Will Cash Be Trashed?

Jan 20, 2021

Vijay Bhambwani, Editor, Fast Profits Daily

This video covers a topic which I believe is critical to your long-term financial well-being.

I ask and answer the question, will cash be trashed? In other words, what will happen if the world moves towards digital money?

What will be the implications on your personal, social, and financial lives?

There will be some benefits but there are things you need to be wary about too. Some of those things might make you uncomfortable.

But as your editor, I believe you should be informed about the consequences of a digital money system well in advance.

So, let's see what they are...

Hi, this is Vijay Bhambwani and, in this video, I want to touch about a very critical update asking you whether cash is going to be trashed. Will cash become worthless?

What if, just like November 2016, all the currency lying in your cupboard, in your pockets, in your wallet, was to become useless? This is something that you need to think about.

China has now in a very major way, promoted digital currency. Let me tell you up front, this is not about Bitcoin. I'm not talking about crypto currencies. So if you're one of those crypto currency bulls, please moderate your comments because this is not about cryptos. I am talking about digital payments, digital wallets, and electronic money.

So what if, like the Chinese have done where people are carrying money in their mobile wallets on their cell phones, imagine you go out there and buy a bottle of Coca Cola or buy a packet of cigarettes, and instead of fishing your wallet out, taking currency out of it and paying with currency notes, you simply have to press a few messages on your mobile phone and zap the money across from your phone to the other guy's phone?

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How would it change your world and basically what will be the fallout on various asset classes whether it is commodities, whether it is your holding in bullion, whether it is gold jewellery or your equity market investments, your bonds, your mutual funds, etc? I am gonna attempt to take 360 degree world view and address your doubts on this matter.

I'm Vijay Bhambwani, a trader with 35 years of trading, experience, 28 of which are as a founder, promoter, and CEO of a limited company that day trades for a living. If you think my videos have helped you become better traders, please subscribe to my YouTube channel. Click on the bell icon to receive instant alerts of my fresh videos being up uploaded here and in the comments section, I'd love to hear what you have to say about my videos.

So let's simply dive into this topic and see where we are going. I am not against the idea of digital money or payment wallets. At the end of the day, I can only have as much balance in them as I can kind of top up, fill in, put in, call it what you want.

But initially, there will be different kind of hiccups and procedurally, what will follow are different kind of hiccups. If you have been filling your income tax returns and preparing a balance sheet every year, you will agree with what I am saying. There is on the asset side an entry called Cash in Hand. You would obviously want to deposit all that cash into the bank or into the payments wallet so as to be able to spend it.

But ask yourself this question. How many tax paying citizens will have exactly rupee to rupee paise to paise the same amount of cash in hand as it appears on the assets sign of your balance sheet? There will obviously be a mismatch. Minor hurdle, you'll say. I agree but a hurdle, nevertheless.

Secondly, the minute you start spending money electronically, you are leaving an audit trail. Now the social aspect of it is if you were to lie to your wife that you have given up smoking, she can find out but that is only the social aspect.

I've heard a lot of jokes on WhatsApp about a guy calling up a pizza shop 20 years from now, and he is ordering a double cheese burst pizza and the guy tells him, I can't serve you the double cheese burst pizza because your Aadhar card, which is linked to the central database, which is linked to the medical database, says you're very high on cholesterol, and therefore you must be on a diet. Your order is rejected. Click. Hangs up the phone!

Now what really happens if your medical insurance company or your life insurance company finds out that you have been smoking? Very simply put, your insurance premium goes up.

What if you are used to the idea of stopping by at the club or at the bar and having two pints of or maybe more pints of beer or hard liquor of whatever? Your insurance premium will start going up. Not just health insurance, but maybe even auto insurance. Hey, you're a hazard on the road, right?

You're spending patterns will now become an open book, and you've will start getting targeted ads on to your mobile phone, which is something you're already experiencing on social media. Go and click on a T-shirt on Amazon or Filpkart, go to any other page, navigate away from that page, that ad will come and haunt you in some corner of the future pages, as if you're stuck to them like glue.

So you're spending patterns will be Big Brother's open secret rather than you going out there and discreetly spending cash. It will have implications on your life. Your transactions, the way you live life will be very, very regulated, disciplined, and you will basically live within the lane that is specified to you of dos and do nots. Have and have nots.

So it's like a science fiction movie, which you would have seen say projecting 2050 or 2100 or 2080 year, I'm talking of the year, of how life is very regulated and people are paying each other with credits from your mobile phones or pagers in some of the older movies, that is possibly going to become a reality.

The other thing that can happen is, now we are talking about asset classes, the other thing that can happen is that once people have taken all their cash in their hands in their wallets, etc and topped up their e-wallets, physical currency will die out.

Nobody will know just how much electronic currency the government has produced out of thin air. The currency peg will be set rather than free float. So the government will decide how much the Indian national rupee will be against the US dollar.

Of course, this is subject to the fact that digital currency becomes a reality. This is still a hypothesis. Only a few countries, mostly authoritarian countries like China, and to a certain degree, Russia, is now following in bullion. You cannot sell or buy even one gramme of gold unless you produced your social security card in Russia. So big brother Vladimir Putin wants to know what the citizens are doing with their gold, buying or selling, or if they're buying or selling just how much.

So you will be under careful watch. The government will basically nudge you into to wanting to spend money in areas where you're currently not spending or stopping you from spending money in an area which you are currently spending. Basically, it means that a little bit of your financial freedom will get infringed.

Now that the currency peg will be predetermined or set by the government, chances are now we're talking about hypothetical situation, chances are that even bullion prices will be set by the government.

So just when you thought that you will be basically sitting on a part of gold, if digital currency were to come in, when inflation and unbacked printing of currency etc will go behind an iron curtain, will be all under a shroud, we just don't know how much fiscal deficit there could be and therefore how much gold will go up or go down.

Your financial instruments and financial investments like stocks, bonds, T-bills, mutual funds will remain constant. I don't expect too much of a kind of a turmoil there. It is the physical commodities and the currency space, the currency peg rather and of course, your lifestyle expenditure based on your spending patterns, your insurance payments etc, which will change radically.

This is something which will be accelerated thanks to the covid pandemic worldwide, and this is a change that will be irreversible. We are heading towards it slowly but surely. Think of it is a possibility, not an eventuality right now but keep an open mind and think at a future date this might be what is in store for us.

On that sombre note, I will bid goodbye to you. I wish you a very, very profitable day ahead. Vijay Bhambwani signing off for now. Thank you for watching me. Take care. Bye

Warm regards,

Vijay L Bhambwani
Vijay L Bhambwani
Editor, Fast Profits Daily
Equitymaster Agora Research Private Limited (Research Analyst)

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1 Responses to "Will Cash Be Trashed?"

Virat Trivedi

Jan 20, 2021

Vijay, you pushed me back few decades, to school days - reminding of Jules Verne!
Vivid imagination that can truly be prophetic shaping reality!

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