Why do the Feds want to abolish cash? - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 21 May 2015
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Why do the Feds want to abolish cash? A  A  A

- By Bill Bonner

Bill Bonner
Medellin, Colombia

Dear Diary,

A vision of Hell troubles our sleep. It is the vision of what America will be like when the authorities have obliterated 5 millennia of monetary progress and have their boots on our necks.

Here's Peter Bofinger in Der Speigel magazine:

    "With today's technical possibilities, coins and notes are in fact an anachronism. They made payments incredibly difficult," with people wasting all sorts of time at the cashier as they wait for the person ahead of them to dig through their belongings to find some cash, and for the cashier to render change (rather than, for example, waiting for someone to find the right credit card, complete the transaction, and wait for approval).

    But the additional time is not the largest benefit of the elimination of cash. It dries out the markets for moonlighting and drug trafficking. Almost a third of the euro cash in circulation consists of 500-euro notes. No one needs those for shopping; light-shy figures use them for their activities.

    "It would be easier for central banks to impose their monetary policies. At this time, they cannot push interest rates appreciably below zero because the savers would hoard cash. If there is no cash, the zero bound is eliminated."
Yes, dear reader, it seems to be coming...a dreadful slide back beyond the Darkest Ages and into the mud and slime of pre-history. Back then, modern 'money' had not been invented. You could only trade with people you knew...and on a very limited scale. Capitalism was impossible. Progress was unattainable. Wealth couldn't be accumulated.

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Then came gold and silver coins - real cash. You didn't need to know the person you were trading with. You didn't know his family. Or his motives. Or his balance sheet. And you didn't have to keep track of who owed what to whom. You could just settle up - in cash.

This made modern commerce and industry possible.

This new wealth also provided people with a new kind of liberty. They could travel - and pay for food and lodging with this new money. They could invest...and use this new, private wealth to create even more wealth. And they could even raise their own armies...build their own fortifications...and challenge the power of the ruling elites.

But now, governments all over the world are trying to abolish cash. Leading economists want it banned. Limits on cash use are already in place in many countries. And in the US, having a large amount of cash is considered 'suspicious activity,' subject to forfeiture without due process.

Why do the feds want to eliminate cash? Isn't it obvious? They want to control you and your money. Where did you get it? They'll want to know. What will you do with it? They'll want a say. Couldn't you use it for something 'bad' ? Heck, you might support 'terrorists'...evade taxes...or buy a pack of cigarettes.

The possibilities are too rich to ignore. And the arguments are to persuasive to stop. Zero Hedge summarizes the "pros:"
  • Enhance the tax base, as most / all transactions in the economy could now be traced by the government;

  • Substantially constrain the parallel economy, particularly in illicit activities;

  • Force people to convert their savings into consumption and/or investment, thereby providing a boost to GDP and employment;
The arguments are hollow, but they'll probably be convincing. And for the first time in 5,000 years, rulers will have a way of controlling people by cutting off their money. Electronic money, run through a government-controlled banking system, allows the feds to put us where they want us...with bars on our cages and whips on our backs. All transactions could be subject to approval . And every person would know that he could feel the feds' lash at any time.

In Argentina, between 1974 and 1983, approximately 13,000 people 'disappeared.' That is, they were rounded up by death squads , murdered, thrown from planes or dropped in the river.

How much easier it will be - and more humane, too - simply to cut off their money? With modern face recognition technology, the feds could identify almost anyone in any setting - at a cafe, a public meeting, or an ATM. Then, with a couple strokes on a keyboard, the accounts could be frozen...or confiscated. The poor citizen would 'disappear' in seconds, unable to participate in public life...forced to scrounge through trash cans to stay alive.

And who would dare to help him? Who would dare to support him? Who would dare to speak out against this new diabolical system? They too would be marked as undesirables...and disappeared. Imagine the political candidate who suddenly discovers his backers have no money? Imagine the whistleblower who suddenly has no whistle to blow?

Are we hallucinating? Are we worrying about nothing?

In Argentina, military rulers first targeted leftist revolutionaries - who may have posed some real threat to the Republic. Then, the targets grew more diverse - with students, political adversaries, intellectuals, trade unionists, and anyone they wanted to get rid of - caught in the net.

The period only came to a close when the generals unwisely invaded the Falkland Islands and proclaimed sovereignty. The plain people are easily led into war - no matter how moronic the pretense. As they had hoped, the Argentines rallied behind their soldiers.

But the English did not play the role the generals had expected. Rather than negotiate a settlement, they sent the fleet. In a matter of weeks, the English had sunk the Belgrano and were hammering away at the ill-prepared Argentine troops, shivering out in the South Atlantic.

This was too great a humiliation for the gauchos to take. The Union Jack went back over the Falklands, the generals were thrown out of office and the disappearances stopped.

Are Americans smarter than Argentines? Are their politicians more honest or more faithful to the rule of law? Does power corrupt less in the northern hemisphere than it does south of the equator?

We doubt it.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

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