As Greece moves closer to becoming a cashless society, it is clear that the country’s attitude towards cash is reckless and dangerous. The supposed convenience of switching to a cash-free system comes with a great deal of risk, including needless overreach by the state.
by Michael Nevradakis
Part 4 - Cashless policies bode poorly for the future
Where does all this lead though? What does a cashless economy actually mean and why are global elites pushing so fervently for it? Consider the following: in a cashless economy without coins or banknotes, every transaction is tracked. Buying and spending habits are monitored, and it is not unheard of for credit card companies to cancel an individual’s credit or to lower their credit rating based on real or perceived risks ranging from shopping at discount stores to purchasing alcoholic beverages. Indeed, this is understood to be common practice. Other players are entering the game too: in late May, Google announced plans to track credit and debit card transactions.
More to the point though, a cashless economy doesn’t just mean that financial institutions, large corporations, or the state itself can monitor all transactions that are occurring. It also means that the entirety of the money supply—itself now existing only in “virtual” form—will belong to the banking system. Not one cent will exist outside of the banking system, as physical currency will simply not be in circulation. The banking system—and others—will be aware not just of every transaction, but will be in possession of all of our society’s money supply, and will even have the ability to receive a percentage of every transaction that is taking place.
So what happens if your spending habits or your choice of travel destinations raises “red flags”? What happens if you run into hard times economically and miss a few payments? What happens if you are deemed to be a political dissident or liability – perhaps an “enemy of the state”? Freezing a bank account or confiscating funds from accounts can take place almost instantaneously. Users of eBay and PayPal, for instance, are quite aware of the ease with which PayPal can confiscate funds from a user’s account based simply on a claim filed against that individual.
Simply forgetting one’s password to an online account can set off an aggravating flurry of calls in order to prove that your money is your own—and that’s without considering the risks of phishing and of online databases being compromised. Many responsible credit card holders found that their credit cards were suddenly canceled in the aftermath of the “Great Recession” simply due to perceived risk. And if you happen to be an individual deemed to be “dangerous,” you can be effectively and easily frozen out of the economy.
Those thinking that the “cashless revolution” will also herald the return of old-style bartering and other communal economic schemes might also wish to reconsider that line of thinking. In the United States, for instance, bartering transactions are considered taxable by the Internal Revenue Service. As more and more economic activity of all sorts takes place online, the tax collector will have an easier time detecting such activity. Thinking of teaching your child to be responsible with finances? That too will have a cost, as even lemonade stands have been targeted for “operating without a permit.” It’s not far-fetched to imagine that particularly overzealous government authorities could also target such activity for “tax evasion.”
In Greece, while oligarchs get to shift their money to offshore tax havens without repercussion and former Finance Minister Gikas Hardouvelis has been acquitted for failure to submit a declaration of assets, where major television and radio stations operate with impunity without a valid license while no new players can enter the marketplace and where ordinary households and small businesses are literally being taxed to death, police in August 2016 arrested a father of three with an unemployed spouse for selling donuts without a license and fined him 5,000 euros. In another incident, an elderly man selling roasted chestnuts in Thessaloniki was surrounded by 15 police officers and arrested for operating without a license.
Amidst this blatant hypocrisy, governments and financial institutions love electronic money for another reason, aside from the sheer control that it affords them. Studies, including one conducted by the American Psychological Association, have shown that paying with plastic (or, by extension, other non-physical forms of payment) encourage greater spending, as the psychological sensation of a loss when making a payment is disconnected from the actual act of purchasing or conducting a transaction.
But ultimately, the elephant in the room is whether the banking system even should be entrusted with the entirety of the monetary supply. The past decade has seen the financial collapse of 2008, the crumbling of financial institutions such as Lehman Brothers in the United States and a continent-wide banking crisis in Europe, which was the true objective behind the “bailouts” of countries such as Greece—saving European and American banks exposed to “toxic” bonds from these nations. Italy’s banking system is currently teetering on dangerous ground, while the Greek banking system, already recapitalized three times since the onset of the country’s economic crisis, may need yet another taxpayer-funded recapitalization. Even the virtual elimination of cash in Iceland did not prevent the country’s banking meltdown in 2008.
Should we entrust the entirety of the money supply to these institutions? What happens if the banking system experiences another systemic failure? Who do you trust more: yourself or institutions that have proven to be wholly irresponsible and unaccountable in their actions? The answer to that question should help guide the debate as to whether society should go cashless.