By Don Quijones, Spain & Mexico, editor at Wolf Street. Originally published at Wolf Street
In January 2017 the European Commission announced it was exploring the option of imposing upper limits on cash payments, with a view to implementing cross-regional measures as soon as 2018. To give the proposal a veneer of respectability and accountability the Commission launched a public consultation on the issue. Now, the answers are in, but they are not what the Commission was expecting.
A staggering 95% of the respondents said they were opposed to a cash ceiling at EU level. Even more emphatic was the answer to the following question:
“How would the introduction of restrictions on payments in cash at EU level benefit you, or your business or your organisation (multiple replies are possible)?”
In the curious absence of an explicit “not at all” option, 99.18% chose to respond with “no answer.” In other words, less than 1% of the more than 30,000 people consulted could think of a single benefit of the EU unleashing cross-regional cash limits.
Granted, 37% of respondents were from Germany and 19% from Austria (56% in total), two countries that have a die-hard love for physical lucre. Even among millennials in Germany, two-thirds say they prefer paying in cash to electronic means, a much higher level than in almost any other advanced economy with the exception of Japan. Another 35% of the survey respondents were from France, a country that is not quite so enamored with cash and whose government has already imposed a maximum cash limit of €1,000.
By its very nature the survey almost certainly attracted a disproportionate number of arch-defenders of physical cash. As such, the responses it elicited are unlikely to be a perfect representation of how all Europeans would feel about the EU’s plans to introduce maximum cash limits. Nonetheless, the sheer strength of opposition should (but probably won’t) give the apparatchiks in Brussels pause for thought.
Respondents cited a number of objections to EU-wide cash restrictions, chief among them the convenience of using cash and the limited impact the measure would probably have on achieving its “stated” objectives of curbing terrorism, tax evasion, and money laundering. Of course, there are many other reasons to worry about living in a cashless (or “less cash”) society that were not offered as an option in the survey, including the vastly increased power it would give to political and monetary authorities as well as the near-impossibility of ever escaping from the clutches of the banking system or central banks’ monetary experiments.
The biggest cited concern for respondents was the threat the cash restrictions would pose to privacy and personal anonymity. A total of 87% of respondents viewed paying with cash as an essential personal freedom. The European Commission would beg to differ. In the small print accompanying the draft legislation it launched in January, it pointed out that privacy and anonymity do not constitute “fundamental” human rights.
Be that as it may, many Europeans still clearly have a soft spot for physical money. If the EU authorities push too hard, too fast in their war on cash, they could provoke a popular backlash. In Germany, trust in Europe’s financial institutions is already at a historic low, with only one in three Germans saying they have confidence in the ECB. The longer QE lasts, the more the number shrinks.
Bundesbank president Jens Weidmann has already warned that it would be “disastrous” if people started to believe cash would be abolished — an oblique reference to the risk of negative interest rates and the escalating war on cash triggering a run on cash. The IMF has also waded into the debate with a working paper full of sage advice for governments keen on “de-cashing” – as the IMF calls this procedure – their economies against the will of their citizenry (emphasis added):
The private-sector-led de-cashing seems preferable to the public-sector-led decashing. The former seems almost entirely benign (e.g., more use of mobile phones to pay for coffee), but still needs policy adaptation. The latter seems more questionable, and people may have valid objections to it. De-cashing of either kind leaves both individuals and states more vulnerable to disruptions, ranging from power outages to hacks to cyberwarfare. In any case, the tempting attempts to impose de-cashing by a decree should be avoided, given the popular personal attachment to cash.
A targeted outreach program is needed to alleviate suspicions related to de-cashing; in particular, that by de-cashing the authorities are trying to control all aspects of peoples’ lives, including their use of money, or push personal savings into banks.
It basically involves making it easier and cheaper for people to use electronic payment methods while subtly turning the screw on those who would prefer to continue using cash (for perfectly valid reasons, as the IMF itself admits), presumably by making it more difficult and expensive to do so. In many places it’s already happening.
But a surprisingly large number of people still appear to have a strong sense of attachment to physical money, particularly in Europe’s most important economy, Germany. And if the survey is any indication, they have little interest in changing those habits.
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… a surprisingly large number of people still appear to have a strong sense of attachment to physical money…
I don’t think it’s really just that. Direct transactions (cash or barter) make it very clear to both/all parties that complete fulfillment is expected.
By presenting cash, I am in effect saying: with this, you are made whole, and our transaction is complete. Credit card payment, or even a check, require further processing before the seller receives “full” (minus fees) payment.
Even worse, payment channels like insurance (or even single-payer, which is still a third party) can shift the seller’s/provider’s sense of which party must be satisfied.
When the surgeon cuts, they had better be focused on keeping the payer alive. I don’t want them thinking they’ll get paid anyway if the screw up (or think they can judge me as unworthy of their care, which happens), as they might (and apparently sometimes do) when payment actually comes from having filled out a form.
Cash can be difficult to trace, and offers opportunities for fraud. But so do opaque and extended payment systems; the only difference is that the opportunities have been shifted.
In USAmerica, the sense of community is dying (already out cold); the parties to transactions are often complete strangers (and of divergent classes), some may even have come from afar, and have no stake in the local community. In other lands/cultures, where local community is still alive and a valued part of economic (and social) identity, people are still aware of the nuances of their transactions.
You haven’t even mentioned control. A cashless society is not a free society and eliminating cash is just one more step towards control of the population and the primary excuse is the black market; aka criminal use of cash; which can’t be easily tracked by law enforcement.
That’s utter B.S., and a poor reason; but it hides the true motive.
Eliminate cash; gold, silver, and crypto currencies will become even more in use.
Eventually cash will be eliminated regardless the pushback; be prepared…
All these analysis papers assume that the public sector isn’t already controlled by the criminal part. The private sector is partially controlled by the criminal part, but usually when large scale lying, fraud, theft occur, the infected entity dies. Unless it is backed up by free money from the public sector.
We have already seen how the criminal part of the public sector … has the back of important parts of the private sector. Max societal corruption will be reached, complete breakdown, because all elements of society will be part of the criminal sector. Think Mongol Horde.
If the PubliCriminal Sector goes forcible-cashless, then the last refuge for cash-based non-criminals to buy and sell beyond the reach of the PubliCriminal SectorGov will be the cash-based Underground Patriot Markets.
So the PubliCriminal Sector GoverLords would certainly want to outlaw and forbid cash so as to shut down the Underground Patriot Markets. But cash-patriots will only go deeper Underground in their dealings with eachother.
PubliCriminal GoverNarcs will try infiltrating these markets to see who uses cash how. Perhaps the PubliCriminal GoverNarcs will be quietly taken out of sight, killed, cut up and fed to alligators and etc. . . . whenever detected by cash market patriots.
” Citizen! Cash is Criminal! See something? Say Something!”
When cash is outlawed, only outlaws will use cash.
Correct. But why would a government want to criminalize an entire population? If everyone is a criminal, with the only question being, which statute you are in violation of, then you can be picked up arbitrarily and oppressed at will by the authorities. State terror. It is the nature of government, to arrogate to itself the certain behaviors, that if done by non-government, are considered crimes. Counterfeiting for example.
When this is very limited, the people are more free. When this is maximized, the people are crushed. When we are all criminals, the government won’t arrest itself. It is simply that all government people will have a “get out of jail free card” just like the WS bankers. It does matter on whom the criminal law is enforced. The Elite criminals won’t enforce the law on themselves, only on the non-Elite.
In short, we have Nazi or Stalinist government when criminality by the government is maximized, both in how it characterizes the people, and how it exempts itself from State terror. Dystopia is achievable, unlike utopia. The best that can be achieved, is a lesser dystopia.
I like that. “A cashless society is not a free society.”
I agree.
You are supposed to have the right to leave the nation you were born into according to the UN 1976 Covenant on Civil or Political Rights. That Covenant is supposed to have the force of international law. There is supposed to be an enforcement capability from international courts.
Apparently these rights are hard to enforce for all of the world citizens. World citizenship is simply claimed as a de facto citizenship by rich hucksters. Someone like Sir Richard Branson for instance. He has an island.
He may even fly his own flag.
If the government controls all the currency, eliminating money, the only people with cash will be the rich.
Damned right there is no freedom really for those without cash. There was a time when the government couldn’t, or didn’t just reach into your bank and take your money.
Gold is for bribing the border guards is what one writer somewhere wrote. One has the right of self defense most generally, and if you have cash, it is a form of self defense capability.
I knew a pilot who flew freighter airplanes to islands. Poor places where people live moment to moment and the people you see at the airport you may never see again.
He carried 5 thousand dollars cash in his wallet all the time. If you don’t have cash you can’t go to places where people don’t have anything else.
A poor person, say someone who only has cash is more free if they have enough to buy transportation, even if they have to charter a special guy, than a rich person in a poor nation with no cash.
What is the alternative if you have to go? A gun?
So what then, a man with a gun and cash is more free than a man with no cash and no gun.
Some people may think the world is safe and stable and civilized, but it is not, not more than three meals thick was what one of my most criminal friends said.
Cash is King, is what a lot of people have said, and that is not ever going to change.
‘Privacy and anonymity do not constitute “fundamental” human rights.‘
Ho-hum … the Enlightenment has been rolled back. As in feudal times, the peasantry has reverted to being the chattel property of their liege lords in government, who supervise their breeding, education and health care (if any) … for the greater good.
Public education has been a tool in darkening the minds of millions, so that serfdom seems progressive.
Indeed; we are not sovereign.
The neo-feudal is upon us; ho-hum indeed; the masses bow…
When I was a mere sprout–way back when–it seemed that all they talked about in school, on tv, the politicians, was “freedom.” Doubtless a lot of this had to do with the Cold War rivalry. We were free–unlike those other guys.
But there was also a lot to it. As an American you could drive thousands of miles without ever having to show a passport. You could go to Canada or Mexico without a passport. Religious freedom was taken seriously even if atheists were frowned upon. There was racial discrimination and economic exploitation and freedom may have only meant you were free to starve but you were free.
Here’s suggesting that what has made the change is America’s other great love–money. The rise of a super rich oligarchy has made it ever more important to keep the rest of us under control. After being discredited during the Depression and the leveling effect of WW2, the upper classes started to get their mojo back. When Reagan was elected one socialite marveled that it was “ok to be rich again.” When those Soviet rivals then collapsed the uppers no longer had to pretend to care about throwing sops to the lowers much less about freedom. Oligarchy could revert to form.
So yes time for a new Enlightenment. Unfortunately the intellectuals who would lead such a movement all seem to be in thrall to the establishment and our moribund political parties. Perhaps the best the rest of us can do is to maintain our own little corner of freedom. Taking privacy seriously is one way.
Yes, but we got the guillotine
(This live version is a bit edgier than the released video.)
Thank you, Higgs.
Because of this song, I had my elderly mother rapping with me at the nursing home. We were a spectacle.
Despite age, Mom’s still cool.
Thanks again!
Yep. Nothing turns a person into chattel like a free education or medicine for their kid ;)
There is no free lunch. If there is no explicit price, then there is an implicit one. Usually an implicit price is your enslavement. Children get a free lunch by degrees, but less so as they get older. The goal of parenting is to produce non-dependent adults. Failure to do this keeps adults in perpetual childhood … like pre-liberation women, and serfs. People being corrupt, will gladly except a fake free item, in return for their soul. This is the Devil’s bargain. The goal of the State or corporations, to keep people in perpetual childhood isn’t benign, any more than keeping women in perpetual dependency. It is the patriarchy in action.
You seriously have to got be kidding me……or did you forget the /s?
I could give you a sound walloping with facts (which I am sure you would ignore), but I only need have you look at 3rd world countries where the people don’t have access to good healthcare or education…..you think they are more “free” and less “dependent”?
Our first world country does NOT have good healthcare.
I know – I almost added (like us) after 3rd world countries…..
lack of universal healthcare makes people dependent on their jobs (not the only reason as one unusually needs to work to have food and shelter period, but for some a major reason for not retiring at say 62, or switching jobs to an otherwise more promising one etc.). So it’s far more a direct (and directly experienced as such) condition of dependency than a single payer system ever would be.
Only a counterfeiter believes in a free lunch. Government or BitCoin promoter? Liquidity helps you purchase food, but it doesn’t grow it. Read the “Cross of Gold” speech by William Jennings Bryan. It is prophecy. I would take the freedom of 1900 over the slavery of 2000, anytime. My great-grand-parents lost my freedom, before my parents were born.
A proposed added bar to the cage as described by John Berger in his essay ” Fellow Prisoners “.
Video & transcript :
https://www.youtube.com/watch?v=O13oDMvR02Q
https://www.guernicamag.com/john_berger_7_15_11/
Who pays with cash anymore? Just a bunch of grandparents from the AARP! . . . When I go to the lunch place and pay cash I’m like the only one who does! It’s card after card after card. These are probalby Germans who sat around drinking beer and eating sausage when Mel Brook’s Springtime for Hitler was in the theaters!
Some boys kiss me
Some boys hug me
I think they’re OK
If they don’t pay by credit card then
I just walk away
They can beg and they can plead
If they can’t see the light (that’s right)
And try to pay with cold hard cash
They’re always Grandpa Right
Cause we are living in immaterial worlds
And I’m an immaterial girl
You know that we are living in immaterial worlds
And I’m an immaterial girl
-apologies to Madonna
I wished I’d cashed my paycheck
Before I came to town
But I reached into my pocket
Found three twenties and a ten
It feels so good feelin’ good again
— Robert Earl Keen, Feelin’ Good Again
Say grandpa … can ye spare me some cutter for a macchiato?
We toured Iceland last summer. It is virtually cash free. We never exchanged any money for cash in 18 days. You can pay for a soda with a card…no problem.
Iceland is not a good example of banking innovation. It seems to be a laboratory for bad neo-liberal ideas. In the future, you can get anything you want, even without a card. You have this chip in your forehead you see …
Actually, Iceland is a great example of banking innovation. When the banks screwed over the people of the country, the nation actually punished its bankers.
That’s the kind of innovation we could use here in the USA.
That was political innovation of a kind impossible elsewhere. When the Apocalypse comes, perhaps only Icelanders will remain.
Let’s start having cash mob days. Sort of like flash mobs, but with money.
Nice account you have there. It would be a shame something were to happen to it. Now behave and everything will be just fine.
You don’t mind if we use this to bail in this enormous bank, mmm? Of course you don’t.
Human beings are predators … we are not benign. In New Guinea they play the “Friend Game”. You try to become someone’s best friend, with the eventual intent, in the least expected way, to murder your friend. Think of corporations both public and private, engaged in this prehistoric behavior.
And yet human beings developed societies to take care of each other and to protect their weaker members – go figure……
I guess that freedom to kill or be killed just wasn’t as important to humans as survival…..
Being a predator isn’t irrational. Rational predation is the most dangerous kind. We don’t protect the weaker … in general … only those who will be useful to us in the future. It reeks of self interest, and it should.
Being a predator isn’t irrational. . .
I think it’s totally irrational. I don’t walk around in fear that another human “predator” is going to attack me, and I certainly don’t walk around looking to be a predator towards someone else. Psychopaths have their own rationale, which I can’t relate to.
Look in the mirror and say it’s kill or be killed and reflect on the absurdity of it.
Isn’t this pretty much the kiss of death for Modern Monetary Theory (MMT)? Cash is already a minuscule part of the money supply (approximately 3%?) What is the Seigniorage (profit) from creating cashless money? (Creating money is apparently no longer the prerogative of ‘the sovereign’.) Short of something like the American Monetary Act , what is to keep PRIVATE banksters and their wealthy clients from simply creating all the ‘money’ they need to buy up the world’s real wealth?
Let me put it this way: I would consider going cashless if, and only if the electronic accounts which would serve as substitute for cash would be accounts at the central bank, not private banks, with perpetual, 100% guarantee (the central bank cannot go bust), and no fees whatsoever for having an account and performing a transaction through it.
Hell, private banks have the equivalent of electronic cash accounts at the central bank. Why not simple citizens?
Otherwise, forget it. I will keep relying upon cash. By the mechanisms of our society, I am already obliged to entrust too much of my assets to banks, and forced to use their expensive services to move money around.
Yes, using cash minimizes the grift.
yes it does, when “grift” is properly understood as looting by the institutional “shadow”/laundry economy. Which only makes it all the more breathtaking when they repeatedly try to “educate” us (ok, sorry Jens, “reach out”…) to the effect that “cash = black markets/drugs/terrorism/unspecified ‘crime'”.
Not so sure though about Visitor’s suggestion of personal accounts at central banks as an alternative: for a start, which central banks are not already private banks with special legal status? (Genuine, not rhetorical question.) Not those of the UK or Italy for sure (sorry can’t check others while writing this because my useless internet connection will freeze if I try to open a second window). If the Bank of England as formed in the late 17th century can still be considered the model for what became central banking in general, its specific purpose was to create a National Debt allowing private finance to bankroll the state in general and its military adventures in particular. With private finance to benefit many times over from military backing for exclusive looting rights in the Caribbean, North America and eventually India, the South Pacific and Africa. See George Caffentizis, Michael Hudson and many others (sorry again, no links for same reason mentioned above).
Historically true … banking facilitates imperialism and colonization. It still does, under neo-colonialism and neo-imperialism. Large states require an ocean of liquidity to operate. So does warfare. First paper money, and now digital money, greatly facilitate imperialism and colonialism. Internal imperialism and internal colonialism are not new either.
I would never under any circumstances approve a cashless society.
By utilizing your preference for “convenience” they will be acquiring the control and surveillance. Not an equal bargain in any sense of the imagination.
Not a kiss of death, I don’t think. MMT’s assertion that money is grounded in state power still stands. See A Memo From MMT’s Legal Department at New Economic Perspectives. It might be a kick in the teeth to people who expect government to be responsible for the well-being of the lower orders.
Government has always been responsible for the well-being of the upper orders. Monarchy or republic. Authoritarianism or democracy. Always the same. You can change who the upper orders are … sometimes … but not the necessity for the upper orders, or their predation on the lower orders.
Looks like I should give Michael Hudson credit for this. (I confess. I get most of my economic world view from Hudson’s & Frederick Soddy’s work these days.) @Clinical wasteman – here is a good Hudson link: Why the U.S. has Launched a New Financial World War — And How the the Rest of the World Will Fight Back
Perhaps we are drawing too fine a line between government cash and bankster credit? Perhaps government and bankster are the same entity?
As far as I know, the boots-on-the-ground limit to what a bank can do lies in surviving daily clearing. If they have enough reserves, or can borrow enough reserves to get through the daily exchange with other banks and at least break even, then they’re viable.
There was a good article posted here within the last couple of months describing why a bank can’t compete against other banks by cutthroat loan creation. If BankA boosts its loan portfolio way beyond its size (measured by its reserves, ultimately by its deposits) then it gets killed when other banks try to redeem the checks that their customers got from BankA’s customers. The article implied that banks all have to grow together if they grow at all. (Can’t remember the URL.)
That’s probably the post by economist Cameron Murray.
http://www.nakedcapitalism.com/2017/05/bank-competition-myth.html
A cashless society would be another example of the continuing financialization of the economy. When you think about who benefits the most from the cashless society, then you know that it will not be a good thing in the long run. We already have finance in control of a government who may treat all governance as a financial transaction where the most important measure is whether a transaction is risky or beneficial–to the banking system or the governing billionaires, not the people. A murderous prospect at best!
Rentier economy at all levels. VAT at all levels, with taxes going to private parties who dominate the State apparatus.
I would like to make a point no one has brought up. Escrow companies have begun denying wire transfers for “all-cash” payments and have begun requiring the use of cashier’s checks. Why, you ask? Wire fraud.
The hilarious (and ironic) thing about this, is escrow allows the big bank crooks to close and obtain payment without producing evidence (the NOTE) that they have authority to release the debt and convey the property. Why? Cuz electronic transfers of note, and quite possibly double-pledging of notes. So, escrow releases funds and leaves the Seller liable. Escrow, of course, obtains a hold harmless contract.
Sometime soon all this must end. Like Hoggs Boson said: we got the guillotine.
I still find cashier’s checks valuable for mid-sized transactions. Really large ones, I would still do a wire transfer bank-to-bank. But the banks are criminal … so you know they can’t be trusted, and they can’t trust each other. That is what broke down in 2008. Though for presumably systemic reasons, not because of criminal conspiracy.
Let alone the horrifying rentier/surveilling/absolute control of ones income aspect of this, something I don’t see being mentioned near enough in this insane push to a cashless society is the effect of power outages (which appear to be increasing exponentially, many times lasting for days); particularly the effect on those who will not be extended credit when those servers go down. You’d think none of the amoral parties promoting this had never been at a business where customers were told they could make no purchase (OR PAYMENT) because the ‘servers’ were down.
A Cashless Society: what a way to kill off thousands during a Katrina or Sandy Hook type event– no means to purchase protective materials; no means to buy fuel or pay for an evacuation vehicle; no means to purchase food clothing or shelter if one survives the disaster in place.
Pure evil; earth is being run by a death cult.
But there are other problems:
1. Banks are making ludicrous bank fees
2. Small banks and credit unions are under siege from the big banks who control the regulators.
3. There are negative interest rates.
4. Cash also gives the end user the opportunity to protest (ex: withdraw and leave it in your basement – then the only “tax” is inflation).
5. Finally, last but not least, there is the control. Lost of anonymity and civil liberties.
Yeah I can see why the authorities hate cash. It also gives banks the perfect chance to rent seek.
And what happens to a cashless society if it’s financial systems get hacked by Vlad and his mates, or by that whole postcode full of Party employed hackers somewhere in China?
Talk about handing a loaded gun to your adversaries….
Even more stupid than Donald Jr.
We can hope if we go cashless that an EMP event will end the evil species we will have become. You won’t be able to buy or sell, even with the mark of the beast. When you try to get IT help, Vijay in India, with telecom down, will be unable to help you either, since you got rid of all your local IT people.
In a cashless society, when the power goes down, does that mean that the economy ceases to exist? We had the power for an entire State go down recently for about a week. And if there had been no cash for people to get by with? Can your State afford to have no economy for a week? I myself experienced the same six years ago after a major flood here and cash became king again after power and network collapses. Cash is analogue and can be used as is, hand to hand. Digital cash needs electrical power, devices, computer networks, financial institutes, etc. In other words, multiple failure points for which only one has to fail for digital cash to fail.
Our government is now making noises about getting rid of $100 notes because of criminals, terrorists and old-age pensioners. You read that right. Seems that a lot of old people remember the stories their parents told them of how during the depression the government closed the banks for awhile leaving people to sink or swim by themselves. So they keep a wad of cash for emergencies, a reserve if you will. The government wants these oldies to put it in a bank or force them to spend it and put it into circulation “for the good of the country”. I remember an interview with three government financiers on TV from the UK a few years ago where they were openly gloating that by lowering interest to zip, they were forcing people to spend their money. People are not supposed to have any financial reserves it seems.
Sounds like the ECB wants to monopolize cash handling in Europe. Perhaps they’ll monopolize suitcase manufacture as well.
In supposedly targeting social / financial crime and corruption, the Europeans are injuring themselves.
How can any country operate a capitalist economy without preserving bribery when required? It can’t be done. Europe should be focusing on real problems, not these self-destructive suicidal nightmares.
> In the curious absence of an explicit “not at all” option
Ha ha ha!
Every single transaction will have a fee associated with it.
Every single transaction will be documented.
What could possibly go wrong?
The first time Ocwen tried to steal my home, BofA deleted my entire online payment history proving I never missed a payment – and flatly stated it was at Ocwen’s request. Bofa said because it was “their” system they were entitled. Twice after that they claimed a direct deposit was not made. Without cash, you can be bankrupted with a keystroke.