Going back to L Tecolote’s 6 Feb post about a cashless society, I found the following additional recent developments to add to the other items posted:
➢ January 22: Norway’s biggest bank, DNB, called for the country to stop using cash.
➢ January 29: The editorial board of Bloomberg published an article titled “Bring on the Cashless Future.” It called for the elimination of physical cash.
➢ February 4: The Financial Times ran an op-ed titled “The Benefits of Scrapping Cash.” It advocated the elimination of physical money.
➢ February 8: Peter Sands, president emeritus of Harvard, issued a paper titled “Making it Harder for the Bad Guys: The Case for Eliminating High Denomination Notes.” It advocates removing large bills from circulation to help fight the various made-up wars…the war on crime, the war on drugs, the war on terror…
(As always, I’m only recommending this article for the meat – NOT the advertising come-ons. Casey Research isn’t what it used to be, with Doug Casey no longer in charge, but Porter-the-used-car-salesman Stansberry at the helm.)
I have had some increasing (and increasingly concerning) thought about one aspect of a cashless society, however. Supposing we really, truly get to a point where cash is outlawed or deemed worthless after a certain “turn in” date, and all that’s deemed “legal” after that date is digital cash? At that point, gold and silver would simply be contraband. Today, many people hold it in case of massive inflation, expecting it to hold its value so they can cash it in and make a profit or at least still break even, having avoided the inflation. But if cash doesn’t exist anymore, and gold and silver can no longer be “turned in” for digital credits, it would seem reasonable to assume that people won’t be as interested in accepting it in an underground economy, since there’s no method of conversion back to what most people know – cash.
It would seem that holding some cash to get through a significant period of closed banks, some gold and silver to continue to be able to “trade” with people and businesses, and then have plenty of spare commodities on hand for barter, would be a very wise mix. In the investment world, they call that diversification of assets to protect against diverse circumstances. What if gold no longer has any quantifiable value because it’s no longer convertible to cash (which no longer exists)? Even in a non-SHTF scenario, FedGov could force us into an extremely tight position – deal in digital money so they can track everything we do, or spawn a massively larger underground barter economy than currently exists.
One might respond to the above scenario with the question, “Well how would they know?” Easy! They’ve already got our incomes, deductions, credit card and checking spending patterns, etc., from years of IRS returns, and other trackable transactions. Sudden major deviations in spending patterns would be a giveaway that we’re up to something, and it wouldn’t be revenue-friendly for the feds. I can imagine it being similar to what happens if you “sell” a house to a family member, but charge 0% interest. The Feds will “impute” interest, and come back and charge you fines and penalties for not having paid your “fair” tax on the “fair market value” interest rate you “should” have received. As in that example, if IRS deems that we’re not spending “enough” based on prior patterns, I can easily see them imputing a spending amount and coming after us looking for our bartering activity so they can tax us on that as “income” (that’s currently the case, by the way, for those that don’t know – they call bartering “income” for tax purposes).
We’re heading down a very slippery slope that is about to have a steep drop off.