Cash Pressure Instrument
Pfäffikon SZ, Switzerland – In recent months the discussion surrounding the abolition of cash has picked up steam. Now that central bankers have pushed interest rates into negative territory, the fear is that citizens will withdraw their money in increasing amounts to stuff under their mattresses. In addition, so-called bank runs cause undesired monetary problems as we were witness of in Greece recently. Not to mention banning black money and criminally obtained funds. Commercial banks hate cash because they view it as an extremely expensive millstone around their necks.
Drop
Cash has existed for thousands of years and according to many it will never disappear. Having said that, the use of cash has continued to decline. Powerful lobby groups have been trying for many years to quash the use of cash, and not without results. For the alternative is not only cheaper, it also stimulates consumer behavior. The perception of value for money disappears which leads to consumers spending more than they would have done if they would have had to physically pull it out of their wallets. It is notable that an increasing amount of stores has made the use of cash impossible under the guise of vague environmental and safety concerns. As if the seasoned cybercriminals would be sleeping.
Anonymous
Cash allows you to move around anonymously, which is a great thing. It is a financial form of freedom of speech. As you know, governments hate uncontrolled money flows. Those in power would like for nothing more than to glance over your shoulder, especially when it comes to your finances. That you would have nothing to hide is a weak argument. The argument is that your data does not fall into the hands of persons or institutions that have nothing to do with the ins and outs of your finances. This could lead to precarious situations that would make possible environmental and security concerns pale in comparison.
Control
The abolition of physical money gives monetary policy makers and governments complete control over the financial system. But the tax authorities also reap the benefits. In a world without cash those that wield power, with the press of a button, can disconnect you from society, which would backfire. Banks have a complete hold over your finances and can at any given moment have a financial ice age descend upon you. Wringing of the citizen in this case becomes a walk in the park.
The decline in the use of cash can no longer be halted. In and of itself this is not a bad development. However, complete abolition of cash is currently a step too far for yours truly. Perhaps a course in advanced bartering is a good idea in order to be prepared for a cashless society.
It remains for me to wish you a good weekend.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in the above shares and has no intention of doing so in the next 72 hours.
