Banning Cash – Who Do You Trust?
News yesterday about an interim report released by the Treasury's Black Economy Taskforce noted: "While the use of cash as a means of payment has been declining, overall demand for cash in Australia has been rising, particularly for high denomination notes." This has been jumped upon by the federal opposition and some academics who claim a lot of them are being used by criminals, and Australia should consider scrapping the $100 and then even the $50 notes altogether.
We have touched on this topic previously (“Banning ‘Big Note’ Cash” back in November 2016) but these new rumblings are of particular concern when viewed against the backdrop of the recent “bail-in” laws that were passed with just 7 senators present on the 14th of February (“Senate Passes ‘Bail In’ Law – How Safe Is Your Cash Now?”). Furthermore, it has been suggested that high denomination notes are no longer necessary with the implementation of the New Payments Platform (NPP) which will allow almost instantaneous electronic money transfer between participating bank accounts. This argument is fundamentally flawed and simply does not stand up to any logical scrutiny. The only thing it appears to do is remove the ability for people to control their own money which has potentially dangerous implications that have not been properly considered.
At its core this proposition fundamentally relies on the good faith of government and banks, financial stability and public order, and access for all to electronic funds. With all due respect to the banks and our government, they don’t always act in a way that is in the best interests of all people. As we witnessed most recently in Greece and Cyprus financial instability and ensuing public disorder, particularly in our new world of ‘bail in’ legislation, can see your access to, and even ownership of ‘your money’ disappear very quickly.
Maybe even more fundamentally, speaking to our individual human rights, is the question of control. Does the government have the right to control how and where you spend your money? It would be naïve to see this move as anything other than control. As we mentioned in that last article that could be the simple ‘tax’ of keeping your money in the system to apply negative rates as we saw in Europe and Japan. But even more fundamentally we have the recent instances of banks imposing their controls on where you spend your money. The news was awash and our friends at Nugget’s News tweeted at the end of 2017 that several banks were freezing customer accounts and transfers related to the cryptocurrency space.
To be clear, these were not people trading in illegal illicit substances or acts of human abuse. These were ordinary Australians wanting to invest in a new technology, and let’s cut to the chase, a new form of money outside that very same banking system that stepped in to stop it.
Banning cash, forcing people into a centralised payments system, flies in the face of democracy. While politicians and academics continue to wage a “war on cash” it may be more important than ever to look for alternatives to secure your wealth and take advantage of unexpected economic challenges that can arise.