Apple CEO Tim Cook has one big hope for the future – that he lives to see the end of money.
“…I’m hoping that I’m still going to be alive to see the elimination of money.”
Speaking at a meeting for Apple shareholders in Cupertino, California earlier this month, Cook made it clear that he is firmly on the side of the war-on-cash establishment.
“Because why would you have this stuff! Why go through all the expense of printing this stuff and then some people steal it, and you’ve got to worry about counterfeits and all these things,” he continued.
As Apple’s CEO talked about the downsides of cash, BI reported your credit card ripped off, I’m sure a lot of you have, I have, it’s not a good experience.”that he became more animated, revealing his real passion about the topic…
“We can provide a solution for the customer that’s simpler, more convenient, you don’t carry around a wallet with a bunch of cards in it, or a purse with a bunch of cards in it,” Cook said.
“And it’s more secure, if you’ve ever had your credit card ripped off, I’m sure a lot of you have, I have, it’s not a good experience.”
Until now, it has tended to be politicians and central bankers leading the call for a cashless society… for your own good.
The enemies of cash claim that only crooks and cranks need large-denomination bills.
Except when the Obama Administration flew $400M in cash to Iran
They want large transactions to be made electronically so government can follow them. Yet these are some of the same European politicians who blew a gasket when they learned that U.S. counter terrorist officials were monitoring money through the Swift global system. Criminals will find a way, large bills or not.
The real reason the war on cash is gearing up now is political: Politicians and central bankers fear that holders of currency could undermine their brave new monetary world of negative interest rates. Japan and Europe are already deep into negative territory, and U.S. Federal Reserve Chair Janet Yellen said last week the U.S. should be prepared for the possibility. Translation: That’s where the Fed is going in the next recession.
Negative rates are a tax on deposits with banks, with the goal of prodding depositors to remove their cash and spend it to increase economic demand. But that goal will be undermined if citizens hoard cash. And hoarding cash is easier if you can take your deposits out in large-denomination bills you can stick in a safe. It’s harder to keep cash if you can only hold small bills.
So, presto, ban cash. This theme has been pushed by the likes of Bank of England chief economist Andrew Haldane and Harvard’s Kenneth Rogoff, who wrote in the Financial Times that eliminating paper currency would be “by far the simplest” way to “get around” the zero interest-rate bound “that has handcuffed central banks since the financial crisis.” If the benighted peasants won’t spend on their own, well, make it that much harder for them to save money even in their own mattresses.
All of which ignores the virtues of cash for law-abiding citizens. Cash allows legitimate transactions to be executed quickly, without either party paying fees to a bank or credit-card processor. Cash also lets millions of low-income people participate in the economy without maintaining a bank account, the costs of which are mounting as post-2008 regulations drop the ax on fee-free retail banking. While there’s always a risk of being mugged on the way to the store, digital transactions are subject to hacking and computer theft.
Cash is also the currency of gray markets—amounting to 20% or more of gross domestic product in some European countries—that governments would love to tax. But the reason gray markets exist is because high taxes and regulatory costs drive otherwise honest businesses off the books. Politicians may want to think twice about cracking down on the cash economy in a way that might destroy businesses and add millions to the jobless rolls. The Italian economy might shut down without cash.
By all means people should be able to go cashless if they like. But it’s hard to avoid the conclusion that the politicians want to bar cash as one more infringement on economic liberty. They may go after the big bills now, but does anyone think they’d stop there? Why wouldn’t they eventually ban all cash transactions much as they banned gold and silver as mediums of exchange?
Beware politicians trying to limit the ways you can conduct private economic business. It never turns out well.
But the swing to America’s corporatocracy calling for a war on cash is not for your own good ‘Murica.
All of this anti-cash angst from Cook can be summed up in 3 short words – Use Apple Pay – and follows Visa’s Andy Gerlt, who last year proclaimed: “We are declaring war on cash.”
As we detailed previously, the shots fired in the war on cash may have several unintended casualties:
- Cashless transactions would always include some intermediary or third-party.
- Increased government access to personal transactions and records.
- Certain types of transactions (gambling, etc.) could be barred or frozen by governments.
- Decentralized cryptocurrency could be an alternative for such transactions
- Savers could no longer have the individual freedom to store wealth “outside” of the system.
- Eliminating cash makes negative interest rates (NIRP) a feasible option for policymakers.
- A cashless society also means all savers would be “on the hook” for bank bail-in scenarios.
- Savers would have limited abilities to react to extreme monetary events like deflation or inflation.
3. Human Rights
- Rapid demonetization has violated people’s rights to life and food.
- In India, removing the 500 and 1,000 rupee notes has caused multiple human tragedies, including patients being denied treatment and people not being able to afford food.
- Demonetization also hurts people and small businesses that make their livelihoods in the informal sectors of the economy.
- With all wealth stored digitally, the potential risk and impact of cybercrime increases.
- Hacking or identity theft could destroy people’s entire life savings.
- The cost of online data breaches is already expected to reach $2.1 trillion by 2019, according to Juniper Research.
As the War on Cash accelerates, many shots will be fired. The question is: who will take the majority of the damage?