Last year, MoneyWeek wrote quite a lot about what we called the "war on cash" the way in which central banks and governments seem determined to stop us using actual cash for any transactions at all.
We noted the way in which cash transactions over a few thousand euros were outlawed in much of Europe; we watched the way in which the €500 note was demonised as being the note of choice for all manner of criminals; observed that the Bank Of England website has no timetable on it for the introduction of a new £50 note; and reported at length on a speech in which the Bank's chief economist Andy Haldane reflected on how much easier modern monetary policy would be if only people were forced to stop using cash.
Lots of you accused us of mild paranoia. Turns out we weren't anywhere near paranoid enough. The deputy head of Downing Street's policy unit, Daniel Korski, put forward a pretty radical proposal on the matter.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The aim is to make the UK an entirely cashless society by 2020 with a view to stopping it fuelling the criminal economy; pushing up productivity; and making the UK "the centre for innovation for money in the future".There's a large body of thought that reckons this is a pretty good idea after all, cash does facilitate crime to a degree (although I can't imagine that without it there would be less crime).
But it is worth remembering the two main reasons why abolishing it is a bad idea.The first is that it removes all privacy: without cash you can never buy or sell a thing or a service without anyone knowing about it. The second is that it opens up the way for the state to confiscate your cash at will. One of the reasons why it is hard to make negative interest rates work (ie to get away with effectively charging people for bank deposits) is that, when pushed, people demand bank notes and store them elsewhere (see my previous blogs on this).
Abolish cash, force everyone to keep their money in digital accounts at the central bank and that problem is gone: the state can take rates as negative as itlikes in the happy knowledge that there is nothing the general population can do about it.The last financial defence of the individual against the state is gone. That (for the avoidance of doubt) is not a good thing.
-
Japan’s medium-sized stocks provide shelter from trade warsNicholas Price, portfolio manager of Fidelity Japan Trust, tells us where to invest in Japan
-
Gold ETFs see first outflows in six monthsNovember saw the first net monthly outflows from global gold ETFs since April, according to data from the World Gold Council
-
Beating inflation takes more luck than skill – but are we about to get lucky?Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
-
Rishi Sunak can’t fix all our problems – so why try?Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
-
Young people are becoming a scarce resource – we should value them more highlyOpinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
-
Ask for a pay rise – everyone else isOpinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
-
Why central banks should stick to controlling inflationOpinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
-
How St Ives became St Tropez as the recovery drives prices sky highOpinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
-
The real problem of Universal Basic Income (UBI)Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
-
Why an ageing population is not necessarily the disaster many people think it isOpinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
