Electronic Cash: The End of Privacy
Imagine that cash never existed. There are only electronic records of all our financial transactions. Then imagine the reaction from the government if cash were to be introduced.
They’d be horrified. They’d fear financial collapse. They’d consider cash a weapon of mass destruction launched against law enforcement. They’d claim that because cash is anonymous and untraceable, it’s only of interest to criminals, drug cartels, terrorists, prostitution rings and money launderers. They’d demand a licensing procedure for individuals or businesses that plan to use cash, limiting it to trustworthy individuals who keep detailed, auditable records of all their cash transactions, in order to keep America safe from criminals.
Sounds crazy, right?
Not so fast. The pressure to eliminate cash — and to turn you and anyone else who prefers it into a presumptive criminal — is growing fast.
Cash — coins and paper money — is only about 10% of the aggregate U.S. money supply, or M2. The rest is just entries on the balance sheets of banks. Nevertheless, plenty of people want to get rid of this remaining bit of real currency.
For example, Kenneth Rogoff, a professor of public policy and economics at Harvard University, recently published an article in the Financial Times headlined, “Paper money is unfit for a world of high crime and low inflation.” He proposes that “it is time to consider whether … phasing out currency would address the concern that a significant fraction, particularly of large-denomination notes, appears to be used to facilitate tax evasion and illegal activity.”
Plenty of pointy-headed intellectuals agree with Rogoff. Matthew Yglesias believes that “Already, a movie character depicted as carrying a large quantity of cash can be reliably assumed to be doing something illegal,” and therefore looks forward to the day when “cash will be left with its rump use as a medium of exchange for drug dealers, tax evaders, and other shady operators and we can expect countries to start banning it altogether.”
Apparently, cash is only of interest to pimps, thieves and fraudsters. But there’s more. In a cashless society, governments could easily force people to spend their wealth by decreeing a negative interest rate for all electronic deposits: use it or lose it.
Left-wing economists salivate at the prospect of “privatized Keynesianism.” There’d be no need to run government budget deficits to spur economic activity; just force people to spend their own virtual “money.” Under a negative interest rate, “money” would be like a hot potato, as each person who receives some in exchange for goods or services tried to spend it as quickly as possible to avoid loss of purchasing power that would come from storing it in a bank.
Or what if the United States decided to implement a Cyprus-style wealth confiscation one night to ease the tremendous burden of its national debt? An all-electronic cash system would make it incredibly easy for the government to reach into your bank account and take what it needs to avoid financial collapse, leaving you with…? Nothing.
Indeed, a growing number of economists and technocrats want all money to be virtual, and therefore under the control of government and corporate financial institutions. Of course, that would mean the elimination of financial privacy once and for all. In 1976, in U.S. v. Miller, the Supreme Court decreed that there is no legitimate expectation of privacy in any financial transaction that involves a third party. Every electronic transaction involves a third party, such as bank or credit-card processing company.
No cash = no privacy.
Damned if We Do, Damned if We Don’t
Cash allows private peer-to-peer transactions. It decentralizes power in society, and preserves a space where government and corporate elites can’t monitor and control everything. That’s why, for those elites, cash has simply got to go. And it’s why we have to fight for our right to use cash.
There’s a certain irony in that. After all, most cash in use today is issued by governments, and remains their property. They retain control over it and can manipulate its value at will. They can even declare it invalid and launch a new currency, as has happened numerous times in recent history. So in fighting for the right to use cash, we’re fighting for one form of enforced dependence on government (state-issued cash) as opposed to another (electronic currency).
Plenty of people have tried to escape that contradiction. The most recent attempt is Bitcoin, the “virtual currency” that captured everyone’s attention late last year, and then collapsed in the face of hostility from a variety of governments, including China’s.
The problem with Bitcoin is that it lives in the electronic ether. It’s just as vulnerable to interference as a sovereign currency like the dollar or the euro. All it takes is a government decision to do so.
That’s why the only real escape from the slowly closing circle of government domination of our financial lives lies in hard assets — foreign income-producing real estate holdings, gold & silver, gemstones such as Natural Fancy Colored Diamonds, rare collectible stamps, art and other valuable items.
And that’s why The Wealth Coaches recommend investments in such hard assets, and protecting your identity using Trusts. But don't pay retail when you can buy wholesale thorugh our proprietary network of suppliers.
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