Forcing everyone to spend only by electronic means from an account held at a government-run bank would give the government far better control over recessions, economic booms, etc. (and how you spend your money).
From: telegraph.co.uk, by: Jim Leaviss, on: May 13, 2015, see the article HERE.
Preface by Garnet92: You’ll see immediately that this is being proposed in Denmark, so it’s not here YET. But, you can bet that liberals in the United States will be drooling over the thought of having control over ALL OF OUR MONEY. No more cash in mattresses, no safe full of precious metals, no ATMs, no way for the public to hide money from our benevolent government. The money-changers will be able to see all, know all, and indeed have all of OUR funds tucked safely away in the soft maternal bosom of Washington, DC.
A proposed new law in Denmark could be the first step towards an economic revolution that sees physical currencies and normal bank accounts abolished and gives governments futuristic new tools to fight the cycle of “boom and bust”.
The Danish proposal sounds innocuous enough on the surface – it would simply allow shops to refuse payments in cash and insist that customers use contactless debit cards or some other means of electronic payment.
Officially, the aim is to ease “administrative and financial burdens”, such as the cost of hiring a security service to send cash to the bank, and is part of a programme of reforms aimed at boosting growth – there is evidence that high cash usage in an economy acts as a drag.
But the move could be a key moment in the advent of “cashless societies”. And once all money exists only in bank accounts – monitored, or even directly controlled by the government – the authorities will be able to encourage us to spend more when the economy slows, or spend less when it is overheating.
This may all sound far-fetched, but the idea has been developed in some detail by a Norwegian academic, Trond Andresen*.
In this futuristic world, all payments are made by contactless card, mobile phone apps or other electronic means, while notes and coins are abolished. Your current account will no longer be held with a bank, but with the government or the central bank. Banks still exist, and still lend money, but they get their funds from the central bank, not from depositors.
Having everyone’s account at a single, central institution allows the authorities to either encourage or discourage people to spend. To boost spending, the bank imposes a negative interest rate on the money in everyone’s account – in effect, a tax on saving.
Faced with seeing their money slowly confiscated, people are more likely to spend it on goods and services. When this change in behaviour takes place across the country, the economy gets a significant fillip.
The recipient of cash responds in the same way, and also spends. Money circulates more quickly – or, as economists say, the “velocity of money” increases.
What about the opposite situation – when the economy is overheating? The central bank or government will certainly drop any negative interest on credit balances, but it could go further and impose a tax on transactions.
So whenever you use the money in your account to buy something, you pay a small penalty. That makes people less inclined to spend and more inclined to save, so reducing economic activity.
Such an approach would be a far more effective way to damp an overheated economy than today’s blunt tool of a rise in the central bank’s official interest rate.
If this sounds rather fanciful, negative interest rates already exist in Denmark, where the central bank charges depositors 0.75pc a year, and in Switzerland.
At the moment it’s easy for individuals to avoid seeing their money eroded this way – they can simply hold banknotes, stored either in a safe or under the proverbial mattress.
But if notes and coins were abolished and the only way to hold money was through a government-controlled bank, there would be no escape.
Apart from the control over the economy, there would be many other advantages of a cashless society. Such a system is much cheaper to run than one based on banknotes and coins. Forgery is impossible, as are robberies.
Electronic money is an inclusive and convenient system, giving poor and rural sectors of an economy – where cash machines and bank branches may be few and far between and not all people have accounts – a tool for easy participation in the economy.
Finally, the “black economy” will be hugely diminished, and tax evasion made all but impossible.
Did you notice all of the “advantages” that a government-controlled central bank would offer? Do you think that it’s coincidental that all of the advantages accrue to the government? Just think of how B. Hussein Obama or the Clintons would use a capability like this. Does the reference to “Big Brother” mean anything to you?
We’ll lose our God-given right to cheat on our taxes! Or to buy or sell anything without the prying eyes of Big Brother watching. Just think that it’s like the NSA monitoring ALL of our spending. Taken to a logical extreme, we could be prevented from contributing to the “wrong” political party. We could be prevented from buying anything that Big Brother didn’t approve of – or, buying from a vendor that is NOT approved by Big Brother. I won’t go on listing all of the rights that we enjoy today that
could would be at risk if this concept were to be implemented in the U.S., you guys can no doubt conjure up hundreds, perhaps thousands of prohibitions that could be exercised by a government who controls our wealth. As we so often say, follow the money to see who’s in control and if this concept is implemented, you can bet your bottom dollar that it won’t be US.
Yes, today it may seem ludicrous, but let me remind you that just a few years ago, the thought of a president who routinely lies to the American people, ignores Congress, and pays no attention to the Constitution would have been thought to be caused by drug-induced hallucinations – and yet, here we are with Barack Hussein Obama doing those very things. If we sleep through the next decade or two, we may awaken to a cashless society where 40 hours of hard work is represented by a few digital binary bits recorded in the government’s cloud. And we can forget about buying anything that Big Brother doesn’t approve of – like firearms, or alcoholic beverages, or tithing to a church.
Think Murphy’s Law: whatever can go wrong, will go wrong, and whatever goes wrong will likely cause the most damage.