‘Powerful government agencies will examine “if there is any reason for businesses to operate on a cash only basis”…the Black Economy Taskforce said last month.’
When was the last time you dropped over $10,000 in cash? If you’re like me, it’s probably not a weekly, or even yearly, experience.
In fact, the last time I spent that much in cash was eight years ago. My wife and I had just moved to South Australia and were in the market for a new (used) car. Since we had some specific features in mind — and a tight budget — we took a one-way flight to Port Lincoln to scoop up a bargain.
We flew out over the weekend and didn’t want to deal with the hassles of transaction limits. You know, the kind that find you engaged in lengthy phone calls with bank employees begging them to release more of your money.
So we took enough cash to cover the asking price.
Now, carrying that much cash is not without risk. If you lose it or someone steals it…it’s gone. But we weren’t about to misplace more than $10,000. And the odds of thieves intercepting us in transit to or from the airport were tiny. In short, the convenience outweighed any risk.
After a test drive and peek under the bonnet, we forked over the cash and signed the paperwork…duly noting the proper amount we’d paid. Happy seller. Happy buyers. Deal complete.
Would you take $9,999.99?
I bring this to your attention because, if the government has its way, this same story won’t play out for long. Not unless we could have talked the seller down to accepting $9,999.99.
You may have heard of Michael Andrew. He’s head honcho of the federal government’s Black Economy Taskforce. (Cue ominous music.) He was featured in an article in The Age last week, titled ‘Call for $10,000 limit on cash deals to fight black economy’.
According to the article, Michael, ‘is advising the Turnbull government on how it can claw back an estimated $15 billion in lost federal tax revenue and illegitimate welfare payments due to widespread cash economy activity…’
Michael said that $4–5 billion in tax savings could be realised with certain reforms. ‘Reforms were needed so that cash payments could not be tax-deductible unless people had a valid invoice with an ABN, or a group certificate.’
That sounds reasonable enough. I’m not sure who’s been getting away with illegitimate welfare claims or big tax write-offs by claiming undocumented cash payments. But closing that loophole sounds like a no-brainer.
As for the other proposals:
‘“We are saying, let’s just ban [cash] transactions over $10,000,” said Mr Andrew, who also heads the Board of Tax…
‘Other measures could be taken, such as putting an expiry date on $100 notes, which was common overseas, he said. And credit card fees for transacting at restaurants and hotels could be reduced to just 10¢ to encourage more transparent electronic transactions.’
The government would have you believe the intention is to shut down ‘money laundering, terrorism financing and illicit trade’. But do you really think terrorists, organised crime syndicates, and drug kingpins will cease large cash transactions because the government’s banned them?
As for the rest of us, we so rarely spend more than $10,000 in cash that the government hopes it can sneak this measure through without much voter pushback. But do you think the Black Economy Taskforce has taken a long-term view on the $10,000 limit? Has it bothered to consider the eroding powers of inflation over time?
If inflation over the next 50 years is similar to the past 50 years, $10,000 in 2067 will be worth about $813 in today’s dollars. And that’s assuming future ‘taskforces’ don’t cut the cash limit further. To $1,000…or just $100.
Of course, if you’re holding that cash in $100 notes, it may be worth absolutely nothing…if our cash comes with a use-by date as Michael Andrew suggests.
And that’s the real plan here. Make no mistake — this is just one more salvo in world governments’ war on cash. What’s in it for them?
We’ve written about this before in Markets & Money. But in short, once all of your cash is digital, once you can no longer hold onto physical notes, and store and spend them as you see fit, governments and central banks will finally hold all the cards.
If the banks are in trouble, they no longer need to fear a bank run. There’ll be nothing to run and get. If they need to do a ‘bail-in’ and steal money from savers to pay off bad debts, you won’t be able to do anything to prevent it. Even if you see it coming months ahead of time.
And central banks will finally be able to implement their much-dreamed-of negative interest rate policies. Without the option of storing physical cash in a safe, they can drain 1–2% per year (or more) from your account to ‘stimulate spending’ and ‘fix the economy’.
Not to mention that the transparency the government is seeking means an end to your privacy. Every purchase, every single dollar spent, can be monitored. Are you a smoker? Eating fatty foods? No longer paying your gym membership? Went skydiving? Just bought an ounce of gold? Duly noted.
What can we do?
First, enjoy your cash while you can.
Second, consider the alternatives.
Gold comes to mind. Its’ a good store of wealth that’s largely outside of government control. But it’s hard to buy things with.
What looks like a far better alternative — and it’s looking better every month — is cryptocurrencies. Cryptos offer an anonymous way of making transactions or simply storing your savings. And they remain completely outside of government control.
Our resident technology guru and cryptocurrency expert, Sam Volkering, tells me there are already over 800 cryptocurrencies available. Some have seen explosive growth, while others have fallen to nothing. It’s certainly not the kind of market you want to go into blindly.
That’s why Sam has put together detailed reports to walk investors through the digital minefield. One report tells you the cryptos to avoid at all costs. Another gives you Sam’s favourite digital coins and his outlook for their future performance.
Sam’s been following this market since the beginning. And he’s already gotten subscribers at Revolutionary Tech Investor into the action, tipping three cryptocurrencies to date. One is up 250% since November. Another is up 618% since April. And the third is up 7% since May.
With his insider knowledge, Sam makes it all sound easy. But trust me, it’s not easy. Before investing a single dollar into any cryptocurrency, find out what Sam has to say here.
For Markets & Money