Better Than Cash – Gold & Silver in a Cashless Society
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Posted 18/09/2023
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The tug-of-war between cash and cashless continues. Macquarie Bank’s decision last week to phase out cash altogether in 2024 is hot off the heals of CBA, NAB and ANZ ceasing cash handling at a number of branches and setting a trend for more to come. However, whilst ATM withdrawals and cash transactions fall, the pandemic saw an increase in cash held and even transaction tick up as the penny dropped about the perils of centralised digital ‘money’ for many.
In a news.com.au article entitled Australia to be ‘functionally cashless’ by 2025 last week, UNSW Business School professor of economics, Richard Holden, predicted the headline above but went on to say “But unless the government gets involved to accelerate the process I think we’ll be actually cashless by 2030”.
The article goes on to quote sources around the banks “cash rationing” through less branches and limits on ATMs. Already Ainslie customers regularly experience banks limiting how much cash they can withdraw to buy bullion. So to be clear, not being allowed to take THEIR money out.
The ease and convenience of the various digital payment methods nowadays with the likes of ApplePay, PayID and tap and go card payments etc, mean cash is becoming ‘inconvenient’ for both users and receivers alike. That ease fuels the problem for those wanting to use cash as the majority happily accept the short term convenience. Then along came the pandemic which highlighted to many the ease of implementation and extent of government overreach and had many then questioning where else that could happen.
We wrote extensively of the proposed ‘cash ban’ before the Senate in 2019 and 2020. We last wrote to this here and worth a read to get up to speed if you weren’t aware, particularly its links to previous articles. That Bill was ultimately defeated but blind Freddy can see it will come back again. The pandemic changed many things for many people. From today’s reference article:
“However the use of cash has ticked up slightly after Covid, with an RBA survey finding cash was used in 27 per cent of in-person transactions in 2021, compared with 23 per cent in 2020.
ATM cash withdrawals and banknote deposits have similarly increased from their pandemic lockdown lows.
The pandemic also saw more businesses refusing cash altogether, although cash acceptance remains high overall at 94 per cent in June 2022, from 99 per cent in February 2020, according to the RBA.”
“The RBA also notes that while Australians are using cash less frequently for transactions, overall demand for cash remains strong.
“The value of banknotes in circulation grew particularly strongly during the pandemic, with circulation growing by 23 per cent from December 2019 to December 2021,” it said.
“Much of the increase in demand was for high-denomination banknotes ($50s and $100s), suggesting that many people in the community continue to view holding banknotes as desirable for precautionary (i.e. emergency) or store-of-wealth purposes, especially in times of economic uncertainty.”
A lecturer at Macquarie University, Chris Vasantkumar, is an expert in “anthropology of cash and cashlessness”. He makes some very salient points:
““While most Australians use far less cash than they did 20 years ago, the idea of having cash to fall back on remains very important,” he said in an email.
“There are a number of reasons for this. First, it’s pretty easy to replace cash as a medium of exchange (using it to buy and sell things) but harder to replace it as a store of value (stuffing it in the proverbial mattress).”
Dr Vasantkumar said there were serious issues to consider at both a personal and societal level.
“On a personal level, some folks (indeed some societies) have serious concerns about lack of privacy — this is the flip side of a popular argument for moving to cashless transactions — decreased crime as a result of increased transparency,” he said.
“But one person’s transparency is another person’s surveillance. How much information about our economic behaviour are we comfortable giving up? Different countries answer this question in different ways. Germans, for example, still strongly prefer cash (especially in the east) due to negative past experiences with state surveillance.”
More broadly, Dr Vasantkumar suggested an issue less often considered with going cashless was “in some ways a kind of privatisation of what used to be a public asset — money itself”.
“The kind of money we’re generally used to, standard currency issued by states (or by banks tapped by states to issue it on their behalf) is a public good like a healthcare system — accessible equally by all and ideally not a source of profit,” he said.
“Going cashless moves transactions out of this sphere into a world where you are always relying on privately held banking infrastructures to buy and sell things and someone is making money off your transactions (e.g., debit and credit card transaction fees). We wouldn’t usually think about this as similar to selling off the power grid but in some ways it really is.”
Thirdly, he noted there were real concerns about the durability and dependability of the payments infrastructure itself.
Periodic outages affecting banks’ IT systems have in the past seen Aussies stuck at the checkout unable to pay for fuel, groceries and bills.
“Cash never goes down,” Dr Vasantkumar said.”
This of course doesn’t even touch on the prospect of CBDC’s (Central Bank Digital Currencies) and that complete and utter government control of ‘your money’. We wrote back in late 2020 about CBDC’s, Australia’s RBA moving to establish ‘our’ own, and what that might mean for you. You can read that here. In May this year we wrote to the revolt against these already happening in the US.
The writing is therefore firmly on the wall of the challenges cash has before it. Ultimately, cash is just a Fiat currency backed by nothing but the promise the government. It is a government owned and controlled medium of exchange but is it really money? No, it fundamentally fails the monetary test of ‘intrinsic value’, that is, value in and of itself through scarcity. It is and only, currency. We have written extensively to the global economic Ponzi scheme that underwrites all currency and the eye watering amount of new currency created out of thin air. ALL Ponzi schemes by definition must end. History is routinely riddled with failed Fiat currencies.
Converting your cash to gold and silver ensures you have real money stashed away not pieces of plastic that can be outlawed or unilaterally converted to digital, government controlled currency.
All the warning signs are there. Its just a matter of acting on them and preserving your wealth and liberty.