly put they don’t trust neither the government nor the banks, and with the assault on retirees’ saving accounts through the double pincer of Abenomics (inflation and ridiculously low yields on J-bonds) that distrust is growing by the day.
      No need to worry however, as the Japanese are an inventive people and will find ways around anything the government can throw their way.

      Now a little news on the NIRP front. While pretty much every shop in Switzerland has a credit card reader, businesses are finding a way to incentivate cash payments by offering a discount to anybody paying in cash. The reassuring clang of the old, large ChF5 coin is much more appreciated than the ping of the credit card reader.

    • Les Francis
      November 8, 2015 at 7:42 pm

      Here in Melbourne Australia, I have seen many people buy their daily cup of $3.50 coffee with a credit card.
      I asked one of the coffee chain shop managers about this practice and why do they do this considering the credit card transaction will initiate a fee.
      80% of customers paid for their coffee and cake with a credit card. – They have no cash until pay day.
      If credit card payments were not taken the coffee shop business would not survive.

      This is payday loans by credit card.

      In another development. My local bank charges me $3.00 for a cash transaction or cheque deposit at a human teller. I have a business which needs to receive both of those types of payment.
      You enter the bank and there is a concierge trying to direct you to an internet kiosk. Then there are customer service advisers. The last thing the bank wants you to do is face up to the tellers

      • Spencer
        November 9, 2015 at 10:35 am

        An excellent point. By using a card it’s almost as if the high price for coffee is anesthetized by not seeing real money leave the wallet – what cares do have?

  6. Jungle Jim
    November 7, 2015 at 10:26 pm

    If you think that we have crime problems on the Internet now, just wait until this is forced into place. This will be a happy hunting ground for organized crime. In addition, this will be just one more potential vulnerability for our enemies including North Korea , Iran, and even ISIS to exploit. Then too, what do you do if there is a power outrage after a storm ?

    • November 8, 2015 at 12:39 pm

      ISIS is a CIA created asset. Don’t you think it strange that even though our government surveils every email, keystroke, etc., they couldn’t locate and drone the mile long lines of Toyota Hilux pickups on barren desert highways, yet Russia had no trouble finding and destroying these same vehicles as soon as they got into the fight?

      It’s time to wake up and realize America has become its own worst enemy.

      • Hazel
        November 8, 2015 at 1:44 pm

        Yes! I’ve also been wondering when “enemy” drones are going to be seen here! I would prefer D.C., but either way it’s strange that “our enemies” aren’t “attacking back” directly. Hard to fathom if they’re so dangerous.

  7. Mary
    November 7, 2015 at 11:32 pm

    It is good because I hope it will only serve to accelerate the bitcoin acceptance, bypassing the governments.

  8. Rob
    November 8, 2015 at 10:52 am

    Recently Jim Willie commented that cashless would never work in US, since the shadow government is running the Afghan Heroin trade world wide and illegal drug sales is in all cash. The big money laundering banks would also be cut out of their profits.

  9. Tim
    November 8, 2015 at 11:36 am

    “The biggest tragedy of all is that the governments and banks’ strongest ally in their War on Cash is the general public itself.”

    I can’t believe people are not getting this. It isn’t the public, nor the government. It’s the card/processing companies that are the heavy weight behind this. The governments are simply gophers for the card companies.

    Cashless means more skimming for the card companies. The government is not the important thing here. It is the card companies. More processing fees. It’s all about revenue/cash flow for zombie banks/card companies.

  10. Hazel
    November 8, 2015 at 1:35 pm

    New change that I’m given upon purchasing recently look and feel like they’re aluminum. Is there a metal that’s lighter? Could they be plastic?

  11. Hazel
    November 8, 2015 at 1:46 pm

    …”taking their money out of the bank and parking it where the erosive effects of NIRP can’t reach it.”

    Where’s that?

  12. Sgt Milstar
    November 8, 2015 at 3:42 pm

    It’s bad enough that when I go out and buy or have something to eat, the government is sitting next to me consuming at 8.25% for state and god knows what for federal. Now with cashless society, the banks will be eating along side too.

    As far as abandoning cash, I see that could be a problem in the USA. How would the politicians be able to accept bribes? You can only have so much blow, viagra, coke and hookers before you collapse. Right Lamar?

    • Alice Ridden Hooker
      November 8, 2015 at 10:49 pm

      Gold bullion for them, a chip in the hand (card) or head (cell phone plastered on the ear) for us.

      • Sgt Milstar
        November 9, 2015 at 1:51 am

        Gold Bullion, no way. You know that’s not money.

        On a serious thought, if money is outlawed, then the metals will be targeted next.

  13. AC
    November 8, 2015 at 3:55 pm

    There was a BBC series called ‘The Last Enemy.’ If you haven’t seen it, it’s worth watching – mainly for the tight controls on individual financial transactions.

    I’d say it was fiction, but here we are.


  14. erect lee
    November 8, 2015 at 11:49 pm

    Once cash goes digital fully… so do passports & personal IDs

  15. no bull
    November 12, 2015 at 4:20 am

    Banksters have always controlled citizens with cash. The whole fed reserve, bank of england and imf print out of fresh air so governments can borrow to enslave the populations. Why would a government representing the people not print interest free? Politicians are key intermediaries giving people an illusion of free choice when they work for the bankers to control us. Combined with surveillence, divide and conquere, war, flouride and aluminium chem trails these bastards are really going to control us. They are playing us for fools, always have and unless we refuse to stop following like sheep, always will.

  16. Calgacus
    November 12, 2015 at 9:16 pm

    sorry for the botched html

  17. Oneyedjack
    November 18, 2015 at 9:22 pm

    Secede!I can not stress that enough.The corruption of the New World Order and laws for thee and not for me for bankers,congress,fake Birth certificate Hussein have to go

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