BY RUSSELL TURNER
THE POWER OF CASH
I have always believed that having a few dollars in your pocket gives you the ability to buy the things that you need at the best possible price. I have seen individuals go to a car dealer with cold hard cash and buy the auto they need at a price much lower than someone who has to take out a loan to buy it. Some of the reasons why the salesman will take the lower amount is he doesn’t have to do any paper work nor does he have to worry about a check clearing the bank. The whole transaction becomes much simpler with cash; when an auto is financed there are a multitude of fees and costs that go along with the extra paperwork. Many of those fees are paid to the government, and the government would prefer that no cash sales would take place. Recently I read an article were several countries were wanting to go to a cashless economic system.
The momentum to “ban cash”, and in particular high denomination notes like the 500 euro and $100 bills, is seriously picking up steam. Prominent economists and banks have joined the refrain and called for an end to cash. Even a former US Treasury Secretary published an op-ed in the Washington Post about getting rid of the $100 bill. According to their reasoning cash is something that only criminals, terrorists, and tax cheats use. A recent Harvard research paper was entitled: “Making it Harder for the Bad Guys: The Case for Eliminating High Denomination Notes”. The authors claim that “without being able to use high denomination notes, those engaged in illicit activities – the ‘bad guys’ of our title – would face higher costs and greater risks of detection. Eliminating high denomination notes would disrupt their ‘business models’.” It is a sad fact that as long as there have been human on this planet there has been crime. Crime pre-dates cash. And it will exist long after they attempt to ban it.
For nearly eight years central bankers across the world have lowered interest rates to near zero percent interest rates. Despite having created massive bubbles and enabled extraordinary amounts of debt, their policies aren’t working. Now in Europe and Japan interest rates are going negative. Even here in the United States the Federal Reserve has acknowledged that negative interest rates are being considered. If you have $20,000 in your savings account at negative 1%, you’d have to pay the bank $200 each year just to store your money. There’s a certain point, however, when interest rates become so negative that no rational person would hold money in the banking system. Eventually people will realize that they’re better off withdrawing their money and holding physical cash. It would be far cheaper to purchase a safe or bury it deep in your backyard.
Whenever you hear someone saying that going to a cashless society would reduce crime you need to remember that being able to have control of your wealth and property is the cornerstone of our freedoms. If cash is banned everyone will be at the mercy of the government, and if you do manage to save some money you will be forced to pay someone to store it for you. I have seen from experience that our government has no spending discipline. I like the motto printed on our currency “IN GOD WE TRUST” and all others pay cash.
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