Bankers are Determined to Destroy Cash, and Why You Should Be Worried

When was the last time you used cash while you were out shopping? If you’re like a growing number of Australians, it’s probably been a while. And who could blame you?

Cash has become a nuisance, second only to those irritating shopkeepers that refuse to accept EFTPOS. When your wallet doesn’t even come with a spare change slot, you wonder if cash has passed its use-by date.

Many of us think cash is inconvenient. We wouldn’t bat an eyelid if it was abolished tomorrow. But those among us praying for the quick death of cash should be careful what we wish for. What we’re saying we want, but don’t yet realise, is our very own enslavement to the banking system.

Whether you’re aware of this or not, a global movement to rid the world of cash has been in motion for several years. Its implications are broader than they appear at first glance. The destruction of physical cash is not merely a question of everyday convenience. It goes much further than that. Not only does it give banks free reign to control your money as they see fit, but it prompts grave fears about the future of individual privacy as well.

Here in Australia, the conversation over the future of cash has yet to take place in earnest. But, in other parts of the world, the debate is reaching fever pitch. There could be, in a few short years, nations that have abolished the use of all cash transactions.

Take Norway for instance. Norway’s biggest bank, Norges Bank, called for a complete ban on cash transactions late last week.

Of course, Norges paid no attention to how such a move would intrude on civil liberties. Or how it could serve to empower its own interests and position. Instead, it relied on the tried and tested means of public persuasion, focusing on points that most people can’t really disagree with. The bank suggested banning cash as a way of placing limits on black market sales and money laundering:

Today, there is approximately 50 billion kroner in circulation and Norges Bank [central bank] can only account for 40% of its use. That means that 60% of money usage is outside of any control. We believe that is due to under-the-table money and laundering.’

Moreover, it used figures showing that only 6% of Norwegians use cash regularly as evidence to support its argument.

Does Norges Bank have a point? Taking all of above into consideration, would a ban on cash really be so bad? Stamping out money laundering sounds like a noble pursuit after all, doesn’t it? And the fact that so few people use cash already should make it a foregone conclusion. Right? Well, not quite.

Norway may be half way to a cashless society already, but cash should never become outlawed. The fact that so few people use cash doesn’t make it irrelevant. It actually enhances its importance. A cashless society is acceptable only in the event that people have the option of storing their money outside of a bank. Otherwise, they’re little more than slaves to the banking system.

In truth, most people don’t realise what they’d be getting themselves into. They don’t understand that moves towards banning cash will do more harm than good in the long run.

Make no mistake about it, it’s the governments and central banks that would benefit most from this. If you can’t withdraw cash from a bank, the ‘banksters’ can do as they please. That’s something we’d better off avoiding. And nowhere is this problem more apparent than when it comes to negative interest rates (NIRP).

No cash, only problems

NIRP and cash don’t mix well together, and it’s the single biggest reason why central banks want an end to cash.


If you’ve got cash at a bank, that money earns interest for you. As every saver knows, the higher the rates of return, the better off you are. That’s how things have worked for centuries, until the creation of central banks a century ago, anyway.

Since then, central banks have used their control of monetary policy to regulate the flow of capital across economies. These policies have evolved over time. They’ve become ever more aggressive in an attempt to ward off downturns.

When rates eventually reached the point of no return, the banks raised the stakes. Instead of reining in credit once interest rates hit near zero, bankers got creative. This birthed negative interest rates.

It should be treasonous that we live in a world where NIRP is a reality. Unfortunately, it’s not only legal, but central banks want to expand its use. And they see cash as the only barrier.

NIRP is bad for you for a single reason. When rates go into negative territory, you’re essentially paying banks to hold your money. If you were faced with the prospect of paying banks to store money, would you? Probably not. You’d be far better off keeping your cash stashed under the bed.

Now, it’s true that there’s a difference between central banks and commercial banks. As yet, no commercial bank charges customers to store their money with them. But central banks hold the levers of all capital in the system. Which means they influence how much banks can borrow, and lend. And it also affects the rate at which lenders charge borrowers for storing their money or taking out loans.

In any case, the point remains. There’s a ripple effect when it comes to NIRP. Central banks don’t set the rates for your savings account, but they influence it by setting borrowing rates for commercial banks. But all bankers know that if interest rates went into the negative, people would start pulling their money out of banks.

The solution to this ‘problem’ is the nothing short of eliminating cash altogether.

Why a cash ban is setting the stage for a NIRP takeover

NIRP poses an existential threat to cash. At the same time, cash is the only thing that can keep NIRP from becoming too negative.

Central banks wouldn’t risk lowering rates too far today because people could withdraw their money from any commercial bank they feared was insolvent.

But imagine that same scenario without physical cash to threaten a run on banks. Without the ability to take out cash, there’d be no leash to keep central banks from expanding NIRP.

What would that mean for you? Well, without cash, on top of this unrestrained NIRP, you’d have no say in what happens to your money. Banks could play around with negative rates all they like, and you wouldn’t be able to do anything about it. And if you can’t withdraw cash from a bank, you’re a slave to the bankers. It’s as simple as that. The prospect of NIRP would mean you’d either have to spend your money, or let negative rates eat away at it.

Now imagine NIRP, and a cashless society, were both realities in Australia. Consider what might happen in the event we entered a recession. What options would you, as a saver, have?

You couldn’t hoard cash, as you can now. The RBA could just use NIRP to force you to spend. You’re either spending your money now (and stimulating the economy), or letting banks take it from you through NIRP. It’d be theft of the highest order. And you won’t be able to do anything about it.

What’s more, banks would slap fees on deposits. Where once you were able to manage your own cash, you couldn’t under a cashless society. It’d sit there for the banks to do whatever they please with. It’d be a world of fees, taxes, and no threat of a run on banks…ever.

It’s the perfect crime. And that’s before we take into account the other implications of a cashless society.

You wouldn’t be able to purchase anything without banks knowing about it. Every single transaction you make would be in the private hands of one authority or another. That’d not only impinge on your privacy. But it also raises questions about the future of personalised advertising, among other things.

However, bankers can only realise the true potential of NIRP, and the wealth confiscation that goes with it, by eliminating cash.

Ultimately, this campaign against cash benefits bankers first and foremost. Using digital forms of payment might be convenient to us, but only in a world where physical cash still exists. In a world without cash, it becomes a bankers’ prison, and you become one its 22 million inmates.

It’s no exaggeration to call this movement one of the biggest scams of the 21st century. A cashless society is a world where there are no limits on what banks can do with your money. Their way becomes the only way. And yet we’re willingly sleepwalking into it.

Mat Spasic,

Junior Analyst, Markets and Money

PS: Central bankers’ monetary manipulations are nothing new. Banning cash is the final frontier for them to maintain low interest rates as long as they want. Markets and Money’s Phillip J. Anderson reckons interest rates will remain at current record lows for years.

In his brand new report, ‘Why Interest Rates Could Stay Low for the 21st Century’, Phil warns that you won’t be able to rely on your savings to fund your retirement.

Inflation, stemming from low rates, will eat into your savings. Worse still, you won’t be able to count on savings funding your retirement. The regular return on term deposits has halved in the last four years alone.

But you have options…if you choose to act now.

Phil wants to show you the best way to invest in this low interest rate environment. He’s prepared a four-step strategy that could boost your portfolio and wealth. You’ll learn exactly where to park your cash over the coming decades. And you’ll see how this could lead to incredible profits. To download the report, click here.

Markets and Money offers an independent and critical perspective on the Australian and global investment markets. Slightly offbeat and far from institutional, Markets and Money delivers you straight-forward, humorous, and useful investment insights from a world wide network of analysts, contrarians, and successful investors.

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