By Graham Smith
The supposed coordination of governments and tech companies to create a one-world, cashless society is often viewed as little more than fodder for silly YouTube conspiracy videos. After all, cash is still king in daily life, even in extremely high-tech, innovative societies like Japan. Upon closer examination, though, current realities like Australia’s proposed cash transaction ban for 2020, the continuing removal of higher denomination bills from several world economies, and the creation of centralized, state cryptocurrencies by governments worldwide cannot be ignored.
These trends signal a global push to kill paper money in the name of safety, security, and financial inclusion.
You Can Pay, But It Better Be Our Way
Australia’s “Black Economy Taskforce” wants to put people accepting over 10,000 AUD (~$6,750) in cash in the slammer for up to two years, or fine them up to 25,000 (~$16,890), in an ostensible bid to fight black market economies. The Currency (Restrictions on the Use of Cash) Bill 2019 states:
Transactions equal to, or in excess of this amount would need to be made using the electronic payment system or by cheque. The Black Economy Taskforce recommended this action to tackle tax evasion and other criminal activities.
Note the similarity here with talking points of other governments. India’s Prime Minister, Narendra Modi, when announcing the devastating surprise removal of 86% of the country’s circulating paper cash in 2016, proclaimed:
Black money and corruption are the biggest obstacles in eradicating poverty.
Not surprisingly, Modi’s shock move put the dominantly cash-based society in a panic, forcing people to take their now worthless 1,000 and 500 rupee notes to banks within 50 days of the announcement, to exchange them for smaller denominations. Now The Royal Bank of India is moving to ban all cryptocurrencies but one, the state-approved, digital rupee.
The removal of large cash bills is a worldwide, ongoing reality, with the European Central Bank (ECB) stopping production of the 500 euro note earlier this year. The note, dubbed by the media as “the Bin Laden,” was said to be used disproportionately in financing terrorism. The U.S. used to have banknotes worth $500 and higher as well, some which were known as gold certificates, entitling the bearer to physical gold upon redemption. As fractional reserve banking took over, however, and national debt increased, these systems were progressively abandoned. The trend continues today in the form of Negative Interest Rate Policy (NIRP), and the resultant push for digitization of money.
Stop Holding Cash and Take Our Debt
“If everyone is holding cash, negative interest rates become useless.” These are the wordsof former People’s Bank of China (PBOC) governor Zhou Xiaochuan after the Chinese government had just completed a trial run of their new national cryptocurrency back in 2017. Now the country’s sovereign digital currency is “almost ready.” Zhou has also officially stated:
At the current stage, the central bank’s major goal of issuing digital currency is to replace the physical cash.
Earlier in the same interview, he maintained that “The cost for cash transaction will gradually increase in the later stage. For instance, banks do not charge any fee for counting a large amount of coins now, but in the future they may charge their clients for such services.” Zhou’s remarks about negative interest rates are arguably the biggest giveaway as to what is going on here. If people are holding cash outside of banks, reckless, Keynesian NIRP policies won’t have the desired effect of coercing spending in the populace.
New Zealand Reserve Bank governor Adrian Orr agrees with Zhou:
Let’s tax cash holdings, simple as that: we’re back to monetary policy as usual; people are disincentivised to be holding large lumps of physical cash; they are having to think harder about putting money to work.
Big Tech: We’ll Create the Digital Money, Thank You
While draconian government monetary policy is alarming, the lack of support for actual financial sovereignty in the crypto and tech space is indicative of another problem. Government’s designs on eliminating paper money and fighting permissionless, decentralized crypto exchange — both moves to control money supply and populations of individuals — are obvious, and to be expected. But even big tech companies and exchanges like Facebook and Binance are jumping on the propaganda bandwagon, dragging many well-meaning enthusiasts into the fight against financial freedom (even if unintentionally) right along with them.
“We believe that we all have a responsibility to help advance financial inclusion, support ethical actors, and continuously uphold the integrity of the ecosystem.” – Libra whitepaper
“Binance is looking to create new alliances and partnerships with governments, corporations, technology companies, and other cryptocurrency companies and projects involved in the larger blockchain ecosystem, to empower developed and developing countries to spur new currencies.” – Binance’s ‘Venus’ announcement
The common theme here is eager compliance with Keynesian value destroyers. And these examples are illustrative of the true financial epidemic.
Digital currencies really are extremely convenient. Everybody in the world really should have a chance at financial inclusion. Holding wads of paper cash and coins really can be a bother, as well as a safety hazard, where crime is concerned. In Finland, passengers on state railways won’t be able to purchase tickets with cash for long-distance trips, starting in September. Much easier than messing with the paper stuff. ATMs are becoming less common worldwide, even in countries like China, the U.S., and cash-obsessed Japan. Settlements and payments can be made effortlessly, though, with just a quick scan or entering a PIN, so it’s no big deal.
But this is not a perfect world. Governments are corrupt. Artificial monopolies and seas of red tape exist, keeping the life-threateningly impoverished and entrepreneurial from accessing crypto and banking services via strict KYC and AML policy, and by mandating, like Modi in India, that their hard-earned and hard-saved money is worthless. People already have the opportunity for extreme financial inclusion. A $40 smartphone and an internet connection enables anyone, anywhere in the world, to make or receive money with Bitcoin. In the name of regulation, safety, and financial inclusion, however, the state makes the situation more chaotic, less safe, and extremely exclusive where real human need is concerned.
Some of us crazy people still like paper cash, and prefer to pay that way. Some annoying, behind-the-times Luddites still put money in their mattresses, where global financial policy turns more and more toward negative rates, continued inflation, and devaluation of money sitting in banks. Some entrepreneurs and tech-savvy fans of crypto simply think it’s nobody else’s damn business, preferring paper wallets, coin shuffling, and VPNs, in a world where everyone but those in power are presumed guilty until proven innocent. Some of us “conspiracy nuts” just like crypto for crypto, and paper cash is still closer to that clean and private model than any slimy, centralized digital state currency could ever hope to be.
Graham Smith is an American expat living in Japan, and the founder of Voluntary Japan—an initiative dedicated to spreading the philosophies of unschooling, individual self-ownership, and economic freedom in the land of the rising sun.