Andy Haldane, the chief economist the U.K. central bank, has brought to the mainstream a scary fantasy held by many liberals: abolishing cash. In an era of zero interest rates, and even negative rates in some countries, governments are finding it difficult to continue printing money to stimulate the economy. When their attempts to induce inflation by printing and spending more money aren’t effective, they may move to more draconian measures.
No doubt our enlightened leaders will point to the supposed obsolescence of physical cash, the costs that cash handling imposes, and the wondrous technology that can be brought to bear to relieve us of these burdens. They also mutter about tax evasion and money laundering, which is closer to their real agenda of fully controlling the economy’s resources.
There will possibly come a day when all cash is electronic, on which the government can mandate “negative interest rates”—i.e., theft of depositors’ assets, either to prop up banks and/or to go directly into state coffers. Such totalitarians dream of the scenario in which all assets that you hold are at the pleasure of the government, to be spent as you are told. This is already true to an extent in the era of fiat money, but many central bankers and government treasurers would be very happy to take away citizens’ freedom to stash money under their proverbial mattresses.
Of course, we have seen plenty of capital controls lately, such as Cyprus “bailing in” banks (i.e., stealing from large customers) and Greece not only refusing to allow depositors to withdraw their own money from bank accounts, but even refusing to allow people to remove cash from safe deposit boxes in those banks. (Note to self: buy stock in manufacturers of household safes.)
When a government bureaucrat hears about a bank robbery, he probably laments, “such a missed opportunity.” Our best advice is to think twice about any whiz-bang technology that ties up your money in a place where the long arm of the state can reach it.