The undeclared war on physical cash
Central bankers would rather have you spread the cash around than hoard it
This last bit was particularly interesting.
The public might not much fancy paper cash being abolished so that negative interest rates can be imposed on their savings. But they might just go for it if they are told that it has to go to keep them safe — to prevent terrorism, drug dealing, local garages that don’t declare the proceeds from fixing the steering columns on the nation’s Passats. That sort of thing.
No surprise then that HMRC entered the fray with a call for evidence on “cash, tax evasion and the hidden economy”. This is a campaign gathering steam. I give cash 20 years — tops. Does it matter?
I think it does. Go back to the September paper. It discussed why (if they weren’t criminals) people might be irrational enough to hoard cash when they would be so much better off with a nice deposit account.
The answer? “To provide comfort against potential emergencies,” things such as negative interest rates, bank failures or likely cyber attacks on the financial system perhaps. That seems rational to me.
Without recourse to physical cash we are all 100 per cent dependent on the state-controlled digital world for our financial security. Worse, the end of cash is also the end of privacy: if you have to pay for everything digitally, every transaction you ever make (and your location when you make it) will be on record. Forever. That’s real repression. Something to think about. In the meantime, if you are holding cash at home you might pop down to Selfridges where (assuming you can fight your way through the Greeks in the queue) you can buy lovely little safes disguised as Pringles packets and Coke bottles.
Otherwise, if you really think cash is doomed, you might do what Hutch Vernon of Brown Advisory told me to do earlier this year. Buy shares in the best of all anti-cash investments — Visa.
Tax authorities have become increasingly keen on tracking everything and everyone to make absolutely certain that no assets slip under their radars. The Greeks have been told that come 2016 they must begin to declare all cash held in safes or mattresses of over ₧15,000 and all precious stones, gold and the like worth more than ₧30,000. Anyone else think there might be a new tax coming on all that stuff?