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Why Is Hard Currency Disappearing?


I have written several postings related to Various topics including the military, Voting, the economy, religion and etc in America. A list of links have been provided at bottom of this article for your convenience. This article will, however address additional issues in these topics.

Nobody can deny that they are using hard currency, ie. bills and coins less and less. Is this trend by design and some sort of government and big tech plot, or is it simply an institution that has simply run its course? In this article I will investigate this trend and try to find out an answer. There certainly has been a lot of rumors floating around lately. Let us get to the bottom of them. As always I will not let any pre-conceived bias affect the conclusion of this article. This should be interesting, let us see where this investigation takes us.

I will begin this article with who else but, Bill Gates. He seems to have his fingers in a lot of pies, doesn’t he?

The politicization of facemasks is growing more acute by the day, squeezing non-mask wearers out of stores and offices and casting them aside like collateral damage destined for the societal Dumpster.

We should not be surprised.

Bill Gates informed us early on in the pandemic that we would not be allowed to “return to normal until the entire world is vaccinated.” Adoring news reporters quoted him saying this as though they were talking to God himself.

Now, they are pushing the mask to ensure that their god’s prophecy comes true. No normalcy allowed. The vaccine is not yet ready!

The mask is a sign of fear, submission and obedience to the media-driven hysterical over-reaction to this virus by governments and corporations. This virus is in fact no more deadly than the seasonal flu and far less so in children. This is a very manageable disease, with a recovery rate of 99.7 percent. But, when you see masks everywhere, it’s easy to believe that the country that placed men on the moon just can’t get a handle on this invisible enemy.

If you acquiesce to the mask edicts, that’s fine, it’s your decision. But don’t be naïve and think for one minute that forced masking is not part of a greater agenda that involves forced vaccinations — which Gates called his “Final Solution” to the coronavirus. And if you think this will be just another of the many “normal vaccinations,” you are deceived. Big Pharma has never developed an effective vaccine for a coronavirus [one of which is the common cold].

So not only are they developing something completely new, they are rushing it to market.

It’s clear that the mask shaming is part of a dry run for the coming vaccine, which has been placed on a fast track by President Trump’s Operation Warp Speed.

President Trump assured us the vaccine will not be mandatory.

But that should not be taken seriously by anyone who is awake and watching how mayors, governors and corporations have been acting with the mask.

In Georgia, where Gov. Brian Kemp has not mandated masks. And, yet, it is getting seriously difficult to find a grocery store where you can enter mask-free. Non-maskers have been reduced to Dollar General, outdoor markets and fruit stands.

Why is that? The government isn’t forcing this in Georgia, so who is?

What’s happening is another case of our side being outmaneuvered and out organized by the left.

People in the grocery-store industry say that they are bombarded daily with calls and in-person complaints from people trying to bully them into requiring masks on every single shopper in their stores.

Our side, those who still believe that our health and our dress-code are personal decisions, is largely silent.

Because conservatives tend to place a higher value on individual liberty, the vast majority of the cry-babies out there calling and vilifying store managers for not mandating masks are Democrats. Those confronting non-mask wearers in store aisles and berating them are mostly Democrats. That’s because Democrats are collectivists. They don’t see people as individuals created in the image of God and capable of making their own decisions.

Conservatives, even those who wear masks, most likely do not wish to make it a crime for those who don’t. That’s just the way we are. But the left is always intolerant of opposing opinions and skilled in the use of coercive tactics. Hence, they have mounted a Twitter campaign to shame any company not requiring masks while bombarding these companies with high-pressure calls, emails and in-person visits, some threatening to sue if the company doesn’t bow to their demands.

The entire thrust of the Democrats and their media lackeys is to create enough panic so that governors will reverse course and lock their citizens back down in their homes, so they can collapse the economy ahead of the Nov. 3 election and blame the carnage on Trump. Everyone knows this. So why are we aiding their program of fomenting false panic by wearing masks?

If we can’t compete with the left on organization, we must honestly assess our options going forward. We can now be denied service based on what we wear and because we refuse to follow the media-led herd. And when the media-led herd is jumping to the dictates of the mad doctor and Bill Gates crony, Anthony Fauci, who has been wrong about every single facet of this virus, then we quickly find ourselves relegated to second-class status.

The only way to survive in Gates’s “new normal” will be to develop a network of service providers who work off the surveillance grid of Big Brother. These will be small mom and pops and sole proprietors. Now is the time to seek them out. Doctors, dentists, meat cutters, fruit growers, small farms selling eggs out of a backyard shed. Many will have to accept cash because hard currency is gradually being phased out in favor of digital dollars. Eventually, we will need to barter after cash is gone.

You can still find a few chains that will allow you into their stores without a mask. Some have started asking as you enter their stores to cover your face, and if you tell them you have a health issue that makes mask-wearing untenable they will let you in. Others, such as Kroger, have announced they will not grant any exceptions. No mask, no service. They will tell you to buy online or stop doing business with them. I’m happy to oblige. Done with Kroger.

None of this is rational, chasing off paying customers who spent hundreds of dollars with companies like Kroger. Influenza has always posed a threat to people in close quarters. Where were the mask requirements for that?

The science behind face coverings and their ability to block the virus is shaky at best. And there is plenty of evidence that long-term, continuous mask wearing is actually harmful to your health, due to oxygen depletion.

In fact, the N-95 masks include a warning that they are not capable of blocking viruses. I happened to have an unopened pack of N-95s from a purchase I made two years ago at Home Depot. I opened it and read the literature. Sure enough, it was there. Number two on the list of five warnings stated: “This respirator does not protect against the risk of contracting disease or infection.” [See scan below]. I’m told many manufacturers have removed this warning in the wake of COVID.

A little common sense should tell us that if N-95 certified masks are not capable of blocking viruses then the cloth masks you see many folks wearing are even less effective.

But when a nation is captivated by a “flood the zone” propaganda campaign [like the one designed in October 2019 at the Event 201 conference hosted in New York by the Gates Foundation, Johns Hopkins University and the World Economic Forum], the facts don’t matter. This over-the-top response to COVID was part of a political agenda carefully planned ahead of time to steamroll everything that gets in its way. The WEF has since come out, on June 3, and admitted that elites are using COVID as a pretext for what it calls the “Great Reset” of national economies, transforming them from capitalism to socialistic sustainable development.

If we don’t push back now, we are guaranteed to be further marginalized once the focus shifts from the mask to the vaccine. Even if we do push back, we must prepare for the real possibility that we will be on the losing side because not enough of our fellow Americans chose to join us in the resistance.

In the 1964 book, None Dare Call it Treason, author John A. Stormer dispels the myth that a free nation like America would never allow itself to be taken over by communism.

“At least 98% of all Americans are opposed to communism. Yet, they watch elected and appointed officials give continual aid and comfort to the enemy – and they do nothing,” Stormer wrote.

Stormer noted that the Marxists within our federal bureaucracies, in the universities, classrooms and churches don’t need to make Americans into communists. All that is needed for them to succeed in transforming America into a communist country is for Americans to “go along” with the relentless push toward that end. [Page 97, None Dare Call it Treason, John A. Stormer, 1964, Liberty Bell Press]

The opposite of going along is to resist. I don’t see much resisting going on right now in America. With each new bizarre story of conservatives being discriminated against, with each new retailer announcing “no mask, no service,” you can hear a collective yawn.

We have already been given glimpses of what the new Amerika will look like:

A place where human life is reduced to that of a nameless, faceless, mask-wearing number and people get fired or discriminated against based on the color of their skin. Stand here. Don’t stand there. Don’t ask questions. Do as you are told or face the wrath of the mob!

A place where everyone’s life runs on some version of auto pilot. No one dares to ask who is in charge of steering the ship because to do so might mean losing your job. Those who insist on thinking for themselves, on asking questions, on calling out the lies and double standards, on denouncing the snitchlines and mandates, are singled out as the enemy.

This is the spirit of Antichrist closing in around us. Some will let this spirit drown out the spirit of God in their lives. This is what Jesus was referring to when He said in the last days, because of the extreme violence and lawlessness, “the love of many will grow cold.”

Remember, the Antichrist doesn’t need your conversion. He only needs your obedience.

The pressure to conform is UN-American and comes from the top down, starting with the United Nations and filtering into every level of government and the dominant corporations.

There is a precient line in the 1960s British TV series, The Prisoner, that states: “You only have so much time to give them what they want, before they take it from you.” (The Arrival, Episode I, The Prisoner)

You can only resist for so long before you realize you have been check-mated. In the end you become either a criminal or a mental patient. That’s what happened to dissidents in the old Soviet Union.

First they erase your national history, vandalize and burn the churches.

A nation that loses touch with its past is unable to calibrate its present or its future. They are left confused, dazed, divided, demoralized and without a coherent strategy to fight back.

The model for Gates, Fauci, Soros, Buffet, Bezos, Zuckerburg, the Rockefellers and the rest of the technocrats is a Chinese-style total surveillance state. In their ideal world, your ability to function in society will be determined by a “social scoring” standard defining your value as a human being based on how obedient you are to the prevailing social norms. Any attitudes, values, beliefs or opinions not on the approved list will be labeled as hate speech.

Those guilty of thought crimes will not be allowed to work, buy or sell in the new Antichrist system being created by hardcore Marxists and technocrats in our government, churches, schools and corporate boardrooms.

It is all coming into focus now, compliments of the forced masking of America. If you can’t see it, you’re just not paying attention.

Those of us who are guilty of wrongthink will not be allowed into any stores, will be denied treatment at government or corporate-owned healthcare facilities, won’t be allowed to board a plane or enter any large-venue sporting event, meeting hall, etc. You will effectively become a non-person without a certified digital certificate proving you’ve  been vaccinated. No vaccine, no service. Bill Gates said this. Everything else he has said about not returning to “normal” has been accurate. I think it’s time we started taking him seriously.

This transformation of American society into a lockdown surveillance state will be fast-tracked under Joe Biden, should he win on Nov. 3. If Trump wins, we will have no walk in the park, because the left still controls the bureaucracy, the schools, the universities, most big-city police departments and prosecutor’s offices, the media and the majority of churches. The extent of this control has all been exposed over the last five months. Every one of these institutions has fallen in line with the left’s dictates, and those who refused have been called murderers and selfish haters.

Obama aide Cecelia Munoz in a news conference saying that her job as domestic policy advisor was to ensure that Obama’s policies were embedded “into the DNA” of every federal agency, so they would live on long after she and her boss were gone from the White House. We can see now, nearly four years after Obama’s exit, that most of the federal bureaucrats answer to him, not Trump.

The crackdown on free speech since the arrival of COVID greatly intensified. This virus has been weaponized against the First Amendment. After it is extinguished, they will work on abolishing the Second Amendment.

No one can any longer claim that “oh this is America, and Americans will never stand for that.”

Eliminating cash will also eliminate the checks and balances on banking policy and practice

The rhetoric against cash (bank notes and coins) has intensified over the past months. Academics and central bankers are advocating the elimination of large denominations of currency notes; some suggest to eliminate cash altogether. This hasn’t gone unnoticed by the public as the spike in Google Trends for topics such as “war on cash” shows. Now it seems the ECB is considering the first step towards implementation by eliminating the largest euro-denominated bank note: the 500 EUR bill. This bill, so described by ECB president Mario Draghi, “is being viewed increasingly as an instrument for illegal activities.”

We examine this trend and the recent rhetoric around the ‘war on cash’. We find the academic-led strategy to rush through a ban on large bills quite concerning; their analysis lacks thoroughness in examining those baring the costs of such a policy, while at the same time containing a high degree of misdirecting-spin by focusing on criminal activity rather than their underlying economic goals. We also discuss the following insights and findings, largely underreported thus far:

1. While most advocates for phasing out large bills are not getting tired emphasizing that smaller bills would not be affected, we show that the largest bills of each currency account for over 2/3 of all bank notes in circulation. Hence, many of the problems we think will emerge with a complete phase-out of cash would in our view already materialize by eliminating the largest bills.

2. One important finding we present is the systematically important use of large-denomination cash bills in times of market volatility. Eliminating the ability of savers to redeem cash and store it outside of the banking system would remove important checks and balances on commercial banks’ activities.

3. Removing the lower boundaries for central bank interest rate policy by phasing out cash would remove important checks and balances on central bank policy itself, something that historically has been associated with severe monetary instability.

Our sister company BitGold has revolutionized the way people can save and spend in gold. As the cash phase-out advances, the appeal to hold gold as a savings asset without banking risk will only increase. We show the significance of large bills as a portion of physical currency and show that by removing them, the total value of gold would outweigh currency as a percentage of total physical money by 3:1.

By phasing out the largest bills, gold outweighs currency as percentage of total physical money by 3:1 from currently 1:1

Source: GoldMoney Research

Eliminating cash will also eliminate the checks and balances on banking policy and practice

Avid readers of financial news have witnessed a sharp increase in rhetoric towards a phase-out of cash over the past months. Many countries, particularly Europeans, have already introduced upper limits on cash purchases in recent years. But more recently, we saw a push from academics and central bank officials around the world advocating the phase out of large bills or even an outright ban on cash.

The principal argument is that large bank notes are apparently mainly used in the underground economy, facilitating illegal activities such as the widespread drug trade and terrorism. Even those who make no pretense of their true intension for a cash phase-out, such as Harvard Economist Kenneth Rogoff1, claim that “Paper currency facilitates making transactions anonymous, helping conceal activities from the government in a way that might help agents avoid laws, regulations and taxes,” and use this as the main argument for a phase-out of large bills.

The latest development in this regard is the likely elimination of the EUR 500 note by the European Central Bank (ECB). Indications that the ECB is considering this step began to surface in early February. But the German Handelsblatt newspaper reported on Monday (March 15, 2016) that the ECB council has already decided to phase out the largest EUR note and has given itself 2 months to evaluate ways to implement this step. When ECB president Mario Draghi spoke in front of the European Parliament the same day he said that “There is a pervasive and increasing conviction in world public opinion that high-denomination bank notes are used for criminal purposes,” but he did not confirm that the phase out of the note is a done deal according to Bloomberg News.

Moving to a cashless society has been a topic in academia for a while now. The strict opponents of such a policy have dubbed it “the war on cash”. However, the general public has not really caught on this until very recently when evidence that central banks are increasingly pushing into this direction has become more and more obvious. Google searches for “war on cash” spiked sharply in February, in tandem with similar searches in other languages such as “Bargeldverbot” in German (see Figure 1).

Figure 1: There has been a sharp rise in google searches related to the phase-out of cash as of late

Source: Google Trend, GoldMoney Research

Central bank officials such as Mario Draghi insist that there is no war on cash and that the phase out of large bills is to serve fighting criminal activity which allegedly flourishes due to existence of large bank notes. According to Mr. Draghi, smaller bills would not be touched. Critics of a cash phase-out say that the elimination of large bills is only first step and that ultimately all bank notes and coins will disappear. However, we find that most of the problems that come with a total phase-out of cash will already materialize when just the largest bills are taken out of circulation.

The 500 EUR note accounts for nearly 30% of all outstanding EUR bills. And the EUR is rather the exception when it comes to the breakdown of bank notes by denomination. The 100 USD bill for example, the largest US bank note in circulation in the current series, accounts for 78% of all outstanding bank notes. And all 10’000 YEN notes account for 92% of all outstanding YEN bank notes.

We collected data on bank notes and coins in circulation for the 11 most traded currencies in the world plus the Indian Rupee, Brazilian Real and the Russian Ruble. The countries issuing these currencies account for about 77% of global GDP. Combined, all the currency in circulation is about USD5.2tn at current exchange rates. Importantly, the largest bills account for about USD3.6tn, or close to 70%. Hence, extrapolated to the entire world, there is about USD6.39tn worth of currency in circulation. Removing just the largest bills of all currencies, we estimate that USD4.4tn worth of currency would disappear.

By way of comparison, according to a report by GoldMoney founder James Turk, the combined above ground stocks of gold were roughly 155 thousand tons by the end of 2011. Including the 12 thousand tons that have been mined since means that total above ground gold stocks are priced at roughly USD6.6tn which brings the current ratio of currency in circulation to gold to around 1:1. However, eliminating just the largest bills would bring the ratio to 3:1.

Table 1: The largest bills in circulation account for over 2/3 of all currency in circulation  – End of 2015 where available

Source: GoldMoney Research, Bloomberg, FED, ECB, BOJ, BOE, RBA, SNB, BOC, BM, RBNZ, SRB, RBI, BCB, CBR, IMF

In Keynesian economics, saving cash, either on a bank account of simply by accumulating bank notes is labeled as hoarding in order to give it the air of something nefarious. However, saving for a child’s college education can hardly be regarded as an anti-social thing, and the same goes for saving for a house or simply for bad times, or for all manner of sensible financial planning. Rather than speculating in assets such as stocks that exhibit volatile prices, people naturally tend to have at least part of their savings in cash in order to reduce risk. Cash savings can either be on a bank account or it can be in physical cash. In this context, large bills have helped savers in times of increased risks in the banking sector. For example, the issuance of EUR 500 bills spiked sharply in 2009, at the height of the credit crisis. It coincided with a spike in the TED spread – the difference between the interest rates on interbank loans and US Treasury-bills – which reflected the rapid loss in confidence in commercial banks (see Figure 3). Hence, large-denomination cash bills have helped savers to reduce their counterparty risk in times of market volatility (see Figure 4)

This is important. Having the ability to withdraw cash from is an important element in the checks and balances on banks. Banking regulation is there to protect savers by imposing limits on what banks can do with their clients’ money. But if savers lose confidence in the banks, or in the regulators thereof, something that has become far more common post-2008, the only thing they can do to protect themselves is not to lend money to a bank as deposits. One can argue that even in a world without cash, savers have the ability to move their savings from a bank they don’t trust to another. But what if there is not one bank they can trust, say if they lose trust in the regulatory regime? Eliminating the ability of savers to withdraw cash from a bank could create increased moral hazard among banks. After all, if they all act the same, there would be no risk for a bank run anymore because there is no place to hide for savers. The sorts of banking practices that contributed to the 2008-09 global financial crisis would become all the more likely were cash to be banned outright.

Clearly, one of the aims for scraping large bills could therefore be to limit the ability of savers to withdraw cash in times of crisis. While this might help to protect balance sheets of commercial banks, this comes at the expense of savers, who, for better or worse, have to assume the default risk of at least one institution.

But the elimination of cash would not just remove important checks and balances on commercial banks. Another potential motive for a complete cash phase-out has become even more obvious over recent months. Since the 2008/2009 financial crisis, central banks around the world have held interest rates at historical lows. The US Federal reserve has held the FED lending rate near zero for nearly 7 years. Other banks have followed, and some didn’t stop there. After central banks of some smaller economies such as Switzerland have introduced negative interest rates earlier, Japan and the ECB have recently followed suit. The hope was that this would encourage spending which in turn would bring back economic growth. However, the much desired effect in consumption and thus economic growth has so far not materialized. Interestingly, while institutional investors in countries with negative interest rates effectively pay to lend their money to banks or the government already – a big problem for pension funds – savers have so far been spared negative rates on their savings account. For example, we know of only once Swiss bank that has decided to pass on negative rates to its clients. Hence NIRP and ZIRP had so far mainly one effect, to drive up asset prices as large institutional investors have been forced to chase the same assets the central banks were also buying. But in order to generate the desired effect on consumption, negative interest rates will ultimately have to be passed on to savers. And there is where the problem lies. Savers might not be willing to either simply spend their savings away in order to avoid paying somebody to lend their money to. As the push for negative interest rates intensifies, central banks face the dilemma that savers might simply opt to pull their money out of banks altogether and store cash at home or in a safe. Not just would this undermine all efforts by central banks to stimulate growth with negative rates, it would also affect aggregate bank deposits. At the moment, the ability to simply store cash currently sets a lower boundary for how far central banks can push rates lower. Eliminating large notes would complicate that. Eliminating cash entirely would make it impossible. A phase out of cash, and be it just the largest bills, would effectively remove this checks and balances on central banks as well. It is therefore obvious that central banks are not honest with their constituents of why they push for a cashless society.

In the end it’s the savers who will pay the price. Based on our estimates for the largest bills in circulation, at 1% average negative rates, savers would be exposed to an additional USD44bn p.a. in additional costs just from not being able to hold cash (see Table 2, next page). If all currency in circulation would be eliminated, this jumps to USD64bn. At -5% interest rates, these numbers increase to USD219bn and USD320bn p.a., respectively. To be clear, this is not the total amount of negative interest rate costs savers face, those are a lot higher as at this point, cash accounts only for a small portion of all savings. It is simply the costs that they could have otherwise avoided by moving some of their savings into cash. That cash would then be no longer available. But the problem lies beyond costs as it removes the lower boundaries for central bank policy and would allow central banks to enter unchartered territory.

However, just as ZIRP has not led to desired effect and to a lot of unwanted side-effects such as soaring assets prices, NIRP might achieve the same, even if cash is abandoned. Faced by two choices, either spend their savings even though they don’t want to or pay a penalty for lending money to banks, people might simply do the same things institutional investors such as pension funds have done for a while now. Instead of spending their money, they might buy assets instead which would further drive up the price of real estate and other real assets. And there is another obvious choice. Gold has been the money of choice for 1000’s of years. The value of the total above ground stocks of gold and the value of all currency in circulation is currently about the same. Removing the largest bills from the equation would mean that gold would have to assume a much larger role going forward. Our sister company BitGold has revolutionized the way people can save and spend in gold. With BitGold, savers can hold a cash-like asset without storage costs, negative rate related fees (direct or indirect), but engage in payments and digital commerce easier than cash. As the cash phase-out advances, the appeal to hold gold as a savings asset without banking risk will only increase.

Table 2: Eliminating the largest bills in circulation would have severe negative impact for savers in a negative interest rate environment
End of 2015 where available

The disappearing paper: Why cash is a dying payment method

A cashless society has been a talking point for futurists for years, but for one reason or another, has never quite been within our grasp. Now, like the electric car and clean energy, it’s finally happening – and it’s about time.

The arguments for ditching notes and coins are numerous, and quite convincing. In the US, a study by Tufts University concluded that the cost of using cash amounts to around $200 billion per year – about $637 per person. This is primarily the costs associated with collecting, sorting and transporting all that money, but also includes trivial expenses like ATM fees. Incidentally, the study also found that the average American wastes five and a half hours per year withdrawing cash from ATMs; just one of the many inconvenient aspects of hard currency.

While coins last decades, or even centuries, paper currency is much less durable. A dollar bill has an average lifespan of six years, and the US Federal Reserve shreds somewhere in the region of 7,000 tons of defunct banknotes each year.

Physical currency is grossly unhealthy too. Researchers in Ohio spot-checked cash used in a supermarket and found 87% contained harmful bacteria. Only 6% of the bills were deemed “relatively clean.”

Cash is expensive, inconvenient, wasteful and unhealthy – it’s time to call it quits with physical currencies.

The first attempts to replace cash with something more convenient was the credit coin – a small metal disc used to tie receipts to a customer’s credit account in department stores and hotels. Their modern successor – the credit card – has been the most successful in dethroning the banknote. According to Visa, in 2012 card payments accounted for 32.8% of worldwide consumer spending, while cash accounted for 38.3% (cheques and other payment methods made up the remainder).

When you consider that the entire card payment industry, including American Express, Visa and Mastercard (companies with combined assets of over $200 billion), has not managed to eclipse cash payments in 60 years of existence, it seems that cashless solutions that want to have a permanent impact have a mountain to climb.

There are also wider societal issues involved with the end of cash. Paper money is used more frequently by low-income groups and independent businesses — street traders, panhandlers and one-man bands — those who cannot get a bank account or absorb card processing fees. The working classes incur much higher costs from the move to cashlessness than those with higher incomes – one in twelve US households deal only in cash primarily because they cannot afford banking fees.

That’s not to say it’s impossible – Stockholm’s homeless population recently began accepting card payments.

Perhaps counterintuitively, a lack of cash can result in us spending more money. A University of Kansas study concluded that frictionless spending results in more frequent purchases, while consumers paying with cash are more focused on the cost, whereas those paying with plastic think more about the immediate benefit of the purchase.

Even more worryingly, a study by Dan Ariely, a Professor of Psychology and Behavioural Economics, found that transacting without cash makes us less honest. Subjects in Ariely’s study had to report – honestly – how many maths questions they were able to solve from a test sheet, receiving a reward per correct answer. Those rewarded with tokens (which could be exchanged for cash) were twice as likely to lie about the number of questions they answered than those rewarded with hard currency.

Ariely concluded that although the tokens had an equal monetary value to the cash, subjects perceived a lesser value – and so were more likely to lie – because it was not actual money.

Whether or not we’re ready to face the issues thrown up by the demise of paper currency, it’s happening. Cash transactions worldwide rose just 1.75% between 2008 and 2012, to $11.6 trillion. Meanwhile, non traditional payment methods rose almost 14% to total $6.4 trillion. This group includes online and mobile payments, and all modern cashless alternatives.

Cash is dying in the unlikeliest of places: M-Pesa in Kenya, a money transfer system that can be used on even rudimentary mobile phones, sees around 25% of the country’s gross national product pass through its system each year. In Zimbabwe, where hyperinflation has rendered paper currency impractical, a similar system called EcoCash has seen explosive growth recently. In some locales, stocks of paper currency are declining for the first time. According to the European Central Bank’s figures there are 15.6 million fewer €500 notes in circulation now than in 2011.

Whether the final nail in the coffin will be a new cashless innovation, impracticality of use or the running costs of cash itself, has yet to be seen, but the death knell of notes and coins could very well sound within our lifetime. Pennies and dollars are already being replaced by ones and zeros with the rise of cryptocurrencies like Bitcoin. As the shackles of traditional financial systems are shaken loose the real innovation can begin – currency will be just another data feed for developers to play with.

Costs and benefits to phasing out paper currency

This paper explores the costs and benefits to phasing out paper currency,
beginning with large-denomination notes, later extending to all but small coins and bills,
and eventually those as well. It is hardly a simple issue; paper currency is deeply
ingrained in the public’s image of government and country, and any attempt to change
long-standing monetary conventions raises a host of complex issues. The symbolic value
of the euro, for example, as a flag for nascent European Institutions, is hard to overstate.
Nevertheless, it is important to ask whether currency in paper form has outlived its
usefulness. Credit and debit cards today are increasingly being used for even small
transactions. And although today’s crypto-currencies fall far short of being true
currencies – for one thing their prices are simply too volatile – the underlying
technologies may ultimately strengthen the menu of electronic payments options.
Zero-interest negotiable bonds as an obstacle to negative policy interest rates

Paper currency has two very distinct properties that should draw our attention.
First, it is precisely the existence of paper currency that makes it difficult for central
banks to take policy interest rates much below zero, a limitation that seems to have
become increasingly relevant during this century. As Blanchard et al. (2010) point out,
today’s environment of low and stable inflation rates has drastically pushed down the
general level of interest rates. The low overall level, combined with the zero bound,
means that central banks cannot cut interest rates nearly as much as they might like in
response to large deflationary shocks.

If all central bank liabilities were electronic, paying a negative interest on
reserves (basically charging a fee) would be trivial. But as long as central banks stand
ready to convert electronic deposits to zero-interest paper currency in unlimited amounts,
it suddenly becomes very hard to push interest rates below levels of, say, -0.25 to -0.50
percent, certainly not on a sustained basis. Hoarding cash may be inconvenient and risky,
but if rates become too negative, it becomes worth it.

In a series of insightful papers, Willem Buiter has discussed whether it might be possible to find devices for paying negative interest rates on currency. Buiter notes that there were experiments with stamp taxes during the Great Depression (currency would remain valid only if it were regularly stamped to reflect tax payment). There are a variety of other ideas. For example, Mankiw points out that the central bank could effectively tax currency by holding lotteries based on serial numbers, and making the “winners” worthless.

Paying a negative interest rate on currency, or on electronic reserves at the central
bank, may seem barbaric to some. But it is arguably no more barbaric than inflation,
which similarly reduces the real purchasing power of currency. The idea of raising target
inflation to reduce the likelihood of hitting the zero bound is indeed an alternative
approach. Blanchard et al. point out that if central banks permanently raised their target
inflation rates from 2% to 4%, it would leave them scope to make deeper cuts to real
interest rates in severe downturns. Arguably, paying negative interest rates is a better
approach if, as many believe, inflation becomes more unstable as the general level of
inflation rises. Robert Hall argues forcefully that the central role of monetary
policy should be to provide a stable unit of account, and in principle the ability to pay
negative interest rates facilitates its ability to achieve this in today’s low inflation

Even if there is a good case for allowing the central bank to pay a significant
negative interest rate to fight a large deflationary shock, what is to stop a government
from using negative interest rates as a wealth tax in normal times? This is a complex
issue that parallels many of the problems in trying to design central bank institutions that
will resist the temptation to inflate. Nevertheless, the challenges of conducting monetary
policy at the zero bound force consideration of alternatives to the status quo. If, as
Reinhart and Rogoff conjecture, business and financial cycles in the 21st century
may produce larger fluctuations than they did in the last part of the 20th century, the issue
of hitting the zero bound may indeed remain a recurrent one.

Anonymous money as a vehicle for facilitating tax evasion and illegal activity
We now turn to a second drawback to paper currency. Paper currency facilitates
making transactions anonymous, helping conceal activities from the government in a way
that might help agents avoid laws, regulations and taxes. This is a big difference from
most forms of electronic money that, in principle, can be traced by the government. (We
discuss the issue of substitute anonymous transactions vehicles such as Bitcoin, later on.)
Standard monetary theory suggests that an essential property of money is that neither buyer nor seller requires knowledge of its history, giving it a certain form of anonymity. (A slight caveat is that the identity of the buyer might be correlated with the probability of the currency being counterfeit, but until now this is a problem that governments have been able to contain.) There is nothing, however, in standard theories of money that requires transactions to be anonymous from tax- or law-enforcement authorities. And yet there is a significant body of evidence that a
large percentage of currency in most countries, generally well over 50%, is used precisely
to hide transactions. I have summarized the international evidence in earlier research. Other than the introduction of the euro, rather little has changed except that, if anything, anonymous currencies have continued to grow at a faster rate than nominal GDP.

Given that banks and businesses are typically quite efficient in their cash management (as evidenced by several central bank surveys), the most surprising fact about currency is the sheer extant amount that most OECD countries have in circulation, far in excess of anything that can be traced to legal use in the domestic economy. Table 1 gives data on currency by denomination and as a share of GDP for the United States, the Eurozone, Japan and Hong Kong. For example, as of March 2013, there was almost 1.3 trillion dollars in US currency in circulation, or roughly $4,000 for every man, woman and child living in the United States. Moreover, nearly 78% of the total value is in $100 bills, meaning more than thirty $100 bills per person. By contrast, denominations of $10 and under accounted for less than 4% of the total value of currency in use.
The size of dollar currency holdings, relative to GDP or per capita, is hardly
unique. Indeed, in the US the currency supply is 7% of GDP, in the Eurozone 10%, and
in Japan 18%. Despite having lower per capita income, the Eurozone also has roughly
$4,000 in euros for every one of its citizen (valued at the April 2014 euro–dollar
exchange rate). The euro has a much greater range of high denominations, so the value is
not as concentrated in a single denomination as in the United States. Nevertheless, the
same basic phenomenon holds, with roughly a third of the value of euro currency held in
50 euro notes (roughly $70), and another third in 500 euro notes (roughly $700). Adding
in 100 and 200 euro notes brings the percent of high-denomination notes close to that of
the US. In Japan, the total amount of currency outstanding is similar to that in the United
States and Europe, despite having a population size only 40% as large. The concentration
in the highest denomination is even more acute, with 87% of the value of notes being in
10,000 yen notes, the largest denomination, roughly $100 at April 2014 exchange rates.5
It is true that in the case of the US and the euro area, there is fairly convincing
evidence that a large share is held abroad. Porter and Judson use seasonal
comparisons with Canada and biometric techniques to infer that roughly 70% of US
currency is held abroad. It should be noted that Canada is a country that has relatively
low currency use compared to many other advanced countries. However, the fact that
currency outstanding is comparable to the US in so many other OECD countries, most of
whose currencies are used only domestically, suggests that perhaps the size of currency
holdings in the US is similarly quite large; Rogoff speculates that the ratio of US
currency held internationally may be closer to 50%. Of course, as interest rates have
fallen to near zero in recent years, it is not surprising that the demand for currency in the
domestic US economy appears to have risen; using similar techniques to her earlier work,
Judson estimates around 50% of US dollars are held domestically post financial
crisis. Even if foreign holdings of currency are important for a few countries (including
also Hong Kong and Switzerland), this is not thought to be the case for most OECD
countries. The Japanese yen does not appear to be a significant international currency.
In any event, it is clear that the long-term trend domestic demand for currency in
the legal economy is dwindling, due in part to advances in cashless payments.

As already noted, the small number of central bank surveys that have been performed to
measure domestic use of currency in the legal economy typically find very low
percentages, on the order of 10–15% of total extant currency in the case of the United
States (see also Feige 2012a, b). Cash is used more intensively in some Eurozone
countries. Fischer, Kőhler and Seitz (2004) use a wide range of methods to estimate the
transactions demand for currency within the euro area to be 25–35% of total euro
currency in circulation. This estimate is broadly in accord with European Central Bank
surveys taken after the financial crisis (ECB 2011) that reported holdings and demand for
euro in the legal domestic economy of roughly 1/3 of total euros outstanding. Of the
remainder, Bartzsch, Rősl and Seitz (2011) look at euro notes issued by the Bundesbank
and find that between 40 and 55% are held outside of Eurozone countries. (It is quite
possible that the overall level of euro notes held outside the Eurozone is lower, since
Bundesbank-issued notes are particularly popular, even if in principle all the Eurozone
central bank notes should be perfect substitutes.)

Presumably, currency that is not held in the domestic legal economy or in the
global economy (legal and underground) is mainly held in the domestic underground
economy. The underground economy includes agents evading taxes, laws and
regulation. The size of the underground economy is not known within any precision,
though estimates for the US are on the order of 7–10% of GDP. The IRS estimates that for the benchmark year 2006, the tax gap (tax not paid voluntarily) is over $450 billion, with a gap of $385 billion still remaining after tax collection efforts. Importantly, this estimate does not include the informal economy. In Europe, where taxes are higher and regulation is
often more onerous, most estimates suggest that the size of the underground economy is
considerably larger than in the US.

Summing up, currency should be becoming technologically obsolete. However,
in no small part due to its association with the underground economy, it is not.

Arguments against phasing out paper currency

The arguments for eliminating paper currency are impressive, but there are
important points on the other side of the equation. The most straightforward is
seigniorage. The United States money supply increased by an average of roughly $30
billion per year from 2002–2007, and averaged roughly $70 billion dollars per year in the years immediately following the financial crisis. The magnitudes are similar in many other large advanced countries. If a phase-out of paper currency were simply met by an increased demand for electronic central bank reserves, there would of course be no significant loss. However, precisely because paper currency is anonymous, replacing it with non-anonymous electronic money would likely lead to a large shrinkage in demand, and Treasuries would have to absorb the loss. Rogoff (1998) conjectures that this cost might be fully compensated if a modest fraction of the underground economy is induced to pay taxes, and there are also of course potential gains from reduced law-enforcement costs. It is unclear how easily these activities could substitute into other transactions media, but presumably this could be made difficult by restricting other potential anonymous transactions vehicles.

Of course, if the government simply replaced paper currency with electronic
currency that it could somehow credibly make anonymous, there would be not
necessarily any long-run shrinkage in demand. The government would continue to garner seigniorage revenues from the underground economy and the problem of the zero bound on nominal interest rates would be effectively eliminated. That said, it is far from clear that the government can credibly issue a fully anonymous electronic currency and even if it could, anonymous electronic fiat money has all the drawbacks of an anonymous paper currency in facilitating tax evasion and illegal activity.

There is also a question of how forcing a more rapid shift to cashless payments
would affect transactions costs. Retailers are typically forced to pay a pro-rata fee to
companies such as MasterCard and Visa for credit card services. But handling paper
currency also entails substantial costs to protect against theft and pilferage. Also, in
principle, the Federal government could allow individuals to maintain ATMs and debit
cards at the Federal Reserve, and arguably these could be serviced by private
subcontractors at lower cost than conventional bank services.

Another important argument for maintaining the status quo is that eliminating a
core symbol of the monetary regime could disrupt common social conventions for using
money, possibly in unexpected ways. For example, it could lead to a precipitous decline
in demand for debt and not just for fiat money. This need not happen. In his hugely
influential book on monetary policy, Woodford (2003) shows that central bank
stabilization policy can work perfectly well in the limit as money’s role in transactions
goes to zero. As long as social price-setting convention remains, and as long as the
central bank can manipulate banks’ reserves to set the price level, monetary stabilization policy can still operate with full force. However, one must be careful that just because a similar equilibrium can obtain with or without a significant transactions role for money, it does not necessarily mean that private agents will focus on the same equilibrium as they would when there exists paper currency. Yes, the government can help coordinate expectations by insisting that taxes are paid in the electronic fiat currency, and that all state contracts be denominated in this currency. But it is important to acknowledge that there is a least an outside risk that if the government is too abrupt is abandoning a century-old social convention, it will destabilize inflation expectations, introduce a risk premium into bond pricing, and generally induce unexpected macroeconomic instabilities.

There is also a potential risk to central bank independence. Even if eliminating
currency is at least revenue neutral for the government as a whole, the central bank is the one that will lose seigniorage revenue. The Treasury is the one that will correspondingly gain through higher tax revenues and lower law-enforcement costs. Under longstanding institutional relationships, the ability to self-finance has put central banks in a privileged position. Although governments typically maintain oversight of central bank budgets, the fact that the central bank nominally appears to be a “profit center” considerably strengthens its hand in maintaining operational independence. In recent years, quantitative easing has been a massive money maker, but this is not the normal state of affairs when currency provision is a key source of revenue.

Another argument for maintaining paper currency is that it pays to have a
diversity of technologies and not to become overly dependent on an electronic grid that
may one day turn out to be very vulnerable. Paper currency diversifies the transactions
system and hardens it against cyber attack, EMP blasts, etc. This argument, however,
seems increasingly less relevant because economies are so totally exposed to these
problems anyway. With paper currency being so marginalized already in the legal
economy in many countries, it is hard to see how it could be brought back quickly,
particularly if ATM machines were compromised at the same time as other electronic

A different type of argument against eliminating currency relates to civil liberties.
In a world where society’s mores and customs evolve, it is important to tolerate
experimentation at the fringes. This is potentially a very important argument, though the
problem might be mitigated if controls are placed on the government’s use of information
(as is done say with tax information), and the problem might also be ameliorated if small
bills continue to circulate.

Last but not least, if any country attempts to unilaterally reduce the use of its
currency, there is a risk that another country’s currency would be used within domestic
borders. Even if that risk is not great for a country like the United States, there is still the
loss of revenue from foreign users of currency (many of whom may be engaged in
underground or illegal activities within their own borders, even if not within US
borders). Thus, any attempt to eliminate large-denomination currency would ideally be
taken up in a treaty that included at the very least the major global currencies.


Paper currency came into prominent worldwide use at the time of World War I,
and has played a major role in shaping the global history of the last 100 years. Despite
huge and ongoing technological advances in electronic transactions technologies, it has
remained surprisingly durable, even if its major uses seem to be buried in the world
underground and illegal economy. With many central banks now near or at the zero
interest rate bound, there are increasingly strong arguments for exploring how it might be
phased out of use. True, there are many arguments for not disturbing the status quo,
ranging from the importance of seigniorage revenues to civil liberties arguments. Given
relentless technological advance, embodied in everything from mobile banking to
crytocurrencies, we may already live in the twilight of the paper currency era anyway,
Nevertheless, given the role of paper currency (especially large-denomination notes) in
facilitating tax evasion and illegal activity, and given the persistent and perhaps recurring
problem of the zero bound on nominal interest rates, it is appropriate to consider the costs
and benefits to a more proactive strategy for phasing out the use of paper currency.

Why Governments Want to Eliminate Cash

In 2016, the European Central Bank (ECB) announced that it would stop minting €500 notes, in a move that they say is meant to curb fraud and money laundering. The 500 euro note is the second-largest denomination currently across the common euro currency zone, and the ECB says that it is the banknote of choice among criminal

While the stated purpose was to stop financial crime, others have speculated that this move was part of a recent “war” on cash, essentially with the government trying to get rid of cash and eliminate money from the economy. In a “race to the bottom” to weaken currencies in order to stimulate flagging economies around the globe, we may ultimately see a complete elimination of paper cash in favor of electronic money – not to be confused with digital currency, such as bitcoin, but rather fiat currencies stored as entries in bank accounts.

The “War” on Cash

At the time of ECB’s announcement, the number of 500 euro bills in circulation represented over €300 billion, or nearly one-third of all the euro-denominated cash outstanding. Holding on to physical cash is exactly what negative interest rates, as implemented by the ECB and elsewhere, is meant to dis-incentivize. Because it is relatively easy to hoard cash using €500 notes, eliminating them would benefit the central bank by making it increasingly difficult to avoid the negative interest rate policy (NIRP) mandate. Alternatives to hoarding paper money such as physical assets such as gold are much more cumbersome and costly to store and transfer.

Analysts at Bank of America Corp. (BAC) have also suggested that eliminating high-denomination banknotes can effectively weaken a currency in global foreign exchange markets. Without a high-value euro bill, people who want to hold cash (rather than spend it) will trade in their euros for higher denominations in other currencies, like the 1,000 note Swiss Francs or U.S. $100 bills. If this analysis is correct, scrapping high-denomination notes would also serve the ECB’s motives of indirectly weakening the currency so as to boost exports and spur economic growth.

Paper money also makes it easy for people to withdraw large sums of money from their banks, which can be a cause of bank runs in a fractional reserve banking system, and was a big problem during the 2008 financial crisis. If banks have to pay negative interest rates persistently to central banks, they will ultimately have to pass this cost on to their customers. If a bank charges you a negative 1% interest on your deposits, you are much more likely to withdraw your money in the form of cash. Making it harder to effect those large withdrawals will help stabilize the financial sector in such a case.

The European Central Bank is not alone in this recent “war” on cash to eliminate money from circulation. An ex-banking chief in the U.K. has called for a ban on £50 notes in order to “tackle terrorism,” and a former CEO of Standard Chartered Bank Peter Sands has gone on the record calling for the $100 bill to be scrapped in America.

Unfortunately, eliminating cash will likely do little to reduce crime as there are multiple ways to circumvent the need for cash, and even worse, cutting off cash may just lead criminal organizations to innovate and use pre-paid gift cards, digital currency, or bank checks to elude law enforcement. 

The Bottom Line

The “war” on cash begun with the European Central Bank’s proposal to get rid of the 500 euro note and calls for the elimination of the $100 bill in America. While the argument for the move is that these large bills aid in financial crime and terrorism, the ulterior motive may be to make it harder for banks and consumers to avoid negative interest rates by holding on to actual money.

Harvard Economist: US Should Phase-Out All Currency Larger Than $10 Bills

The Unites States should phase-out all denominations of the U.S. dollar larger than a $10 bill to thwart money launderers and tax evaders, Harvard economist Kenneth Rogoff told attendees at a Council on Foreign Relations event this week in Washington, D.C.

“Cash is not used in ordinary retail transactions. It’s used by tax evaders and in a lot of crime of all types, including drug trafficking, human trafficking, extortion, racketeering, you name it,” said Rogoff, a member of the economic advisory panel of the Federal Reserve Bank of New York and author of The Curse of Cash.

“Cash is being used less and less in ordinary transactions,” Rogoff pointed out, noting that the average middle-class American holds about $150 in cash, compared to more than $100,000 in total assets.

“Cash is nothing,” he said.

Rogoff envisions a gradual phase-out of bills larger than $10 over a 15-to-20 year period “to deal with the unintended consequences” of moving to a cashless economy, and scoffed at those who fear the government would then be able to monitor every transaction.

 “If you don’t trust the government and all your money is in cash, you’re pretty stupid,” he said.

According to the Federal Reserve, there were 38.1 billion Federal Reserve notes in circulation last year. An order to print 7.1 billion more in 2017 worth $209 billion has been submitted to the U.S. Bureau of Engraving and Printing. The order includes 2.4 billion $1 bills and 1.5 billion $100 bills.

“There are 11.1 billion $100 bills in circulation, and about 75% of them are held in other countries, in part because the U.S. dollar is the dominant international reserve currency,” according to the Wall St. Journal.

Noting that many of the $100 bills in circulation are used for “illegal activities abroad by Mexican drug lords, Colombian rebels and Russian oligarchs,” Rogoff argued that the “wholesale elimination” of high-denomination bills would mostly affect organized criminals and tax evaders. 

“Every transaction inevitably leaves a trail. Cash doesn’t,” he said.

“Big [cash] purchases are dirty money,” the Harvard economist stated. “Cutting crime by 5 percent would be a good trade. And if the government can collect 15 percent of taxes that it is not getting, you could cut everybody’s taxes.”

The Nordic countries have already reduced cash transactions to about 5 percent of the total, he noted. The impetus to go cashless in Europe was terrorism. “Something bad could spark things here, too,” he said.

But Dr. Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Center at George Mason University, pointed out that many criminals use “trade-based money laundering,” such as exchanging banned elephant ivory for Chinese imports. asked Shelley if eliminating most cash – which Rogoff said he did not recommend for developing markets and emerging economies – would stop terrorist groups and other criminals from laundering money.

“You have to be kidding!” she replied. “They [terrorists] are at the forefront of inventing new methods and refining old methods of trade-based money laundering. Illicit trade has exploded with the Internet.”

In May, Shelley testified before Congress that such illicit trade makes up an estimated 8 to 15 percent of the global economy and “is growing in almost all identified categories,” providing funding for terrorist groups and drug cartels.

“But this illicit trade does not exist in a vacuum. It is supported by banks, it is supported by law firms, it is supported by professional services that write contracts, that develop contracts, and help mask the illicit trade,” she testified.

 “You can hide money in a shell corporation in Delaware, no questions asked,” agreed Porter McConnell, director of the Financial Transparency Coalition. “It’s so easy to do. It’s actually quite easy to move billions.”

Criminals and terrorists use phony invoices, inflate prices of intangible intellectual property, and other tricks to launder money, McConnell told CNSNews. “This stuff is such a bigger game than cash. You can’t move billions of dollars in a briefcase.”

Rogoff also argued that reducing the amount of cash would also give the Federal Reserve another monetary policy tool because it would eliminate the current constraints on cutting interest rates.

“My basic take is that it’s a good idea to get rid of big bills, period, over the longer term,” Rogoff said, especially since U.S. banks may follow the lead of Switzerland and Sweden at some point and “effectively use a negative interest rate policy.”

“Cash is in the way because if you charge a relatively large interest rate to hold money,” large institutional depositors such as pension plans and insurance companies “will take it out,” he explained.

“Right now, central banks are at a loss about what to do about monetary policy. European banks are looking at negative interest rates. We need to be able to do something,” he said, adding that “central bankers are doing a lot of things more dangerous, such as buying 20 percent of the corporate bond market in the next round.”

Rogoff added that he was not worried that criminals would just switch to alternative currencies such as gold or Bitcoin (“which is not really anonymous”) if most cash transactions were eliminated.

 “There are creative ways to do anything, but you can only use them [alternative currencies] sometimes,” he said. “The government can just say to the banks and retail stores: ‘You can’t take that’,” he explained.

CNSNews asked Rogoff how people could get their money out of a failing bank if large denominations are phased out.

“If the bank wants to give you the money, it can do so with an electronic transfer,” he replied, adding that “we still insure deposits up to $250,000.”

But not everybody at the event was convinced that phasing-out currency was a good idea.

Routine cash-based transactions not only ensure privacy, but protect people from credit card and financial fraud as well as identity theft, Marc Rotenberg, president of the Electronic Privacy Information Center, pointed out, adding that “the greatest abuser of cash is the government, which sent pallets of cash to Iraq to pay out money without accountability.”

Coin Shortage or Cashless Conspiracy?

As the seriousness of COVID-19 became clear, Americans stocked up on toilet paper before heading into quarantine. The resulting shortage of that particular product was one of the more peculiar side effects of the pandemic.

Now months later another, a perhaps more serious shortage is at hand.

In June, Federal Reserve Chairman Jerome Powell informed that Congress America’s coin supply had dwindled due to COVID. Since then, the question I am most often asked “is the coin shortage real?” This is usually followed by “or is this the federal government’s sneaky way to get rid of cash and force us to use electronic transactions so the surveillance state can monitor us all the time? The answer is neither.

The amount of coins in the economy hasn’t changed. It is the flow of those coins that has.

Businesses make and receive change when customers pay in cash. Then these businesses deposit coins at their banks. There, the worn-out ones are culled and the rest are wrapped in rolls that businesses use when they run low.

Customers throw their coins in a jar and cash them in at their bank or use a coin aggregator machine at the grocery store.

When banks run low, they order more from the Federal Reserve, and when the Fed’s inventory runs low, they place orders for more from the United States Mint.

This is the normal circulation of coins. COVID has disrupted it.

Many businesses are closed; coins are sitting in their cash registers. Most of those who have re-opened are avoiding handling cash as a means of stopping the spread of COVID. Instead the vast majority of transactions are now done with electronic payments like credit and debit cards.

Customers have also been impacted. Trips to the bank and grocery stores are less frequent and cashing in accumulated coins a less important errand. And, as is customary in times of economic crisis, others are hoarding cash as a precaution for a “rainy day.”

Operations at the United States Mint have not gone unchanged by the pandemic either. On top of the suppliers (and thus supply) reacting to COVID, the Mint has had to sanitize its manufacturing plants, adapt to newly complicated logistics, and reduced staff due to social distancing. And its manufacturing plants have been forced to close from time to time due to a few employees testing positive for the virus. This has all in turn shrunk its manufacturing capacity: Production is currently down while demand is up.

The United States Mint exists to make enough circulating coins to facilitate economic transactions. This shortage illustrates just how important coins, and more broadly cash, are to the world’s largest economy, even in the modern age of electronic transactions. It also shows on a less observed level how some Americans are more vulnerable not just to the virus but its shockwaves than others. For example, particularly hard hit during the pandemic are the working class and the unbanked, two population segments that rely heavily on cash.

There is much to fear from governments waging war on cash: During its “bail in” (versus a bail out) the cash-strapped government of Cyprus confiscated 40% of all savings accounts beyond what was insured. Further, negative interest rate policies have been used to force citizens to spend their wealth to stimulate their economies and to be effective, require that cash be eliminated. And governments, like China, have used electronic transactions as a means to monitor spending habits and collect data on their citizens.

However, our nation’s coin shortage is merely temporary. It is an unintended consequence of COVID and our government’s response to it. As the economy opens more, usage patterns will normalize, and as the United States Mint’s production catches up, coin supply will increase just like toilet paper has.

Is This the End of Cash?

With the coming paper currency apocalypse, your money will no longer be good here. Or there. Or anywhere.

n our steady march toward an all-digital world, an ever-growing array of tangible forms of communication and culture—from printed books and newspapers to handwritten letters (imagine!) to DVDs—are being relegated to history’s dustbin. And now we’re on the cusp of arguably the biggest transition yet: ditching cold, hard cash for a future in which all money is digital.

Actually, it might seem we’re already a good ways along. Just look at our exploding use of credit and debit cards: In 1990 debit cards in the U.S. were used for 300 million purchases; today the total exceeds 40 billion. Swipe technologies like Apple Pay are taking off, as are person-to-person apps such as Venmo and Zelle. Other technologies, involving things like microchip implants, finger­print scans, and facial recognition, are even eliminating the need for phones and smartwatches. In some places using cash is beginning to feel as outmoded as mailing a check to pay your electric bill.

Printed money didn’t come into widespread use until the 17th century, when it was adopted by Europeans, who could exchange their notes for actual gold. In 1933, when the connection between the U.S. dollar and gold was effectively severed, cash truly became just a paper construct. If the paper is no longer needed, logic would suggest, why not just get rid of it?

And yet, as we start to get a sense of what a society without cash might actually look like, that imagined utopia of commerce—where everything is clean, quick, efficient—is running into some resistance. Many of us are stubbornly clinging to our paper money habits. Maybe, just maybe, we’ll miss cash more than we realize.

“Money’s destiny is to become digital,” declared the Organization for Economic Cooperation and Development back in 2002. And, indeed, in many developed countries today, cash is clearly in decline. In South Korea just 20 percent of consumer transactions involve cash or checks. In Canada the figure is 29 percent. In Singapore and the Netherlands it’s around 40 percent. In the U.S. it’s roughly half. A December 2017 report from the Bank of International Settlements found that the number of cashless transactions around the globe has “at least doubled over the last 10 years across all countries.”

Nowhere is the cashless movement further along than in Sweden. After a decade during which the country’s financial sector made a concerted effort to get people to adopt electronic payment methods—by doing things like keeping no cash on hand at most bank branches and refusing to accept cash deposits—only 15 percent of financial transactions are now done with physical money.

Many stores, along with buses and the Stockholm metro, no longer take cash. Most person-to-person payments are made via a mobile app called Swish, which lets you send money instantaneously from one bank account to another with a phone number. Even street vendors have adopted Swish, and contrary to what you might assume, there isn’t a large generational divide; at least half of Swedes over 60 use Swish. It’s so popular, in fact, that the verb “to swish” has entered the nation’s lexicon.

While the drive to eliminate cash is fueled partly by capitalism’s impulse to wring waste out of the system, it is also propelled by consumers’ desire to make their lives easier. In Sweden more than 4,000 people have had microchips implanted under their skin, which makes it possible for them to pay with the wave of a hand; it also brings us closer to a Minority Report future in which we’re greeted with personalized ads and buying options as we walk down the street.

That may sound extreme, but it’s really just a logical extension of the contactless technologies most of us will be using soon, if we aren’t already. Apple Pay and Samsung Pay now let you settle up via your smartphone, and last year Samsung rolled out the first trial of its Contactless Companion Platform, which is a chip that can be inserted into an array of objects—watches, key fobs, bracelets—turning them into payment devices.

Amazon is testing a digital payment system that would enable customers to make purchases without ever taking out a wallet or device. An app checks you in as soon as you enter a store, and any items you leave with are recorded by 3-D scanners at the door and automatically billed to your credit card. No clerks, no checkout counters, no lines.

The London supermarket Costcutter, meanwhile, introduced a system in 2017 that allows customers to pay with a fingertip scan. And Mastercard has announced that by April card users will be able to make payments using fingertip and facial recognition technology that employs scanners similar to the ones found on recent iPhones.

Financial institutions have a very big stake in this future, obviously, as individuals must be linked to a bank account or credit card (or, at the very least, possess a prepaid debit card) to go cashless. In an effort to get a leg up, last summer Visa launched Cashless Challenge, which awarded small businesses $10,000 to upgrade their point-of-sale systems to be totally cashless. Companies that applied had to explain what the move would mean for them and their customers.

Whether a cashless consumer experience is your idea of heaven or a dystopian nightmare, a case against paper money is easy to make. For starters, cash is dirty. A 2017 study found that dollar bills from New York banks were covered with hundreds of species of microorganisms, including ones that cause acne. Also, cash can be lost and accidentally destroyed. And, of course, it can be stolen.

Physical currency requires a vast infrastructure to produce, distribute, and protect it. The U.S. spent almost $900 million in 2018 printing new bills. For banks, transporting money from their vaults to ATMs and branches, sending and storing paper checks, and employing tellers to handle deposits and withdrawals is even more expensive. A recent Morgan Stanley study, for instance, found that Bank of America spends $5 billion a year processing checks and cash. There is also the inefficiency of the cash transaction itself. All that careful counting and pawing through the register for change is slow.

One study by research firm IHL Group found that if you factor in the time it takes to make change, count bills and coins at the end of the day, and take the money to the bank, cash trans­actions cost retailers between 5 and 15 percent of sales. By contrast, digital transactions requiring a simple card swipe or wave of a smart device are typically fast and efficient. And they make it easier, in principle, for people to track their spending, since there’s a digital record.

Governments benefit too. For one thing, digital transactions are harder to hide and thus easier to collect taxes on. Plus, eliminating cash can make it more difficult for certain types of illicit businesses to operate. The U.S., for instance, has driven some offshore betting companies out of business by cutting off their ability to process credit card payments. Though criminals can now turn to cryptocurrencies like Bitcoin, those are also easier to track than cash, since every cryptocurrency transaction is recorded digitally.

Given that going cashless would seem to be a win-win for most of us, how much longer do we have to wait until the revolution is complete? Maybe longer than you’d think. Interestingly, while people are using cash less frequently, the actual amount of cash in circulation has increased. There are more physical dollars (and most other paper currencies) in the world today than ever before. According to the Federal Reserve, 65 percent of Americans regularly carry cash, perhaps because, as one recent consumer survey found, not having money in our wallets makes most of us anxious. Especially for small trans­actions, cash remains many people’s payment method of choice.

Why is that? Partly it’s about psychological and cultural factors, including our attachment to what’s familiar and not wanting to have our options limited. We might speak of cold, hard cash, but studies have shown that we actually have an emotional attachment to physical money. Participants in a well-known 2011 study cited feeling “a sadness that once you have handed it over, it’s gone.” Another study found that people who did nothing more than touch money before putting their hands into a pot of hot water were able to endure pain better and longer than people who had handled blank paper instead.

The visceral sense of security we associate with physical money stands in stark contrast to the increased exposure and eroded privacy that would inevitably accompany a cashless economy, in which, theoretically, every transaction is recorded. While that may be good for tracking your own spending habits, it also makes it easy for companies—and potentially governments—to track them too. Historically, consumers have been willing to give up a certain amount of privacy for convenience, but that bargain has soured in recent years as our every move on the internet is tracked, analyzed, and sometimes resold for profit. In that light, cash—and the anonymity it provides—can be appealing.

There are also technological impediments to the cashless takeover. Particularly in the U.S., businesses have been slow to adopt cashless systems (which is why companies like Visa are paying them to do it). Some are understandably anxious about vulnerability to hacking and cyberattacks, power grid failures, and outages in banking networks—like the one that hit Visa’s payment systems in Europe last June.

The company’s network suffered widespread disruptions for close to 10 hours, which rendered vast numbers of businesses unable to process transactions and provoked a run on ATMs, sending shockwaves through the continent’s economy. Another reminder of the limitations of going cashless was Puerto Rico’s experience after Hurricane Maria knocked out more than 80 percent of the island’s power lines for months, which prevented many residents from accessing their money and made electronic trans­actions impossible.

The fact is a lot of economic activity around the globe is still conducted using cash, and not only in less developed regions. Wealthy Americans may not use cash to buy much (according to a McKinsey study, once you get into the upper middle class, cash accounts for just 2 percent of all point-of-sale transactions), but many of the workers the wealthy employ—nannies, gardeners, housekeepers—are paid in cash. Such off-the-books transactions would be impossible in a fully cashless economy. Ditto tips for hotel housekeepers, doormen, valets, baristas, and the like. Workers in the tourism industry, for instance, would likely see their incomes decline in a cashless world. And those who don’t have checking or savings accounts—close to 7 percent of Americans (mostly non-white)—would be at risk of being shut out of the system completely.

Another aspect of going cashless is the impact it would have on our spending habits. Precisely because cash gives us a feeling of security, handing it over is painful in a way that swiping a card or waving a phone is not. What economists call “the price of paying” is simply higher with cash. As one consumer put it, “I really see the cash going out of my pocket when I spend.”

Thus, when we use cash we tend to value those purchases more. In one experiment, subjects had to buy a mug. Some used cash, others a debit card. Then the researchers offered to buy the mugs back. The people who had paid cash demanded, on average, almost twice as much for their mugs—­suggesting that they valued them more highly. The essential idea here is that when we use cash, we are connected to—and are arguably more in control of—our spending.

When we use cards or other electronic forms of payment, we suffer from what is sometimes called the decoupling effect: We’re less connected to the money we’re spending, which makes it easier to spend freely. Studies have found that the presence of the American Express logo on a shopping catalog makes people buy more. One famous experiment conducted by the economist Drazen Prelec involved a silent auction for tickets to sold-out NBA games. Half the bidders were told they could pay only with cash (or a check), and half could pay only with a credit card.

On average the credit card buyers bid more than twice as much as the cash buyers. Not surprisingly, there appears to be a correlation between a country’s electronic transactions and its level of household debt, with Canada, South Korea, the Netherlands, and, yes, Sweden ranking high in both categories.

The willingness to be more profligate when using digital money isn’t only about buying on credit. People shopping with gift cards also spend more than their cash-­paying counterparts. (Even more weirdly, people using a photocopier card make more copies than people who pay for their copies with cash.) When McDonald’s began experimenting with touchscreen order kiosks, it saw a pickup in sales in stores that had them; in one outlet the average touchscreen order was 30 percent higher than those placed at the counter.

Although it’s impossible to say when total cashlessness will come to pass, we can surmise that when it does we’ll spend more freely and take on more debt. Our kids will grow up without ceramic piggy banks, gifts from the Tooth Fairy, and birthday cards from Grandma with a few bills slipped in. But they will adapt. A cashless society will not be a utopia—it will involve complicated trade-offs.

Privacy and control will be sacrificed for convenience and ease. We will have a more efficient economy, but in some ways a more regulated one, with fewer ways to bend the rules. And we’ll undoubtedly have a more distant, impersonal relationship to money. Our feeling that cash is more intimate, more real, than electronic money is an illusion. It’s just a very hard one to shake.

Inside Track

The global establishment is increasingly pushing the notion of what it calls a “cashless society” — a world in which all payments and transactions would be conducted electronically, creating a permanent record for governments to inspect and track at will. Multiple governments from Africa and Asia to Europe and the Americas are explicitly working toward that goal, and in recent months, even more have joined the effort. Powerful globalist forces and organizations including the United Nations are helping. However, analysts are warning that the implications of such a shift would be nightmarish for liberty and privacy.

Establishment Pushing “Cashless Society” to Control Humanity

The global establishment is increasingly pushing the notion of what it calls a “cashless society” — a world in which all payments and transactions would be conducted electronically, creating a permanent record for governments to inspect and track at will. Multiple governments from Africa and Asia to Europe and the Americas are explicitly working toward that goal, and in recent months, even more have joined the effort. Powerful globalist forces and organizations including the United Nations are helping, too. However, analysts are warning that the implications of such a shift would be nightmarish for liberty and privacy.  

Proponents of the government-enforced move away from physical currency cite a wide array of potential real and imagined benefits. Among them: possible reductions in armed robbery, tax evasion, black-market commerce, the cost of printing and securing physical cash, and more. Critics, though, are warning of the dangerous and Orwellian schemes that could be unleashed in a world where out-of-control governments can monitor literally every purchase, transaction, and bit of economic activity. In light of the recently exposed NSA snooping scandal, the possibilities for abuse and total surveillance are more than hypothetical, obviously. 

As the supposed “debate” on the alleged merits of the controversial plot rages on, more than a few governments and central banks are already working hard to reduce reliance on cash among citizens and businesses. The end goal, as they openly admit, is an ultimate end to all cash transactions, supposedly ushering in a wonderful world of safety and flourishing digital commerce. The darker side is rarely discussed, but as the move toward a “cashless society” accelerates, critics are increasingly sounding the alarm.

Of course, advocates of abolishing cash have tried to portray the scheme as a natural and organic phenomenon driven largely on its own — a sort of “evolution” in human society, perhaps. In a July 2 propaganda feature by CNN, the “news” outfit even included a graphic purporting to show “The Evolution of a Cashless Society,” highlighting how far along each country is on the road to abolishing cash entirely. Apparently the United States is at a “tipping point” while Canada, Belgium, France, Sweden, and others are “almost cashless.” Other countries are either at the “inception” or “transitioning.” 

In reality, though, the “trends” are hardly taking place on their own. Big Business has played a major role. Governments, meanwhile, are largely driving the plot with taxpayer funding. Controversial and deep-pocketed mega-foundations are helping to bankroll it all and build some semblance of public support. In September of 2012, for example, the Ford Foundation, which funds everything from “reproductive justice” to “sustainable development” schemes, unveiled what it called its “Better Than Cash Alliance.”

On its website, the scheme is described thus: “The Better Than Cash Alliance partners with governments, the development community and the private sector to empower people by shifting from cash to electronic payments.” Among the organizations involved in the radical partnership are the CIA-linked Ford Foundation, the American taxpayer-funded U.S. Agency for International Development (USAID), the Bill and Melinda Gates Foundation, bailed-out mega-bank Citi, credit card giant Visa, and more.

The United Nations is also at the heart of the plot, with the UN Capital Development Fund serving as the alliance’s “secretariat.” Other UN outfits involved in the scheme include the World Food Programme and the United Nations Development Programme (UNDP). Several governments and official agencies are listed on the alliance’s website, too, including authorities in Malawi, Colombia, Kenya, Afghanistan, Peru, and the Philippines. Some nominally private aid agencies are also involved.  

A key tactic in the scheme involves having partner regimes deliver welfare electronically. “We believe technology is a central tool in our collective efforts to broaden economic, social and political opportunity to even the poorest and most marginalized people,” said Ford Foundation boss Luis Ubiñas in announcing the anti-cash alliance. “Moving the public, private and development sector from cash to electronic payments is the first step in helping families not only to gain access to a formal financial system, but to save and build permanent financial assets.”

On its website, the UN Capital Development Fund also boasts of its ongoing schemes to attack cash. “Bringing about the shift to electronic payments on a global scale and ensuring that these benefits are maximized can be accelerated by an organization dedicated exclusively to providing global advocacy, knowledge sharing, collaboration and guidance on effective practices,” it says. The goal of the plan, the UN added, is to “encourage governments, development organizations and the private sector to commit to the digital transition, and facilitates [sic] the translation of these commitments into action.”

All over the world, the shift is indeed taking place. In May, under the guise of stopping tax evasion and black markets, Israeli authorities became the latest to join the push for curbing the use of cash in the economy. As part of the controversial plot to essentially abolish cash transactions in Israel, a committee led by Prime Minister Benjamin Netanyahu’s chief of staff, Harel Locker, finally unveiled its three-part plan. Among other tactics, it would ban cash transactions by businesses and individuals over a certain threshold, with the already-low limit to be reduced going forward. Violations would be a crime. 

In the Third World, the anti-cash scheming appears to making massive inroads as well. On July 1 in Nigeria, for example, the so-called “cashless policy” — a 2012 plot by the Central Bank of Nigeria (CBN) and the Bankers’ Committee seeking to slash the amount of physical currency in circulation — went into effect in another 30 states. Under the scheme, cash withdrawals from banks for individuals and businesses are being severely limited. Huge fees to use cash are also going into effect.

Separately, the Nigerian central bank and commercial banks are also rolling out a massive new scheme to gather biometric data on customers. “We have launched the Bank Verification Number today, the timetable suggests that within 18 months, every customer would have been registered,” said central bank boss Lamido Sanusi while unveiling the biometric registration plot. “This is a day that we would remember for many reasons, not for where we are but where we are likely to get from here. Nobody can steal this identity except he or she steals my fingers.”

The trend is not new. As The New American reported in 2010, Swedish authorities have long been working fiendishly toward the goal of abolishing physical currency — and all economic privacy and anonymity by extension. Celebrities, bankers, bureaucrats, labor leaders, and more have all been agitating for a complete ban on cash. Already, Sweden is reportedly further down the road toward becoming a “cashless society” than any other nation, with around three percent of transactions conducted in cash.

It is hardly alone, though. In 2012, The New American highlighted an electronic payment system touted by Canadian authorities as “better than cash” and the “evolution of currency.” The Royal Canadian Mint was behind the controversial scheme, hosting a contest to get application developers — “North America’s best brain power,” it said in a video — on board in highlighting the supposed “potential benefits.” Under the plan, users were supposed to be able to use phones or other electronic devices to make even tiny transactions, all but eliminating the need for cash.

Indeed, all over the world, similar schemes are already underway. At the same time, the establishment has been openly promoting human micro-chipping for years, with the eventual goal of having each person “chipped” and able to use the device as an ID, a credit card, and more. In 2012, the U.S. government openly announced a plan to start micro-chipping troops, supposedly for “health” purposes. Prisoners are also often cited as a potential target “market.” 

Other opponents of the schemes point to the implications for privacy and security, especially in light of the NSA scandal as well as the FATCA and GATCA global tax regimes. In a “cashless society,” literally every transaction would be tracked. If the electricity grid went down, chaos would ensue. If a government decided to quash dissidents, it could cut them off from the economy.

The potential for mischief or worse is literally endless. Whether Americans and humanity will put up with it, though, remains to be seen.

In Conclusion

I have pretty much exhausted my resources on the subject of a cashless society. I have come across references that state that the government wants to eliminate cash, to make it easier to track criminals. However I think that this nonsense, because truly intelligent criminals are too sophisticated to be hurt by the lack of hard currency. There has even been talk of eliminating the hundred dollar bill, to make it more difficult to transfer large quantities of cash. This might hurt some criminals. But the vast majority of monetary crime is electronic now. Hackers can make millions without ever touching hard currency. They can launder money electronically quite easily. There is another argument that it is too expensive to print paper money and to make coins. I know we are losing money with our coins. It routinely costs almost twice what the coin is worth to mint it. There is also another argument that cash is being limited because it is dirty and with the COIVID scare, this concern certainly came to the forefront.

So I believe that the answer to my original question is that it lies somewhere in the middle. Anybody in the know truly doesn’t believe that criminals can be controlled by eliminating cash. It will certainly make it harder to hide money under your mattress, though. But with the advent of the credit card, the amount of money that people put in savings has decreased substantially. Most full-time employees have direct deposit. Many is the time that I never see a single dollar bill from my paycheck. So after much research, I am not able to support the government conspiracy of control by eliminating hard currency. The COVID pandemic has had a much greater influence on our hard currency.

Resources, “Forced masking of America paving the way for Bill Gates’ ‘Final Solution’,” By Leo Hohmann;, “Eliminating cash will also eliminate the checks and balances on banking policy and practice,” By Stefan Wieler;, “The disappearing paper: Why cash is a dying payment method,” By Jon Norris;, “Costs and benefits to phasing out paper currency,” By Kenneth Rogoff;, “Why Governments Want to Eliminate Cash,” By Adam Hayes;, “Harvard Economist: US Should Phase-Out All Currency Larger Than $10 Bills,” By Barbara Hollingsworth;, “The End of Paper Money,” By Vikas Shah;, “Coin Shortage or Cashless Conspiracy?” By Ed Moy;, “Is This the End of Cash? With the coming paper currency apocalypse, your money will no longer be good here. Or there. Or anywhere,” By James Surowiecki;, “8 Examples Of How The Government Is Trying To Take Total Control Of Our Food, Health, Money And Even Our Dignity;”, “Tracking Down Terrorist Financing, By Eben Kaplan;, “Establishment Pushing “Cashless Society” to Control Humanity;”


The End of Paper Money

It’s quite conceivable that the grandparents (or even parents) of the future will be  made to feel even more archaic as the young of that generation look at them quizzically and state “…are you serious? You used to use bits of paper as money?!”

Money is a cultural abstract.   It is the social, cultural and legal consensus of what a given society- at a given time- considers as being money.    When economies are working well- this tends to be the most efficient form of value-exchange (which for most of recent history has been banknotes) but in less stable-times, communities have used everything from checkerboard pieces to playing cards and even pieces of wood as being their chosen mode of exchange.  You may laugh, but in the digital-era we unanimously agree that imperceptible bits of data, held in the ether, are a suitable way for us to store and exchange the oxygen of our modern lives.

What is money now?

In the post-digital era, it may seem perhaps a legacy of bygone times that we still use aesthetically pleasing pieces of pulped-tree, metal or plastic as our medium of exchange, but as Kenneth Rogoff states,“Despite advances in transactions technologiespaper currency still constitutes a notable percentage of the money supply in most countries.  For example, it constitutes roughly 10% of the US Federal Reserve’s main monetary aggregate, M2.”

The case to eliminate paper money!

Modern financial markets are behaviourally and structurally different to anything that was previously conceptualised.  It would have seemed impossible previously to assert that central banks would ever need to take interest rates below zero, but we exist at a time where that is possible and many argue necessary.  “Paying a negative interest rate on currency, or on electronic reserves at the central bank, may seem barbaric to some…” writes Rogoff, “But it is arguably no more barbaric than inflation, which similarly reduces the real purchasing power of currency.”   With any paper money in circulation, and no deflation wiggle-room, it becomes close to impossible for bank rates to (in reality) breach zero.

Paper money also provides anonymity from the government.  Rogoff notes that, “Standard monetary theory (e.g., Kiyotaki and Wright 1989) suggests that an essential property of money is that neither buyer nor seller requires knowledge of its history, giving it a certain form of anonymity. (A slight caveat is that the identity of the buyer might be correlated with the probability of the currency being counterfeit, but until now this is a problem that governments have been able to contain.) There is nothing, however, in standard theories of money that requires transactions to be anonymous from tax- or law-enforcement authorities. And yet there is a significant body of evidence that a large percentage of currency in most countries, generally well over 50%, is used precisely to hide transactions.”  This is a huge amount of physical cash; around 7% of US GDP, 10% of Eurozone GDP and almost 18% of Japan’s GDP.  In the US alone, this underground economy creates a tax-gap of around $450 billion (the European figure, with a much harsher tax regime, would be considerably larger).

The case to keep paper money

As we sit here today (perhaps in large part due to the underground economy) the demand for paper currency is outstripping the potential for that paper currency to be replaced by electronic central bank reserves.  If we were to simply stop accepting paper money, the world’s central banks would have to absorb a large proportion of the difference, perhaps upto $70billion per year in the case of the USA.  Theoretically it is possible for a government to issue currency which could be de-facto anonymous (using platforms like Bitcoin) however the potential for said money to facilitate a tax-gap and underground economy would continue (a large price to pay for a non zero-bound interest rate world…).

Rogoff also comments that“…another important argument for maintaining the status quo is that eliminating a core symbol of the monetary regime could disrupt common social conventions for using money, possibly in unexpected ways. For example, it could lead to a precipitous decline in demand for debt and not just for fiat money.”  He continues, “…just because a similar equilibrium can obtain with or without a significant transactions role for money, it does not necessarily mean that private agents will focus on the same equilibrium as they would when there exists paper currency. Yes, the government can help coordinate expectations by insisting that taxes are paid in the electronic fiat currency, and that all state contracts be denominated in this currency. But it is important to acknowledge that there is a least an outside risk that if the government is too abrupt is abandoning a century-old social convention, it will destabilize inflation expectations, introduce a risk premium into bond pricing, and generally induce unexpected macroeconomic instabilities.”

From a geopolitical perspective also, we see the threat that by eliminating a domestic currency, the population may just shift to using another- again, this is not beyond the realms of reason, many failed states have adopted the USD as the de-facto currency when that national offering ceased to serve its purpose.

The risks of living without paper…

Alongside the obvious risk of electronic currency to cyber-attack and infrastructure failure, there is also the broad-line concern as to whether a full shift to electronic currency introduces in tracking and traceability which would violate our basic civil liberties.

The Future

 “Despite huge and on-going technological advances in electronic transactions technologies, it [paper currency] has remained surprisingly durable, even if its major uses seem to be buried in the world underground and illegal economy…. Nevertheless, given the role of paper currency (especially large-denomination notes) in facilitating tax evasion and illegal activity, and given the persistent and perhaps recurring problem of the zero bound on nominal interest rates, it is appropriate to consider the costs and benefits to a more proactive strategy for phasing out the use of paper currency.” writes Rogoff.   

The normalisation of innovation into a society (where said innovation becomes accepted as a norm) can happen gradually, or through shocks.

Mobile communications and the internet illustrate this clearly.  In western societies, the normalisation of these technologies was relatively slow – taking a couple of decades.  In other countries however, they became the norm from day one; for many developing nations, mobile telephony and the internet were inserted into culture as a shock by development groups as the first form of reliable telecommunications ever to be in-place, and so the allied and emergent concepts built on these (such as electronic money and so forth) are not only more prevalent, but highly normalised.

For a true replacement to emerge for paper currency, the step-change in innovation would have to be more than marginally better for some of the stakeholders (as current alternatives are) it would need to be a pivot that gives states, central banks, governments, businesses and consumers a real reason to make the switch.

For my mind, I feel the solution will be more abstract.  It would be hard to see (at least in the short or medium term in the western world) a situation where paper currency is truly abandoned- the socio-cultural momentum that would require is perhaps a generation or two away, and will almost certainly require a role-model country elsewhere in the world to show it works.

What we are seeing however is that technology has enabled transactions to occur in the middle-ground between barter and money.  Fundamentally money exists when the community using it agrees that it is an acceptable, secure and sustainable store of value.  Crypto-currencies and many other technologies  in the space are giving credible platforms on which the notion of money can exist.  The pace of technological development also means that these platforms move much more rapidly from the development world into the real world; where they can live or die in the markets.

In the future, we could have three layers of currency in our world.  A macro layer enabling central banks to trade with each other (perhaps using some modified form of the SDR), a sovereign layer enabling nations or country alliances (such as the EU) to have a core currency as their systemically important money-supply and a third layer; the civic layer- where the community itself creates currencies to facilitate trade between themselves with freedom from policy interference.

8 Examples Of How The Government Is Trying To Take Total Control Of Our Food, Health, Money And Even Our Dignity

Over the past several decades, no matter which political party has been in power the government has continued to become a larger part of our lives. These days many people are speaking of the “nanny state” that we have created, but the reality is far worse than that. The truth is that the government has become a gluttonous, out of control behemoth that is gobbling up everything in sight and that is attempting to exert full spectrum dominance over our lives.  Today, the government seems to have an insatiable hunger to watch us, track us and control us.  Now they even want to feel our private parts before we get on an airplane.  No matter what politicians we send to Washington D.C., it just seems to get worse and worse.  Anyone who still believes that we live in “the land of the free” is completely and totally delusional.

It isn’t just in one particular area that all of this government intrusion into our lives is so offensive.  What we are witnessing is the government slowly digging its fingers even deeper into our lives in a thousand different ways.  Sadly, most Americans see the government as the one who is supposed to take care of them from the cradle to the grave, as the one who is supposed to fix all of the problems in society and as the one who is their ultimate authority.

This is in direct contradiction to the concept of a “limited government” that our Founding Fathers tried so desperately to enshrine in our founding documents.  The American people need a big-time wake up call.  The following are 8 examples of how the U.S. government is attempting to take even more control over our lives….

#1 Taking Total Control Of Our Food – S. 510 “The Food Safety Modernization Act”

S. 510, “The Food Safety Modernization Act”, is another huge power grab by the FDA and the federal government over our food supply.  The bill is written so broadly and so vaguely that nobody really knows what it means.  The potential for abuse of these vague new powers would be staggering.  So will the government abuse these powers?  Those who are in favor of the bill say that of course the government will be reasonable, but those who are opposed to the bill point to all of the other abuses that are currently taking place as evidence that we simply cannot trust the feds with vague, undefined powers.

Fortunately, the Tester Amendment has been attached to S. 510 at least for now, but big agriculture is not happy about this, and they will be doing everything they can to get it kicked out of the final version of the law.  In any event, if this food safety law does get passed, tens of millions of Americans will be left wondering what they are allowed to grow in their back yards, what seeds they are allowed to save and what can and cannot be sold at farmer’s markets.

In case you think this is paranoid, just consider what is already happening.  It has been documented that the feds recently raided an Amish farmer at 5 AM in the morning because they claimed that he was was engaged in the interstate sale of raw milk in violation of federal law.  If the feds are willing to stoop so low as to raid Amish farmers, do you think they will have any hesitation when the time comes to raid your home?

#2 Taking Total Control Of Air Travel – The Dehumanizing Full Body Scanners And “Enhanced Pat-Downs”

Totalitarian governments throughout history have always sought to dehumanize their subjects.  Sadly, that is exactly what is happening in America today.  If you want to get on an airplane in the United States, you will now be forced to either let TSA agents gawk at your naked body or let TSA agents grope your entire body including your genitals.

What these TSA agents are being instructed to do to ordinary Americans is so bizarre that it is hard to believe.  It is being reported that in many instances TSA agents are actually reaching down the pants of male travelers and up the skirts of female travelers.  One retired special education teacher was left humiliated, crying and covered with his own urine after an “enhanced pat-down” by TSA agents.  Quite a number of women that have been through these “enhanced pat-downs” have used the phrase “sexual assault” to describe the experience.

So is this what America has become?  A place that is so “dangerous” that we all must be treated like prison inmates?  Large numbers of Americans are swearing that they will simply not fly anymore, but what happens when these “enhanced pat-downs” start showing up at our schools, our shopping centers and our sporting events someday?

#3 Taking Total Control Of Our Health Care – The Loss Of Our Health Freedom

Once upon a time, Americans had control over their own health care decisions.  That is no longer true today.  Thanks to major changes in our health care laws, the health care landscape in America has been dramatically changed.  Americans are now forced to participate in the officially-sanctioned health care system by purchasing health insurance.  But Americans cannot just get any kind of health insurance policy that they want.  Our health insurance choices are now tightly constrained by thousands of regulations.

Not only that, but doctors in America no longer have the freedom to treat patients however they see fit.  Only “approved” treatments are permissible, and now the federal government is going to be telling doctors which of those “approved” treatments are “cost-effective” enough.  As the new health care laws are fully implemented over the next decade, the American people are going to become truly horrified not only about how much their health insurance premiums are going up, but also about how much health freedom they have actually lost.

#4 Taking Control Of Our Money – Multiplying Taxes

Whenever one tax goes down, it seems like several other taxes either go up or get invented.  The truth is that Americans are being drained by the federal government, state governments and local governments in dozens upon dozens of different ways.  To our various levels of government, our primary function is to serve as a revenue source.  Each year it seems like they find more ways to stick it to us.  In fact, it looks like 2011 is going to be a banner year for tax increases.  If you doubt this, just see my previous article entitled “2011: The Year Of The Tax Increase“.

#5 Taking Control Of Our Businesses – Thousands Of Ridiculous Regulations

Why would anyone in America even attempt to be an entrepreneur today?  Most small businesses are literally being strangled by hordes of red tape.

Just consider how things have changed in America.  The Federal Register is the main source of regulations for U.S. government agencies.  In 1936, the number of pages in the Federal Register was about 2,600.  Today, the Federal Register is over 80,000 pages long.

The following is just one example of how bizarre things have gotten in this country.  The U.S. Food and Drug Administration is projecting that the food service industry will have to spend an additional 14 million hours every single year just to comply with new federal regulations that mandate that all vending machine operators and chain restaurants must label all products that they sell with a calorie count in a location visible to the consumer.

Do we really need to spend 14 million more hours telling Americans that if they keep eating hamburgers and fries that they are likely to get fat?

But it is not just the federal government that is the problem.  One reader recently described how difficult  it was to try to run a business in the state of California….

Had 10 employees, but one almost exclusively to deal with government regs, taxes, reporting etc, Received a $144 penalty for a .33 (yes, cents)error on my quarterly payroll taxes from Cal Franchise Tax Board. I called to ask if that was not a bit repressive, why level penalize someone for what was obvisouly a didminimus error? I was told “we would have penalized you if it was .03!” I said, I did not volunteer to be the income tax collector for the State and Fed government, you should be paying me to do all this work and insane paper pushing. Reply: “That is part of the PRIVILIGE of being a business owner!!!”

#6 Taking Control Of Our Environment – The Green Police

The government is using the “green movement” as an excuse to take an unprecedented amount of control over our lives.  From coast to coast, communities have been given government grants to track our trash with RFID microchips. The following are just some of the communities that will now be using microchips to track what we throw away….

*Cleveland, Ohio

*Charlotte, North Carolina

*Alexandria, Virginia

*Boise, Idaho

*Dayton, Ohio

*Flint, Michigan

Not only that, but some cities are now starting to fine citizens for not recycling properly.

In Cleveland, Ohio if an RFID tracking chip signals that a recycle bin has not been brought out to the curb within a certain period of time, a “trash supervisor” will actually sort through the trash produced by that home for recyclables.

According to Cleveland Waste Collection Commissioner Ronnie Owens, trash bins that contain over 10 percent recyclable material will be subject to a $100 fine.

Does that sound like America to you?

Now we don’t even have the freedom to throw out trash the way we want to.

#7 Taking Away Our Independence – The Exploding Welfare State

You don’t have much freedom if you can’t take care of yourself.  But in America today, tens of millions of Americans have literally become completely dependent on the government for survival.  Over 42 million Americans are now on food stamps.  Approximately one out of every six Americans is enrolled in a federal anti-poverty program.

The number of Americans living in poverty has increased for three consecutive years, and the 43.6 million poor Americans in 2009 was the highest number that the U.S. Census Bureau has ever recorded in 51 years of record-keeping.

The more Americans that are destitute and totally dependent on the government the easier it will be for the government to control them.  Today a rapidly growing percentage of Americans fully expect the government to take care of them.  But this is not what our founders intended.

#8 Taking Away Our Patriotism – We Are Even Losing The Freedom To Be Proud Of America

Do you ever think things will get so repressive in America that a group of high school students will be forbidden from singing the national anthem at the Lincoln Memorial?  Well, that has already happened.  Do you think that areas of our nation will ever become so anti-American that they will forbid students from riding to school with an American flag on their bikes?  Well, that has already happened.

Fortunately, there was such an uproar over what happened to 13-year-old Cody Alicea that it made national headlines and he ended up being escorted to school by hundreds of other motorcycles and bicycles – most of them displaying American flags as well.  The school reversed its policy and now Cody can ride his bike to school every day proudly displaying the American flag.

But what if nobody had decided to stand up?

That school would have gotten away with banning the flag if the American people had allowed them to.

Our liberties and our freedoms are under attack from a thousand different directions and they are being stripped away from us at a blinding pace.

It has gotten to the point where most of us just sit in our homes and enjoy the “freedom” of digesting the “programming” that is constantly being hurled at us through our televisions.  Of course the vast majority of that programming is produced by just 6 monolithic corporations that control almost everything that we watch, hear and read.

Power and money have become more highly concentrated in America today than ever before, and yet most Americans don’t even realize it.

Most Americans are so busy just trying to survive from month to month that they don’t even have time to think about the deeper issues.  At the end of the night most of them are so exhausted from serving the system that all they can do is collapse on the sofa and turn on some programming.

But the American people desperately need to wake up.  Without liberty and freedom our country cannot work.  But our freedoms and liberties are being stripped away a little bit more each and every day.

The America that so many of us grew up adoring is dying right in front of our eyes.  If you plan on saying something about it, you better do so before it is too late.

Tracking Down Terrorist Financing

A lower-profile but still crucial aspect of global anti-terror efforts involves unraveling the networks that have funded attacks from New York to Bali. Terrorists have proven adept at maintaining financial links intact.


As the U.S.-led “war on terror” nears its fifth year, efforts to dismantle terrorist financial networks remain an essential part of Washington’s strategy. More than $140 million in terrorists’ assets have been frozen across some 1,400 bank accounts worldwide, but experts say terrorist groups have become increasingly adept at eluding detection through use of cash, sophisticated laundering operations, or legitimate front companies. Monetary practices embedded in Muslim culture, such as donating to charities and informal money-transfer centers, have compounded the difficulty in tracking down terrorist financial links. Law enforcement efforts are further confounded by the fact that devastating attacks can be accomplished at relatively low cost.

Where do terrorist organizations get their money?

Why do charities play such a big role in terrorist financing?

One of the pillars of Islam, zakat, is the compulsory giving of a set proportion of one’s wealth to charity. While most of these charities in the Muslim world exist to help the poor and spread the message of Islam, they have also been used, particularly in wealthy Middle Eastern nations, to finance jihad.

Weeding out ill-intentioned charities from the benevolent is a difficult task. As Lee Wolosky, a former National Security Council official explains, “There are nefarious charities and there are good charities with nefarious people working for them.” The U.S. Treasury Department has been disparaged for shutting down charities that critics contend have no ties to terrorism. In a March 12 Washington Post op-ed, two board members from KinderUSA, a Muslim American charity, bemoaned the government’s “assault” on perfectly legitimate charities. London-based Interpal, which funds Palestinian social programs, has been blacklisted by the United States but is still allowed to operate in Britain. Wolosky says “U.S. policy is very clear that no charity can provide money to any organization that may have terrorism as part of their agenda.” Under U.S. policy, Interpal’s support of the Hamas-run Ramallah-al-Bireh Charity Committee is seen as financing terrorism.

How do terrorists transfer funds?

Quite often, terrorists transfer money in plain sight: “If it isn’t done through the ordinary banking system, it’s done through shell companies,” says Bill Tupman, a senior lecturer at the University of Exeter who specializes in transnational crime. In their book, Chasing Dirty Money, Peter Reuter and Edwin M. Truman say financial crime is so widespread that as much as 10 percent of the global GDP is estimated to be laundered funds. Despite heightened efforts to track terrorist financiers, the vastness of the modern financial system means government officials often find themselves looking for the proverbial needle in the haystack.

Another, more traditional means of transfer is also widely used by terrorists. Hawalas are time-honored, trust-based remittance agencies popular across Asia and found throughout the world, particularly in Muslim communities. With no more than a handshake and a password, individuals are able to transfer money across the world.

How much does a terrorist operation cost?

Though the 9/11 attacks are believed to have cost as much as a half million dollars, most terrorist operations have much more modest budgets. The UN estimates the 2002 bombing of a Bali nightclub cost about $50,000. By comparison, the 2004 Madrid train bombing is believed to have cost between $10,000 and $15,000. The 2005 attacks on London’s mass transit system cost about $2,000, says Napoleoni.

What are governments doing to stop terrorist financing?

The 9/11 attacks brought an international sense of urgency to disrupting terrorists’ financial networks. Within a few weeks, the UN Security Council adopted a wide-ranging resolution demanding countries take action to suppress terrorist financing. The following month, the Financial Action Task Force, an intergovernmental body, issued a list of recommendations that became the basis for many governments’ efforts. These included passing legislation specifically criminalizing terrorist financing, requiring financial institutions to report suspicious transactions, creating a greater degree of international cooperation in tracking down terrorist financiers, and ratifying the UN convention on financing terrorism, a step that has been taken by 150 countries.

Like several other nations, the United States created a special agency—the Office of Terrorism and Financial Intelligence—to coordinate these efforts. The Patriot Act, along with subsequent legislation, created tough legal measures to combat terrorist financing. Banks must now report any suspicious activities and are also required to check their clients and third parties involved in transactions against a list of suspected terrorists. While these measures have been fairly effective within the United States, Napoleoni says terrorists have simply “shifted all the money to Europe.”

What are some of the difficulties with tracking down terrorist financiers?

The greatest difficulty is that terrorist networks have stayed aware of governments’ efforts to stymie their activities and adjust their operations accordingly. Napoleoni says “terrorist financing mutates continuously,” which generally keeps terrorists a step ahead of the authorities.

Terrorists have increasingly relied on illegal activities, like smuggling or counterfeiting, to generate revenue that is difficult to track through the financial system. Terrorists have also begun to rely more on cash, leaving less of a paper trail. According to Napoleoni, much of the funding for Abu Musab al-Zarqawi’s al-Qaeda organization in Iraq is brought into the country by couriers carrying cash. The July 2005 attacks in London were also funded entirely by cash, which Napoleoni says is untraceable.

The London attacks highlight another development in terrorist finance: the use of domestic sources in planning and funding attacks. The bombings were planned inside Britain by British citizens who raised all the money locally for the attacks. Because the plotters only used cash and didn’t cross any national borders, it was difficult to track their financial activities.

Enforcement of new financial laws has also proven difficult. According to the British Bankers’ Association, UK banks spend about $430 million each year to comply with anti-terror and anti-money laundering laws. Experts say the U.S. Department of Treasury is overwhelmed by the number of suspicious activity reports it receives, which have risen some 350 percent since 2001.

How can governments more effectively combat terrorist financing?

Because terrorist networks transcend national boundaries, improving international cooperation is essential. “One of the problems of coordination,” Wolosky says, “is reaching common ground on ’what is a terrorist organization.’” The UN General Assembly has tried for more than a decade to agree on a definition for terrorism, which would help underpin a comprehensive treaty banning the practice. Beyond that, Napoleoni calls for an international body dedicated to information-sharing and an international court to oversee the terrorism blacklist of individuals and organizations.

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