I have been warning for years that my cycles are converging, leading to what will be the worst financial crisis of all time — a loss in confidence in government — creating utter chaos in the markets over the next few years.
Case in point: Governments around the world are trying to restrict the use of cash, or paper currency.
If central bankers and governments have their way, large denominations of physical cash are going to be banned. This push toward a fully digitized (cashless) monetary system — where every transaction will be recorded, scrutinized, controlled, and taxed — is being sold to the public as “the cure” to rid the world of terrorists, drug lords and other criminal behavior.
And just to point out how mainstream this way of thinking has grown, Kenneth Rogoff, a respected economist from Harvard, has a new book — “The Curse of Cash” — arguing the benefits of a cashless society.
Rogoff has written many insightful articles about various aspects of the economy. But when it comes to his views on a cashless society, he is just plain wrong.
In his book, Rogoff argues that paper money fuels:
3. Tax evasion and
4. Illegal immigration.
Rogoff claims that his plan would reduce money-laundering and thereby reduce crime while at the same time exposing tax cheats who deal in cash payments.
But, do you really believe the mafia or drug cartels will stop doing business just because the government eliminates paper currency? Not a chance! It might inconvenience them, but it certainly won’t stop them. This will just force these illegal activities to go further underground, and/or come up with a new form of exchange or a barter system.
And what about good people? They’ll be forced underground too.
In the U.S., the state of Louisiana has already banned the use of cash in all transactions involving secondhand goods. That means that you are not allowed to pay with cash at a garage sale or a flea market anymore. Likely result? People will come up with new ways to make the same transactions without Big Brother watching over them.
So for respected Dr. Rogoff and others advocating a cashless society, I say “Be careful what you wish for!”