Demolishing The Myths Behind The War On Cash

Tyler Durden's picture

Authored by Ronald-Peter Stoferle via The Mises Institute,

The attacks on physical cash from a phalanx of economists, central bankers, commercial banks, and politicians have not diminished in recent years. On the contrary, in the face of the worldwide increase in terror attacks, particularly in Europe, and ongoing pressure on public budgets, the cash ban issue is increasingly dragged into the spotlight.

In a highly-recommended study entitled “Cash, Freedom and Crime. Use and Impact of Cash in a World Going Digital,” Deutsche Bank Research demolishes numerous popular myths surrounding cash, inter alia in the context of crime and terrorism.

Without cash there are no longer bank robberies at gun point, instead there are now electronic bank robberies. Fraud involving credit cards and ATM cards is massively increasing in Sweden, the country considered the pioneer of the cashless society.

The argument that adopting a cashless payment system would facilitate the fight against terrorism doesn't hold water either:

As regards terrorism in Europe, an analysis of 40 jihadist attacks in the past 20 years shows that most funding came from delinquents’ own funds and 75% of the attacks cost in total less than USD 10,000 to carry out — sums that will hardly raise suspicions even if paid by card.

Moreover, many terrorists, particularly if they are prepared to risk their own death, won't be deterred by prohibitions, just as stricter gun laws have no impact on people who must use unregistered weapons for their crimes. Often, they are unable to get hold of a weapon by legal means anyway if they have a criminal record. Planned terror attacks are as a rule characterized by a meticulous and careful approach. At best a cash ban might make financing of terrorism more difficult (even that is doubtful), but at the price of subjecting the law-abiding peaceful population at large to even more intrusive surveillance.

Legislators have passed additional regulations in the past 12 months which at least restrict the use of cash; bans of high-denomination banknotes (e.g., the 500 euro note) and (lower) thresholds for legal cash payments. There are however also technological developments that are significantly reducing the transaction costs of cashless payments and are therefore making cash comparatively unattractive.

In Sweden, an app called “Swish”  introduced by the country's leading banks has revolutionized cashless payments. To this point, the app has been downloaded 5.5 million times. In the Scandinavian country only 2% of all payments are settled in cash these days.

Sweden's central bank expects that this percentage will decline by another three-quarters to 0.5% by the end of the decade. 900 of the 1,600 bank branch offices in the country no longer have any cash in store.

The academic debate continues unabated. A paper that has recently triggered intense debate is the IMF working paper “The Macroeconomics of De-Cashing,” which was published in March 2017.  Its author Alexei Kireyev examines the possible macroeconomic consequences of abolishing cash. His central conclusions are:

  • A cashless payment system would make the monetary policy transmission mechanism more efficient, as there would be very little or no cash available anymore. In particular, it would become possible to implement negative interest rates on a broad front, in order to boost consumption.
  • Since a decline in cash holdings would go hand in hand with an increase in demand deposits at banks, the banking sector would be able to extend more loans. That would lower the level of interest rates and boost economic growth.
  • A sudden increase in the demand for cash is a sign of an imminently impending financial crisis. Shortly before the collapse of Lehman Brothers in September 2008, demand for cash currency increased significantly. That was a sign that bank customers increasingly lost confidence in the solvency and liquidity of commercial banks. This warning signal would no longer be available if cash were abolished.
  • A cashless economy makes tax collection easier, as the example of Sweden illustrates.

Regardless of a superficially balanced approach in large parts of the text, the article clearly evinces an underlying bias toward supporting the abolition of cash. Several arguments in the paper are fallacious and represent little more than intellectual kowtowing to the prevailing zeitgeist. Thus a cashless economy is supposedly going to improve “financial inclusiveness” — as every citizen and economic actor would be forced to open a bank account; it would reduce illegal immigration — as employment of illegal immigrants would become more difficult; and it would help protect the environment — because the production of paper or polymers for banknotes has a greater impact on the environment than electronic money.

Whether the given objective of fighting crime and black markets can be realized by banning cash remains a highly controversial issue. Thus, Professor Friedrich Schneider, one of the most renowned experts in the areas shadow economy and tax evasion, shows that a cash ban would reduce illicit employment be a mere 10% and organized crime by less than 5%. 

The paper's conclusions ultimately read like a political manual for the abolition of cash by means of salami tactics.

In other words, to prevent the population from getting alarmed, it is to be weaned off cash in tolerable doses through a piecemeal approach. Economic incentives for cashless payments are to be put in place, i.e., specifically, fees for cash payments are supposed to be introduced or raised. In our assessment, the most important point though concerns the notion that “de-cashing” would be “critical for the efficiency” of a negative interest rate policy.


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VWAndy's picture

 Barter cant be stopped. Ask the Russians about it. They tried.

gatorengineer's picture

You need to rethink that a bit.  Russia used the war on barter to populate Siberia.  With today's dtabases I would expect most hedges to be fema camped the first week, bartering would be as good an excuse as any.

VWAndy's picture

 My understanding was the black markets were really calling it on the streets. The cops needed stuff just like everyone else.

pizdowitz's picture

" The cops needed stuff just like everyone else."

the weakest link in the chain

playit's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

playit's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

pizdowitz's picture

I dunno.

When the SHTF hits really big-time , then no FEMA, no camp, no credit cards, no skin-deep-chips, no BitCoin, no officer Bob, will either work, or be accepted.

That was Russki experience in the 90's.


Max Victor's picture


Chickens and rabbits - chickens eat rabbit shit and rabbits eat chicken shit - and both rabbits and chickens find their own food if free range -  you just need a few fields in a suitablely secluded location.  LOL

BeanusCountus's picture

And that.... is how revolutions begin.

MrPalladium's picture

When they attempt to eliminate cash, silver rounds will circulate in its place. Small shops with sole proprietors will flourish.

Croesus's picture

It's simple:

If THEY think it's GOOD, then it's Bad for You.

Normalcy Bias's picture

Yep, they're constantly scheming ways to suck the remaining blood from the bottom 99.9% of Americans.

Rusty Shorts's picture

I don't have as much cash as I would like to have, so there's that...

junction's picture

Unlike cash, it is very easy for the government to freeze your bank account and block your credit cards.

Four former U.S. Air Force service members (with more than 20 years of experience between them operating military drones) wrote a letter to President Obama warning that his drone program “has become a major driving force for ISIS and other terrorist groups.”

According to a recent tweet by Radack [their lawyer], the four whistleblowers are experiencing the consequences of speaking out against the government. All four have had their credit cards and bank accounts frozen:

SubjectivObject's picture

So, the message is that the government's preferred criminals will not be constrained, but the general public of farm stock proles will be.

Win win.

Spread the word.

DavidC's picture

I agree. Food, drink, cigarettes and prostitution.

The one outstanding thing that scares the hell out of me is with digital if the government doesn't like you they can switch you OFF.


gatorengineer's picture

Go to any wells Fargo branch on any day and try and get 20 100 dollar bills.  You can't.  The war on cash is here and very very real.

Anteater's picture

I can get 100 $100s from my bank and they'll ask me if there's anything they can do for me, send out my dry cleaning, get my shoes shined, its a full-service bank, aftwr all.

frank further's picture

Uh, care to share your bank's name?  Or did you forget /sarc?

Conax's picture

I got several grand in cash without complaint from US bank.

I glommed it up from different accounts. No probs. Bought me a 'new' car, an '09 model.  I have to use cash to buy cars since better deals can be struck when a stack of green is present. Or it walks away.

BeanusCountus's picture

For now. Deposited $500 cash into a Chase account recently. Deposit slip made out. The guy asked for my id. "What for?" "Its our policy, to prevent money laundering." "On a $500 cash deposit? Who would be trying to "Launder" a measley $500?" "Well, $500 for you, $500 for another person, a few more and it's real money." "Your bosses are idiots. It's my birthday money." And so it goes.

BrownCoat's picture

The economy needs more exceptional people.

If everybody does the same thing, they are easier to corral. Every so often at irregular intervals withdraw cash. Pay different ways just to keep more payment options available.

Conax's picture

I'd switch banks if they implied I was a crook or dragged their feet handing over the paper.  I don't even have to sign deposit slips unless there is cash back involved.

Max Victor's picture

Do what I did with Santandare -   I asked them for a £1000 loan so that I could test the bank - at the time I had about four times that deposited there.


They told me no - so I went to a local porn broker and purchased all my deposit in bullion.  LOL




BandGap's picture

This is not true where I live. I get whatever denomination in whatever amount as long as it is less than $5000. I always mention going to the casino but most times they could care less.

I get great tax advice from my coin dealer, too.


Flankspeed60's picture

Cashed out my remaining 0-yielding IRA on 30 minutes notice - $16,000 cash in 100 denominations. Little country bank.

pizdowitz's picture

You must be Canada. I do 3k-5k daily OK. I also get a thank you , come back again, and a lolipop.

SubjectivObject's picture

While I like the feel of your assertion, I happen to regularly take blocks of zeros out of wefo without out so much as a question.  I'm sure they appreciate being abe to use me toward meeting their SAR quota for the month.

44magnum's picture

These same cocksuckers CONNED the world into fiat,everything they say about money is bullshit. So now they are trying a new CON to get more control? Where is the hit team to take these financial terrorists out?

HRClinton's picture

They're on the PH1 Team. And a myriad of low key, small groups.

[1] Project Mayhem

pizdowitz's picture

Jezooz Kreist, you still here! I thought you had a heart attack after CNN blow-out, and all.

"myriad of low key, small groups." like lice and cockroaches? yeah, keep dreaming.

Call Martha Stewart how to bake cookies - beats that end-of-month blues...

illuminatus's picture

You want to be a hero? It could be you!

Cordeezy's picture

If we become cashless, it will be because Bitcoin has replaced fiat currency not because the bank came up with an easy to use app.  No one trusts bankers or anything the government can control.  This is why Bitcoin works despite the fact people cannot see or touch it.



gatorengineer's picture

Once you tell me how I make change for a bitcoin, use it after an emp event, or after the internet kill switch is used.  I will believe.  Until then its snake oil.

Crypto-World-Order's picture

Here we go again, the infamous zerohedge mythical EMP, the Kill Switch, Jade Helm 15, FEMA camps, Chem Trails and Im sure someone will chime in with Nibiru. Do you really believe all this fear porn shit?



Bitcoin doesnt care if you think its snake oil. You will come to recognize its importance sooner or later. 

gatorengineer's picture

Ok let me make it simple for you if you can't hold it you don't own it.  Did you see the Canada ruling?  Nothing would stop them from using that ruling to block bitcoin would it?

Crypto-World-Order's picture

Do you know you can own it? Trezor wallets allow you to hold it .. You can walk or crawl or carry lets say a 100grand worth of Satoshi's w/o ANYONE ever knowing it

frank further's picture

What if you lose your wallet, or you're robbed of it?  Recourse?

Crypto-World-Order's picture

You have multiple wallets, one can never have too many, redundancy is key here

atx_0110's picture

Bitcoin is like BitTorrent. The feds can tell that it's happening but there is no single pressure point to force into compliance (like Google in the Canada case). They would have to turn off the internet in order to "stop" bitcoin.

When they become sufficiently threatend they will block and monitor the exchanges, to prevent people from fleeing from fiat into bitcoin. But as long as the internet is running they can't stop a trade between two holders.

atx_0110's picture

Someone should probably notify the 25,000 people currently downloading the new King Kong movie that their network died back in 2016.

alibi's picture

Regardless of how the power goes out you won't be able to turn it back on. Your bitcoin

will be as worthless as a college degree until the lights come back on. 

Crypto-World-Order's picture

Like ive said 1000000000000000000 times, IF the power goes down for a prolonged time, H20 and food are your only hope of survival. No water in 3 days? Kiss your dead ass goodbye. 3 weeks w/o food same result.

alibi's picture

Got plenty, hopefully, of that depending on how much shit and how big the fan is. I have other things, too. Few cases of whisky and a few cases of cigarettes. Don't drink or smoke but someone may have something I need in exchange. Beans, bullion, bullets and band-aids. Things you can rely on when the power goes out.


Silver and gold don't care about the fake news currencies, paper or electronic.

You already recognise their importance, thanks to over 5000 years of race memory tangible value performance. 

Snaffew's picture

most of the country has long been cashless.  Direct deposit checks into bank accounts and the plethora of "cash back" on credit cards that is anything but---the masses use their credit cards for just about everything they can purchase to pump up those rewards and airline miles.  Bitcoin has essentially nothing to do with it.  I bet less than 20 percent use cash these days.

frank further's picture

Would you sell your used car or boat or couch for something not cash?  Just askin'.