The Alliance is in place.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
On Monday in Japan, Apple CEO Tim Cook vented his spleen once more against physical currency, telling the Nikkei that “we don’t think the consumer particularly likes cash.”
It’s a bizarre conclusion to reach, especially in Japan where cash is still the undisputed king. At ¥90 trillion ($885 billion), or about a fifth of gross domestic product, the value of banknotes in circulation is the highest in the world as a proportion of the economy. Many small businesses, including many restaurants, don’t even take plastic. Yet, the country was also the first to popularize mobile wallets and smartphones.
“We would like to be a catalyst for taking cash out of the system,” Cook said, his mind fixed on Apple Pay, which takes a cut on every transaction it processes.
Yet Apple Pay isn’t generating substantial revenue for the company, as Fortune points out. The service — as with just about everything Apple ever produced — is only compatible with Apple’s own products, leaving the more than a billion people worldwide who use Android-based smartphones out of the loop. Not to mention the billions more who don’t use a smart phone at all.
But cash’s days are numbered, as technological advances and changes in generational priorities dampen its allure. The world is brimming with individuals and institutions determined to put it out of its misery.
The Usual Suspects
Top of the list are the world’s central banks, which have the perfect motive for whacking cash: i.e. to make negative interest rates an eternal — or at least, more enduring — reality. And the only way to do that is to stop depositors from cashing out, as the Bank of England chief economist Andrew Hadlaine all but admitted in 2014.
Japan and Europe are already deep into negative territory, and Fed Chair Janet Yellen has already said that the U.S. should be prepared for the same outcome. But 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.
Central banks are not the only ones who dream of a cash-free world. For credit card companies, cash is the ultimate rival. As such, it’s no surprise that the likes of Visa and MasterCard are among those pushing the hardest for a cashless economy. For banks, the benefits are no less obvious, including cost cuts, greater control over the flow of customer funds, and larger fees.
As for politicians, Eurocrats and global plutocrats, including the senior servants of the IMF, World Bank and United Nations, they will enjoy even greater access to and dominion over the people’s funds. What better way of controlling the people than by controlling their access to the money they need to survive? It would amount to what Martin Armstrong calls “totalitarian control over the economy.”
These powerful agents have already created a perfect platform for achieving their dream: The Better Than Cash Alliance (BTCA), a UN-hosted partnership of governments, companies and international organizations. Its purpose, in its own words, is “to accelerate the transition from cash to digital payments globally through excellence in advocacy, knowledge and services to members.”
The Better Than Cash Alliance’s membership list reads like a who’s who of some of the world’s most influential corporations and institutions. They include Coca Coca, Visa and Mastercard. Apple is, for now, conspicuously absent from the list, but in its place representing the tech industry is the Bill and Melinda Gates Foundation. Also on the list are the Citi Foundation, the US Agency for International Development (USAID), and the World Saving Banks Institute, which represents 7,000 retail and savings banks worldwide.
Member institutions range from powerful private foundations — including the Ford Foundation and the Clinton Development Initiative — to a bewildering alphabet soup of UN organizations, including WFP (the World Food Programme), UNFPA (the UN Population Fund), UNPD (the UN Development Program), IFAD (the International Fund for Agricultural Development) and UNCDF (the UN Capital Development Fund).
But it’s BTCA’s member governments that matter the most, for it is they who will ultimately be (and in some places already are) bending the laws and traditional practices of their lands to “accelerate the transition from cash to digital payments.” So far, 18 governments have joined the Alliance, all representing developing or emerging economies, including Uruguay, Colombia, Peru, Mexico, the Philippines, Bangladesh, Pakistan, Afghanistan, India, Papua New Guineau, and Moldova.
The remaining seven — Liberia, Senegal, Sierra Leone, Rwanda, Ghana, Benin and Malawi — are all in Africa, a region that is on the front line of the global war on cash. Thanks to the surge 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. As Bill Gates himself wrote, once the system is well established, some of it will “trickle up” to developed countries.
The system of which Gates speaks is already under construction. In Africa’s most populous nation, Nigeria, the government has 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 – and all their personal and biometric data.
For countries that are lagging behind, BTCA has just published a report mapping out the top ten ways governments and companies can create digital economies, including “developing a unique identification program”, “digitizing government payments and receipts”, and “implementing policies that incentivize and improve the convenience of digital payments.”
The transition to a 100% cashless society will not only enormously benefit BTCA’s members, it will also “drive inclusive growth, helping people lift themselves out of poverty,” says BTCA’s managing director, Ruth Goodwin-Groen. According to a new report by Mckinsley, digital finance could lead to a $3.7 trillion GDP boost by 2025, create 95 million new jobs across all sectors, and save $110 billion annually in “leakages” in emerging countries.
All of which sounds incredibly impressive, if it were actually true. In the BTCA’s version of the future, all that’s needed to transform developing economies into developed economies is to provide their poorest people with more banks and greater access to banks, while ridding them of the grey economy on which they depend. Once the downtrodden have unbridled access to digital transactions (and the iris, fingerprint and vein scans that will accompany them), empty bellies will automatically be filled.
The reality is a whole lot darker. The war on cash is being waged for the exclusive benefit of those who already wield an inordinate amount of power and control over the economy and the people that are struggling in it. And they want more. By slowly, quietly killing cash, they seek to seize the last remaining thing that offers people a small semblance of privacy, anonymity, and personal freedom in their increasingly controlled and surveyed lives. And the way things are going, they’ll get it. By Don Quijones, Raging Bull-Shit.
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