Negative Interest Rates And The War On Cash (Part 2)

In some states almost anything, no matter how small, can be purchased electronically. Everything down to, and including, a cup of coffee from a roadside stall can be purchased in New Zealand with an EFTPOS (debit) card, hence relatively few people carry cash. In Scandinavian countries, there are typically more electronic payment options than cash options:

Sweden became the first country to enlist its own citizens as largely willing guinea pigs in a dystopian economic experiment: negative interest rates in a cashless society. As Credit Suisse reports, no matter where you go or what you want to purchase, you will find a small ubiquitous sign saying “Vi hanterar ej kontanter” (“We don’t accept cash”)….A similar situation is unfolding in Denmark, where nearly 40% of the paying demographic use MobilePay, a Danske Bank app that allows all payments to be completed via smartphone.

Even street vendors selling “Situation Stockholm”, the local version of the UK’s “Big Issue” are also able to take payments by debit or credit card.

Ironically, cashlessness is also becoming entrenched in some African countries. One might think that electronic payments would not be possible in poor and unstable subsistence societies, but mobile phones are actually very common in such places, and means for electronic payments are rapidly becoming the norm:

While Sweden and Denmark may be the two nations that are closest to banning cash outright, the most important testing ground for cashless economics is half a world away, in sub-Saharan Africa. In many African countries, going cashless is not merely a matter of basic convenience (as it is in Scandinavia); it is a matter of basic survival. Less than 30% of the population have bank accounts, and even fewer have credit cards. But almost everyone has a mobile phone. Now, thanks to the massive surge in uptake of mobile communications as well as the huge numbers of unbanked citizens, Africa has become the perfect place for the world’s biggest social experiment with cashless living.

Western NGOs and GOs (Government Organizations) are working hand-in-hand with banks, telecom companies and local authorities to replace cash with mobile money alternatives. The organizations involved include Citi Group, Mastercard, VISA, Vodafone, USAID, and the Bill and Melinda Gates Foundation.

In Kenya the funds transferred by the biggest mobile money operator, M-Pesa (a division of Vodafone), account for more than 25% of the country’s GDP. In Africa’s most populous nation, Nigeria, the government launched a Mastercard-branded biometric national ID card, which also doubles up as a payment card. The “service” provides Mastercard with direct access to over 170 million potential customers, not to mention all their personal and biometric data. The company also recently won a government contract to design the Huduma Card, which will be used for paying State services. For Mastercard these partnerships with government are essential for achieving its lofty vision of creating a “world beyond cash.”

Countries where electronic payment is already the norm would be expected to be among the first places to experiment with a fully cashless society as the transition would be relatively painless (at least initially). In Norway two major banks no longer issue cash from branch offices, and recently the largest bank, DNB, publicly called for the abolition of cash. In rich countries, the advent of a cashless society could be spun in the media in such a way as to appear progressive, innovative, convenient and advantageous to ordinary people. In poor countries, people would have no choice in any case.

Testing and developing the methods in societies with no alternatives and then tantalizing the inhabitants of richer countries with more of the convenience to which they have become addicted is the clear path towards extending the reach of electronic payment systems and the much greater financial control over individuals that they offer:

Bill and Melinda Gates Foundation, in its 2015 annual letter, adds a new twist. The technologies are all in place; it’s just a question of getting us to use them so we can all benefit from a crimeless, privacy-free world. What better place to conduct a massive social experiment than sub-Saharan Africa, where NGOs and GOs (Government Organizations) are working hand-in-hand with banks and telecom companies to replace cash with mobile money alternatives? So the annual letter explains: “(B)ecause there is strong demand for banking among the poor, and because the poor can in fact be a profitable customer base, entrepreneurs in developing countries are doing exciting work – some of which will “trickle up” to developed countries over time.”

What the Foundation doesn’t mention is that it is heavily invested in many of Africa’s mobile-money initiatives and in 2010 teamed up with the World Bank to “improve financial data collection” among Africa’s poor. One also wonders whether Microsoft might one day benefit from the Foundation’s front-line role in mobile money….As a result of technological advances and generational priorities, cash’s days may well be numbered. But there is a whole world of difference between a natural death and euthanasia. It is now clear that an extremely powerful, albeit loose, alliance of governments, banks, central banks, start-ups, large corporations, and NGOs are determined to pull the plug on cash — not for our benefit, but for theirs.

Whatever the superficially attractive media spin, joint initiatives like the Better Than Cash Alliance serve their founders, not the public. This should not come as a surprise, but it probably will as we sleepwalk into giving up very important freedoms:

As I warned in We Are Sleepwalking Towards a Cashless Society, we (or at least the vast majority of people in the vast majority of countries) are willing to entrust government and financial institutions — organizations that have already betrayed just about every possible notion of trust — with complete control over our every single daily transaction. And all for the sake of a few minor gains in convenience. The price we pay will be what remains of our individual freedom and privacy.

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Gary Anderson 4 years ago Contributor's comment

This of course, is a brilliantly written article that infuriates me. The statists want complete control. They are not yet in the majority, but we are heading their direction. This article is a must read that should be shared among the young people of this nation.