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paranoid theory of the week :: the conspiracy against cash

i remember when i was little, hearing my grandmother tell me about how she had taken a trip to england decades before [not a common thing for someone from a small town in nova scotia] and showing me a few of the souvenirs that she had brought back with her. it was something she remembered with a great deal of fondness and i loved hearing about it. it was years later when i found out that the occasion for her trip was the death of her father. she was obliged to make the trip not to attend a funeral [he'd taken off when she was very young and she never really knew him], but because she was his heir and had to collect her money. at the time, just after world war ii, restrictions were such that she couldn't take the money out of the country, so she had to just spend it there and pump money into the ravaged british economy.

that might sound strange, but so-called capital controls, where a government restricts what people can do with their own money, were for some time the norm. now, of course, we live in a wild world of free-flowing capital, capital that exists in an imaginary sphere most of the time. indeed, money exists in a state of flux where its traded, invested, gained or lost all the time, even when it just appears to be sitting in the bank. in fact, the only time that money stands still is when it's in your hands, either as cash or as goods. at all other times, money is vapour. and apparently, a lot of big players want to move it even further in that direction, which is the subject of this week's ptotw.

the theory :: there is a concerted effort to eliminate the use of cash

the story :: 

because electronic money is easier to monitor and control, as well as easier for other parties to access, there are efforts being taken to convert holdings and transactions to a digital format and to gradually withdraw cash as a method of payment. this is being done in order to consolidate control in the hands of government and banks, allowing them considerable power in how people are able to live their lives and eroding privacy.

the originator :: 

this one has been around so long and has so many variants that it's really impossible to tell.

the believers :: 

lots and lots and lots of them. this is a staple of a lot of libertarian and anarchist groups. the extent to which it is perceived as sinister and the extent to which people believe that we are headed towards a true cashless society varies significantly, but the number of people who believe at least somewhat in the idea that cash is being displaced as a standard is pretty high.

the bad guys ::

big banks and big government, in collusion to some extent, but also possibly at cross-purposes [see below].

the evidence ::

it's not hard to find evidence of questionable activity when it comes to banks. since their inception, people have been suspicious of them, especially since we all started giving them our money to take care of while we went out and worked to get more money to give to them. it was marginally acceptable when they paid us a decent amount for the convenience of not being able to access all our money, all the time, but as interest rates have fallen to nigh on nothing and service fees for maintaining our money have increased, it's pretty easy to feel hostile. and i'm not even going to get started on the feelings people have about handing over tax money to their governments.

the best evidence that there is an effort to move people away from cash and toward electronic funds is right in front of us and it is everywhere: plastic payments are increasingly normal, with banks making it easier to pay with a card and introducing more services for businesses to encourage them to favour those transactions. there are fees charged for withdrawing cash. banking hours have decreased, which means that going to the bank to pay bills has become more difficult, while making online payments has become more convenient than in-person banking ever was. i can pay my telecommunications bill at two in the morning in my underwear, while wearing a face mask, researching for a future blog post on a different tab and eating wasabi peas. what a time to be alive.

the price of that convenience is that there is a clear record of every single thing i do with my money and, legally or not, anyone can access it. is that a conspiracy? not as such. moving to an eletronic economy means that banks have to employee fewer people and in particular, fewer unskilled people, who work as first-line customer service reps in banks. it also frees them to save money by sending their unskilled work to other, cheaper countries. and the fact that they're able to charge money for all this, instead of paying you a convenience fee [in the form of interest], improves their profits yet again. all we're talking about here is the application of sound business principles: reducing costs and increasing sales.

at the same time, governments have made it more difficult in a regulatory sense to use cash, especially for large transactions. italy and france have reduced the cap for cash transactions, meaning that, if you want to make a major purchase, you're basically forced to "register" it. in a similar, and possibly more threatening, vein, spain has introduced a tax on bank account deposits and israel is taking action to become the world's first cashless society. this means that governments can ensure that you're paying the proper taxes and allows them to impose new taxes on what you have, whether or not that money is taxable income. those two things clearly mean that the governments have more visibility and more control over your money and what you do with it.

so do we have a conspiracy yet? well, we do have at least two parties, working together, in order to achieve a goal. by definition, a conspiracy requires at least two. but it's not like the clampdown on cash is exactly a big secret. if you ask bankers and governments if they're trying to shift the economy to electronic rather than paper transactions, they'll say that they are and a government representative will tell you that their are doing so because it makes the flow of money easier to track and control. so we seem to be lacking that element of secrecy, the ulterior motives that are normally associated with a true conspiracy.

banks like electronic transactions because it keeps them leaner and allows them to apply their charges directly, rather than having to bill customers and wait for them to pay for any services. governments like electronic transactions because it helps them crack down on black markets and security risks. those are the reasons they give and they're perfectly valid. since cash purchases aren't registered, no one ever knows if the correct taxes were paid on them. and it's easier to identify odd and potentially threatening spending patterns [purchases of a lot of weapons, say, or ingredients used to make drugs, or sending a lot of money transfers out of country, to suspicious locations] and can alert authorities that they should be keeping tabs on certain individuals or organizations. it's the old argument that people who have nothing to hide have nothing to fear.

another government argument for having visibility and some level of control over our money is that it helps ensure that more of that money stays in the economy. [in this, the banks and the government part company. banks would prefer to have the ability to move their assets wherever they want, without impediment. governments want to make sure that money being sent out of the country has been properly taxed according to the law of the land.] these sorts of measures are called capital controls and, according to finance and economics expert paul krugman, they're coming back in style. an example of a capital control would be the story i told at the beginning of this post: a government regulates what private citizens can do with their own money in the name of strengthening the national economy.

the counterargument, of course, is that the banks and the government have no business prying into your personal financial affairs. it's your money, after all, not the state's and you're allowed to do with it what you will, within the bounds of the law. if they're able to review financial transactions for everyone and can identify a loophole being used to legally shepherd money out of the country without being taxed, what's to stop them from changing the law, so that they can collect taxes on those funds? what's to stop them from using their influence on countries that do serve as tax shelters to get them to change their policies? and if financial records are used to identify people who may be transferring money to terrorist groups, the extent to which that is a good thing depends on your confidence in the government's ability to identify terrorist threats. it also depends on your point of view on whether or not governments can be trusted with this sort of information at all.

the likelihood :: 9/10

i'm deducting one point on the believability index, because i don't think that the government or the banks have an interest in completely eliminating cash, at least not for quite a while. small businesses remain heavily reliant on cash and, while that may open the door to some tax issues, local economies are heavily dependent on these types of businesses to stay healthy. there's also the risk of obtaining too much information, where important details like someone sending money to a terrorist group get lost under a mountain of my grocery receipts. [ok, that example is exaggerated, but trust me, too much information is a very bad thing when you're trying to act.]

for banks, investing in bringing the smallest businesses and all individuals on line doesn't offer a great return on investment. it gets increasingly hard to reach everybody and the sums involved get smaller. that's not to say that they won't try to reach the maximum number of people, just that they'll exert less and less effort in doing so the less money it's going to bring in. banks are businesses and the rules of the market apply.

that doesn't even touch on the logistics of how difficult it would be to enforce a total ban on cash. after all, if the current printed money is removed from circulation, what's to stop people from assigning values to other items? if i want to get eggs, those eggs have a value to me. i might have a lot of batteries, which have a value to someone else. once currency is removed, the government and banks have essentially ceded control over how things are valued, which is pretty dangerous for them.

but even taking all that into account, yes, there is a plot to move societies away from using cash as the standard for conducting business. it's right out there in the open and we can see it every day. many of us have seen a remarkable shift within our lifetimes and can testify to the fact that cash is less important than ever.

there are valid arguments for shifting to an electronic economy, arguments that do not deserve to be dismissed as smokescreens for a hidden agenda. what also needs to be considered, however, is that once certain changes take place, they can't be changed back. once the government has your financial information, it has it. that information can be used exactly how they say it will be used, or it could be used for other things as well. or subsequent governments could use it for things that they decide are important. it's all about trust, and not a lot of governments inspire that.

the bottom line is that there is such a thing as a real conspiracy. it just depends on what you want to read into it.

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