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The elimination of cash

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The elimination of cash

Unread postby Zarquon » Sun 09 Apr 2017, 04:59:57

http://norberthaering.de/en/32-english/ ... guidelines

IMF tells governments how to subvert public resistance against elimination of cash

The International Monetary Fund (IMF) in Washington has published a Working Paper on “de-cashing”. It gives advice to governments who want to abolish cash against the will of their citizenry. Move slowly, start with harmless seeming measures, is part of that advice.

In “The Macroeconomics of De-Cashing”, IMF-Analyst Alexei Kireyev recommends in his conclusions:

Although some countries most likely will de-cash in a few years, going completely cashless should be phased in steps. The de-cashing process could build on the initial and largely uncontested steps, such as the phasing out of large denomination bills, the placement of ceilings on cash transactions, and the reporting of cash moves across the borders. Further steps could include creating economic incentives to reduce the use of cash in transactions, simplifying the opening and use of transferrable deposits, and further computerizing the financial system.

The private sector led de-cashing seems preferable to the public sector led decashing. The former seems almost entirely benign (e.g., more use of mobile phones to pay for coffee), but still needs policy adaptation. The latter seems more questionable, and people may have valid objections to it. De-cashing of either kind leaves both individuals and states more vulnerable to disruptions, ranging from power outages to hacks to cyberwarfare. In any case, the tempting attempts to impose de-cashing by a decree should be avoided, given the popular personal attachment to cash. A targeted outreach program is needed to alleviate suspicions related to de-cashing; in particular, that by de-cashing the authorities are trying to control all aspects of peoples’ lives, including their use of money, or push personal savings into banks. The de-cashing process would acquire more traction if it were based on individual consumer choice and cost-benefits considerations.


Note, that the author is not talking about unreasonable objections and imagined disadvantages: He does count it among the advantages of de-cashing in the very next paragraph that personal savings are pushed into banks and he also does count total control of all aspects of financial life under the pros, as in the last sentence of the last quote below.

“As de-cashing gives incentives to economies’ agents to convert their currency in bank deposits, the deposit base of the banking system will increase, which can help reduce the lending rates and expand credit.”

And finally the advice to do it together:

Coordinated efforts on de-cashing could help enhance its positive effects and reduce potential costs. At least at the level of major countries and their currencies, the authorities could coordinate their de-cashing efforts. Such coordinated efforts are, in particular, important in the decisions to phase out large denomination bills for all major currencies, to use ceilings and other restrictions on cash transactions, and to introduce the reporting requirements for cash transactions or their taxation. For currency areas, a single decashing policy would be clearly preferable to a national one. Finally, consensus between the public and the private sector and outreach on the advantages and modalities of gradual decashing should be viewed as key preconditions for its success.

The paper itself is an example of such “outreach on the advantages” even though it pretends to give a balanced account . Throughout, as in the following paragraph, potential disadvantages of cash are in the indicative and strongly worded, advantages are introduced a hypothetical, by referring to the possibility that people may perceive a certain advantage of cash.

The differences between currency and transferrable deposits are also remarkable. They are often used by both sides of the debate on the pros and cons of decashing. First, currency can become technically obsolete. Banknotes fade and break, and the efforts to remedy the problem with plastics is of little help and involve unneeded costs. Transferrable deposits do not have this problem. Second, payments with currency are anonymous, which makes them a popular vehicle for abuse, tax avoidance, terrorism financing, and money laundering. Transferrable deposits are personified and generally cannot be used for these purposes. Third, currency is prone to counterfeiting, at times on a large scale. Transferrable deposits are not. Fourth, currency is often perceived as a means to preserve privacy, i.e., economic operators generally are not interested in the history of the currency of their transaction. Also, the individual right for privacy is usually enshrined in laws and transferrable deposits store each step of the payment history, which can be viewed as a threat to privacy. Transferrable deposits lead to full transparency, at least to the issuing bank, and a complete record of transactions, which in virtue of law can be used by tax and law enforcement authorities.

The paper lists a fair number of advantages and disadvantages of cash, but makes no explicit attempt to argue that overall the disadvantages are more important. The language and the recommendations make the bias more than clear, though.

Needless to say that, as with all scandalous, antidemocratic recommendations, the ones described here are officially only those of the author, not of the IMF.
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Re: The elimination of cash

Unread postby dolanbaker » Sun 09 Apr 2017, 05:46:23

Control how people manage their day to day spending = control the people.
Simple!
The next great leap from Mayer Amschel Rothschild famous quote, "Permit me to issue and control the money of a nation, and I care not who makes its laws!"
Such a system would eliminate the ability of people to have self determination as their every action would be visible to anyone with the authority to view and analyse their spending habits.

A return to serfdom.
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Re: The elimination of cash

Unread postby SeaGypsy » Sun 09 Apr 2017, 06:17:23

As long as one stable-ish economy produces cash, they all will, as the black economy can use any currency.
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Re: The elimination of cash

Unread postby dolanbaker » Sun 09 Apr 2017, 07:03:38

SeaGypsy wrote:As long as one stable-ish economy produces cash, they all will, as the black economy can use any currency.

A country that retains high value denomination notes will be very careful to avoid such use of their currency as too many notes in circulation will devalue their economy.
As for the black market using foreign currency, This is widespread with traders using US dollars & Euros right now, but I just don't see underground trading in, for example, Polish Zlotys or similar having a major impact in any other country. Bitcoin would be a good candidate for such trade, but it would probably get eliminated when it becomes a real threat to "the plan".
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Re: The elimination of cash

Unread postby SeaGypsy » Sun 09 Apr 2017, 08:08:48

Black economy is like unemployment. The public need to believe both are bad, but the economy works best when there is some of both. Zero unemployment is very bad for business, makes hiring difficult or impossible. Zero black economy means no garage sales, a hell of a lot more landfill & waste. The number for unemployment is well known- 5-6%. I'm not sure if the ideal ratio of black economy has been worked out. As for cash moving offshore leading to devaluation- no way, look at the US$.
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Re: The elimination of cash

Unread postby vtsnowedin » Sun 09 Apr 2017, 08:42:35

SeaGypsy wrote:Black economy is like unemployment. The public need to believe both are bad, but the economy works best when there is some of both. Zero unemployment is very bad for business, makes hiring difficult or impossible. Zero black economy means no garage sales, a hell of a lot more landfill & waste. The number for unemployment is well known- 5-6%. I'm not sure if the ideal ratio of black economy has been worked out. As for cash moving offshore leading to devaluation- no way, look at the US$.

I wouldn't consider a yard sale black economy. Cash for a baggie of weed is or that happy ending massage is more like it. And there is the dentist that will cut his rate if you pay in cash. You can be sure he reports every cash dollar he takes in at income tax time. :roll:
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Re: The elimination of cash

Unread postby SeaGypsy » Sun 09 Apr 2017, 09:28:37

Hookers & drug dealers spend their money, usually. Goes around comes around.
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Re: The elimination of cash

Unread postby Outcast_Searcher » Sun 09 Apr 2017, 11:39:30

I know doomers have to see virtually everything as doom. But isn't this just a wee bit over the top in 2017?

What if in relatively stable first world countries, cash was eliminated because 99% of people had little or no use for it. (In other words, demand shrunk considerably over time)?

This conversation / fear has been present for the 4 decades I've been paying attention. Say, 35 years ago, early in my career, when I only got a credit card because I needed one to travel (rent a car) for business -- then eliminating cash sounded really nasty.

Today? In a place like the US? So what?

1). For everything of substance for an honest person who isn't trying to avoid taxes, we're already there.

a). The IRS and/or feds track most stuff on computers. Tax records, major transactions like moving cash over $9999, all your 1099's, etc. etc.
b). For example, I had a friend in KY Revenue compliance a few years back. He went to businesses and threatened them for not paying their taxes. An example of one of his best weapons? Their CC billing history. And the CC data for all their CUSTOMERS (i.e. the huge preponderance of their revenue).
c). Speaking of credit cards, aside from credit cards or checks, the ONLY cash I spend now is:
i). Gardners, mowers, etc. that prefer cash.
ii). Quarters for parking meters and laundromats. (In my city, "old people" lacking smart phones find the electronic parking meters do NOT work with credit cards, despite what the directions say (our government at work), so we just haul around some quarters. It's not just me -- I have several older friends who do the same thing. (And no, parking meters aren' the "killer app" to get me to spend $50ish a month on a smart phone).

2). Cash can be lost and stolen or even destroyed. Cash is often very dirty (germs, drugs, etc). Credit card histories help me with knowing what I spent without lots of records or budgeting. If I lose my credit card, no problem.

3). If I really want to do something with serious underground spending with a lot of money, I can use common gold bullion coins. The last time I considered doing something like that was over 30 years ago when a coin dealer offered to waive the sales tax if I paid for the coins in cash.

(After pondering for 30 seconds, I decided I preferred to just always be honest and have records, and not have to to worry about stuff. If I get an envelope from a tax agency all I think is "Darn. I must have made a mistake." If a cop pulls me over, all I think is "Did I miss a speed limit sign?" Or "Oops, I'm X over the limit. The stupid court costs are gonna hurt.)" I DON'T get scared and worry about if they've discovered me for my significant misdeeds. (I think I can handle the fines and jail time for the occasional jaywalking or public profanity).

And finally, as an honest person, I'm doing my "share" re taxes. If you're not and eliminating cash helps make you start, don't expect sympathy from me or the other 90ish+% of people who pay the vast majority of the taxes they owe.

But I really don't get this. In modern times, governments don't need to eliminate cash to know where the huge bulk of transactions are going -- and make you pay up if you try to blatantly cheat.

So unless you believe big governments will sit by and let crypto-currencies replace electronically trackable cash, is there even a good option? Using chickens, or even gold or diamonds as currency for everyday transactions, and worrying about all the cameras out there isn't what I'd call a "good" solution.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The elimination of cash

Unread postby dolanbaker » Sun 09 Apr 2017, 11:58:48

SeaGypsy wrote:As for cash moving offshore leading to devaluation- no way, look at the US$.

The US has the global reserve currency and having the US dollar globally acceptable is in the US governments interests.
For other countries, it would cause supply difficulties (of cash) .
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Re: The elimination of cash

Unread postby vtsnowedin » Sun 09 Apr 2017, 12:03:16

It's nice you are such a good person OS but considering how bungled the withdrawal of large bills in India this past couple of months went I'd just as soon see the USA $100 bill in service along with everything smaller except the penny for a good long while yet. All electronic banking is run by computers and computers can be hacked or put out of service by disasters that knock the power grid down.
Sure the little guy chisels on his taxes a bit when he can but the big guys cheat with tax accountants and bought and paid for Congressmen.
We need to resist the advance of Big Brother ism at every front and at every opportunity. :)
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Re: The elimination of cash

Unread postby Outcast_Searcher » Sun 09 Apr 2017, 12:10:16

vtsnowedin wrote: Sure the little guy chisels on his taxes a bit when he can but the big guys cheat with tax accountants and bought and paid for Congressmen.
We need to resist the advance of Big Brother ism at every front and at every opportunity. :)

Fair enough.

I was mainly pointing out that the paranoid vision that cash is a panacea for government intrusion into our lives is no longer a valid model. When they're scanning all our emails, etc. the game is pretty much over.

But if keeping currency makes people feel like we're resisting "the man", go for it. I'll continue to use my credit card, hold some inflation hedges, and munch on popcorn.

And yes, computers can be hacked. Can they all be hacked simultaneously without any remedies? That sounds as far fetched to me as the doomer idea of rapid economic collapse of the entire system due to a variety of fears.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The elimination of cash

Unread postby Hawkcreek » Sun 09 Apr 2017, 12:39:49

Looks like VT is saying that he doesn't want to surrender yet, and OS is saying that he already gave up, and it didn't hurt too much.
I agree that trying to hold on to a little bit of the feeling of independence is a good thing, but in the case of money, it is probably a lost cause. They already own us when it comes to that.
Just a matter of time before cash is a footnote.
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Re: The elimination of cash

Unread postby vtsnowedin » Sun 09 Apr 2017, 17:41:06

Outcast_Searcher wrote:
vtsnowedin wrote: .......
......

And yes, computers can be hacked. Can they all be hacked simultaneously without any remedies? That sounds as far fetched to me as the doomer idea of rapid economic collapse of the entire system due to a variety of fears.

Do you have any evidence that they can't all be hacked at once? They all have to be interconnected to function properly and those same interconnections can be exploited to spread a hack as far as possible.
Remedies probably exist but will they take effect before you are bankrupt or are out of food with no means to buy more.
History is well supplied with what happens when a country goes toes up. Most of those are not pretty and you do not want to be the next chapter in the narrative.
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Re: The elimination of cash

Unread postby Zarquon » Mon 10 Apr 2017, 00:01:42

Perhaps the most important issue is not crime or disruption of computer systems, but the introduction of *negative interest rates* as a last resort of financial policy. When the next bubble bursts, we'd all be punished for having savings, and they can only do that if there is no easy way to hoard cash anymore.
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Re: The elimination of cash

Unread postby SeaGypsy » Mon 10 Apr 2017, 04:10:05

dolanbaker wrote:
SeaGypsy wrote:As for cash moving offshore leading to devaluation- no way, look at the US$.

The US has the global reserve currency and having the US dollar globally acceptable is in the US governments interests.
For other countries, it would cause supply difficulties (of cash) .


Why nobody wants to actually do this. Who trusts who? Who is going to believe the US will stop printing dollars? Who stops first? It's a banker's & government economists wet dream. The reality of the world won't let it happen.
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Re: The elimination of cash

Unread postby EdwinSm » Mon 10 Apr 2017, 06:47:41

I guess if this is being pushed then it would be best to convert the small holding of spare cash into goods that I could store, rather than put them in the bank.
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