We’ve been writing extensively on the war on cash over the past couple of years. Particularly in relation to what is and may be happening in Australia and New Zealand on this front.
In case you’ve not kept up there’s a selection of recent articles further down the page below. But the overriding theme has been that globally there is a definite trend by governments and central banks to make it harder and harder for people to use cash.
This week there was some even more surprising news out of Australia.
Calls for Nano Chipping of A$100 Notes
The leader of the Government task force assigned to crack down on the “black economy” is calling for the nano-chipping of A$100 and possibly even A$50 notes.
Speaking to The Courier-Mail, Michael Andrew said too much cash was being hoarded under pensioners’ beds and also being taken out of Australia and stockpiled as a trusted currency in China.
“Mr Andrew, a former global head of KPMG and current Board of Taxation chairman, said there should be 14 $100 notes for every adult in Australia but there were fewer than that in circulation.
“You see a lot of Chinese don’t trust their banking system so they like to take Australian dollars back to China,’’ he said.
Crime gangs preferred $50 notes and foreign migrants the $100 note.
“I’m working with the Reserve Bank and Austrac to get a better understanding of where our notes are. Clearly there’s a section of this that is organised crime. One of the options we would have is putting an expiry date on these notes. You could put a trace on some of these notes to see where they would go. You can use nano technology to put little chips in so you could then trace it.”
The Reason Given for Nano-Chipping
Of course as per the standard modus operandi for central planner types, the reason for this further crack down on cash is always blamed on crooks and those trying to escape paying their “fair share”:
“The community had to understand that hardworking Australians, who played by the rules, would be slapped with higher taxes to pay for the essential services the community expected if the problem was not addressed, he said.
That message is being directed at the young, Baby Boomers and pensioners.
“We’re seeing $100 notes used by pensioners because there’s an assets-based test at the moment and they like to keep a fair bit of cash under the bed.”
So nothing to do with wanting to track the citizenry’s every transaction and nothing to do with a move to completely digital and centrally controlled monetary system then?
The Real Reasons for the War on Cash
As we’ve said before the real reasons for the “war on cash” are because it allows the government to do a number of things:
- Track and tax every payment you make or receive – there is no “cash economy”, no “cash jobs”
- Freeze deposits and then bail-in deposits in case of a failing bank – see here for more on what happens to your deposits in a bank failure in New Zealand
- Enact negative interest rates without people escaping to cash
- No bank runs – Once all money is digital, there can’t be a run on a bank anymore. You won’t be able to remove your money if you see troubles coming to your bank in advance.
Of course we understand the convenience factor of using “digital money”. But we must keep in mind what freedom and privacy we lose when every single transaction can be tracked.
What to Do About the War on Cash?
As we’ve also recommended before, if you’re going to stockpile some cash then it is probably advisable to go with lower denomination notes like $20 and $10. As the larger denomination notes will be the first to be cracked down on if (or perhaps rather when) it happens here in New Zealand. Plus were the financial system to freeze up, the lower denomination notes will be better for everyday transactions of food, fuel etc.
Secondly stockpile or hoard some gold or silver bullion. As currently there are no controls on precious metals in New Zealand.
The Royal Canadian Mint Silver Maple Leaf 1 oz coin is a good one to consider. A “monster box”, 500 of these coins currently sells for: $13,360. Go here to see the latest indicative price or to request an up to date quote.
Finally, as mentioned earlier, here are the previous articles discussing the war on cash developments here and in Australia: