The decades-long push for the elimination of cash by central bankers, globalist think tanks, politically motivated authors and film producers, the ‘news’ media, even toy companies, has been growing in intensity over the last few years. To counter it and keep the right to use cash, one must (in addition to using cash whenever possible) understand the three main tricks of anti-cash propaganda: references to reduced cash usage (where regional anomalies are misrepresented as a global trend), promises of increased security and convenience from non-cash payment methods (when card or phone payment would mean a reduction of both), and reminders of the use of cash for illicit purposes (when the most serious corruption and crime has long been committed with primarily non-cash value transfers).

 

Is cash really on the decline?

Not paying in cash has significant popularity in only three areas that comprise less than 6% of world population: Scandinavia, where 25% of transactions are in cash, and to a much lesser extent in the UK, US, and Canada. Scandinavian countries represent only 2% of the European population and 0.2% of the world population. In the US and Canada, as well as the UK, together another 5.6% of world population, the share of cash transactions is also relatively low (around 50%, not accounting for unreported transactions), though it has increased in recent years.

Cash use elsewhere remains high, and in most places has risen from where it was 5 or 10 years ago. In Germany, Switzerland, and Austria, it accounts for over 80% of transactions, and more than 90% of small purchases. In France and southern and eastern Europe, the share is around 70%. In poorer pockets of Europe, virtually 100% of any but large purchases, and sometimes even those, are in cash. Australia and New Zealand stand at about 65% of transactions. From my limited knowledge of Latin America, Africa, and Asia, cash usage there can overall only be as high as or higher than in Europe, including in Japan and other East Asian economies where cash reigns. These high percentages of transactions understate usage since they only account for known transactions, when many cash sales go unreported; a study in Norway found that 60% of cash exchanges could not be accounted for by the country’s central bank. (1)

Even the anti-cash ECB (European Central Bank) admits in a little-referenced 2014 report, parts of which were re-published by the Federal Reserve, that ‘there is a surprising resilience of cash in the 21st century for the selected group of industrial countries [for this report, Australia, Austria, Canada, France, Germany, the Netherlands, and the US]. In most of these countries, the ratios of currency in circulation (CIC) relative to nominal GDP generally declined at least through the 1980s or even early 1990s. Since then, however, these ratios have stayed flat or even increased.’ Of those countries, among the wealthiest countries in the world and longest exposed to card payment, the lowest rate of cash use was 46% of transactions (US), while the highest was 82% (Austria and Germany). Canada and Australia measured at 53% and 65% respectively. The report also found that younger people in the US have been using cash at an increasing rate and higher rate than older people.

The report concluded as follows: ‘Many have predicted and espoused the view that cash is increasingly disappearing as a payment instrument. However, to paraphrase Mark Twain, we would say the reports of the death of cash have been greatly exaggerated. This paper shows that in all seven countries considered, cash is still used extensively- particularly for low-value transactions. In some European countries such as Austria and Germany, cash even dominates consumer payment choices for all transaction values.’

Because of their especially low cash use, almost all references to a reduction in cash payment, which are then misrepresented as a global trend, come from Sweden, Norway, and Denmark. Why are they alone in this regard? The main reason must be that a large segment of the population has unusually high satisfaction with and trust in government. There is also a wider belief in those countries in the right and practical ability of the people to unseat a government that would abuse them. Most other nations, on the other hand, have significant, if not fatalistically complete, mistrust in their governments. The average world citizen views most national-level politicians as cronyist sellouts who will crack down if their power or that of their sponsors is threatened. Accordingly, he and his trading partners are loath to forfeit their economic agency and give the government and corporate establishment any more power than they already have.

Outside of Scandinavia, card use is static or declining. Many establishments vocally, even proudly, refuse credit cards. I’ve noticed the same trend in the US, albeit in a less pronounced way, particularly in businesses like restaurants and barber shops. After all, who wants to give up 2 to 4% of gross revenue to banks that pay them no interest and riddle them with fees? Even if merchant processing fees became negligible, unlikely due to the ‘quadopoly’ of the major card networks, credit card processing slows the cash flow of businesses and presents the risk of fraudulent chargebacks, among other disadvantages.

Why banks and governments hate cash; the link between the anti-cash agenda and staged terrorism

The war on cash is being fought primarily by banks, particularly central banks, the corporations they own, and the ‘news’ networks that represent their interests. Banks hate cash for three main reasons. The first is that when money is in the bank and not in your hand, they can lend up to ten times its value through the fractional reserve system, though at base all money (i.e. debt) is created out of thin air by the sale of new debt and not ultimately dependent on the storage preferences of individuals. The second is that if a bank makes bad loans and becomes in danger of failure, account holders can take their money out of the bank, exacerbating the bank’s problem. Historically banks respond by locking their doors and freezing accounts so that the bank’s shareholders and creditors can steal whatever deposits are left. The third reason is merely a confluence of interest. Governments do not like cash for a variety of obvious reasons, and banks control most governments.

Other than an outright ban, governments and banks have a few ways of reducing cash usage, all of which have been attempted in different countries. One is to economically inhibit cash payment by instituting higher fees for ATM withdrawals, and charging a fee for withdrawing or depositing cash at banks. Another is instituting onerous reporting requirements for large withdrawals or making them illegal altogether. The third, already mentioned, is using propaganda to psychologically discourage using cash.

Without the ability to hold cash, your savings can be raided at will for bank bail-ins or any other emergency of the day. Government can inflate away your purchasing power while leaving you unable to move your money elsewhere, or increase income, VAT, and point-of-sale taxation to whatever rate they like: whether 30%, 50%, or 80%. Banks would be free to speculate and remain immune from failure or even losses, thanks to ‘rescue packages’ (or more recently in the media parlance of the Greek debt crisis, simply ‘deals’) funded straight from your account.

When it comes to linking cash to illegal activities, the second main stratagem of anti-cash propagandists, they invariably invoke at least the first three of the Four Horsemen of government bans – terrorist, drug-dealer, money-launderer, and child pornographer – which are used to justify any ban on the basis that the to-be-banned thing is aiding the work of one of those criminal types. For examples of this with cash, take these two recent articles, ‘The Case for Retiring Another Barbarous Relic,’ and ‘Bring on the Cashless Future‘ that each invoke three. Or this ‘Homeland Security’ PSA (cash-related parts are at 2:28 and 7:55) that focuses on terrorism. (In the DHS video, a hotel receptionist calls the FBI tip line on a guest for paying in cash, yet in most countries of the world, at the average hotel and not just 5-star chain hotels, the majority of guests pay in cash). Unsurprisingly, the articles universally ignore the vast amount of crime and corruption perpetrated using non-cash exchanges (see below).

The manufactured menace of terrorism is closely linked in particular to the drive to outlaw cash, due to the specter of terrorism’s deeper penetration into the average person’s psyche relative to fear or concern over money laundering and drug dealing. A common notion is that the goal of the counter-fake-terrorist police state is to monitor you, control you, and keep you in fear. That’s true, but what’s the use of watching and scaring people if they’re not working for you, or at least making you some money? The real purposes of staged terrorism are twofold: to provide an excuse to surveil and potentially neutralize non-terrorist opponents and critics of the government, and if you are not a critic of the government, to provide an excuse to surveil your money, and eventually (attempt to) corral all of it within a digital, easily monitored system and ban physical cash. Everyone will ultimately be targeted in one way or another. The more that people keep their heads down and surrender their liberties now, the greater willingness they show to be abused, the harder they will be hit later.

Commentator Max Keiser coined a term for this potential state of affairs as the ‘casino gulag’: banks and governments gamble and waste, and citizens, (believing they are) powerless to organize a revolt, either pay the tab or go to Guantanamo. In the Casino Gulag, the police state is above all a tool to protect the ill gotten gains of the political and financial elite from popular redress, and more importantly, to lock in revenue from their future subjects.

The anti-cash interests seek nothing less than a return to feudalism: a guaranteed cut of every citizen’s annual ‘crop,’ whether or not his revenue exceeded his costs, the abolition or heavy restriction of private property, and the limitation of movement, like they had in the old days. More than that, they want complete control of the supply, value, and movement of all money. They are not free-marketeers, but elitist, self-styled aristocrats who disdain entrepreneurship, free commerce, private property ownership, and economic and political independence for the masses. To them, we are still serfs whose sole purpose is to serve our masters, and to their chagrin cash provides us the option to disengage from that role to some degree.

Using the ‘war on terror’ to try to eliminate cash is only a new method to accomplish the old objective that political elites have had since the days of the Egyptian pharaohs: for the given ruling group to gain more secure power over a greater number of subjects, in order to maximize their ‘cut’ of those subjects’ production and minimize risk of popular rebellion. In a world where lip service has been given to the values of individual political rights and economic independence, more creative ways of carrying out the normal business of imperialist rulers (waging war and shaking down subjects), methods that now require getting the (apparent) consent of the ruled, need to be devised regularly. For more on how this process works in modern times, see Renaissance 2.0.

 

Banning cash would not increase convenience, eliminate crime, prevent losses, or improve security

The above-linked Bloomberg piece giddily describes cash as ‘dirty and dangerous, unwieldy and expensive, antiquated and so very analog.’ Few people I know think of cash bills in their hands as dirty, unwieldy, expensive, or antiquated, and the last I checked most of life is analog, not digital. We eat real food, have relationships with real people, drive real cars, live in real houses made of physical materials. Why should our money be different? The only one of these charges that deserves a response is the notion that cash is dangerous, or promotes serious crime and political corruption by way of bribery.

Nevertheless, to briefly address the charge of inconvenience, cash payment has lately gotten more high-tech, with an increasing number of registers automatically giving correct change, and newer registers taking cash payments via slots for bills and coins, and returning both bills and coins to the customer as change in less time than it take to process a card. Propagandists frequently cite the speed of non-cash transactions in comparison to cash. I dispute this. Passing a bill and receiving change is on average faster than scanning a card once or a few times, entering your PIN, answering a bunch of questions, waiting for the processing and printouts, and signing the receipt, especially since the advent of automated change calculators and dispensers.

Contrary to the aforementioned articles, banning cash would do little to nothing to stop serious political corruption or fraud. There are myriad ways for favors to be exchanged and fraud to be committed that do not involve cash notes: speaking fees, consulting fees, do-nothing directorships and other sham salaried positions, cushy tax, regulatory, or law enforcement treatment to the point of exemption, government land or money grants, foreign aid funneled to private corporations, ‘public-private partnerships,’ special interest rates or other terms on loans, sweetheart deals on real estate, private equity, and other property, campaign and Super PAC contributions, no- or closed-bid contracts, inside stock information, ‘business trip’ luxury vacations, lobbyist expense accounts, and corporate entertainment expense accounts, just to name some of the more obvious methods. Cash in an envelope is for the little people; the really dangerous criminals at the federal and international level, some of whom are the very people calling for an end to cash, have long moved on to more sophisticated methods and would gain, not suffer, from an end to cash: competition would be eliminated, a lootable tax base widened and made more secure, and a false sense of political correctitude imparted to the public.

Another argument is that physical cash can be easily stolen or lost. The amount of cash that the average person has ever lost or had stolen, or will ever lose or have stolen, is negligible compared to the value appropriated by annual inflation, let alone to the tens of thousands of dollars per household charged by governments for bailouts, or the amounts stolen from depositors by banks in ‘bail-ins’ in Cyprus, Argentina, and maybe soon in Greece. Eliminating cash would dramatically increase the moral hazard for banks that gamble since more money would be available to steal from depositors in the case of a loss, and governments would have less trouble taking from citizens to pay for bank and corporate bailouts. It also opens the door for negative interest rates, where the bank steals a percentage of your balance on a monthly basis, have been implemented in many European central banks since last year and publicly discussed this year by the Federal Reserve. Instituting negative interest rates is much more difficult when people can choose to store money outside banks.

Lastly, anti-cash interests argue that using a card is more secure than carrying cash, and that using a smart phone or fingerprint to pay would mean even greater security. Unless you live in a very dangerous neighborhood, there is little chance of getting robbed of cash. Most of the fatal robberies I have heard of recently, especially those outside dangerous neighborhoods, involve the victim not being robbed of his cash and killed, but being kidnapped or subjected to a home invasion, driven to an ATM multiple times, and then executed. If there is no intention to kidnap, you are probably better off giving up cash to an armed robber than frustrating him by having none. Even if one believes there is less robbery risk with card use, is whatever increased security you believe you are getting worth paying 2 to 4% more for all your goods and services?

In cases of card theft or fraud, issuing banks typically reimburse the cardholder, but considering this to be a no-loss situation, which I myself have been guilty of, is a delusion. When a loss is reimbursed, the cost of the fraudulent purchase is incurred by either the vendor or the issuing bank. Both the annual customer reimbursement costs to card issuers and the anticipated chargeback loss to vendors are built into the price of merchant processing or banking services and of the retail product respectively, and passed on to all consumers at a mark-up.

The privacy-destroying smartphone payment methods that governments and banks salivate over are even less secure than cards. If cash is lost or stolen, the loss is limited to that cash, and there is no identity theft risk. If cards are used fraudulently, there is generally no immediate loss incurred by the cardholder (assuming he is able to detect the fraud in time), but all consumers including that cardholder are later punished equally and made to bear their share of the cost of all card fraud. Once the card is reported stolen and replaced, exposure to identity theft ends. Having a hackable smartphone stolen and used for fraudulent payments would leave you open to the same or greater loss, plus the cost of the phone. A rise in smartphone payment would make your phone much more likely to be targeted for theft and hacking and more likely for you to be targeted for mugging or robbery.

Biometric payment, an unholy grail of banks and governments, presents the highest risk in both financial loss and identity theft. If a company has your fingerprint or iris pattern, that information can be hacked, and with technology like 3D printing, easily duplicated. Since you only get one body, you could never free yourself from the consequences of biometric identity theft. It would be harder to prove it was not you who committed fraud and the seemingly high level of security would likely allow for larger amounts to be stolen in one go, with lower chance of recourse and reimbursement. With your personal biometric data in the hands of private corporations, it could be sold or ‘shared’ legally via murky privacy policy agreements, transferred in corporate acquisitions, stolen by company insiders, or hacked by criminals. You could even be framed for a crime or have crimes committed using your biological identity. Does anyone trust claims of airtight security when the supposedly most secure of entities, like the NSA, are repeatedly compromised? IT security professionals are quick to remark that the most overblown and overused of all technology marketing claims are those of uncrackable encryption and hackproofing.

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In spite of the regular broadcast of anti-cash and pro-smartphone-payment messages in major news networks, Hollywood TV and movie productions, airports, government offices, and mega-chain stores, cash continues to be widely and readily used and accepted. The inevitability of cashlessness is a myth that has its only basis in the fantasies of political and financial elites, conveyed to us via propaganda, and the misrepresentation of anomalous Scandinavian payment habits as a global trend. Going cashless isn’t cool, isn’t better, and isn’t the future, and that’s the evidence speaking, not me. Physical money does what we currently want it to do perfectly well. If we ever move to a world largely without cash, it should and will be a voluntary change made by small, individual communities, not greased into society by the media and enforced by monolithic states.

As with most political agendas, discouraging and banning cash payment is about helping the powerful who control the government and hurting the ordinary citizen who does not. If you want to make a difference socially and politically but aren’t interested in speaking out or engaging in activism, one way is to pay in cash whenever you can, and patronize independent businesses wherever possible. By doing so you are undermining the push for a cashless society, reducing transaction costs for businesses and thereby reducing your own retail costs, and increasing your own privacy and that of the person with whom you are dealing. While electronic payments certainly have their place on the internet, it is critical to human freedom to maintain and nurture the ability to at least sometimes hold wealth in our own hands, not entrust it to faceless bankers and bureaucrats in far-off places.