Posted on 08/20/2017 8:40:15 PM PDT by Lorianne
Visa recently unveiled its own offensive in the war on cash. Visa is offering certain merchants a $10,000 reward if they refuse to accept cash in the future.
Not surprisingly, Visas competitor is also part of the war on cash. Mastercard is increasing its efforts to encourage merchants to refuse cash. Heres Bloomberg, quoting the CEO of Mastercard:
Mastercard Chief Executive Officer Ajay Banga has been one of the most ardent supporters of ditching paper currency in the U.S. The 57-year-old first declared his war on cash in 2010.
These private efforts by Visa and MasterCard exist side by side with official efforts to eliminate or discourage the use of cash coming from governments in India, Australia, Sweden as well as the United States.
These efforts are always portrayed in the most favorable light. Private parties talk about convenience and lower costs. Governments talk about putting pressure on tax cheats, terrorists and criminals.
Governments always use money laundering, drug dealing and terrorism as an excuse to keep tabs on honest citizens and deprive them of the ability to use money alternatives such as physical cash and gold.
But the so-called cashless society is just a Trojan horse for a system in which all financial wealth is electronic and represented digitally in the records of a small number of megabanks and asset managers.
Once that is achieved, it will be easy for state power to seize and freeze the wealth, or subject it to constant surveillance, taxation and other forms of digital confiscation.
The war on cash has two main thrusts. The first is to make it difficult to obtain cash in the first place. U.S. banks will report anyone taking more than $3,000 in cash as engaging in a suspicious activity using Treasury Form SAR (Suspicious Activity Report).
The second thrust is to eliminate large-denomination banknotes. The U.S. got rid of its $500 note in 1969, and the $100 note has lost 85% of its purchasing power since then. With a little more inflation, the $100 bill will be reduced to chump change.
Last year the European Central Bank announced that they were discontinuing the production of new 500 euro notes. Existing 500 euro notes will still be legal tender, but new ones will not be produced.
This means that over time, the notes will be in short supply and individuals in need of large denominations may actually bid up the price above face value paying, say, 502 euros in smaller bills for a 500 euro note. The 2 euro premium in this example is like a negative interest rate on cash.
The real burden of the war on cash falls on honest citizens who are made vulnerable to wealth confiscation through negative interest rates, loss of privacy, account freezes and limits on cash withdrawals or transfers.
The whole idea of the war on cash is to force savers into digital bank accounts so their money can be taken from them in the form of negative interest rates. An easy solution to this is to go to physical cash.
The war on cash is a global effort being waged on many fronts. My view is that the war on cash is dangerous in terms of lost privacy and the risk of government confiscation of wealth. India provides the most dramatic example.
How would you like to go to bed one night and then wake up the next morning to discover that all bills larger than $5.00 were no longer legal tender? Thats essentially what happened in India not long ago.
The good news is that cash is still a dominant form of payment in many countries including the U.S. The problem is that as digital payments grow and the use of cash diminishes, a tipping point is reached where suddenly it makes no sense to continue using cash because of the expense and logistics involved.
Once cash usage shrinks to a certain point, economies of scale are lost and usage can go to zero almost overnight. Remember how music CDs disappeared suddenly once MP3 and streaming formats became popular?
Thats how fast cash can disappear.
Once the war on cash gains that kind of momentum, it will be practically impossible to stop. Thats why Im always saying that savers and those with a long-term view should get physical gold now while prices are still attractive and while they still can.
Given these potential outcomes, one might expect that citizens would push back against the war on cash.
But in some places, the opposite seems to be happening.
A recent survey revealed that more than a third of Americans and Europeans would have no problem at all giving up cash and going completely digital.
Specifically, the study showed 34% of Europeans and 38% of Americans surveyed would prefer going cashless.
Notably, Germans are the most resistant to going cashless. Almost 80% of transactions in Germany are done in cash, and many Germans never use credit cards.
The German experience with hyperinflation after WWI and additional monetary chaos after WWII certainly plays a part in this resistance to the cashless society.
Incidentally, the German word for debt, schuld, also means guilt.
Other countries, such as Romania and Bulgaria, which have recent experiences with currency and financial crises, also tend to use cash extensively.
Of course, theres no denying that digital payments are certainly convenient. I use them myself in the form of credit and debit cards, wire transfers, automatic deposits and bill payments.
The surest way to lull someone into complacency is to offer a convenience that quickly becomes habit and impossible to do without.
The convenience factor is becoming more prevalent, and consumers are moving from cash to digital payments just as they moved from gold and silver coins to paper money a hundred years ago.
But when the next financial panic comes, those without tangible wealth will be totally at the mercy of banks and governments who will decide exactly how much of your own money youre allowed to have each day.
Just ask the citizens of Cyprus, Greece and India who have gone through this experience in recent years.
It will come to the U.S. soon enough.
Other dangers arise from the fact that digital money, transferred by credit or debit cards or other electronic payments systems, are completely dependent on the power grid. If the power grid goes out due to storms, accidents, sabotage or cyberattacks, our digital economy will grind to a complete halt.
Thats why its a good idea to keep some of your liquidity in paper cash (while you can) and gold or silver coins. The gold and silver coins in particular will be money good in every state of the world.
I hold significant portion of my wealth in nondigital form, including real estate, fine art and precious metals in safe, nonbank storage.
I strongly suggest you do the same.
Good posting, Lorianne. Thanks for posting it all.
My only credit card purchases are for major appliances, expensive car repairs or travel/hotels. I’ve been running otherwise on cash for about 45 years.
I used to withdraw $5000 for 2-3 day trips to Vegas several times a year with no questions from my bank. Would I be able to do that today, based on what this article stated?
I spend $700-800 cash a month just at my local grocery store, which gets all of it, instead of having reduced revenue because of the fees the CCs charge to the merchants for the use of their cards.
Many merchants also give a discount for paying with cash.
We told our youngest to always have $20 in his wallet and he was like, Why?
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I’m 75 and have had $20 in rolled pennies in a small bank bag in the trunk of my car for decades. Probably need to increase that to $200 now, in case of a tow or gas problem on the road.
The credit card companies can't charge their exorbitant interest rates when you use cash.
"Cashless society"? Greed; raw, sinful GREED!!!
“The good news is that cash is still a dominant form of payment in many countries including the U.S.”
Is this really true? Some companies now charge you a fee for paying by cash or check. My social security payment is made on a card. I don’t use cash often. And I doubt rich people ever
use cash.
Did William Devane write this?
But there are security cameras.
I was at a dollar store recently with my daughter and the cashier asked debit IR credit. My daughter said cash. The cashier looked confused for a second.
It’s stalemate with me.
The medical community and joint big tire/big front end alignment/DOT alliance does a great job of torpdeoing me routinely it seems.
Insurance sends me randomly generated bills for whatever I’ve had done and paid for already or so I think.
Just when I think I’m free of paying whatever, the lousy roads in SC knock my front end out of line causing a tire to wear prematurely so I can buy a new one and get re-aligned.
Not that I’m conspiracy minded or anything.
That $2500 that the wun promised would help a lot.
As far the fixer-upper jeeps and blazer, I could buy a wheel one week and a tire the next week starting now and have them all fitted out by Christmas. I detest rust and won’t run chrome wheels.
The CJ7s originals are in OK shape. K5’s are a rusted red just like the paint.
Tires are insane. Batteries right behind them.
That's what they make banks for. There's one right next door.
You missed the point entirely, or so it seems.
I think not. Debit works pretty well, checks suck.
No joke. Here’s the thing—if you are in business, it is your job (or part of your job) to make it easy to get paid, not harder, like has happened with these stupid chip readers.
or not
The only cash payment I make using paper money is to my barber.
They are still around. You can get a worn-out $500 for $550 and a $1000 for $1100. A bill in better shape will cost more than one in worse shape. You can deposit them in a bank at face value and they will send it in to the Federal Reserve for destruction, although I suppose a smart bank employee would buy it for face value. All bills up to $10k are still as legal tender as the day they were issued. I have never seen a $5k or $10k but have seen tons of 500's and a lot of 1000's.
Yes. I've withdrawn up to $12k but they had to go into a safe somewhere (not the safe with the safety deposit boxes) to get it. I found a crisp $100 with a star and sold that for $110 to a collector. They are supposed to send in reports when people do that, and I assume my bank reported that withdrawal.
This is about both greed and control. Visa and MasterCard get a percentage of each sale. The charge to the merchant varies based on risk and profitability to the card issuer. Customers will pay more as most small independent merchants can’t absorb the cost. Control has already been discussed in detail. However, security is very important to most individuals. The fact that card numbers and codes can be stolen is a major concern. I have a friend that had his card copied in a restaurant and later had to argue with the credit card company about charges. Another friend pays cash whenever possible to avoid being a victim. Yet another friend was upset when he had to provide credit card statements to Internal Revenue during an audit. And yet another refuses to use credit cards when purchasing a gun and has a strong preference for private sales. Both cash and cards carry risk but I firmly believe the consumer should have the option as to which he or she will use.
I saw his fake news click-bait statements in the article.
When you make statements that are fake news for the sake of drawing clicks it is click-bait.
So fake news to you is anyone you don’t agree with, I see. Since we still live in a capitalist society, of course sites need to generate clicks to make money, unless it is supported by donations like this site is.
No. Fake news is fake news. Fake news disagrees with the facts.
I don’t use cash on a daily basis but we do keep a stash of emergency cash. I also use it to pay my handyman and housekeeper since they prefer it. I add to it every month.
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