By all accounts the authorities don’t like cash: it fuels the grey economy, reduces the tax take by allowing people to hide undeclared income, and makes it easier for terrorists, criminals and drug dealers to carry our their dastardly deeds. Cash is also expensive to transport and store, and is not very secure – you can easily lose it, it can be forged and it can be stolen.
And so in recent years, reports pop up from time to time telling us that we would be better off without cash. Norway, Denmark, Sweden, China and the IMF have all promoted the idea of a cashless society. You may remember India actually banning the use of high value bank notes last November. Even Andy Haldane, the Bank of England’s Chief Economist, has floated the idea of replacing cash with a digital currency – one benefit he says is that it will allow central banks to impose negative interest rates as a way of stimulating the economy in times of stress.
However, for a growing number of people, therein lies the rub.
They feel uneasy about the level of control that this would give to governments. Without cash, they say, governments could ‘encourage’ us to spend by imposing negative interest rates on private bank deposits, or by introducing fees and charges on cash transactions. They could see what we are spending our money on, and there would be no hiding place at all for those unfortunate customers of ‘bust’ banks that need to be recapitalised (think Argentina in 2001, Denmark in 2011, Cyprus in 2013…)
Others are dubious about the security argument against cash, and they may have a point. You only have to think about the exponential rise of computer ‘ransomware’, and the staggering sums lost to hacking and assorted scams to know that crims and terrorists are doing very nicely now that they don’t have to bother about stealing our cheque books, or breaking into bank vaults.
If the doubters are right then public opinion will be our best form of defence. So will we be better of with cash, or without it? Answers on a postcard please…
In case you missed it, here is the article we first used in 2015, which we reproduced with the kind permission of Bill Bonner [emphasis ours]
