Cashless Society means a Loss of Freedom and Control of your Liquid Assets
Sections of the Swedish economy have announced it plans to be a cashless society in 5 years. That means every transaction will be controlled via a bank with an annual “account” and associated transaction fee. Every transaction can be monitored. In essence, supposed material wealth is actually a credit liability on an electronic ledger.
If the Bank holding entity fails, your electronic cash disappears with that entity. The “cashless” movement is now being discussed in other countries. Tech companies like Visa and Apple are lining up to make the transition simple and a revenue stream.
Security is noted as a major plus for a cashless society. In the New York Times article about Sweden moves to “cards” it notes “Sweden’s embrace of electronic payments has alarmed consumer organizations and critics who warn of a rising threat to privacy and increased vulnerability to sophisticated Internet crimes. Last year, the number of electronic fraud cases surged to 140,000, more than double the amount a decade ago, according to Sweden’s Ministry of Justice.”
Putting the criminals aside, the fact that your “wealth” is controlled by bank or government policy decisions immediately means one’s ability to change circumstances is limited. Worse still, it will also allow others to define what is an allowable or approved transaction. In the instance of the next financial crisis that means bail-ins or the mandatory purchase of Government bonds will have priority. The ability to opt-out and move to another country is defined by how much money can be accessed.
Limits are being applied to the level of cash withdraws. Take the UK for instance, Youth customers – up to £50 per day or Personal accounts – up to £300 per day. Those levels now defined, can be adjusted at any point, as was the case in Cyprus where the limit was reduced to €100 per day. That may seem ok but if the Banks don’t fill the machines with cash, (as was the case in Cyprus) then the limit is meaningless. The second threat is a deliberate or unintended take down of the card or electronic processing network. In a crisis hard cold cash is king, promissory tenders become meaningless. How many people trust Cheques anymore? All trade relies on reliably, acceptable liquidity. Hence why bank notes, (with a promise back by treasuries, historically backed by Gold), became nationally acceptable tender.
Going back to the UK, the Bank of England announced that the current £50 note is being withdrawn as of the 1st of April 2016. No announcement has been made as to when the £50 note would be replaced. An excerpt from the Bank of England site states “The next £5, £10 and £20 banknotes will be printed on polymer. The new £5 note will be issued in September 2016 with the full details of design and security features revealed on 2 June. The £10 note will be issued in 2017 and the £20 note by 2020.” end quote. The elimination of the £50 note means holding or storing cash becomes more difficult (5 physical notes versus 2) or a greater risk (the mattress starts to bulge). Three events will occur; people will hoard £20 notes (in replacement of £50 notes), home robberies will increase and people will be forces into electronic accounts. Electronic accounts are then subject to zero or negative interest rates and capital value losses per month.
Counter to this in Switzerland they intend to keep their largest note. This assures their historical place as a safe haven currency and confirms our point, counter to trends. In a recent Guardian article quote “The high proportion of large denominations indicates that banknotes are used not only as a means of payment but also to a considerable degree as a store of value,” the SNB website explained. “One Swiss banking source said they had seen recent signs of people hoarding SFr1,000 notes as a reaction to negative Swiss interest rates, which make banks and large institutional investors pay for some deposits.” end quote.
Having an oversea’s bank account if you are in the US seems to makes that person a suspect for dubious activities. For a US Citizen opening an overseas bank account this requires an approved application subject to the US Foreign Account Tax Compliance Act. US IRS FBAR reporting is required for any person who has US$10,000 or more deposited. Thats down from US$50,000. So you know your current limit and where that is probably heading.
Owning property in a safe haven type country is one way to have security and a plan. When the next crisis appears or an immediately better standard of living for the family is within reach. An increasing number are being smart by cashing up at the height of their local property markets and finding safety and security in New Zealand. That window will close. Authorities erode the freedom we have come to accept as “given rights”, in the name of “security”. With those right diminished goes the ability and freedom to control your personal wealth.
see safehaven.nz for services in making a transition to New Zealand.