Cashless transactions are nothing new; they are part of the fabric of modern society. Online bill paying, credit cards and our phones allow us to make transactions without touching paper money. But, is a totally cashless society something we should embrace or should the idea alarm us?
The move toward a cashless society has been promoted on the basis of convenience and credit. Besides, bad guys such as tax cheats, drug dealers and terrorists use cash to hide their “business” from the government.
To motivate consumers to use them, credit card transaction fees are not charged to the customer but to the merchant. Of course, this is only an illusion since these costs get reflected in the price a merchant charges a consumer, even if that consumer uses cash. Banks offer online services for free because it is cheaper than processing paper checks.
It is important to note that in a paper money transaction between two individuals that involves a single currency there is no possibility for a “middle man” to take a cut. Similarly, the government cannot apply negative interest rates to cash that you stuff in your mattress. They also cannot track it, tax it or control it.1
Cash is a thorn in the side of central banks that want to employ negative interest rates. The mere existence of paper money means there is a limit to how low negative interest rates can go because it always provides an option to take money out of the banking system.2 When the cost to use banks becomes too onerous people will simply choose to use cash and stop using banks despite the inconvenience.
Is there evidence that banning cash is even a remote possibility? Consider this:
- Nearly 40% of Danish use a Danske Bank app for payment via smart phone. A cashless society is “no longer an illusion but a vision that can be fulfilled in a reasonable time frame.” – Michael Busk-Jepsen, executive director of the Danish Bankers Association 3
- Only 30% of Nigerians have a bank account. To remedy this situation, Nigeria (with the help of MasterCard) launched a biometric national ID card that will be used as a payment card.4
- Banks are pushing for a ban on cash (to ostensibly inhibit tax evaders and money launderers) in Norway where purportedly only 6 percent of the people use cash on a daily basis.5
- France’s finance minister has declared cash and anonymity to be the enemy in the fight against terrorism.6
However, bringing about a cashless society won’t be easy. There are still significant numbers of people who would oppose it, both in and out of government. Ninety percent of Americans still use cash on a daily basis.7 Even in Scandinavian countries, government officials are concerned about privacy. In countries like India the move to a cashless society would not be easily accomplished because electronic transactions represent a very low percentage of all financial dealings and silver and gold ownership is commonplace. Nevertheless, there are people in positions of power and influence around the world who continue to press forward with the agenda.
Other convenient forms of storing wealth outside of the banking system will also be targeted. Gold, illegal to own in the U.S. between 1933 and 1974, will likely be made illegal once again. The government can also cause the inflation it covets by setting the price of gold it confiscates arbitrarily high. This has happened before. In 1934, the U.S. government adjusted the price of gold from $20.67/ounce to $35/ounce.8
Christians know from reading the book of Revelation that one day authoritarian control of the ability to buy and sell will be used against them. Whether financial repression as practiced today will play a role in shaping a world in which such control would be possible remains to be seen.
In the near term, financial repression is here to stay. That’s because despite how they have bungled the economy, those in power truly believe they can manage our lives better than we can.
Evil Disguised as Benevolence
In an effort to address the abuses that occurred in the financial industry leading up to the 2008 crisis (and there were many), the Consumer Financial Protection Bureau (CFPB) was formed. This agency now seeks to protect confused seniors and their IRAs from unscrupulous financial advisors who lead them into risky and fraudulent investments.9 In order to protect us, the CFPB is amassing a huge data base of our financial habits.10 It seems to me that they want to go beyond the God-given mandate for government to restrain evil11 in the marketplace. They want to direct it. So, instead of acting like a police officer who pulls you over to give you a ticket for running a red light, they act like a police officer who wants you to move over and let him drive.
Some people fear that this will all eventually lead to Americans being forced to buy low return government bonds with their retirement savings thus turning the nation’s IRA accounts “into a $20 trillion ATM for the government.” 12 Rather than simply performing its role to catch and punish the bad actors in our economy, it seems as if the government, when it comes to wicked wealth transfers, only wants to get rid of its competition.
Convenience always has a price tag associated with it. In our world, not only do the modern-day money changers charge fees for the convenience we enjoy, but we pay an even higher price as measured in the loss of privacy and loss of personal control of our finances. Even without considering more sinister outcomes, Christians viewing this from a stewardship standpoint should conclude that the move to a cashless society is not something to embrace and that financial repression is not something we should allow to stay hidden. At least not as long as we live in a free society.
1) “The Death of Cash”, Peter Coy, Bloomberg Businessweek, April 23, 2015
3) “This could be the first country to go cashless” by Virginia Harrison, June 2, 2015 CNN Money
4) “MasterCard targets Africa governments in new growth strategy”, October 12, 2015 Lilian Ochieng, Daily Nation
5) “Norway’s Biggest Bank Calls for Country to Stop Using Cash”, Abigail Abrams, January 22, 2016, International Business Times
6) Fighting the “War on Terror ” by Banning Cash, Joseph T. Salerno, June 22, 2015
7) “One in 10 Americans don’t carry paper money anymore” CNBC, May 12, 2014, CNBC.com staff
9) “Senior Designations for Financial Advisors” Consumer Financial Protection Bureau
10) “Richard Cordray and the CFCB Are Monitoring Your Banking Habits”, Carter Dougherty, April 25, 2013, Bloomberg Business
11) Romans 13:4
12) Economist George Gilder quoted in the article “Financial Repression From the Obama Administration: How Savers May Be Forced To Buy Federal Debt” by William Tucker, Forbes, Dec. 23, 2013