Cashless Societies – Do You Really Want To Create Such Monsters?

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May 14 2015
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Cash is King, goes the powerful saying, which is still true today. Soon, we may enter a new dimension, whereby money in terms of cash will be made “illegal”. Here’s why cash is horrible – it’s dirty because a U.S. study found 3,000 types of bacteria on bank notes. Cash is easily torn, not to mention irreplaceable if lost or stolen. Cash also facilitates tax evasion and illegal transactions hence breeds corruption and money laundering.


You also looses money due to foreign exchange (damn those banks), every time you cross a new border. With so many problems related to cash, people are adopting cashless transactions. The countries that are leading the world towards cashless societies are none other than Sweden, Norway and Denmark. The Scandinavia is the most cashless place on planet Earth.

Cashless Societies - Buy Espresso

In Stockholm you can pay a street hawker with a credit card. In Helsinki, you can go grocery shopping leaving your wallet at home. In Copenhagen you can get a dose of espresso with your smartphone. Now, Denmark has up the ante with reports that the country’s Ministry of Finance is allowing certain business to opt out of cash transactions. If approved by parliament, retailers could start “rejecting” cash from January 2016.


So far, there has been little resistance to the proposal from the Danes, and it’s not hard to see why. According to Danish Payment Council, only 25% of retail transactions were paid for by cash or cheque last year in Denmark. A wonderful world of cashless society, is it not? But wait. A supposedly clever money expert – Jim Leaviss – thinks there’re more goodies that we haven’t realise with this new economic “cashless” tool.

Cashless Societies - Mobile Pay

Apparently, the proposed new law in Denmark could be the first step towards an economic revolution. In future, owning cash is illegal where physical currencies and all money exists only in bank accounts. Here’s the fun part. With Central Bank (not banks) in possession of all the money in the world, inevitably government will monitor, or even control them. This makes government superbly powerful, and crazily dangerous.


Why is that so? Since you cannot keep any cash under the pillow, because it’s illegal to do so in the first place, you make all payments using contactless card, mobile phone apps or other electronic means. Again, in case you still didn’t realise till this point, your banking account is with the government or central bank, not Citibank, Maybank, Deutsche Bank, Bank of America and whatnot.

Jim Leaviss - head of retail fixed interest at M&G Investments

Jim Leaviss thinks this is marvellous because the government would possess better tools to combat recessions and economic booms. Let’s say the economy is bad and the government wants everyone to spend in order to boost the economy. To do that, central bank imposes a negative interest rate on the money in everyone’s account. In short, you’ve to spend like crazy otherwise the powerful government will tax on your saving.


What happens when economy is booming and overheating? The central bank will tax you on transactions, of course. What this means is you need to pay some fees to spend your money. Hence, in order not to get penalised, people would start spending less. And voila, the economy will slow down on its own. But can you see the problem here? Essentially, the government controls all your money, whom you may not trust at all.

Cashless Societies - Emperor Obama Declare Negative Interest Rate

If you think this is absolutely rubbish and will never happen, think again. Switzerland’s National Bank (SNB) is imposing negative interest rate of 0.25%. So does the European Central Bank and yes, the countries championing cashless societies – Sweden and Denmark – have a negative interest rate on money you put in the bank. The Swedish is negative 0.1% while the Danes have gone to 0.75%.


While it’s true that the primary reason some countries imposed negative interest rate was to control their currencies, rather than to cool down economy, the fact is – negative interest rate happens. Fortunately, for now, depositors can withdraw their saving from such banks and keep it under their mattress. But you cannot do so in a pure cashless societies, simply because there’s no cash for you to hide.

Cashless Societies - Keep Money Under Pillow

But why do we still need banks in cashless societies anyway? Well, banks will be there to lend money, but they get their funds from the central bank, not from depositors as what happens now. If you prefer, you can call them “loan shark agents” doing the bidding of the powerful central bank of government. Let’s hope President Obama or Emperor Najib do not hear about this fabulous weapon, shall we?


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