India's War on Cash: Who, and Why

Cross-posted from Real Economics.

On 8 November 2016, the government of India announced its intent to demonetise large denomination currency. It is one of the most baffling economic actions taken by a government in recent memory, but a few weeks ago, the Indian news website Scroll carried an excellent three part series explaining what was going on and why. It seems some economic ideologues have joined forces with large financial institutions to force demonetisation on the citizens of India. What could go wrong? 

Note the role of Harvard economics high priest Kenneth Rogoff, the deficit scold whose April 2013 book warning that disaster inevitably resulted when a nation surpassed a specific ratio of debt to GDP, was found to contain computation errors.

Understanding demonetisation: The problem with the war on cash
Force marching unprepared citizens towards a cashless utopia that has little space for the informal sector is callous and indefensible.

Part I: Understanding demonetisation: Why there’s a war on cash (and you are in the middle of it)

Part II: Understanding demonetisation: Who is behind the war on cash (and why)

Part III: Understanding demonetisation: The problem with the war on cash

Another Indian news source described the "bewildering pain and desperate hope" the real economy has been plunged into after two months of demonetization. The article includes timetable of demonetization in India.

Fast-moving consumer goods (FMCG) firms have reported lower sales, especially in rural areas. Some 90% of the FMCG market
in India comprises small mom-and-pop stores, heavily reliant on cash sales. And 60% of small traders have already seen a drop in sales post-demonetisation, according to market research firm Nielsen.

In rural areas, where internet penetration is limited, cash is often the only mode of payment. People in the hinterlands have struggled to access cash—there are 7.8 bank branches per 100,000 persons in rural India—and this, in turn, has affected wage and loan disbursal in these areas.

I suspected that there would be very dramatic effects on the auto industry in India, but found that the effect was even more pronounced on the scooter industry, which sells some ten time more units than the auto industry does. Asia Times reported that "Most two-wheeler brands cost between the 50,000 rupees and 100,000 rupees (US$738-US$1,476) and cash plays a major role in the transactions. According to Credit Suisse, about 40% of purchases of two-wheelers are done in cash."

The largest maker of motorcycles, scooters and auto rickshaws in India is Hero MotoCorp, which saw its sales of scooters fall from 663,153 in October, to 479,856 in November. (Sales in November 2015 were 550,731 units.) A month later, The Economic Times reported the Hero's sales fell another 34% in December 2016, to 330,202 (compared to 499,665 units in December 2015). More recently, Hero MotoCorp sales were down 14% in January 2017.

Bajaj Auto suffered a sales drop of 12% in November last year, 237,757 (compared to 270,886 a year earlier). December sales were even worse, with a reported 225,529 being a 22 percent collapse from 289,003 vehicles in 2015. According to the India Times, January sales were 211,824 units in January 201, down 16 percent from 252,988 units in January 2016.

Meanwhile, India's homegrown automaker, Tata Motors, has reported that its profits have plummeted 96% after the cash ban.
So what could possibly be the reason for inflicting such immense pain on one's own country? The answers are laid out in the Scroll 3-part series, excerpts of which follow:

The war on cash is being waged by four major groups. One, existing financial services providers such as banks and credit card companies. Two, technology companies, including start-ups, with financial services ambitions (known as Fintechs in current terminology). Three, governments. And four, Central banks. It is difficult to imagine a more powerful combination of forces.

It is not that they have the same objectives. In fact, they have different objectives that sometimes conflict. But their interests are complementary when it comes
to driving cash out of existence.

....for banks, it costs money to count, manage, store and move cash. But the moment currency turns into digital bits, two opportunities present themselves – one, to charge tiny little fees on every single transaction and two, to create a data trail of income and expenditure of customers that would come in handy to sustain new services and business models.

Cash today forms only 22% to 68% of transactions by volume in advanced economies. Norway, Australia and Denmark lead the digital pack while Japan, Germany and South Korea are among those who still prefer cash to cashless, with the United States falling somewhere in between, with a figure of 49%. But the theoretical scaffolding and reasoning for
eliminating cash altogether began being put together only after the financial crisis of 2008.

[As central banks responded to the financial crash of 2007-2008 and the ensuing economic crisis, they] "began to cut interest rates down to zero to stimulate investment and
spending. But they found to their horror that zero or near-zero interest rates were not enough to get their economies humming again."

Interest rates are the single most powerful tool that Central banks have, to control inflation or stagnation. If the economy is heating up and inflation is going beyond the targeted rate, central banks raise interest rates thus cooling down investment and consumer spending. People save more and spend less, bringing down inflation and along with it, growth. But if the economy is stagnant and inflation is lower than targeted, with not enough investment or consumer demand, central banks reduce interest rates to stimulate demand. Economic theory suggests that pushing interest rates significantly below zero might have been necessary to pull many advanced economies out of the funk they have been in since 2008.

A negative interest rate means that if you keep Rs 100 with your bank for a year, instead of getting back, say Rs 105 including a 5% interest, you may get back only Rs 99.90 – the rest being taken as, say, 0.1% negative interest rate. The expectation is that negative interest rates will force banks, businesses and individuals to lend, invest or spend their money rather than keep it idle, because there’s a cost to keeping it idle.

Now this is great in theory, but there is a practical problem. Central banks can take interest rate as high as they want without limit, but they cannot take it into seriously negative territory for a simple reason: if it goes there, everyone would just take their cash out of the banks and keep it in safe deposit boxes. No spending happens, and the
central bank objectives are not met. In other words, economists argue that there is an asymmetry in the way central banks can use interest rates. They have immense power to cool down an overheating economy, but only limited power to stimulate a stagnant economy by bringing down interest rates sufficiently.

The technical term economists use to describe this situation is Effective Lower Bound, or ELB – the negative interest rate below which people will just withdraw their money from
banks. Since there is a convenience to keeping money in the bank, the ELB is usually not exactly zero, but a little below zero – say, - 0.5% or -1%. People don’t mind keeping their money in the bank if the negative interest rate is a minor annoyance, because there is a
convenience to operating with a bank account and say, a debit card.

After the Great Recession, this is the situation that central banks found themselves in: operating close to ELB. And it is in this situation that some economists started pushing a new idea that sounded horrendous to many: eliminating cash altogether. If there is no cash, people cannot take their money out of banks, and central banks can take interest rates as much below zero as needed. In other words, eliminating cash will improve the ability of central banks to fight stagnation and improve growth.

There are two well-known economists who pushed forward the idea of eliminating cash initially: Willem Buiter, now Chief Economist at financial services behemoth Citigroup and Professor Kenneth Rogoff of Harvard University. (Buiter was a thesis advisor to current Reserve Bank of India Governor Urjit Patel, and they have authored many papers together.) Willem’s 2009 piece titled “Negative Nominal Interest Rates: Three Ways to Overcome the Zero Lower Bound

Rogoff presented his paper, “Costs and benefits to phasing out paper currency in 2014” at the National Bureau of Economic Research’s Macroeconomics Conference at Cambridge, Massachusetts,

Since these two men made their case, others have added their own powerful voices to the chorus, including former US Treasury Secretary Larry Summers (who was considered for appointment as the Federal Reserve Chairman) and Nobel Laureate Paul Krugman. Both Krugman and Summers argue that in the situation that advanced economies are faced with, there are only two choices: either have negative interest rates (along with its inescapable corollary, currency elimination), or tolerate much higher levels of inflation,

These ideas are gaining momentum. Denmark, for example, is predicting that it will eliminate cash by 2030. In Italy and France, it is illegal to make purchases exceeding 1,000 Euros in cash. In Spain the limit is 2,500 Euros. Last year, European Central Bank decided to stop printing and issuance of the 500 Euro note,

At a conference that was held in London on May 18, 2015 titled “Removing the Zero Lower Bound on Interest Rates”, Buiter and Rogoff were the keynote speakers, and other speakers
represented the central banks of Switzerland, Europe, US, Denmark and Sweden, Soros Fund Management, insurance company Generali, Asset Management Company Brevan Howard and so on. So by 2015, the war had already been joined by many financial service behemoths who had begun to see the gains to be had from pushing currency out of the system. And by October 2015, the International Monetary Fund itself had released a paper titled “Breaking Through the Zero Lower Bound.”

....

There is also a belief that emerging markets are where new digital financial technologies will evolve, by leapfrogging the stages that the advanced economies had to go through.
....the Better than Cash Alliance in 2012, hosted at the United Nations in New York and funded by the United States Agency for International Development (commonly known as USAID), Bill and Melinda Gates Foundation, Citi Foundation, Ford Foundation, Mastercard, Omidyar Network and Visa Inc. The United Nation’s Capital Development Fund serves as the secretariat. In June 2015, the finance ministry put up a draft proposal on its website, recommending tax concessions to reduce the cost of credit, debit and online payments. In July 2015, 11 new payment bank licences were given out, including one for PayTM. In November 2015, a Memorandum of Understanding was signed between the Ministry of Finance and USAID – the same agency behind the Alliance – to start working on interoperable digital payment models to drive transactions that involve small businesses and low-income consumers.

On October 14, 2016, USAID, one of the founding partners of the Better Than Cash Alliance, announced the launch of a new initiative called Catalyst to drive cashless payments in India.

....a report on the great opportunity that digital finance presents in emerging economies, prepared by McKinsey and released just four months ago, in September. The report is prominently linked on the website of the Better Than Cash Alliance.

As more people obtain access to accounts and shift their savings from informal mechanisms, as much as $4.2 trillion in new deposits could flow into the financial system 

Yeah, right.

Scroll next gives us an amazing excerpt from the above mentioned  international "business consulting" firm McKinsey, which comes right out and admits the goal is to destroy small, independent "informal" producers and retailers, in order to give more "market share" to "formal" "high productivity, modern firms," i.e., multinational conglomerates run by the new world corporatist oligarchy:

....the kind of growth that will result from a forced move towards cashless is likely to be particularly weak on employment growth for a simple reason: The stated intention of the cashless push is to make it impossible for the informal sector to survive as it does today – even though it employs more than 70% of India’s labour.

“From an economic perspective, the informal economy imposes a high cost and significantly
hinders growth. Many developing countries have a two-speed economy: a modern sector of healthy companies with high productivity (or output per unit of input), and an informal sector of subscale firms that drags down overall productivity and growth. Informal firms face perverse incentives and may avoid investments or growth that could increase their visibility to regulators and tax authorities. In Turkey, for instance, MGI has found that the productivity of formal companies is 2.5 times that of informal firms. The gap in productivity levels between formal and informal firms is similar in Brazil, India, Mexico, Russia, and elsewhere.

“The presence of informal firms also harms the economy by limiting the ability of high productivity, modern firms to gain market share, given the significant cost advantage informal firms enjoy by not paying taxes. MGI research has found that the cost advantage from tax avoidance ranges from 5 percent of the cost of goods sold in Mexico food retail to 25 percent in India’s apparel sector and to more than 100 percent in the case of Russian software. Formal companies also face additional costs and complexity in managing informal firms with outmoded technology in their supply chain. This dampens the healthy process of
“creative destruction” in the economy in which the most productive companies take market share from less productive ones.”

Shashi Tharoor, a former UN under-secretary-general and former Indian Minister of State for Human Resource Development and Minister of State for External Affairs, is currently an MP for the Indian National Congress and Chairman of the Parliamentary Standing Committee on
External Affairs, writes in Project Syndicate:

....the impact is not being felt equally by all. India’s wealthy, who are less reliant on cash and are more likely to hold credit cards, are relatively unaffected. The poor and the lower middle classes, however, rely on cash for their daily activities, and thus are the main victims of this supposedly “pro-poor” policy.

Small producers, lacking capital to stay afloat, are already shutting down. India’s huge
number of daily wage workers can’t find employers with the cash to pay them. Local industries have suspended work for lack of money. The informal financial sector – which conducts 40% of India’s total lending, largely in rural areas – has all but collapsed.

India’s fishing industry, which depends on cash sales of freshly caught fish, is wrecked. Traders are losing perishable stocks. Farmers have been unloading produce below cost, because no one has the money to purchase it, and the winter crop could not be sown in time, because no one had cash for seeds.

Perhaps the worst part is that these sacrifices are not likely to achieve the government’s
stated goal. Not all black money is in cash, and not all cash is black money. Those who held large quantities of black money seem to have found creative ways to launder it, rather than destroying it to avoid attracting the taxman’s attention, as the government expected. As a result, most of the black money believed to have been in circulation has
now flooded into banks, depriving the government of its expected dividend.

On top of all of this, the government’s plan does nothing to control the source of black
money. It will not be long before old habits – under-invoicing, fake purchase orders and bills, reporting of non-existent transactions, and blatant bribery – generates a new store of black money.

Modi has been discussing going even further, moving India to an entirely “cashless society.” Does he not know that more than 90% of financial transactions in India are conducted in cash, or that over 90% of retail outlets lack so much as a card reader? Is he unaware that over 85% of workers are paid in cash, and that more than half of the population is unbanked?

Again, here are the links for the 3-part series in Scroll:

Understanding demonetisation: The problem with the war on cash
Force marching unprepared citizens towards a cashless utopia that has
little space for the informal sector is callous and indefensible.

Part I: Understanding demonetisation: Why there’s a war on cash (and you are in the middle of it)

Part II: Understanding demonetisation: Who is behind the war on cash (and why)

Part III: Understanding demonetisation: The problem with the war on cash

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Comments

snoopydawg's picture

Thanks for writing it and posting this here.
As usual Summer's name is mentioned again for being in the middle of anything that has to do with money and making profits for the financial industry.
The banks have been able to get their hands on everything that will make their shareholders happy.
I know that it's easier for states to use a plastic card for things like food stamp EBT cards but how much more money does it cost the states to use them and how much money does the banks get every time people swipe their cards?
Every credit or debit card transaction costs businesses money and the banks make a profit from them.
As stated, going cashless is so the IRS can keep track of people's money if they have to put it in a bank and of course the banks can keep people's money for when the next economic crisis happens and instead of the government bailing them out the banks are going to be allowed to take people's money.
This was written into one of the latest omnibus bills and signed by our good friend Barry who has sheltered them from any prosecution.
His new charity organization has Eric Holder as a member and Barry isn't staying in DC only for Sasha to finish school. He's staying there to help protect what is left of his legacy and to keep involved in the DNC and helping to reform the Democratic Party.
dkmitch has been putting links to articles about this.
Apparently he didn't do as much damage as he wanted to do.

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20 users have voted.

A noun, a verb and Putin.

Raggedy Ann's picture

and limits our freedom. Keep coins and old broken jewelry, they can be melted down and traded. Barter is a great system, too. Grow food and trade it. Make art and trade it. Trade your skill for another's.

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If you acknowledge it, you can change it.
AMERICAN PRIVILEDGE: When INTERVENTIONISM is just a word to you because it's not your front door those drone strikes come knocking on. ~Caitlin Johnstone's friend

Song of the lark's picture

@Raggedy Ann barder is a great system. However remember that you can't run any kind of modern economy on severely deflationary barder. If we go to barder in any substantial way the status quo is already broken and the economy is gone. Also better be armed up in that case like back in the day when highway robbery was big.

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eyo's picture

I am following McGuires's implementation meetings. Hundreds of millions, maybe a billion of untaxed cash in California the biggest challenge is banking, financial services. Unless Sessions cracks down, then tough shit California public, because LEOs are immediately ready to seize, then no one will need new services anyway. Maybe that is why no effort toward a state bank, but even that the feds could close I think. Maybe it's all the Feds are waiting for in fact, the huge list of people that want banking services, get 'em all together at once and watch the prison industry and your forfeiture accounts grow. /paranoid

Once Track and Trace gets implemented, if it does, they will then attempt to extinguish the black market completely. It will be "papers please" on everything cannabis right down to the water molecule, I am not kidding. The Governor of Colorado was drooling for that Silicon Valley technology. The taxation is ridiculous for small cultivators, pre-pay per plant before the season even starts, no matter what size plant is grown. So, the bad actors that hog water and grow trees will profit, the small cultivator that grows a right-sized crop gets screwed. There is no "right-sized" crop law in California, we're capitalists "That's the system." Water wars exist already, now more. Of course pre-pay also requires loans and crop insurance, see how that works?

McGuire leading the implementation effort is ironic, no? How much effort goes in after opposing something the whole way? Talk about a windsock, is that what people want now? Not me.
Citing marijuana ‘mess,’ Sen. Mike McGuire opposes California’s faulty Proposition 64

Though voter approval of Proposition 64 on Nov. 8 would put an end to marijuana prohibition in California, state Sen. Mike McGuire predicts it will take at least 10 years to redress the rampant illegal cultivation, violent crime and environmental damage wrought by a largely unregulated pot industry over the past two decades.

and what about the children! /sarcasm
Job security, he'll stretch it as far as it can go. Poor thing has to work for his constituents now, at least he is showing some effort. I think? Toward what I'm not sure. Ecocide? Yep! That's it. Kill the watershed while smashing the round cannabis peg in to that square alcohol hole.
Edit: lol because I just could not type "square cannabis" for some reason, but get the idea.
Mendocino County winery seeks new life as marijuana operation

PEACE

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9 users have voted.

On a blog.

monopoly capitalism is a dying system and will continue to beggar the 99% to maintain its privileges and wealth. In the financialization phase of global capital that emerged in the late 1980's, currency manipulation and the creation and sale of exotic and poorly understood financial instruments created more wealth than investment in factories or other productive enterprises.
Stagnation is the normal state of this end stage of capitalism and financialization merely prolongs its reign as the organizing system to feed the global center its wealth. Companies find it more profitable to buy back their stocks than to invest in productive capacity - there's already a surplus of productive capacity.

There is no Nobel Prize for economics.

In 1969 the central bank of Sweden created an economics prize in memory of Alfred Nobel and it went to the outstanding apologist for capitalism of the year. Once or twice a non apologist was given the prize. I remember that one economist was bracketed by Milton Friedman and Hayak; it was like the Swedes were limiting the infection by surrounding the economist with two monetary insaniacs.

The situation in India can accurately be seen as Big Finance attacking the traditions and way of life of ordinary Indians to squeeze a few more dollars out of a dying system.

The efforts should be made of ridding the earth of neoliberal capitalism, not making a precarious life for the 90% even more precarious and desperate.

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19 users have voted.

"The justness of individual land right is not justifiable to those to whom the land by right of first claim collectively belonged"

gulfgal98's picture

@duckpin @duckpin Thepush for a cashless economy is one of the last ways that the rentier class can squeeze its last bit of profit from the rest of us, particularly the poor. I have yet to read one thing that shows me that a cashless society would be preferable to one in which people would opt to use either/both cash and credit.

The first thing that came to mind was that by making everyone switch to a system of credit cards is that it harkens back to the days when coal miners were paid in script which had to be used to pay for goods purchased from the company store. The song, Sixteen Tons made famous by Tennessee Ernie Ford was not fiction, but real. Further it allows our surveillance system to monitor our every move and every purchase.

Second, forcing people into a cashless society automatically creates a new revenue stream for the financiers whereby they charge a transaction fee on every purchase. These are the very same people who are vehemently opposed to a transaction fee on stock trades.

To me, the only real shock about this "experiment" is that they chose India in which to implement it. This is something that we must fight to prevent from happening here.

Thank you, Tony for this outstanding and comprehensive essay and for cross posting here for us.

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13 users have voted.

"I don't want to run the empire, I want to bring it down!" ~Dr. Cornel West "...isn't the problem here that the government takes on, arbitrarily and without justification, an adversarial attitude towards its citizenry?" ~CantStopthe Signal

@gulfgal98 was a true believer in office with a working majority - or a roll over & play dead opposition.

Last generation, most of India was not in the global economy and barter was more common than business-type transactions. I cannot believe the people of India would want to go cashless. It is my impression that they want something they think is tangible, like cash, or is tangible like gold.

I like your two points about an income stream for the banks and a spy scheme for the government.

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8 users have voted.

"The justness of individual land right is not justifiable to those to whom the land by right of first claim collectively belonged"

travelerxxx's picture

@gulfgal98

...forcing people into a cashless society automatically creates a new revenue stream for the financiers whereby they charge a transaction fee on every purchase. These are the very same people who are vehemently opposed to a transaction fee on stock trades.

Further, this War on Cash is using financial nuke weapons on any business that isn't a huge multi-national corporation. As is stated in the article:

Small producers, lacking capital to stay afloat, are already shutting down. India’s huge number of daily wage workers can’t find employers with the cash to pay them. Local industries have suspended work for lack of money. The informal financial sector – which conducts 40% of India’s total lending, largely in rural areas – has all but collapsed.

India’s fishing industry, which depends on cash sales of freshly caught fish, is wrecked. Traders are losing perishable stocks. Farmers have been unloading produce below cost, because no one has the money to purchase it, and the winter crop could not be sown in time, because no one had cash for seeds.

In the end, this move is a massive attack on The People by the oligarchy; right now, India's people. It certainly will not be limited to India. The oligarchy does not care how many bodies are left in the aftermath of this attack - there are lots of potential bodies in the nation of India. If this attack succeeds in India, it will spread rapidly, especially in the context of a new global financial crash.

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gulfgal98's picture

@travelerxxx @travelerxxx When I went and read the links and the "reasons" for going cashless, I failed to see any reason that was more beneficial to the actual people. There was a lot of economic mumbo jumbo about increasing GDP. Whoopee! GDP does not translate into jobs or income for average people, as we have seen in the US. What the real purpose is a consolidation of the death grip that the banks and large corporations have on all of us. And if people lose out, no big deal as long as the banks and corporations remain whole.

I really wish this essay would get greater attention because it shows just how Orwellian the future for all of us will be under corporate control.

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8 users have voted.

"I don't want to run the empire, I want to bring it down!" ~Dr. Cornel West "...isn't the problem here that the government takes on, arbitrarily and without justification, an adversarial attitude towards its citizenry?" ~CantStopthe Signal

travelerxxx's picture

@gulfgal98

I really wish this essay would get greater attention because it shows just how Orwellian the future for all of us will be under corporate control.

It surely looks like a blueprint to me.

We should all keep an eye on this situation in India. Not hard to do either, as there is no language barrier (other than their English is usually better than ours).

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6 users have voted.

@travelerxxx @gulfgal98 of a rotten future. He came close, produced a real service to the readers, but didn't go far enough

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6 users have voted.

"The justness of individual land right is not justifiable to those to whom the land by right of first claim collectively belonged"

Steven D's picture

I knew in my gut a cashless economy made no sense for ordinary people, but now I understand the reason why it is being pushed so much is to increase the power of multinational corporations at the expense of the rest of us. Another blatant attempt to sell a 1% policy as a "benefit" for the "poors."

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14 users have voted.

"You can't just leave those who created the problem in charge of the solution."---Tyree Scott

Amanda Matthews's picture

horrific idea. It's from the second link provided in the OP as to who is pushing this new 'cashless society' BS.

EDIT: From left to right: Willem Buiter, Kenneth Rogoff, Narendra Modi, Paul Krugman, Larry Summers

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8 users have voted.

is becoming so ubiquitous is that people like it. A debit card is just so bloody convenient, it's hard to resist using it instead of cash. Fiddling with nickles and pennies at the check out counter when there are six people in line behind you, is nobody's idea of a good time. And to even get cash, you need a card to access an ATM. Unless you want to drive to a bank, park your car, and then wait in line there. Forget about walking to the bank. People don't walk anywhere any more.

I certainly wish it were otherwise. I've always hated those damn plastic cards instinctively, and for the very intelligent reasons stated in this excellent post. However, mea culpa - I now find myself using a debit card almost exclusively. Partly I guess because almost everyone else uses one, and swimming against such a tide seems somehow futile, perhaps even a bit anti-social.

Sometimes I feel as if I'm living inside a vast all-encompassing machine, as a reproducible unit performing designated tasks to facilitate its over-all functioning.

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5 users have voted.

native

gulfgal98's picture

@native @native of credit and debit cards still allows the individual to make that decision. Forcing people into a cashless society removes the individual from the decision making process that will greatly affect their own lives. People should have the freedom to opt out of being forced to use a credit or debit card.

Also in reading the links, there is another reason why financial institutions want to go cashless. This excerpt is from the first of the three major links posted in Tony Wikrent's essay above.

After the Great Recession, this is the situation that central banks found themselves in: operating close to ELB. And it is in this situation that some economists started pushing a new idea that sounded horrendous to many: eliminating cash altogether. If there is no cash, people cannot take their money out of banks, and central banks can take interest rates as much below zero as needed. In other words, eliminating cash will improve the ability of central banks to fight stagnation and improve growth. Of course, this is like a forced appropriation of people’s savings and many would find it outrageous.

To be clear, there is a lot I do not understand but that excerpt seems to be the driving force for the central banks behind all of this. So knowing that I am just your average person trying to interpret all of this, IMHO, it appears to be just another bandaid upon already failing bandaids that the creditor class has imposed upon the rest of us.

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"I don't want to run the empire, I want to bring it down!" ~Dr. Cornel West "...isn't the problem here that the government takes on, arbitrarily and without justification, an adversarial attitude towards its citizenry?" ~CantStopthe Signal

@gulfgal98

on a suppurating wound. The intention being not to heal it, but to conceal it. I hope Modi lives to regret this, whether his intentions are honorable or not.

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native

Song of the lark's picture

@native Only five percent is cash.

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gulfgal98's picture

@Song of the lark of all transaction by volume according the part 1 of the three part linked series in this essay.

We know that plastic has been replacing cash worldwide in a slow and steady manner for decades, causing many to predict the death of cash prematurely. Cash today forms only 22% to 68% of transactions by volume in advanced economies. Norway, Australia and Denmark lead the digital pack while Japan, Germany and South Korea are among those who still prefer cash to cashless, with the United States falling somewhere in between, with a figure of 49%. But the theoretical scaffolding and reasoning for eliminating cash altogether began being put together only after the financial crisis of 2008.

To me, the real issue is that the user (citizen) should have the right to make his or her own determination whether to use cash or plastic. Going cashless takes away that right and forces the person to use a system that is being set up solely to benefit the financial institutions.

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0 users have voted.

"I don't want to run the empire, I want to bring it down!" ~Dr. Cornel West "...isn't the problem here that the government takes on, arbitrarily and without justification, an adversarial attitude towards its citizenry?" ~CantStopthe Signal

The "benefits" of a cashless society are nothing but self serving bullshit.

Back in the 1980s I tried to write what I called "the dark future book" where I was going to posit a perfect storm of every conceivable worst case scenario, ecological, social and political. in about 6 months I found that this was impossible - the worst case scenarios of 1983 proved to be optimistic by 1984. A science fiction writer named Robert Sawyer (btw, I recommend him, even in light of what I am about to say) wrote, in 1999, a book set in 2009 where everyone gets a vision of the world of 2030. His predictions of 2030 would make a snotty high school kid of 2017 laugh. (2 "predictions" come to mind - he predicts that the average income of an American in 2030 will be $157,000, but a loaf of bread will cost $4, and that after DNA evidence proves that 100 innocent people were executed America will abolish the death penalty)
First rule of capitalism: If you let the rich have their way any prediction of the world in 30 years will be laughably pollyannaish in 10. (or universally exposed as an outright lie)

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A PROUD Hillary hater since 1993

@doh1304

There is considerable doubt as to whether there will be any life remaining on the planet in several decades, if the Parasite Class are permitted to continue having their way.

And even if there should be, it seems unlikely that any non-billionaires will form any portion of it.

As has been pointed out, this monetary bankster coup takes the medium of currency of exchange entirely out of the control of all The People to place it entirely under the control of to-be-uncontrolled financial criminal organizations 'legally' enabled to rob entire populations of their rent and grocery money, at both a chunk at a time and all at once at any moment, with no recourse for the victims, (much like their 'exceptional' 'trade courts') and clearly has nothing to do with 'the black-market', which only involves a fraction of the population.

But extra charges will ensure that those barely making it will be unable to. Come to that, electronic records could be altered by banking institutions to erase all traces of your ever having had missing money in your account at all.

And I daresay, where any money goes which is spent by the owner could be easily limited by institutions to approved (corporate) recipients providing kick-back rather than, say a competitor not affiliated with your bank or perhaps a progressive website or environmental group promoting corporate-profit-reducing heresy, assuming such are not simply censored off the net. To whom would you complain?

Also, not so easy to lend someone 10 bucks they urgently need when you'd have to give him your card and password to do it. And no way could you give a few bucks to any among the desperate on the street, perhaps about to lose a job that sorta feeds them because of their bank having removed their busfare from their card, so direct personal human financial assistance to strangers is out. This limits and potentially adversely affects just about everything in normal life, quite apart from the continual total uncertainty as to whether your money will be there/be accessible when you reach the check-out counter or your bills come due.

Smaller/independent business is to be killed off, leaving no choice beyond certain of the most ruthless corporations for any employment or anything we might be able to purchase, entirely doing away with competition and the pretense of any 'invisible market hand' holding back any degree of corporate/billionaire profiteering.

What's the point of Joe/sophine citizen working to earn a living when that money can simply vanish - 'legally' stolen by banksters - whether fast or slow, at any instant? Oh, wait, we're all being replaced by robots anyway; the Parasite Class believe that they no longer need us and this is simply a next step in the looting phase of the final solution for life on the planet, draining that last drop of blood from our stones, so to speak.

In any modern society, having no money renders you helpless; this is planned for entire populations.

In any large-scale emergency, only those with money can pack up and travel away from an anticipated flood, fire or large-scale industrial accident/toxic leak; any internet/power outage and no-one has access to funds and the entire area is paralyzed.

But who will still need the non-billionaire poors among Those Who Matter? Not that they want to pay the rest of us anything at all for work they need done or to even 'allow' us basic rights, with their pathological greed dictating that any one having anything at all, health, comforts, property, money or rights, is somehow outrageously depriving them...

So, out of curiosity, what happens to the actual worth of all of the money in world once they have it all and when they're down to... what, a few thousand of the billionaires or, perhaps a few hundred or less of the most ruthless trillionaires - then forced to predate upon each other for resources and supplies it's no longer possible/profitable enough to produce in the limited market? Oh, wait - no natural life-support system = no oxygen outside. One earthquake/other disaster/power failure and they're paralyzed and... well... dead, anyway.

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Song of the lark's picture

@Ellen North plenty of gated communities will be burnt out and so called billionaires strung up.

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If banks are about to go bust, they can use their depositor's money. They did it partially in Crete (was it? or Malta? one of the small European tax havens), and the US signed something allowing it here. Naked Capitalism covered it in some detail.

Depositors are only unsecured creditors. It's not actually your money.

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